Enterprise Resource Planning

Lecture 6
Recap
• Why Use ERP
• ERP Modules
• ERP Implementation Challenges
• ERP Cost
• ERP Advantages
• ERP Disadvantages
1. Introduction
• ERP System • ERP system is a complete System
• Defining ERP System which integrates information and
• Organizational Integration & business processes to enable the
Automation of Processes organization to share the information
• What is ERP System among different departments.
Success?
• It integrates the core departments of
• ERP Implementation Success
vs. ERP System Success an organization and manages the
flow of information in different
functions of an enterprise.
• It also allows information sharing
across organizational units.

3
1. Introduction (Cont.)
• ERP System
• Defining ERP
• Organizational Integration &
Automation of Processes ERP System
• What is ERP System
Success?
• ERP Implementation Success
vs. ERP System Success

4
 5

ERP System
1. Introduction (Cont.)

• ERP System
• Defining ERP
ERP System
• Organizational Integration & Automation
of Processes
• What is ERP System Success?
• ERP Implementation Success vs. ERP
System Success

6
 Organizatio
nal
Performanc
e
Process
Performanc
ERP System e

Individual
Performanc
e

7
1. Introduction (Cont.)

• ERP System
• Defining ERP
• Organizational Integration & Automation
of Processes
• What is ERP System Success?
• ERP Implementation Success vs. ERP
System Success

8
 9

ERP Implementation ERP System Success

Success
Organizatio
nal
Performanc
e
Process
Performanc
ERP System e

Individual
Performanc
e
BPR
BUSINESS PROCESS RE-ENGINEERING
Introduction
• In today’s ever-changing world, the only thing that doesn’t change is ‘change’ itself. In a world
increasingly driven by the three Cs: Customer, Competition and Change, companies are on
the lookout for new solutions for their business problems.
Some of the recent headlines in the popular press read,
• “Wal-Mart reduces restocking time from six weeks to thirty-six hours.”
• ” Hewlett Packard’s assembly time for server computers touches new low- four minutes.”
The reason behind these success stories:
Business Process Reengineering!
History of BPR
1990 1993 1994 1995 onwards

Michael Martin The idea was adapted The authors Martin Once popular, the
Hammer, former MIT fast by huge number Hammer and James critics blamed BPR for
Professor claimed in of Businesses. Well Champy published a putting too much
his paper in Harvard established Business book called control in
Business Review that Thinkers like Peter Reengineering the Management and
Managers are using IT Druker and Tom Corporation. being misused for
to automate non Peters argued in favor They promoted the Downsizing. BPR now
value add processes of BPR that it helps idea that sometimes started as a Business
rather than counteract radical redesign and Process with Business
eliminating them. competition managing reorganization of Analysis and Re-
He argued that non squeezed cost. an enterprise was design as its aspects.
value add processes By 1993 nearly 60% necessary to lower Later, BPM (Business
should be demolished of Fortune 500 costs and increase Process Management
and made fast using companies initiated quality of service; and and ERP (Enterprise
help of IT. the process of BPR. IT was the key Resource Planning)
enabler for that took center stage.
radical change.
What is BPR?

• BPR is the fundamental rethinking and redesign of business processes to achieve

dramatic improvements in critical, contemporary measures of performance, such
as cost, quality, service and speed.
• BPR advocates that enterprises go back to the basics and re-examine their very
roots. It aims at total reinvention.
• BPR focuses on processes and not on tasks, jobs or people.

Refrence: Hammer & Champy, 1993,

www.slideshare.com/businessprocessreengineering-110417062044-
phpaap1
What is a Process?
• A process is a cross-functional interrelated series of activities that convert business inputs
into business outputs
• A group of logically related tasks that use the firm's resources to provide customer-oriented
results in support of the organization's objectives

Supplier Input Activity Activity Activity Output Customer

Process
 Why Re-Engineering?

• Customers
• Demanding
• Sophistication
• Changing Needs
• Competition
• Local
• Global
• Change
• Technology
• Customer Preferences

www.slideshare.com/businessprocessreengineering-110417062044-phpaap
BPR Methodology
There has been a lot of suggestions around the stages of or approach to Business Process Re-Engineering.
However, the basic model or Cycle would be as below:

Evolve Implementation Plan.

Prototype & Simulate Transition Build Cross Functional Team.
Identify Customer Driven Objective.
Plans.
Develop Strategic Purpose.
Initiate Training Programs.
Implement Transition Plan.

Test and
Identify
Implement
Processes
‘To-Be’

Design Review,
Update &
‘To-Be’ Analyze
‘As-Is’
Create Activity Models. Create Activity Models.
Create Process Models. Create Process Models.
Simulate and Perform Activity based Simulate and Perform Activity based
Costing. Costing.
Identify Disconnects and Value Identify Disconnects and Value
Adding Processes. Adding Processes.
Characteristics of a Typical Re Engineered
Process
• Several jobs are combined into one
In a re-engineered process the earlier tasks are integrated into one to
ensure single point responsibility
• Workers makes decisions
• The steps are performed in a natural order
• Work is performed where it makes the most sense
• Checks and controls are reduced
• Reconciliation is minimized
Single ownership rather than dual ownership
Inventory management, accounts receivable increases the cost

Total Quality of Management Tapan K Bose

• Organizational Structure changes from hierarchical to flat
Team Works
Requirements of supervisor are minimal
Teams are required to analyze the situation and make decisions
Hierarchal clashes are almost absent as the team members enjoy
equal rights
Communication gaps are eliminated so need of managerial and
functional support is greatly reduced thus the organizational structure
gets flat.

Source: Total Quality of Management Book by Tapan K Bose

 CHARACTERSTICS of BPR
Michael Hammer and James Chapy laid stress on 4 words:
• Fundamental ( No Assumptions, No Given Beginning)
• Radical ( Get to the Roots)
• Dramatic (Kaizen, Think Totally New)
• Processes ( Leave the traditional and task oriented thinking and learn how
value is being added for CS)
Outcome:
• Radical Improvement
• Process improvements need to become firmly rooted within the organization
• Integrated Change
• People Centred
• Business Understanding, Empowerment & Participation, Organizational
Culture
• Focus on End-Customers
Process improvements must relate to the needs of the organization and be
relevant to the end-customers to which they are designed to serve
• Process-Based
BPR Initiatives must add-value over and above the existing process
Key Steps to implement BPR
Common Problems With BPR

• Process Simplification is Common - True BPR is Not

• Desire to Change Not Strong Enough
• Start Point the Existing Process Not a Blank Slate
• Commitment to Existing Processes Too Strong
• Quick Fix Approach
• Process under review too big or too small
• Reliance on existing process too strong
• The Costs of the Change Seem Too Large
• BPR Isolated Activity not Aligned to the Business Objectives
• Allocation of Resources
• Poor Timing and Planning
• Keeping the Team and Organization on Target