Description
ERP Driven Business Process Redesign
ERP-driven Business Process Redesign
Business Process Information Support
• Business processes are generally cross-functional. • Process information support systems, therefore also have to be cross-functional.
New Product Development Process
Needs Market Research Analysis Test CompoProduct nent Test Design Product Release Process Design Equipment Design Production Start
Marketing
R & D/ Engg. Manufacturing
ERP-driven Business Process Reengineering 2
Problems in Implementing BPR
• Zero-based innovative process design fosters an unbiased look at what could be radically changed in existing processes. • Experience shows that companies fail to harvest the promised benefits due to the inherent risks of providing an adequate business process support system. • Conventional software development methods are very slow.
ERP-driven Business Process Reengineering 3
Problems in Implementing BPR
(contd.)
• Existing (legacy) systems are often „islands of automation? and almost non-integrable across functions . • Major bottleneck in getting to build software and system solutions for BPR needs is often „integration?. • Strategic choice of standard business application software packages as the backbone of highly integrated, enterprise-wide information systems.
ERP-driven Business Process Reengineering 4
Enterprise Resource Planning (ERP)
• ERP is an approach to the provision of business support software that enables companies to integrate seamlessly the computerised information systems of different functional areas of the business -- production, sales, finance, human, resources, etc. -- and run them through a single database.
ERP-driven Business Process Reengineering
5
ERP System
An Enterprise Resource Planning (ERP) system: • is a set of packaged application software modules, with an integrated architecture, that can be used by organisations as their primary engine for integrating data, processes, and information technology, in real time, across internal value chain; • impound deep knowledge of business practices that vendors have accumulated from implementations in a wide range of client organisations, that can exert considerable influence on the design of processes within new client organisations; • is a generic „semi-finished? product with tables and parameters that client organisations and their implementation partners must configure, customise, and integrate with other computer-based information systems to meet their business needs.
ERP-driven Business Process Reengineering 6
Architecture of ERP Systems
ERP System
Workflow Manager
Information Manager
Process Modelling & Simulation
ERP-driven Business Process Reengineering
7
Integrated Process Architecture in ERP Systems
Financial accounting Sales and distribution
Integrated data base system
Inventory control
Human resource management
ERP-driven Business Process Reengineering
Production planning & control
8
ERP System?s Capability
An ERP system allows an organisation to: • automate and integrate the majority of its business processes; • share common data and practices across the entire enterprise; and • produce and access information in a real-time environment.
ERP-driven Business Process Reengineering
9
Enterprise Systems (ERP II)
• Enterprise systems (ES) (also called ERP II) are largescale organisational systems (composed of people, processes, and IT), built around ERP system software. • Enterprise system software includes ERP, customer relationship management (CRM), supply chain management (SCM), product life cycle management (PLM), enterprise application integration (EAI), data warehousing and decision support, and eProcurement/ eMarketplace/electronic exchange software.
ERP-driven Business Process Reengineering
10
Conceptual Framework for ERP II
EAI SCM B 2 B SRM ERP PLM HRM CPM CRM B 2 C
B2E
ERP-driven Business Process Reengineering
11
Four Layers of ERP II
Layer Components
Integrated database (DB) Application framework (AF) Enterprise resource planning (ERP) Business process management (BPM) Supply chain management (SCM) Customer relationship management (CRM) Supplier relationship management (SRM) Product lifecycle management (PLM) Employee lifecycle management (ELM) Corporate performance management (CPM) Business-to-consumer (B2C) Business-to-business (B2B) Business-to-employee (B2E) Enterprise application integration (EAI)
12
• Foundation • Core • Process • Analytical • Central • Corporate
• Portal
• Collaborative
ERP-driven Business Process Reengineering
Motivations for ERP System
Process Improvement Operating Cost Reduction Strategic Decision Making Customer Responsiveness Data Visibility
Common Platform
Infrastructure
Capability
ERP-driven Business Process Reengineering
Performance
13
Advantages of ERP System
• Enables different divisions and departments to easily share information and communicate with one another. • Allows automation of previously paper-based business processes, making them very efficient in work and information flows. • Greatly reduces the margin for errors created by information being input by different employees into many different computer systems. • Enables use of timely information for analysis and decision making related to key issues such as material usage, costs, quality, profitability, etc. • May also support planning decisions based on alternative scenarios.
ERP-driven Business Process Reengineering 14
ERP-Enabled Reengineering
Is ERP likely to be used?
Desire to improve process As-Is process analysis No -conventional reengineering
Yes -- ERPenabled reengineering
Develop ERP-enabled To-Be process design
ERP and process configura tion
ERP-driven Business Process Reengineering
15
Framework for ERP-enabled Process Reengineering
B e s t P r a c t i c e D e s i g n s (ERP-supported)
ERP-driven Business Process Reengineering 16
As-Is Process Issues & Aspirations
To-Be Process Vision
As-Is Process Analysis
Customised ToBe Process
To-Be Performance Goals
How Can ERP Support BPR?
The following features of ERP can support even radical process redesign: • Scope of functionality
– ERP systems encompass functionality for a number of vital business processes in manufacturing firms.
• Configurability
– By configuring ERP software, ERP can support the business processes modelled as part of BPR.
• Integrativeness
– Integrativeness stems from sharing of one common database, and options of designing cross-functional processes in the software.
ERP-driven Business Process Reengineering 17
Nature of ERP Implementation Projects
•
ERP implementation projects are very complex due to the following factors: the number and variety of stakeholders in the implementation project: the sponsor, the champion, the actors, and the customers; the high cost of project implementation and consultancy; the integration of business functions; the subsequent configuration of software representing business processes; the management of change and political issues associated with BPR projects; and the enhanced training and familiarisation requirement.
ERP-driven Business Process Reengineering 18
• • •
•
•
Techniques in ERP Implementation
• Configuration: tailoring the ERP software using parameter settings provided by the vendor. • Customisation: adding non-standard features to the ERP software. • Business process change to align with the process embedded in ERP software (best practice).
What should be their mix?
ERP-driven Business Process Reengineering
19
Stages of ERP Implementation
• ERP Design: Deciding whether to accept the process embedded in the software, and whether processes will be standardised across the entire firm or only in the sub-unit. • Implementation: Implementing design decisions, training users, and let ERP “go live”. • Stabilisation: Cleaning up data and rules, providing additional training on processes, and resolving software bugs. • Continuous Improvement: Adding functionality and improving processes. Realising benefits. • Transformation: Leveraging organisational visibility for increased agility.
ERP-driven Business Process Reengineering 20
Organisational Performance during ERP Implementation
Transformation
Design
Continuous Improvement
Stabilising
Implementation
ERP-driven Business Process Reengineering
21
Obstacles to ERP Success
• Failure to establish metrics for success. • Inadequately resourcing the post-implementation stage. • Ignoring management reporting requirements. • Inadequately addressing resistance to change.
ERP-driven Business Process Reengineering
22
ERP Implementation Strategies
• The Big Bang: A single ERP system across the entire
company in one go. Old approach, risky.
• Franchising strategy: Independent ERP systems in
each unit, while linking common processes across the enterprise. Good for large and diverse companies.
• Slam dunk: ERP process is used for process design,
where the focus on just a few key processes. ERP used more as an „infrastructure?, and may not give much payback to the company. Generally used by smaller companies.
ERP-driven Business Process Reengineering
23
When Not to Use an ERP?
?
ERP-driven Business Process Reengineering 24
When Not to Use an ERP?
• When the process to be implemented is strategic to the company.
Example: Demand forecasting and order processing process for Compaq (with build-to-order business model).
• When ERP implementation may force increasing product prices resulting in lost sales.
Example: Air Products and Chemicals.
ERP-driven Business Process Reengineering
25
What can an ERP do for a business?
?
ERP-driven Business Process Reengineering 26
What can an ERP do for a business?
• Integrate financial information Avoids different versions of financial information from sales, production and finance. • Integrate customer order information Keeps track of order more easily and co-ordinate production, inventory and dispatch among different locations. • Standardise and speed up manufacturing processes Manufacturing companies having mergers and acquisitions find same part being made by using different processes and computer systems.
ERP-driven Business Process Reengineering 27
What can an ERP do for a business? (contd.)
• Reduce inventory ERP makes manufacturing processes flow more smoothly and improves visibility of order fulfilment process. This can lead to reduction in the work-in-process inventory, and can help users better plan deliveries to customers, reducing the finished goods inventory. • Standardise Human Resource information In companies with multiple business units, HR may not have a unified, simple method for tracking employees time and communicate with them about benefits and services.
ERP-driven Business Process Reengineering
28
ERP System Benefits
(as realised by 45 organisations in Greece)
• • • • • • • • • •
Increased flexibility in information generation Improved quality of reports -- statements Increased integration of applications Easy maintenance of databases Increased user-friendliness of information systems Reduced time for issuing of reports -- statements Improved decision-making process Improved co-ordination between departments Reduction in errors in logistics Increased internal communication
ERP-driven Business Process Reengineering 29
ERP System Benefits (contd.)
• • • • • Reduction of time for transaction processing Improved delivery times Reduction of stock levels Increase in stock turnover Reduction of total operating and administrative costs
ERP-driven Business Process Reengineering
30
Hidden Costs of ERP Implementation
• • • • • • • Training Integration and testing Customisation Data conversion Consultants Replacing your best and brightest staff Implementation team may continue working after implementation (for data analysis) • ROI takes much longer • Post-ERP depression (because of performance degradation)
ERP-driven Business Process Reengineering 31
Measuring Organisational Performance After ERP Implementation
1. From whose perspective is effectiveness being judged? 2. What is the domain of activity? 3. What is the level of analysis? • Process owners • Enterprise systems • Both organisation and function • Planning, management, and improvement • Years after ES went live • Objective and perceptual • Stated goals of the organisation
32
4. What is the purpose of evaluation? 5. What time frame is employed? 6. What type of data are to be used? 7. Against which referent is effectiveness to be judged?
ERP-driven Business Process Reengineering
Key Factors Driving ES Value Realisation
Integrate
Spend time with the ES
Invest in the ES
Implement Extensively
Optimise
Realise Benefits
Informate
ERP-driven Business Process Reengineering
33
Enterprise Systems Value Drivers
• Integrate: Unify and harmonise the ES, data and processes with an organisation?s unique environment, and use the systems to better connect organisational units and processes, as well as customers and suppliers. • Optimise: Standardise most processes using best practices embodied in ES software, mould and shape processes to fit the unique or strategic needs of the business, and ensure that processes flow and fit with the systems themselves. • Informate: Organisations informate by transforming ES data into context-rich information and knowledge that supports the unique business analysis and decision-making needs of multiple work forces.
ERP-driven Business Process Reengineering 34
Strategic Evolution of ERP Use
Stage 1: Basic Transaction Processing Systems (TPS) updated in the context of a defined information architecture (process-oriented information support). Stage 2: Linked (interconnected) TPS, within and between the basic processes: vendor processes, customer processes, employee processes, and accounting processes. Stage 3: (SCM) Linked TPS functionality along the supply chain of firms of which the firm is a part. Stage 4: Have a comprehensive data warehouse (DW) to hold all the data from stages 2 and 3. Stage 5: Does the DW include business information beyond transaction data and have OLAP capabilities for drill-down and synthesis of this data. Stage 6: Is DW being used to facilitate strategic management?
ERP-driven Business Process Reengineering 35
Strategic Use of Data Warehouse
• Who actually is using the data?
(Line managers at every level and all staff analysts should use.)
• How do they use the data warehouse?
Data mining for :
- using buying patterns to segment customer groups - profiling customers for individual relationship management - understanding why customers leave for competitors - uncovering factors affecting purchasing patterns etc.
• What actual decisions have been made differently?
ERP-driven Business Process Reengineering 36
doc_903025043.pptx
ERP Driven Business Process Redesign
ERP-driven Business Process Redesign
Business Process Information Support
• Business processes are generally cross-functional. • Process information support systems, therefore also have to be cross-functional.
New Product Development Process
Needs Market Research Analysis Test CompoProduct nent Test Design Product Release Process Design Equipment Design Production Start
Marketing
R & D/ Engg. Manufacturing
ERP-driven Business Process Reengineering 2
Problems in Implementing BPR
• Zero-based innovative process design fosters an unbiased look at what could be radically changed in existing processes. • Experience shows that companies fail to harvest the promised benefits due to the inherent risks of providing an adequate business process support system. • Conventional software development methods are very slow.
ERP-driven Business Process Reengineering 3
Problems in Implementing BPR
(contd.)
• Existing (legacy) systems are often „islands of automation? and almost non-integrable across functions . • Major bottleneck in getting to build software and system solutions for BPR needs is often „integration?. • Strategic choice of standard business application software packages as the backbone of highly integrated, enterprise-wide information systems.
ERP-driven Business Process Reengineering 4
Enterprise Resource Planning (ERP)
• ERP is an approach to the provision of business support software that enables companies to integrate seamlessly the computerised information systems of different functional areas of the business -- production, sales, finance, human, resources, etc. -- and run them through a single database.
ERP-driven Business Process Reengineering
5
ERP System
An Enterprise Resource Planning (ERP) system: • is a set of packaged application software modules, with an integrated architecture, that can be used by organisations as their primary engine for integrating data, processes, and information technology, in real time, across internal value chain; • impound deep knowledge of business practices that vendors have accumulated from implementations in a wide range of client organisations, that can exert considerable influence on the design of processes within new client organisations; • is a generic „semi-finished? product with tables and parameters that client organisations and their implementation partners must configure, customise, and integrate with other computer-based information systems to meet their business needs.
ERP-driven Business Process Reengineering 6
Architecture of ERP Systems
ERP System
Workflow Manager
Information Manager
Process Modelling & Simulation
ERP-driven Business Process Reengineering
7
Integrated Process Architecture in ERP Systems
Financial accounting Sales and distribution
Integrated data base system
Inventory control
Human resource management
ERP-driven Business Process Reengineering
Production planning & control
8
ERP System?s Capability
An ERP system allows an organisation to: • automate and integrate the majority of its business processes; • share common data and practices across the entire enterprise; and • produce and access information in a real-time environment.
ERP-driven Business Process Reengineering
9
Enterprise Systems (ERP II)
• Enterprise systems (ES) (also called ERP II) are largescale organisational systems (composed of people, processes, and IT), built around ERP system software. • Enterprise system software includes ERP, customer relationship management (CRM), supply chain management (SCM), product life cycle management (PLM), enterprise application integration (EAI), data warehousing and decision support, and eProcurement/ eMarketplace/electronic exchange software.
ERP-driven Business Process Reengineering
10
Conceptual Framework for ERP II
EAI SCM B 2 B SRM ERP PLM HRM CPM CRM B 2 C
B2E
ERP-driven Business Process Reengineering
11
Four Layers of ERP II
Layer Components
Integrated database (DB) Application framework (AF) Enterprise resource planning (ERP) Business process management (BPM) Supply chain management (SCM) Customer relationship management (CRM) Supplier relationship management (SRM) Product lifecycle management (PLM) Employee lifecycle management (ELM) Corporate performance management (CPM) Business-to-consumer (B2C) Business-to-business (B2B) Business-to-employee (B2E) Enterprise application integration (EAI)
12
• Foundation • Core • Process • Analytical • Central • Corporate
• Portal
• Collaborative
ERP-driven Business Process Reengineering
Motivations for ERP System
Process Improvement Operating Cost Reduction Strategic Decision Making Customer Responsiveness Data Visibility
Common Platform
Infrastructure
Capability
ERP-driven Business Process Reengineering
Performance
13
Advantages of ERP System
• Enables different divisions and departments to easily share information and communicate with one another. • Allows automation of previously paper-based business processes, making them very efficient in work and information flows. • Greatly reduces the margin for errors created by information being input by different employees into many different computer systems. • Enables use of timely information for analysis and decision making related to key issues such as material usage, costs, quality, profitability, etc. • May also support planning decisions based on alternative scenarios.
ERP-driven Business Process Reengineering 14
ERP-Enabled Reengineering
Is ERP likely to be used?
Desire to improve process As-Is process analysis No -conventional reengineering
Yes -- ERPenabled reengineering
Develop ERP-enabled To-Be process design
ERP and process configura tion
ERP-driven Business Process Reengineering
15
Framework for ERP-enabled Process Reengineering
B e s t P r a c t i c e D e s i g n s (ERP-supported)
ERP-driven Business Process Reengineering 16
As-Is Process Issues & Aspirations
To-Be Process Vision
As-Is Process Analysis
Customised ToBe Process
To-Be Performance Goals
How Can ERP Support BPR?
The following features of ERP can support even radical process redesign: • Scope of functionality
– ERP systems encompass functionality for a number of vital business processes in manufacturing firms.
• Configurability
– By configuring ERP software, ERP can support the business processes modelled as part of BPR.
• Integrativeness
– Integrativeness stems from sharing of one common database, and options of designing cross-functional processes in the software.
ERP-driven Business Process Reengineering 17
Nature of ERP Implementation Projects
•
ERP implementation projects are very complex due to the following factors: the number and variety of stakeholders in the implementation project: the sponsor, the champion, the actors, and the customers; the high cost of project implementation and consultancy; the integration of business functions; the subsequent configuration of software representing business processes; the management of change and political issues associated with BPR projects; and the enhanced training and familiarisation requirement.
ERP-driven Business Process Reengineering 18
• • •
•
•
Techniques in ERP Implementation
• Configuration: tailoring the ERP software using parameter settings provided by the vendor. • Customisation: adding non-standard features to the ERP software. • Business process change to align with the process embedded in ERP software (best practice).
What should be their mix?
ERP-driven Business Process Reengineering
19
Stages of ERP Implementation
• ERP Design: Deciding whether to accept the process embedded in the software, and whether processes will be standardised across the entire firm or only in the sub-unit. • Implementation: Implementing design decisions, training users, and let ERP “go live”. • Stabilisation: Cleaning up data and rules, providing additional training on processes, and resolving software bugs. • Continuous Improvement: Adding functionality and improving processes. Realising benefits. • Transformation: Leveraging organisational visibility for increased agility.
ERP-driven Business Process Reengineering 20
Organisational Performance during ERP Implementation
Transformation
Design
Continuous Improvement
Stabilising
Implementation
ERP-driven Business Process Reengineering
21
Obstacles to ERP Success
• Failure to establish metrics for success. • Inadequately resourcing the post-implementation stage. • Ignoring management reporting requirements. • Inadequately addressing resistance to change.
ERP-driven Business Process Reengineering
22
ERP Implementation Strategies
• The Big Bang: A single ERP system across the entire
company in one go. Old approach, risky.
• Franchising strategy: Independent ERP systems in
each unit, while linking common processes across the enterprise. Good for large and diverse companies.
• Slam dunk: ERP process is used for process design,
where the focus on just a few key processes. ERP used more as an „infrastructure?, and may not give much payback to the company. Generally used by smaller companies.
ERP-driven Business Process Reengineering
23
When Not to Use an ERP?
?
ERP-driven Business Process Reengineering 24
When Not to Use an ERP?
• When the process to be implemented is strategic to the company.
Example: Demand forecasting and order processing process for Compaq (with build-to-order business model).
• When ERP implementation may force increasing product prices resulting in lost sales.
Example: Air Products and Chemicals.
ERP-driven Business Process Reengineering
25
What can an ERP do for a business?
?
ERP-driven Business Process Reengineering 26
What can an ERP do for a business?
• Integrate financial information Avoids different versions of financial information from sales, production and finance. • Integrate customer order information Keeps track of order more easily and co-ordinate production, inventory and dispatch among different locations. • Standardise and speed up manufacturing processes Manufacturing companies having mergers and acquisitions find same part being made by using different processes and computer systems.
ERP-driven Business Process Reengineering 27
What can an ERP do for a business? (contd.)
• Reduce inventory ERP makes manufacturing processes flow more smoothly and improves visibility of order fulfilment process. This can lead to reduction in the work-in-process inventory, and can help users better plan deliveries to customers, reducing the finished goods inventory. • Standardise Human Resource information In companies with multiple business units, HR may not have a unified, simple method for tracking employees time and communicate with them about benefits and services.
ERP-driven Business Process Reengineering
28
ERP System Benefits
(as realised by 45 organisations in Greece)
• • • • • • • • • •
Increased flexibility in information generation Improved quality of reports -- statements Increased integration of applications Easy maintenance of databases Increased user-friendliness of information systems Reduced time for issuing of reports -- statements Improved decision-making process Improved co-ordination between departments Reduction in errors in logistics Increased internal communication
ERP-driven Business Process Reengineering 29
ERP System Benefits (contd.)
• • • • • Reduction of time for transaction processing Improved delivery times Reduction of stock levels Increase in stock turnover Reduction of total operating and administrative costs
ERP-driven Business Process Reengineering
30
Hidden Costs of ERP Implementation
• • • • • • • Training Integration and testing Customisation Data conversion Consultants Replacing your best and brightest staff Implementation team may continue working after implementation (for data analysis) • ROI takes much longer • Post-ERP depression (because of performance degradation)
ERP-driven Business Process Reengineering 31
Measuring Organisational Performance After ERP Implementation
1. From whose perspective is effectiveness being judged? 2. What is the domain of activity? 3. What is the level of analysis? • Process owners • Enterprise systems • Both organisation and function • Planning, management, and improvement • Years after ES went live • Objective and perceptual • Stated goals of the organisation
32
4. What is the purpose of evaluation? 5. What time frame is employed? 6. What type of data are to be used? 7. Against which referent is effectiveness to be judged?
ERP-driven Business Process Reengineering
Key Factors Driving ES Value Realisation
Integrate
Spend time with the ES
Invest in the ES
Implement Extensively
Optimise
Realise Benefits
Informate
ERP-driven Business Process Reengineering
33
Enterprise Systems Value Drivers
• Integrate: Unify and harmonise the ES, data and processes with an organisation?s unique environment, and use the systems to better connect organisational units and processes, as well as customers and suppliers. • Optimise: Standardise most processes using best practices embodied in ES software, mould and shape processes to fit the unique or strategic needs of the business, and ensure that processes flow and fit with the systems themselves. • Informate: Organisations informate by transforming ES data into context-rich information and knowledge that supports the unique business analysis and decision-making needs of multiple work forces.
ERP-driven Business Process Reengineering 34
Strategic Evolution of ERP Use
Stage 1: Basic Transaction Processing Systems (TPS) updated in the context of a defined information architecture (process-oriented information support). Stage 2: Linked (interconnected) TPS, within and between the basic processes: vendor processes, customer processes, employee processes, and accounting processes. Stage 3: (SCM) Linked TPS functionality along the supply chain of firms of which the firm is a part. Stage 4: Have a comprehensive data warehouse (DW) to hold all the data from stages 2 and 3. Stage 5: Does the DW include business information beyond transaction data and have OLAP capabilities for drill-down and synthesis of this data. Stage 6: Is DW being used to facilitate strategic management?
ERP-driven Business Process Reengineering 35
Strategic Use of Data Warehouse
• Who actually is using the data?
(Line managers at every level and all staff analysts should use.)
• How do they use the data warehouse?
Data mining for :
- using buying patterns to segment customer groups - profiling customers for individual relationship management - understanding why customers leave for competitors - uncovering factors affecting purchasing patterns etc.
• What actual decisions have been made differently?
ERP-driven Business Process Reengineering 36
doc_903025043.pptx