Enterprise Resource Planning by Muhammad Amir Manzoor

Re-engineering and Enterprise Resource Planning Systems

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Objectives
Recognize factors associated with the evolution of ERP systems
BPR Client-server networking Integrated databases

Examine role of process modeling in redesigning business models

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Re-engineering

Fundamental rethinking and radical redesign of business processes Goal is to achieve major improvements in performance Efficient redesign of value chain
Primary activities
Inbound logistics, operations, outbound logistics, marketing and sales, service Organizational activities, human resources, technology, purchasing

Secondary activities

Motivations
Deregulation, consolidation, customer sophistication, increased competition

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Business Process Re-engineering (BPR)

Technology used to mechanize work Create new business rules Remove outdated rules Improve responsiveness Reduce costs

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Business Process Re-engineering (BPR), continued

Decentralize decision making
Become responsive to customers needs Flatten organization

Facilitated by information technology Redesign of jobs

New levels of judgment New types of leaders
Adaptable
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Process Modeling
Business process
Business activities Data needed by business process Data transferred between processes or from a process to data store

Data store Data flow Organizational unit

Units where processes take place

Includes triggers and outcomes
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Event

Neighborhood Food Cooperative

Weekly cycle Members submit list Lists merged Orders placed for product by phone Suppliers confirm in writing with invoice Shipments made to cooperative Members collect product Cooperative pays net 10 days
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Basis for Best Practices Supported by ERP Modules

Re-engineered process models

Improved process change depictions

Data integration
Among multiple processes

Structural changes
Streamline business functions Maximized productivity

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Reliable Finance Company

Expansion required redesign of existing system Needs enhanced information system Increase number of branches exponentially Achieve a competitive advantage Analysis of loan application system
Reduce approval from 10-13 days to 2-3 days Improve access to databases for approval decisions
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Failure in Re-engineering
Rosenthal:
Apply clean slate approach
Continuous training for new roles Measure performance Jobs must be redesigned Use rewards as incentives to change

Move away from status quo Too narrowly focused Project too general
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Information Technology Facilitates ERP

Client-server computing allows for increase power and control Integrated databases

Reduces redundancy
Increases data consistency

Supports multiple functional units Data maintained separately from application modules Database management systems
Central data administration Improved data integrity Improved control
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Process Enterprises
Changed management structures
Process responsibility given to process owners
Has process design authority

Stresses teamwork Leans toward standardization of processes Focuses on achieving goals

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Case: Re-engineering the Payment Process System at RFC

Current payment processing system
Customers:
Make payments at branch
Cash, check, money order Manually processed Batched for deposit in afternoon Home Office mailed an Advice of Payment Received Manually processed Batched for deposit in afternoon Branch mailed an Advice of Payment Received

Mail payments to branch

Payment made to Home Office

Each night, batch payment processing runs to update accounts

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Case: Re-engineering the Payment Process System at RFC, continued

Weekly delinquency analysis run Payment reminders sent out at 15, 30, 45 and 60 days
Computer generated

Settlement figures processed upon request

Urgent requests take overnight

Major expansion planned

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Summary

BPR allows the organization to rethink and radically redesign their business processes Process modeling of business activities change organizational management structures ERP systems are facilitated by IT Processes are standardized and teamwork enhanced
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