Selecting Large Systems

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• Selecting Large Systems

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Make or buy decision
Decision Criteria Pressure to Make/Own
Pressure to Buy
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Flattening the Organizational Structure
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Streamlining the Business Cycle

• Operating Cycle
• The activities through which an organization
  designs, produces, markets, delivers, and
  supports its product and services
• Management Cycle
• The activities through which an organization
  manages the design, produces, markets, delivers,
  and supports its product and services

Operational Process
Management Process
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BPR

• Business Process Redesign
• The fundamental rethinking and radically redesign
  of business processes to achieve dramatic
  improvement in critical, contemporary measures of
  performance such as cost, quality, service and
  speed.
• The implementation of deliberate and fundamental
  change in business processes to achieve
  breakthrough improvements in performance.
• Enabled by IT

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BPR

• Business Process Redesign
• Also known as Reengineering or Process
  Innovation is offered as an enabler of
  organizational transformation.
• Organization embrace a BPR approach when they
  believe that a radical improvement can be
  achieved by marring business process,
  organization structure, and IT change.
• Examples
• Taco have embraced BPR to enable the redefinition
  of their business

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BPR

• BPR Objectives
• To dramatically reduce cost
• Reduce time
• To dramatically improve customer services or to
  improve employee quality of life
• To reinvent the basic rules of the business e.g.
• the airline industry
• taco bell from Mexican food to fast food to
  feeding people anywhere, anyhow.
• Customer satisfaction
• Organizational learning

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BPR

• Change
• To transform an organization, a deep change must
  occur in the key behavior levels of the
  organization
• jobs, skills, structure, shared values,
  measurement systems and information technology.
• Role of IT
• BPR is commonly facilitated by IT e.g.
• Organizational efficiency
• Effectiveness
• Transformation

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BPR

• Efficiency
• Applications in the efficiency category allow
  users to work faster and often at measurable
  lower cost
• Mere automation of manual tasks, resulting in
  efficiency gains (least deep)
• Effectiveness
• Applications in the effectiveness category allow
  users to work better and often to produce higher
  quality work.
• Requires changes not only in technology, but in
  skills, job roles, and work flow (deeper).

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BPR

• Transformation
• Applications in the the transformation category
  change the basic ways that people and departments
  work and may even change the very nature of the
  business enterprise itself.
• A major change in the organization, including
  structure, culture, and compensation schemes
  (deepest).

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BPR

• Process
• A process is set of logically related tasks
  performed to achieve a defined business outcome
• A collection of activities that, taken together,
  create value for customer e.g. new product for
  customer. This tasks are inter-related tasks

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BPR

• How can Companies Identify their Business
  Processes. Examples
• Manufacturing As the procurement-to-shipment
  process
• Product development as the concept-to-prototype
  process
• Sales as the prospect-to-order process
• Order fulfillment as the the order-to-payment
  process
• Service as the inquiry-to-resolution process

Business Processes
Business functions
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BPR

• How can Companies Identify their Business
  Processes.
• Dysfunction Which process are in the deepest
  trouble
• Important Which process have the greatest impact
  on customer
• Flexibility which process are the most
  susceptible to redesign.

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BPR

• Embarking on Re-engineering
• Persuade people to embrace or at least not to
  fight -the prospect of major change by developing
  the clearest message on
• 1 A case for action- Here is where we are as a
  company and this is why we cant stay here
• show your balance sheet
• show competitors balance sheet
• 2 A vision statement - This is what we as a
  company need to become

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BPR

• Simple Rules
• Start with a clean sheet of paper.
• With my current experience what can I do today
• If I were to re-create this company today, given
  what I know and current technology, what would it
  look like.
• How will I be focusing, organizing and managing
  the company?
• Transition from a vertical functional departments
  to one that is horizontal, CUSTOMER focused and
  process-oriented?

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BPR

• Simple Rules
• Listen to customer
• Enhance those things that bring value to the
  customer or eliminate those that dont
• Be ambitious, focus your commitment to radical
  change on the process

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BPR

• Process Improvement and redesign Process

Improvement Innovation/Reengineering
Magnitude Increment Radical Improvement
30-50 10x-100x Sought Starting
base Existing Process Blank skeet Top
management Relatively low High commitment Role
of IT Low High Risk Low High
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Anatomy of a Traditional (Non-Integrated)
Architecture
Interface
Interface
Interface
Interface
Order Entry
Inventory Mgmt.
Billing
A/R
Finance
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The Value Chain
Support activities
Primary activities
Inbound logistics Materials receiving, storing,
and distribution to manufacturing
premises Operations Transforming inputs into
finished products. Outbound logistics Storing
and distributing products Marketing and
Sales Promotions and sales force Service Servic
e to maintain or enhance product value Corporate
infrastructure Support of entire value chain,
e.g. general management planning, financing,
accounting, legal services, government affairs,
and QM Human resources management Recruiting,
hiring, training, and development Technology
Development Improving product and manufacturing
process Procurement Purchasing input
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Value Chain Integration
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ANATOMY OF AN ENTERPRISE SYSTEM
Managers Stakeholders
Int Ext
Ext Int
Sales delivery App.
Reporting App .
Financial App
S u p p l i e r s
C u s t o m e r s
Back office admin. workers
Sales force customer service reps.
Central database
Mfg. App
HRM App
Service App.
Inventory supply App
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RATIONALE FOR ERP SYSTEMS

• One of the key reasons why managers have sought
  to proceed with difficult ERP projects is
• to end the fragmentation of current systems,
• to allow a process of standardization,
• to give more visibility on data across the entire
  corporation,
• to obtain competitive advantage (Sammon Adam,
  2000).
• A seamless integration is essential to provide
  visibility and consistency across the enterprise.

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Picking the right System

• Focus on both implicit and explicit key business
  processes
• Identify a short list of vendors that can support
  the key processes
• Dont start with RFP until you have identified
  the key processes

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Picking the right System

• Vendor reputation
• System Operating requirements
• Functionalities
• Price
• Geographical coverage

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Picking the right System

• Weighted approach

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Picking the right System

• Rule of Thumb
• 75-80 fit between business requirements and
  system functionality
• Key business process is key requirement
• Analyze organizational change management ability

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Picking the right System

• Summary
• Identify key business process
• Impact of the key business on organization
  performance
• Identify a short list of vendors (Use a
  consultant carefully)
• Ask how the selected vendors can support your key
  business processes
• Vendor demonstration of system supporting key
  processes. Involve the users in this process
• Check vendor references
• Include clauses that protect the key processes
  and the others

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Recommendation for Multinational Companies

• Focus on a short list of vendors that can provide
  global operation and support.
• Consider best of breed
• Ability to integrate with local location
  specific system requirements

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Recommendation for Midrange Enterprises

• Consider local vendor with in-depth local
  knowledge of customers business
• Price

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Recommendation for Small Enterprises

• Consider implementation tactical rather than
  strategic
• Good functional depth, domain expertise and local
  capabilities (e.g. service and support)
• Consider best of breed as well
• Vendor long term viability
• Price