IT and Changing Business Processes

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IT and Changing Business Processes

• Define ERP, ERPII, Enterprise Information System
  (EIS), business process, TQM, BPR
• Discuss the advantage of a business process
  perspective to a silo perspective
• Distinguish the basic characteristics of TQM and
  BPR
• Indicate when an enterprise system should not
  drive BPR
• Discuss the characteristics, benefits,
  disadvantages and application of EIS
• Discuss the risks of radical design

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IS IT an Enabler or an Inhibiter?
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Business Process Perspective

• Business process includes
• A beginning and an end
• Inputs and outputs
• A set of tasks to transform inputs to outputs
• A set of metrics for measuring effectiveness
• Crosses functions
• Offers a bigger picture than silo perspective

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Comparing Silo Business Process Perspectives
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Comparing Silo Business Process Perspectives
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Advantages Traditional Departmentation Approaches

• DIVISIONAL
• Focus on purpose
• Good training for generalists
• Good for coordination within self-contained unit
• More adaptive

• FUNCTIONAL
• Focus on specialization
• Good for recruiting and training specialists
• Good for coordination within specialization
• Efficient
• Less duplication of effort

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Total Quality Management (TQM)

• Process by which managers make changes
  continually (and often incrementally) to improve
  business processes over time
• Management philosophy where quality metrics drive
  performance evaluation of people, processes, and
  decision
• Improve business activities with the goal of zero
  defects

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Total Quality Management

• Choose business process to improve
• Choose a metric by which to measure the business
  process
• Enable personnel involved with the process to
  find ways to improve it according to the metric

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Business Process Redesign (BRR)

• Radical redesign of organizational business
  processes to attain more aggressive improvement
  goals.
• Reengineering - Fundamental rethinking and
  radical redesign of a business process to achieve
  dramatic improvements in performance (Hammer,
  1990)
• Starting over

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Key aspects of BPR

• Need for radical change to existing processes
• Cross-functional business perspective
• Challenging old assumptions
• Networked (cross-functional) organization
• Empowerment of employees
• Measurement of success via metrics tied to
  business goals

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BPR vs. TQM

• BPR
• Radical improvements
• Change existing processes

• TQM
• Incremental improvements
• Tweak existing processes

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Definitions

• Enterprise Information System (EIS) - distributed
  system that covers the entire organization
• ERP A type of EIS a large highly complex
  software program that integrates many business
  functions under a single application
• Legacy system - older or mature IS (often 20-30
  years old)

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ERP Characteristics

• Integrated modules such as manufacturing,
  accounting, HR and sales
• Commercial packages require long-term
  relationship with vendor
• Best practices
• Some assembly required
• Evolving moving toward web-based systems

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ERP

• Most widely used SAPs R/3 (Others
  PeopleSoft, Baan, Oracle)
• All modules can easily communicate with one
  another
• Tool for centralized operations decision making
• Growing need to integrate ERP applications within
  companies and across trading partners
• middleware for 24/7 B2B applications (ERP
  databases and B2B applications)
• Average TCO of 15 million

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ERP Advantages and Disadvantages

• Advantages
• Integration
• Fits with companys desire to centralize
• Efficient use of companys databases
• Disadvantages
• Need for company to redesign itself to fit ERP
• Risk

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When an EIS should drive BPR

• Organization is new and does not yet have
  processes
• Organization does not rely on its operational
  business processes as a source of competitive
  advantage
• Current systems are in crisis and time, knowledge
  or resources are too short to make correct
• ERP features fit organization
• ERP has top management support