Chapter 6: Technology Enabled verses Clean Slate Reengineering

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Chapter 6Technology Enabled verses Clean Slate
Reengineering
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What is Reengineering?

• Business Process Reengineering is a management
  approach aiming at improvements by means of
  elevating efficiency and effectiveness of the
  processes that exist within and across
  organizations. It is a fundamental and radical
  approach by either modifying or eliminating
  non-value adding activities. (Wikipedia)
• Formalized by Michael Hammer
• Claimed that the 1 goal for managers should be
  the elimination of non-value added tasks
• Reengineering can be accomplished through the
  implementation of ERP..but is this the best
  approach?

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Real example to be workflow
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• Reengineering/Redesign Choices
• What are the choices?
• What are the advantages / disadvantages of each?
• Who should or does use which?

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• Reengineering Choices Defined
• Technology Enabled (Constrained) Reengineering
• Choices are a direct function of the software
• Not altering software makes time and cost lower
• Also called Concurrent Transformation
• Clean Slate Reengineering
• Start from scratch with no structures or
  documents
• Software must be made to fit the needs of the
  firm
• Costs in terms of time and dollars is generally
  greater
• Blend (along a continuum) is typical

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Technology Enabled (Constrained) Reengineering - 1

• A particular technology (or portfolio of
  technologies) is chosen as a tool to facilitate
  reengineering.
• Thus, reengineering choices are a function of the
  technologies chosen.
• The technology drives the reengineering.

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Technology Enabled (Constrained) Reengineering - 2

• Provides an ideal goal for reengineering
• Best Practices
• Provides structure
• Pre-existing organization and data requirements
• Provides a reason for reengineering
• Persuades the reluctant
• Produces a better quality system
• Leverages knowledge-base outside the firm
• Provides design boundaries
• Clear objectives with minimal if any wandering

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Technology Enabled (Constrained) Reengineering - 3

• Provides a design that fits the software
• Minimizes modification to already existing
  software
• Provides a proven design
• Takes advantage of lessons learned experience
• Provides for a cost-effective implementation
• Faster, simpler, more predictable, less risky
• Avoids engaging Management Consultants
• No need to think outside the box
• Michael Hammer 400/hr

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Advantages of Technology Enabled Reengineering -
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• ERP provides the tool and structure to facilitate
  change
• ERP bounds the design, limiting overload
• Design is feasible and we know it works (its
  been proven unless beta version used)
• Designs likely are cost effective than inhouse
  development
• Designs likely can be implemented in a timely
  manner

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Clean Slate Reengineering

• Process design starts with a clean slate
• Also referred to as starting from scratch or
  green field.
• Theoretically, no limits

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Advantages of Clean Slate - 1

• Provides freedom from tools constraints
• Avoids tool biases by using a portfolio of tools
• Not limited by the constraints of a single
  software package
• Provides freedom from predefined structures
• Can develop own unique, leading-edge processes
• Not limited to the configuration options within
  a single software package
• Separates BPR and technology implementation
• Clearly defines costs as one or the other
• Permits immediate use of new technology
• Dont have to wait for the software company to
  catch up with an advance

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Advantages of Clean Slate - 2

• Competitive advantage
• Allows an organization to develop innovative
  software that is not available through existing
  ERP software
• May be the only option
• For some firms in niche industries, clean slate
  reengineering is the only option

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Comparison Clean Slate vs. Technology Enabled
Advantages
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Which Firm Should Use Which Approach?

• Depends on
• Firms Size
• Available Resources
• Time Pressure
• Strategic Gain
• Uniqueness of solution

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Large Firms

• Have the resources to do clean slate
• Are often industry leaders and thus, generally
  have time
• Are likely to use processes as a competitive
  advantage
• Are more likely to need a unique solution

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Firms with Deep Pockets

• Clean slate requires substantial resources
• In some cases, clean slate will lead to many
  starts and stops before the final design is
  found

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Firms with Time

• Clean slate takes longer so only firms that have
  the time can really do clean slate approaches.

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Firms for which Processes are a Strategic
Advantage

• The more unique a firm is in terms of its
  industry, processes, customers or other factors,
  the more likely that they see their specific
  processes as a competitive advantage and thus use
  some clean slate approach.

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Firms that Seek a Unique Solution

• Technology enabled approaches are easily copied
  and diffused
• Clean slate approaches are not as rapidly or as
  easily copied.

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Blend - Somewhere Between the Two

• The approach claimed to be used by most firms is
  Technology Enabled Reengineering, simultaneous
  with ERP software implementation.
• In actuality, there are few projects that are
  purely clean slate or technology enabled
• More of a spectrum

Technology Enabled
Clean Slate
MOST FIRMS
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Reengineering Tenets

• Combine multiple tasks and assign a single point
  of contact for each process. EMPOWERMENT
• An important feature of BPR is integrating
  activities and assigning business process
  responsibility to one individual called a case
  worker.
• Allow workers to make decisions. Avoid decision
  hierarchies that require workers to go through
  layers of management for decisions about the work
  they are doing.
• Perform process steps in their natural order.
  Rather than following a linear sequential set of
  tasks, perform process activities as needed,
  sometimes in parallel.

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Reengineering Tenets

• Do a cost/benefit on controls and other checks.
• Only use those checks and controls that are
  cost-effective.
• Use IT to centralize data management. This allows
  companies to capture and store data only once,
  yet disperse as needed.

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How do you figure out what processes to
reengineer?

• Whats broken the most?
• What process has the greatest impact on the
  customer?
• Which of the processes are most susceptible to
  successful redesign? (feasibility and scope)

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How do you know if its broken (or at least in
major trouble?)

• Extensive information exchange, data redundancy,
  and re-keying of data into multiple systems
• Excessive inventory, buffers, and other assets
• High ratio of checking and control to value
  adding
• Reworking and iteration

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Need for BPR

• Survey of SAP R/3 users1
• Technology enabled strategy dominated
• Prior to ERP implementation
• 16 thought BPR needed prior to SAP
  implementation
• 33 thought BPR unnecessary
• After ERP implementation
• 35 thought BPR needed prior to SAP
  implementation
• 10 thought BPR unnecessary
• So BPR seems to be a useful exercise

1OLeary 2000
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Whose Business is Business Improvement?

• Read the case.
• Form small groups (2-4)
• (My) Left side of room
• Business should lead justify!
• (My) Right side of room
• IT should lead justify!