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Business Process / Enterprise
(Process Oriented) Systems
Information, Organizations, Processes and
Control
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Hierarchical organizations of past years
Today
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Process-oriented, Learning, Team-based, and Fastcycle organizational models
Flat, flexible, focused on core competence
Inside, empowered, interfunctional teams of
knowledge workers are reengineering and
continually improving core business processes.
Think globally and act locally
Flattening the Organizational Structure
Information, Organizations,
Processes and Control
 To accomplish the organizations of the year 2000 and
beyond firms must change the way they are
organized, and employees at all levels must become
information literate - not just computer literate.
Creating the Information Age
Organization
 Transforming an Organization Requires more than just
Changing the Structure.
 True change occurs deep within the organization as
individuals and work teams redefine the way they work
and the values that guide decision making and action.
 Managers need to rethink the nature of control and
authority
 Smashing together the features of the hierarchy with
features of an entrepreneurial firm will not work.
 Work must change and people must change
 New knowledge and skills are needed
Business Process / Enterprise
(Process Oriented) Systems
 Business process systems are crossfunctional
 that is, the system boundaries are not
within a single
function but actually go across boundary
lines
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
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.
BPR
 Hammer and Champy
 It is an all-or-nothing proposition that
produces dramatically impressive results.
Most companies have no choice but to muster
the courage to do it. For many, reengineering
is the only hope for breaking away from the
ineffective, antiquated ways of conducting
business that will otherwise destroy them.
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
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
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).
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).
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
Business Function - Business Function -A group of similar resources that perform similar
activities or tasks.
 This is also called a task-oriented approach where
the emphasis is placed on perfecting the execution
of individual tasks.
Functional IS Systems -- also known as "silo"
systems supported one business function
BUSINESS FUNCTION
IS SYSTEM
Logistics
Procurement
Production / Operations
Material Resources Planning
Finance / Accounting
Accounts Payable
Human Resources
Payroll
Sales / Marketing
Sales Order Management
When information from one IS system was needed by another business function,
then periodically information would pass from one IS system to the other.
BPR
 How can Companies Identify their
Business Processes. Examples
 Manufacturing: As the procurement-toshipment process
 Product development as the concept-toprototype process
 Sales as the prospect-to-order process
 Order fulfillment as the the order-topayment process
 Service as the inquiry-to-resolution process
Advantage of a business
process
 The inherent advantage of a business
process is that its performance can
easily be measured against the
attainment of the goal.
 Looking at the business function
systems -- how is performance
measured?
Business process
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IT Systems organized around business processes:
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Enterprise Resource Planning (ERP)
or Business Engineering (BE)
or ENTERPRISE SYSTEMS (ES)
Packaged, application software (modules) designed to
address common business processes (across industries and
business functions)
Evolved, in part, from MRP (Materials Resource Planning)
concepts,
thus the 'rp' in erp and mrp
Typically, vendors assume some customization and
integration will be required -- but customization will NOT be
to the core
Vendors also assume system infrastructure exists
(including: RDB, client, servers, browsers, network, etc.)
Common Features:
 On-line system with no traditional batch
interfaces
 One database for all data
 Clear definition of every data items
 Efficient support of back-office transaction
processing;
weaker in decision support and analytical
support but improving
 Templates for processes of best practices
 Client/server computing, network
infrastructure, RDB, GUI, Web Enablement
 Proprietary language and tools (e.g. ABAP/4 for
SAP R/3)
Advantages:
 Tight integration among all modules
 Single view of the business -same db, consistent reporting and analysis
 Process orientation: streamline processes
 Rich functionality : templates & reference model
 Flexibility: current and new environment
 Scalability: small group vs. enterprise
 Expandability: modular vs. total systems
 Interoperability with 3rd party solutions
 Rapid implementation: "vanilla" version
Challenges:
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High cost with low payoff is the norm when vanilla version not
implemented
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Difficult to change /test all aspects that are affected simultaneously
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Difficult to design a new process that's an improvement
(particularly when the organization's structure is an issue)
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Difficult to find/build software for new process.
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Difficult to change all aspects simultaneously
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Learning Curve Realities
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Idiosyncratic support needs are the norm
BPR- How can Companies Identify
their Business Processes
 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.
BPR- How can Companies Identify their Business
Processes
High
Increasing
operating
performance
Manufacturing gap
versus industry leader
Maintain
Advantage
Catch up
Increase flexibility,
responsiveness
Differentiate
product and
services
Low
Low
Services / Marketing gap versus industry leader
High
Different competitive investment strategies facing industry players as they
consider there position versus industry leaders.
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 can’t stay here
 show your balance sheet
 show competitors balance sheet
2: A “vision statement” - This is what we as a
company need to become
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?
BPR
 Simple Rules
 Listen to customer
 Enhance those things that bring value to the
customer or eliminate those that don’t
 Be ambitious, focus your commitment to
radical change on the process
BPR
 Process Improvement and redesign Process
Magnitude
Improvement
Increment
Innovation/Reengineering
Radical
Improvement
Sought
30-50%
10x-100x
Starting base
Existing Process
Blank skeet
Top management
commitment
Relatively low
High
Role of IT
Low
High
Risk
Low
High
Magnitude of Change
Source: Adapted From O'Hara, Watson and Kavan
The Seven Phases of Process
Re-generation
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1. Strategy Linkage
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2. Change Planning
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kicks off project
secure management commitment
discover process opportunities
identify IT enabling opportunities
align with corporate strategy and select BPR project
inform stakeholders and organize re-generation team
prepare project schedule and set performance goals
3. Process Pathology
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document existing process
uncover process pathologies
The Seven Phases of Process
Re-generation
 4. Social Re-Design -- 5. Technical ReDesign (reiterative until satisfied)
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explore alternative designs
design new process
design HR architecture (x-func/multi-discipline)
select IT platform
prototype holistic process
The Seven Phases of Process
Re-generation
 6. Process Re-Generation
 implement HR changes
 develop & deploy IT support -- tug of war game -forces towards catastrophe and towards the ideal
 re-organizing:
 teams
 jobs
 training
 top management communication and persuasion
critical here
 7. Continuous Improvement
 measure performance
 link to quality improvement
The Seven Phases of Process Regeneration
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1. Strategy Linkage
 a. kicks off project
 b. secure management
commitment
 c. discover process
opportunities
 d. identify IT enabling
opportunities
 e. align with corporate
strategy
select BPR project
2. Change Planning
 a. inform stakeholders
organize re-generation
team
 b. prepare project
schedule
set performance goals
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A. Imperative
"Prove the need"
 Positive ("this change" is a
big chance to grab it all)
 Negative (without "this
change" we will die)
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B. Leaders
Instigate and Sustain the
change
"Walk the talk" and
"Block escape"
 brave
 fearless
 communicative
The Seven Phases of Process Regeneration
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3. Process Pathology
 a. document existing
process
 b. uncover process
pathologies
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C. Levers
the tools-- changed
processes, people,
technology, environment
"Power the transition"
and "Demonstrate new
reality"
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rewards/punishments
peer pressure
forced
environmental/technological
changes -- "no going back"
stakeholder feedback
The Seven Phases of Process Re-generation
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4. Social Re-Design -5. Technical ReDesign (reiterative until
satisfied)
 a. explore alternative
designs
 b. design new process
 c. design HR architecture
(x-func/multi-discipline)
 d. select IT platform
 e. prototype holistic
process
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D. Affected Agents
all those affected by the
change
"Segment them" -
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"Strategy and
communication tactics for
each"
customers
suppliers
strategic partners
stockholders
community neighbors
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6. Process Re-Generation
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a. implement HR changes
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b. develop & deploy IT
support
-- a tug- of- war game on
forces aimed towards
catastrophe and the ideal
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c. re-organizing:
 teams
 jobs
 training
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d. top management
communication
top management
persuasion
( critical here)
7. Continuous Improvement
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a. measure performance
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b. link to quality improvement
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E. Buoys
Stabilizers ( life
preservers)
for affected agents
Exploit
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camaraderie
consistency
core competencies
cultural values
strategic relationships