Enterprise resource planning 1st by mary summer chapter 02

Enterprise Resource Planning, 1st
Edition by Mary Sumner
Chapter 2:
Re-engineering and Enterprise
Resource Planning Systems

© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition

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Objectives
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•

Recognize factors associated with the evolution of
ERP systems
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BPR

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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

•
•
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Primary activities
•

–

Secondary activities
•

•

Inbound logistics, operations, outbound logistics, marketing
and sales, service
Organizational activities, human resources, technology,
purchasing

Motivations
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Deregulation, consolidation, customer sophistication,
increased competition

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Business Process Re-engineering
(BPR)
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•
•
•
•

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Remove outdated rules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 customer’s needs

–

Flatten organization

•

Facilitated by information technology

•

Redesign of jobs

–

New levels of judgment

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New types of leaders

•

Adaptable

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Process Modeling
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Business process
–

•

Data store
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•

Data transferred between processes or from a
process to data store

Organizational unit
–

•

Data needed by business process

Data flow
–

•

Business activities

Units where processes take place

Event
–

Includes triggers and outcomes

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Neighborhood Food Cooperative
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•
•
•
•
•
•
•

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
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Re-engineered process models
–

•

Improved process change depictions

Data integration
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•

Among multiple processes

Structural changes
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Streamline business functions

–

Maximized productivity

© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition

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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

© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition

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Failure in Re-engineering

Rosenthal:
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Apply “clean slate” approach

•
•
•
•

Continuous training for new roles
Measure performance
Jobs must be redesigned
Use rewards as incentives to change

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Move away from status quo

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Too narrowly focused

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Project too general

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Information Technology
Facilitates ERP
•
•

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

© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition

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Process Enterprises
Changed management structures
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Process responsibility given to “process owners”

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Has process design authority

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Stresses teamwork

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Leans toward standardization of processes

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Focuses on achieving goals

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Case: Re-engineering the
Payment Process System at RFC
Current payment processing system
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Customers:
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Make payments at branch
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Mail payments to branch
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–
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•

Manually processed
Batched for deposit in afternoon
Home Office mailed an Advice of Payment Received

Payment made to Home Office

–
–
–

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Cash, check, money order

Manually processed
Batched for deposit in afternoon
Branch mailed an Advice of Payment Received

Each night, batch payment processing runs to
update accounts

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Case: Re-engineering the Payment
Process System at RFC, continued
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Weekly delinquency analysis run

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Payment reminders sent out at 15, 30, 45, and 60
days

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•

Settlement figures processed upon request
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•

Computer generated
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

© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition

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