Do ERP systems really contribute to public administration

1
Do ERP systems really contribute to public
administration?

• Neven Vrcek
• University of Zagreb
• Faculty of Organization and Informatics
• Varadin

2
Organization

• One of the most complex human inventions
• Hard to innovate and change
• That is why we have disciplines like leadership,
  change management...
• What kind of thinking is necessary for efficient
  organization in information society?
• Let us think and recognize that organization and
  IS are totally inseparable

3
Organization and ICT
Business Process Management
4
Organizational system
Different views and different graphical
representations
Applications
5
Work flow diagram
6
Complex workflow diagram
7
Matrix view
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Efficient organization

• Apply these techniques to increase organizational
  efficiency by using ICT
• Complete and holistic thinking by having in mind
  that organization and IS are two sides of the
  same coin

9
Applied to government (As Is)
Tendencies to advance such way of working
This is not the right way of thinking
10
After BPR (To Be)

• Principles of BPR-a in public services
• Optimize business processes for citizens
• Solving complete problem and not administrative
  step
• ICT in process and not organizational unit
• Reduce unnecessary processes and administrative
  steps

11
COTS

• How about Commercial Of The Shelf?
• Blueprints of some other business processes
• How come that they are so influential?

12
ERP systems

• Several decades on the market
• Still very expensive and ongoing topic of
  interest
• Many success stories and many failures
• Benefits vaguely defined
• Various performance indicators (tangible and
  intangible)

13
Enterprise Wide Information System

• Functions of ERPs
• To integrate the many business functions into one
  seamless application.
• To run on top of an established database
  management system.
• Integration with other information (sub)systems
• CRM, SCM, ...

14
Quality of service

• Every investment should contribute to competitive
  advantage (profit sector) or quality of service
  (public sector)
• How does it apply to ERP and what benefits does
  it bring? many approaches and pro et contra
  attitudes
• ERP represents best business practice?
• I do not want to buy best business practice I
  want to create it
• OTS software can not bring significant
  competitive advantage to profit oriented sector
  neither can significantly differentiate services
  of public sector
• Why? Because it is commodity and widely
  available.
• Complicated adaptation without clear view to
  competitive advantage or differentiation
• Software to business processes
• Business processes to software

15
Suitability of organization and benefits of ERP

• Certain organizations are better suited for
  implementation of ERP systems than the others
• Certain organizations have more benefits from ERP
  systems than the others
• What are characteristics of their business
  processes?

16
SPIS - methodology

• Strategic Planning of Information System
• Developed for bringing competitive advantage by
  use of IT
• Deep analysis of business processes
• Published in several scientific and professional
  articles and verified in one scientific and
  several commercial projects
• The methodology consists of a significant number
  of well known methods, but it combines them into
  structured and chained holistic process which
  gives deep insight into the business system and
  corresponding information system
• By combining various methods under a common
  framework of methodology we obtain detailed and
  documented picture of an organization
• 16 steps

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ERP system implementation

• Standard procedures (ORACLE AIM, SAP ASAP)
• Strictly focused and goal oriented to
  implementation of particular ERP system
• Based on standard documentation which enables
  easy transfer of knowledge and benchmarking of
  implementation projects
• Known by various ERP system consultants, which
  reduces dependence on certain implementation
  expert(s)
• Verified on number of projects, which reduces the
  risk of successful implementation.

18
Standard ERP implementation methods

• Leave very little room for serious rethinking of
  business technology and business process
  reengineering
• On the course of implementation, changes in
  business processes are usually proposed as a
  consequence of disproportion in functionality
  between ERP system and present work practice.
• Such forced business process reengineering adapts
  the enterprise to the ERP system without taking
  much care about actual business needs.

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Gap analysis

• Standard step in every ERP implementation
• Denotes disproportions between current business
  processes in the organization and standard ERP
  system functionality
• These disproportions are called gaps and might be
  solved in various manners, but there is usually
  very little attention paid to strategic
  importance of the declared gaps
• Usually gap analysis is used to eliminate most
  obvious problems in implementation projects, and
  serious gaps, such as complete lack of support
  for certain business processes, are left to some
  subsequent projects
• However results of the gap analysis are valuable
  source of information on which strategic impact
  of ERP system might be estimated

20
BCG matrix

• Early step of SPIS methodology

BCG is acronym for Boston Consulting Group.
Details in McFarlan, F. W. Information
technology changes the way you compete,
Hardware Business Review, May 1984.
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BCG and Gap analysis

• The question is how the existence of gaps relates
  to the quality of service (public sector) or
  competitive advantage (profit oriented sector) of
  the organization and how are supported business
  processes that play key role in the diferentiation

22
Research

• 3 production companies, 4 profit oriented service
  based companies, 4 public administration entities
• Detailed analysis of business procesess and
  correlation with BCG and Gap

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Results (1)

• Each analyzed organization has certain number of
  business processes in every quadrant of the BCG
  matrix and their classification was iterated
  several times and verified by the top management
• During the gap analysis each process was checked
  against standard ERP functionality and the level
  of support was validated
• Therefore in every quadrant of the BCG matrix two
  groups of business processes were obtained
  supported and unsupported
• The ratio of supported across overall number of
  business processes was calculated

24
Results (2)
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Conclusion

• Obtained results prove that in many cases
  strategic business processes are not supported at
  adequate level, and gained business results are
  sub-optimal
• Different sectors have various level of support
  by OTS ERP
• Without detailed rethinking of the entire
  business paradigm, supported by really holistic
  and integral information system, competitive
  advantage will never be achieved
• ERP should be regarded as infrastructure on which
  specialized and strictly focused modules must be
  built