Information Technology and Changing Business Processes

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Information Technology and Changing Business
Processes
BUAD 661, Fall 2004, Chapter 5 Peggy M Beranek,
PhD
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Functional (Silo) Perspective

• The organization of the company is around the
  defined business functions
• Each department determines its own core
  competencies and works with them
• This perspective is widespread and is reinforced
  by business curricula

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Functional Perspective - Benefits

• The organization can optimize expertise
• Can move experts across the functions
• It is easier to make connections and evaluations
  with other organizations

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Functional Perspective - Drawbacks

• Efforts are often re-created across departments
• There are often communication gaps
• The structure and culture across departments can
  vary
• Handoffs between departments are often a source
  of problems
• It becomes more difficult to communicate the big
  picture

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Process Perspective

• The Process perspective keeps the big picture in
  mind, allows the manager to concentrate on the
  work that must be done

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Process Perspective

• An Inter-related, sequential set of activities
  and tasks that turns inputs into outputs and
  includes
• A beginning and an end
• Inputs and outputs
• a set of tasks that transforms the inputs into
  outputs
• A set of metrics for measuring effectiveness

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Leading with the Process Perspective

• Identify the customers of processes
• Identify the customers requirements
• Clarify the value that each process adds to the
  overall goals of the organization
• Share your perspective with other organizational
  members until the entire organization becomes
  process focused

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Transforming a Business

• BPR Business Process Re-engineering
• Radical process
• Is a Core Competency for some companies
• TQM Total Quality Management
• Incremental, continuous process
• Both processes are equally important
• Both must view the business as a set of processes

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TQM

• Small incremental changes are used to improve a
  business, involves
• Choosing a business process to improve
• Choosing a metric for measurement
• Enabling personnel to find ways to improve the
  process using the metric
• Tends to be less threatening
• You need to allow personnel the freedom to try
  new ideas to improve processes

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BPR

• Enables aggressive improvement goals
• Makes rapid, breakthrough impacts possible
• Faces greater resistance
• Used when facing major changes in the operating
  environment
• Used for discontinuities

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BPR Key Aspects

• The need for Radical change
• Thinking from a cross-functional perspective
• Challenging old assumptions
• Networked, cross-functional organizations

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BPR - Steps

1. State a case for action, with an understanding of
   current conditions
2. Assess the readiness of the organization to
   change
3. Identify the business processes that will be
   affected
4. Analyze those processes

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BPR - Steps

• Analyze those processes
• Develop a Workflow diagram
• Define the scope, mission, and boundaries of the
  process
• Develop a high-level diagram
• Identify metrics for evaluation
• Develop a transition plan

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Enterprise Systems - ERP

• Computer systems that support the entire
  organization from a process perspective

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ERP - Characteristics

• Integration of information flows throughout the
  organization
• Tend to be large commercial packages
• Which reflect industry best practices
• The systems need to be integrated with the
  organizations current systems
• Are evolving to Web-based and OO systems

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ERP - Advantages

• All the modules communicate with the other
  modules, reduces replication and redundancy
• Allows for the effective use of organizational
  Data Bases
• Enforces use of standard procedures

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ERP Drawbacks/Difficulties

• Different data formats are used throughout the
  organization
• Many business processes need to be re-designed
  Many organizations may need to make changes to
  their organizational structure
• The systems are sold as suites of applications
  which increases their expense

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ERP Adoption

• Let the ERP drive the business process redesign
• New organizations
• When operational business processes are not a
  competitive advantage
• When the current systems are in crisis

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ERP Adoption

• Redesign the process first then apply the ERP
• When the operations are the basis of a strategic
  competitive advantage
• When the features offered by the ERP do not meet
  the needs of the organization
• When there is
• lack of top management support
• A desire for strategic flexibility
• Highly decentralized decision making

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Common Reasons for Failure

• Lack of senior management support
• Lack of a coherent communication program
• Introducing unnecessary or too much complexity
• Underestimating the amount of time, effort and
  resources needed
• Combining (or substituting) re-engineering with
  downsizing