FREE online courses on Business Needs and ERP - BPR and ERP - BPR or The Faces of Reengineering

 

When properly scaled, attention to a business process can pay rich rewards; however, the company has to be aware of the implications prior to defining a project. When the scale of the effort is too small, little can be accomplished beyond incremental improvements.

 

The term reengineering was originally applied to such sweeping changes as a new sales and delivery mechanism that increased sales by 60%, reducing the cycle time to process an order from 10 days to 10 minutes; or a new manufacturing facility that delivered 10% more products in 25% of the space using 50% of traditional employees. Hammer and Champy, in Reengineering the Corporation, describe it as fundamental, radical, dramatic business process change. Davenport used the term ‘innovation', to distinguish it from incremental improvements.

 

Symmetrix, one of the pioneers in business process redesign, believes strongly in reinventing only the critical business process. To make this 80/20 cut, it focuses on a deep understanding of the economic implications to the proposed changes. By doing so, it concentrates its efforts on the changes that will substantially improve the business.

 

The word reengineering today often implies changes from the most mundane to the most significant. The term commonly used is BPR (business process redesign). Not all companies wish to make massive changes to their business processes. The changes companies require are on a continuum from streamlining to reinvention. Streamlining a business process implies making incremental changes to the current process to increase quality, decrease cycle time or reduce cost. Reinventing a business process means scrapping the current one and creating a process that truly meets the needs of the company. This usually requires a fresh look at the purpose of the business and the core competencies needed to serve that purpose.

 

Projects are often identified at points along this continuum. While some companies engage in massive full-scale reengineering, many are content to solve major business problems that plague them today while setting the stage for future efforts. Thus, many reengineering efforts, especially those that are combined with the implementation of ERP, are grouped somewhere in the middle of the streamline-to-reinvent continuum. As such, the effort may be a combination of solving old problems and creative redesign of selected processes.

 

Many companies identify changes that are meant to streamline their business processes and find that to implement change successfully, the project team will need to reinvent the corporate approach and that change will have major implications for individuals, jobs and structures. One organization made up of several divisions decided to centralize its accounts. On the face of it, management reasoned, centralization was not a change in the way the process operated, only a change in location. When the business owners considered the change, they realized its value, but identified numerous changes they would have to make in their operations to extract accounts payable. The organizational impact of the change pushed it in the direction of reinvention on this continuum.

 

ERP is well suited to efforts anywhere on this continuum, although a company should develop a high level design prior to the implementation of any project at the far right (reinvent) of this line.

 

A company can decide to start a BPR project with a small element of the business for any number of good reasons such as:

• The project may be a pilot to test the changes prior to involving the entire corporation.
• The purpose may be to test a hardware or software product, or to gain the skills needed in the long-term.

 

Projects that include major sections of the company will be undertaken by those who feel they are ready for a larger scale project or who feel the large scale is essential.

We can align these two dimensions in a matrix that will give us a sense of the size-and thus difficulty-of the undertaking. The indications of possible difficulties within each quadrant are examples to illustrate the concepts.

 

In the lower left quadrant, a company may decide to automate the cash applications process, increasing the speed and quality of this relatively minor process. In the upper left quadrant, a company may implement a process to standardize the human resource services. In this example, the change will streamline the collection and delivery of information to employees across the entire corporation.

 

Moving to the lower right quadrant, a company may decide that its highest leverage move is to completely reinvent the lead management process, a minor segment of the business.

 

And finally, the effort with the greatest amount of change across the largest portion of the company may be to implement a new business model across all the strategic business units that might entail changing the order management, the sales and distribution and the supporting financial processes.

 

Identifying the correct quadrant helps the project team and the executive sponsor to choose the appropriate project process and to appreciate the amount of change required. This knowledge will positively influence their success rate. This is a critical point that will be emphasized throughout this book. The larger the scale and the closer to reinvent the project is, the more attention must be paid to the critical success factors and the change management issues. Nothing will cause a project to fail more spectacularly than less than full attention to these matters.