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Selecting Large Systems

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Make or buy decision

Business strategy IT application or infrastructure provides proprietary competitive advantage

IT application or infrastructure supports strategy or operations, but is not considered strategic in its own right

Core competence

Information/ process security and confidentiality

Availability of suitable partners

Availability of packaged software or solutions

Cost/benefit analysis

Time frame for implementation

Evolution and complexity of the technology

Ease of implementation

Decision Criteria Pressure to “Make/Own” Pressure to “Buy”

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Flattening the Organizational Structure

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Streamlining the Business Cycle

Operating Cycle The activities through which an organization

designs, produces, markets, delivers, and supports its product and services

Management Cycle The activities through which an organization

manages the design, produces, markets, delivers, and supports its product and services

Man

agem

ent

Pr o

cess

Operational Process

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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

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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.

Examples: Taco have embraced BPR to enable the

redefinition of their business

BPR

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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

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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

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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

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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

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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

BPR

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How can Companies Identify their Business Processes. Examples Manufacturing: As the procurement-to-

shipment process

Product development as the concept-to-prototype process

Sales as the prospect-to-order process

Order fulfillment as the the order-to-payment process

Service as the inquiry-to-resolution process

Bus

ines

s fu

ncti

ons

Bus

ines

s P

roce

sses

BPR

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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

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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

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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

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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

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Process Improvement and redesign Process

Magnitude Increment Radical

Improvement 30-50% 10x-100xSought

Starting base Existing Process Blank skeet

Top management Relatively low Highcommitment

Role of IT Low High

Risk Low High

Improvement Innovation/Reengineering

BPR

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Interface Interface Interface Interface

Anatomy of a Traditional (Non-Integrated) ArchitectureAnatomy of a Traditional (Non-Integrated) Architecture

OrderEntry

InventoryMgmt.

Billing A/R Finance

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The Value Chain

Supportactivities

Primary activitiesInbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,

financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input

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Value Chain Integration

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ANATOMY OF: AN ENTERPRISE SYSTEM

Centraldatabase

ReportingApp .

HRMApp

Sales &delivery

App.

ServiceApp.

Inventory &supply App

Mfg.App

FinancialApp

Managers & Stakeholders

Custome

r s

Suppliers

Salesforce &

customerservicereps.

Backoffice

admin.&

workers

Ext Int Int Ext

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RATIONALE FOR ERP SYSTEMS

One of the key reasons why managers have sought to proceed with difficult ERP projects is: to end the fragmentation of current systems, to allow a process of standardization, to give more visibility on data across the entire

corporation, to obtain competitive advantage (Sammon &

Adam, 2000).

A seamless integration is essential to provide visibility and consistency across the enterprise.

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Picking the right System

Focus on both implicit and explicit key business processes

Identify a short list of vendors that can support the key processes

Don’t start with RFP until you have identified the key processes

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Picking the right System

Vendor reputation System Operating requirements Functionalities Price Geographical coverage

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Picking the right System Weighted approach

Factor Weight Vendor 1 Vendor 2 3..n

Support 20

Functionality 30

User interface 10

Flexibility 20

Custom ability 30

Future prospects 10

Reliability 20

Integration 30

Platform 20

Total X

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Picking the right System

Rule of Thumb 75-80% fit between business

requirements and system functionality

Key business process is key requirement

Analyze organizational change management ability

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Picking the right System

Summary1. Identify key business process2. Impact of the key business on organization

performance3. Identify a short list of vendors (Use a consultant

carefully)4. Ask how the selected vendors can support your

key business processes5. Vendor demonstration of system supporting key

processes. Involve the users in this process6. Check vendor references7. Include clauses that protect the key processes

and the others

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Recommendation for Multinational Companies

Focus on a short list of vendors that can provide global operation and support.

Consider best of breed

Ability to integrate with local location specific system requirements

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Recommendation for Midrange Enterprises

Consider local vendor with in-depth local knowledge of customer’s business

Price

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Consider implementation tactical rather than strategic

Good functional depth, domain expertise and local capabilities (e.g. service and support)

Consider best of breed as well

Vendor long term viability

Price

Recommendation for Small Enterprises