1 Selecting Large Systems

2 Make or buy decision Business strategyIT 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”

3 Flattening the Organizational Structure

4 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 Management Process Operational Process

5 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

6  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

7  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

8  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

9  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

10  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

11  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

12  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 Business functions Business Processes BPR

13  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

14  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

15  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

16  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

17  Process Improvement and redesign Process MagnitudeIncrementRadical Improvement 30-50%10x-100x Sought Starting baseExisting ProcessBlank skeet Top managementRelatively lowHigh commitment Role of ITLowHigh RiskLowHigh Improvement Innovation/Reengineering BPR

18 Interface Anatomy of a Traditional (Non-Integrated) Architecture Order Entry Inventory Mgmt. BillingA/RFinance

19 The Value Chain Support activities Primary activities Inbound logisticsMaterials receiving, storing, and distribution to manufacturing premises Operations Transforming inputs into finished products. Outbound logisticsStoring and distributing products Marketing and SalesPromotions and sales force ServiceService to maintain or enhance product value Corporate infrastructureSupport of entire value chain, e.g. general management planning, financing, accounting, legal services, government affairs, and QM Human resources managementRecruiting, hiring, training, and development Technology DevelopmentImproving product and manufacturing process ProcurementPurchasing input

20 Value Chain Integration

21 ANATOMY OF: AN ENTERPRISE SYSTEM Central database Reporting App. HRM App Sales & delivery App. Service App. Inventory & supply App Mfg. App Financial App Managers & Stakeholders C u s t o m e r s SuppliersSuppliers Sales force & customer service reps. Back office admin. & workers Ext Int Int Ext

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23 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.

24 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

25 Picking the right System  Vendor reputation  System Operating requirements  Functionalities  Price  Geographical coverage

26 Picking the right System  Weighted approach FactorWeightVendor 1Vendor 23..n Support20 Functionality30 User interface10 Flexibility20 Custom ability30 Future prospects10 Reliability20 Integration30 Platform20 TotalX

27 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

28 Picking the right System  Summary 1.Identify key business process 2.Impact of the key business on organization performance 3.Identify a short list of vendors (Use a consultant carefully) 4.Ask how the selected vendors can support your key business processes 5.Vendor demonstration of system supporting key processes. Involve the users in this process 6.Check vendor references 7.Include clauses that protect the key processes and the others

29 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

30 Recommendation for Midrange Enterprises  Consider local vendor with in-depth local knowledge of customer’s business  Price

31  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