MIS 101 PSCJ 4/21/2017 Lecture 6 Title: Business Process Automation, Improving, and Re-engineering MIS 325 PSCJ Mr Hashem Alaidaros

Introduction The goal of business process modeling is to identify what is currently happening and what to do differently to satisfy customer requirements Modeling a business process helps determine whether the business process needs to be improved, automated or reengineered There are three approaches. Each approach varies in the level of “intensity” with which change is desired: Business Process Automation (BPA) Business Process Improvement (BPI) Business Process Reengineering (BPR)

Business Process Automation (BPA) leaves the manual system essentially unchanged but makes processes more efficient by automating them. BPA does not impact the way things are done, but rather how fast they are accomplished. Example: Library Before BPA: Manual Checkout After BPA: computerized checkout customer still checks books out at desk, the computer makes this process more efficient.

Business Process Improvement (BPI) This approach takes an evolutionary view of the system. No radical changes but constant search for improvements. Changes are made to the way things are done, not just the computer system but the business system as well. Example: Library Before BPI: manual checkout After BPI: students can use computer to search catalog, check out book and have it delivered using campus mail. changes both the computer system and the way you do business.

Business Process Improvement using Six Sigma Six Sigma is defined as “an improvement program aimed at reducing variability and achieving near elimination of defects from every product, process, and transaction” Six Sigma aims to reduce costs and increase revenue through increased process efficiency and effectiveness. This methodology focuses on variance reduction, cycle time reduction and yield improvement. Six Sigma is divided into 5 steps: define, measure, analyze, improve, and control (DMAIC).

Business Process Reengineering a radical and fundamental rethinking of the business processes currently used looking for dramatic improvements high risk increased time very often associated with “downsizing” BPR is concerned with radical change, so we need radical techniques to use BPR. Resistance to change is highest here, because the stakes are highest.

Business Process Reengineering The search for, and implementation of, radical change in business processes to achieve breakthrough results Synonyms: business process redesign, business transformation, process innovation, business reinvention, change integration Starting point: clean sheet of paper Example: Library Before BPR: manual checkout after searching the stacks After BPR: Make books available on web

Business Process Reengineering 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 fast food to feeding people anywhere, anyhow.

When Should a Business Process be Reengineered? (I) Three forces are driving companies towards redesign (The three C’s) Customers are becoming increasingly more demanding Competition has intensified and is harder to predict Change in technology constant pressure to improve; design new products faster flexibility and ability to change fast are requirements for survival

Business Process Re-engineering case studies

Reasons for BPR Failures Lack of support from senior management Poor understanding of the organization and the infrastructure Inability to deliver necessary technology Lack of guidance, motivation and focus Fixing a process instead of changing it Neglecting people’s values and beliefs Willingness to settle for marginal results Quitting too early Allowing existing corporate cultures and mgmt attitudes to prevent redesign Not assigning enough resources Working on too many projects at the same time Trying to change processes without making anyone unhappy Pulling back when people resist change

Business Processes Collection of activities that takes one or more kinds of input and creates an output that is of value to customer Customer can be traditional external customer or internal customer Thinking in terms of business processes helps managers to look at their organization from the customer’s perspective Businesses must always consider customer’s viewpoint in any transaction Sharing data effectively and efficiently between and within functional areas leads to more efficient business processes Managing inputs and business processes effectively requires accurate and up-to-date information

Marketing and Sales Needs information from all other functional areas Customers communicate orders to M/S in person or by telephone, e-mail, fax, the Web, etc. M/S has a role in determining product prices Pricing might be determined based on a product’s unit cost, plus some percentage markup Requires information from Accounting and Finance, and Supply Chain Management data M/S needs to interact with Human Resources to exchange information on hiring needs, legal requirements, etc.

Supply Chain Management Needs information from various functional areas Production plans based on information about product sales (actual and projected) that comes from Marketing and Sales With accurate data about required production levels: Raw material and packaging can be ordered as needed Inventory levels can be kept low, saving money Supply Chain Management data and records can: Provide data needed by Accounting and Finance to determine how much of each resource was used Support the M/S function by providing information about what has been produced and shipped

Accounting and Finance A/F personnel: Record company’s transactions in the books of account Record accounts payable when raw materials are purchased and cash outflows when they pay for materials Summarize transaction data to prepare reports about company’s financial position and profitability People in other functional areas provide data to A/F M/S provides sales data SCM provides production and inventory data HR provides payroll and benefit expense data

Human Resources HR needs information from the other departments Tasks related to employee hiring, benefits, training, and government compliance are all responsibilities of HR HR needs accurate forecasts of personnel needs from all functional units HR needs to know what skills are needed to perform a particular job and how much the company can afford to pay employees HR observes governmental regulations in recruiting, training, compensating, promoting, and terminating employees

ERP software Significant amount of data is maintained by and shared among the functional areas Timeliness and accuracy of these data critical to each area’s success and to company’s ability to make a profit and generate future growth Managers think in terms of business processes that integrate the functional areas Need to share information between functions and functional areas ERP software provides this capability by means of a single common database Allows accurate, real-time information to be available Examples of ERP software are SAP and Oracle