1. Enterprise Resource Planning, 1st Edition by Mary Sumner
Chapter 2:
Re-engineering and Enterprise Resource Planning Systems
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

2. Objectives
Recognize factors associated with the evolution of ERP systems
BPR
Client-server networking
Integrated databases
Examine role of process modeling in redesigning business models
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

3. Re-engineering
Fundamental rethinking and radical redesign of business processes
Goal is to achieve major improvements in performance
Efficient redesign of value chain
Primary activities
Inbound logistics, operations, outbound logistics, marketing and sales, service
Secondary activities
Organizational activities, human resources, technology, purchasing
Motivations
Deregulation, consolidation, customer sophistication, increased competition
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

4. © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

5. Business Process Re-engineering (BPR)
Technology used to mechanize work
Create new business rules
Remove outdated rules
Improve responsiveness
Reduce costs
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

6. Business Process Re-engineering (BPR), continued
Decentralize decision making
Become responsive to customer’s needs
Flatten organization
Facilitated by information technology
Redesign of jobs
New levels of judgment
New types of leaders
Adaptable
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

7. © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

8. Process Modeling Business process Data store Data flow
Business activities
Data store
Data needed by business process
Data flow
Data transferred between processes or from a process to data store
Organizational unit
Units where processes take place
Event
Includes triggers and outcomes
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

9. Neighborhood Food Cooperative
Weekly cycle
Members submit list
Lists merged
Orders placed for product by phone
Suppliers confirm in writing with invoice
Shipments made to cooperative
Members collect product
Cooperative pays net 10 days
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

10. Basis for Best Practices Supported by ERP Modules
Re-engineered process models
Improved process change depictions
Data integration
Among multiple processes
Structural changes
Streamline business functions
Maximized productivity
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

11. Reliable Finance Company
Expansion required redesign of existing system
Needs enhanced information system
Increase number of branches exponentially
Achieve a competitive advantage
Analysis of loan application system
Reduce approval from days to 2-3 days
Improve access to databases for approval decisions
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

12. Failure in Re-engineering
Rosenthal:
Apply “clean slate” approach
Continuous training for new roles
Measure performance
Jobs must be redesigned
Use rewards as incentives to change
Move away from status quo
Too narrowly focused
Project too general
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

13. Information Technology Facilitates ERP
Client-server computing allows for increase power and control
Integrated databases
Reduces redundancy
Increases data consistency
Supports multiple functional units
Data maintained separately from application modules
Database management systems
Central data administration
Improved data integrity
Improved control
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

14. Process Enterprises Changed management structures
Process responsibility given to “process owners”
Has process design authority
Stresses teamwork
Leans toward standardization of processes
Focuses on achieving goals
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

15. Case: Re-engineering the Payment Process System at RFC
Current payment processing system
Customers:
Make payments at branch
Cash, check, money order
Mail payments to branch
Manually processed
Batched for deposit in afternoon
Home Office mailed an Advice of Payment Received
Payment made to Home Office
Branch mailed an Advice of Payment Received
Each night, batch payment processing runs to update accounts
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

16. Case: Re-engineering the Payment Process System at RFC, continued
Weekly delinquency analysis run
Payment reminders sent out at 15, 30, 45, and 60 days
Computer generated
Settlement figures processed upon request
Urgent requests take overnight
Major expansion planned
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

17. Summary
BPR allows the organization to rethink and radically redesign their business processes
Process modeling of business activities change organizational management structures
ERP systems are facilitated by IT
Processes are standardized and teamwork enhanced
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner