© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner 2-2 Objectives • Recognize factors associated with the evolution of ERP systems – BPR – Client-server net
Trang 1© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-1
Edition by Mary Sumner
Chapter 2:
Re-engineering and Enterprise
Resource Planning Systems
Trang 2© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-2
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
Trang 3© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-3
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
Trang 4© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-4
Trang 5© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-5
Business Process Re-engineering
(BPR)
• Technology used to mechanize work
• Create new business rules
• Remove outdated rules
• Improve responsiveness
• Reduce costs
Trang 6© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-6
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
Trang 7© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-7
Trang 8© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-8
Process Modeling
– Business activities
– Data needed by business process
– Data transferred between processes or from a
process to data store
• Organizational unit
– Units where processes take place
– Includes triggers and outcomes
Trang 9© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-9
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
Trang 10© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-10
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
Trang 11© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-11
Reliable Finance Company
• Expansion required redesign of existing
system
• Increase number of branches exponentially
• Analysis of loan application system
– Reduce approval from 10-13 days to 2-3 days
– Improve access to databases for approval
decisions
Trang 12© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-12
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
Trang 13© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-13
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
Trang 14© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-14
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
Trang 15© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-15
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
– Manually processed – Batched for deposit in afternoon – Branch mailed an Advice of Payment Received
– Each night, batch payment processing runs to
update accounts
Trang 16© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-16
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
Trang 17© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition
by Mary Sumner
2-17
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