Enterprise Systems (ITC-321)

Lecture 06
Ms. Sarah Farrukh
Managing Requirements
 Requirements: Set of needs for business/users that trigger need of system.
 Requirement Definition: process of understanding requirements and
documenting them. Following should be considered
 Granularity of Requirements: depends on organization to organization and also
depends on levels from which requirements are coming.
 Requirements means different thing to different people: depends at which
organizational level requirement is defined. For example, CEO’s vision can be
better customer satisfaction and efficient supply chain while operator needs
search for facilitation.
 Requirements should be clearly stated: It is beneficial to define requirements
in quantitative term instead of having vague requirements. For example “95%
of uptime is expected”
 Requirement should be verifiable: Test criterias and parameters needs to be
defined for requirement verification process.
 Requirement Prioritization: Should be grouped into vital, essential and
desirable
Business Process Workshops
 Requirements are usually gathered through business process workshops.
 These are usually done process wise (procure to pay, order fulfillment).
 Several workshops are conducted in business blueprinting phase.
 These work shops results in following details
 Process area Description: written description of process area including its
scope, primary products and services, a high-level bulleted. Document “AS IS”
and “TO BE” state of the process.
 Business objectives, expected benefits and metrics: Business improvement
objectives and expected benefits, associated KPI’s and matrix (as applicable)
 Process Diagram: related process maps or diagrams
 Roles/Jobs: Role/job of the current organization working on this process.
Business Process Workshops
 Business Process Scope & Description: includes list of business processes with its
steps which are in scope and which are out of scope alongwith detailed
description.
 Business Process Inputs & Outputs: Inputs list alongwith initiative events and
outputs to next process. It also includes operational reports required from the
process.
 Legacy system to replaced and interfaced: listing includes legacy system which
needs to be replaced or interface with ERP system. Explanation of functionalities
done by these are also documented.
 Business objectives, expected benefits and metrics: Business improvement
objectives and expected benefits, associated KPI’s and matrix (as applicable)
 Process Gaps/functional deficits: High-level gap of the process requirement and
what is available in the ERP package
 Process Improvement Areas: Areas where the company expects improvements by
deploying ERP.
 Process Roles: Who performs this process in the organization. Identification of
roles in process.
Business Analysis Question Set
Sample
 Production planning sample questions
 What is configuration of manufacturing facilities?
 What are number of production steps?
 How many plants are there?
 Where are intermediate storage locations?
 How many people are involved in the process? What are their roles and
responsibilities?
 What are the production ranges?
 What is the production cycle times and what does it includes?
 What is the throughput per day?
 Are you able to track specific customer orders?
 What are performance indicators in your department?
 Which reports are generated in this process?
Business Process Reengineering
 Business Process: set of logically related tasks that use the resources of an
organization to achieve defined business outcome. It has clear beginning and
end and has defined set of inputs and outputs. Processes can be cross-
functional.
 Customer Order Management process is given below
Business Process Reengineering
(BPR)
 Reengineering: fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary
measures of performance, such as cost, quality, service, and speed
 Fundamental Rethinking: BPR is not about doing small changes; it is all about new
way of thinking to do the process.
 Radical redesign: The new process should look very different from the old one.
 Dramatic improvements: A reengineered process can bring significant
improvement in the process performance in terms of cost, time or service
performance
PROS of BPR
 Enterprise integration: Departments are consolidated, several jobs are combined into one job
 Worker empowerment
 Handoffs are eliminated: Benefits of elimination of handoffs are: limit transits, waiting for
another operator, waiting in queues, setups, supervision/coordination required
 Fewer rules and less coordination is required
 Number of steps in a process are reduced; simplified process with reduced inspections,
checks and controls.
 Every process step is reassessed: Can it be eliminated? Can it be taken off line? Can it be
performed in parallel? Can it be combined? Is it a bottleneck? Can its variance be reduced?
 Work is performed where it makes the most sense (For example, Wal-Mart moves the
replenishment function to its suppliers)
 Reconciliation is minimized
 A case manager provides a single point of contact
 IT enables decisions to operate autonomously
CONS/Challenges of BPR
 High Failure Rate: After running the project for several months, the business benefits were
never realized.
 Can Consume lot of organizational resources: It costed a lot in terms of organizational
resources and precious time of senior executives, but at the end, the project had been
abandoned in between.
 Can make existing jobs redundant: Sometimes successful BPR prototyping actually made lots
of existing jobs redundant. Instead of accommodating these people, organization had thrown
them out and this resulted in problems during larger rollouts.
 Lack of Change Management: Such initiatives are resisted by larger population in the
organization for reasons like fear and rumors
Reasons for Failure
 No focus on processes.
 Analysis Paralysis; spending a lot of time for analyzing the current situation – It does
not make sense as anyway you are going to throw it out
 Proceeding without strong executive leadership
 Going directly from conceptual design to implementation and avoiding prototyping
 Ignoring the concerns of people
 Poor scoping–100% improvement to a 1% value-adding process is only 2% value
addition
 Looking for recipes
 Fading top management commitment
 Tweaking the process instead of radically redesigning it
 Assigning less-than-best people to reengineering
Keys to Success
 Committed leadership and top management commitment in the project
 Prototyping every process before large-scale implementation
 Showing early success within first three to six months. Even if the success is a small
one, this interests everyone in the organization in the project
 Communicating effectively. This helps in managing change. If people are not aware of
what the project is all about, this can result in fear (of things like job loss) or issues
related to acceptance of the project
Keys to Success
 Committed leadership and top management commitment in the project
 Prototyping every process before large-scale implementation
 Showing early success within first three to six months. Even if the success is a small
one, this interests everyone in the organization in the project
 Communicating effectively. This helps in managing change. If people are not aware of
what the project is all about, this can result in fear (of things like job loss) or issues
related to acceptance of the project
Reengineering Phases
 Step 1 – Have the reengineering team in place: Self-appointed, charged with
reengineering zeal. Responsible for entire scope of reengineering effort.
 Step 2 – Selection of process to be redesigned: Most important step, selection of
right process to be redesigned.
 Step 3 – Process diagnosis/Understanding the existing processes: includes
understanding current process in greater detail
 Step 4 – Process Redesign: is about innovation and fundamental rethinking. Actual
redesign is done in this phase
 Step 5 – Prototyping: Design and build a prototype of the new process
 Step 6 – Full-scale implementation: Stage in which new process need to be rolled out
in a large scale
Reengineering Roles
 Leader: Self-appointed, charged with reengineering zeal. Responsible for entire scope
of reengineering effort.
 Identifies the key business processes of the organization
 Appoints senior managers as process owners
 Creates the environment by motivating and supporting the team
 Establishes measures of performance and rewards
 Articulates and communicates the need to reengineer
 Process Owner: Manager of function involved in the process.
 Appoints the reengineering team for the process
 Obtains resources for the team
 Motivates, inspires and advises the team
 Supports and protects radically new ideas
 Manages the process once reengineering is over
Reengineering Roles
 Reengineering Team: Group of 5-10 people. It can have full-time and associate (part-
time) members.
 Produce ideas and plans and debate them exhaustively
 Redesign the process
 Sell the designed process to the people
 Continue through to implementation
 Steering Committee: Senior Managers, can include process owners too
 Settle issues outside the scope of individual processes
 Determine order of priority
 Allocation of resources
 Settlement of inter-process disputes
Reengineering Roles
 Reengineering Coordinator: Senior manager conversant with reengineering
techniques.
 Advise the leader on overall management of the "hard" part
 Coordinate the ongoing reengineering activities
 Provide common approaches
 Help in selecting insiders and outsiders for teams
 Monitor the process owner
 Anticipate and develop infrastructure for the effort
 Change Coordinator: Senior Manager with strong people background. Has
experience of managing large scale change
 Helps the leader fashion the change management programme
 Follows up on the implementation of the programme
 Tests and reports periodically the reactions of the rest of the folk
Reengineering Players and their relationships
Selection of process to be redesigned
 Having a list of high-level processes: Difficult as activities done in each department
may be listed as a process. For example sending payment reminders to customers,
customer’s check credit, but only high level processes should be documented which
can be typically between 5-10. Bew are few examples
 Procure to pay (PTP)
 Employee hire to retire
 Product development process (PDP)
 Benchmarking approach for process selection: Different approaches can be taken
for process. Data needs to be gathered on performance matrix of same process with
same industry or outside the industry. For example if companies PTP average
duration is 15 days while similar industry it is 5 days, then it can be taken up for
reengineering
Selection of process to be redesigned
 Select process that shows quick benefits: Difficult as activities done in each
department may be listed as a process. For example sending payment reminders to
customers, customer’s check credit, but only high level processes should be
documented which can be typically between 5-10. Bew are few examples
 Procure to pay (PTP)
 Employee hire to retire
 Product development process (PDP)
 Benchmarking approach for process selection: Select a process that can be
changed quickly for a better result. For longer timelines, reengineering teams can
lose their momentum and organizations can lose interest in the project.
Process Diagnosis/Understanding the existing process
 This is understanding process in greater details and should avoid following
 Taking too much time for analysis resulted in analysis paralysis so quick scan is
required.
 Break rules and assumptions during diagnosis.
 Key steps are
 Understand steps in current process – inputs and outputs.
 Record time taken for each step, use of information system in each step.
 Categorize the steps into value adding, non-value adding and waste activities.
 Understand the issues in the process.
 Examine rules and assumptions behind any issue.
Process Diagnosis/Understanding the existing process
 Typical non-value and waste steps/activities in process are
 Expediting
 Storing items.
 Moving material in and out of the company
 Checks and controls in the process
 Inspection
 Reworking
 Reconciliation
Process Redesign
 Examples of some common process problems are
 No end to end ownership of the process, lack of ownership
 Large number of reconciliations and audits
 Everyone measures task performance and not process performance
 Very few of process steps are value adding.
 Reasons for process problems are
 Several hand-offs and transfer of ownership in the process.
 Fragmentation of processes across several departments.
 Process in under designed or over designed.
 Poor training and education of process participants.
Process Redesign
 No defined steps and recipe for process redesign. Few common principles are listed
below
 Maximize VA steps, minimize NVA steps and eliminate waste: Identify and classify steps.
VA steps are those which works for customer.
 Parallelize work: Concurrent engineering technique is used to remove sequencing (using
technology). Processes are speed up by setting required only precedence.
 Simplify process: Avoid over engineering. Simple processes are less costly and more
flexible
 Multiple Versions: Different markets and situations uses different versions. For example
90% cases follow simple process while 10% may use complex path.
 Workers Empowerment: Decision making is worker part of work. Workers don’t have to
follow vertical hierarchy to get decision which suppresses communication delay and lower
management overhead.
 Reduce audits, checks and controls: Cost is incurred for putting checks and controls.
Design quality in process. Downstream inspections are costly and does little quality
improvement,
Process Redesign
 Single Point of Contact (SPOC) for process: Case manager (process owner) is a single point
of contact for process. S/he has access to all people and information systems and
empowered by management to change the process.

 Combine several jobs into one: Assign multiple process activities to one person and avoid
division of task.
 Process teams: Avoid over engineering. Simple processes are less costly and more flexible
 Coaches: There is no boss; bosses turn to coaches who help a process team to meet their
objectives.
Process Redesign
 Customer perspective: Be aware of customer’s goals, objectives–wants and needs, and
also the unknown wants.
 Automate appropriately: Avoid automating current processes unless needed as
automation can also mean doing wrong things faster. Automate repetitive tasks. Leave
interesting jobs for people.
Levers of Process Redesign
 Reengineering affects everything in department. Changes are in five areas
 Roles & Responsibilities: New roles (like case manager) emerge and existing
responsibilities changes (bosses turn coaches).
 Measurement & Incentives: Incentives are based on whole process performance and not
on how an individual function is performing.
 Organizational Structure: Organization structure becomes flat. In a process-centered
organization, there are process owners and centres of excellence for each skill managed
by coach.
 Information Technology: becomes an enabler for process redesign.
 Skills: From narrow functional skill to multi skilling becomes important where a person
understands the entire process. i.e. Case Manager
Prototyping & Detailing of new process
 Prototyping first run process for a small set and helps in detailing the process after
fixing observations raised in first time execution.
 It helps in firming up the details prepared in process redesign phase which includes.
 What will be the exact process steps, inputs and outputs for each step?
 How information system can be used in each step?
 How the process will be measured?
 What are the new skills needed to run the process?
 What will be the new roles?
 What organizational structure is needed to support?
 How knowledge transfer of the process will happen?
 What all things should be contained in the training material? training days needed?
trainer selection?
Full scale Implementation
 Final stage of redesign where the new process need to be rolled out in a large scale.
 The cutover from old process to the new to be planned in detail. Change management is a
big challenge as the entire organization will be touched now.
 Depending on the type of process, it may be applied to all suppliers (for procure to pay
process), to all customers (for order fulfillment process) or to all products (for product
development process)
Role of IT in BPR & Business Engineering
 IT was one of the major drivers for BPR revolution.
 For successful BPR, focus needs to be on
 Designing processes around IT
 Disruptive use of IT
 Strategic use of IT
 Business Engineering: Information technology-driven business process engineering is
called business engineering. Below are few examples of how IT can be used to
change the rules of a business process.
Role of IT in BPR & Business Engineering
 IT was one of the major drivers for BPR revolution.
 For successful BPR, focus needs to be on
 Designing processes around IT
 Disruptive use of IT
 Strategic use of IT
 Business Engineering: Information technology-driven business process engineering is
called business engineering. Below are few examples of how IT can be used to
change the rules of a business process.
BPR & ERP
 ERP implementation does not give benefit for automating the existing processes, but
doing BPR to build TO BE processes or future business model for ERP.
 Best approach is redesign the processes and then enable those with ERP. This
approach has number of issues.
 Longer time and cost required
 No guarantee that new designed processes will be supported by the ERP or not.
 Due to longer times, business dynamics may change; new line of business started or new
company acquired.
 As a middle ground, companies follow the processes that come along with the ERP
solution with limited BPR of existing processes.
 To get the competitive advantage, companies do BPR for the processes which are
different and can provide maximum advantage over their competitors.
Best Practices
 Best Practices are a particular way of doing a business process that is proven and had
given benefits to numerous companies.
 Best practice can be invented by a particular company or set of companies in same industry
and later on offered by ERP vendors as part of their suite. For example Kanban was invented
by Toyota, Vendor Managed Inventory process was invented by P&G and Wallmart. Similarly,
in retail industry a body called ECR (efficient consumer response) had come up with a set of
best practices
 ERP vendors can also came up with specific best practices. They have knowledge of particular
process done across several industries, and learnt the best way of doing it.
 Best practices may differ depending on a particular industry or a particular country. For
example best practices of excise accounting and tax management for Pakistan may not make
sense for US.
Best Practices offering in ERP Solution
 Most of the ERP vendors offers pre-configured solution (best practice library) specific to
every industry which includes
 Best practice processes.
 Recorded configuration settings to activate these processes (for example, SAP has something
called BC sets that can record all SAP related configurations for a process)
 Documentation of the business blueprint and configuration of the process. This helps in training
 Test scripts to test the process
 Master data sets for the process
 Pre-configured solution helps in quick implementation and ERP little adoption for
company specific setting.
Thank You