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					Selecting Large Systems




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                        Make or buy decision
 Decision Criteria           Pressure to “Make/Own”                  Pressure to “Buy”
Business strategy          IT application or infrastructure   IT application or infrastructure
                           provides proprietary               supports strategy or
                           competitive advantage              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
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Ease of implementation
Flattening the Organizational Structure




                                    3
  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




Operational   Process




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                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
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               BPR


 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
                                                     6
              BPR


 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
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               BPR


 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                               8
                BPR



 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).
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              BPR



 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).




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              BPR



 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




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             BPR

 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
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             BPR


 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.

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              BPR



 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

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            BPR

 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? 15
             BPR



 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




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                 BPR

 Process Improvement and redesign Process
                 Improvement           Innovation/Reengineering
Magnitude           Increment                    Radical

Improvement         30-50%                      10x-100x
Sought

Starting base       Existing Process            Blank skeet

Top management      Relatively low              High
commitment

Role of IT          Low                         High
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Risk                Low                         High
Anatomy of a Traditional (Non-Integrated) Architecture




        Interface   Interface        Interface     Interface

Order          Inventory        Billing          A/R       Finance
Entry            Mgmt.




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                                 The Value Chain
Support
activities




                Primary activities
Inbound logistics                Materials receiving, storing, and distribution to manufacturing premises
Operations                       Transforming inputs into finished products.
Outbound logistics               Storing and distributing products
Marketing and Sales              Promotions and sales force
Service                          Service to maintain or enhance product value
Corporate infrastructure         Support of entire value chain, e.g. general management planning,
                                 financing, accounting, legal services, government affairs, and QM
Human resources management       Recruiting, hiring, training, and development
Technology Development           Improving product and manufacturing process                      19
Procurement                      Purchasing input
Value Chain Integration




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               ANATOMY OF:     AN ENTERPRISE SYSTEM
                      Managers & Stakeholders

Ext Int                                                     Int Ext
               Sales &
               delivery      Reporting      Financial
C               App.           App .          App                  S
u     Sales                                              Back      u
s    force &                                             office    p
t   customer                                            admin.     p
     service                                               &       l
o                                                       workers
      reps.                  Central            Mfg.               i
m
e                            database           App                e
r                                                                  r
s                                                                  s


               Service         HRM        Inventory &
                App.           App         supply App
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  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.
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     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
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      Picking the right System


   Vendor reputation
   System Operating requirements
   Functionalities
   Price
   Geographical coverage




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              Picking the right System
     Weighted approach
Factor               Weight   Vendor 1 Vendor 2   3..n
Support              20
Functionality        30
User interface       10
Flexibility          20
Custom ability       30
Future prospects     10
Reliability          20
Integration          30
Platform             20
Total                X

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    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


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    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

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    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
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Recommendation for Midrange Enterprises



 Consider local vendor with in-depth
  local knowledge of customer’s
  business

 Price




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   Recommendation for Small Enterprises


 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



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