ERP (Fall - 2015)

Business Process Reengineering

 Ahmad Jalil Ansari

 Business Head
Enterprise Solution Division
 [email protected]
Course Objectives

“The course provides the basic concepts of BPR and

related technologies.”
“The goal of the course is to establish the conceptual
foundation of BPR, its business requirements,
implementation methodologies and distinctive features
and the technologies which helps in optimizing the
business processes in an organization.”
BPR is the restructuring of organizational processes
through the innovative use of information systems and
technology”
Motivation

 Remarkable evolution of Business Environment in last

two centuries
 On contrast approach to tackle problems are still
stagnant
 This course is ideal for people who are new in business
environment
 It will give you a better understanding of:
 How organizations work
 What problems they face
 What are the real approach to get rid of these problems
Motivation

 It will help you on thinking out-of box approaches in

your career as well as in daily life

 This course is a friendly introduction to:

 Organizations
 Organizational approaches
 Entrepreneurship
Books

Reengineering the Corporation

by Michael Hammer & James Champy

Reference Book
Organizational Transformation through Business
Process Reengineering
by Vikram Sethi & William R. King
Topics Covered

Topic Reading Session

Introduction / Orientation Slides 1
Organizations Slides 2
Evolution of Information Technology Slides 3
Common Business Processes Slides 4
The Crisis That will never go Ch: 1 5-6
Reengineering – The Path to Change Ch: 2 7-8
*** First Hourly *** 9
Rethinking Business Process Ch: 3 10-11
The new world of Work Ch: 4 12-13
Enabling Role of Information Technology Ch: 5 14
Topics Covered

Topic Reading Session

Who will Reengineer Ch: 6 15-16
*** Second Hourly *** 17
The Hunt for Reengineering Ch: 7 18-19
The experience of Process Redesign Ch: 8 20-21
Embarking on Reengineering Ch: 9 22
Presentation Sessions 23-24
*** Third Hourly *** 25
Guest Speaker 26
BPR Implementation Methodology / Enabling Slides 27-28
Technologies
*** Final Examination ***
Marks Distribution

Marks Distribution Weight Frequency Remarks

Hourly Exam (N-1) 30 3

Final Exam 40 1

Quiz (N-1) 10 3-4

Assignments (N-1) 5 3-4 Group-wise

Case Presentation 5 1 One for each group

Project 10 1 One for each group

Instructions

Group Formation

1. Form groups by second week

2. Each group must comprise of 3-4 members
3. Assignments, Presentation and Projects will be
done by these groups
4. Marking – Half individual effort and half group
efforts, where possible
Class Representatives

1. Select two class representatives – Senior & Junior

2. Responsibilities of CR:
 Communication with class
1. Forming group on Facebook
2. Uploading slides & other materials
3. Messaging information
4. Collecting assignments and
 Reward
1. Bonus marks for Senior CR: 2.5
2. Bonus marks for Junior CR: 1.5
Instructions

Presentation and Project

1. Presentation and Project are two different

assignments bearing different marks
2. Decide topics by 1st hourly
3. Approval of topics before 2nd hourly
4. Presentation as per schedule mentioned in
course outline
5. Project report on third hourly
Instructions

Guest Speaker

1. One session after 2nd hourly

2. Two bonus marks for arranging Guest Speaker
Session
3. Finalize your selection before 2nd hourly
Quiz #0

1. Your name & Registration#

2. Your e-mail
3. Education before joining this class
4. If working, your organization & position
5. Define organization (in less than five lines)
6. What are objectives of an organization (Bullet points)
7. Define ERP (in less than five lines)
8. Write the objectives of BPR (in less than five lines)
Introduction – Students

1. Name
2. Qualification
3. Organization & position, if any
4. Number of courses completed
5. Why you joined this course
6. Your extracurricular activities
7. Anything about you interesting for us
Introduction - Faculty
Name: Ahmad Jalil Ansari
Business Head of Enterprise Solution Division
Qualification:
M. Sc. Math (KU)
MBA Finance (IBA)
M. Phil Finance (in process)
Introduction - Faculty
IT Experience: 35 years
UBL: 6 years
Hoechst Pakistan Limited: 13 years
Computer Research (Pvt.) Limited: 13 years
Others: 3 years

Enterprise Solution Experience: 14 years (SAP,

Business Plus, IBM Cognos etc.)
Introduction - Faculty
Teaching: Business Math & Statistics
Business Quantitative Techniques
Business Process Reengineering
IT for Business
at
Bahria University
PAF Kiet
Hamdard University
Our Objectives

Grade Grade
Your Parent
Learning Your Objectives Learning
Objectives

Sync

Learning University Learning

Reputation
Faculty
Earning
Objectives Objectives
Business Process Re-engineering

BPR embodies of three words:

1. Business
2. Process
3. Re-engineering
Organization

Enterprises are conceived as social structures created

by individuals to support the collaborative pursuit of
specified goals - Richard Scott

An Enterprise is the group of people, with certain goals,

which has certain resources at the disposal to achieve
these goals - ERP Demystified by Alexis Leon
Organizational Objectives

Serving their customers at a reasonable cost to save

enough money for distributing profit and further
investing for growth; so that it can increase its value &
sustainability

 Profitability
 Growth
 Increasing Value
 Sustainability
Organizational Growth Cycle

New
Idea

Plan for
Perform
grow
Organizational
Growth

Profit Return
Organizational Components

Organizational
Components
Organization - Classification

 Sole Proprietorship
 Partnership
 Corporation
– Limited company
– Unlimited company
 Not-for-profit corporation
Management

Act of coordinating the efforts of people to accomplish

desired goals and objectives using available resources
efficiently and effectively.
Henri Fayol (1841–1925) considers management to
consist of six functions:
 forecasting
 planning
 organizing
 commanding
 coordinating
 controlling
Organization – An overview

Resources Organization Goals

HR People Profitability
Finance Process Growth
Material Technology Increasing Value
Knowledge Information Sustainability
How Organizations Achieve
Objectives
 Increasing and retaining loyal customers
 Acquiring best possible resources
 Reducing Cost on resources - Human resource, Inventory,
Assets and Expenses etc.
 Reducing Wastages – Reworking, Unnecessary Expenses,
Wastages, Frauds etc.
 Competitive Prices – Value of Product
 Quality of the Product – Acceptable to targeted customers
 Better Services – Satisfying Customers’ Needs
 Fast Deliveries
 Etc. etc.
Evolution of Organizations

The view of an organization drastically changed in last few

decades. Initially organizations were run by a few people
normally headed by an owner knowing every activities
occurring in the organization.

With the advent of mass productions the idea of large

traditional organization came into being. The changing
environment around these organization forced them to adopt
concept of modern organization.
Traditional Organizations

These enterprises were compartmentalized into various

departments working independent of others. So we had Finance
department, Human Resource department, Production or
Manufacturing department, Research & development
department, Sales & Marketing department & so on.

These departments were working as independent silos and

have their own set of goals and objectives; and have their own
system of data collection and analysis. They used to provide
reports of their working to management in summarize form. The
top management will combine the data provided by these
departments to get the overall picture of organization.
Characteristics of Traditional
Organizations
Characteristics of these organization were:

 Lack of Enterprise view

 Difficulty in matching corporate objectives with or
organizational objectives
 Conflicting views among departments
 Lack of transparency among department
Modern Organizations

Modern organizations are viewed as a system composed of

various functional areas like Marketing & Sales, Production
and Material Management, Accounting and Finance, Human
Resources etc. Each functional area comprises variety of
functions business activities within a functional area of
operation.

These functional areas of operation are responsible for

initiation of various processes which are consumed by other
functional areas.
Cross Functional Activities
Example-1
Example:1 A purchase order was sent to a supplier for
100 items@ Rs. 10 per item. Supplier delivers 40 items.
Identify how many area this transaction will affect?

 PO updated (40 items received & 60 items left)

 Accounts Payable – Liability increased by Rs. 400
 General Ledger – Liability account increased by Rs.400
 Item Quantity
 Inventory Valuation
 Material Requisition Plan
 Material Production Schedule
 Payment Plan
 Etc. etc.
Cross Functional Activities
Example-2
Example:2 A worker in a company is entitled to get provident
fund, overtime, education cess, EOBI, Worker Profit
Participation Fund. Identify how many area this transaction will
be affected when his monthly salary is paid?

 All provisions related to these areas

 Salary
 Tax Provisions
 Salary Payable
 General Ledger
 Cost of goods sold
 Etc. etc.
Functional Area

Grouping activities by functions performed.

Grouping of individuals on the basis of the functions each

performs in the organization, such as accounting,
marketing, manufacturing

Grouping of activities or processes on the basis of their

needs in accomplishing one or more tasks
Business Dictionary
Process

A business process is a collection of activities that takes one

or more kinds of input and creates an output that is of value to
customer.

Sequence of interdependent and linked procedures which, at

every stage, consume one or more resources (employee time,
energy, machines, money) to convert inputs (data, material,
parts, etc.) into outputs. These outputs then serve as inputs
for the next stage until a known goal or end result is reached.
Tasks

The smallest identifiable and essential piece of

a job that serves as a unit of work, and as means of
differentiating between the various components of
a project.
Process - depicted
Motivation for Organizational
Evolution
 Technological Evolution
 Vision Evolution
 Quest for Power
 Evolution of Applications
Technological Evolution

Moores Law

The capabilities of digital devices, in term of

processing speed and memory doubles every year.
Vision Evolution

As computer power increased, Instead of simply

recording, organizations started thinking:

 What has happened

 Why it has happened
 What will happen
 What is happening
 What should be happened
Quest for Power
Evolution of Applications

Data Mining
Data
Evolution

Warehousing
Business Intelligence

ERP / MIS

Computerization

Manual Processing Time

Evolution of Applications

 Manual System – Book Keeping

 Legacy System – Data Processing
 ERP & MIS – Information Processing
 Business Analytics – Ad-hoc Reporting & Deep
Analysis
 Data Mining – Predictive Analysis
Manual Processing
Record Keeping

 Confidence of Oldies / Old timers

 Lower dependencies
 Lower chance of being disconnected due to
electricity failure etc.
 Easy manipulation
 Easy to implement
 Lack of quality information
 Preparing useful reports is very cumbersome
 No insight
 Not fulfilling the basic needs of modern organization
Data Processing
Computerization
 Independent Applications e.g. GL, Sales, Production etc.
 Faster Execution of Manual Processes
 Lower dependencies on cross functional processes
 Easy manipulation
 Fairly easy to implement
 Process inefficiencies
 Lack of application integration
 Fragmented and distributed information
 Lack of cross functional information
 Lack of accurate information
 No Transparency
 Reconciliation very difficult
 IT Dependence
Organizational Silos

A mind-set present in some companies

when certain departments or sectors do not
wish to share information with others in the
same company.

 Less communication with outside

 Duplication of data and services
 Reduced efficiency of the overall
operation, Silos are where grains and
 Placing their own goals ahead of the corn are kept
larger goals of the enterprise itself.
Integrated Organization

 Open communication with outside

 Less redundancy of data and services
 Increased efficiency of the
overall operation,
 All individual goals are for support of
organizational goals.
ERP systems

Enterprise Resource Planning (ERP) systems are

integrated, enterprise-wide comprehensive and
highly complex systems that provide automated
support for standard business processes within
organizations.
ERP

ERP is a paradigm shift for an Enterprise:

 It needs a change in mind-set of users
 No dependency on IT for business process
 It is not a conversion of manual system to
computerized system
 Change your organization from tradition to
modern organization
 Get used to standard industry practices
 Get used to organizational and cross functional
thinking
ERP – Detailed definition

Enterprise resource planning (ERP) systems are highly

complex information systems.
The implementation of these systems is a difficult and high
cost proposition that places tremendous demands on
corporate time and resources.
Many ERP implementations have been classified as
failures because they did not achieve predetermined
corporate goals.
Therefore it is very necessary to identify success factors,
understanding the software, and having proper
implementation strategy critical to a successful
implementation
ERP vs. Legacy Systems
ERP Legacy
Real time Data Obsolete/ Delayed Data

Complete Integration Lack of integration

Data Validity & Uniformity Lack of Data Validity & Uniformity

Strong Audit Trail Weak Audit Trail

Versatile Reporting Weak/ Limited Reporting

Accountability & Data Security Lack of Transparency & Data Security

Business Intelligence
Senior Management Needs:
• Ad-hoc Reports / Charts
• In-depth Analysis – slicing & dicing
• Dashboards
• Scorecards

ERP System cannot fulfill these requirements as ERP is

designed for transaction processing (OLTP – Online
Transaction Processing) not for Analysis (OLAP - Online
Analytic Processing)
Business Intelligence

• Getting the real benefits of ERP

• While ERP is meant for running an organization,

Business Analytics provide efficiency and
effectiveness to organization

• While ERP provides standard reports and queries for

tactical level of operation, Business intelligence
provide tools for ad-hoc analysis
Business Intelligence vs. ERP

Features OLTP OLAP

Purpose To run the organization To improve the organization:
What, why, where, who, when
Application Orientation Functional Subject

Reports Structured & well-defined Ad-hoc

Analysis Standard Interactive, Iterative & Directional

Data per transaction Small Large

Level of Data Detailed – Micro Aggregated - Macro
Nature of Data Current Historical
Tables Multitude of Relational Multi-dimensional aggregate tables
Table – Snowflake Schema (Cubes) – Star Schema
User Almost all employees Few - Top Management
Database Size Medium (GBs or TBs) Very High (TBs & PBs)
Data Warehousing
Repository of Information

A complete repository of historical corporate data

extracted from transactional systems that is available
for ad-hoc access by knowledge worker
 Complete Repository – all branches & functional
area
 Data extracted from Transactional System (ERP) to
Analytical System (OLAP)
 Ad-hoc Access – Requirement not known
 Knowledge worker – Not IT, mainly senior
management
Data Cubes
Slicing & Dicing
Data Warehouse
Process
Dimensions & Facts

Dimension & its hierarchies Facts

 Quantity Sold
 Revenue
 Margin
 Wastages
 Returns
 Expenses
 Freight
 Delivery Time
Data Warehouse
Examples
 Fraud Detection
 Profitability Analysis
 Direct Mail Marketing
 Customer Churning
 Credit Risk Analysis
 Yield Management
 Inventory Analysis
 Many unconventional e.g. Historical usage of
English words, social networking analysis etc.
Data Mining
Looking into Unknown

There are things that

• We know we know - OK
• We know we don’t know - ERP
• We don’t know we know - Ignorance
• We don’t know we don’t know – Data Mining
Data Mining

Finding nuggets from heap i.e. finding useful hidden

patterns and relationships in the data and information
from huge historical data

It is digging out valuable non-trivial information from

large multi-dimensional, apparently unrelated historical
data by integrating business knowledge, people,
information, algorithms, statistics and technology
Data Mining - Examples

• Identifying groups of customers having particular

spending patterns (Clustering)
• Grouping customers on their behaviors – liking &
disliking (Classification)
• Estimation of sales growth (Predictive Analysis)
• Correlation between various items (Market-Basket
Analysis or Cross-selling opportunities)
Home Assignment #01

Write a summary of
Due: Start of 3rd class
eMail: [email protected]
“Introduction ”
Thank you

Question & Answer

Contact:
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