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Enterprise
Resource
PlanningBY:-FHA.ShiblySEU/IS/03/MG/031FMC
SEUSL
Business
Process
Reengineering
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Presentation - Path
ERP General Concepts
Why ERP For Business World
Advantages and Disadvantages of ERP
Implementing Issues in ERP
Different Types of ERP
Success and failure stories in ERP
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Job Opportunities in ERP
Challenges of ERP
ERP in Sri Lanka
BPR Some concepts
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What is ERP?An ERP or Enterprise ResourcePlanning system integratesinformation and businessprocesses to enable informationentered once to be sharedthroughout the organization.
ERP had its origins inmanufacturing and productionplanning. In the mid-90s it wasextended to other back-officefunctions such as financialmanagement and human resource
management.More recently these systems haveaddressed applications specific tohigher education such as studentsystems and grants management.
Common examples includeCommon examples include
SAP, PeopleSoft, BannerSAP, PeopleSoft, Banner
and Oracleand Oracle..
Needs
Assessment
Software
Selection
Process
Reengineering
Conference
Room
Pilot
Training
Phased
Implementation
ERP ProjectERP Project
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Finance
-General Ledger
-Accounts Receivable
-Accounts Payable
-Procurement
-Fixed Assets
-Treasury Mgmt
-Cost Control-Grant Management
Human Resources
-HR/Benefits
Administration
-Payroll
-Self-service HR
e-Business
-eProcurement
- Employee Self Service
- e-Recruiting/e-Hiring
- e-Filing
- Citizen Access
- Web-enabled transactions
- e-Commerce
Transaction Engine
Core software that manages
transaction flow among
applications and handles taskslike security and data integrity
Customer Relationship Mgt
-Consistent user experience
- Personalization of services- Realtime access- enterprise info
Supply Chain Mgmt
Planning, scheduling and fulfillment
applications that address all
procurement requirements across
the enterprise
Data Analysis
Decision support software that lets
senior executives and other users
analyze transaction data to track
business performance
Finance
ERP FunctionalityERP Functionality
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ManufacturingEngineering, Bills of Material,Scheduling, Capacity, Workflow
Management, Quality Control, CostManagement, Manufacturing Process,Manufacturing Projects, ManufacturingFlow
Supply Chain Management
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Supply Chain ManagementInventory, Order Entry, Purchasing,Product Configuration, Supply Chain
Planning, Supplier Scheduling,Inspection of goods, Claim Processing,Commission Calculation
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Human Resources
Human Resources, Payroll, Training, Time &Attendance, Fostering, Benefits
Customer Relationship Management Sales and Marketing, Commissions, Service,
Customer Contact and Call Center support
Data Warehouse
and various Self-Service interfaces for Customers,Suppliers, and Employees
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Why ERP?
For Management to know what is happeningin the companyOne solution for better ManagementFor cycle time reductionTo achieve cost control & low working capitalTo marry latest technologiesTo shun the geographical gaps
To satisfy the customers with high expectationsTo be Competitive & for survival
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Evolution of ERP
1960s - Systems Just for Inventory Control
1970s - MRP Material Requirement Planning
(Inventory with material planning & procurement)1980s - MRP II Manufacturing Resources Planning(Extended MRP to shop floor & distribution Mgnt.)
Mid 1990s - ERP Enterprise Resource Planning
(Covering all the activities of an Enterprise)2000 onwards ERP II Collaborative Commerce(Extending ERP to external business entities)
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How ERP applies in differentsectors
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ERP in Engineering
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ERP in Manufacturing
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ERP in Hospital
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ERP in HRM Division
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Production Planning
Demand management
Master planning
Rough-cut capacity
planning
MRP/Planned orders
Order
- Creation
- Release
- Confirmation
Shop floor controlCapacity leveling
Process planning
Quality ManagementLot inspection
Process charting
Warehouse management
Materials Management
Direct requisition
Purchasing
Inventory management
Goods receipt
Material valuation
Invoice verification
Preventive MaintenancePlanned repair
Emergency
Sales and Distribution
Customer order
processing
Shipping,
billing, transport
Sales planningProfit planning
SOP
Planned requirements
Forecasts
Project system
Tactical Within function integration relationship
between modules
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What are the Benefits of ERP?Improve access toinformation
Improve workflow andefficiency
Improve controls and
program alerts
Ship ProductReceiving
Buyer or Management
Approval Cycle
SupplierFulfillmentRoute to
Recipient
Requisitioning
Purchase
OrderUser Product
Selection
Accounts Payable
General Ledger
Financial Reconciliation
Process reengineering --update old processes
Foundation for newprocesses, such as e-procurement, with significantROI
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ERP Implementation BenefitsStreamlines or eliminates inefficient manualprocesses
Eliminates disparate stand-alone systems
Provides integrated, enterprise-wide common tools,processes and systems
Establishes a backbone structure that can beleveraged to handle all operational processes
Integrates and increases control of budgeting,planning and financial management processes
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ERP Implementation Benefits
(continued)Provides enterprise-wide reporting anddecision support
Presents opportunity for re-engineering withindustry best practices and templates
Presents opportunity to lever vendorsfuture investment in enhanced functionality
Incorporates new functionality andtechnology - provides a springboard to e-Business
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DisadvantagesSuccess depends on the skill and experience of the workforce,including training about how to make the system work correctly.
Small enterprises are often undercapitalized & are also not
updated about the latest offerings in the market
Personnel turnover; companies can employ new managerslacking education in the company's ERP system, proposingchanges in business practices that are out of synchronizationwith the best utilization of the company's selected ERP.
Customization of the ERP software is limited. Somecustomization may involve changing of the ERP softwarestructure which is usually not allowed.
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DisadvantagesRe-engineering of business processes to fit the "industrystandard" prescribed by the ERP system may lead to a loss ofcompetitive advantage.
ERP systems can be very expensive to install often rangingfrom 30,000 US Dollars to 500,000,000 US Dollars formultinational companies.
ERP vendors can charge sums of money for annual licenserenewal that is unrelated to the size of the company using theERP or its profitability.
Technical support personnel often give replies to callers thatare inappropriate for the caller's corporate structure.Computer security concerns arise, for example when telling anon-programmer how to change a database on the fly, at acompany that requires an audit trail of changes so as to meetsome regulatory standards.
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What are the Costs of ERP?Direct costs only represent a fraction of thetotal costs of ERP
Direct costs include hardware, software, andpeople on the project -- the largest categoryis personnel costs
Indirect costs include the costs of back-fillingpositions, increasing salaries and the total lifecycle costs of the ERP -- maintenance,ongoing production, and upgrades.
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How should we
implement ERP systems
Obtain the right mix of people,processes and technology!!
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How should we implement
ERP Systems?People
Project Structure
Should be aligned to processes
Process Implementation Process (outlined in detail)
Adapt your processes to those of the ERP.
Technology
Hardware
Software
Integrated Systems
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Process1. DefinitionandAnalysis
Hold discussions with various functional
personnel to establish the actual number ofsystems operating at client site, what they areused for, why and how often
Produce the Project Scoping Documentoutlining current situation, proposed solution
and budgeted time
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Process2. Design
Prepare various functional reports - specifies currentscenario and wish list
Prepare Design document which specifies how thesystem is going to work
Prepare test scripts to be followed on system testing
Map out the interface paths to various modules
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Process3.Build
Configure system as per set up documentspecifications i.e. transfer conceptual modelinto reality
Test system to verify accuracy (preliminarytests)
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Process4. Transition
Train users on their specific areas
Assist in test data compilation and systemtesting by users
Finalise the Live system and capturedopening balances
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Process
5. Production
Official hand holdingEffectiveness assessmentBusiness and Technical Directionrecommendations
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TechnologyTechnology is an enabler, not the driver(it is there to assist the organisation to
achieve business goals)
It is a means to an end, not the end
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ERP Implementation
ChallengesFocus on applications rather than business processesTurf battles over ownership
ERP project management expertise
Issue resolution bottlenecks (restricted)
Scope and change management
Sub-optimization of system capabilities
Staffing and retaining full time project resourcesExperienced implementation partners
Product maturity and limitations
Nature of government funding cycles
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Project Critical Success
FactorsLeadership commitmentCommunication
Full-time staff
Professional project managementPhased implementation approach
Scope management
Business transformation and change management
Job-specific end-user training
Focused issue resolution
Post implementation support
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An ERP Start-up Roadmap
Functional Requirements Analysis
Procurement Strategy
Proposal Evaluation Plan
Analysis of Software / Implementation ResourcesComparative Cost Analysis
Software Demonstrations
Site Visits
Discovery
Contract Negotiations
Evaluation of Final Vendor
Final Contract
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ERP Implementation Activities
Package Integration
(SAP,PeopleSoft, JDE,
Oracle...) Software Environment
Builds Enterprise-wide
Infrastructure
Planning/Design & Roll-out Interfaces and
Conversions Data Warehouse
Integration E-Business Business Intelligence Networking
Design Implementation Tuning
Manage It... Change It... Implement It.. Operate It... Service It... Teach It...
Change Mgment Business Vision and
Goals Process Analysis
Package Select .
Business Case Bus. Process
Reengineering Industry Best
Practices
As Is /To Be Process
Modeling Fit-Gap Analysis Policy Design and
Procedure Dev. Readiness
Assessment Organizational Design Communications Plan
Data Center Operations Application Development
& Maintenance Network Station
Management Network Operations &
Support
Platforms & Technology
Services
Installation/
Customization &
Maintenance Performance and
Tuning Software Services
Planning/Design/
Install Migration
Management Problem Mgmt.
Systems Mgmt.
Internet Enablement
Web Site Design Help Desk Disaster Recovery Business Resumption
Services
Training Needs
Assessment
Custom Curriculum and
Material Development
CBT Development End User Training
Classes Train-the-Trainers
Roll-out of Training
Prime Contractor Project
Management Detailed Project
planning and Tracking Communications Plan
Subcontractormanagement
Project Scope Control Financial Control
Project Oversight and
Quality Assurance Reviews
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Types Of ERP
JDEdwards
Lawson Oracle/Siebel
PeopleSoft
SAP BAAN
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SAPSAP is the name of the companyfounded in 1972 under the German
name (Systems, Applications, andProducts in Data Processing) is theleading ERP (Enterprise ResourcePlanning) software package.
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There are number of technical reasonsnumbers of companies are planning to
implement SAP. Its highly configurable,highly secure data handling, min dataredundancy, max data consistency, youcan capitalize on economics of sales like
purchasing, tight integration-crossfunction.
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What is SAP R/3A third generation set of highly integratedsoftware modules that performs common
business function based on multinationalleading practice. Takes care of any enterprisehowever diverse in operation, spread over theworld. In R/3 system all the three servers likepresentation, application server and databaseserver are located at different system.
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J. D. EdwardsAs an ERP system JDE comprises 3basic areas of expertise, functional-
business, programmer-developer andtechnical-CNC-system administration.
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Functional business analystA JDE functional person is an expert on oneor more of the JDE modules, financials,
manufacturing, operations, transportation,sales and other areas. This person is thebusiness subject matter expert. Often theystarted as a JDE user, the super user orpower user and gradually developed the skillset of being able to support the businessaspects ofJDE
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Developer/programmerThis person is trained in the softwaredevelopment and programming tools
that translate the businessrequirements as identified by thefunctional people above into code andprogramming.
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CNC - ERP System architect,
engineer and administratorThis is a catch-all function comprisingall that the two positions above do not
cover including, installation, upgrades,updates, change management, systemadministration, security, performancetuning, package build and deployment
and over-all architecture
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Siebel Systems/OracleSiebel Systems, Inc. was a software companyprincipally engaged in the design, development,marketing, and support of CRM applications.
The company was founded by Thomas Siebel in1993. At first known mainly for its sales forceautomation products, the company expanded into thebroader CRM market. By the late 1990s, SiebelSystems was the dominant CRM vendor, peaking at
45% market share in 2002.
On September 12, 2005, Oracle Corporationannounced it had agreed to buy Siebel Systems for$5.8 billion. Siebel is now a brand name owned byOracle Corporation.
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BaanBaan was a vendor of popular enterpriseresource planning (ERP) software that is nowowned by Inform Global Solutions.
Baan is still one of the best ERP products fordiscrete manufacturing industries, especiallyfor Make to Order and Engineering to order
market. Nowadays, still thousands ofmanufacturers are running on Baan software.
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PeopleSoftPeopleSoft, Inc. was a company thatprovided Human resource management
systems (HRMS), customer relationshipmanagement, Manufacturing,Financials, Enterprise PerformanceManagement, and Student
Administration software solutions tolarge corporations, governments, andorganizations.
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Success Stories In ERPJada precisions Plastics co INC andIQMS ERP software
Eiffel ERP software's implementation inU.S.based chemical company.
WinMan ERP in Athena controls
Intitutive ERP Software in San Antonio'sLighthouse
SAP ERP Solutions in TISCO (Tata Ironand steel company Limited)
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Failure Stories of ERP
Hershey is a leading manufacturer of chocolates,confectionaries and beverages in United States of
America. They offer lots of delicious and lip smacking
chocolates in various assortments. The company alsomakes sugar free chocolates and products suiting thenutritional constraints of the customers. What startedas a small entity by Milton.S.Hershey in Pennsylvaniahas now become a very big company commanding astake in the U.S. food market. They are also an
important player in the international scenario
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Job Opportunities in ERP
Positions-* Functional ERP/CRM
* Technical ERP/CRM* Developers* DBA's* Consultants* Data Architects* Data Modelers
* Project Leader / Management
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ERP in Sri Lanka
Enterprise Resource Planning (ERP) isno longer alien for Sri Lankan
organizations. Enterprise ResourcePlanning is not just another way ofautomating organizational activities
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Issues
ERP is not just another way ofautomating organizational activities. It
is more than a simple transactionprocessing system. In the recent pastmany Sri Lankan organizations haveinitiated ERP implementation projects
aiming to centralize and streamline theirorganization's processes for betterperformance.
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Issues
However, a large number of ERPimplementations have failed to deliverexpected results
This gave the insight to conduct a survey toinvestigate ERP implementations in Privatesector firms in Sri Lanka. The objective of theresearch was to identify Critical Success
Factors in ERP implementations and toidentify critical uncertainties in ERPimplementations
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Issues
For the research 74 private sector firmscovering business sectors of
telecommunication, hotels and travels,diversified holdings, banks, finance,insurance and services, and IT haveparticipated that have implemented ERP
systems.
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Issues
According to the results, the mostimportant Critical Success Factor in the
implementations of ERP in Sri Lanka aretop management support, fit betweenERP software and hardware, projectteam competence, user training and
education, and effective projectmanagement.
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Success in Sri Lanka
IFS Sri Lanka as the ERP solutionsprovider by TVS Lanka
IFS Sri Lanka, a global enterpriseapplications company, was chosen asthe solutions provider by TVS Lanka, ahouse hold brand name in Sri Lanka aswell as in India for motor cycles.
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The Enterprise Resource Planning system would offerTVS Lanka with better transparency within andoutside the company, quicker access to precise data,
superior dexterity in business progression andscaleable solution that supports growth of thecompany. As a result, business decisions taken willbe more accurate, whilst the company could as wellmore easily adapt to changes in business trends. Ithelps the company to avoid stock-outs and stock
piling up as well as on-line relocation of stock onrequirement basis.
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Chemical Company Re-engineers itsBusiness Process
FiNAC Blends Into Tea IndustryLocal FMCG Giant UNILEVER' PoweredBy FiNAC
NIPPOLAC streamlines with FINAC
Richardsons Projects implements FiNAC
Tokyo Cements the deal with FINAC
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Finac The Cash Flow Manager
Sri Lanka's number one locallydeveloped business software has been
facilitating many local wholesalers andTrading organizations in maintainingfocus on their Cash Flow thuspreventing them from working for the
lenders of capital.
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Over 350 SME's have invested in Finac tomainly focus on inventory and proper debtmanagement .
The most vital thing in any business is that itmakes optimum use of its financial resourcespreventing excess stocks and keeping debtorsunder control and strictly monitoring bouncedcheques and credit limits.
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Debt Management
Listing of debtors over 45 days. (Can be 30, 60, and 90 etc...)Prevent invoicing debtors who have exceeded the credit limit who havea track record of returned cheques.A general debtors age analysis 0-30, 31-60, 61-90 etc so that you canplan your next months cash flow.
Sending debtors monthly statements to reconcile and confirmoutstanding balances.Automatic letters reminding debtors of outstanding invoices.Monitoring debtors outstanding by salesman responsible for the debt.Have a register of PD cheques received with all information likereceived from, banked date etc.PD cheques banked and forecasted date of realisation.
PD cheques to be banked for a given period.PD cheques realised.Tracking of customers with PD cheques dishonoured.
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Stock Management
Identify all stocks in stores over 60 days.
Discount and sell off overdue stocks before they dryup your cash flow.
Identify all fast moving items. Ensure sufficientstocks are available.
Daily value your stock and ensure that the salesvalue of your stock is equal to your monthly turnover.(some multinationals have only 15 days stocks)
Perform regular stock counts of all items to preventtheft.
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Financial Management :
Prepare daily, weekly, monthly cash flow reports.
Budget all expenses and prevent issuing cheques ifbudget is exceeded.
Have a monthly profit and lost statement.Check profitability of each item and how much profitit had distributed during the month and year.
Perform weekly/monthly bank reconciliation.
Prevent discounting by sales reps who are only
interested in incentives and commissions.
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Customer RelationshipManagement :
Keep important customers with specialdiscount schemes.Monitor customers who give you the best
profit.Frequently perform Direct mail postings tocustomersEmail, Fax, or Call customers thru an updatedCustomer Database
Send Customer Monthly statements andprevent confusions and misunderstandings
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Squeezing Suppliers
Monitor suppliers who give you the bestprofit.
Use supplier's credit line to improveyour cash flow.
Negotiate with Creditors for longercredit periods
Do consignment sales. Thus working onthe suppliers cash flow
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Future of ERP
Move from Client/Server applications toInternet Based Application
Enterprise Application for the InternetEconomy
Electronic Commerce, Sales forceCustomization, and customer relationship
management software'sSelf-Service Application, Web Based Ordering
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Future Of ERP
The functioning of ERP has gained muchprominence and utility with the interventionof web enabled and open sourcetechnologies.
ERP II the latest advancement in ERPsoftware deserves special mention. In thiscontext it becomes important to analyze thedirection in which ERP is geared to progressor will ERP diminish in the future etc?
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Some of the points requiringattention
ERP is an effective application. It will be great if onecan bring an ERP system that id devoid of thedrawbacks from the existing ones. The latestintrusions namely open source and web enabledtechnologies has increased the effectiveness of theapplication. However they are not enough
ERP applications should be designed to make themaximum use of internet so that the user can accessdata from any part of the world just by a click of themouse. This has further deepened the future of ERP.ERP's future is yet to reach saturation.
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Market forecasting
Formerly ERP was purely restricted to fortune 500companies, in the sense only they could afford toinvest on them. This put the small and MediumIndustries at a large disadvantage. ERP's futureseemed to be dooming on them.
However this drawback has been removed after theintervention of open source facilities. The concept ofoutsourcing has helped in removing the difficultiesfaced by small and medium enterprises
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The future of ERP holds an undisputeddemand not only in the national level
but also at the global level. If thetechnology can be improvised to thedesired ext
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BPR Some Concepts
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BPR
Business Process Redesign
The fundamental rethinking and radically redesign ofbusiness processes to achieve dramatic improvement
in critical, contemporary measures of performancesuch as cost, quality, service and speed.
The implementation of deliberate and fundamentalchange in business processes to achieve breakthrough
improvements in performance.
Enabled by IT
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Business Process Redesign
Also known as Reengineering or ProcessInnovation is offered as an enabler of
organizational transformation.
Organization embrace a BPR approach when theybelieve that a radical improvement can be achievedby marring business process, organizationstructure, and IT change.
BPR
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BPR Objectives:
To dramatically reduce cost
Reduce time
To dramatically improve customer services or toimprove 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 tofeeding people anywhere, anyhow.
Customer satisfaction
Organizational learning
BPR
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Change:
To transform an organization, a deep change mustoccur in the key behavior levels of theorganization:
jobs, skills, structure, shared values, measurementsystems and information technology.
Role of IT
BPR is commonly facilitated by IT e.g. Organizational efficiency
Effectiveness
Transformation
BPR
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Efficiency Applications in the efficiency category allow users to
work faster and often at measurable lower cost
simple automation of manual tasks, resulting inefficiency 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).
BPR
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Transformation
Applications in the the transformation categorychange the basic ways that people and
departments work and may even change the verynature of the business enterprise itself.
A major change in the organization, includingstructure, culture, and compensation schemes(deepest).
BPR
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Process
A process is set of logically related tasksperformed to achieve a defined business outcome
A collection of activities that, taken together,create value for customer e.g. new product forcustomer. This tasks are inter-related tasks
BPR
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How can Companies Identify their BusinessProcesses. 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-paymentprocess
Service as the inquiry-to-resolution process
BPR
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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 Iknow and current technology, what would it look like.
How will I be focusing, organizing and managing thecompany?
Transition from a vertical functional departments to onethat is horizontal, CUSTOMER focused and process-oriented?
BPR
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Process Improvement and redesign Process
Magnitude Increment adical
Improvement 30-50% 10x-100x
ought
tarting base xisting rocess Blank sheet
Top management elatively low High
commitment
ole o IT ow High
isk ow High
Improvement Innovation/ eengineering
BPR
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Phases
Activities:
Participate in
tailored training in
BPR tools and
techniques toinclude
approximately 60
NOAA and 40 other
Department of
Commerce staff
Complete an Action
Learning Modulethat prepares
participants for
next phase
Perform a 90-day
end-to-end
assessment of 8
administrativebusiness areas
across NOAA with
trained NOAA staff
Identify areas of
duplication and
redundancy as well
as opportunitiesand
recommendations
for improvement
Participate in To-Be
design effort with trained
NOAA and Department
staff
Focus areas:
Budget Formulation
and Execution
Grants
Administration
Workforce
Management
Analyze current
business processes,
develop new business
processes, and develop
implementation plan
Execute the plan to
implement new
organization and
business processes
changes
Evaluate, measure,
and adjust the new
business processes
Implementationof BPRTransformation
Design of To-Be Processes
Assessment ofAs-IsEnvironment
Business ProcessReengineeringTraining
I II III IV
BPR Approach
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Expected BPR BenefitsReduce cost to process a grant
Increase grant processing capacity
Decrease cycle time to process a grant
Shift focus of grants personnel from low valueadded to high-value added activities
Improve grant workload distribution
Increase ability to award grants 30-days prior
to their start date, leading to increasedcustomer satisfaction
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Combine Several Jobs into OneAssign multiple processactivities to one person
Avoid the Industrial Revolution Division of tasks
Specialization of labor
Unskilled work force
No need for communication
Create Task Inter-relationships
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Curr t
usi ss
Pr sses
Future
Busi ess
Pr esses
I f r ti
echnology
Skills
S
T
R
AT
E
G
I
C
D
I
R
E
C
T
I
O
N
S
Infor tion
Technology
Skills
Current
Environments (AS-IS)
Future
Environments (TO-BE)
Tr nsition/Implement tion (Change anagement)
BusinessProcess Reengineering ethodology
CurrentProducts/Services
FutureProducts/Services
AI CORP-Automated Information anagement Corporation
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BPR: STRATEGY
Stakeholder Assessment - shareholders, customers,
employees
Determine which stakeholder expectations shouldbe met to gain competitive advantage
Determine how to redesign to meet expectations
Map out IT solutions to support
Develop & implement new processes, etc.
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SOFTWARE REENGINEERING
RESTRUCTURING - Transforming unstructured
(spaghetti code) code into structured code
equivalent [10% penetration]REENGINEERING - Gradually clean up old
software without affecting user functionality
REVERSE ENGINEERING - Uncover or rediscover thedesign specification from existing code; then apply
forward engineering
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Thanks for your
Participation &Co-operation