MANAGEMENT DEVELOPMENT ISNTUTUTE COLLEGE OF BUSINESS ADMINSTRATION MISSOURI STATE UNIVERSITY Mini MBA: Information Technology and Business

Process Reengineering
Presented by:

Waleed El-Naggar, MBA, PMP

Contents
Introduction: The Information Age Management Information Systems Business Process Reengineering E-Commerce

Learning Objectives
Explain the importance of the use of Information Technology in Business Explain the role of Business Process Reengineering (BPR) within the organization Identify the basic steps of BPR Explain the use of e-commerce

THE INFORMATION AGE

The stone age was marked by man's clever use of crude tools; the information age, to date, has been marked by man's crude use of clever tools.

Information Age
Adam Smith in his book Wealth of Nations, stated that the wealth of a nations is dependent on how well a society organizes its production in national businesses and factors. The wealth of nations will be dependent upon how well a society can organize information & knowledge Knowledge workers are those who use, manipulate, process and transmit information.

Computers
Personal computer (PC) is a general-purpose computer whose original price, size, and capabilities make it useful for individuals, and which is intended to be operated directly by an end user, with no intervening computer operator. Today a PC may be a desktop computer or a laptop.

Internet
The Internet is a global network of interconnected computers, enabling users to share information along multiple channels The World Wide Web (www) is a very large set of interlinked hypertext documents accessed via the Internet. Electronic mail (e-mail) is any method of creating, transmitting, or storing primarily text-based human communications with digital communications systems File Transfer/Sharing

Management Information Systems

An 'MIS' is a planned system of the collecting, processing, storing & disseminating data in the form of information needed to carry out the functions of management Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making

Microsoft Office
Microsoft Word (Text Editor) Microsoft Excel (Spreadsheets) Microsoft Power Point (Presentations). Microsoft Project (Project Management) Microsoft Outlook (Email)

Enterprise Resource Planning

Enterprise resource planning (ERP) is an enterprisewide information system designed to coordinate all the resources, information, and activities needed to complete business processes such as order fulfillment or billing ERP delivers a single database that contains all data for the software modules

Enterprise Resource Planning

Manufacturing Supply chain management Financials Projects Human resources Access control Customer relationship management Sales and marketing, commissions, service, customer contact and call center support Data warehouse

Enterprise Resource Planning

SAP
SAP ERP Financials SAP ERP Logistics SAP ERP Human Resource Management

Oracle ERP

In-class Case Study

A software development company needs to implement an ERP system. Discuss what the company needs for successful implementation. Systems Analysis (HR, Accounting, HR, project reporting, Supplier chain, sales, marketing Required Resources (Machines, software, employees). Training. Vendors

Business Information Technology

Business Information Technology (BIT) is concerned with a range of factors that determine the effective and efficient design, development and integration of information systems and Information technology to increase the income or profit. According to an American survey in 1990, over 50% of the employees in the US are knowledge workers. On average, over 75% of the national capital investment within modern information-based economics is on IT and IS.

Information Technology & Information System

An information system within business results from the structure of integrates to handle , store and process data. There are three components parts to an information system: Inputs Processing Outputs

The data processing activity

Data Processing Information

Information represent processed data

Quality information for decision making is an essential asset for any competitive business.

Technology Growth

Business and Technology

Business organizations are often referred to as being information based retrieval e.g.: Banking sectors Financial organization Airlines companies Stock keeping Payroll Professional Investment Systems (PIS)

BUSINESS PROCESS REENGINEERING

An organizational make-over Reengineering is new, and it has to be done. Peter F. Drucker

What is Process?
A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action
(Davenport, 1993)

Business Process Reengineering

The search for, and implementation of, radical change in business processes to achieve breakthrough results Synonyms: business process redesign, business transformation, process innovation, business reinvention, change integration

Business Process Reengineering

Rather than organizing a firm into functional specialties (like production, accounting, marketing, etc.); complete processes from materials acquisition, to production, to marketing and distribution should be considered. The firm should be re-engineered into a series of processes.

BPR is NOT:
Automation Outsourcing Downsizing

BPR vs. Continuous Improvement

Continuous Improvement Process Reengineering

Incremental Change People Focus Low Investment Improve Existing Work Unit Driven

Radical Transformation People & Technology Focus High Investment Rebuild Champion Driven

BPR, A System Perspective

Feedback

Inputs

Transformation

Outputs

Environment

BPR in Action
Start from the future and work backwards BPR is not easy - serious work BPR is not free - financial & cultural BPR often driven by fear and greed Change is a struggle; BPR is a war

BPR: Strategy
Stakeholder Assessment - shareholders, customers, employees Determine which stakeholder expectations should be met to gain competitive advantage Determine how to redesign to meet expectations Map out IT solutions to support Develop & implement new processes, etc.

BPR Key Steps

Select The Process & Appoint Process Team Understand The Current Process Develop & Communicate Vision Of Improved Process Identify Action Plan Execute Plan

1. Select the Process

Review Business Strategy & Customer Requirements Select Core Processes Understand Customer Needs Dont Assume Anything Select Correct Path for Change Appoint BPR Champion

1. Select the Process (Contd.)

Identify Process Owners Establish Executive Improvement Team Provide Training to Executive Team

2. Understand the Current Process

Develop a Process Overview Clearly define the process (Scope & Boundaries) Set business and customer measurements Understand customers expectations from the process Clearly Identify Improvement Opportunities

3. Develop & Communicate Vision of Improved Process

Shared understanding among all stakeholders Provide information on the progress of the BPR Assure that the BPR is necessary & properly managed Indicate actions required and those responsible Tackle any actions that need resolution Direct communication to reinforce new patterns of desired behavior

4. Identify Action Plan

Develop an Improvement Plan & appoint Process Owners Simplify the Process to Reduce Process Time Remove Bureaucracy that may hinder implementation Remove non-value-added activities

4. Identify Action Plan (Contd.)

Standardize Process & Automate Where Possible Up-grade Equipment Plan/schedule the changes Construct in-house metrics and targets Introduce and firmly establish a feedback system

5. Execute the Plan

Qualify/certify the process Perform periodic qualification reviews Define and eliminate process problems Evaluate the change impact on the business and on customers Benchmark the process Provide advanced team training Evaluate the Results

Reengineering Success Factors

Strong Top Management Sponsorship Alignment with company strategic direction Measurable objectives Proven Methodology Effective Change Management. Line Ownership (pair ownership with accountability) Reengineering Team Composition (breadth & knowledge)

Case: Ford Motors, Reengineering the Accounts Payable Department

Results of BPR effort Reduction of paper flow (invoice-less processing) Up-to-date data Personnel reduction by 75% Accurate financial information

Reengineered Process Enabled by IT

Process: Accounts Payable Account Payable Department: 500 Personnel (400 after improvement) vs. 15 in Mazda Enormous paperwork, non-matching data: Purchase order, Receiving documents, invoices BPR: Just-in-time Purchasing Eliminate non-valueadding activities

Reengineered Process Enabled by IT

Reengineered Process Enabled by IT

Technology Facilitates the Process People drive the Process

E-Commerce
Buying and selling of products or services over electronic systems such as the Internet. The amount of trade conducted electronically grew extraordinarily since the spread of the Internet. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

Online Activities
Buying online (amazon.com, ebay.com, etc) Eliminate distance On-line auctions. Virtual Banking. Travel and booking information. E-library E-government E-advertising (free services)

Case Study Send Results by Email

Search engines are free tools used to search for anything on the Internets. Main Revenue: Advertising Smart engines: which advertisement to show?
User location User Interests

Engines evolve into portals (Google, Yahoo, etc)