BUSINESS PROCESS CHANGE

Chapter 2

Things to ponder:“Never ask things to be easier, always ask yourself to be BETTER”

Learning outcomes

Describe the impact of technology towards organizationDescribe the common terms used in this courseDescribe the business process change in manufacturing

and administration situations.Discuss the importance of performing business process

change

Introduction

Today, computers are faster, connected, less expensive, greater storage capacity, etc.

Manual processes to be automated, placing technology in an outmoded infrastructure lead to technology evolution

Technology as an enabler

Scenario 1: Manufacturing industry Electricity was introduced in the manufacturing

environment to replace steam engines. No immediate/major change to current infrastructure However, the invention of electric motor had caused

some changes to the building but not to productivity improvements.

Why? Because the building and machines were still designed

in the same manners. After 40 years, the productivity started increasing. Moral: the technology did not cause the changes to

occur but allow the changes to take place

Technology as an enabler

1960s- computers were introduced to business world. More than 40 years later- computers were replacing processes either

previously done manually or by mechanical machines. The functions or processes have not changed but the technology has just

been applied to it.

Technology as an enabler

Scenario 2: Office environment Today, secretary uses computer to prepare letters. Manager still dictates letter to some devices as

before. The secretary still types the letter, print it and send

a copy for the manager to review. Moral: replacing a typewriter with a computer

does not contribute to productivity improvement but the flow of the business communication process has to be reevaluated

This includes the office arrangement, procedures, and all related matters needs to be reevaluated

accordingly. Ex. Purchase requisition forms

Process vs Product

Scenario 3: Sales process If sales of products decreased in an

organization Typical solution – to install a customer tracking

system that can keep track and generate follow-ups

Solution is provided without understanding and defining the real problem

Technology is offered as a solution rather than focusing on underlying problem – how to obtain new customer and increase sales ex. send sales officer for training

Things to avoid: when the technology is used to solve the problem but it’s still unsolved.

Moral: Focus on the process

Manufacturing vs Office

Manufacturing – the actual production process has been reevaluated and redesigned The processes were redesigned to gain benefits of the technology Due to this, productivity and quality were increased and costs were

decreased Focus on process not product.

Manufacturing vs Office

Refer to scenario 3 The company needs to focus on process (how sales are made) rather than

the products (number of sales) This situation is rarely realized in an office environment. In contrast to the manufacturing which iterative process occurred with a

clearly defined rules that will determined whether the products can be accepted or not.

Each steps are easier to conceptualize and the focus is always on the process

However, processes in office work are not easy to identify and definable.

Office Works

Processes may take place in every functional area such as: Document preparation Business communication Problem solving Decision making Order processing Strategy planning and etc.

It can be defined in 2 dimensions: Ability to reproduce functions or tasks The level of frequency (daily, weekly and annually)

A clear definition of office processes is essential to identify the problem.

Productivity of Workers

In manufacturing Manual processes were automated, the

results: Minimize costs Increase productivity Increase quality Increase accuracy

Because over the years, the business processes HAVE CHANGED

Number of sales

Productivity of Workers

Technology enables processes to change in order to increase productivity.

In the office environment is difficult to have the same impact as most of the processes and procedures are still the same.

What need to be done?

The pastThe past The futureThe future

Formal training To control current processes Do not question management’s decision Do not question the user’s

requirements or needs On-the-job training

Learn the way things are done

Learning by example Risk taking is not encouraged

Formal training How to analyze current process How to gather information To understand the rational behind the

users’ requests

On-the-job training Learn to critically assess the processes

and procedures, Investigate any possible alternative

Learning by example Failure must be tolerated Risk taking is encouraged

Molding Future Management

Pressures on Today’s Organization

Procedures and processes have been developed within an organization to cope with both internal and external changes.

Procedures that were developed in the past may not be necessary or applicable anymore.

Among the reasons to opt for automating or enhancing the existing processes- reduce money and time.

However, it is not advisable for the unstable foundations of old systems. Thus the following questions need to be asked: Should we need this service or perform this process? Do we need this procedure? Could we provide this services in a different /better manner?

Building on Old Systems

Do you know the axiom of “garbage in- garbage out? The existing systems (manual procedures and process) that are automated

without a close investigation on how the technology can increase the effectiveness and efficiency of the processes will end up building the similar constraints and limitations into the new system

Many organization automate or update computer programs based on obsolete procedures and processes- assumptions: the written programs still applicable.

May not valid anymore as technology rapidly changed, regulations changed etc.

The impact of automating current systems

The impact of automating current systems Major concern: Payback Is it worth the effort? Major considerations involved with legacy systems. Most of the automation issues : either to update the systems or

automating manual processes Legacy systems are expensive to maintain and difficult to modified. How to analyze legacy systems?

Concentrate on what not how. Look how the current system is designed to what the essence of the system is

Ex. Purchase requisition process

Example Example: if an existing process requires 2 copies of purchase requisitions to

be created (one for purchasing dept and the other maintained by central administration).

DO NOT automate this process without questioning why 2 copies are necessary

DO NOT assume that whatever currently is in place must remain in place. After further investigation: the 2 copies were necessary in the past as

both departments were located separately and both needed to have the information upon request.

How can this problem resolved with today’s technology and approach? If the constraint as above was no longer exist, what were the benefits of

continuing the procedure? Remember! Do Not just automate the process, eliminate them if

necessary

Solving Problem Rather than Symptoms

Reduce the number of tasks and processes required whenever feasible. You must find out why a process or procedure is done in a certain manner. If not, you are going to eliminate the symptom of the problem, but the ‘real

problem’ still exists. The hardest part in problem solving process -> to define the problem. Many unnecessary ISs were developed to solve symptom. But once the

problem resolved, the IS may not be necessary any more. Spending time to determine the problem is worth spent rather than money

and time are devoted on developing systems or automating manual process just to get rid of the symptom.

Remember! Efficiency without effectiveness is pointless.

Business process- SCM

supplierManufac

turerDistribu

torRetailer

Customer

Push to customer

Typical aim: Optimize the production process for cost and efficiencyTypical characteristic: manufacturer-led new product development

poor data integration through limited use of technology, long cycle and response times, and high inventory levels.

Use of IS: Independent data management through supply chain member, limited use of EDI

Figure 1: Push approach to SCM (adopted: Chaffey, 2002)

Use the SCM to emphasize distribution of product to

passive customers

This is a great product, who shall we

sell it to?

Business process- SCM

supplier Manufacturer

Distributor

RetailerCustome

r

Pull from customer

Typical aim: Enhance product and service qualityTypical characteristic: market research driven, technology used to achieve research and data integration, short cycle and response times, low inventory levelsUse of IS: Integrated internal systems, information sharing between supply chain members. Extensive use of EDI and e-Commerce, often through B2B exchanges and intermediaries

Figure 2: Pull approach to SCM (adopted: Chaffey, 2002)

Use the SCM to deliver value to customers who are actively

involved in product and service specification

What do our customers demand in the ideal product

& service?

Business process – value chain

Example 1 : Generic Value Chain System (source: Google)

Business process- value chain

Example 2 : Revised Value Chain System (source: Google)

Business process- value chain

Example: Value chain Systems (source: Google)

Business process change- what are the considerations

An effective business process change can be executed based on the following foundation: An organization-wide effort involving everyone from senior managers to

junior employees, i.e. creating awareness Comprehensive, enterprise-wide business process architecture, Process measures that are aligned with company strategies i.e. the

attributes and standards applied An ongoing management effort that continually monitors processes and

introduces improvements, A common vocabulary that everyone can use to describe and understand

business process change.

Why drives business process change?

Market /Customer shift demandGlobal competitivenessTechnologyChange of company’s directionProblem solvingImprove productivity, quality,

efficiency and effectiveness

What are the options?

BPABPIBPRAny others?

Summary

Provide a few scenarios to : Understand the organizations’ situation Focus should be on the processes not the products Solve the problems not the symptom

Self-Assessment Questions

1. Describe the different between symptom and problem.

2. Assume that you are one of the analysts involved in automating a manual inventory process, describe the activities that you plan to execute during

the Analysis stage.

References

Harrington, H.J., Esseling, E.K. and Nimwegen, H.V., Business Process Improvement: Documentation, Analysis, Design, and Management of Business Process Improvement, 1997.

Chaffey, D. and Wood, S., Business Information Management: Improving Performance using Information Systems, Prentice Hall, 2005.

Loudon, K. and Loudon, J. Management Information System, Prentice Hall, 2009 Business Process Trend, Vol.1, No.1 (

http://www.bptrends.com/publicationfiles/BPT%20Overview%201-11-03.pdf) Dutta, S. and Manzoni, J-F., Process Reengineering, Organizational Change and

Performance Improvement, McGraw Hill Publishing, 1999. Kubeck, L.C., Technique for Business Process Design, John-Wiley &Sons, 1995. www.google.com