PBSAIS 006 LEC – Enterprise Resource Planning and Management

MODULE 3 – you expect this module to receive on October 04, 2021. The submission of
completed activities will be on or before October 11, 2021 otherwise it will no longer
considered.
File name format: ERP LEC MODULE 3_SURNAME_FIRST NAME
Learning Outcomes:
At the end of the module, you can:
1. Discuss the concept of Business Process Re-engineering
2. State the characteristics of Business Process Re-engineering
3. Know the history and Identify the elements of Business Process Re-engineering
4. Discuss Business Process Re-engineering challenges

Introduction
Business process re-engineering is one approach for redesigning the way work is done to
better support the organization’s mission and reduce costs. Re-engineering starts with a high-
level assessment of the organization’s mission, strategic goals, and customer needs. Basic
questions are asked, such as “Does our mission need to be redefined? Are our Basic questions
are asked, such as “Does our mission need to be redefined? Are our strategic goals aligned
with our mission? Who are our customers?” An organization may find that it is operating on
questionable assumptions, particularly in terms of the wants and needs of its customers. Only
after the organization rethinks what it should be doing, does it go on to decide how best to do
it.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
1
 Business Process Re-engineering
Business process re-engineering (BPR) is an approach aiming at improvements by means of
elevating efficiency and effectiveness of the business process that exist within and across
organizations. The key to BPR is for organizations to look at their business processes from a
“clean slate” perspective and determine how they can best construct these processes to
improve how they conduct business.
Business process re-engineering is also known as BPR, Business Process Redesign, Business
Transformation, or Business Process Change Management. It is the radical redesign of an
organization’s processes, especially its business processes. Rather than organizing a firm into
functional specialties (like production, accounting, marketing, etc.) and considering the tasks
that each function performs; complete processes from materials acquisition, to production, to
marketing and distribution should be considered. The firm should be reengineered into a series
of processes. The main proponents of re-engineering were Michael Hammer and James A.
Champy.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
2
 Re-engineering is the basis for many recent developments in management. The cross-
functional team, for example, has become popular because of the desire to reengineer separate
functional tasks into complete cross-functional processes. Also, many recent management
information systems developments aim to integrate a wide number of business functions.
Enterprise resource planning, supply chain management, knowledge management systems,
groupware and collaborative systems, Human Resource Management Systems and customer
relationship management systems all owe a debt to re-engineering theory.
Hammer and Champy (1994) define BPR as “fundamental revision and radical redesign of
processes to reach spectacular improvements in critical and contemporary measurements of
efficiency, such as costs, quality, service and quickness.” Keywords in this BPR definition
are:
1. Fundamental: What is the company’s basic style of working?
2. Radical: All existing procedures and structures must be forgotten and new styles of
working must be discovered. Superficial changes are not useful. Changes must be
made at the very root.
3. Spectacular: Spectacular changes must be discovered, not marginal improvements.
4. Processes: Redesign must be fixed on the processes not on the tasks, jobs, people, or
structures.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
3
 Parker defines BPR as the analysis and redesign of the business and manufacturing processes
with a view to eliminating the activities that do not add up value. These definitions enable us
to outline the following main characteristics of BPR:
1. Concentration should be given on fundamental problems and not on departments or
other organizational elements.
2. Concentration should be given on processes and less on activities, functions, people
and structures. A process is a total of activities, which take one or several inputs, and
creates an output, which is valuable for the client.
3. A radical approach which presupposes going to the root of things not only making
superficial changes of the existing things but acting by removing what is obsolete
and inventing new ways of carrying on the activity.
4. Changes that have a spectacular character that is achieving spectacular results and
not simply effecting marginal or gradual improvements.
5. A strong link of BPR with informatics technologies, a very important characteristic
which cannot be seen directly from definitions. The processes introduced through
BPR could not exist without applying informatics technologies
Concept of Business Process Re-engineering
Business Process Re-engineering (BPR) began as a private sector technique to help
organizations fundamentally rethink how they do their work in order to dramatically improve
customer service, cut operational costs, and become world-class competitors.
A key stimulus for re-engineering has been the continuing development and deployment of
sophisticated information systems and networks. Leading organizations are becoming bolder
in using this technology to support innovative business processes, rather than refining current
ways of doing work.
Business process re-engineering is one approach for redesigning the way work is done to
better support the organization’s mission and reduce costs. Re-engineering starts with a high-
level assessment of the organization’s mission, strategic goals, and customer needs. Basic
questions are asked, such as “Does our mission need to be redefined? Are our strategic goals
aligned with our mission? Who are our customers?” An organization may find that it is
operating on questionable assumptions, particularly in terms of the wants and needs of its
customers. Only after the organization rethinks what it should be doing, does it go on to decide
how best to do it.
Within the framework of this basic assessment of mission and goals, re-engineering focuses
on the organization’s business processes – the steps and procedures that govern how resources
are used to create products and services that meet the needs of particular customers or markets.
As a structured ordering of work steps across time and place, a business process can be
decomposed into specific activities, measured, modeled, and improved. It can also be

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
4
 completely redesigned or eliminated altogether. Re-engineering identifies, analyzes, and
redesigns an organization’s core business processes with the aim of achieving dramatic
improvements in critical performance measures, such as cost, quality, service, and speed
Re-engineering recognizes that an organization’s business processes are usually fragmented
into sub-processes and tasks that are carried out by several specialized functional areas within
the organization. Often, no one is responsible for the overall performance of the entire process.
Re-engineering maintains that optimizing the performance of sub-processes can result in some
benefits, but cannot yield dramatic improvements if the process itself is fundamentally
inefficient and outmoded. For that reason, re-engineering focuses on redesigning the process
as a whole in order to achieve the greatest possible benefits to the organization and their
customers. This drive for realizing dramatic improvements by fundamentally rethinking how
the organization’s work should be done distinguishes re-engineering from process
improvement efforts that focus on functional or incremental improvement.
Successful organizations are envisioned to be networked across functional boundaries and
business processes rather than functional hierarchies. However, simply using the latest
technology on existing processes, respectively procedures, is no valid solution to the problem.
The solution is found in taking a step further, rethink and question the business activities being
a fundament for business processes. Effective redesign of business processes by removing
unnecessary activities and replacing archaic, functional processes with cross-functional
activities, in combination with using information technology as an enabler for this type of
change will, according to the advocates of BPR lead to significant gains in speed, productivity,
service, quality and innovation. Business re-engineering normally includes a fundamental
analysis of the organization and a redesign of:
1. Organizational structure
2. Job definitions
3. Reward structures
4. Business work flows
5. Control processes and, in some cases
6. Reevaluation of the organizational culture and philosophy
Requirement of Business Process Re-engineering
Business Process Re-engineering (BPR) calls for a radical redesign and systematic
overhauling of strategic systems and processes in an organization. In the technology-centric
business environment of today, more and more organizations are using Information
Technology (IT) tools in their mainstream organizational processes. Hence, for BPR, it is
required that the functionalities of these IT systems are modified.
The goal of business process re-engineering is to redesign and change the existing business
practices or process to achieve dramatic improvement in organizational performance.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
5
 Organizational development is a continuous process but the pace of change has increased in
manifolds. In volatile global world organizations enhance competitive advantage through
Business Process Re-engineering (BPR) by radically redesigning selected processes.
The business process re-engineering implies transformed processes that together form a
component of a larger system aimed at enabling organization to empower themselves with
contemporary technologies business solution and innovations. Organizational effective
performance has become a watchword in modern business; as a result, there is inexorable
pressure for Business Process Re-engineering.
History of Business Process Re-engineering
In 1990, Michael Hammer, a former professor of computer science at the Massachusetts
Institute of Technology (MIT), published an article in the Harvard Business Review, in which
he claimed that the major challenge for managers is to obliterate non-value adding work, rather
than using technology for automating it. This statement implicitly accused managers of having
focused on the wrong issues, namely that technology in general, and more specifically
information technology, has been used primarily for automating existing processes rather than
using it as an enabler for making non-value adding work obsolete.
Hammer’s claim was simple: Most of the work being done does not add any value for
customers, and this work should be removed, not accelerated through automation. Instead,
companies should reconsider their processes in order to maximize customer value, while
minimizing the consumption of resources required for delivering their product or service.
A similar idea was advocated by Thomas H. Davenport and J. Short in 1990, at that time a
member of the Ernst & Young research center, in a paper published in the Sloan Management
Review the same year as Hammer published his paper.
Elements of Business Process Re-engineering
BPR is generally conceived as consisting of four elements to be considered, as there are
strategies, processes, technology and humans where strategies and processes are building the
ground for the enabling utilization of technologies and the redesign of the human activity
system. A brief description of these four dimensions will be given below:

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
6
 Strategies - The strategy dimension has to cover strategies within the other areas
under concern, namely organization strategy, technology strategy and human
resources strategy. The determination of all strategies has to be performed with
respect to the dynamic marketplaces the organization is acting on and is not focused
on internalities, but the external presumptions for successful acting on markets.
Beyond that, strategies have to be current and relevant to the company’s vision, as
well as to internal and external constraints, which implies, that a reconsideration and
redefinition of strategies might be a presumption for further change. Finally, the
strategies must be defined in a way that enables understanding and motivation of
employees in order to align the work force with them.
Processes - Processes can be defined on different levels within the organization. The
issue is, to identify core processes which are satisfying customer needs and add value
for them.
It is important to point out, that processes are not determined by internal
organizational requirements, but by customer requirements, even though
organizational constraints have to be taken under consideration. The shift from
functional departments to inter-functional processes includes a redesign of the entire
organizational structure and the human activity system and implies process- instead
of task optimizing
Technology - Information technology is considered as the major enabler for spanning
processes over functional and organizational boundaries and supporting process
driven organizations. However, the point is not to use IT as an improver for existing
activities, as which it often has been conceived, but as enabler for the new
organization. This includes using new technologies such as groupware, as well as
new methods for using them and an acceptance of technological changes and the fact
that information technology will be shaping the future.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
7
 People - The human activity system within the organization is the most critical factor
for re-engineering. While top management support for re-engineering efforts is rather
simple to ensure, the real change agents, middle management are far harder to win
due to the fact, that they have to identify change opportunities and perform them,
while they are the group facing most threats, as BPR often is used for cutting
hierarchies and reducing the work force. The other crucial factor is to align the work
force with the strategies defined and to address the variable cultural and
environmental contexts within the organization. Finally, flattening hierarchies
implies decision making to be moved down in the organization and empowerment of
the employees taking them
This requires training and education as well as motivation and trust from top
management that people are able and willing to take responsibility, a fact that is rather
contradictory to the “trust is good, control is better” way of thinking.

Advantages of Business Process Re-engineering

Satisfaction: A big advantage of re-engineering is that the work becomes more satisfying
because the workers get a greater sense of completion, closure, and accomplishment from
their jobs. The employee performs a whole job, a process or a sub-process, that by definition
produces a result that somebody cares about. The workers not only try to keep the boss happy
or to work through the bureaucracy. More important is the fact to satisfy the customer needs.
Growth of Knowledge: Furthermore, the personal development within a process team
environment does not play such an important role which means climbing up the hierarchy is
a minor goal.
In this case it is much more important to get a widespread knowledge of the whole process
and there are no such things as “mastering” a job; as a worker’s expertise and experience
grow, his or her job grows with it.
Solidarity to the Company: Moreover, since workers in a reengineered process spend more
time on value adding work and less time on work that adds no value, their contributions to the
company increase, and, consequently, jobs in a reengineered environment will on the whole
be more highly compensated.
Demanding Jobs: There is, however, a challenging side to all this good news about work in
a reengineered environment. If jobs are more satisfying, they are also more challenging and
difficult. Much of the old, routine work is eliminated or automated. If the old model was
simple tasks for simple people, the new one is complex jobs for smart people, which raises
the bar for entry into the workforce. Few simple, routine, unskilled jobs are to be found in a
reengineered environment.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
8
 This fact that the jobs are more demanding can be either an advantage or a disadvantage. It
depends on the view from where you consider it. Unskilled employees might get difficulties
to get along with the process changing. Some people are just not able to perform several tasks.
For such persons it will be probably difficult to survive within this new environment which
mostly leads to a personal failure in their job
Authority: In a traditional oriented company the management expects from the employees
that they follow some specific rules. In contrast to that the reengineered companies do not
want employees who can follow rules; they want people who will make their own rules. As
management invests teams with the responsibility of completing an entire process, it must also
give them the authority to make the decisions needed to get it done.
References:
Enterprise Resource Planning, Edited by Sartaj Singh (Lovely Professional University,
Phagwara)

ACTIVITY 1 FOR MODULE 3 (Essay) 10 pts each

1. What are the challenges of BPR? How at to overcome it?

2. Explain the requirement of BPR in an organization.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF REPRODUCTION, DISTRIBUTION,
UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION OF THE UNIVERSITY IS
STRICTLY PROHIBITED.
9