ERP and Business process reengineering

UNIT-3
 Business Process Reengineering
 Defined as systematic methodology to identify the
best ways of doing business
 Reengineer or redesign the business processes so as
to get the maximum benefits
 Analogous to System analysis and design phases of
development life cycle of a typical information system
development project
 Organizations undertake BPR to understand the best
way of doing business
 Generally organizations undertake BPR to understand
the best way of doing business
 There may be following reasons for conducting BPR
study in an organization
– Implement the current purchased ERP system
– Automate the existing manual process
– Improve Customer Services
– Streamline the current business process to increase
efficiency, reduce cost.
 BPR is important in total implementation efforts of system
 User may be aware of problem but many not know how to
solve
 Analysis of existing Business practices may be done using
various tools such as data flow diagrams, data dictionary,
object oriented analysis tool and rough descriptions of relevant
algorithm
 Final product of analysis of business process is a set of
information requirements of the proposed business processes.
 BPR LIFE CYCLE
BPR life cycle also known as BPR process consist of
following steps.
 Preparation and planning for undertaking BPR is done
 Current or existing business process of the organization are
understood
 Business process mapping and gap analysis is done
 Business process are redesigned so as to match the best
practices
 Redesigned processes are tested and evaluated for further
improvements
 BPR LIFE CYCLE

BPR Planning ‘As is’

Evaluation and
Improvement Process Mapping

To Be
 Preparation and Planning for BPR
 In this phase, goals and scope of BPR is defined
 Goals must be measurable and simple to understand by
organization
 Team consisting of people from all the functional heads, consultant
and technical people is formed with defined roles of each team
members
 This phase starts after an organization has already selected a
particular ERP package for implementation
 The best practices adopted in selected ERP package becomes the
benchmark against which the business process of an organization is
redesigned
 In case, ERP package is yet to be selected , then the best practices
of industry becomes a basis for redesigning business processes and
redesigned business processes become the basis for selecting an
appropriate ERP package.
 Understanding of Current Business Process (As IS’)
 In this phase, existing business process are understood
 Activity is considered as the most difficult and also the most error-
prone activity because of the communication gap between the user
and technical people
 This phase determines how the user is currently doing its business
which is also known as requirements determination activity under
system analysis of SDLC
 Phase becomes an improvement or change in the existing way of
doing business or in selected ERP package
 Phase can be equated with requirement investigation phase of
SDLC in which the existing system is studied and documented for
further analysis
 Various methods like fact finding are used for the purpose
 Fact finding techniques include the following methods :
(i) Traditional Methods
(a) Interview
(b) Questionnaire
(c) Record Review
(d) Observation
(ii) Modern Methods
(a) Joint Application Development (JAD)
(b) Prototyping
 Requirement determination in fact is to learn and collect the
information about basic process; data which is used or produced
during the process; various constraints in terms of time and volume
of work and performance controls used in the system
Let us discuss these activities in detail:
 Understand the process: Process understanding can be acquired if
the information is collected regarding the
Purpose of business activity
Steps which and where they are performed
Persons performing them
Frequency, time and user of the resulting information
 Identify data used and information generated: Next to process
understanding is what data is used to perform each activity
 Determine frequency, timing and volume: Information should be
collected to know how often an activity is repeated and volume of
items to be handled. Similarly timing does affect the way analysts
evaluate certain steps in carrying out activity.
 Know the performance controls: System controls enable analysts
to understand how business functions can be maintained in an
acceptable manner.
 Process Mapping and Gap Analysis
 Process mapping refers to modelling the business processes using
some graphical tools and techniques so as to understood the
business processes.
 As technical team person may not be well versed in business
processes, there may be certain gaps in their understanding when
these processes are described by the users
 In order to make sure that there is no communication gap between
the user and technical person, it is important that the business
processes described by the user are drawn graphically and shown to
user for verification.
 This step is equivalent to requirement specification step of System
analysis under SDLC
 In this stage, data collected during fact finding investigation is
mapped to understand the business processes.
 This process mapping is done by using various tools and
techniques like DFD, Data dictionary, decision tree, decision
table, E-R diagram, object oriented tools and techniques like
rational unified language and use cases and so on.
 Once the existing business processes are mapped, an analysis
is undertaken to find out the gaps in the existing system and
best practices
 Process requires a through understanding of the business and
deep analysis.
 Number of software BPR tools available in the market that
assists in mapping out of the existing and new business
process.
 Some of these software BPR tools are comprehensive and
take teams through the entire BPR process, whereas other
have limited functionality.
 Redesigning the Business Processes (‘TO BE’)
 Business processes are redesigned so as to match the selected ERP
package .
 This phase dismantles the existing processes and puts them back
with new sense of purpose
 Some of the processes will be eliminated and some may be
grouped or combined to get efficient and better results.
 Some member of BPR team may be threatened by the idea of
changing a process
 Business analyst make sure that all the processes are analyzed
objectively and judiciously
 In case, the ERP package is yet to be selected, then the redesigned
process should be used to compare the ERP package available in the
market for an organizational match.
 Redesigned business processes are innovative, free from redundant
and efficient.
 Evaluation for continuous Improvement
 Once the business processed are redesigned, the job of BPR does
not come to an end.
 Rather BPR is a continuous activity
 After Business process are redesigned, the new processed must be
tested for the validity and reliability of results
 Processes are evaluated on continuous basis and improvements
made as per changed requirements of an organization.
 At some point of time, an organization may again think of changing
the way , it does business and thus radical change or BPR may be
planned.
 BPR Tools and Technologies
 There are various approaches which an organization can use to
reengineer its business processes.
 There are two categories of tools and technologies used in
reengineering business processes of an organization:
(i) Technology enabled Reengineering
(ii) Clean Slate Reengineering
 Technology Enabled Reengineering :
 In technology enabled reengineering, a particular technology or a
combination of technologies is selected and business processes are
redesigned or reengineered to match the selected technology .
 This kind of reengineering technology is driven
 There are various advantages of technology enabled
reengineering . This approach can help :
• Provide a standard or a goal of reengineering
• Provide a structure for the BPR process
• Build better solutions
• Constraint the design effort
• Generate cost effective design process
• Ensure timely implementation
 Clean Slate Reengineering
 System design starts with a clean slate or from a scratch.
 Business process are reengineered to meet the organizational
needs and requirements
 In this approach, business analyst can generate an optimal system
design for a particular organization
 For implementing ERP system, an organization would first
reengineer it business processes and then purchase ERP system
 In this case, ERP system would be required to be customized to fit
the needs of business processes of organisation
 With the clean slate approach, the new system would better meet
the organization’s needs but the implementation costs may be too
high :
 Clean Slate reengineering approach has many advantages which
include the following :
• Organizations are free to redesign their processes
• Future revisions are not limited by the technology
• Organizations can develop unique process designs
• Reengineering is not confused with technology implementation
• Clean slate may be the only approach to build processes for use in
new technologies.
 Generally Clean slate reengineering approach is suitable to large
organizations with large ERP budget , long time period and tend to
have unique business processes as basis of strategic advantage.
 Technology enabled reengineering is most suitable to organizations
that have limited budget, relatively standard processes and less
time for implementing ERP systems
 However in implementing an ERP systems, the choice of two
approaches of BPR should not be confused as discrete ones
 Rather practically an approach which lies between these two
approaches – either clean slate or more towards technology
enabled.
 Decision is taken focusing on whether an organization should
change the ERP software or business processes
 Selection of reengineering approach should be based on the needs
and resource constraints in reengineering
 Success and Failure Factors in Implementing BPR
 BPR which is a prerequisite of successful implementation of ERP
system also gives a competitive advantages to organizations as it
takes into account the innovative and best practices of industry
 BPR changes the way; an organization does its business and thus
changes the human, organizations and technological aspects of
entire organization
 This makes BPR difficult proposition and requires the attention of
the top management
 Organization must understand the factors which may lead to
success or failure
 Following factors are considered critical success and failure factors:
 Top Management Commitment :
• For the successful implementation of BPR, Top management
commitment is a must.
• Top management is responsible for the strategic mission of an
organization should know about the current situation of an
organization .
• They should be knowledgeable about BPR projects and should have
realistic expectations from BPR results.
• Top Management should be able to motivate the BPR initiative,
control BPR team as well as users.
 BPR planning : Extent and rigor of BPR planning determines the
success of BPR in an organization. BPR plan should clearly define
the mission, objectives, strategies and policies. It should also define
the scope of BPR and time requires for this initiative.
 User Participation : Factor ensures the confidence and trust of
management in employees. It is through the user participation that
vision of management can be shared with its employees. When the
ideas of the users are implemented, the user thinks as if it is was
their initiative and this ensure success.
 Collaborative Environment: Factor of collaborative or cooperative
working environment is one of critical success factors in BPR
projects. When employees work in teams, interact in friendly
manner and have trust on each other , the implementation of BPR
be a success.
 IT applications : Successful applications of IP plays a critical and
important role in BPR projects. IT refers to Hardware, Software,
information systems and communication technology which provides
users with the required information; allow users to share and
collaborate with other team members
 Training and Education: BPR implementation team as well as all the
users must be trained and educated for successful implementation
of BPR.
 Training and Education: BPR implementation team as well as all the
users must be trained and educated for successful implementation
of BPR. The implementation team members should be sensitive to
doubts and apprehensions of the users about BPR
 Resistance to Change : Generally resistance to change is regarded
as negative or failure factor. As BPR brings about change and
human being resists change. The resistance to change is the most
common barrier to successful implementation of BPR. There may
be various reasons of resistance to change which may include fear
of job loss, authority loss and change in working relationship within
the peer group.
 Data Collection Methods
 There are several methods to collect the data which are outline below :
Interview :
• Interview is a face to face method for collecting the required data
• In this method, a person (interviewer_ asks questions from the other person
being interviewed
• Interview may be formal or informal and questions asked may be structured
or unstructured
• Interview is the oldest and most often sued device for gathering information
about an existing system
• Respondents are generally users of existing system or potential users of
proposed system
• Although one of the preferred techniques, interviewing is not always the best
source of application data
• This method is helpful for gathering information from individuals who do not
communicate effectively in writing or who may not have time to answer
questionnaires
• Interviews allow analyst to discover areas of misunderstanding,
unrealistic expectation and even indications of resistance to the
proposed system
• Analyst must plan the interviews and must know clearly in advance
regarding the following issues of proposed system
 Whom to interview
 When to interview
 What to ask
 Where to hold interview
 How to begin interview
 How to conclude interview
 Interviewing is regarded as an art and it is important that analysts
must be trained in the art of successful interviewing
 Success of interview depends on the skill of the interviewer and his
or her preparation for interview.
Questionnaire :
• Questionnaire is term used for almost any tool that has questions to which individuals
respond
• Use of Questionnaire allow analysts to collect information about various aspects of a
system from a large number of persons
• Questionnaire may contain structured or unstructured questions
• Use of standardized Questionnaire may give more reliable data than other fact finding
techniques
• Wide distribution ensures greater anonymity for respondents which can lead to more
honest responses
• Questionnaire survey helps in saving time compared to interviews
• Analysts cannot observe the facial expression or a reaction of respondents as it is
possible during interviewing
• It is difficult to design exhaustive and self explanatory questionnaire
• Analyst should know pros and cons of structured as well as unstructured questionnaire.
• Questionnaire must be tested and modified as per background and experience of
respondents.
Record Review :
•Record review also known as Review documentation
• Main purpose to establish quantitative information regarding volumes, frequencies,
trends, rations and so on.
• In record review, analyst examine information that has been recorded about the
system and its users
• Records/documents may include written policy manuals, regulations and standard
operating procedures used by an organization as a guide for managers and other
employees
• Procedures, manuals and forms are useful sources for analyst to study the existing
system
• Main limitation of this approach is that the documentation of existing system may
not be complete and up to date
• There are two different views regarding study of existing system
• One view favors study of existing system is through study of existing system, learns
about its shortcomings and may use this knowledge to avoid committing same
mistakes again
• View which is against such a study argues that it inhibits the generation of new ideas
and may bias the developer towards the same logic as contained in old system.
• However both the views seems valid.
Observation:
• Another information gathering tool used in the system studies is
observation
• It is process of recognizing and noticing people, objects and
occurrences to obtain information
• Observation allow analysts to get information which is difficult to
obtain by other fact finding method.
• This approach is most useful when analysts need to actually observe
the way documents are handled, processes are carried out and
whether specified steps are actually followed
• As an observer, analyst follow a set of rules
• While making observation, he/she is more likely to listen than a talk
• Exercise is time consuming and costly
• Observer may not be able to get all the required information
especially about intricacies of system
• Electronic observation and monitoring methods are being used widely
as information gathering tools because of their speed and efficiency.
Joint Application Development (JAD)
• JAD is one of the modern methods for data collection
• In this method, the users are taken to some other place away
from office
• Users of various functional areas are asked questions in joint
meeting
• This kind of meeting proves very beneficial as it acts as brain
storming session where certain queries can be answered and
solutions are found
• JAD method saves a lot of time which otherwise is wasted for
data collection.
Prototyping
• Prototyping is another method of data collection especially
when users are not able to define their information
requirements
• In prototyping method, a working, throw away , model is
developed on basis of initial interaction with the user
• Working model is handled over to the user for his/her
feedback.
• On the basis of feedback from the user, prototype is refined.
• Process is repeated till all the information requirements are
captured
 Business Process Mapping Tools
 Business process mapping tools help the business analyst to
document the system specification of the existing system
 Main tools which are used for the purpose are given below
(i) Data Flow diagram
(ii) Data Dictionary
(iii) Structured English
(iv) Decision Trees
(v) Decision Tables
Data Flow Diagram (DFD):
• DFD is a graphical representation of the logical flow of data.
• It helps in expressing the system’s requirements in a simple
and understandable form
• It also known as bubble chart
• Its aim is to clarify the system requirements and identify major
transformation that will become programs in system design
• It decomposes the requirement specifications down to the
lowest level of details
• DFD consist of series of bubbles joined by lines representing
data flow in the system
 There are four main symbols used in DFD which are depicted below
(i) Square: It represents source/destination of system data

(ii) Arrow: It identifies data flow; it is a pipeline through which data

flows.

(iii) Circle/Bubble: It represents a process that transforms incoming

data into outgoing data flow. A process can be represented by a
circle or an oval bubble.
(iv) Open rectangle : It represents a data store

A number of rules are to be followed in drawing a DFD :

 Processes should be named and numbered. Name should
represent the process
 Direction of flow is from top to bottom and form left to right
 When a process is exploded into lower levels , they are numbered
properly e.g the process obtained from the explosion of process
number 5, should be numbered as 5.1, 5.2 and so on
 Name of data stores, sources and destinations are written in capital
letters. Process and data flow named have the first letter
capitalized.
• DFD should have no more than 10-12 processes as having even
12 will make a DFD complex and difficult to understand
• DFD shows the minimum contents of a data store. Each data
store should contain all the elements that flow in and out of it
• DFD is very effective when the required design is not clear and
the user and analyst require some symbolic representation for
communication
• Main disadvantage of DFD is that a large number of iterations
are often required to arrive at an accurate and complete
solution
• For example Consider the case of payroll system to prepare
salary statements for each employee of an organization
• Data flow for such a system can be represent shown:
 Salary Employee
Statement

Employee
Accounts Payroll
section Processing Employee File

Updation
Employee
Data

DFD For Payroll Processing

• Employee data originate from accounts department(source),
gets processed, salary statements are received by
employees(sink) and updated data on employees (e.g., total
tax deducted, provident fund contribution etc) is stored in
intermediate file which is required for processing in the
subsequent months
• DFD displays data flow in a top down approach.
• To draw a DFD, start with macro DFD and then explode it into
micro DFDs
• While exploding DFD into lower levels, continuity and linkage
is maintained between a DFD and its member DFDs
• This is achieved by numbering each circle (processing step) by
adopting the numbering system , e.g 1,2,3 , each further
numbered as 1.1,1.2, 1.3,…. and still further numbered as
1.1.1, 1.1.2.
 Employee Employee
Data Employee
Gross Salary Salary
Statement
Gross
Accounts Net Salary
Salary
section Processing
Processing

Updation

Deduction Employee File

Deduction File

DFD For Payroll Processing (Exploded View)

 1.1.1

1.1

1.1.2

1.0

1.2.1
1.2

1.2.2

Explosion of DFD
Data Dictionary
• Data dictionary is a structured repository of data about data
• In another words, it is a set of precise and accurate definitions
of all DFDs, data elements and data structures
• It supports documentation in a netter way
• It also improves communication between the user and analyst
as it provides precise and consistent definition for various data
elements, terms and procedures
• It can also serve as a common database for programmers and
can also be used for control purposes.
• Most database have data dictionary as a desirable feature
There are mainly three items of data presented in data dictionary
(i) Data element: It is smallest unit of data and cannot be
decomposed further
(ii) Data structures : It is group of data elements handled as a
unit . A data structure contain a number of data elements as
its fields
(iii) Data flows and data stores: Data flows are nothing but data
structures in motion whereas data stores are data structures
at rest. In other words, data stores are locations where data
structures are temporarily stored. Data dictionary is an
integral part of structured specifications.
Following rules are followed in constructing a data dictionary
(i) Terms used in describe data structures are always in capital
letters
(ii) Multiple word names are hyphenated
(iii) Assigned names should be straightforward and user-
oriented.
(iv) There should be names for every data flow, data store, data
structure and data element.
(v) Consistency checks should be performed
(vi) Identification numbers of processes and their names should
be mentioned in the data dictionary
(vii) Aliases must be encouraged.
 Data Dictionary and DFD are correlated and data should be
present in a specification
 Data Dictionary does not provide functional details and not
very acceptable among non-technical users
 Most Business process models lie activity models, data flow
models, and so have originated from traditional system
analysis where processes could be assumed to be relatively
stable and mechanistic and thus the traditional modelling and
analysis tool are simple in nature
 Modelling techniques are not well equipped to deal with
business and organizational environments which processes are
incompletely specified.; involve multiple parties with different
interests and consists of numerous elements having many
variations and special cases.
 Business processes are dynamic and interactive in nature
 Business analysts and managers also need behavioral
modelling which reveals how a business process operates .
 Understanding , analyzing and redesigning business processes
therefore require modelling techniques and tools that go
beyond those offered by traditional systems analysis.
 Various BPR tools which are available in market include
Apache, Visio, Bonapart, Caddie, METIS, Clear Process, Cosmo,
Business Resource Software.