How business process redesign is affecting ERP

In this expert tip, learn how business process redesign fits into the ERP implementation process and the role that business process management plays.

It is well known within the manufacturing industry that ERP software can improve productivity, reduce cost and increase on-time delivery to customers. It is also widely recognized that ERP requires a focus on business processes in order for the new system to be implemented successfully. With that said, there continues to be a great deal of confusion when it comes to what the term business process redesign actually means within the context of ERP. I believe there are two reasons for this.

First, there are industry terms that add to this misunderstanding and that can set incorrect expectations regarding what ERP is all about, the scope of the business process redesign effort and the potential benefits. These terms include business process reengineering (BPR) and, more recently, business process management (BPM).

While BPR and BPM are good approaches for improving business performance, it is important to recognize the difference between them in order to apply the right method to the right situation. Unfortunately, many in the ERP industry use the terms BPR and BPM rather loosely. But the former approach has very little to do with an ERP project, and the latter should occur only after the ERP system is not the biggest concern.

Second, ERP software vendors have clouded the business process redesign question. Many tout the capabilities of their software as a turnkey solution. Other vendors claim that the answers lies within the packaged tools used to configure the software to support various industries. While software capabilities and implementation tools are extremely helpful, vendor sales hype can send the wrong message to potential clients. When it comes to ERP and the need to redesign processes, there is no such thing as the "Easy Button."

Business reengineering vs. software implementation

Back in the 1990s, Michael Hammer ignited a wave of business reengineering initiatives across the country with his groundbreaking article, Don't automate, obliterate. The significance of the reengineering movement was that companies began to recognize, in many cases, that the issues preventing major improvements are much more fundamental than software.

In its purest sense, business reengineering is about throwing out the current ways of doing business and, more or less, starting over. The goal is to take a holistic view of the business model, structures, performance measurements and culture that drive the suboptimization of processes. While few take reengineering to this extreme, it is an entirely different focus from installing a new ERP system or BPM. The first goal should be to fix the business, and there are still many companies where this strategy should certainly apply.

In most cases, reengineering should occur instead of implementing ERP, or perhaps before a new package is purchased. When done at the same time, the problem is that the software side of the ERP project will be in constant conflict with the unaligned organization. This can significantly increase the risk of schedule and cost overruns, or result in outright ERP project failure.

Business process redesign during an ERP Implementation

Typically, the goals of an ERP project are to integrate the information flow across the business, to realize software-enabled benefits, to take advantage of other improvement opportunities presented and to replace older technologies.

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In most areas, the business process redesign scope is usually limited to just the extent necessary to get the software installed within the time frame allowed, leverage the new system as much as initially possible and address any low-hanging-fruit improvements that are identified.

For many organizations, this is a major leap forward. But for others, the improvements are more incremental in nature. This is primarily due to the fact that, unlike BPR and BPM, many of the activities associated with an ERP project inevitably focus on simply getting the system installed and running within the business.

The role of business process management

BPM recognizes the ongoing need to identify and removed barriers to improvement by focusing primarily on business processes as they relate to the current operating paradigms. BPM includes many of the process-analysis tools used during an ERP project.

However, BPM also usually includes the introduction of software and technologies to automate workflows, link the workflows with various systems, share content and encourage collaboration across the organization. In this case, the existing ERP system is considered adequate, with the exception of configuration changes or software modifications that might be necessary to support the desired process changes.

About the author:
Steven Phillips is an ERP professional with more than 27 years of implementation experience. He is author of the book Control Your ERP Destiny.

Follow SearchManufacturingERP on Twitter @ManufacturingTT.

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