ERP is DEAD: Business Process Management Lives F07

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ERP is DEAD Business Process Management Lives
F-07

• Tim Salaver
• President
• Cornerstone Systems Solutions, Inc.

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What is ERP

• Combined functionality of many systems into one
  integrated system.
• Complex mega-packages designed to support the key
  functional areas of an organization.
• APICS defines ERP as an accounting-oriented
  information system for identifying and planning
  the enterprise-wide resources needed to take,
  make, ship, and account for customer orders.

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What is ERP

• A company-wide Information System
• tightly integrates all aspects of a business
• one database
• one application
• unified interface across the entire enterprise
• shared, integrated database

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ERP Objectives

• Links all areas of a company with external
  suppliers and customers into a tightly integrated
  system with shared data and visibility.
• Solves problem of the fragmentation of
  information over many legacy systems in large
  business organizations.
• Plays a critical role in improving or
  reengineering outdated infrastructures.
• Tighter control over internal operations
• Drives down costs.

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ERP is

• Hardware
• Software
• Network Infrastructure
• Business Processes
• Resources to manage those processes

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Automation

• Printing Checks
• Producing Dunning Letters
• Tracking Trucks
• Counting Inventory
• Transactional processing
• Managerial Reporting

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Computing Power

• Mini Cooper size IBM Mainframe (1980)
• 64MB RAM
• 250 MB Tape Cartridges
• Treo 650 (2005)
• 64MB Ram
• 1GB SD Card

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Technology changes, not Process

• New Vendor
• Journal Entries
• New employee hire
• Any others

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Processes Change When

• Businesses grow
• Larger vendors say so
• Customer demands increase
• Competition requires it

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Systems and Processes

• Get out of hand
• Complex
• Unwieldy
• Greater control
• Touch points increase
• Aligned to corporate objectives

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History of ERP

• Technology existed before ERP
• McCormack and Dodge
• MSA
• Cincom
• COBOL
• Fortran
• Assembler
• Punch Cards
• Ledgers

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What made ERP?

• Gartner Group (1994)
• Meta Group (1995)
• Define software categories and taxonomies
• Transition from MRPII
• Same planning and control systems

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Debate for Hours

• SAP (1972)
• Oracle (Company 1977/Applications
  1987/PeopleSoft-J.D. Edwards 2004)
• PeopleSoft (1987/J.D. Edwards 2003)
• J.D. Edwards (1977)
• Lawson Software (1975/Intentia 2005)
• Microsoft Business Solutions (1975/ Great
  Plains-Solomon 2000/Navision 2002)

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Survey of ERP Failures

• Review of existing work processes and
  organizational structure.
• In 2000 only 3.6 percent of ERP implementations
  were successful.
• 70 percent of ERP systems do not achieve their
  estimated benefits.
• 42 percent of the companies faced serious
  problems with their business strategies.
• 72 percent of the respondents believed that the
  ERP solution fulfilled less than 50 of their
  business IT requirements.

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Survey of ERP Failures

• Almost 96 percent of enterprises are frustrated
  with their information management processes.
• Over 70 percent feel that their current
  information systems deliver inconsistent
  reporting and it takes too long to collate
  information.
• Nearly 60 percent of companies find that their
  current information systems do not have the
  flexibility to handle change.
• Nearly 60 percent of companies have concerns
  about the accuracy of their data sources.
• 14 percent of implementations are abandoned.
• 40 percent either just meet or fall short of
  expected benefits.

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Survey of ERP Failures
ERP GRADE F or DNM
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ERP Objectives and BPM Steps

• ROI
• Streamlined Operations
• Reduced FTEs
• Better Management
• Enhanced Processing
• .

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ERP Objectives and BPM Steps

• ROI
• Streamlined Operations
• Reduced FTEs
• Better Management
• Enhanced Processing
• REQUIRES
• BENCHMARKING AND TRACKING

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Business Process Management

• Key to meeting ERP Objectives
• Not based on the bigger view
• Discrete processes transform businesses

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BPM Steps to consider

• Strategy
• Process
• Tools
• Organizational Elements

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BPM Steps Considerations
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Process Driven Approach to BPM
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BPM Primary Goals

• Map
• Manage
• Streamline

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Technology is not going to rescue us if we fail
to solve our core process problems, adds David
M. Fisher, author of Optimize Now (or else!)
How to Leverage Processes and Information to
Achieve Enterprise Optimization (and Avoid
Enterprise Extinction), published in December
2003. Web services dont solve the problem of
garbage in, garbage out.
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U.S. Army Approach

• In May 2004, the U.S. Army Materiel Command
  committed itself to one of the largest business
  process re-engineering in its history using the
  principals of BPM.

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BPM

• Fundamental Rethinking
• Redesign of Business Processes
• Cost
• Quality
• Service
• Speed

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Process

• Integration of
• Rules
• Methodologies
• Technology
• People
• Infrastructure
• Management techniques

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BPM Core Steps

• Review of existing work processes and
  organizational structure
• Analysis of functional requirements to identify
  procedures and decision flows
• Identification of candidate processes for
  re-design and prototype of potential solutions
• Providing advice in developing and integrating
  processes to eliminate information and process
  redundancies
• Identifying and recommending new processes
• Providing expert advice and assistance in
  implementing new processes
• Workflow Documentation

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Business Process Management Alignment to Main
Thing

• Executive Goal Definition
• Business Context and Operating Strategy
  Definition
• Current Process State Analysis
• Visionary and Future State Definition
• Process Change Implementation
• New Processes Management

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Executive Goal Definition

• Define change objectives
• Change that transforms business
• Understand the need for change
• Define the type of change
• Fact-finding
• Define desired results

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Business Context and Operating Strategy Definition

• Define and understand the business context and
  operating strategy.
• Define why the business operates and the
  strategies behind its operations.
• Policy and procedure level.
• Knowing the drivers which require business change.

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Current Process State Analysis

• Analyze the current state of Business Processes.
• Business Transformation Team.
• Background of the current state business
  processes and any significant enabling
  technologies.
• Identify the primary pain-points and key
  transformation areas.

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Visionary and Future State Definition

• Defining and understanding the visionary and
  future state.
• Greater view of what the business area will
  become.
• Define the future state of the business
  operations and the visionary strategies needed
  for its operations.
• Policy, procedure, and activity level.
• Gives purpose to the greater body of knowledge
  which will make up the core values of the
  organization.
• Focus on knowing the drivers and how they will
  become the business.

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Process Change Implementation

• Implementing the changes.
• Comprehensive plan for how, where and when to
  introduce each change.
• Measurements and controls for the new processes
  are identified and built.
• Confirm results of transformation.
• Monitored and action taken when performance
  drifts out of tolerance.

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New Processes Management

• Emphasis on determining if the gains of making
  the changes line up with the predetermined
  expectations.
• Two main components
• Instituting appropriate measures
• Striving to continuously improve the process

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Process Decomposition and Construction

• Hackett Group taxonomy
• Process Group
• Process
• Sub-process
• Activity

• Value Mapping
• Value Chain (level 1)
• Process Chain (level 2)
• Process Map (level 3)
• Activity Map (level 4)
• Step Map (level 5)

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Value Chain
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Process Chain
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Process and Activity Map
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Step Map

• Procedure Manual
• Reference Manual
• How-to Manual
• Quick Reference Card
• Tutorial
• Training Manual

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Step Map

• Procedure Manual
• Reference Manual
• How-to Manual
• Quick Reference Card
• Tutorial
• Training Manual

THE DREADED DOCUMENTATION BUT SOMEONE HAS GOT TO
DO IT
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BPM in Finance

• Long-term operating-cost models that support the
  delivery of business strategy effectively with
  improved levels of efficiency and cost control.
• Deliver improved revenue, market share and cost
  efficiency by contracting with a strategic
  business partner that help businesses to focus on
  their core operations by not only executing
  firms financial processes, but delivering
  continuous strategic change to benefit
  bottom-line.
• Help improve controls, re-engineer processes to
  deliver faster, and implement best practices to
  reduce the cost of transactional activities.
  (e.g. in activities like accounts payable, global
  payment processes are executed in low cost global
  business center.)
• Deliver practical solutions to the issues faced
  by CFOs world-over.

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BPM in Procurement

• Improvement of procurement performance.
• Re-engineering it from a back office function to
  a key business function.
• In-depth purchasing expertise, process and
  quality specialists, and a flexible technology
  platform to build and execute programs that
  produce sustainable and consistent savings for
  customers year after year.
• Key elements
• Organization
• Performance management
• Global sourcing
• Processes
• Increased leverage with suppliers.
• Significant reductions in spending by employees.
• Reductions in purchase order cycle times among
  other benefits.

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BPM in HR

• Align the HR function more closely with business
  objectives.
• Solutions offer examination of the HR strategy
  and how it supports the business strategy.
• Derive tremendous improvements from the
  transformation process.
• Supports firm's business.
• Demonstrate an improvement in value, and carry
  out cost-heavy administration.
• Deliver technology-enabled HR and people
  management services enabling manager and employee
  service at lower costs with leaner processes.
• Optimizing the gains, while fulfilling the
  commitment to leaner and faster processes,
  responsiveness and delivery.
• Success in Business Process Management can only
  be achieved by documenting the reality of what
  employees are doing and implementing a plan of
  continuous improvement.

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Final Thoughts

• BPM is the inclusive analysis and re-design of
  end-to-end business processes, associated
  information systems and organizational
  structures.
• Objective is to achieve dramatic improvement in
  business performance and create substantial
  customer and stakeholder value through
  revolutionary change.

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• Tim Salaver
• Tim_at_Go-CSS.com
• ERP is DEAD
• Business Process Management Lives F-07
• Please return your completed session survey
• to the room monitor or the collection boxes
• near the exit.