Page 26 - DCAP302_ENTERPRISE_RESOURCE_PLANNING

Enterprise Resource Planning

notes objectives

After studying this unit, you will be able to:

l z State the need for business process re-engineering
l z Describe management information system, decision support system and executive
information system

l z Discuss the concepts data warehousing and data mining
l z Explain the concept of supply chain management

introduction

Business Process Re-engineering (BPR) is the fundamental rethinking and radical redesign of
business processes of an organization to achieve dramatic improvement in critical contemporary
measures of performance such as cost, quality, service and speed. In simple terms, the process
of examining current processes and redesigning those processes to increase the efficiency and
effectiveness of an organization is called BPR. More precisely, BPR means the rapid and radical
redesign of strategic, value-added business processes and systems, policies and organizational
structure that support them to optimize workflow and productivity in an organization. BPR
concurrently pursues breakthrough improvements in quality, speed, service and cost by
leveraging the potential of information technology while addressing the issues of organizational
strategies and vision for change. Breakthrough improvement means quantum gains of 5 to
10 times compared to incremental improvements of 20-30 percent. These improvements are
generally characterized in terms of improvement of product and service quality at low cost and
less time lag between product designs to marketing.

2.1 Why process re-engineering?

Organizations re–engineer for a variety of compelling business reasons. Improving business
processes is paramount for businesses to stay competitive in today’s marketplace. Over the last
few years organizations have been forced to improve their business processes because customers
are demanding better products and services. Another apparent trend is the opening up of world
markets and increased free trade. Such changes bring more companies into the marketplace, and
competing becomes harder and harder. In today’s marketplace, major changes are required to
just stay even. It has become a matter of survival for most organizations.
Organizations re-engineer when the management feels that a significant gap is existing between
the actual and desired results, creating a business problem. At times, senior management
translates this business problem into process performance problems and opportunities. This
allows the company to focus on fundamentally transforming the target process(es), thus,
improving business results and solving the problem. At this early stage of identifying the need
for radical change, senior management commitment and sponsorship is essential in taking the
decision to re-engineer. Traditionally, nearly 70 percent of all re-engineering projects fail. This
extreme failure rate has often been ascribed to a lack of senior management sponsorship or
failure to make an ongoing commitment to the tough management decisions needed to effect
these changes to the work environment.

2.2 What re-engineering is and is not?

By definition, re-engineering is ‘radical change, fast’. Re-engineering involves fundamental
rethinking and transformation of an integrated set of business processes. Re-engineering requires
not only a redesign of business processes but also concurrent examination and redesign of the

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