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ERP is DEAD: Business Process Management Lives F07

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Title: ERP is DEAD: Business Process Management Lives F07


1
ERP is DEAD Business Process Management Lives
F-07
  • Tim Salaver
  • President
  • Cornerstone Systems Solutions, Inc.

2
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.

3
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

4
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    reengineering outdated infrastructures.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.

5
ERP is
  • Hardware
  • Software
  • Network Infrastructure
  • Business Processes
  • Resources to manage those processes

6
Automation
  • Printing Checks
  • Producing Dunning Letters
  • Tracking Trucks
  • Counting Inventory
  • Transactional processing
  • Managerial Reporting

7
Computing Power
  • Mini Cooper size IBM Mainframe (1980)
  • 64MB RAM
  • 250 MB Tape Cartridges
  • Treo 650 (2005)
  • 64MB Ram
  • 1GB SD Card

8
Technology changes, not Process
  • New Vendor
  • Journal Entries
  • New employee hire
  • Any others

9
Processes Change When
  • Businesses grow
  • Larger vendors say so
  • Customer demands increase
  • Competition requires it

10
Systems and Processes
  • Get out of hand
  • Complex
  • Unwieldy
  • Greater control
  • Touch points increase
  • Aligned to corporate objectives

11
History of ERP
  • Technology existed before ERP
  • McCormack and Dodge
  • MSA
  • Cincom
  • COBOL
  • Fortran
  • Assembler
  • Punch Cards
  • Ledgers

12
What made ERP?
  • Gartner Group (1994)
  • Meta Group (1995)
  • Define software categories and taxonomies
  • Transition from MRPII
  • Same planning and control systems

13
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)

14
(No Transcript)
15
(No Transcript)
16
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.

17
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.

18
Survey of ERP Failures
ERP GRADE F or DNM
19
ERP Objectives and BPM Steps
  • ROI
  • Streamlined Operations
  • Reduced FTEs
  • Better Management
  • Enhanced Processing
  • .

20
ERP Objectives and BPM Steps
  • ROI
  • Streamlined Operations
  • Reduced FTEs
  • Better Management
  • Enhanced Processing
  • REQUIRES
  • BENCHMARKING AND TRACKING

21
Business Process Management
  • Key to meeting ERP Objectives
  • Not based on the bigger view
  • Discrete processes transform businesses

22
BPM Steps to consider
  • Strategy
  • Process
  • Tools
  • Organizational Elements

23
BPM Steps Considerations
24
Process Driven Approach to BPM
25
BPM Primary Goals
  • Map
  • Manage
  • Streamline

26
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.
27
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.

28
BPM
  • Fundamental Rethinking
  • Redesign of Business Processes
  • Cost
  • Quality
  • Service
  • Speed

29
Process
  • Integration of
  • Rules
  • Methodologies
  • Technology
  • People
  • Infrastructure
  • Management techniques

30
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

31
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

32
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

33
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.

34
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.

35
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.

36
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.

37
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

38
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)

39
Value Chain
40
Process Chain
41
Process and Activity Map
42
Step Map
  • Procedure Manual
  • Reference Manual
  • How-to Manual
  • Quick Reference Card
  • Tutorial
  • Training Manual

43
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
44
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.

45
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.

46
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.

47
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.

48
  • 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.
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