Enterprise resource planning (ERP) systems manage a number of day-to-day business functions, such as accounting, supply chain operations, human resources, customer service and more. It’s a software that collects transactional data from several sources and stores it in a centralized platform, where it can be accessed, shared and analyzed by all departments across the organization.
Today, ERP has become an indispensable tool for all business owners and decision-makers seeking to streamline their operations and enhance competitiveness. However, in their rush to jump on the automation bandwagon and capitalize on all ERP has to offer, many companies find that their implementation efforts fall short of expectations.
This is not an uncommon occurrence; in fact, statistics show that as many as 70% of ERP implementations fail to deliver their intended results. Among the reasons why this happens, one culprit stands out: the inefficiency of their existing processes.
As much as ERP promises to improve a business’s performance, it can not do so if the underlying processes are inherently flawed. In such cases, rethinking how your company operates is necessary. In other words, a business process re-engineering (BPR) might be in order.
What Is Business Process Re-engineering?
Business process re-engineering is the radical redesign of a company’s processes to realize dramatic improvements in critical, contemporary performance measures, such as cost, quality, service and speed.
Essentially, It uses an approach that defines business processes in two models: the “as-is” model and the “to-be” model. The as-is model examines the current state of an organization’s workflow. It highlights any inefficiencies and redundancies as well as what components can be improved.
Alternatively, the to-be model depicts the target state of a business process and, in doing so, outlines the changes necessary to get there.
Next comes a comparison of both models, also known as the gap analysis, in which business analysts identify the disparities and develop an action plan to reconcile them.
How Can BPR Facilitate ERP Implementation?
The following are a few standard steps in business process re-engineering that can aid companies in their ERP implementation efforts:
1. Mapping Current and Future Business Models and Identifying Gaps
As mentioned, attempting to deploy ERP on top of an already flawed process can impede a system’s effectiveness and, in turn, the desired outcomes. For example, if a manufacturing unit is constantly experiencing production delays due to machine downtime, an ERP’s real-time monitoring capabilities and data insights will be of no use.
In the same vein, if a finance department uses manual, paper-based methods for invoice processing and revenue tracking, an ERP’s automation and digitization capabilities are as good as obsolete.
In his Harvard Business Review article, Michael Hammer, BPR’s founding father, and former MIT professor, described the tendency to automate processes without taking into account whether they are effective in the first place as “paving the cow paths.”
In other words, no matter how sophisticated or expensive your ERP system is, its functionality will always be as limited as its underlying processes.
Following the “as-is” model, business consultants in the UAE identify and map all processes, however interconnected or interrelated they might be, across the organization to assess how they’re performing in terms of generating value for customers or contributing to the company’s bottom line.
After this, they develop a conceptual framework for an optimized process flow in the “to-be” model. Lastly, BPR experts conduct a systematic comparison of both models to highlight the points of departure between them and start prioritizing those processes that would benefit from redesign or elimination, thereby laying the foundation for a successful ERP implementation.
2. Creating a BPR Task Force
Whether you decide to enlist the help of external business consultants or keep everything in-house, a key component in conducting BPR is communicating the need to transform existing processes and getting the right people to work on them.
Ideally, such a team should comprise the following roles:
- Leader: Authorizes and oversees the BPR project.
- Process owner: In charge of a specific process and the re-engineering effort for it.
- Re-engineering team: Employees invested in the re-engineering of a particular process, who diagnose it and oversee its redesign and achievement.
- Steering committee: Senior managers who develop the organization’s re-engineering strategy and monitor its progress.
- Re-engineering advisor: Responsible for developing re-engineering techniques and tools and collaborating across different departments during the project.
In this setting, all team members are accountable for process improvement. This elicits buy-in from all stakeholders and minimizes resistance to change in case of monumental process alterations or ERP implementation plans.
3. Redesigning Processes to Support Business Objectives
In adopting an ERP system, your company undoubtedly has a specific goal in mind, be it quicker product iteration cycles, improved customer satisfaction, better cost management, enhanced decision-making capabilities or all of the above.
However, sometimes, your current infrastructure might not be primed to support these objectives.
Suppose your company has decided that its goal in deploying cloud-based ERP is to take advantage of its built-in CRM capabilities and accessibility and deliver more personalized customer interactions; meanwhile, you’ve been using a legacy CRM to manage customer data and engagement that doesn’t have the functionality to back up this strategy and only a handful of employees know how to use it.
In the course of BPR, how well your current processes align or conflict with your business objectives will likely be one of an expert’s starting points. From there, they will enact modifications, if not eliminations, that tie in with your ERP implementation goals.
4. Operationalizing New Processes
After redesigning processes, the next step is establishing standard operating procedures for the new workflows and communicating them to all employees to ensure everyone follows the same approach to performing their duties.
For example, if a re-engineered process calls for using an ERP system for inventory management and triggering automatic reorders, it’s crucial to thoroughly assess the system’s capabilities in executing this task and train inventory managers and personnel on how to use it.
In this way, BPR prepares employees for working with ERP and ensures a smooth transition to the new system, minimizing downtime and disruption.
BPR: A Prelude to ERP Success
BPR might not be a necessary endeavor for every enterprise embarking on an ERP journey, but it is one well worth considering. It’s a process that helps you rethink, optimize and align your organization’s operations and lays the groundwork for ERP success.
AUTHOR BIO
Ratheesh C. Ravindranathan is the Managing Partner at Affility, a comprehensive advisory services firm assisting clients in the UAE and worldwide with IT, risk and management consulting solutions. Being a specialist FinTech professional with over 20 years of experience, an MBA in Information Systems Management, Oracle Certified Professional (OCP) and a Certified Information Systems Auditor (CISA), Ratheesh is an expert at guiding through your business’s digital transformation journey, Independent ERP Advisory, and Transaction Advisory for various M&As in this region.
