BUSINESS PROCESS IMPROVEMENT
Drive Business Process Management (BPM) with ERP
We study your business processes, Improve your processes, stabilize then Optimize, train your people and change your culture to sustain the gain
What is Business Process Management and how it relates with ERP
It’s unlikely that someone would go on a long journey without first procuring a map and planning their route. People have an easy time visualizing a destination when planning their route but don’t understand the pitfalls that lie in the journey. Business process management is the roadmap to the destination of a successful ERP implementation. Like all roadmaps, there are multiple routes to consider.
Within an ERP implementation there are various levels of business process management to consider as you design your new system:
Business Process Improvement (BPI) – There are a variety of approaches within business process management; the first being business process improvement. In this approach, it’s important to examine the key processes within an organization that are competitive differentiators. Here, organization first identify the current state and primary key performance indicators to measure success. Next, organizations determine root cause, validate root cause and improve processes to optimize ultimate efficiency. Finally, organizations put a control plan in place to monitor the ongoing process and ensure checks are put in place to trigger appropriate responses if key metrics fall out of control.
Business Process Optimization (BPO) – Optimization looks at all of the existing processes within the business and seeks to improve them to reduce the company’s overall cost to produce.
Business Process Management (BPM) – Business process management is a holistic approach used to evaluate, improve and align business processes to an organization’s overall goals and strategy. It enables businesses to be more efficient and flexible to change.
Business Process Reengineering (BPR) – Business process reengineering identifies the current process but requires a more radical change. It is used when current processes can’t be improved with minor changes but need to be redesigned from scratch, creating a new process from start to finish. For Example: Due to the high discrepancy between Sub-ledger and General Ledger data, an organization is starting automated bank reconciliations both at P2P and O2C related transactions.
Choosing the right level of business process management is critical to designing a roadmap for your ERP implementation. Having a roadmap in place is a smart way to avoid the common pitfalls associated with getting lost along the way.
ERP and Business Process Improvement
Major conflict occurs when the company begins to consider replacing their legacy information system with a modern ERP system. At this point one of the following arguments surface:
> Our business information processes are so bad that that we should throw them out and start over with a new ERP system.
> Our business processes are so bad that we cannot implement a new ERP system until we improve our existing processes. Otherwise we would be implementing bad processes.
So, who is correct? Let’s examine both situations.
“Throw out current processes and start over” –
The company’s attitude is that they cannot achieve improvements by reengineering their existing systems and processes. They believe they can only change their poor business processes as part of an ERP implementation that has best practices. Many of these existing processes were driven by decisions made far in the past. This company has done some process improvements in the past that have been department driven. The result may be a number of islands of information driven by loosely or non-integrated solutions.
“Improve our businesses processes first’ –
This company has people on the team that have had success improving business processes through either Lean or Six Sigma programs. The attitude is that incremental steps toward business process improvements will yield incremental benefits. The company has a legacy system. Through its journey of continuous improvement, the company has modified the legacy system, and added various departmental solutions. Again, the result may be a number of islands of information driven by loosely or non-integrated solutions.
Both positions exist in today’s world. Both positions have validity based on the personality of the company. At RAL Infosystems, we have been asked to assess both situations. For both situations we recommend a plan to assess all of the aspects of their current state, get educated on what is possible, and to develop a vision of a future state, and a plan to achieve the business benefits of change.
Process Improvement: The Biggest Advantage of ERP
The processes that drive an organization can make or break it. Efficient process can result in improvements in most aspects of an organization, while inefficient processes can bring a company to its knees. That’s where enterprise resource planning (ERP) comes in.
From our experience, we can say that when implementing ERP, organizations are forced to consider the processes that ERP affects. High level, 2 approaches are available: Throw it all out and start fresh, or Improve the existing processes incrementally. Either approach helps the organization improve processes. First one comes with lot of headache and can lead to failure of an ERP project if mass changes becomes overwhelming, however if success reap maximum benifits. Second one, which is One bite at a time approach, is most successfull way as small bites are easier to digest.
BPI goes in hand with ERP, and we suggest our clients to form a team to lead its BPI process which should be led by a Senior member and serve as Chief Process Officer (CPO). The CPO (often but not necessarily the chief information officer) leads the team of process owners (POs) in identifying all of the business processes in the enterprise impacted by an ERP solution. CPO along with POs coordiate with our process improvement consultants. We solicits input from the POs, by function within the company. When a designated CPO directs the initiative, the ERP selection and implementation processes tend to run more smoothly—contingent on the CPO selected.
Finally, Process Improvement team coordiantes with CPO/POs and able to gather and understand functional data, as well as synthesize and analyze reports coming from sales, shop floor, inventory, accounting, quality and other areas basis which the current state documentation is completed. Many users in companies may not be well-versed in current best practices. They know very well, however, their current system or may recall some capabilities from a past position.
Once the current state is reviewed and documented, we educate their business-process owners on what is possible with current, state-of-the-art ERP systems. To build the future state, we lead the charge to develop improved business-process flows. In hands-on workshops, process owners review waste in current processes and discuss best practices and future-state requirements. Finally, we develop “TO-BE” maps that, when combined, define the desired, improved future state.
Change is Good-
Improving business processes is a requirement in today’s market to stay competitive. In a time when how lean an organization is determines how successful it is, making those changes is essential