Technology Enabled vs. Clean SLateReengineering
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
ERP and Reengineering“SAP implementation equals forced reengineering”
“it’s rare when you don’t have to do some kind of reengineering”
ERP is the “electronic embodiment of reengineering”
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Reengineering Tools and Technologies in 1994 (CSC Index 1994)
Tool USA Europe
None 41% 36%
Process Value Analysis 36 27
Benchmarking 34 36
Competitive Analysis 25 28
Activity-Based Costing 20 17
Other 16 17
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Currently, ERP is the dominant tool!
Technology Enabled (Constrained) Reengineering“Enabled” vs. “Constrained” …
◦ Which term? Why?
A particular technology (or portfolio of technologies) is chosen as a tool to facilitate reengineering.
◦ Thus, reengineering choices are a function of the technologies chosen.
◦ The technology drives the reengineering.
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Clean Slate Reengineering
Process design starts with a clean slate
Also referred to as “starting from scratch”
Theoretically, no limits
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Somewhere Between the TwoIn actuality, there are few projects that are “purely” clean slate or technology enabled
More of a spectrum
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
TechnologyEnabled
CleanSlate
Advantages of Technology EnabledERP provides a tool to facilitate change
ERP helps structure complex reengineering efforts
Tools help explain and rationalize efforts
ERP bounds the design, limiting overload
Design is feasible
There is Evidence that the design will work
Designs likely are cost effective
Designs likely can be implemented in a timely manner
There is software available
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Advantages of Clean SlateNot constrained by a particular tool
Not constrained to a limited set of processes
Evolution is not limited by a particular technology
Can develop a design that others cannot access
There is evidence that firms think they should reengineer and then implement
May be the only option
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Which Firm Should Use Which Approach?
Depends on
Firms Size
Available Resources
Time Pressure
Strategic Gain
Uniqueness of solution
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Large FirmsHave the resources to do clean slate
Are often industry leaders and thus, generally have time
Are likely to use processes as a competitive advantage
Are more likely to need a unique solution
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Firms with Deep PocketsClean slate requires substantial resources
In some cases, clean slate will lead to many starts and stops before the “final” design is found
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Firms with TimeClean slate takes longer so only firms that have the time can really do clean slate approaches.
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Firms for which Processes are a Strategic Advantage
The more unique a firm in terms of its industry, processes, customers or other factors, the more likely that they see their specific processes as a competitive advantage, and thus use some clean slate approach.
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Firms that Seek a Unique Solution
Technology enabled approaches are easily copied and diffused
Clean slate approaches are not as rapidly or as easily copied.
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY, 2000 ©
Chapter 8
Choosing an ERP System
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Two Basic Approaches
There are two basic approaches that are used as bases of choosing ERP software
◦ Requirements Analysis (“As Is”)
◦ Best Practices Analysis (“To Be”)
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
“As Is” AnalysisAs is refers to the current system and its current capabilities
The system “as it is” right now
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Requirements Analysis (“As Is”)“As Is” the ways things are.
Organization determines what their processes and artifacts currently are and use that “as is” model to establish requirements that software is judged against.
Typically, the software that best meets the requirements is the one chosen by the firm
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Requirements Analysis -Evaluating FeaturesTypically, requirements are features that the software “must have”◦ In addition, sometimes “would like to have” also is
gathered.
◦ Likely to use a numeric scale of say 1-5 for each feature, based on how important the feature is
For missing features, typically changes to the software are seen as a gradation of change, e.g., “enhancement” or “customization”
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
How many requirements?Timberjack’s requirement analysis took six months and generated > 1,000 requirements
Another firm took eight months and generated 1,500 requirements
If it takes a long time, then requirements can (will?) change
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
How long will it take?Can be a substantial effort and take a while!
Typically 1 - 3 months
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Who Should Be Doing Analysis?Trade-off between current employees who know how work is done, and managers, who see work from a different perspective. ...
Which processes should be captured:◦ Past
◦ Current, or
◦ New?
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Help for Doing Requirements Analysis
Consultants specialize in requirements analysis, e.g., Big 5
There are existing packages that facilitate requirements analysis, e.g., “The Requirements Analyst”
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Advantages of Requirements AnalysisClassic System Choice Process, so it is generally understood
Establishes a bench mark that can be used to judge fit of software
Provides a document that can be used for communication and to generate buy-in
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Disadvantages of Requirements Analysis“As Is” analysis can be very
◦ time consuming, slowing the implementation
◦ costly (e.g., one firm spent $100,000)
May (will) be impossible to specify all software requirements
If there are too many requirements then vendors may not fully respond to the RFP
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Disadvantages of Requirements AnalysisLose chance to reengineer by focusing on the ‘‘As Is” model
◦ Cements existing processes without evaluation as to their quality
Requirements are not stable, so it is likely that requirements can only chase reality
◦ Requirements are only a snap shot
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
FormatTypically a list, along with a relative ranking of the importance (1,2,3,4,5)
Scripted◦ Loosely Scripted -- “show me what you have”
◦ Tightly Scripted -- “can you handle this data?”
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
“To Be” AnalysisProcess of determining which best practices should be used by a particular organization, i.e., how should the organization process information, and choose the software on that basis
Focuses, not on where the organization is, but where it wants to be.
Search often includes Big 5 best practices, and ERP best practice capabilities
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Gap AnalysisMatch “AS IS” and “TO BE” to determine if any gaps.
How do we evaluate gaps?◦ Count them?
◦ Rate importance?
◦ ...
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Both Requirements Analysis and Gap Analysis Ignore Important Issues
Cost
Installation time
Flexibility
User interface
Upgradability
Implementation Personnel
Reliability …
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Cost Factors - Mini Case:Which Do You Choose?
Upgrade Oracle SAP
Implementation $3-5 M $4-8 M $6-10 M
Software Development $2-4 M $1-3 M minimal
No. of Users (Seats) 15-20 10-15 8-10
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Both approaches ...basically assume that majority wins. How do you choose, the software that has the most requested features or the most valuable features or ..?
can focus on artifacts (e.g., invoice) rather than processes
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Emerging ApproachIncreasingly, consultants are promulgating the approach where no “as is” model is developed, no gap model is developed …
Go straight to the “to be” model, since that is what really counts
Typically, with this approach the consultant knows both your organization and the software
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
Emerging ApproachInstead, just choose one of the better ERP packages and choose the best practices available within that package.
◦ Systems are so good that any of the systems will have processes that are “good enough”
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
How do firms choose?A Case Study
Company: Chesapeake Display and Packaging (CDP)
They used a five step approach, including a vote as to which everyone preferred.◦ Form Blue Ribbon Committee◦ Contact Vendors to Arrange Demos◦ Ask Vendor for Proof of Rapid Implementation◦ Vote◦ Make Choice
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
1. Form Blue Ribbon TeamA Blue Ribbon Team (BRT) was chosen for their knowledge of the business and business processes
There were some big picture people
The committee was limited to no more than ten people
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
2. Contact Vendors to Arrange Demo’sA limited number of first tier vendors were chosen, contacted and asked to prepare a demo for the BRT
Vendors were given unlimited access to the BRT for three weeks.
Demos lasted 1-2 days
Vendors choose the hardware and software that they preferred
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
3. Ask the Vendor for Proof of Rapid Implementation AbilityVendors were asked ...
◦ Show your software can handle our business
◦ Show you can implement in the time required
◦ Show expertise in understanding the industry
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
4. VoteAfter the demos, there were three candidates, Baan, J.D. Edwards and SSA.
In order to choose, the BRT was asked to rank 1 to 3 based on “Best functional fit” and “Best implementation personnel”
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
5. Software RecommendationJ.D. Edwards was seen as offering
◦ Superior financial capabilities
◦ One integrated solution
◦ Human resources and payroll
◦ Advanced object oriented tool set
◦ A planning module that allowed for scheduling on a cost basis
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
So, What do you ...Like about the way they selected their system?
Not like about the way that they selected their system?
“ENTERPRISE RESOURCE PLANNING SYSTEMS”, D. E. O’LEARY,
2000 ©
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