Erp System Implementation and Business Process Change: Case Study of a Pharmaceutical Company

Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises. The purpose of BPR is to make all business processes the best-in-class. Michael Hammer and James Champy published their best-selling book, reengineering the Corporation, where the authors promoted the idea of radically redesigning the enterprise by wiping the slate clean. New information technology, including the ability for people throughout the supply chain to communicate in real time and the ability for controls and monitoring to be instituted throughout the supply chain, is often a driver of process reengineering within the organization. By reengineering workflows with better quality controls within the production process, companies can more easily uncover issues within the supply chain at their source. Through breaking down the processes of the business and organizing around outcomes, companies can uncover and remove inefficiencies in their processes. In the insurance industry, claims typically took 31 days to

In today’s business environment, companies use integrated information systems to gain competitive advantages. The primary objective of senior management is to generate a 10% profit to reinvest into the enterprise and expand their divisions. Several of Bandon’s competitors have implemented ERP with integrated CRM solutions. In order for Bandon Group, Inc. to compete with businesses such as Xerox, it is necessary to integrate the business applications. According to Monk, Ellen, & Wagner, “increasing information system efficiency often results in the effective management of business processes, which is essential to maximizing profit and sustainable growth” (2009). Bandon Group has common critical problems and issues within the organization today; there are also opportunities and challenges that need to be addressed. The technology department is small and strained. With the range of various technical solutions that have been implemented across the divisions it has become very difficult to provide data migrations, network support, technical support and training (Sumner, 2005). An ERP system can dramatically reduce costs and improve operational efficiency as it removes feudal decision-making and facilitates data integration and transparency between business units

It was considered to be overly structured and complicated, especially in the opinion of the CEO. He felt that lean management system enabled people’s involvement in the designing and improvement of processes more than that within the IT system. With the failure of initial IT implementation, CEO was of the opinion that “one size fits all” is not a feasible approach in Lean and IT amalgamation. Due to this, there were discrepancies of opinions among the executives as some believed IT systems could prove to be beneficial in the long run. Mr. Cremin believed that Lean manufacturing pushes the decisions down to people directly engaged in producing products. Incremented changes are key to innovation and continued improvement and an overly structured and complex IT system could interfere with the process innovation.

As the new CIO of Volkswagen of America (VWoA), Dr. Uwe Matulovic brings an impressive resume that includes ample experience in aligning business process management (BPM), business process re-engineering (BPR) and the insights necessary to create the Business Process Technology Organization (BPTO). As the IT projects within VWoA have lacked governance and are facing a severe budget shortfall of $150M, Dr. Matulovic has a formidable challenge. He must first align all existing IT projects to strategic initiatives, which is the essence of effective IT governance (Huang, Zmud, Price, 2010) and then he must define processes to stabilize these strategies yet ensure integration still occurs at the process and system level (Korac-Kakabadse, Kakabadse, 2001). All of these factors need to be taken into account as VWoA is evaluating up to 22 new models with will have an exponential, nearly chaotic impact on their existing IT systems and their ability to respond. Further, the VWoA business has continued to suffer from a lack of unified focus of IT spending to overall strategic initiatives. This lack of governance has created a process of defining IT priorities more defined by the persuasive ability of managers, their ability to build compelling Return on Investment (ROI) arguments, and

As a result of technological advancements, modern businesses seek new and improved methods of conducting their business processes. Systems have been designed to augment and manage core business functions such as production, accounting, procurement, and human resources. However, even with these systems in place, information is unreliable and inconsistent if they are on disparate platforms. Enterprise Resource Planning (ERP) software tackles this problem by integrating business processes into a centralized system.

As new technologies are developing at a rapid pace we must decide whether to upgrade our existing ERP system built on extremely outdated technology, or replace it with an entirely new ERP system. Using the completed decision flowchart I was able to evaluate whether upgrading or replacing the existing ERP system would be the best course of action. I started the flowchart with the most basic question of whether the system even needed to be upgraded or replaced at all. We know that the current software is more than 10 years old and it is based on is much older technology. We also know that the data entry screens are completely text based and the system doesn’t even have mouse support. With this knowledge we are able to determine that we

Many ERP projects reported in the trade journals will include a description and discussion of the re-engineering of business processes which occurred when the ERP system was implemented. When an organization implements ERP, it is important to re-engineer existing business processes to conform with the “best practices” which are supported by the ERP software.

Michael Hammer’s “Reengineering Work: Don’t Automate, Obliterate” is an article on the problems and some solutions businesses used to overcome their issues of wasting time and money on inadequate operation processes. As businesses grow, the operation processes grow as well and the way the process is handled needs to change to accommodate the growth to be more efficient. If you just add more the current process without considering a new way to handle the process, you end up with a larger problem then you began with. What Hammer is trying to get across is that instead of adding to current processes, you need to eliminate them all together and create a new design for the process. This new design depending on the purpose of the business

Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.

The most significant costs and risks a company can take are in re-aligning its core business processes and systems to allow for greater responsiveness to market opportunities and threats. Increasingly Enterprise Resource Planning (ERP) systems are being used as the unifying platform for all systems throughout an enterprise. As a result, the project, implementation, training and support plans often must be carefully devised and implemented across nontechnical and technical personnel to ensure the overall project's success. ERP systems especially are fulfilling a critical role in the managing of enterprises, taking on the tasks of managing accounting, financial reporting, supply chain management, logistics and ongoing quality management of products, processes and the role of people in adding value to finished goods and services (Ash, Burn, 2003). ERP has become the catalyst of entirely new approaches to using information, including the ongoing development of analytics and business intelligence (BI) applications that are giving executives greater visibility into their operations than ever before (Ash, Burn, 2003). In addition to analytics and BI, companies are aggressively pursuing Customer Relationship Management (CRM) systems that give them the ability to more effectively track and evaluate the performance of marketing and selling strategies. CRM systems are

According to Chiu and Tam (1997), in their title of project “Business Process Reengineering: The role of information technology” stated that business environment nowadays such as competition, customer demand and customer change require business to focus in business process reengineering (BPR) to reduce time, improving quality, customer service and reduce costs. Therefore, they suggested that process design should be enabled and change process should be identified in any BPR

Jean-Philip Pritchard & Colin Armistead, (1999); described Business Process Management (BPM) as a methodology designed to eliminate waste, customer–driven and ensure increased productivity. The main drivers of the approach in most organization are threat of competition, need to improve quality, responsiveness of products and services, while the main benefits are the need to improve client relationship, change in organization culture and ensuring better cross - functional working environment.

Process Reengineering is a more radical approach to improvement than TQM. It involves completely redesigning business processes and it is often implemented by outside consultants.

In the book Reengineering the Corporation: A Manifesto for Business Revolution, Michael Hammer and James Champy discuss a concept that he originated known as “reengineering”. The process of reengineering involves coming up with new ideas, specifically processes, which are technologically advanced and extremely effective in completing corporate work. Companies must think ahead so that they will not only succeed today, but also set the rules for future business. A critical part of reengineering involves ignoring the current procedures and structures that have been set by a company and replacing them with more efficient processes. In creating these new processes, companies must focus on the needs and wants of consumers. This will ensure customer satisfaction, which is a key part of maintaining a competitive advantage in today’s world.

Business must endlessly update their systems to keep up with the changes that occurs with their business process. Business processes are continually trying to find many ways to accomplish new and shifting goals for the business. New or shifting goals, such as changing the responsible for a current business process, or combining more than one responsible into one can be difficult and needs a clear understanding of multi-tiered systems and the business processes itself. The absence of connection among requirement and employment can lead to problems in recognizing the suitable program which must be changed to further increase the worthiness of a system in response to the new goals. Unfortunately, these changes can lead to errors and can make take longer than expected.