Enterprise-Level Business System - Literature review Example

Running head: Enterprise Assessment of an enterprise-level business system ___________ ________________________ ________________ Assessment of an enterprise-level business system Introduction ''''''''''This paper has the primary objective to delineate requirements of a system which can be used to assess an enterprise level business system. During the course of the assessment it would be pertinent to examine the various information-gathering methods that can be used in the process. An essential ingredient would be the statement of the business process mapping methods that can be utilized in analyzing the business activities. While doing the above this paper would also examine some of the business process mapping tools that can be used in documentation. At the end this write up would set forth the criteria for establishing the acceptability or otherwise of the business process mapping tools and suggest any improved tools. In fact all this considerations can be answered in the concept of business process reengineering. Discussion It was in the early 1990s that many US corporations, and subsequently companies all over the world, began to adopt the concept of business process reengineering (BPR) to obtain long lost competitiveness that they had lost during the previous decade. The primary feature of BPR is the sole focus on business processes, rather than functional organizational structures. Davenport (1993) defines a (business) process as "a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus's emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. ... Taking a process approach implies adopting the customer's point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers." 1 Hammer & Champy's (1993) definition can be considered as a subset of Davenport's. They define a process as "a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer." Whereas Johansson et. al. (1993) defines a process as, "a set of linked activities that take an input and transform it to create an output. Ideally, the transformation that occurs in the process should add value to the input and create an output that is more useful and effective to the recipient either upstream or downstream." This definitions lead us to chief feature of a business process viz. Definability, Order, Customer, Value adding, Embeddedness and Cross functionality. In order to gain an understanding of the various processes involved in the organization which completes its business system information pertaining to above features of the business processes needs to be collected. There can be essentially two approaches to collection of such data-one, the primary data collection and, two, the secondary data collection. With in these approaches primary data could be collected through face to face interviews with key personnel responsible for such processes and a broader based questionnaire approach can be used for the operative employees. Secondary data sources can be rich and can range from industry publications to in-house examination of manuals, sales and marketing registers, financial accounts, accounting vouchers to Board minutes to minutes of the various committees of the Board and other executive committees. 2 The process of business process mapping can follow two approaches. Davenport and Short (1990) have identified two basic methods for process identification, which they termed "targeted" and "comprehensive" methods. Targeted methods take their starting point in the identification of a relatively small number of processes being critical to the business, which are determined by interviews or discussion with managers of the organization. This approach can provide a fast pay-off and results often occur relatively fast. This essentially means that the processes of a business are divided into two parts viz critical and non critical based on initial data collected about them. Like pulling out the inner most string it is the critical processes around which the restructuring begins. 3 As against this, the comprehensive method aims for first identifying all business processes, and then prioritizing them according to their reengineering-need and potential. This method is more time and effort consuming, but allows a more well thought out rationale for BPR in terms of project prioritization that fits into the overall strategic goals of the organization. (Grover & Kettinger, 1995) 4 This process leads to a mapping process such as the one described below: 5 Define core competencies. The identification of core competencies is a most vital measure to envision the current and possible future positioning of the company. 6 Develop shared vision. The future vision must be shared broadly among the company's stakeholders in order to create initial impetus and prepare for the necessary ongoing commitment in the organization. 7 Determine strategies and priorities. Based on the future vision, strategies are developed in the areas business, organization/processes, technology and people. Within the areas, the most important improvement areas are targeted. 8 Develop operational vision. Based on the overall vision and strategic priorities, an operational vision is developed, describing how the new organization is supposed to work. 9 Create next level process models. The results of the initial phase are used as input for developing new process models, supporting organizational structures and sketches for IT solutions. 10 Benchmark current operations against vision. The new process models need to be now benchmarked against current operations with regard to performance in terms of time, cost, quality and service level. 11 Analyze gaps. Gaps are defined in terms of performance differences between current and future operations, as identified in the previous benchmarking process. 12 Assess barriers to change. Factors that can hamper organizational and technical change and development can be found in multiple areas. 13 Identify quick hit initiatives. In order to show results fast, a number of limited and targeted initiatives are defined that can be executed in a short-term perspective and with limited resources, but still can provide significant improvements within their scope. 14 The tools to ascertain the effectiveness of mapping can be several. However two of the most important tools are : 15 Balance sheet. An opening balance sheet is set up for the new operational processes as a starting point for ongoing evaluation. At this stage, the new processes are brought into continuous improvement phase. 16 Scorecard. Scorecard based models for measuring internal and external performance have proven to be powerful instruments for operating and improving processes. Scorecards are utilized at different levels with in the organization, for individual processes and activities for managing individual processes, and aggregated in order to provide an overall assessment. 17 Any improvement felt necessary, as above, essentially implied working back to improve the mapping and in some cases it can even imply moving over from one mapping method to another. The entire tool-set would comprise of time-oriented analysis tools and modeling approaches including some experimentation to test new situations. In general, the strategy adopted for the use of tools or methods for data collection, analysis and documentation is entirely dependent on the type of business and its processes facing the analyst. Sometimes the tool set being practically used may be a hybrid mix of different approaches and at others it may be based on recommendations of consultants based on the initial process studies. A clear and comprehensive categorization of these tools in accordance with the forecast/crisis criteria is not possible. However it can be safely concluded that the three criteria that can be used to evaluate these tools would comprise of robustness, ability to explain causality and comprehensiveness to the extent feasible. Thus forecasting accuracy and ability to provide decision variables readily in crisis situations can be the two criteria for judging various tools and methods involved in business process analysis. Methods are normally considered as explicit mechanisms for problem solving (Jayaratna, 1994). In the entire BPR process the role of Information Technology is paramount. Most frequently used application areas of IT along side BPR efforts are: Shared databases. The concept of database sharing, which allows a wide distribution of critical business information, is one of the most important areas where IT can contribute to a more effective and efficient performance of business processes, and has gained considerable attention since client/server technology has become a widely used solution. Shared databases allow companies to move from a sequential to a parallel performance of activities in a process. Expert systems. This type of technology, based on Artificial Intelligence (AI) field, can enable non-experts to perform expert work by capturing and widely distributing knowledge. As Hammer (1990) points out, however, the concept of expert systems in BPR does not refer to the earlier attempts of replacing experts by computer systems, but means to provide specialized knowledge to individuals in order to elevate their skills. 1 The forecast accuracy and crisis resolution criteria suggests that forecast initiatives should have a strategic focus on the role of IT, whereas crisis projects would focus on cost and time efficiency. For instance, the focus of the application leading to Remote Data Capture, would be to cut time in transactional decision making thus having the strategic impact of significantly reducing time-to-market. Recently IT has been combined with communication technology to capture both internal and external data on real time basis. These are called ICT systems integrated with BPR.These IT enabled systems can allow the use of prototypes alternatives instead of the stand alone process wise analysis done through various forecasting and crisis resolving methods. This would allow scenario analysis and lead to selection of best methods. References Davenport, Thomas (1993), Process Innovation: Reengineering work through information technology, Harvard Business School Press, Boston. Hammer, Michael and Champy, James (1993), Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business. Johansson, Henry J. et.al. (1993), Business Process Reengineering: BreakPoint Strategies for Market Dominance, John Wiley & Sons. Davenport, Thomas & Short, J. (1990), The New Industrial Engineering: Information Technology and Business Process Redesign, in: Sloan Management Review, Summer 1990, pp 11-27. Grover, V. & Kettinger, W. (1995), The Process Reengineering Life Cycle Methodology: A Case Study, in: Business Process Change: Concepts, Methods and Technologies, Idea Group Publishing. Jayaratna, N. (1994), Understanding and Evaluating Methodologies: NIMSAD, a systemic framework, McGraw-Hill, Maidenhead. Hammer, Michael (1990), Reengineering Work: Don't automate, obliterate, Harvard Business Review, Jul/Aug 1995, pp 104-112. Read More