Business Process Reengineering and ERP Systems

Chapter-I
An Introduction to Business
Process Reengineering
JLn introduction to (Business (Process (Reengineering
1.1 General Outline

The business environment world over has changed more in the last five years
than it did over the last 50 years. The key forces are customer, competition and
change. The pace of change continues to accelerate and enterprises around the world
seek to undergo business process reengineering (BPR), i.e. revitalize, reinvent and
resize themselves in an effort to position for success in the twenty first century. BPR
represents the radical transition that enterprises must make to keep pace with today's
ever-changing global markets. The winners of tomorrow will be those businesses
that most effectively gather and act quickly upon crucial information. Making
informed business decisions will enable enterprises to accomplish their business
growth and enable them to utilize the information to competitive advantage. To
make it possible for the enterprises to execute this vision, the need will be- for an
adequate infrastructure that provides information across the enterprise. The use of
information technology (IT) facilitates the creation of integrated management
information and offers new possibilities for the enterprises.
According to Morris "Business engineering (BE) is the re-thinking of

business processes to improve the speed, quality and output of materials or sendees".
BE revolves around IT and continuous change and constant refinement of an
enterprise's changing needs. According to Hammer and Champy "Business
reengineering represents the radical transition that companies must make to keep
pace with today's ever-changing global markets". BE makes enterprises more
customer-focused and responsive to changes in the market. It achieves these results
by reshaping corporate structures around business processes and implements change
not by the complete automation of a business but rather by the redefinition of
enterprise tasks in holistic or process-oriented terms. In the majority of cases, IT
powers BPR. Previously, IT was used to help enterprises automate existing business
processes but recently, technology is being used to change those processes
fundamentally. The recent developments in IT have made BPR possible on a radical,
extensive scale and also more effective. The merger of the two concepts has resulted
in the latest concept, Business engineering (BE) .The entirety of BE lies in radical,
process oriented business solutions that have been greatly enhanced by the IT of
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Jin introduction to (Business (process (Reengineering
client/server computing. Most of the enterprise resource planning (ERP) systems

developed are based on the client/server solution model and BE blue print that
represent an advanced integration of BPR and IT.
A lot of organizations have significantly changed their business processes in
order to remain competitive in the global market. Such process improvements were
obtained mainly by combining business process reengineering (BPR) efforts with the
adoption of Enterprise Resource Planning (ERP) systems. Enterprise Systems (ERP)
are defined as “configurable information systems packages that integrate information
and information-based processes within and across functional areas in an
organization” [Kumar and Hillegersberg, 2000].Enterprise resource planning (ERP)
systems are reshaping business structures because they promise to solve the
challenges posed by portfolios of supposedly disconnected and uncoordinated
business applications [Davenport, 1998]. Business Process Reengineering (BPR) is
defined as radical changes of business processes in order to achieve dramatic
performance improvement [Hammer and Champy, 2001]. With both focusing on
business process, ERP and BPR are closely related: enterprise system provides an
ideal information system platform to implement BPR, and a company cannot fully
utilize ERP system without a thorough BPR. While the objective of BPR is to
eliminate non- value-added activities and administrative barriers, ERP
implementation projects seek to streamline an organization's processes by integrating
the information flow into a single system. Benefits related to both BPR and ERP
implementation projects result from the capability to efficiently combine
organizational changes with information technology [Davenport, 1993; Esteves,
Pastor and Casanovas, 2002].The concept of "doing more with less" described above
has typically come to imply an attempt to achieve significant increases in asset
utilization and labor productivity; that is, to generate more value with fewer
resources and fewer staff. That is the fundamental reengineering objective.
Enterprise resource planning (ERP) systems can be regarded as one of the
most innovative developments in information technology (IT) of the 1990s. With the
growing interest of many organizations in moving from functional to process-based
IT infrastructure, ERP systems have become one of today’s most widespread IT
solutions. While ERP systems have traditionally been used by capital-intensive
industries, such as manufacturing, construction, aerospace, and defence, they have
recently been implemented in the finance, education, insurance, retail, and
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jZti Introduction to (Business (Process (Reengineering
telecommunications sectors [Chung and Snyder, 2000], ERP systems are now
considered the standard technology on which many organizations are operating their
business, and they are, therefore, known by the specific ERP standard they are
adopting [Sweat, 1998], From a historical point of view, the concept of ERP has
advanced from the MRP (Material Requirement Planning) systems in the 1970s and
the MRPII systems in the 1980s. Currently, SAP, Oracle, PeopleSoft, Baan, and J.D.
Edwards are considered the top ERP vendors. Despite the differences in the
marketing policies of their vendors, these packages have similar offerings and
shortcomings, and they still adopt the MRPII’s model for the manufacturing
planning components of their system products [Gray and Landvater, 1989]. Overall,
ERP systems are beneficial in providing support for all variations of best business
practices, in enabling the implementation of these practices with a view towards
enhancing productivity, and in empowering the customer to modify the implemented
business processes to suit their needs [Rao,2000]. According to Kraemmergaard et
al.,(2000), ERP systems pave the way for BPR since the implementation of ERP
systems requires examination of many business processes [Boudreau et al.,1999,
Taylor 2000], The frontiers of which comes first, BPR and then ERP, or ERP and
then BPR, are not quite well defined in most of the cases. Some organizations use
ERP systems to promote a BPR [e.g. Martin et al., 2000], while others are driven
into BPR during the implementation of an ERP system.
1.2 Review of Literature

There have been some attempts in the past to study the effect of ERP in
Reengineering process, the need of Business Process Reengineering(BPR) and the
interdependency between Reengineering and IT. Some of the prominent studies
relating to implementation of ERP and their success, cause and impact of
Reengineering are mentioned below:
The study titled” Enterprise resource planning in reengineering business” by Subba
Rao Siriginidi (2000) highlighted the need for business process reengineering and
impact of IT on enterprises. He presented in detail the evolution, modules, verticals,
model, management concerns and network infrastructure, selection of software
packages and enterprise preparedness for implementation of enterprise resource
planning. He then briefly describes the key features of popular ERP packages, viz.
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fln introduction to (Business (Process (peengineering
MFG/PRO, IFS/AVALON, SAAP, BAAN IV, J.D. Edwards, Marshal (R) and
PeopleSoft. At the end he concludes that enterprises definitely attain best business
practices by implementing ERP, in an effort to position for success in the twenty-
first century.
I.C. Ehie and M. Madsen in the year (2005) in their study on “Identifying critical
issues in enterprise resource planning (ERP) implementation “ presented the results
of an empirical study that surveyed manufacturing companies in the Midwestern
region of the USA to determine the critical issues affecting ERP implementation.
With responses obtained from 36 companies, a factor analytic solution was used to
derive factors affecting successful ERP implementation. These factors were
feasibility and critical evaluation of ERP systems, project management principles,
human resource development, business process reengineering, cost/ budget issues IT
infrastructure, consulting services, and top management support. The study revealed
that about 86.3% of the variances in ERP implementation were explained by the
critical factors identified in the study. Identification of these critical factors also
permitted managers to obtain a better understanding of issues surrounding ERP
implementation. Managers can use the factors identified and validated in this study
to better prepare themselves for a successful implementation of ERP systems. This
study provided insights to companies who were either embarking on ERP
implementation or considering implementing ERP systems.
C.K.M.Lee, Linda Zhang, P.X.Lee and K.O. Au(2009) in their work “Using ERP
Systems to Transform Business Processes: A Case Study at a Precession Engineering
Company”, have made an attempt to provide practitioners with an insight into ERP
implementation and the resulting business performances. Their work investigated
how a successful ERP implementation can help transform enterprises processes. . A
case study at a precession engineering company was conducted to evaluate the
feasibility of the proposed strategic enterprise information model. Their work
focuses on the implementation of Sales & Marketing and Warehouse modules of an
ERP system. The key performance indicators were used to evaluate how the ERP
implementation can improve the business processes and it was found that ERP helps
to improve data visibility and improve on-time delivery but less effective on
improving employee productivity. They have proposed an enterprise information

model to exploit what strategy should be formulated and how ERP tactic can be
implemented in company to enhance enterprise competitive advantages. The
strategic enterprise information model was formulated based on in-depth case study
and ERP consultant’s experience.
A survey made to 220 European companies implementing SAP showed that

simultaneous implementation of Business Process Reengineering and SAP has
proved to be the most effective and powerful method for business
improvement.(Chemical Marketing Reporter 1996).
Soliman and Youssef (1998) in their study “The role of SAP software in business
process reengineering “claim that the success of BPR relies on the use of IT and they
also identified the characteristics of successful BPR.
Realizing the importance of modelling and analysis of business process

reengineering, A. Gunasekaran and B. Kobu (2002) in their study” Modelling and
analysis of business process reengineering” have made an attempt to understand first
the role of modelling of BPR and then to study the various tools used for modelling
and analysis of reengineering efforts. Finally, they have presented a framework for
modelling and analysis, and guidelines for the selection of tools/techniques of
business process reengineering . This paper also gives some of the future research
directions in the areas of modelling and analysis of BPR.
Childe et al. (1994) in their study titled” Frameworks for understanding business
process reengineering “have presented frame-works for BPR that focus upon the
sequence of activities that form business processes. They attempted to develop a
framework for understanding BPR and to explain the relationship between BPR and
Total Quality Management, Time Based Competition and Information Technology.
Larsen and Myers in the year 1999 discussed a BPR project in a financial service
firm that involves the implementation of ERP software and they defined the success
of a BPR project as a moving target, since initial success in the case turned into
failure in the long term.
Jl.n introduction to (Business (Process Reengineering
Similarly, Crowe et al. In the year 1997, after studying five US electronics firms,
argued that choosing the right BPR project reduces the risk of failure.
Mahapatra and Lai (1996) in their work “Business process reengineering-a

competitive necessity”explored the similarities between IT-enabled BPR and the
competitive use of IT, and argued that BPR extends the competitive use of IT to all
levels in an organization.
Collins and Reynolds (1995) in their study entitled” Reengineering a European

supply chain “presented the experience of Microsoft Ireland’s reengineering
programme and explained how to solve inventory problems effectively. The
company has solved the inventory problems in supply-chain by using online stock
control with advanced IT.
Chan and Peel (1998) in their work “Causes and impact of reengineering “have made
a survey of 37 companies in 17 different industries, and concluded that the primary
reasons for Business process reengineering are increased efficiency (internal) and
improved customer service (external).
Kallio et al. (1999) studied 32 BPR projects and found that most projects were
focused on streamlining current business processes, while only in a few cases were
business processes radically redesigned. Based on the results, they developed a
framework to help managers choose the most appropriate BPR strategies.
Plipkin and De Cock (2000) in their work on” lessons for maintenance management
“analysed four postulates relating to the implementation of new maintenance systems
in four organizations and attempted to establish a set of critical success factors in
Reliability Centre Maintenance (RCM) and Total Productive Maintenance (TPM)
implementation, and to provide some guidelines for their adoption.
Ziaul Huq and Thomas N. Martin in their research in the year 2006 on” The recovery
of BPR implementation through an ERP approach” compared the approaches
towards implementation of business process reengineering (BPR), and to provide
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Jin introduction to (Business (process <Peengineering
some evidence as to which approach offers a greater chance of success. A hospital

case analysis was used to study where both top-down/participative BPR and
enterprise resource planning (ERP)-driven BPR were used to reengineer its
processes. The authors found that with an ERP-driven BPR, it was easier to define
the scope of the project, design of the process changes, mapping of the new system
in the software, and to obtain a realistic preview of the outcomes. In addition they
found out that the ERP-driven change approach requires close cooperation and
mutual protocols between all the principal stakeholders, i.e. the executive suite,ERP
system vendor, business process and support teams, and IT department. The authors
have rightly pointed out that there is always a tendency for the motivation and
support for such change efforts to dissipate and so further research is needed on how
to sustain the momentum for such change endeavours.
McAfee (2003) and Koch (2001) in their works have reported a number of ERP-
driven BPR implementation case studies. Their studies have made clear that ERP
adoption at these companies caused major process changes and various levels of
system integration. In most of these cases, the ERJP-supplied business maps and
engagement tools provided a robust platform for effective knowledge transfer. They
allowed project teams, ERP vendors, and ERP partners and consultants to speak the
common language as to how the ERP modules could support the company-specific
business processes. Engagement tools also allowed the project team to customize the
visual content to support the design of the reengineered solutions. These tools not
only helped develop company-specific, business maps to document, plan, and design
re-engineering projects, they also helped analyze the potential return on investment
in BPR projects. They became even more powerful in the hands of the IT department
when the reengineering efforts were driven by the process stakeholders.
By undertaking an empirical study, Bemroider et al. (2008) in their work “IT

governance for enteiprise resource planning supported by the DeLone-McLean
model of information systems success” pointed out that ERP success increases if
firms have explicitly defined Information Technology/Information Systems
strategies and employed a participative form of decision making. On the
contrary,ERP success decreases if a project team is dominated by business unit.
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JLn introduction to <Business (process (Reengineering
Whitman and Gibson developed a study in the year 1997 for discovering why
companies use BPR.In order of importance, they listed the reasons as follows:
1) to improve inefficient business processes;
2) to be the industrial leader;
3) to reorganize business functions;
4) to improve current industry position;
5) to be among the industry leaders; and
6) to dramatically turn the company's position around.
Hammer (1990) introduced reengineering in his work, "Reengineering Work: Don't

Automate, Obliterate." Through it, he pointed out the general lines and principles of
this methodology and discussed its advantages through the application in U.S.
companies such as Ford Motor and Mutual Benefit Life. By applying shared
databases in the accounts payable process, which includes purchasing, receiving, and
accounts payable, Ford Motor reduced its employee work force by 75 percent.
In the year 2006,Mehmet C. Kocakulah, Jeramie S. Embry, Marvin Albin in their

work on” Enterprise Resource Planning (ERP): managing the paradigm shift for
success”have presented a new model called the paradigm shift model. They argued
that because of the scope, complexity and continuous nature of ERP, the project-
based approach to managing the implementation process resulted in failure rates of
between 60% and 80%. The paradigm shift model that they have presented was
made up of three parts: 1) A Hierarchy of Purpose; 2) Impact Roles; and 3)
Continuous Change. By focusing on the benefits of ERP as a success measure, they
claimed that this model provided a sound framework for managing the paradigm
shift of enterprise resource planning for success.
Marta Fossas Olalla (2000) in his work” Information Technology in Business

Process Reengineering” have pointed out the importance of Information Technology
in business process reengineering. His work has demonstrated the importance of IT
in one of the most prominent methodologies. He has concluded that Enterprises can
make their tasks easier, redesign their organization, change the way they work, and
achieve spectacular improvement using, among other enablers, IT.
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Marc J. Schniedeqans and Gyu C. Kim in their work” Implementing enterprise

resource planning systems with total quality control and business process
reengineering” in the year 2003 have conducted a survey research on US electronic
manufacturing firms to identify successful integration sequences of total quality
management (TQM) and business process reengineering(BPR) with enterprise
resource planning( ERP). The findings revealed that both the sequence of
implementation and the strategies selected to initiate ERP systems can significantly
impact business performance successfulness.
Marianne Bradford and Juan Florin in the year 2003 have conducted a study titled”
Examining the role of innovation diffusion factors on the implementation success of
enterprise resource planning systems “which draws upon Diffusion of Innovation
(DOI) theory and Information Systems Success (IS) theory to develop and test a
model of ERP implementation success. The results revealed that top management
support and training are positively related to user satisfaction, while perceived
complexity of ERP and competitive pressure show a negative relationship.
Consensus in organizational objectives and competitive pressure were positively
associated with perceived organizational performance. Post hoc analysis identified
user satisfaction as a moderator between certain DOI characteristics and
organizational performance.
Thomas F. Gattiker and Dale L. Goodhue (2005) in their research titled” What
happens after ERP implementation: Understanding the impact of interdependence
and differentiation on plant-level outcomes” presented a model of the organizational
impacts of enterprise resource planning (ERP) systems once the system has gone live
and the “shake-out” phase has occurred. The Organizational information processing
theory states that performance is influenced by the level of fit between information
processing mechanisms and organizational context. Two important elements of this
context were interdependence and differentiation among subunits of the
organization. Because ERP systems included data and process integration, the theory
suggested that ERP will be a relatively better fit when interdependence was high and
differentiation was low. Their model focused at the subunit level of the organization
(business function or location, such as a manufacturing plant) and included
intermediate benefits thiough which ERP’s overall subunit impact occurs (in our
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case at the plant level). ERP customization and the amount of time since ERP
implementation were also included in the model. The resulting causal model was
tested using a questionnaire survey of 111 manufacturing plants. The data support
the key assertions in the model.
Ziaul Huq’Faizul Huq’Ken Outright (2006) in their study” BPR through ERP:
Avoiding change management pitfalls “have reported that a fragmented approach to
change management practices was the major reason for BPR failures. The main
objective of their study was to look at the change management process in companies
where BPR was implemented through ERP, and thereby obtained some insight into
the dynamics of this change process. They have reported that many' ,ERP
implementers were finding themselves in a position to re-engineer their existing
processes to fit the software they are implementing. They used a case study approach
that investigated six change management issues at three diverse companies where
ERP-led BPR was implemented. They have concluded that through close attention
to the change management principles the ERP implementers must integrate the
changes with company strategic objectives, and through detailed planning and
workforce cultural changes navigate the new system.
Peyman Akhavan, Mostafa Jafari, Ali R. Ali-Ahmadi, in their study titled”

Exploring the interdependency between reengineering and information technology
by developing a conceptual model” in the year 2006 investigated the role of
information technology (IT) in business process reengineering (BPR) and their
interdependency in the organization. Their study examined the current perspectives
of BPR regarding IT and provided a general framework for the study of BPR and IT.
They provided a conceptual framework that clarified the interdependency between
IT and BPR and also presented the major IT functions in different areas in the
organization during the change program. The authors also suggested further research
studies in case-based studies implementations and analysis .
Markku Tinnia(1995) in his research “Strategic perspective to business process

redesign” have stated the importance of redesigned or reengineering the business
process. He has reported that several world class companies have achieved up to 80
per cent savings on time and costs by restructuring business processes and
organizations. The emphasis seems to have been on operational and implementation
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issues, as well as on radical use of information technology to enable streamlining of

processes to a previously unseen extent.
Shi Liang Wu’ Lida Xu’ and Wu He(2009) in their stud/’ Industry-oriented
enterprise resource planning ’’have reported the problems of general purpose ERP
such as complex configuration processes, low adaptation to specific industries, and
an extensive implementation time period. To alleviate these issues, they proposed the
concept of industry-oriented ERP (IERP) and a component-based approach to IERP
development. They also presented a framework of developing IERP in which
business process modelling and software reuse were employed as primary methods
to improve the operability of component-based IERP. The framework consisted of
five layers including server layer, team work supporting layer, IERP construction
and customisation layer, reusable assets and toolset layer, and the IERP system
instance layer. These layers as well as their relationship with each other were also
described in their work.
Spathis and Constantinides (2003) in their study titled” Enterprise resource -planning
systems’ impact on accounting process” have found that ERP systems also offer the
opportunity for companies to re-engineer their activities and revamp their accounting
and management practices.
Review of Literature clearly indicates that no significant studies have been

conducted in India as regards to success of ERP in integrating the different elements
of business; the interlink between different aspects of manufacturing industry with
purchase and inventory function, the success and the hurdles faced while
implementing in an organisation with varied functions such as the case with
Hindalco. The present study aims to integrate the different elements or functions of
the business using ERP in the manufacturing industry and a case study has been
presented with respect to the implementation of ERP at Hindalco. The present Work
covers the requirements of Hindalco and study has been carried out to make ERP
compatible to the customer requirements. Necessary work has been done to align the
requirements of Hindalco viz.Purchase module has been reworked to meet the
requirements of the maintenance requirements which covers the cost of company in
terms of spares, manpower which includes involvement of permanent staff and
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Jin introduction to (Business (Process \Reengineering
contractor manpower. Similarly Maintenance module covers not only the planning of
manpower (skilled and unskilled), but also looks into the availability of the
equipment to take into maintenance after ensuring the availability of requisite spares.
The work also highlights the system to be followed for schedule maintenance and the
system to be followed for breakdown maintenance. In case of a breakdown
maintenance, which is inevitable, the system alarms for the critical spares to be
maintained.
No, significant study has been carried out in implementation of ERP in
any organisation of varied functions. The present work has been carried out targeting
the advantages in implementing ERP in a manufacturing industry. After the
implementation of ERP , we expect that the working functions will drastically
improve and a clear flow of elements will be seen which will help the organisation in
optimum utilisation of resources(manpower and material) and also time
management. The process will also help the organisation in reducing the breakdown
time and cost of equipments and hence increasing the productivity as a whole.
1.3 Need for Research

The topic “Re-engineering of Maintenance Process using IT tools: A case study of
Hindalco, Hirakud” was chosen as a research topic for the Ph.D. for following
reasons:
Hindalco Industries Ltd. presently, one of the Aluminium Smelters of Aditya
Birla Group and the oldest smelters of India, located in the near vicinity of
Sambalpur has all the Plant Maintenance processes and Logistics (Purchasing and
Inventory Management) planned manually. By doing so, it had the limitations of
integrating its Maintenance activities and Logistics (Purchasing and Inventory
Management) to its cost centers. The plant had already implemented Oracle Finance
earlier. Further, the maintenance planning was not fully successful as the inventory
management couldn’t support the maintenance management system during
breakdown of equipments. Also, due to the increase in the number of equipments
with the expansion of the plant, the preventive maintenance frequency of the
equipments was badly hampered which was difficult to plan manually. Hence there
was a need for implementation of ERP to have a control on the maintenance
management and inventory management function for the better life of the equipment
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and better productivity of the plant. By implementing Enterprise Asset Management

(EAM) for Plant Maintenance and Logistics, all the Plant Maintenance activities
could be directly linked to the cost centers, which can help the plant to automatically
calculate the cost of production per unit weight of metal manufactured.
1.4 Objectives of the Study

Enterprise Assets Management System is one of the objectives of this
research study. The achievement of world class performance demands delivery of
quality products expeditiously and economically. Organizations simply cannot
achieve excellence with unreliable equipment. The attitude towards maintenance
management has changed as a result of quick response manufacturing, Just-in -Time
reduction of work in process inventory and the elimination of wasteful
manufacturing practices. Machine breakdown and idle time for repair were once an
accepted practice. Times have changed. Today when a machine breaks down, it can
shut the production line and the customer’s entire plant. The Preventive Maintenance
module of ERP provides an integrated solution for supporting the operational needs
of an enterprise-wide system.
The second objective of the study was about the Inventory Management.
Oracle’s Inventory Management provides advanced, real time inventory transactions
and visibility functionality for a wide variety of business types. With Oracle
Inventory Management we can improve inventory visibility, reduce inventory levels
and control inventory operations. All the materials in each line of business and stage
of the inventory lifecycle can be tracked in a single system. Increased transparency
will reduce the need for local buffer stocks, and inventory will be located where it
previously wasn’t known to exist.
As testing is the most primary element of Quality Evaluation System, at the
end we have studied about the Enterprise Resource Planning (ERP) Software Testing
elements and of the different attributes affecting the quality of ERP Product. This
approach can be easily extended to any big IT project.
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JLn introduction to (Business (Process Reengineering
1.5 Scope
According to our above stated objectives, the scope of our research is focussed on
Re-engineering of Maintenance Process of Hindalco ,Hirakud as the ERP tool is very
cost intensive and we would be able to access only to those data and information
provided by Hindalco. So, we focussed our study to the EAM and Maintenance
module using ERP and the advantages gained with its implementation.
1.6 Research Methodology

In our study we have used the following research methodology:
(a)Process Map to study the entire business process.
(b)Business Mapping Report (BMR) after discussion with users, study of
existing system and study of current business process.
(c) Use of DBMS for designing and creating of various databases.
(d)Creation of various users define screen customization and report writing.
1.6.1Data Source and Method Collection

The required data for the study has been collected with Interaction with the
frontline managers of maintenance and stores department of Hindalco Hirakud to
find out the limitations and problems with the existing maintenance system.
1.7 Limitations
The whole Plant Maintenance process of Hindalco is carried out by its own
employees and some of the jobs are outsourced from contractors. In this study cost
of own employees has been considered who are on permanent role. However it is
difficult to calculate the cost incurred for contractors as the jobs from contractors are
need based. Till the completion of study, the organization did not think of integrating
the contractors cost to the metal cost through ERP. This limitation can be considered
as future scope of research once the outside support taken by the plant for its plant
Maintenance activities are systematically planned and linked to its cost centre.
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1.8 Reasons for Business Process Improvement
Improving business processes is paramount for businesses to stay competitive in

today's marketplace. Over the last 10 to 15 years companies have been forced to
improve their business processes because we, as customers, are demanding better
and better products and services. And if we do not receive what we want from one
supplier, we have many others to choose from (hence the competitive issue for
businesses). Many companies began business process improvement with a
continuous improvement model. This model attempts to understand and measure the
current process, and make performance improvements accordingly.
The figure below illustrates-the basic steps.
Document Establish Follow Measure Identify and

As-is Measures Process Performance Implement
Process Improvements
Fig 1.1 Continuous Process Improvement Model

We begin by documenting what we do today, establish some way to measure the
process based on what our customers want, do the process, measure the results, and
then identify improvement opportunities based on the data collected. We then
implement process improvements, and measure the performance of the new process.
This loop repeats over and over again, and so it is called continuous process
improvement. Also it is known as business process improvement, functional process
improvement, etc. This method for improving business processes is effective to
obtain gradual, incremental improvement. However, over the last 10 years several
factors have accelerated the need to improve business processes. The most obvious is
technology. New technologies (like the Internet) are rapidly bringing new
capabilities to businesses, thereby raising the competitive bar and the need to
improve business processes dramatically. Another apparent trend is the opening of
world markets and increased free trade. Such changes bring more companies into the
marketplace, and competing becomes harder and harder. In today's marketplace,
major changes are required to just stay even. It has become a matter of survival for
most companies.
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As a result, companies have sought out methods for faster business process
improvement. Moreover, companies want breakthrough performance changes, not
just incremental changes, and they want it now. Because the rate of change has
increased for everyone, few businesses can afford a slow change process.
One approach for rapid change and dramatic improvement that has emerged is
Business Process Reengineering (BPR).
1.9 Business Process Reengineering (BPR)
The concept of reengineering traces its origins back to management theories

developed as early as the nineteenth century. Business Process Reengineering (BPR)
is known by many names, such as ‘core process redesign’, ‘new industrial
engineering’ or ‘working smarter’. All of them imply the same concept that focuses
on integrating both business process redesign and deployment of information
technologies (IT) to support the reengineering work. The purpose of BPR is to find
new ways to organize tasks, organize people and redesign information technology so
that the processes support the organization’s goals. It means analyzing and altering
the business processes of the organization as a whole. The purpose of reengineering
is to "make all your processes the best-in-class."
The main proponents of re-engineering were Michael Hammer and James A.
Champy. [Hammer & Champy, 1993] define business process reengineering (BPR)
as “Reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of
performance such as cost, quality, service and speed”.
The two key words are radical and dramatic. Radical redesign means getting rid
of existing processes and procedures and inventing new ways. Dramatic
improvement means a quantum leap in performance [Hammer& Champy, 1993].
Both of these ideas are in direct conflict with the old thinking of "constant
incremental improvement".
Professor Michael Hammer has given a principle of re-engineering [Hammer, 1990]
for the implementation in any organisation.
1. Organize around outcomes, not tasks.
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2. Identify all the processes in an organization and prioritize them in order of

redesign urgency.
3. Integrate information processing work into the real work that produces the
information.
4. Treat geographically dispersed resources as though they were centralized.
5. Link parallel activities in the workflow instead of just integrating their
results.
6. Put the decision point where the work is performed, and build control into the
process.
7. Capture information once and at the source.
[Sharma, 2006] posited that business process re-engineering implies

transformed processes that together form a component of a larger system aimed at
enabling organization to empower themselves with contemporary technologies
business solution and innovations. BPR relies on a different school of thought than
continuous process improvement. It begins with defining the scope and objectives of
the reengineering project, then going through a learning process (with the customers,
employees, competitors and non-competitors, and with new technology). Given this
knowledge base, we can create a vision for the future and design new business
processes. Given the definition of the "to be" state, we can then create a plan of
action based on the gap between the current processes, technologies and structures,
and where we want to go. It is then a matter of implementing the solution.
The approach is shown below.
Scope Learn from Create Plan Implement

Project Others To-be Process Transition
Fig 1.2 Breakthrough Reengineering Model

Thus we see, that the extreme contrast between continuous process improvement and
business process reengineering lies in where we start (with today’s process, or with a
clean slate), and with the magnitude and rate of resulting changes.
Business Process Re-engineering advocates that enterprises go back to the basics
and re-examine their very roots. It doesn’t believe in small improvements. Rather it
-17-
yin introduction to (Business (Process (Reengineering
aims at total reinvention. As for results: BPR is clearly not for companies who want
a 10% improvement. It is for the ones that need a ten-fold increase.
1.9.1 Characteristics of Business Process Reengineering
The BPR characteristics - outcomes include the following:
1. Several jobs are combined into one.

2. Decision-making becomes part of the job of employees (employee
empowerment).
3. Steps in the processes are performed in natural order, and several jobs get
done simultaneously.
4. Processes have multiple versions. This enables the economies of scale that
result from mass production, yet allows customization of products and
services.
5. Work is performed where it makes the most sense.
6. Controls and checks and other non-value-added work are minimized.
7. Reconciliation is minimized by cutting back the number of external contact
points and by creating business alliances.
8. A single point of contact is provided to customers.
9. A hybrid centralized/decentralized operation is used.
BPR focuses on processes and not on tasks, jobs or people. It endeavours to
redesign the strategic and value added processes that transcend organizational
boundaries.After all the organization is only as effective as its processes [Hammer &
Champy, 1993],[ Hunt & Daniel, 1996 ]. “A business process is a series of steps
designed to produce a product or a service. It includes all the activities that deliver
particular results for a given customer (external or internal) [Mayer et al., 1998].”
Processes are currently invisible and unnamed because people think about the
individual departments more often than the process with which all of them are
involved. So companies that are currently used to talking in terms of departments
such as marketing and manufacturing must switch to giving names to the processes
that they do such that they express the beginning and end states. These names should
imply all the work that gets done between the start and finish. For example, order
fulfilment can be called order to payment process [Hammer & Champy, 1993].
-18-
Jin introduction to (Business <Process Reengineering
Talking about the importance of processes just as companies have organization

charts, they should also have what are called process maps to give a picture of how
work flows through the company. Process mapping provides tools and a proven
methodology for identifying your current As-Is business processes and can be used
to provide a To-Be roadmap for reengineering your product and service business
enterprise functions. It is the critical link that your reengineering team can apply to
better understand and significantly improve your business processes and bottom-line
performance [Hammer & Champy, 1993],[ Hunt & Daniel,1996].
Having identified and mapped the processes, deciding which ones need to be
reengineered and in what order is the next question. No company can take up the
unenviable task of reengineering all the processes simultaneously. Generally they
make their choices based on three criteria:- dysfunction: which processes are
functioning the worst?; importance: which are the most critical and influential in
terms of customer satisfaction; feasibility: which are the processes that are most
likely to be successfully reengineered [Hammer & Champy,1993].
1.9.2 Concept of Business Process Reengineering
The reengineering concepts involve four dimensions that are stated below:
a. Innovative Rethinking: This is a process that is itself utterly dependent on

creativity, inspiration and old-fashioned luck. [Drucker, 1993] argues that this
paradox is apparent only not real most of what happens in successful innovations is
not the happy occurrences of a blinding flash of insight but rather, the careful
implementation of unspectacular but systematic management discipline.
b. Process Function: Taking a systematic perspective, [Hammer & Champy, 1993]
describes process functions as a collection of activities that take one or more kinds of
input and creates an output that is of value to the customer. Typical process of this
includes ordering of organizational structure, manufacturing, production,
development, delivery and invoicing.
c. Radical change: In radical change, a key business process is the transformation of
organizational element; it is essential to an organization survival. Change leads to
new ideas, technology, innovation and improvement. Therefore, it is important that
-19-
organizations recognize the need for change and learns to manage the process
effectively [Pamela et al, 1995].
d. Organizational Development and Performance'. It takes a look at the firm's level
of efficiency and way to improve its current activity level in order to meet up to
standards and survive the competitive pressure.
One way to judge the performance of an organization is to compare it with
other unit within the company. Comparison with outsiders however can highlight the
best industrial practices and promote their adoption. This technique is commonly
term “bench making” [Roberts, 1994].
1.9.3 Objectives of Business Process Reengineering
applying the 3PR management technitjne to a business organization the

implementation team effort is focused on the following objectives:
Customer focus: Customer service oriented processes aiming to eliminate customer
complaints.
Speed: Dramatic compression of the time it takes to complete a task for key business
processes. For instance, if process before BPR had an average cycle time 8 hours,
after BPR the average cycle time should be cut down to half an hour.
Compression: Cutting major tasks of cost and capital, throughout the value chain.
Organizing the processes a company develops transparency throughout the
operational level reducing cost. For instance the decision to buy a large amount of
raw material at 50% discount is connected to eleven cross checking in the
organizational structure from cash flow, inventory, to production planning and
marketing. These checking become easily implemented within the cross-functional
teams, optimizing the decision making and cutting operational cost.
Flexibility: Adaptive processes and structures to changing conditions and
competition. Being closer to the customer the company can develop the awareness
mechanisms to rapidly spot the weak points and adapt to new requirements of the
market.
Quality: Obsession with the superior service and value to the customers. The level of
quality is always the same controlled and monitored by the processes, and does not
depend mainly on the person, who servicing the customer.
-20 -
Innovation: Leadership through imaginative change providing to organization

competitive advantage.
Productivity. Improve drastically effectiveness and efficiency. In order to achieve
the above mentioned adjectives the following BPR project methodology is proposed.
1.10 Steps Involved in Business Process Reengineering

[Davenport and Short, 1990] prescribe a five-step approach to Business Process
Reengineering. These are:
(i) Develop the business vision and process objectives’. Business Process
Reengineering is driving by a business vision which implies specific
business objectives such as cost reduction, time reduction, output quality
improvement, quality of work life.
(ii) Identify the processes to be redesigned: Most firms use high- impacts
approach which focuses and most important processes or those that
conflict most with the business vision. Few number of firms use the
exhaustive approach that attempts to identify all the processes within an
organization and the prioritize them in order to redesigned urgency.
(iii) Understand and measure the existing process: For avoiding the
repeating of old mistake and for providing a baseline for future
improvements.
(iv) Identity information technology (IT) levels: Awareness of IT capabilities
can and should influence process. This is because IT is a sine qua non to
the business process reengineering.
(v) Design and Build a prototype of New Process: The actual design should
not be viewed as the end of the BPR process. Rather, it should be viewed
as a prototype, aligns the BPR approach with quick delivery of results
and the involvement and satisfaction of customers.
1.11 Methodology of a BPR Project Implementation
BPR is world-wide applicable technique of business restructuring focusing on

business processes, providing vast improvements in a short period of time. The
technique implements organizational change based on the close coordination of a
-21-
methodology for rapid change, employee empowerment and training and support by
information technology. In order to implement BPR to an enterprise the followings
key actions need to take place:
■ Selection of the strategic (added-value) processes for redesign.

■ Simplify new processes - minimize steps - optimize efficiency -.(modeling).
* Organize a team of employees for each process and assign a role for process
coordinator.
■ Organize the workflow - document transfer and control.
* Assign responsibilities and roles for each process.
■ Automate processes using IT (Intranets, Extranets, Workflow Management)
■ Train the process team to efficiently manage and operate the new process
“ Introduce the redesigned process into the business organizational structure
Most reengineering methodologies share common elements, but simple

differences can have a significant impact on the success or failure of a project. After
a project area has been identified, the methodologies for reengineering business
processes may be used. In order for a company, aiming to apply BPR, to select the
best methodology, sequence processes and implement the appropriate BPR. plan, it
has to create effective and actionable visions. For creating an effective vision, five
basic steps are mentioned below.
the right combination of individuals come together to form an
optimistic and energized team
clear objectives exist and the scope for the project is well defined and
understood
the team can stand in the future and look back, rather than stand in the
present and look forward
the vision is rooted in a set of guiding principles.
All methodologies could be divided in general 'model' stages:

The Envision stage: the company reviews the existing strategy and business
processes and based on that review business processes for improvement are targeted
and IT opportunities are identified.
22-
-
The Initiation stage: project teams are assigned, performance goals, project planning
and employee notification are set.
The Diagnosis stage-, documentation of processes and sub-processes takes place in
terms of process attributes (activities, resources, communication, roles, IT and costs).
The Redesign stage: new process design is developed by devising process design
alternatives and through brainstorming and creativity techniques.
The Reconstruction stage: management technique changes occur to ensure smooth
migration to the new process responsibilities and human resource roles.
The Evaluation stage: the new process is monitored to determine if goals are met
and examine total quality programs.
1.12 Implementation Procedure of BPR
A BPR project consists of specific steps aiming to a successful outcome. The

processes developed and proved to be successful in implementing the change has
four phases, each is composed of several stages with its own suggested activities. For
each activity, the steps or tasks to be taken toward completion of the activity are also
necessary.
1. Position for change
2. Diagnose the existing process
3. Redesigning the process
4. Transition to New design.
1. Phase 1: Position for change:
This phase encompasses four critical stages; they are
(a) Establishing the urgency and gain commitment
(b) Creating process map
(c) Selecting processes and assigning owners, and
(d) Developing project framework.
2. Phase II: Diagnosing the Existing process:

One can begin the activities in this phase while continuing to establish urgency and
gain commitment (Phase I stage (a)) The critical stages in this phase are:
(a) Defining key process components
(b) Understanding the customer needs
-23 -
(c) Identifying the current design weaknesses and

(d) Establishing performance targets.
3. Phase III: Redesigning the Process:

This phase may be started before the completion of phases II. For instance,
benchmarking and performance measurement activities often extended in phase III.
More accurately the reengineering team identifies underlying assumptions and root
causes of weaknesses in the existing process design. The stages included in this
phase are:
(a) Identifying the potential innovations
(b) Developing initial vision of the New Process.
(c) Identifying incremental improvements and
(d) Developing commitment to the vision of new process.
4. Phase IV: Transition to the New Design:

In this phase, it may take some time to see the performance from the first release of
a newly reengineered process. Cultural changes take time and patience. Identifying
and adjusting with compensation systems, career paths, new roles etc. must be a part
of the long-term transition plan. The main focus in this phase is on the
communication process. The critical stages in this phase include.
(a) Beginning transition change management
(b) Creating the transition plan and teams.
(c) Prototype and test initial instalment
(d) Completing transition and continuously improve the process.
1.13 Expected Results / Benefits from Reengineering
The expected results for a company that implements business process reengineering
are the following:
■ Reallocation of jobs and processes so as to be combined into fewer, to be
executed in natural order, simultaneously and by the least possible number
of employees.
-24-
■ Reorganization of the company's structure (downsizing) and employee

empowerment.
■ Jobs and processes become flexible so as to be executed according to the
needs of each case, company's and customer's need's (hybrid centralized /
decentralized operations).
The above changes will bring reductions of costs in the company, better quality (as
far as price, promptness of delivery and offerings of related services) in the products
and services provided to the customers. BPR shows that there is 'more than one way
to skin a cat' and enables a fresh view without ingrained prejudice affecting
judgement. It can produce huge initial savings where a business is struggling and
often has the affect of turning around an unprofitable operation. Also, it leaves the
business with a fully documented model of the operation, which is invaluable if
embarking on a quality programme.
1.14 BPR Success Factors / Failure Factors
Despite the significant growth of the BPR concept, not all organizations embarking
on BPR projects achieve their intended result. [Hammer & Champy, 1993] estimate
that as many as 70 percent do not achieve the dramatic results they desire. BPR has
great potential for increasing productivity through reduced process time and cost,
improved quality, and greater customer satisfaction, but it often requires a
fundamental organizational change.
There are both soft and hard factors that cause success and failure of BPR efforts.
• Change management
• Management competency and support
• Organizational structure
• Project planning and management
• IT infrastructure
Factors relating to change Management Systems and Culture:
Factors relating to change management systems and culture are important to the
success of BPR initiatives. Change management, which involves all human- and
-25 -
social related changes needed by management to facilitate the acceptance of newly

designed processes and structures into working practice and to deal effectively with
resistance, is considered by many researchers to be a crucial component of any BPR
effort.
Effective communication is considered a major key to successful BPR-related
change efforts. Communication is needed throughout the change process at all levels
and for all audiences, even with those not involved directly in the reengineering
project. As BPR results in decisions being pushed down to lower levels,
empowerment of both individuals and teams becomes a critical factor for successful
BPR efforts.
Factors for Management Competency
Sound management processes ensure that BPR efforts will be implemented in the
most effective manner. The most noticeable managerial practices that directly
influence the success of BPR implementation are top management support and
commitment, championship and sponsorship, and effective management of risks.
Commitment and leadership in the upper echelons of management are often cited as
the most important factors of a successful BPR project. Leadership has to be
effective and creative in thinking and understanding [Hammer & Champy, 1993] in
order to provide a clear vision of the future. Barriers such as political, economic, and
organizational risks are all associated with BPR-related change. And champions of
the change play a major role in overcoming these barriers and increasing the chance
of successful BPR implementation. The champions must be able to persuade top
management of the need to change and to continually push the change efforts
throughout the organization. BPR implementation involves radical change to several
systems in the Organization. Risks associated with acceptance of changes in the
organizational structure, deploying emerging technologies with little familiarity,
large investment in new resources needed for the new processes, loss of personnel,
and loss of earnings [Towers, 1996],[Clemons, 1995] are some examples of the
many risks that an organization may take when implementing BPR. Therefore,
continuous risk assessment is needed throughout the implementation process to deal
with any risk at its initial stage and to ensure the success of the reengineering efforts.
-26-
Factors relating to Organizational Structure
As BPR creates new processes that define jobs and responsibilities across the
existing organizational functions [Davenport and Short, 1990], there is a clear need
to create a new organizational structure which determines how BPR teams are going
to look, how human resources are integrated, and how the new jobs and
responsibilities are going to be formulated. An adequate job integration of
organizational human resources infrastructure is important to a BPR project's
success. Effective BPR cross-functional teams are a critical component of successful
BPR implementation. Team members should be experienced in variety of
techniques. Teams should be made up of people from both inside and outside the
organization [Hammer & Champy,1993]. The determinants of an effective BPR team
are as follows: competency of team members, their credibility within the
organization and their creativity, team empowerment, motivation, effective team
leadership, proper organization of the team, complementary skills among team
members and adequate size.
Factors related to BPR Project Management
Successful BPR implementation is highly dependent on an effective BPR Program

management, which includes strategic alignment, effective planning and project
management techniques, identification of performance, adequate resources, effective
use of consultants, building a process vision integrating BPR with other
improvement techniques. Proper planning for the BPR project with an adequate time
frame are key factors in delivering a successful BPR project on time. Effective use of
project management techniques and managing people-related issues have also a
crucial role in smoothing the flow of the process redesign stages.
Factors related to IT Infrastructure
Building an effective IT infrastructure is a vital factor in successful BPR

implementation. An adequate understanding of technologies for redesigning business
processes is necessary for proper selection of IT platforms. Effective overall system
architecture, flexible IT infrastructure and proper installation of IT components all
contribute to building an effective IT infrastructure for business processes. The IT
infrastructure and BPR are interdependent in the sense that deciding the information
-27 -
JLn introduction to (Business (process engineering
requirements for the new business processes determines the IT infrastructure. In

addition, recognition of IT capabilities provides alternatives for BPR.
1.15 The Role of Information Technology
One main objective of BPR is to use IT to support radical change. Some authors
view IT as the central implementation vehicle of BPR. However BPR has not really
worked as its proponents expected. [Davenport and Short, 1990] attribute this
problem to a lack of understanding of the deeper issues of IT. They claim that IT has
traditionally been used to increase the speed of work but not to transform it and BPR
is about using IT to do things differently. Therefore, IT plays an important role in
BPR. Properly implementing IT can improve the competitive position of
organizations. But inappropriately implementing IT may create 'barriers to
responding to the rapidly changing business environment. Further, simply picking IT
packages cannot achieve successful BPR if it is simply used to speed up the process
rather than reengineer it. As [Davenport, 1993] contends:
... information and IT are rarely sufficient to bring about the process change; most
process innovations are enabled by a combination of IT, information and
organizational / human resource changes.
Any BPR effort that fails to understand the importance of IT, and goes
through the pre-BPR analysis and planning phases without considering the various
IT options available, and the effect of proposed IT solutions on the employees and
the organization, is bound to crash during the takeoff. [Hammer, 1990] considers
Information Technology (IT) as the key factor in BPR for organization that wants to
witness a “radical change” in its operation. He says the use of IT is to challenge the
assumptions inherent in the work processes that have existed since before the advent
of modem computer and communications technology. [ Davenport and Short ,1990]
argue that BPR requires taking a broader view of both IT and business activity, and
of the relationships between them. IT should be viewed as more than an automating
or mechanizing force but rather as a way to fundamentally reshape the way business
is done.[Aremu and Saka ,2006] argued that Information technology (IT) is a
strategic resource that facilitates major changes in competitive behaviour, marketing
and customer service. In essence, IT enables a firm to achieve competitive
advantages.
-28-
It is important to realize that while IT is not the minimum necessity for BPR,
it has been a critical component of many successful BPR efforts. Modem computing
tools and telecommunication technology offer the potential for breakthrough
performance gains in BPR by compressing the effects of time and space. For
example, IT can be used to improve organizational efficiency and effectiveness by
eliminating delay, administrative intermediaries, redundant processing steps and
providing better access to information. These innovative applications of IT can be
expected to transform business process within the organization and as well as
between organizations. Information technology (IT) and Business Process
Reengineering (BPR) have recursive relationship. IT capabilities should support
business processes and business should be in terms of the capabilities IT can provide
Shared databases, making information available at many places Information
technology (IT) has historically played an important role in the reengineering
concept. It is considered by some as a major enabler for new forms of working and
collaborating within an organization and across organizational borders.
Early BPR literature [Hammer & Champy, 1993] identified several so called
disruptive technologies that were supposed to challenge traditional wisdom about
how work should be performed.
• Expert systems, allowing generalists to perform specialist tasks

• Telecommunication networks, allowing organizations to be centralized and
decentralized at the same time
• Decision-support tools, allowing decision-making to be a pail of everybody's
job
• Wireless data communication and portable computers, allowing field
personnel to work office independent
• Interactive videodisk, to get in immediate contact with potential buyers
• Automatic identification and tracking, allowing things to tell where they are,
instead of requiring to be found
• High performance computing, allowing on-the-fly planning and revisioning.
Effective alignment of IT infrastructure and BPR strategy, building an

effective IT infrastructure, adequate IT infrastructure investment decision, adequate
measurement of IT infrastructure effectiveness, proper information systems (IS)
29-
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J4n introduction to (.Business (process êngineering
integration, effective reengineering of legacy information systems (IS), increasing IT

function competency, and effective use of software tools are a few of the most
important factors that contribute to the success of BPR projects. This alignment of IT
infrastructure and BPR strategy are needed to ensure the success of the BPR
initiative.
In the mid 1990s, especially workflow management systems were considered as
a significant contributor to improved process efficiency. Also ERP (Enterprise
Resource Planning) vendors, such as SAP, JD Edwards, Oracle, PeopleSoft,
positioned their solutions as vehicles for business process redesign and
improvement
1.16 The Future: BPR and ERP Systems

According to [Light, 2000], organizations are continuing to implement business
process change projects and one of the most important factors of the BPR concept
throughout the nineteen nineties has been the wide scale adoption of Enterprise
Resource Planning (ERP) systems. Basically, it brings about significant changes in
basic business process to improve efficiency in performance of the organization.
With the growth of education, especially in Science and Technology, the above has
transformed from the skills of individuals to a scientific way of carrying out
engineering and reengineering [Bancroft et al., 1998], [Boudreau et al., 1999], [Kale,
2000], [Kraemmergaard et al., 20000], [Martin et al., 2000], [Taylor, 2000]. It is
important to examine the link between these two areas. .
ERP systems are process oriented and highly integrated standard software
systems, which are used to automate core corporate activities such as, finance,
logistics and human resources. The ERP applications market has grown enormously
over the past several years. Interestingly, [Light, 2000] mentions that the key reasons
for the adoption of ERP systems are closely tied to those for the evolution of BPR -
the need to deal with legacy systems in a complex and dynamic business
environment. Companies are now looking to improve the management of global
operations and employ innovative supply chain based competitive strategies such as
the formation of new types of industrial structures.
However, many existing systems have become so difficult and costly to
maintain, inflexible and misaligned with a global business strategy that organizations
-30 -
JLn introduction to (Business (process (Reengineering
have taken a clean slate approach towards their IT and have implemented ERP
systems. Managers of ERP projects have suggested to [Light, 2000] that ERP is the
new BPR. The reason for this is because a key aspect of any ERP project is the need
for most organizations to undertake some form of BPR exercise. ERP systems are
process oriented and, due to their highly interconnected nature, require organizations
that implement these types of system to adopt a process-oriented philosophy.
Therefore, if an organization has not undergone an organization wide reengineering
exercise, they will have to do so. Even if there are elements of a process orientation
within an organization, it is likely that a certain level of reengineering will occur.
This can have a considerable impact on competitive advantage.
1.17 Outline of the Thesis

The present study has been divided into six chapters as detailed below:
Chapter I deals with a brief introduction about the subject matter, review of th.e
literature, need for research, objectives, scope, research methodology adopted for the
study, limitations of the study, Implementation Procedure of BPR and benefits
from Reengineering.
Chapter II discusses about the evolution of Enterprise Resource Planning (ERP)

with its characteristics and how ERP helps in reengineering. It also discusses about
some of the challenges that the Industry is facing while dealing with ERP, along with
the grand convergence of ERP for IT. At the end the Oracle Applications Modules
has been discussed briefly, giving a detailed function of Oracle Inventory, as it is the
core module of entire Oracle E-Business Suite.
Chapter III gives an overview of Hindalco, Hirakud with its department hierarchy.
It briefly discusses about the Oracle Enterprise Asset Management listing some of its
features. Subsequently, it discusses about implementation of Enterprise Asset
Management (EAM) System at Hindalco. The Existing Inventory Management
Process at Hindalco is explained in detail first with the functions performed by
various departments and then the Envisioned Business Process is given. This
Chapter also highlights the study and scope of Business Mapping Report along with
the Process Flow Map of the processes involved.
-31-
Chapter IV discusses about the implementation of Maintenance module in ERP at

Hindalco. A brief review of the Existing Maintenance Process of Hindalco along
with the Organization structure of Maintenance Departments has been covered in
detailed in this chapter. It also highlights about the different activities performed by
the respective Maintenance departments and also about the different types of
Maintenance Activities along with the Envisioned Maintenance Process after
implementation of EAM.
Chapter V discusses about the ERP Software Testing elements and of the different
attributes affecting the quality of ERP Product. In this chapter, the elements affecting
the quality of an ERP software product are analysed and the testing that may be
involved in evaluating the quality of an ERP software product is interpreted from
aspects of distributed system, database application system, ERP products and
software product engineering point of view. The quality evaluation elements from
which the ERP software can be evaluated are interpreted separately. This approach
can be extended to any big IT project.
Chapter VI summarizes the major findings and provides direction for future
research.
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jAn introduction to (Business (Process (Reengineering
1.18 Conclusion
Dramatic changes in the business environment throughout the nineteen
eighties forced organizations to examine outdated modes of work and develop new
focused strategies based on new business models. Many business management
concepts emerged but BPR has probably been the most influential. BPR emerged as
a concept geared towards a clean slate, radial approach. However, the original ideas
did not take into account the situations in organizations where factors such as the
evolution of the ways of work, organizational cultures and IT infrastructures had
become significantly linked with organizations. A variety of methodologies, tools
and techniques for BPR projects have developed out of implementation failures. As a
result, the concept of BPR has survived and has been broadened to become more
commonly associated with multidimensional process change efforts. Reengineering
is not just a matter of fundamental and radical improvements in performance, but is
also an approach to analyzing and transforming the nature of businesses and
industries.
The basic concept of business Process Reengineering along v/ith its
characteristics and objectives has been covered in this chapter. This chapter also lists
the different phases while implementing BPR and the role that Information
Technology plays in BPR.
-33-
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Chapter-I

1.1 General Outline

According to Morris "Business engineering (BE) is the re-thinking of

client/server computing. Most of the enterprise resource planning (ERP) systems

1.2 Review of Literature

improving employee productivity. They have proposed an enterprise information

A survey made to 220 European companies implementing SAP showed that

Realizing the importance of modelling and analysis of business process

Mahapatra and Lai (1996) in their work “Business process reengineering-a

Collins and Reynolds (1995) in their study entitled” Reengineering a European

some evidence as to which approach offers a greater chance of success. A hospital

By undertaking an empirical study, Bemroider et al. (2008) in their work “IT

Hammer (1990) introduced reengineering in his work, "Reengineering Work: Don't

In the year 2006,Mehmet C. Kocakulah, Jeramie S. Embry, Marvin Albin in their

Marta Fossas Olalla (2000) in his work” Information Technology in Business

Marc J. Schniedeqans and Gyu C. Kim in their work” Implementing enterprise

Peyman Akhavan, Mostafa Jafari, Ali R. Ali-Ahmadi, in their study titled”

Markku Tinnia(1995) in his research “Strategic perspective to business process

issues, as well as on radical use of information technology to enable streamlining of

Review of Literature clearly indicates that no significant studies have been

1.3 Need for Research

and better productivity of the plant. By implementing Enterprise Asset Management

1.4 Objectives of the Study

1.6 Research Methodology

1.6.1Data Source and Method Collection

1.8 Reasons for Business Process Improvement

Improving business processes is paramount for businesses to stay competitive in

The figure below illustrates-the basic steps.

Document Establish Follow Measure Identify and

Fig 1.1 Continuous Process Improvement Model

1.9 Business Process Reengineering (BPR)

The concept of reengineering traces its origins back to management theories

1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritize them in order of

[Sharma, 2006] posited that business process re-engineering implies

Scope Learn from Create Plan Implement

Fig 1.2 Breakthrough Reengineering Model

1.9.1 Characteristics of Business Process Reengineering

The BPR characteristics - outcomes include the following:

1. Several jobs are combined into one.

Talking about the importance of processes just as companies have organization

1.9.2 Concept of Business Process Reengineering

a. Innovative Rethinking: This is a process that is itself utterly dependent on

1.9.3 Objectives of Business Process Reengineering

applying the 3PR management technitjne to a business organization the

Innovation: Leadership through imaginative change providing to organization

1.10 Steps Involved in Business Process Reengineering

1.11 Methodology of a BPR Project Implementation

BPR is world-wide applicable technique of business restructuring focusing on

■ Selection of the strategic (added-value) processes for redesign.

Most reengineering methodologies share common elements, but simple

All methodologies could be divided in general 'model' stages:

1.12 Implementation Procedure of BPR

A BPR project consists of specific steps aiming to a successful outcome. The

2. Phase II: Diagnosing the Existing process:

(c) Identifying the current design weaknesses and

3. Phase III: Redesigning the Process:

4. Phase IV: Transition to the New Design:

1.13 Expected Results / Benefits from Reengineering

■ Reorganization of the company's structure (downsizing) and employee

1.14 BPR Success Factors / Failure Factors

Factors relating to change Management Systems and Culture: