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Business Process
Reengineering. BPR. Change management. Management change is a must before automation.
No point in automating wrong or obsolete business process.
Managers can
unleash the real ‘power’ and immense capabilities of computers by challenging
‘centuries–old’ notions about work. Business Process re-design.
If you automate a procedure with ERP, it will
speed up the results. But, what if the legacy procedure itself was
‘incorrect’? After ERP, now the ‘incorrect’ procedure will do wrong things
faster. Is that what you wanted to achieve by deploying ERP? Correct method to
implement ERP is first to identify a process, second improve.
Third, automate
with ERP. Here is a short story that exemplifies need for
change. Some companies keep on changing ERP instead of changing their legacy
procedures.
Crow story: Once there was a Koel sitting on a
branch. She saw a crow running away. She asked him, why are you running?
Crow said, ‘I am fed up with people around here, I am going to a new
place’. She asked ‘Why’? Crow said, ‘they are not good, they do not allow
me to seat at one place, they always shoo me away by throwing stone and all
that, and so I am going to a new place.’ She asked him, ‘Oh, OK, but did
you change the old habit of screaming Ka Ka Ka and disturbing people’. He
said ‘No’. Then she said. ‘in new place also perhaps people will drive you
away and you will not benefit by running away from this place’.
Moral of the story: Change before you automate.
No point in just changing ERP, try to change users.
Let us consider few examples:
In one small company, the purchase officer was in
habit of ordering material on phone. In ERP that is not allowed. If PO is not
made, stores cannot enter data about material received. For about three months,
everyone tried his or her best to resist change. Then the MD came to our
rescue. He instructed security that if the truck comes without bill, or without
our Purchase Order reference number: “Do not allow the material to come inside
the factory”. After a couple of incidents where the material was returned, all
the suppliers understood that the company was serious. They started writing the
PO reference number on their challan-cum-invoice. Challans alone is not
accepted. Vendors and third-party insisted on getting the PO or JO from the
purchase officer. In other words, change was enforced by the top boss.
Benefit: Return on investment realized.
Classic example: “In DNS ERP software, we gave a
link in the Purchase Order (PO), to pickup rate from the Purchase quotation.
User’s reaction: “I do not have time to prepare purchase quotations in ERP”.
Then, how ERP will help you with the pre-purchase
module? You have to change. As a top person with authority, you should put
your foot down and say, ‘nothing doing, we have invested in ERP to improve our
business processes and not mimic old way of working in new ERP business logic.’
Another example: In one project, the user insisted
on making challan to give materials to customer. Our team said this is wrong
and that you have to make CCI – Challan cum Invoice. He did not budge. He made
our programmer change. Now after six months he realized the mistake and again
requested for the change back to the way it was. He was charged Rs. 50,000/-
for making changes.
This is a good example (of sticking to
bullock-cart): In one company accountant was using an old fashion
account-centric program, where she was allowed to change / edit / delete a
transaction. She expected ERP to do the same. Without realizing, the very
benefit of ERP is lost. ERP is multi-user software. Now we are planning to
give access to branch offices. The edit facility is a serious problem because
user will ‘misuse’. If you have a motor bullocks are not required, it is that
simple (see picture above).
Ask yourself a question: What are the opportunities
for improvement? Please write down for each function, say in accounts, in
purchase, and so on. Resistance to change is natural but we are intelligent
human being, we have the reasoning mind. Take ERP implementation as opportunity
to carry out changes.
Why change? Conventionally, the legacy
system that organizations use today, captures only transactional data like ‘what
is bought’, at what price and when. The RFID technology enables capturing the
event data through wireless sensor (reader) on each item and communicates to the
ERP server on ‘Real-Time’ basis. We should “change” our businesses; Use the
power of I. T. to radically redesign our business processes in order to achieve
dramatic improvements in their performance.
Old rule: “we pay when we get the invoice”. New
rule: “we pay when we get the goods”. In many growing companies in developing
countries like India, they receive material with a ‘Challan’ (piece of paper
that just mentions quantity) and later the supplier gives the invoice. The
material is accepted, by stores based on Challan; and may be even issued to
production. While account section is not making any entry because ‘invoice’ was
not received at that time. It is necessary to persuade vendors to give the bill
along with the material. That is, insist on Challan-cum-Invoice (CCI). Only if
the vendor is under excise rule, stores will receive material with
Challan-cum-Invoice. If vendor is not under excise he may send bill with
Challan.
What to do? Now these vendors need to be educated
for sending the bill so that accounts entry in ERP and that in stores will
always match. One of our DNS users understood the significance and importance
and took initiative to send some 400 mail merge letters to all suppliers to
ensure that they send the bill as per the Purchase Order Schedule (which was
prepared in ERP) citing the PO number on the bill. Even the security (security
guard) was told not to allow any material to enter if not accompanied by a bill.
It took sometime for all concerned to understand the ‘reengineering’ but after
sometime everybody said it was a change for better!
Re-engineering while implementing ERP triggers
changes of many kinds, not just of the business process itself. Job designs,
organizational structures, management systems, and most importantly ‘Attitude
changes’ – anything associated with the process – must be refashioned in an
integrated way. In other words, re-engineering is a tremendous effort that
mandates change in many areas of the organization . ”Don’t be afraid to give
your best to what seemingly are small jobs. Every time you conquer one, it makes
you that much stronger. If you do the little jobs well, the big ones will tend
to take care of themselves”. (by Dale Carnegie).
In ERP, we try to coordinate parallel function
during the process – and not after it is completed. Considering the inertia of
old processes and structures, the strain of implementing re-engineering plan can
hardly be overestimated. But by the same token, it is hard to overestimate the
opportunities, especially for established companies.
Before implementing DNS ERP software one must do
quite a bit of BPR. In fact, BPR and ERP implementation goes hand-in-hand. On
one extreme, we change the software to suit current business processes – known
as customization. On the other extreme, user is ready to change the current
business processes and does BPR. The sensible way is to strike a balance
somewhere in-between. Please instruct the ERP implementation team to carry out
only ‘essential customization’. At the same time, identify old inefficient
processes for revamp, and tell the users to adapt to new business processes in
view of ERP, since some of the tasks that they were doing would now no longer be
required.
Example of top management strictness: In one ERP
project, we observed that they took the following approach: After GO-LIVE,
everyone was asked to join ‘new’ company. They are working in a new company, in
a new role, and if they could not take on the new processes and working with ERP
menus, they should leave after the 3 months probationary period was up. While
effective, not always possible, and also an extreme example.
