Chapter 15
Online File W15.1
Project Management Software
Online File W15.2
Types of End-user Computing
Online File W15.3
Delivery and Process Risks of Offshore Outsourcing
Online File W15.4
Utility Computing: “The Next Big Thing”
Online File W15.5
Criteria for Determining Which Acquisition Approach to Use
Online File W15.6
The Process of Vendor and Software Selection
Online File W15.7
Boeing Designs a New Aircraft
Online File W15.8
The Drivers of Process Redesign
Online File W15.9
Changes of Business Processes Brought by IT
Online File W15.10
Ten Reasons to Value BPR Software
Online File W15.11
Restructuring Processes and Organizations
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ONLINE FILE W15.1
PROJECT MANAGEMENT SOFTWARE
Along with the managerially oriented project skills set, there are excellent software
tools to assist project managers. These include Microsoft Project (microsoft.com),
PlanView (PlanView Inc.), and ActiveProject (Framework Technologies Corporation). Many of these tools are Web-enabled to allow collaborative teamwork
online over time and distance. Microsoft Project 2003 with Microsoft Project Central software includes a friendly Web-based collaboration tool. PlanView Web
Software is designed to handle project and workforce management (PlanView
Inc., Austin, Texas). PlanView is a dynamic, multidimensional tool for resource
and program management. It includes the HomeView Portal. Most project management tools are Web-based, including PlanView, Microsoft Project, Rational
Software’s Rational Unified Process (RUP), Business Engine’s Business Engine
Software (BEN), Metafuse Inc.’s Project Insight, and onProject Inc.’s S-O Comply.
Allan (2005) provides a practical guide on the use of different types of project
management software.
Gates (2003) describes how many vendors of project management tools have
added portfolio management tools into project management systems. For example,
WorkLenz from Metier Ltd. aggregates and analyzes project data across the enterprise to identify inefficiencies, predict future work, and improve processes.
Microsoft Project includes a centralized repository of projects and resources. S-O
Comply from onProject Inc. allows users to view all projects, tasks, resources, issues,
files, events, and notices. This helps an organization to see how all projects fit
together and how they affect each other and various departments in the organization. One approach to project portfolio management is to create a digital dashboard
to track projects’ progress. The dashboard provides an early warning system to alert
project managers of problems.
Still another aspect new project management tools are addressing is collaboration among disparate development teams. Project managers are using GSS software
and systems like Groove Virtual Office and WebEx WebOffice directly. In addition,
project management software systems are incorporating GSS capabilities. For
example, Georgia (2001) describes Inovie Software’s TeamCenter and Primaverea
Systems’ TeamPlay, which provide collaboration features and Web functionality.
Metier’s WorkLenz product includes document attachment sharing, threaded notes
discussions, and e-mail alerts features to aid in collaboration. In addition, the product is Web-enabled so it can be accessed from anywhere.
Project management software and methods are surveyed on a regular basis.
Trepper (2000a, 2000b) provided a list of representative project/process management products. Ali and Money (2005) surveyed 497 users on the acceptance and
usage of project management software.
References for Online File W15.1
Ali, A. S. B., and W. H. Money, “A Study of Project Management System
Acceptance,” Proceedings of the 38th Annual Hawaii International
Conference on System Sciences, 2005, pp. 234–244.
Allan, B., Project Management: Tools and Techniques for Today’s ILS
Professional. London, UK: Facet Publishing, 2005.
Gates, L., “Project Management Tools: A New Look,” Application
Development Trends, 2003.
Georgia, B. “Building a Better Project,” NetWorld, Vol. 18, No. 11,
March 12, 2001.
Trepper, C. H., “A Project Management Primer,” Application Development Trends, August 2000a.
Trepper, C. H., “Getting an Edge on the Competition,” Information
Week, August 28, 2000b.
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ONLINE FILE W15.2
TYPES
OF
END-USER COMPUTING
Researchers have identified the six end-user computing categories shown in Figure
W15.2.1 (see Rockart and Flannery, 1983; and Guimaraes, 1999). Note that the last
four of these categories participate in some form of development. With experience,
end users can migrate into the development categories, or advance from doing limited to more extensive development.
In the 1980s, many large organizations set up information centers to help their
employees learn how to use the emerging technology of personal computing. These
information centers had their own office space and a variety of PC hardware and
software, as well as employees in category 5 in the table. Although some organizations have since closed their information centers, they typically continue to provide
end users with help-desk and training functions from other locations or through
outsourcing. The running of information centers in the twenty-first century is quite
different from that of the 1980s.
Category
Activities
Figure W15.2.1
1.
2.
3.
4.
5.
6.
Enter data, use application
Access data, print reports
Develop applications for personal use
Develop applications for others to use
Training, hotline, develop applications
Work on a contract basis
Categories of end-user
computing.
*Support personnel and programmers are typically not employees of user workgroups.
Nonprogramming end users
Command-level users
End-user programmers
Functional support personnel
End-user computing support personnel*
Programmers*
References for Online File W15.2
Guimaraes, T., “Empirically Testing the Relationship Between EndUser Computing Problems and Information Center Success Factors,”
Decision Sciences, Spring 1999.
Rockart, J. F., and L. S. Flannery, “The Management of End-User Computing,” Communications of the ACM, October 1983.
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ONLINE FILE W15.3
Delivery and Process Risks of Offshore Outsourcing
Risk Category
Description of Risk
Cultural
Differences in culture inhabit the offshore outsourcing relationship—including national and
corporate cultural differences.
Limited understanding of the language—mainly for involved employees who are not native
English speakers—hinders the service delivery process.
Interaction between the service recipient and service provider representatives is hindered by
time zone differences.
Changes in the scope of the offshore outsourcing contract impact the service delivery process
(i.e., uniform service delivery processes and certification support managing change).
The absence of employees with the right skill set and competencies limits the quality of the service
delivery process.
Due to staff rotation, instability in the team that is responsible for the service delivery process
constrains the service delivery process.
Unstable infrastructure to support the service delivery process hinders the service delivery
process—including telecommunications and data infrastructure.
Protecting physical assets and intellectual property ensures the continuity of the service delivery
process.
Knowledge transfer processes between the service provider and service recipient are essential
to the service delivery process. This is impacted by cultural risks and language and communication risks.
Limited understanding of the business processes of the service recipient’s IT professionals
hinders the service delivery process.
Language and
communications
Different time zones
Managing scope
changes
Human capital
Rotating onshore
resources
Infrastructure
Security and privacy
Knowledge transfer
Understanding of
business processes
of service recipient
Geopolitical risk
Size of the offshore
outsourced IT
service
Length of the
contract
Trust and
relationship
War, terrorism, or internal armed conflicts might disturb the continuity of the service provisioning.
Geographical locations have to be in stable regions.
The size of the contracts has to be substantial for the service provider, to cover the coordination
costs.
The length of the contract determines the opportunity for the service provider to cover costs.
Long-term contracts result in a lock-in of the service recipient and short-term contracts will
not support the implementation of a proper service delivery process by the service provider.
Therefore the length of the contract needs to be balanced.
Lack of mutual trust between the offshore vendor and client. Ensure both parties understand
the expectation and success factors.
Sources: Beulen, E., P.V. Fenema, and W. Currie, “From Application Outsourcing to Infrastructure Management: Extending the Offshore
Outsourcing Server Portfolio,” European Management Journal, 23(2), 2005, pp. 133–144; and Sinha, D., and R. Terdiman, “Potential Risks
in offshore sourcing,” Gartner Research, ID Number: ITSV-WW-DP-0360, September 2002.
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ONLINE FILE W15.4
UTILITY COMPUTING: “THE NEXT BIG THING”
Imagine this scene. It’s noon on Friday and you just found out that your relatives are
coming to spend the weekend. It’s time to contact the electric company to let them
know that you will need extra electricity for the weekend. You’re told you have to
fill out a purchase order and it will be five to seven days before you can get extra
electricity. Of course, life is not like this, because basic utilities have extra capacity
built into their delivery systems. But this would be a likely scenario if you were to
find out at noon on Friday that you were expecting a major spike in usage on your
servers. You’d have to call your provider, do a bunch of paperwork, and maybe in a
few days you could get the extra capacity you need. That’s the kind of problem that
utility computing aims to solve.
THE TECHNOLOGY
IMPLEMENTATION
CONCLUSION
Utility computing vendors are looking toward a future in which computing capacity
is as easy to acquire as electricity. Rather than having a fixed amount of computing
resources, you would have access to computing resources on an as-needed basis—
just like electricity. Many IT market leaders are now starting to catch on to the concept of utility computing as a bulletproof utility service that we can virtually take for
granted. IBM has spent more than $10 billion on its on-demand computing initiatives. HP also developed its Utility Data Center architecture, and Sun has its own
N1 data center virtualization projects. Sun, HP, and IBM are duking it out over how
best to meet utility computing requirements and command a leadership position.
Already present in a variety of capacity-based pricing models, utility computing is
poised to expand throughout the enterprise as various key technologies intersect
(e.g., Web Services, grid computing, and provisioning). Growth of utility computing
in the enterprise will deliver to the industry not only equal access to supercomputing resources, but also new revenue streams for commercial data centers, new application pricing models based on metered use, and an open computing infrastructure
for companies with little or no standing IT maintenance budget. Utility computing
is on track to be the “next big thing” for IT vendors and services companies that sell
to large enterprises.
Utility computing (also called “on-demand computing”) has become one of the hot
topics in the IT analyst community and, increasingly, in larger enterprises that are
looking for ways to reduce the fixed costs and complexity of IT. Utility computing
tools provide total flexibility in information systems development, from in-house
and self-managed to fully outsourced, with everything in between—including a
hybrid deployment model in which in-house capacity can be supplemented by thirdparty resources to handle peak needs. Utility computing presents an IT paradigm
shift (see Stafford 2005).
References for Online File W15.4
Noel, D., “The Utility Computing Promise,” InfoWorld, April 2002.
Stafford, J., “CEO: Labor Costs to Plummet with Utility Computing,”
Enterprise Linux News, February 2005, utilitycomputing.itworld.com/
4804/050215uclabor (accessed June 2006).
Zimmerman, J., “Utility Computing Is the Next Big Thing,” ZDNetUK:
Tech Update, March 2003, insight.zdnet.co.uk/hardware/servers/
0,39020445,2131446,00.htm (accessed June 2006).
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ONLINE FILE W.15.5
CRITERIA FOR DETERMINING WHICH ACQUISITION APPROACH TO USE
If a company decides to buy or lease an IT application, the following representative
selection criteria need to be considered:
•
•
•
•
•
•
•
•
•
•
•
Functionality and flexibility. Commercial packages need to be modified or
adapted to the specific requirements of an application. Therefore, it is important
to evaluate the extent to which a package can be adapted and the willingness of
the vendor to perform or support the adaptation.
Information requirements. The selected package should satisfy the information
requirements of the users. Information collection, storage and retrieval capabilities, and the database structure should be carefully examined.
User friendliness. User friendliness is important. If the IT application is hard for
business professionals to use, then it will be rarely used.
Hardware and software resources. The computer type and the operating system
required by the IT package must be compatible with the existing infrastructure.
The CPU and storage requirements are also important considerations.
Installation. The installation effort required to implement the package should
also be taken into account. Some packages are complex, and their installation
requires extensive consultation. The installation process may also take a considerable amount of time.
Maintenance services. Because IT application requirements could be constantly
changing, continuous maintenance is required. It is important to consider how
often the package needs to be upgraded and whether the vendor provides assistance for its maintenance.
Vendor quality and track record. It is less risky to acquire an IT package from a
vendor that has a good reputation and track record than from one with a lessthan-stellar or unknown reputation. The quality of the vendors can be indicated
by their related experience in the particular application and their sales and financial records, as well as their responsiveness to clients’ requests. To minimize risk,
minor applications should be leased first.
Estimating costs. The total costs of IT projects are usually difficult to assess and
often underestimated. In addition to the obvious costs associated with system
acquisition or development, it is also important to factor in the costs of installation, integration, customization, and maintenance.
Measuring benefits. It is often difficult to accurately predict the benefits of EC
applications, because such applications are usually novel and may have no precedent for comparisons. Furthermore, some IT and EC applications are interorganizational and are thus influenced by the environment of the organization. Such
effects are usually intangible and difficult to isolate and quantify.
Personnel. Staffing requirements should be planned for in advance to ensure that
the organization has the appropriate human resources for systems development
(in the case of in-house development), implementation, operation, and maintenance. It may be difficult to recruit and retain IS personnel with appropriate
knowledge and experience in certain types of IT application development. Special
expertise can be acquired from external consultants, but usually at a very high cost.
Technological evolution. Planning ahead for technological evolution facilitates
the upgrade of IT applications and enables the organization to adopt innovations
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•
•
•
•
•
more quickly than the competition. It is therefore very important to allow for
flexibility in the application design so that the chosen options do not impose
major limitations on future choices. Given the rapid pace of IT evolution, it is
sometimes preferable to develop IT applications incrementally to take advantage
of the latest developments in the technology.
Scaling. System scalability refers to how big a system can grow in various dimensions to provide more service. Scalability can be measured in several ways, including the total number of users, the number of simultaneous users, and the transaction volume. These dimensions are not independent, because scaling up the size
of the system in one dimension can affect the other dimensions. The growth of
scale is facilitated or constrained by the system architecture.
Sizing. The required size and performance of an application are also difficult to
predict, because the growth of the user population of certain IT applications is
hard to anticipate. Overloading the application decreases performance.
Performance. System performance is a critical factor for business success. In addition to convenience, good performance also brings customers and competitive
advantages. Performance is measured by two main metrics: latency and throughput. Latency measures the time required to complete an operation such as downloading a Web page. It is an indicator of the users’ experience with the system.
Throughput measures the number of operations completed in a given period of
time. It indicates the capacity or number of users that a system can handle.
Throughput and latency are interrelated. An increase in either measure will lead
to an increase in the other.
Reliability. Reliability is an essential requirement for a successful system. System
failures and downtime may lead to public embarrassment. When an IT application fails, business is interrupted and the company loses customers. System reliability can be enhanced through redundancy (i.e., backup systems).
Security. Security is one of the most important factors for the adoption and diffusion of IT applications. Data and information flow in IT applications, as well as
stored data, may include private and/or proprietary information. Thus, a selected
package must meet strict security requirements. Systems, communication, and
data security must be addressed early in the design of the applications and not
after their implementation. In addition to technological solutions such as firewalls
and encryption, physical and procedural security measures must also be enforced.
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ONLINE FILE W15.6
THE PROCESS
OF
VENDOR
AND
SOFTWARE SELECTION
Martin et al. (2002) identified six steps in selecting a software vendor and an MSS
package. These six steps are illustrated in Figure 15.5 and explained in the following
sections.
STEP 1: IDENTIFY
POTENTIAL
VENDORS
STEP 2: DETERMINE
THE EVALUATION
CRITERIA
STEP 3: EVALUATE
VENDORS AND
PACKAGES
STEP 4: CHOOSE
THE VENDOR AND
PACKAGE
Potential vendors can be identified from software catalogs, lists provided by
hardware vendors, technical and trade journals, consultants experienced in the
application area, peers in other companies, and Web searches. These sources
often yield so many vendors and packages that one must use some preliminary
evaluation criteria to eliminate all but a few of the most promising ones from further consideration. For example, one can eliminate vendors that are too small or
that have no track record or a questionable reputation. Also, packages may be
eliminated if they do not have the required features or will not work with available hardware or operating system, communications network, or database management software.
The most difficult and crucial task in evaluating a vendor and a packaged system is
to determine a weighted set of detailed criteria for choosing the best vendor and
package. Some areas in which detailed criteria should be developed are characteristics of the vendor, functional requirements of the system, technical requirements
the software must satisfy, amount and quality of documentation provided, and vendor support of the package. These criteria should be documented in a request for
proposal (RFP), which is sent to potential vendors to invite them to submit a proposal describing their software package and how it would meet the company’s
needs. The RFP provides the vendors with information about the objectives and
requirements of the system, the environment in which the system will be used, the
general criteria that will be used to evaluate the proposals, and the conditions for
submitting proposals.
The collective responses to an RFP generate massive volumes of information that
must be evaluated to determine the gaps between the company’s needs (as specified
by the requirements) and the capabilities of the vendors and their application packages. Often, the vendors and packages are given an overall score by assigning an
importance weight to each of the criteria, ranking the vendors on each of the
weighted criteria (say 1 to 10), and then multiplying the ranks by the associated
weights.
Once a short list has been prepared, negotiations can begin with vendors to
determine how their packages might be modified to remove any discrepancies
with the company’s desired MSS application. Thus, one of the most important factors in the decision is the additional development effort that may be required to
tailor the system to the company’s needs or at least to integrate it into the company’s environment. Additionally, the opinions of the users who will work with
the system and the IT personnel who will have to support the system have to be
considered.
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STEP 5: NEGOTIATE
A CONTRACT
STEP 6: ESTABLISH
A SERVICE-LEVEL
AGREEMENT
The contract with the software vendor is very important. Not only does it specify the
price of the software, but it also determines the type and amount of support to be
provided by the vendor. The contract will be the only recourse if the system or
the vendor does not perform as specified. Furthermore, if the vendor is modifying
the software to tailor it to the company’s needs, the contract must include detailed
specifications (essentially the requirements) of the modifications. Also, the contract should describe in detail the acceptance tests the software package must pass.
Service-level agreements (SLAs) are formal agreements regarding the division of
work between a company and its vendors. Such divisions are based on a set of
agreed-upon milestones, quality checks, what-if situations, how checks will be made,
and what is to be done in case of disputes. If the vendor is to meet its objectives of
installing MSS applications, it must develop and deliver support services to meet
these objectives. An effective approach to managing SLAs must achieve both facilitation and coordination. SLAs do this by (1) defining the partners’ responsibilities,
(2) providing a framework for designing support services, and (3) allowing the company to retain as much control as possible over their own systems.
Reference for Online File W15.6
Martin, E. W., et al., Managing Information Technology, 4th ed. Upper Saddle River, NJ: Prentice Hall, 2002.
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ONLINE FILE W15.7
IT at Work
Boeing Designs a New Aircraft
Boeing (boeing.com) is at a critical time in its history. European
aerospace rival Airbus (airbus.com) has overtaken Boeing in
commercial-airplane deliveries, and the two companies have
different strategies for next-generation airplanes. Airbus is
betting on a 550-seat aircraft called the A380. In contrast,
Boeing is planning for a 200- to 300-passenger jet designed
to consume 20 percent less fuel than bigger jets and fly
longer routes previously limited to larger planes. Boeing has
named its new jet the 787 Dreamliner. The company plans to
start production of the 787 in 2006, with aricraft to be in service by 2008.
The 787 represents a dramatic shift in how Boeing builds
planes. The company, which used to design and build the bulk
of its aircraft, will outsource 70 percent of the airplane to suppliers. This outsourcing will require cross-company, global collaboration.
Boeing is designing the Dreamliner for half the cost of its
last flagship airplane (the Boeing 777). To accomplish that,
Boeing will use—and will insist that key suppliers use—software
that lets designers around the world collaborate electronically in
designing every manufacturing process and every component,
Reference for Online File W15.7
Bacheldor, B., “Boeing’s Flight Plan,” Information Week, February 16, 2004.
POM
from wings to seat-back trays. As a result of this collaboration,
the company anticipates improved efficiency in the plane’s
development process. Designers will use a single set of data,
so the data will not have to be reproduced for multiple purposes as in the past. In addition, planners will be able to simulate digitally the plane’s life cycle from design through production. The ability to quickly model iterations of a design will
reduce errors and redundant work in achieving the best
design. Boeing is using a “relational design,” which means
that the digital models it builds will be made up of virtual
components—digital versions of the chairs, metal, and screws
used to build a plane. For example, if designers move the
location of the windows, the associated parts will move with
it, speeding the process. Also, models can also be used to
test component combinations to see, for example, if the
design can handle certain loads.
Source: Compiled from Bacheldor (2004) and boeing.com (accessed
June 2006).
For Further Exploration: What makes the management of
collaborative business processes difficult?
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ONLINE FILE W15.8
THE DRIVERS
OF
PROCESS REDESIGN
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•
Fitting commercial software. To reap the best benefit of buying or leasing software, it is frequently best to use the software as it is rather than to modify it. But
what if the software does not fit your business processes, and it is not possible or
advisable to change the software? The best solution sometimes is to redesign the
affected business processes. Typical software in this category are the functional
information systems, ERP, business intelligence, and business performance management software.
Restructuring old processes prior to automation. Many organizations believe that
the solution to their problem is to automate business processes. While in some
cases it makes sense to do it, in many others it does not. Automating ineffective
processes can result in only small savings, whereas restructuring can result in a
much larger savings.
Need for information integration. Focusing on vertical functions and their corresponding information systems to support the business has resulted in fragmented,
piecemeal information systems. Integration of information is required for good
decision making. Achieving it is one of the goals of business process redesign.
Reducing cycle time. Cycle time refers to the time it takes to complete a process
from beginning to end. As discussed earlier, competition today focuses not only
on cost and quality, but also on speed. Time is recognized as a major element that
provides competitive advantage, and therefore cycle time reduction is a major
business objective.
Need for customization. In today’s competitive business environment, customers
demand products more customized to match their unique needs. Customization
means major shifts in operating methods throughout the organization, engineering, manufacturing, marketing, and the supply chain. Business process redesign is
an important strategy to achieve successful mass customization.
Empowering employees. Empowering employees means giving employees power
to do their job. To be empowered, employees need a system that would enable
them to collaborate and give them an up-to-date view of the company’s activities.
Streamlining the supply chain. As seen in Chapter 8, it is frequently necessary to
change segments in the supply chain to streamline its operations and to better collaborate with business partners. Redesign is frequently done on small segments of
the chain, but sometimes the entire chain is redesigned.
Improving customer service. To properly introduce CRM, it is often necessary to
change business processes. As will be seen later in this chapter, centralizing 800
numbers and empowering frontline employees involve process restructuring.
Participating in private or public e-marketplaces. With the increased trend to use
e-marketplaces comes the need to get connected to them, as well as to the organization’s back-end processes. To enable such integration, it is frequently necessary
to redesign internal as well as external processes. The same is true with participation in auction sites. Not changing the processes results in manual operations (e.g.,
data entry) that may be expensive, slow, and error-prone.
Conducting e-procurement. Introduction of e-procurement methods frequently
requires complete redesign of the purchasing process (requisition, approval, control, and payment for purchases).
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•
•
•
Enabling direct online marketing. Many manufacturers as well as retailers are
using direct marketing to consumers, mostly via the Internet. Moving to such a
business model requires design or redesign of order taking and order fulfilment.
Reducing cost and improving productivity. For generations, companies have
sought to reduce costs and increase productivity. An example is industrial engineering methods. Many of these are part of continuous small improvements, while
others require radical changes in business processes.
Transformation to e-business. When organizations transform themselves to
e-business, usually by automating processes or collaborating electronically, they
frequently need to change their business processes.
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ONLINE FILE W15.9
Changes in Business Processes Brought by IT
Old Rule
Intervening Technology
New Rule
Information appears in only
one place at one time.
Only an expert can perform
complex work.
Business must be either
centralized or distributed.
Only managers make
decisions.
Field personnel need offices to
receive, send, store, and
process information.
The best contact with potential
buyers is a personal contact.
You have to locate items
manually.
Plans get revised periodically.
Shared databases, client/server
architecture, Internet, intranets
Expert systems, neural computing
Information appears simultaneously
wherever needed.
Novices can perform complex
work.
Business can be both
centralized and distributed.
Decision making is part of
everyone’s job.
Field personnel can manage
information from any location.
People must come to one
place to work together.
Customized products and
services are expensive and
take a long time to develop.
A long period of time is spanned
between the inception of an
idea and its implementation
(time-to-market).
Organizations and processes
are information-based.
Move labor to countries where
labor is inexpensive (off-shore
production).
Telecommunications and
networks: client/server, intranet
Decision support systems, enterprise
support systems, expert systems
Wireless communication and
portable computers, the Web,
electronic mail
Interactive videodisk, desktop
teleconferencing, electronic mail
Tracking technology, groupware,
workflow software, search engines
High-performance computing
systems, intelligent agents
Groupware and group support
systems, telecommunications,
electronic mail, client/server
CAD/CAM, CASE tools,
online systems for JIT decision
making, expert systems
CAD/CAM, electronic data
interchange, groupware,
imaging (document) processing
Artificial intelligence, expert systems
Robots, imaging technologies,
object-oriented programming,
expert systems, geographical
information systems (GIS)
The best contact is the one
that is most cost-effective.
Items are located automatically.
Plans get revised instantaneously
whenever needed.
People can work together
while at different locations.
Customized products can be
made quickly and inexpensively
(mass customization).
Time-to-market can be
reduced by 90 percent.
Organizations and processes
are knowledge-based.
Work can be done in countries
with high wages and salaries.
Source: Compiled from M. Hammer and J. Champy, Re-engineering the Corporation (New York: Harper Business, 2001).
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ONLINE FILE W15.10
Ten Reasons to Value BPR Software
Reason
Description
Graphical representation of process on
a timeline
The software allows easy capture of relevant process data (activities,
resources, organizational data) into an organized repository that
facilitates graphical representation of process flow on a timeline.
BPR software facilitates the graphical display and analysis of a
business process.
The software facilitates the selection of different process data, process
performance calculations, and for comparing process redesign
alternatives.
With the software, it is easy to ask what-if-questions and to assess the
impacts of different process designs and organizational parameters.
The software can simulate process behavior based on probabilistic
input rates with visual tracking of work in queues and can uncover
process capacity bottlenecks.
The software allows the analysis and redesign of a particular process
case or a comprehensive assessment of all possible cases combined.
The software facilitates the business professional in processing
analysis and reporting, its resource allocation capabilities, and links
to costing, and the usefulness of its outputs for presentation to
management.
The software forces careful and blow-by-blow descriptions of process
specifics. This helps deepen the understanding of how a process
works.
The software speaks the language of business processes and
management rather than the language of data flows and software
engineering.
The software sensitizes the importance of coordinating dynamic
interdependence among the different parts of a business process.
Examining process at any level of
detail
Graphical objects that are “live” with
data
What-if capabilities
Animated simulation
Case generation and analysis
BPR software is a business tool
When you can explicitly describe a
process, you deeply understand it
A shared business language for
communicating about processes
and BPR
BPR software changes the way you
think about processes and BPR
Source: Compiled from El Sawy (2001).
Reference for Online File W15.10
El Sawy, O., Redesigning Enterprise Processes for E-Business. New York:
McGraw-Hill, 2001.
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ONLINE FILE W15.11
RESTRUCTURING PROCESSES
AND
ORGANIZATIONS
Redesign, restructuring, and reengineering efforts involve many activities, three of
which are described in this section: redesign of one or a few processes, cycle time
reduction, and restructuring the entire organization
REDESIGN OF ONE
OR A FEW
PROCESSES
Redesign efforts frequently involve only one or a few processes. One of the most
publicized examples of process redesign is the accounts payable process at Ford
Motor Company (Hammer and Champy, 1983). The Ford example, as shown in
Figure W15.11.1, demonstrates changes in a simple process. Khan (2000) describes
the restructure of an air cargo process that was much more complicated and
involved several IT tools.
Cycle time refers to the time it takes to complete a process from beginning to end.
As discussed earlier, competition today focuses not only on cost and quality, but also
on speed. Time is recognized as a major element that provides competitive advantage, and therefore cycle time reduction is a major business objective. The success
of Federal Express, for example, is clearly attributable to its ability to reduce the
delivery time of packages. It does this by using complex computer-supported systems that allow flexible planning, organization, and control (see Wetherbe, 1996).
Additionally, the Internet, extranets, and intranets provide a means of economically reducing cycle time by cutting communications time through the use of e-mail
and EDI (also Internet/EDI) and by allowing collaboration in design and operations of products and services.
CYCLE TIME
REDUCTION
RESTRUCTURING
THE WHOLE
ORGANIZATION
The fundamental problem with the hierarchical organizational structure is that any
time a decision needs to be made, it must climb up and down the hierarchy. If one
person says “no” to a pending decision, everything comes to a screeching halt. Also,
if information is required from several “functional sources,” getting all the right
information coordinated can be a time-consuming and frustrating process for
employees and customers alike.
So, how is organizational redesign done? It varies, depending on the organization and the circumstances. For example, providing each customer with a single
New Process
Old Process
Supplier
Purchasing
Purchase order
Copy of
purchase
order
Supplier
Purchasing
Purchase order
Goods
Goods
Ford receiving
Ford receiving
Receiving document
Invoice
Database
Accounts payable
Accounts payable
Payment
500 Employees
Figure W15.11.1 Reengineering processes at Ford Motor Company.
Payment
125 Employees
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Customer
Call
center
Account
manager
supported
(via a portal)
by. . .
My
accounts
Customer
accounts
Databases
Checking
accounts
Expert system
Installment
loans
Backed up by. . .
Savings
accounts
Mortgage
loans
Investment
expert
Trusts
Etc.
Statement
Etc.
Figure W15.11.2
Reengineered bank with
integrated system.
Loan
expert
Consolidated
statement
point of contact can solve the stovepipe problem. In the traditional bank, for example, each department views the same customer as a separate customer. Figure
W15.11.2 depicts a redesigned bank in which the customer deals with a single point
of contact, the account manager.
The account manager is responsible for all bank services and provides all services to the customer, who receives a single statement for all of his or her accounts
and can access all accounts on the same Web page (“My Accounts”). Notice that the
role of IT is to back up the account manager by providing her with expert advice on
specialized topics, such as loans. Also, by having easy access to the different databases, the account manager can answer queries, plan, and organize the work with
customers.
An alternative to the single-point contact is a networked structure. In this structure, regardless of where and when a client contacts the company, the networked
agents would have access to all customer data, so that any employee can provide
excellent customer service. Companies such as USAA, Otis Elevator, and others
have all agents located in one city and give customers around the country the same
toll-free number and a centralized Web address. In this model, the company also can
install a computer-based call-center technology, which brings up complete customer
information (or information about a customer’s elevator in the case of Otis) on the
computer screen, whenever a customer calls. This means that anyone who answers
the call would know all the information necessary to make a quick, frontline decision (see Chapter 12). There is no need to ask questions of the customer, and any
agent can give personalized and customized service. This is especially important in
services such as reservation systems for hotels or airlines, as well as for utility companies, financial services, universities, and health care services.
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References for Online File W15.11
Khan, M. R. R., “BPR of an Air Cargo Handling Process,” International
Journal of Production Economics, January 2000.
Hammer, M., and J. Champy, Re-engineering the Corporation. New
York: Harper Business, 1983.
Wetherbe, J. C., The World on Time. Santa Monica, CA: Knowledge
Exchange, 1996.