REENGINEERING A LEGACY SYSTEM

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1 INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) International Journal of Management (IJM), ISSN (Print), ISSN (Online), ISSN (Print) ISSN (Online) Volume 6, Issue 1, January (2015), pp IAEME: Journal Impact Factor (2014): (Calculated by GISI) IJM I A E M E REENGINEERING A LEGACY SYSTEM Kansana Mala H Technology Lead, Infosys Ltd, Chennai. ABSTRACT The objective of preparing this paper is to describe the basic concepts of Business Process Reengineering (BPR). In this paper discussion is continued with the concepts of BPR followed by historical background of BPR, difference of BPR with TQM, methodology followed in reengineering process, way to success in BPR, need of information technology (IT) in BPR, causes of failure in BPR, problems in implementation of BPR along with conclusion and recommendation. INTRODUCTION Under the of notion of the division of labour principle that divides process into small and clearly defined tasks, classical business structures are no longer suitable in a world where competition, customers and change demand flexibility and quick response. A good example to show this is order-fulfilment. It starts when a customer places an order and ends when the goods are delivered. The process typically involves a dozen or so steps that are performed by different people in different departments. Clearly, there are no customer service and no flexibility to respond to special requests. No-one is responsible for the whole process and can tell a customer when the order will arrive. Furthermore, the order passing across different departments makes the process errorprone and also delays progress at every hand-off. There are still many further problems. In particular, people working in different departments look inward and upward toward their boss and department, rather than outward toward their customers. The notion of business process re-engineering addresses the problems of the way we should work and the hierarchical structure of organisations. BPR 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. Instead of starting with an activity flowchart, corporations are advised to start with a clean slate. They are then told to look into why they perform the tasks the way they do. A 656

2 Process Engineer will look at the activities to be performed and how they can be engineered to invest minimum resources and get maximum returns. To illustrate the point, let us consider the example of Apple ipod. Apple rethought the way music ought to be made available to the consumers. The changes it brought were: Radical: While all other music labels were selling music via brick and mortar stores, Apple developed its itunes software to sell music digitally. (Napster had made digital music available through a P2P platform earlier, but was sued by music labels for copyright violation) Fundamental: Apple sold single tracks as opposed to whole albums being sold at brick and mortar shops. Apple just kept in mind the end need of the consumer and reconsidered whether conventions were required. Business process re-engineering is required in two cases: 1. The organization has discovered some breakthrough methodology which will revolutionize its processes to give it more productivity and efficiency and therefore the entire process needs to be changes. 2. The organization has failed to keep up to date with the changing technologies. Since it did not continuously innovate, it is now faced with a change or die situation and business process reengineering which helps integrate latest best practices into the processes are the only way to save the business. How to Re-Engineer the Corporation? Information Availability: To fundamentally redesign a process, one must know the details involved. Details from internal and external sources must be captured and provided to the relevant people in the required time duration. This helps them to identify the bottlenecks and work around better ways of reaching the desired end. Information Sharing: A BPR project is usually facilitated by a cross functional team. Most of the times, teams are spread across different geographic locations. Information needs to be successfully shared amongst various people to ensure the reengineering goes as planned and without hiccups. Technology as the Solution: The new processes that are developed as a result of BPR initiatives deploy the latest technology to achieve the desired end results. Usually it is e-commerce, automation or another technology driven solution that is implemented. Business Process Re-engineering has become a very important buzzword in the BPM lexicon. Many corporations who were late in realizing the power and importance of BPM have to undergo re-engineering initiatives to ensure that they are still relevant to the marketplace. Reengineering initiatives are however expensive and may require certain downtime. This is the reason they are resented by many corporations. REASONS FOR BUSINESS PROCESS REENGINEERING MAINTAIN YOUR COMPETITIVE ADVANTAGE: Yes, your current enterprise systems are probably a mess. if they even exist. You probably have a ton of spreadsheets, manual workarounds 657

3 and other inefficiencies that make you wonder how your organization has managed to survive and thrive for this long. But you probably also have business processes that give you a competitive edge, no matter how painful or inefficient they may be. Business process reengineering without the constraints of software configuration ensures that you maintain these competitive advantages as you select and implement your new ERP systems. MITIGATE THE DOWNSIDE OF THE FLEXIBILITY OF MODERN ERP SYSTEMS: Most of today s ERP systems are very flexible. In fact, I have read that the average SAP implementation requires 10,000 configuration decisions in order to assemble a working, end-to-end process flow. If your business processes are not well defined and documented prior to implementation, these thousands of configuration decisions will be made in a vacuum by software techies. SaaS and cloud ERP systems are becoming more flexible as well, so even the SaaS bandwagoners will have trouble disputing this point (although I m sure at least one will try in the comments section below). BEST PRACTICES ARE A FARCE, BUT LEAN SIX SIGMA ISN T: Best practices are a lot like unicorns and Santa Clause they sound mythical, magical, and represent what we all hope really exists, but then we realize one day that they don t. Best practices sound good in theory, but the reality is that they are simply best practices for how any particular ERP vendor s software works rather than for your operations. An exception to this rule is vanilla, back-office functions such as HR and accounts payable. Lean Six Sigma, on the other hand, is a set of tools that can be used to define your own set of best practices, efficiencies, and competitive advantages that you likely don t want to be replicated by industry peers. The graphic below illustrates some of the lean Six Sigma activities that Panorama s team has built into its business process reengineering methodology: FASTER REALIZATION OF BUSINESS PROCESS IMPROVEMENTS AND BUSINESS BENEFITS: When we help clients identify process improvements, we often find that although a new ERP system may help automate and further enable process changes, many improvements can be rolled out independent of the chosen ERP software. For example, if a company decides that it wants to incorporate a purchase order approval workflow to institute tighter controls on procurement costs, it may decide to do so via approvals until a more robust ERP system is in place to further automate this change. In addition, from an organizational change management perspective, spoon feeding changes to employees sooner is more effective than waiting to implement a massive degree of change all at once during an ERP implementation. AVOID THE PAVING THE COWPATHS TRAP: Companies that fail to define business process improvements prior to their implementations are much more likely to simply automate their existing broken processes. The reason? Once an implementation starts, the meter is running on expensive technical consultants, so every minute spent making process decisions or agreeing to changes costs time and money. This set-up forces most project teams into the path of easiest resistance (i.e., simply configuring or customizing the software to fit existing processes). On the other hand, companies that take the time to define processes up front ultimately end up accelerating their implementation durations and minimizing extra costs, allowing the technical resources to focus on how the software can be best configured to meet those processes. Business process reengineering is one of the holy grails of ERP implementations. Everyone wants it, but few know how to achieve it. By having a realistic understanding of how processes are 658

4 best defined and incorporated into an ERP implementation, projects teams will be much more likely to succeed. In addition, your implementation will be faster, less expensive, and more widely embraced by employees with these tips and guidelines in place. BENEFITS OF REENGINEERING A LEGACY SYSTEM A although many application development tool vendors emphasize new development in the form of tools to drive multi-tier application development or web-enablement, the notion of how to leverage past IT investments has largely been overlooked. Since business rules define the active policy of an organization, an ability to identify, understand and leverage these rules is a key prerequisite to evolving an organization s IT infrastructure. Until recently, software engineering concentrated almost exclusively on the definition and improvement of the software development process. And this produced a lot of important results, ranging from structured analysis, to object oriented analysis, domain and component analysis, CASE environments, etc., which are very useful in developing new systems and forward engineering existing systems well maintained and documented. But legacy systems, created prior these methodologies and tools, usually are very poor in documentation and suffer of years of personnel change and ad-hoc maintenance interventions. This is where reengineering steps in. Reengineering is the systematic transformation of an existing system into a new form to realize quality improvements in operation, system capability, functionality, performance, or evolvability at a lower cost, schedule, or risk to the customer. This definition emphasises the focus that reengineering puts on improving existing systems with a greater return of investment (ROI) than could be obtained through a new development. Reengineering is closely related to traditional maintenance, as defined by ANSI-IEEE: maintenance entails making corrective, perfective, and adaptive changes to software, while development focuses on implementing new capabilities, adding functionalities, or making substantial improvements typically by using new computer resources and incorporating new software technologies; reengineering spans the gap between these two activities and exhibits characteristics of both. PAYBACK OF REENGINEERING Lower costs. Evidence from a number of US projects suggests that reengineering an existing system costs significantly less than new system development. Ulrich, for example reports on a reengineering project that cost $12 million, compared to estimated redevelopment costs of $50 million. Lower risks. Reengineering is based on incremental improvement of systems, rather than radical system replacement. The risk of losing critical business knowledge, which may be embedded in a legacy system, or of producing a system that does not meet its users real needs, is drastically reduced. Better use of existing staff. Existing staff expertise can be maintained, and extended accommodate new skills during reengineering. The incremental nature of reengineering means that existing staff skills can evolve as the system evolves. The approach carries less risk and expense which is associated with hiring new staff. 659

5 Revelation of business rules. As a system is reengineered, business rules that are embedded in the system are rediscovered. This is particularly true where the rules govern exceptional situations. Incremental development. Reengineering can be carried out in stages, as budget and resources are available. The operational organisation always has a working system, and end users are able to gradually adapt to the reengineered as it is delivered in increments. CONCLUSION Many unsuccessful BPR attempts may have been due to the confusion surrounding BPR, and how it should be performed. Organizations were well aware that changes needed to be made, but did not know which areas to change or how to change them. As a result, process reengineering is a management concept that has been formed by trial and error or in other words practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent. REFERENCES [1] Champy, James. Reengineering Management. New York, NY: HarperCollins Publishers, [2] X-Engineering the Corporation: Re-inventing Your Business in the Digital Age. New York, NY: Warner Business Books, [3] Davenport, Thomas H. "Need Radical Innovation and Continuous Improvement? Integrate Process Reengineering and TQM." Planning Review, May-June 1993, [4] Process Innovation. Boston, MA: Harvard Business School Press, [5] Kumar, Sameer, and Ralph Harris. "Improving Business Processes for Increased Operational Efficiency: A Case Study." Journal of Manufacturing Technology Management 15, No. 7, (2004): 662. [6] Prof. Dr Slobodan Stefanović and Prof. Dr Radoje Cvejić, Linear Programming of Basic Economic Parameters used at Reengineering in Small and Medium Enterprises, International Journal of Management (IJM), Volume 4, Issue 2, 2013, pp , ISSN Print: , ISSN Online: [7] Petroski, Henry. "Look First to Failure." Harvard Business Review 82, no. 10 (October 2004): 18. [8] Madhumita Panda, IT Enabled Business Process Reengineering, International Journal of Information Technology and Management Information Systems (IJITMIS), Volume 4, Issue 3, 2013, pp , ISSN Print: , ISSN Online: [9] Pryor, Mildred Golden, and Donald W. Pryor. "Process Reengineering as a Quality Strategy." Israel Society For Quality Proceedings, November 1994, [10] Process Reengineering Training Manual. Commerce, TX: Center for Excellence, [11] Reijers, H.A., and S. Liman Mansar. "Best Practices in Business Process Redesign: An Overview and Qualitative Evaluation of Successful Redesign Heuristics" OMEGA 33, no. 4 (August 2005): 283. [12] Roberts, Lon. Process Reengineering: The Key to Achieving Breakthrough Success. Milwaukee, WI: ASQ Press,