References:
Mabin, V.J., Forgeson, S. and Green, L. (2001), “Harnessing resistance: using the theory of
constraints to assist change management”, Journal of European Industrial Training,
Vol. 25 Nos 2-4, pp. 168-91.
Mumford, E. (1999), “Routinisation, re-engineering, and socio-technical design: changing ideas on
the organisation of work”, in Currie, W.L. and Galliers, B. (Eds), Rethinking Management
Information Systems: An Interdisciplinary Perspective, Oxford University Press,
New York, NY.
Lewin K. 1951. Field Theory in Social Science. New York: Harper & Row
Davenport, T. (1995), ``SAP: big change comes in big packages'', CIO, October 15.
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Week 12: Process Redesign (3) and Implementation
Introduction
Week 12’s lecture talks about the IT integration for BPR and change management during the BPR project implementation.
IT tools assist in IT integration for BPR
1. ERP systems
Enterprise resources planning systems (ERP) allow the sharing of real-time information
between manufacturers, customers and business partners.
Benefits of using ERP systems include: shorter manufacturing cycles; increased communication between consumers and business partners; better supply-chain management; and greater control of cost and operation management.
One application used commonly in ERP application is SAP, an enterprise software application that allows a tight coordination between sales, manufacturing, procurement, finance and accounting. Many companies utilize SAP for global integration across geographical business units. For instance, AutoDesk company implemented SAP with significant business results. The quote to time shipped reduced from two weeks to 24 hours and quarterly accounting preparation time was decreased by 50 per cent (Davenport, 1995).
2. Outsourcing
One of the most common trends in the IT industry in the past several years has been the use of project outsourcing. Outsourcing is an attractive choice because it allows companies to implement new technologies quickly, cut costs or improve IT services.
Companies seeking radical change might not be able to find outsourcing a source of substantial productivity gain. However, for smaller projects, outsourcing can be a cost-effective solution.
3. Services of consulting firms
Consulting firms and the use of analysts are key during the planning and implementation stages of reengineering. The major reason that companies turn to these types of companies is to prevent making poor business decisions. The use of outside consulting firms is critical success factor for BPR projects as it allows the company to receive the timely, precise information regarding new technologies. However, the use of consulting firms should be limited to aiding the company in making informed decisions, that is, a consulting firm should not be in charge of the internal decision-making process.
4. Enterprise software
Apart from ERP systems, other enterprise software that can lead to dramatic improvements in information processing can be used. Supply chain management systems allow suppliers, distributors and retailers to connect. Furthermore, supply chain management systems focus on supplier issues and are often more affordable than larger, more functionally integrated systems like SAP. Sales and business process automation is also becoming an increasingly
popular area for reengineering. One reason for its rising popularity can be attributed to the falling prices of software.
Another popular area for software implementation is in business process reengineering (BPR) software. Although some of these software applications are limited in capabilities because each company has different situation, the majority of packages will give companies a good start with the planning aspects of a reengineering project.
Change management
For a BPR project to become successful, the organization should know very well about how to manage the impact of change in the organization. The top management should have the “art” of dealing with people in the changing environment. Effective change management should consider soft issues around human. It would avoid resistance to change among employees (Mabin et al., 2001). Only with the full participation of employees can a BPR project run smoothly.
Change management refers to how a manager or leader manages the potential impact of change to make people accept it in order to implement change of business process. It is the process of continually renewing an organization’s direction, organizational structure, and capabilities to serve the ever-changing needs of external and internal customers.
Change management is not just about managing change of business processes. According to Mabin et al. (2001), based on the theory of constraints, they stated that this theory provides a management model that incorporates the utility of resistance actively, directly and positively. To make radical business process change a success, the concern for people is vital, and that is what top management should consider. Mumford (1999) highlighted that lack of concern for people will make BPR not succeed. In addition, Mabin et al. (2001) discussed the importance of training and development in change management to make people well equipped with knowledge and skills of different aspects, which therefore would reduce the fear of uncertainty due to changes. The top management should figure out the right way of managing people for adapting to and adopting change so that the changes will make succeed and the company would receive a benefit from this in the long run.
Top management should also lay the emphasis on the employees’ satisfaction and treat them in the best way. The organization should employ a number of proactive methods to ensure employees develop their full potential. Examples include identification of training and development needs, encouraging grants and research, fellowships, and professorships. Thus, to make BPR work successfully, it must be executed by people within the organization. Most importantly, the organization should know the art of managing possible impact of change.
Change Process Model - Lewin's 3 Stage Model
This model states that organisational change involves a move from one static state via a progressional shift, to another static state. The model, also known as Unfreeze-Change-Refreeze, comprises a three-stage process of 1) unfreezing, 2) changing and 3) re-freezing.
Stage 1: Unfreezing
This stage involves creating the right conditions for change to occur. By resisting change, people often attach a sense of identity to their environment. In this state, alternatives, even beneficial ones, will initially cause discomfort. The challenge is to move people from this 'frozen' state to a 'change ready' or 'unfrozen' state.
This first stage involves creating the right conditions for change to occur. This includes preparing the organization to accept that change is necessary, which involves break down the existing processes before you can build up a new way of operating business processes.
Key to success of first stage is to show why the existing way of doing things cannot continue. For instance, declining sales figures, poor financial results or worrying customer satisfaction surveys.
To launch BPR successfully, organizations need to start at its core – organizations need to challenge the beliefs, values, attitudes, and behaviors that currently define it.
This first part of the change process is usually the most difficult and stressful. When organizations start cutting down the "way things are done", it will cause discomfort to employees. Top management should avoid resistance to changes among employees. It is the responsibility of top management to gather the employees to participate in the BPR project fully. This can move people in the organization form “frozen” state to “unfrozen” state for changes.
Stage 2: Changing
Good leadership is important, and coaching, counseling or psychological support may be needed. The end goal of this stage is to get people to the 'unfrozen' state and keep them there.
The changing stage is the stage where people begin to resolve their uncertainty created in the unfreezing stage and look for new ways to operating the business. People start to believe and act in ways that support the new business direction.
The transition from unfreeze to change does not happen overnight. People take time to embrace the new direction and participate proactively in the change. In order to accept the change and contribute to making the change successful, people need to understand how the changes will benefit them. Not everyone will fall in line just because the change is necessary and will benefit the company. Therefore a reward system should be well set to reward the employees.
Good leadership, coaching, counseling, psychological support, good time management and communication between different levels are the keys to success for the changes to occur. Good leadership can ensure the smoothness of BPR project implementation. People need time to understand and adapt to the business changes. They also need to feel highly connected to the organization throughout the changing stage.
Stage 3: Refreezing
The organization is ready to enter the refreezing stage when the changes are taking shape and people have embraced the new ways of working. The outward signs of the refreeze can be a stable organization chart or consistent job descriptions. The refreezing stage requires the organization and people within the organization to ensure that the changes are used all the time and that they are incorporated into everyday business. By re-establishing a new place of stability and reconnecting people back into their safe and familiar environment, employees feel confident and comfortable with the new ways of working.
Some people might question about creating a new sense of stability because of the rapid changing business environments. Without the refreezing stage, employees get caught in a transition trap where they are not sure how things should be done, so nothing ever gets done to full capacity. In the absence of a new frozen state, it is very difficult to tackle the next change initiative effectively and employees might lost motivation to business changes.
Organizations should celebrate the success of the change with employees during the refreezing stage. This helps people to find sense of belongings and they can feel that the company thanks them for enduring a hard time for changes. This helps them believe that the BPR project will be successful.
British Airways (Past example)
Early in 1981, British Airways brought on board a new chairperson. When this chairperson started, he noticed that the company was very inefficient and was wasting a lot of valuable resources. To make the organization more profitable, this chairperson decided to restructure the entire organization. He realized that the best way to do this was through change methodology management plan.
Systematically, the company began reducing their workforce. But, before they did this, through his change management leadership, the chairman gave the company the reasons for the restructuring and privatization of the company in order to prepare them for the upcoming change. Thus, through leadership and communication, he directed his company through a difficult time that could have been disastrous without effective change management resistance communication.
California State University (Recent example)
A more recent example can be found at California State University (CSU). Any IT system change that happens at the main campus has to go through every satellite campus, meaning those 23 campuses and thousands of employees, staff, and students must adapt their IT systems as well. Dealing with change at a smaller organization can be a nightmare by itself; it’s worse at a larger organization like CSU.
But, instead of merely throwing their hands up in disgust, the IT department decided to institute an automated change management system. Using Cisco’s Pace functionality, the company can now make upgrades that will automatically make changes to the entire system. And, to make their change management strategy even more effective, they are now defining who can use what system and what changes they can make to their designated area. Their change management strategy considered the human factor and not only included the automated system, but also defined roles of change so that it would minimize the confusion and issues when a change has to be instituted.
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