Business Process Reengineering through ERP Implementation

The electrical utility industry is a major provider of energy in most countries. It is indispensable to factories, commercial establishments, homes, and even most recreational facilities. They have special character that made them regulated by local and national authorities.

In Indonesia, the electrical utilities is run by a state-owned integrated electricity company to serve million customers households, industry, business and others. In this condition they need to use information technology not only to reduce costs and streamline business processes, but also to build competitive advantage and customer satisfaction. This why Accenture suggest to implement an ERP system to this state owned integrity electricity company.


An Old Fashioned Business Process
I work at a state owned enterprise (SOE) and I know that the "old business process" is still a common issue in most of these companies. Incuding in the state-owned integrated electricity company that serves over 37 million customers (households, industry, business and others) with a total asset of USD 35 billion (December 2009). This company as analyzed by Accenture has been operating throughout the country with non-integrated systems and non standardized business processes. The company's major issues, as the other SOE were that it's business processes are not standardized and consolidated financial reports were not produced on a timely basis, lacking important decision-making information.

Another issue related to the business process in this company is they are lack of integrated knowledge and control of inventories and assets led to underutilization of assets. This is also based on Accenture analyses. With respect to Talent Management, the company's processes concentrated on basic record keeping and un-integrated payroll systems, making it difficult to introduce training plans, career management, succession plans, transparent performance evaluation, and other requirements of a modern Human Resource Management area.

How Accenture Helped
Accenture implemented an integrated Enterprise Resource Planning (ERP) that covers Financial Management, Material Management and Human Resource Management areas, using SAP

ERP is an integrated application that is computer-based for the internal and external management of assets and resources involved in a business. It includes management of all tangible assets and materials, financial and human resources to facilitate easy information flow between all the services of an organization. It is an acronym for the term, “Enterprise Resource Planning” (Wikipedia)

The ERP system is an integrated software system that is used widely across many businesses and industries. It is built on a centralised database that uses a single common platform to consolidate all the business operations into a unified environment. With data collected and stored in a single repository, it allows for easier management across different modules of the organization without the need for multiple storage systems. They integrate many functional components of a system like sales & marketing, production planning, inventory management, finance, human resources, etc (1)

Considering the large scale of ERP Implementation and considering the company's first experience with an integrated system, Accenture decided that major change management effort is required. To minimize implementation risk, Accenture selected a multiple phase approach. Combinations of rollout sites were carefully picked to ensure minimal business disruption and yet breadth of functionalities is covered. Lessons learnt from earlier roll out was studied and immediately applied to the next one

A total of over 500 training classes were held and a total of over 10,000 training days were consumed by users to learn the ERP system. Appropriate management sponsorship was maintained throughout the implementation, including training which resulted in over 95% training attendance rate.

Throughout the implementation journey, Accenture managed to help the company build ERP template that consists of standard policies, business process, chart of accounts and reports to be used at other company's business units.

Business Process Reengineering through ERP
Basically a "Business Process Reengineering" (BPR) is the fundamental rethinking and radical re-design, made to an organizations existing resources. So we can say that it is more than just business improvising. It is an approach for redesigning the way work is done to better support the organization's mission and reduce costs. Reengineering starts with a high-level assessment of the organization's mission, strategic goals, and customer needs.

Reengineering identifies, analyzes, and redesigns an organization's core business processes with the aim of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed.

Based on this definition Business Process Re-engineering (BPR) simply implies eliminating tasks that does not add value to a business process while reorganization the value adding tasks. It can also be perceived as a restructuring of redundant dependent tasks or work order. It involves a re-thinking and consequently a re-moulding. In appreciating this concept, it is expedient to view a process as a "chain of tasks". The truth is that in a typical business process, you can have some redundant tasks that if not present does not really have any impact. Such tasks can be eliminated thus streamlining business process. This is what ERP implementation can help not just to simplify to business process but also to redesign the organization core business process.

During ERP implementation, before a business process can be re-engineered, excellent understanding of the defective process is key. This is why it is important to first carry out a critical and objective business process definition and analysis before system design. At this juncture, it is important to state that when restructuring a business process, adherence to best practices is encouraged. This allows the client to be able to leverage the redefined business process externally and not only internally.

Speeding-up the Process
Business processes can be linked to ERP to gain significant advantages and to achieve specific goals. A complete understanding of the traditional method in conjunction with the ERP method of business processing will help in opting for the right method to achieve success.

An ERP implementation can help to speed up the business process in which it involves in channelling power and resources through various departments involved in the business like accounting, finance, inventory management, etc. This ensures that the main focus is on the business process and not on the functional departments, like the traditional business process.

Implementing an ERP system in more broad term is also mean redefining an organization's business processes. ERP implementation, like what Accenture do in this state owned integrity enterprise can be used not just to streamlining the business process but also to enhance and optimize the existing business process. This is the journey that the state owned integrity company doing with the help from Accenture.

Refference

(1)ERP Implementation and Business Process Re-engineering, http://it.toolbox.com/blogs/sap-library/erp-implementation-and-business-process-reengineering-11537
Accenture
Wikipedia
What are the benefits of an ERP System? http://www.erpwire.com/erp-articles/erp-benefits.htm

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Single Costumer View to Improve Indosat Customer Service

Indosat is one the big player in Indonesian cellular industry which has market share approximately 27 percent and ranked as the second largest operator after Telkomsel. Competition in the cellular communications industry is based principally on network coverage, technical quality, price, the availability of data services and special features, and quality and responsiveness of customer service. The last one has become so crucial in this tight competition and companies are putting more concern in this issue because they know the relationship between profitability and customer orientation.

For that reason Indosat has set up its customer service management to maintain lasting relationship with customer and streamlining all CRM activities. As a result in 2010, Indosat has been awarded as "The Best Customer Care Operator” from Cellular Mobile Award". This award is a tribute to customer service Indosat, which indicates recognition of Indosat's service quality customer service to all customers. If we look behind the strategy we can found it is related to what Accenture have done to help Indosat with its integrated customer care & inventory system just after Indosat had a merger. How the adoption of such a system had improved Indosat costumer service is the major analysis of my blog post.


I will start by trying to breakdown the complexity of the systems after the merger and to breakdown what have Accenture actually do to Indosat.

Deregulation, The Merger & Its Problems
The telecommunication sector deregulation has been started with the Telecommunication Law No. 36 Year 1999. After the this regulation the market is changing from monopoly to a competititve market. This regulation has forced Indosat to make some changes. The first step taken by Indosat it to define the vision and mission in accordance with market changes and demands in the national telecommunications industry. The next step is to review the company's management policy, including its subsidiaries such as PT Satelindo, PT IM3 (PT Indosat Multi Media Mobile) and PT Bimagraha Telekomindo. Through the merger of Satelindo, IM3 and Bimagraha to Indosat on November 20, 2003.

The process of merger between Satelindo's cellular network with IM3 was divided into three stages, namely the integration of networking, switching, and intelligent network. But, the major problem from this merger is the combination of several complex systems supporting its different types of products.

After the merger with Satelindo and IM3, Indosat several complex systems supporting its different types of products. The various systems include highly customized CRM systems and other supporting systems for the registration and activation of customers' services. In addition, this merger had also caused multiple cards and voucher inventory systems causing complication in reconciliation and reporting.

The complexity of the system after the merger of satelindo and IM3 had caused the customer data spread across many systems. It is fragmented and often inconsistent. This makes it difficult for organizations to understand the true value of customers, their likely behavior, their needs, and also the risks associated with them. This is why Indosat need to integrate their system

How Accenture Helped: The Adoption of Integrated Customer Care and Cards Inventory Management System
Using the Accenture Communication Solutions, based on telecommunication industry best practices, Accenture implemented an integrated customer care and cards inventory management systems that combined all the wireless products within Indosat Accenture managed the project by working closely with the users to understand the business concerns and practices.

In addition, the project was set-up with a combination of strong local resources combined skilled people from the region and skilled resources from Accenture's delivery center. As a result, the systems implemented had been stable, and had been able to provide better service level to the subscribers. In addition, the project also consolidated Indosat's products within a single system, which enabled the client to provide bundled services. Indosat in turn is able to effectively track its cards inventory and distribution, resulting in a higher accuracy of SIM cards inventory.

Toward Single Customer View

The integrated customer care and card inventory system implemented by Accenture within Indosat is a form of single customer view concept. The “single customer view" will make is easier for organization to understand the true value of customers, their likely behavior, their needs, and also the risks associated with them. Without a single view of those customers, organizations are in the dark and cannot effectively retain customers, cross-sell to them, deliver the right customer experience to them, or manage the risk associated with them. Some form of single customer view is, therefore, fundamental to managing customer relationships.” (Gartner, 2006)

With a single customer view, companies can improve customer service, customer satisfaction, and customer loyalty while cutting IT inefficiencies today. They can also position themselves for higher growth and profitability in the future.

As explained by Gartner (2006), a single customer view helps improve communications with partners, leading to additional strategic opportunities such as joint selling through the partner ecosystem, customized offers and “package deals” involving products from multiple vendors, special discounts that apply to preferred partner products, and so on. In addition, a single customer view can be critical to meeting regulatory compliance and privacy management requirements.

This benefit can also be seen from Indosat case. After the implementation of Integrated Customer Care and Cards Inventory Management System, the systems implemented had been stable, and had been able to provide better service level to the subscribers. In addition, the project also consolidated Indosat's products within a single system, which enabled the client to provide bundled services. Indosat in turn is able to effectively track its cards inventory and distribution, resulting in a higher accuracy of SIM cards inventory.

The tight competition in the cellular communications had forces the player in this industry to focus on their customer. This was based on their believes that there is a strong relation between profitability and customer orientation which then made them innovate their customer relationship management with many complex system in gathering & maintaining customer information to respond to their needs. In that condition, company needs to find a system that make it easier for organization to understand the true value of customers, their likely behavior, their needs, and also the risks associated with them. This is why they need to view the customer in single view, just like what Accenture suggest to Indosat.


Refference:
Gartner, “Creating the Single Customer View with Customer Data Integration,” by John Radcliffe, 2006.
Sun Microsystems, Inc., Achieving A Single Customer View White Paper May 2008.
“Accenture Service Transformation-Rethink, Redefine, Reinvent Transforming customer service for high performance”, 2010 Accenture
Creating the Single Customer View, Hitachi Consulting, White Paper, 2010
Photo credit to Accenture

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