INTRODUCTION

A business process is a collection of tasks or series of activities that takes one or more kinds of
input in order to attain an efficient output. Business process reengineering is defined as
rethinking and radical redesigning of the business processes or in other words its the redesigning
of the workflow. It requires managing a massive amount of information about the processes, data
and systems. In order to support the efficient operations of business processes Enterprise
Resource Planning (ERP) is used. ERP is software that integrates all the functional units and also
provides a centralized database to facilitate all the business activities.
The following three cases help us to better understand the concept of business process
reengineering and how enterprise resource planning has become an aid in raising the standards
and improving the efficiency.

Case 1: CIGNA CORPORATION, INC: MANAGING AND

INSTITUTIONALIZING BUSINESS REENGINEERING

About the case:

This case deals with business reengineering process at CIGNA Corp., a leading provider of
insurance and related financial services throughout the United States and the world.
CIGNA has been practicing business reengineering process with various business divisions by
creating a group CIGNA Reengineering since 1989. This initiative enabled CIGNA Re to
dramatically reduce costs and improve customer service. By 1994, all CIGNA business divisions
had undertaken business reengineering projects and company had saved more than $100million.
Core issues/problems:
In 1988, there was a decline in companys income by 11% from the last year. It was because,
they were implementing sophisticated applications onto their existing system which were not
giving the expected returns. In order to cater this issue CIGNA Corporation call for
Reengineering.
Addressing the problems:
The CIGNA Corporation formed a group CIGNA Reengineering which is consisted of 10
people with an average of 5 to 10 years of work experience in several divisions of CIGNA .The
goal of this group was to improve administrative processes, organizational structures and
automated systems. Within 18 months, CIGNA Re implemented new work processes and cross
functional customer service teams which

helped in reducing operational costs by 40%,

decreased number of application systems from 17 to 5 and a reduction in job descriptions from
27 to 5.With the implementation of Reengineering to different processes, all actions helped in
reducing costs and increase profitability.

Case 2: CISCO SYSTEMS, INC. : IMPLEMENTING ERP

About the case:
Cisco system was founded by two Stanford computer scientists in 1984. The primary product of
the company is router which is a combination of hardware and software that acts as a traffic cop
on complex networks. It was running a UNIX-based software package to support its processing.
Package was supporting three functional areas namely Financials, Manufacturing and Order
Entry system. The application didnt provide an ease to make any change to meet the business
needs hence it necessitated ERP (Enterprise Resource Planning).
Core issues/problems:
Cisco wanted to grow to 5-billion plus company. The UNIX-based software package was not
providing them the degree of reliability , redundancy and maintainability to expand its system. In
order to grow they were implementing softwares (as a band-aid) on their existing systems,
which was able to attain annual growth rate of 80% but they encountered frequent system
outrages. Ciscos central database was corrupted and its legacy system failed .As a result of
which the company was shutdown for two days.
Addressing the problems:
Ciscos management team realized that there is a need to implement ERP(Enterprise Resource
Planning) system to meet its business needs. So, they followed three steps :
1) Selection of ERP product:
In order to select an ERP product, the company had to make a strong Cisco team as wall as a
strong integration partner for which KPMG was chosen, which would assist them in both
selection and implementation of ERP system.
To select an appropriate software, the team approached corporations, accounting firms and
research sources. After evaluating the concerned factors, Oracle was chosen as a vendor because
it had a better manufacturing capability, long term development of functionality and flexibility.

2) Approval from the Board:

Two major concerns for approval was:
How much will it cost
How long will it take
It was estimated to be done in 9 months for $15million.
3) Building an implementation team:
The size of the implementation team was increased from 20 to 100 members. They were placed
onto one of the five tracks which were managed by project management office.
The implementation strategy of Oracle was broken into series of phases called Conference Room
Pilots (CRP).
CRP0 : Training the implementation team and setting up the technical environment.
CRP1: It emphasized on making the system work in specific and finding of gaps.
CRP2 : Focused on larger technical issues and implementation of data warehouse.
CRP3 : Testing the full system and assessing the companys readiness to go live.

Case 3 : IBM TECHNOLOGY GROUP

About the case:
IBM Technology Group was found in the year 1998 to sell companys technologies on external
market. It consisted of six divisions which together form a large original equipment
manufacturing (OEM) unit. Production of many technology group products was highly
integrated and distributed all around the world. Storage Systems division faced some issues with
IT infrastructure. To eliminate this problem IBM selected SAPs R/3 as ERP software.IBM
Technology Group followed virtual enterprises which comprises of internal and external
partners to meet the customers needs.
Core issues/problems:
One of the divisions was Storage Systems Division (SSD) which produce disk drivers and other
storage products. After the launch of SSD in the OEM market for its storage devices, it
encountered few problems such as order fulfillment and billing. In order to address this issue,
SSD implemented a leading ERP application, SAPs R/3.
Some of the benefits realized from SAP R/3 implementation at IBM Technology Group were
Business flexibility, customer responsiveness, warranty tracking, inventory management and
business controls.
Other Concerns:
Interaction of Alliance system with other enterprise application integration (EAI)
software.
Successful implementation of Alliance system was a concern as it was in its nascent stage
and didnt have any long track record of success.

Comparison between three cases:

CIGNA Corporation

CISCO Systems

IBM

Technology

Group
Key element

Implementation

of Selection

Reengineering

and Implementation

implementation

of

of ERP

ERP
Why ERP??

Expected returns were low

Shutdown of system Order

fulfillment

for two days due to and billing

frequent

system

outrages.
Software

Applying reengineering

Oracle

vendor

as

ERP SAPs R/3 as ERP

software

Organizatio

Flatter,

team-based

n culture

flexible

System

Scalable

Architecture

comprising nine divisions

software

and Cross-sectional
team

architecture Conference

No team formed,
headed by IT group

Room Virtual enterprise

Pilots(CRP0,1,2,3)

no
intervention

human