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Business Process Reengineering
Business Process Reengineering
Process
a collection of activities that takes one or more kinds of inputs and creates an output that is of value to a customer.
Business Process
a group of logically related tasks using the firm's resources to provide customer-oriented results to support organisation's objectives.
Definition of Process
A process is simply a structured, measured set of activities designed to produce a specific output for a particular customers or market.
-- Thomas Davenport Characteristics:
A specific sequencing of work activities across time and place A beginning and an end Clearly defined inputs and outputs Customer-focus Measurable and meaningful performance
Processes Are Often Cross Functional Areas“Manage the white space on the organization chart!”
M arketing& S ales
P urchase P roduc tion D is tribution A ccounting
C E O
Supplier
Customer/MarketsNeeds
Value-addedProducts/Services toCustomers"We cannot improve or measure the performance of a
hierarchical structure. But, we can increase output quality and customer satisfaction, as well as reduce the cost and cycle time of a process to improve it."
EXAMPLE: BUSINESS PROCESS
Steps involved when a vendor sells an item to a customer.
Business Process Reengineering Business Process Reengineering DefinitionDefinition BPR first introduced in 1990 in a Harvard Business BPR first introduced in 1990 in a Harvard Business
Review article by Michael Hammer: Review article by Michael Hammer: Reengineering Work: Don't Automate, Obliterate. Reengineering Work: Don't Automate, Obliterate.
Hammer/ChampyHammer/Champy
“Reengineering 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.”
7 April 21, 2023
OTHER DEFINITIONS OF BPR
Involves radical redesign or rebuilding in domains such as individual processes, total organisation, or of the relationships between suppliers and
customers in the marketplace By Colin Coulson Thomas in Cramer ed.
(1995)
8 April 21, 2023
BUSINESS PROCESS BEFORE BPR?
Traditional premise/logic of business processes:Sequential, manual proceduresAutomation of processesEfficiency orientationPush for optimising procedures or functions,
andMaximum level of control
9 April 21, 2023
MOTIVATING FACTORS FOR REENGINEERING
Severe budget cutbacks Insufficient personnel Customer dissatisfaction Stakeholder/Owner dissatisfaction Top leadership mandate Benchmarking results Push from government
GOAL OF REENGINEERING
Reengineering is typically chartered in response to a breakthrough goal for rapid, dramatic improvement in process performance.
Continuous improvement activitiespeak; time to reengineer process
BreakthroughImprovement
Continuous improvementrefines the breakthrough
Competitive Forces Model
Threat of newmarket
entrants
Bargainingpower ofsuppliers
Bargainingpower of
customers
Threat ofsubstitute
products &services
The firmIntra-
industrycompetitors
Why BPR Is Necessary
The Virtual Organization: Three C’s Driving Change Customers take charge.
Mass market v. a “market of one” Backward integration Informed consumers Demanding Sophistication Changing Needs
Competition intensifies. More and different kinds Local Global Big is not better Technology changes the nature of competition.
Why BPR Is Necessary
Change becomes constant. reduced product cycles reduced time to develop new products Technology Customer Preferences
“Companies created to thrive on mass production, stability, and growth can’t be fixed to succeed in [such] a world.”
Integrate people, technology, & organizational culture to Respond to rapidly changing technical & business environment and customer’s needs to achieve big performance gains
Customer Demands
expect us to know everything to make the right decisions to do it right now to do it with less resources to make no mistakes expect to be fully informed
Four Revolutions Affecting Business Today
NewCompetitors
New Rules ofCompetition
NewTechnologies
NewWork Force
The C’s related toOrganization Re-engineering Projects
The 3C’s of organization Re-engineering:
Customers Competition Change
The 4C’s of effective teams:
Commitment Cooperation Communication Contribution
Some of the BPR Objectives
Improve Efficiency e.g reduce time to market, provide quicker response to customers
Increase Effectiveness e.g deliver higher quality
Achieve Cost Saving in the longer run Provide more Meaningful work for employees Increase Flexibility and Adaptability to change Enable new business Growth
18 April 21, 2023
INFO TECH A SOLUTION?
Initially IT only used for automation of processes Short-term improvements of existing fragmented
processes Localised, incremental approach created complex
processes with little contribution to overall effectiveness (Guha et al (1993)
Did not cope with environmental dynamics Inflexible organisational change
19 April 21, 2023
BPR CONCEPT
Rethinking of business activities Remove unnecessary activities Replace archaic, functional processes with
cross-functional activities IT as enabler of change
20 April 21, 2023
VALUE CREATION OF BPR
Cost Speed Productivity Service Quality Innovation
21 April 21, 2023
BPR IS REDESIGN OF:
Organisational Structure Job Definitions Reward Structure Business work flows Control processes Organisational culture and philosophy
22 April 21, 2023
THE REENGINEERED ORGANISATION Flexible to adjust to changing conditions Lean to rival and beat competition Innovative to have new products and services Dedicated enough to deliver maximum quality
and efficient customer service Ready to accept innovations so as to take
advantage of new technologies
23 April 21, 2023
Reengineering: The Business System Diamond
Business Processes
Values and
Beliefs
Jobs and Structures
Management &
Measurement Systems
24 April 21, 2023
BPR CHARACTERS
Reengineering Leader Process owner Reengineering team:
Insiders of processOutsiders of process;
25 April 21, 2023
FOUR DIMENSIONS OF ORGANISATION
Strategies
PeopleTechnology
Processes
26 April 21, 2023
STRATEGIES
Strategies must be reconsidered and redefined Types of strategies
Organisation strategy Technology strategy Human Resources strategy
Determine strategies according to externalities Must be aligned to organisational vision and
consider constraints
27 April 21, 2023
PROCESSES
Identify core processes that satisfy customer needs and add value;
Processes should be defined by customer requirements, not organisational requirements
Redesign of Human Activity Systems (Checkland, 1981)
28 April 21, 2023
TECHNOLOGY
IT is major enabler for spanning processes over functional and organisational boundaries;
Use of new technologies, new methods of using the technologies
Includes acceptance for the changes brought by IT
29 April 21, 2023
PEOPLE
Human activity systems are the most critical factor for BPR
Top management support Change agents Acceptance not resistance Align work force with strategies Address variable cultural and environmental
contexts Empowerment of work force
30 April 21, 2023
TOP TEN MISTAKES OF BPR
Not reengineering but claiming you are; Not focusing on processes Spending too much time analysing current situation; Proceeding before obtaining strong executive leadership; Timid in redesigning; Going directly from conceptual design to implementation; Reengineering slowly; Placing some aspects of the business off-limits; Adopting conventional implementation style; Ignoring concerns of your people;
31 April 21, 2023
IN CLASS ASSIGNMENT
Who should lead a BPR project? Why? By level:
Front-line managers? Middle managers? Top managers?
By title: CEO? COO? CFO? CIO?
32 April 21, 2023
WHO SHOULD LEAD BPR?
Chief Operating Officer (COO)
33 April 21, 2023
WHY COO SHOULD BE REENGINEERING LEADER In a position to compel compliance of all parties
involved in the reengineering; Have authority over the entire end-to-end
processes to be reengineered; Have sufficient stature to demand supporting
staff organisations to adopt operations to meet needs of the new process;
34 April 21, 2023
3S TOOLS OF REENGINEERING LEADERSHIP
SignalsExplicit communications
SymbolsPersonal Behaviour
SystemsMeasurements and Rewards
35 April 21, 2023
AN EFFECTIVE REENGINEERING LEADER Visionary Communicator Leg-breaker
36 April 21, 2023
REENGINEERING WORK
Content Context Style
37 April 21, 2023
REENGINEERING CONTENT
Understanding weaknesses of old process and customer performance requirements;
Inventing a new process design that shatters long-held assumptions;
Constructing the new process; Selling the new way of working and living
to the new organisation;
38 April 21, 2023
REENGINEERING CONTEXT
Uncertainty eliminated gradually over project lifetime;
Experimentation so as to learn mistakes; Pressure: Operate under conditions of
great urgency and intensity;
39 April 21, 2023
REENGINEERING STYLE
Exploration and discovery; “Stumbling forward”
40 April 21, 2023
PROFILE OF A REENGINEER Process-orientation Holistic perspective Creativity Restlessness Enthusiasm
Optimism Persistence Tact Team Player Communication
Skills
41 April 21, 2023
ISSUES TO BE CONSIDERED BY REENGINEERING CZAR ABOUT REENGINEERING TEAM MEMBERS Career Paths Compensation Celebration Communications Care and Compassion
42 April 21, 2023
PROS AND CONS OF USING CONSULTANTS FOR REENGINEERING
The ability to leverage other companies’ experiences
Getting access to essential skills
Third-party objectivity
The risk of outsourcing an important capability
Incurring significant expense
Diffuse accountability
PROS CONS
BPR is Not?
BPR may sometimes be mistaken for the following five tools:
1. Automation is an automatic, as opposed to human, operation or control of a process, equipment or a system; or the techniques and equipment used to achieve this. Automation is most often applied to computer (or at least electronic) control of a manufacturing process.
2. Downsizing is the reduction of expenditures in order to become financial stable. Those expenditures could include but are not limited to: the total number of employees at a company & retirements
3. Outsourcing involves paying another company to provide the services a company might otherwise have employed its own staff to perform. Outsourcing is readily seen in the software development sector.
4. Continuous improvement emphasizes small and measurable refinements to an organization's current processes and systems. Continuous improvements’ origins were derived from total quality management (TQM) and Six Sigma.
Reengineering & Continuous Improvement--Similarities
16
Reengineering Continuous ImprovementSimilaritiesBasis of analysis Process ProcessPerformance measurement Rigorous RigorousOrganizational change Significant SignificantBehavioral change Significant SignificantTime investment Substantial Substantial
17
Reengineering & Continuous Improvement--Differences
Reengineering Continuous ImprovementDifferencesLevel of change Radical IncrementalStarting point Clean slate Existing processParticipation Top-down Bottom-upTypical scope Broad, cross-functional Narrow, within functionsRisk High ModeratePrimary enabler Information technology Statistical controlType of change Cultural and structural Cultural
Key Steps
Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan
BUSINESS PROCESS REENGINEERING: A CONSOLIDATED METHODOLOGY
ACTIVITY 1
ACTIVITY 2
ACTIVITY 3
ACTIVITY 4
ACTIVITY 5
Common Problems with BPR
Process Simplification is Common - True BPR is Not
Desire to Change Not Strong Enough Start Point the Existing Process Not a Blank
Slate Commitment to Existing Processes Too
StrongREMEMBER - “If it isn’t broke …”
Common Problems with BPR
Process under review too big or too small Reliance on existing process too strong The Costs of the Change Seem Too Large BPR Isolated Activity not Aligned to the
Business Objectives Allocation of Resources Poor Timing and Planning Keeping the Team and Organization on Target
How to Avoid BPR Failure
To avoid failure of the BPR process it is recommended that: BPR must be accompanied by strategic planning, which
addresses leveraging Information technology as a competitive tool.
Place the customer at the centre of the reengineering effort, concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.
BPR must be "owned" throughout the organization, not driven by a group of outside consultants.
Case teams must be comprised of both managers as well as those who will actually do the work.
How to Avoid BPR Failure
The Information technology group should be an integral part of the reengineering team from the start.
BPR must be sponsored by top executives, who are not about to leave or retire.
BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of "limbo".
BPR must not ignore corporate culture and must emphasize constant communication and feedback.
Ford Motor CompanyFord Motor CompanyAccounts Payable functionAccounts Payable function500 people500 peopleMost work on mistakes betweenMost work on mistakes between
PurchaseOrders
ReceivingDocuments Invoices
Ford (cont)Ford (cont)
Ford (cont)Ford (cont)
WHY DOES REENGINEERING FAIL?
Trying to fix a process instead of changing it Ignoring everything except the process design Quitting too early Reengineering from the bottom up Neglecting people’s values and beliefs Being willing to settle for minor results Assigning someone who does not understand
reengineering to lead the effort
Conclusion BPR is a multi-discipline approach for strategic change Methodology provides missing “how to” that must
follow the “why” BPR must be managed as a project BPR must be owned by the organization, not driven by
consultants BPR requires constant communication and feedback Ultimate test of reengineering is the value creation; Intended and unintended consequences
Individual Assignment
Examine some business processes at the university (CASE/UTM) or at your workplace. Identify TWO processes that need to be redesigned. Using your creativity, how should it be redesigned? How can IT support the new business process? Draw the before & after process in form of a rich
picture.
April 21, 202359