Business Process Re-Engineering

Prof. R.S.Mathur

Friday, April 7, 2023 Prof R S Mathur 1

Agenda

1. What is BPR?

2. Why BPR?

3. Principles & Methodologies of BPR

4. Issues & Challenges in BPR

5. Critical Success/ Failure Factors in BPR

6. An example of BPR

7. Conclusion

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Michael Hammer and James Champy

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INTRODUCTION • A management tool popularised by Michael Hammer

and James Champy.• Business process re-engineering (BPR) is being

attempted by many firms that are: • either facing extinction because of their inability to

face competition in the changed world, • or by highly successful companies looking for high

gains from the successful redesign of their processes to remain highly competitive.

• BPR is a high risk, expensive , time consuming activity, with no guarantee of success, and yet many businesses claim to be re-engineering their processes

What is Business Process Re engineering (BPR)?

Also called Business Process Redesign, Reinventing

What is BPR?Business Process Re-engineering or BPR is

the analysis and redesign of workflow and processes

within and between Organizations

- Michael Hammer & James Champy, 1993

WHAT IS BPR? (Continued)

“A radical change approach that integrates physical and technical solutions with organization structure, management infrastructure and organization cultural change solutions.”

CHARACTERISTICS OF BPR

• Radical redesign of business processes

• Deployment of information technology as an enabler

• Major disruption to the organization during the process of reengineering

• Attempts at achieving organization wide improvements in performance

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Defining Business Process Reengineering

• “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.” (Hammer & Champy, 1993, page 13)

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Key Words

• Fundamental– Why do we do what we do?– Ignore what is and concentrate on what

should be.

• Radical– Business reinvention vs. business

improvement

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Key Words

• Dramatic– Reengineering should be brought in “when a

need exits for heavy blasting.”• Companies in deep trouble.• Companies that see trouble coming.• Companies that are in peak condition.

• Business Process – a collection of activities that takes one or more

kinds of inputs and creates an output that is of value to a customer.

Key Words

• Cost, quality, service and speed: are strategic weapons for fighting and

winning competition .

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Quality

Speed

Customer Delight

Cost

Service

http://www.open-source-erp-site.com

BPR seeks dramatic improvements in:

Why Reengineer

• The 3 C’s– Customers– Competition– Change

• Nothing is Constant or Predictable

• Change is the only constant

How Did We Get ThereProcesses and organisations designed in the 19th century could run businesses in the 20th century….

…but we need entirely different

PROCESSES & ORGANIZATIONS

for Governance in the 21st Century

Problem restated…• All processes are simple & efficient when

originally designed– User-friendly– Deploying contemporary tools & techniques

• Processes become complex & inefficient with passage of time– with addition of sub-processes to handle exceptions– with changes in environment and– with increase in customer expectations – with increase in volumes

We need toReinvent

the processes

Why Reengineer?

• Customers-Demanding

-Sophistication

-Changing Need

-well informed

Customer Expects US to……

• know everything• make the right decisions• do it right now• do it with less resources• make no mistakes• be fully informed

Why Reengineer?

• Competition– Local– Global

• Change– Technology– Customer Preferences

Business Process Reengineering

WHY ?

Integrate people, technology, & organizational culture To Respond to rapidly changing technical & business environment and customer’s needs to achieve Big performance gains

Why Organizations Don’t Reengineer?

• Complacency

• Political Resistance

• New Developments

• Fear of Unknown and Failure

BPR Examples

• Ford: Accounts Payable

• Mutual Benefit Life: New Life Insurance Policy Application

• Capital Holding Co.: Customer Service Process

• Taco Bell: Company-wide BPR

• Others

Ford Accounts Payable Process*

Accounts Payable

Accounts Payable

VendorVendor

GoodsReceivingReceiving

Payment

Invoice

Receiving document

PurchasingPurchasing

Purchase order

Copy ofpurchase order

PO = Receiving Doc. = Invoice *Source: Adapted from Hammer and Champy, 1993

? ?

Trigger for Ford’s AP Reengineering

• Mazda only uses 1/5 personnel to do the same AP. (Ford: 500; Mazda: 5)

• When goods arrive at the loading dock at Mazda: – Use bar-code reader is used to read delivery data.– Inventory data are updated.– Production schedules may be rescheduled if necessary.– Send electronic payment to the supplier.

Ford Accounts PayableBeforeBefore

AfterAfter

• More than 500 accounts payable clerks matched purchase order, receiving documents, and invoices and then issued payment.

• It was slow and cumbersome.

• Mismatches were common.

• Reengineer “procurement” instead of AP process.

• The new process cuts head count in AP by 75%.

• Invoices are eliminated.

• Matching is computerized.

• Accuracy is improved.

Ford Procurement Process

AccountsPayable

AccountsPayable

VendorVendor

GoodsReceivingReceiving

Payment

Goods received

PurchasingPurchasing

Purchase order

Purchase order

Data base

• 30 steps, 5 departments, 19 persons

• Issuance application processing cycle time: 24 hours minimum; average 22 days

• only 17 minutes in actually processing the application

Department AStep 1

Department AStep 2

Department EStep 19

. . . .

Issuance Application

Issuance Policy

New Life Insurance Policy Application Process at Mutual Benefits Life Before Reengineering*

*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.

Mutual Benefits Life Before Reengineering*

The New Life Insurance Policy Application Process Handled by Case Managers

Case Manager

UnderwriterPhysician

Mainframe

LAN Server

PC Workstation

• application processing cycle time: 4 hours minimum; 2-5 days average

• Application handling capacity double • Cut 100 field office positions

Capital Holding Co. - Direct Response Group*

• A direct marketer of insurance-life, health, property, and casualty-via television, telephone, and direct mail.

• In 1988, DRG president Norm Phelps and other senior executives decided that for our company, the days of mass marketing were over.

• Need to strengthen DRG's relationships with existing customers and target our marketing to those potential customers whose profiles matched specific company strategies.

• A new vision for DRG: The company needed to be exactly what most people didn't expect it to be an insurance company that cares about its customers and wants to give them the best possible value for their premium dollar.

*Source: Adapted from Capital Holding Corporation-Reengineering the Direct Response Group, Harvard Business School case 192-001, 1992.

Capital Holding Co.: VisionCaring, Listening, Satisfying... one by oneCaring, Listening, Satisfying... one by one

Each of us is devoted to satisfying the financial concerns of every member of our customer family by:

• Deeply caring about and understanding each member’s unique financial concerns.

• Providing value through products and services that meet each member’s financial concerns.

• Responding with the clear information, personal attention and respect to which each member is entitled.

• Nurturing an enduring relationship that earns each member’s loyalty and recommendation.

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Reengineering & TQM (Continuous Improvement)--Similarities

Reengineering Continuous ImprovementSimilaritiesBasis of analysis Process ProcessPerformance measurement Rigorous RigorousOrganizational change Significant SignificantBehavioral change Significant SignificantTime investment Substantial Substantial

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Magnitude Increment Radical

Improvement 30-50% 10x-100xSought

Starting base Existing Process Blank skeet

Top management Relatively low Highcommitment

Role of IT Low High

Risk Low High

Cont.Improvement Innovation/Reengineering

Continuous Process Improvement and redesign Process

BPR Principles• Organize around outcomes, not tasks. • Have those who use the output of the process perform the

process. • Subsume information-processing work into the real work that

produces the information. • Treat geographically dispersed resources as though they were

centralized. • Link parallel activities instead of integrating their results. • Put decision points where the work is performed and build

controls into the process. • Capture information once and at the source.

Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July-August, 1990, pp. 104-112.

Positive Preconditions for Reengineering

• Senior management commitment and sponsorship • Realistic expectations • Empowered and collaborative workers• Strategic context of growth and expansion• Shared vision• Sound management process• Appropriate people participating full-time• Sufficient budget

Source: Bashein, B. J., Markus, M. L., Riley, P., "Preconditions for BPR Success," Information Systems Management, Spring 1994, Vol. 11, No. 2, pp. 7-13.

Business Process Reengineering Life Cycle Define corporate visions and business goals

Identify business processes to be reengineered

Analyze and measure an existing process

Identify enabling IT & generate alternative process redesigns

Evaluate and select a process redesign

Implement the reengineered process

Continuous improvement of the process

VisioningVisioning

IdentifyingIdentifying

AnalyzingAnalyzing

RedesigningRedesigning

EvaluatingEvaluating

ImplementingImplementing

ImprovingImproving

Manage change and stakeholder interests

BPR-LCBPR-LC

Phase 1: Visioning

• Apply to enterprise-wide reengineering effort.• Develop overview of current and future business

strategies, organizational structure, and business processes.• Develop organizational commitment to reengineering.• Develop and communicate a business case for action. • Create a new corporate vision.• Set stretched goals.• Prioritize objectives.• Assess implementation capabilities and barriers.

Define corporate vision and business goalsDefine corporate vision and business goals

Phase 2: Identifying

• Construct high-level process map

• Develop a process hierarchy

• Build enterprise-wide data models (optional)

• Evaluate the processes

• Select processes to be reengineered

• Prioritize and schedule processes to be reengineered

Identify business processes to be reengineeredIdentify business processes to be reengineered

TI Semiconductor Business Process Map

Manufacturing Capability Development

StrategyDevelopment

ProductDevelopment

CustomerDesign &Support

OrderFulfillment

Concept

Development

Manufacturing

MarketCustomers

Customer CommunicationCustomer Communication

Source: Adapted from Hammer and Champy, 1993, p. 119.

Criteria for Selecting Processes• Broken • Bottleneck • Cross-functional or cross-organizational units• Core processes that have high impacts • Front-line and customer serving - the moment of the truth• Value-adding• New processes and services • Feasible

Phase 3: Analyzing

• Conduct preliminary scoping.

• Develop a high-level AS-IS baseline process model (work flow model). Avoid analysis paralysis by conducting preliminary analysis at fairly high level.

• Surface purpose and assumptions of the process (Ask WHY?).

• Perform activity-based costing: costs can be assigned based on actual activities and productivity.

• Reveal hidden time and nonvalue-added activities.

• Measure cycle-time and quality.

• Measure profitability in terms of task, product, and customer type.

Analyze and Measure an Existing ProcessAnalyze and Measure an Existing Process

Phase 4: Redesigning

Information Technology

Information Technology

BusinessReengineering

BusinessReengineering

How can IT support business strategies and business processes?

Technology-driven

Business Vision & Strategy

Business Vision & Strategy

Business-pulled

How can business strategies be changed business processes be transformed using IT?

Identify enabling IT & generate alternative process redesignsIdentify enabling IT & generate alternative process redesigns

Three Steps in Redesigning Processes• Simplification:

– Task: Change business rules or procedures of a specific task

– Workflow: A process chain is simplified by elimination of nonvalue-adding activities

• Integration:

– Redesign tasks into a logical and effective process.

– A reengineered process often crosses functional boundaries.

– It offers opportunity for eradicating interdepartmental redundancies and restructuring the organization.

• Automation:

– Usually accompanies nontechnical redesign of organization structures and procedures.

– All reengineering costs and benefits can be projected into a model.

– Reengineering often pays for itself - sources of funding for technology investments are frequently cost savings generated by organizational change.

Phase 5: Evaluating

• Develop criteria of evaluating alternatives of redesigned processes: Cost, Benefit, and Risk.

• Evaluate design alternatives

• Select and recommend a reengineered process

Evaluate and select a process redesign Evaluate and select a process redesign

Phase 6: Implementing

• Plan IT implementation• Plan organization implementation• Conduct a pilot project• Develop a prototype system

– Technical Design – Social Design

• Evaluate results from the pilot project and the prototype

• Prepare large-scale roll out

Implement the reengineered processImplement the reengineered process

Phase 7: Improving

• Develop performance measurement and reward systems in the reengineered process

• Monitor process performance constantly

• Improve the process on a continuous basis

Improve the process continuouslyImprove the process continuously

The Euphoria

• ‘Don’t automate, obliterate’• ‘Sweep away job definitions’• ‘Break loose from outmoded thinking’• Conventional change is like ‘rearranging the

deck chairs on the Titanic’• The solution to ‘bloated, clumsy, rigid, sluggish,

non-competitive, uncreative, disdainful of their customers’ needs, and losing money’ (Hammer and Champy)

Business Process Reengineering (BPR)Making processes • effective - producing the desired resulted

• efficient - minimising the resources used

• adaptable - to changing customer & business needs.

BPR Philosophy

Radical, cross functional, dramatic

Focus on & organise around outcomes

Provide direct access to customers (internal & external)

Harness technology Control through

policies, practices and feedback

Enable independent and simultaneous work

Build in feedback channels

Hammer and Champy,

Re-engineering the Corporation,

Harper Collins, 1993

Hammer and Champy,

Re-engineering the Corporation,

Harper Collins, 1993

Features of BPR 1

• Re-engineering determines …– what an organisation should do– how it should do it– what the concerns should be ...

… NOT what they currently are

• Radical change NOT gradual change

BPR covers:Technology JobsStructureValuesBeliefsManagementMeasurement systems

in addition to process redesign

Features of BPR 2

• IT is as an important enabler of change - NOT a key driver of change

Process Innovation (Davenport 1993)

• Develop the business vision and process objectives

• Identify the processes to be redesigned• Understand and measure the existing

process• Identify the IT levers• Design and build a prototype of the new

process

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Different Views on BPR

Focus onCustomers

Needs

Focus onIT Systems

Focus onInternalCapacities

BPR Projects

InvolvementOwnershipMotivationPrerequisites

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Streamlining the Business Cycle

• Operating Cycle– The activities through which an organization designs,

produces, markets, delivers, and supports its product and services

• Management Cycle– The activities through which an organization manages the

design, produces, markets, delivers, and supports its product and services

Man

agem

ent

Pro

cess

Operational Process

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Flattening the Organizational Structure

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• Business Process Redesign– Also known as Reengineering or Process

Innovation is offered as an enabler of organizational transformation.

– Organization embrace a BPR approach when they believe that a radical improvement can be achieved by marrying business process, organization structure, and IT change.

– Examples:•Taco have embraced BPR to enable the

redefinition of their business

BPR

57

• BPR Objectives:– To dramatically reduce cost– Reduce time– To dramatically improve customer services or to

improve employee quality of life– To reinvent the basic rules of the business e.g.

• the airline industry• taco bell from Mexican food to fast food

to feeding people anywhere, anyhow.– Customer satisfaction– Organizational learning

BPR

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• Change:– To transform an organization, a deep

change must occur in the key behavior levels of the organization: • jobs, skills, structure, shared values,

measurement systems and information technology.

• Role of IT– BPR is commonly facilitated by IT e.g.

• Organizational efficiency• Effectiveness• Transformation

BPR

59

• Efficiency – Applications in the efficiency category allow users to work faster

and often at measurable lower cost• Mere automation of manual tasks, resulting in efficiency

gains (least deep)

• Effectiveness – Applications in the effectiveness category allow users to work

better and often to produce higher quality work.• Requires changes not only in technology, but in skills, job

roles, and work flow (deeper).

BPR

60

• Transformation – Applications in the the transformation category change the

basic ways that people and departments work and may even change the very nature of the business enterprise itself.

• A major change in the organization, including structure, culture, and compensation schemes (deepest).

BPR

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• Process– A process is set of logically related tasks performed to

achieve a defined business outcome

– A collection of activities that, taken together, create value for customer e.g. new product for customer. This tasks are inter-related tasks

BPR

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• How can Companies Identify their Business Processes. Examples– Manufacturing: As the procurement-to-shipment process

– Product development as the concept-to-prototype process

– Sales as the prospect-to-order process

– Order fulfillment as the the order-to-payment process

– Service as the inquiry-to-resolution process

Bus

ines

s fu

ncti

ons

Bus

ines

s P

roce

sses

BPR

63

• How can Companies Identify their Business Processes.

– Dysfunction: Which process are in the deepest trouble

– Important: Which process have the greatest impact on customer

– Flexibility: which process are the most susceptible to redesign.

BPR

64

• Embarking on Re-engineering– Persuade people to embrace or at least not to fight -the

prospect of major change by developing the clearest message on:

1: A “case for action”- Here is where we are as a company and this is why we can’t stay here

• show your balance sheet

• show competitors balance sheet

2: A “vision statement” - This is what we as a company need to become

BPR

65

• Simple Rules– Start with a clean sheet of paper.

• With my current experience what can I do today

• If I were to re-create this company today, given what I know and current technology, what would it look like.

• How will I be focusing, organizing and managing the company?

• Transition from a vertical functional departments to one that is horizontal, CUSTOMER focused and process-oriented?

BPR

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• Simple Rules– Listen to customer

– Enhance those things that bring value to the customer or eliminate those that don’t

– Be ambitious, focus your commitment to radical change on the process

BPR

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Interface Interface Interface Interface

Anatomy of a Traditional (Non-Integrated) ArchitectureAnatomy of a Traditional (Non-Integrated) Architecture

OrderEntry

InventoryMgmt.

Billing A/R Finance

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The Value Chain

Supportactivities

Primary activitiesInbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,

financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input

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Value Chain Integration

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ANATOMY OF: AN ENTERPRISE SYSTEM

Centraldatabase

ReportingApp .

HRMApp

Sales &delivery

App.

ServiceApp.

Inventory &supply App

Mfg.App

FinancialApp

Managers & Stakeholders

Custome

r s

Suppliers

Salesforce &

customerservicereps.

Backoffice

admin.&

workers

Ext Int Int Ext

Impacts

• Increase product by an order of magnitude

• Examine process• Vision• Increase Profits

• Benefit from better product

• Needs are met• Tendency to

return• Loyalty

Teams

Less Workers - More Work

Empowered

Layoffs

Company Customers Employees

Spectrum of Change

• Automation

• Rationalization

of procedures

• Reengineering

• Paradigm shift

Automation

• refers to computerizing processes to speed up the existing tasks.

• improves efficiency and effectiveness.

Rationalization of Procedures

• refers to streamlining of standard operating procedures, eliminating obvious bottlenecks, so that automation makes operating procedures more efficient.

• improves efficiency and effectiveness.

Business Process Reengineering

• refers to radical redesign of business processes.

• Aims at

– eliminating repetitive, paper-intensive, bureaucratic tasks

– reducing costs significantly

– improving product/service quality.

Paradigm Shift

• refers to a more radical form of change where the nature of business and the nature of the organization is questioned.

• improves strategic standing of the organization.

• To reengineer a company is to take a journey from the familiar into the unknown. The journey has to begin somewhere and with someone. Where and with whom?

– P. 101

Keys

• Leaders

• Staff Empowerment

• Broader Scope – Knowledge / Skills

• Tasks to Process– Redesign of Systems

• Information Technology

• Community

The 3 R’s

• Redesign– Cross-function approach

• Retool– Information Tools

• Reorchestrate– Organization changes

What is a Business Process (BP)?

• BP is a collection of activities that takes one or more kinds of input and creates an output that is of value to customers

• Examples of BP, in the context of e-Government, are:– Issuance of a Driving License or Passport– Registration of a Company– Audit of a Tax Return– Release of a Grant

What is a Process?

• A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action.

Reengineering is not …….• Automation of existing ineffective processes

• Sophisticated computerization of obsolete processes

• Playing with organization structures

• Downsizing – doing less with less

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, or spin-off companies.

BPR is Not?

• 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.

Effectiveness Vs Automation• Automation : use technology to automate the

“AS IS” process to make it happen faster - often wrongly perceived as eGovernment.

• Effectiveness: To improve service and satisfy customer needs, while lowering costs.

There is nothing more useless than to do efficiently that which shouldn't be done at all.E.g. Shining Brass when the ship is sinking

Automation & BPR

• Automation is using technological tools to perform OLD processes, in a NEW way.– Like putting OLD Wine in a NEW bottle.

• BPR is about Innovation– Making NEW Wine and putting it in a NEW

bottle

Process Innovation vs. Incremental Improvement

• Change• Effects• Involvement

• Investment• • Orientation• Focus

• Abrupt, volatile• Immediate• Few champions

• High initially, less later

• Technology• Profits

• Gradual, constant• Long-term• From few to everybody• Low initially, high to

sustain• People• Processes

Process Innov. Incr. Improv.

BPR & Quality Initiatives• Quality Initiatives attempt continuous improvement

– Six Sigma

– TQM (Total Quality Management)

• BPR attempts a radical redesign or transformation– Big Bang approach

– Quantum Leap

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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

GOAL OF REENGINEERING

Reengineering is typically chartered in response to a breakthrough goal for rapid, dramatic improvement in process performance.

Continuous improvement activities

peak; time to reengineer process

BreakthroughImprovement

Continuous improvement

refines the breakthrough

BPR Project• An organisational change project with three components :

business strategy, business process and information systems• BPR must be linked with business strategy and information

system

Information System

Business Process

Business Strategy

Steps in process analysis1. target the process area for change

Business process

Task process

2. form a team. Select project leader

3. decide on the objectives of the analysis

4. define customers & suppliers

5. analyse (identify/ chart) the process elements & steps in the process flow

6. describe the existing transformation process

7. develop improved process design

8. gain management approval of the improved design

9. implement new process design

Participants in BPR Project

Core BPR Project Team

Process Owners

Process Participants

BPR facilitators & consultants

Human resources specialist

IT & e-commerce specialists

BPR Project Sponsors

Identify process elements

• raw materials

• product (output) design

• job (sequence, simplification, discretion etc)

• processing steps used

• management control information

• equipment or tools

• people – actors (direct/indirect staff, customers, supply relationships (internal & external)

PHASE 1: Organising for improvementObjective: build leadership, understanding & commitment

Activities

• establish Executive Improvement Team (EIT)

• Appoint BPR champion

• provide executive training

• develop an improvement model

• communicate goals to employees

• review business strategy and customer requirements

• select the critical processes

• appoint process owners

• select BPR Team members

PHASE 2: Understanding & redesign the process

Objective: understand all dimensions of current business process

Activities• define process mission, scope and boundaries• provide team training• develop a process overview• define customer/business measurements & expectations for the process• identify improvement opportunities

errors and re-work high costpoor quality long time delays/backlog

• Record/chart the process• collect cost, time & value data• perform walkthroughs on new process• resolve the differences (existing/new, ideal/realistic)

Process definition and chartingAnalyse (identify and chart) the process elements and steps in the process flow

PHASE 3: ImplementationObjective: secure efficiency, effectiveness and

adaptability of the business process on implementation

Activities

• eliminate bureaucracy and no-value-added activities

• simplify the process and reduce process time

• standardise and automate

• up-grade equipment

• error proof the process and document it

• select and train the employees

• Plan/schedule the changes

PHASE 4: Measurements and controlsObjective:

develop a process control system for on-going improvement

Activities

• develop in-house measurements and targets

• establish a feedback system

• audit the process periodically

• establish a poor-quality cost system

PHASE 5: Continuous improvementObjective:

to implement a continuous improvement process

Activities

• Qualify/certificate the process

• perform periodic qualification reviews

• define and eliminate process problems

• evaluate the change impact on the business and on customers

• benchmark the process

• provide advanced team training

Process Chart SymbolsOperation (a task or work activity)

Inspection (an inspection of the product forquantity or quality)

Transportation (a movement of material fromone point to another)

Storage (an inventory or storage of materialsawaiting the next operation)

Delay (a delay in the sequence of operations)

Method Study Questions for Process Analysis

• What does the customer need?, operations are necessary? Can some operations be eliminated, combined, or simplified?….

• Who is performing the job? Can the operation be redesigned to use less skill or less labor? Can operations be combined to enrich jobs? ….

• Where is each operation conducted? Can layout be improved? ….

• When is each operation performed? Is there excessive delay or storage? Are some operations creating bottlenecks? …..

• How is the operation done? Can better methods, procedures, or equipment be used? ….

BPR and Bench-marking• The BPR team may benchmark another company's process

to determine

–process objectives

–innovative practices

–tried and tested methods

• Benchmarking partners need not be from the same industry. – A photocopying firm on re-engineering its order processing

system compared itself to mail-order firms as well rival photocopy companies.

BPR Problems• Starting with a clean sheet• Preoccupation & commitment to existing business processes• Thinking the problem thru. in the light of new methods &

technologies• Choice of the target process - too big, too small• The “power and resourcing of the cross functional team”• BPR in isolation from strategic and ops plans will not work. • Top commitment essential. Short-termism of decision makers• Isolated efforts will lack direction and will get lost. • Done at times of stress and anxiety• Keeping the BPR team on target• BPR team as action researchers• Costs of the change• Vaccination against change + another quick fix• Finding the time and energy• We need to keep the old, existing core systems running

John Gall, “Systemantics” - If it works, don't change it!

John Gall, “Systemantics” - If it works, don't change it!

BPR programmes

tended

To run out of steam.

Has BPR gone away

- unfashionable?

BPR programmes

tended

To run out of steam.

Has BPR gone away

- unfashionable?

Is BPR different from CQI?Continuous improvement

• Process focus-existing

• Incremental gradual change

• Low investment

• People-practices focus

• Improvement on existing

• Work-unit driven

BPR

• Process focus-new

• Radical change

• High investment

• People & technology focus

• Scrap and rebuild

• Champion driven

IT in BPR

• “A corporation that does not understand the inductive power of Information Technology cannot succeed in BPR” (Hammer and Champy, 1993)

Symptoms of Poor Governance

• Air of Mystification about procedures• Long Queues at delivery points• Multiple Visits to Government Offices

• Pillar-to-Post

• Outcome is in Suspense • OK or NOT OK !

• Gatekeepers at every turn• Poor Quality of Service• Service is a Mercy - not a Right• Too many Intermediaries, Shortcuts

5 Symptoms of Poor Processes

1. Extensive information exchange, data redundancy and re-keying

2. Huge inventory, buffers and other assets

3. Too many Controls and Checks

4. Rework, Iteration & Duplication of work

5. Complexity, Exceptions & Special cases

Root Causes of Poor Service Delivery

LegislativeIntent

Process Problems

Delivery Channel

Problems

Delivery Problems

BPR is an important part of the Solution

3 Goals of BPR1. Customer Friendliness

– Meeting customer requirements closely– Providing convenience

2. Effectiveness– Outcome-based approach– Gaining loyalty of customers– Image and branding

3. Efficiency– Cost– Time– Effort

12 Attributes of Customer-friendly Services

1. Simple 2. Need-based3. Certainty4. Speed5. Convenience

– Place– Time– Channel

6. Equitable7. Responsive8. Customer-

centric9. Quality of

Service10.Cost-effective11.Accessible12.Assisted

Principles & Methodologies of BPR

7 Basic Principles of BPR1. Organize around outcomes, not tasks.2. Identify all the processes in an organization and

prioritize them in order of redesign urgency.3. Integrate information processing work into the real work

that produces the information.4. Treat geographically dispersed resources as though they

were centralized.5. Link parallel activities in the workflow instead of just

integrating their results.6. Put the decision point where the work is performed, and

build control into the process.7. Capture information once and at the source.

The essence of BPR is Transformation

A 4-Pronged Approach toTransformation

Transformation

• Eliminate • Simplify• Automate• Base on Trust• Integrate• Join Up• Legislate

Transforming Process• Multiple Channels• 24x7• Access• Common Service Centres• Mobile • Self-Service• Licensed Intermediaries

Transforming Channels

• Enterprise Architecture• Standards• Unified Databases• Unified Networks• SOA• Portals

Using Technology• •Training• Change Management • CRM skills• Consultation• Empowerment• Education• Awareness

Transforming People

4 Steps in BPR1. Understanding the Current Processes

– ‘AS IS’ study – mapping current processes– Analysis of Root Causes for Inefficiencies– Identifications of Problems, Issues

2. Inventing a NEW Process (‘TO BE’ Process)– Survey of Best Practices – Consultation of Stakeholders

3. Constructing the NEW Process– Bringing in new Laws and Rules– Adopting Disruptive Technologies

4. Selling the NEW way of functioning– Change Management– Communication Strategy

A conceptual framework for evaluating & balancing IT-enabled changeIT Use

Business Processes

Requisite People Skills

Organisationl Form

Leavitt Diamond (adapted)

Change one variable & adjust others e.g. new IT & business processes need to be changed. New skills & organisational form to match the IT?

Change one variable & adjust others e.g. new IT & business processes need to be changed. New skills & organisational form to match the IT?

• How can Companies Identify their Business Processes. Examples– Manufacturing: As the procurement-to-shipment process

– Product development as the concept-to-prototype process

– Sales as the prospect-to-order process

– Order fulfillment as the the order-to-payment process

– Service as the inquiry-to-resolution process

Bus

ines

s fu

ncti

ons

Bus

ines

s P

roce

sses

BPR

BPR Methodology

Phase 0Phase 0

Process Process ImprImprovemovement ent PlannPlanninging

Improved Process

Co

re

Pro

cess

es

Wit

ho

ut

Issu

esCore ProcessesWith Issues

Improvement PlanImprovement Plan

Goals, RolesBoundariesGoals, RolesBoundaries

ImplementationPlanImplementationPlan

Str

ateg

y

Continuous Improvement

Reengineering - Breakthrough

Implementing a BPR Strategy

The C’s related toOrganization Re-engineering Projects

The 3C’s of organization Re-engineering:

The 4C’s of effective teams:

- Customers

- Competition

- Change

- Commitment

- Cooperation- Communication

- Contribution

Key Steps

Select The Process & Appoint Process Team

Understand The Current Process

Develop & Communicate Vision Of Improved Process

Identify Action Plan

Execute Plan

1. Select the Process & Appoint Process Team

• Two Crucial Tasks

1. Select The Process to be Reengineered

2. Identify the Process Team, – orient and train the team

-Appoint the Process Team to Lead the Reengineering Initiative

Select the Process

• Review Business Strategy and Customer Requirements

• Select Core Processes

• Understand Customer Needs

• Don’t Assume Anything

Select the Process

• Select Correct Path for Change

• Remember Assumptions can Hide Failures

• Competition and Choice to Go Elsewhere

• Ask - Questionnaires, Meetings, Focus Groups

Appoint the Process Team

• Appoint BPR Champion

• Identify Process Owners

• Establish Executive Improvement Team

• Provide Training to Executive Team

Core Skills Required

• Capacity to view the organization as a whole

• Ability to focus on end-customers

• Ability to challenge fundamental assumptions

• Courage to deliver and venture into unknown areas

• Ability to assume individual and collective responsibility

Evolution of BPR

TQM

1st-wave BPR

Time-based competition

Web-enabled e-business

Knowledge Management

Degree of enabling IT

Richness of business transformation

2nd-wave BPR

Challenges,Critical Success Factors &

Critical Failure Factors… in BPR

Challenges in a BPR Exercise

1. Identifying Customer Needs & Performance Problems in the current Processes

2. Reassessing the Strategic Goals of the Organization

3. Defining the opportunities for Re-engineering4. Managing the BPR initiative5. Controlling Risks 6. Maximizing the Benefits7. Managing Organizational Changes8. Implementing the re-engineered Processes

• Embarking on Re-engineering– Persuade people to embrace or at least not to fight -the

prospect of major change by developing the clearest message on:

1: A “case for action”- Here is where we are as a company and this is why we can’t stay here

• show your balance sheet

• show competitors balance sheet

2: A “vision statement” - This is what we as a company need to become

BPR

• Simple Rules– Start with a clean sheet of paper.

• With my current experience what can I do today

• If I were to re-create this company today, given what I know and current technology, what would it look like.

• How will I be focusing, organizing and managing the company?

• Transition from a vertical functional departments to one that is horizontal, CUSTOMER focused and process-oriented?

BPR

• Simple Rules– Listen to customer

– Enhance those things that bring value to the customer or eliminate those that don’t

– Be ambitious, focus your commitment to radical change on the process

BPR

• Process Improvement and redesign Process

Magnitude Increment Radical

Improvement 30-50% 10x-100xSought

Starting base Existing Process Blank skeet

Top management Relatively low Highcommitment

Role of IT Low High

Risk Low High

Improvement Innovation/Reengineering

BPR

Magnitude of Change 

Source: Adapted From O'Hara, Watson and Kavan

The Seven Phases of Process Re-generation

• 1. Strategy Linkage –  kicks off project –  secure management commitment –  discover process opportunities –  identify IT enabling opportunities –  align with  corporate strategy and select BPR project

• 2. Change Planning – inform stakeholders and organize re-generation team – prepare project schedule and set performance goals

• 3. Process Pathology – document existing process – uncover process pathologies

The Seven Phases of Process Re-generation

• 4. Social Re-Design -- 5.  Technical Re-Design  (reiterative until satisfied) – explore alternative designs

– design new process

– design HR architecture (x-func/multi-discipline)

– select IT platform

– prototype holistic process

The Seven Phases of Process Re-generation

• 6. Process Re-Generation – implement HR changes  – develop & deploy IT support  -- tug of war game --

 forces towards catastrophe and towards the ideal – re-organizing:

• teams • jobs • training

– top management communication and persuasion critical here

• 7. Continuous Improvement – measure performance – link to quality improvement

9 Changes occasioned by BPR1. Work Units change

• from functional departments to process teams2. Jobs change

• from simple tasks to multi-dimensional work3. People’s roles change

• from controlled to empowered4. Job preparation changes

• from training to education5. Measures of Performance & compensation change

• from activity to results6. Criteria for career advancement change

• from performance to ability7. Values change

• from protective to productive8. Organizational Structures change

• from hierarchical to flat9. Executives change

• from scorekeepers to leaders

Critical Success Factors in BPR

1. Clear Vision for Transformation

2. Top management commitment

3. Identification of Core Processes for BPR

4. Ambitious BPR team

5. Knowledge of Reengineering techniques

6. Engaging external consultants

7. Tolerance of “genuine failures"

8. Change Management

Critical Failure Factors in BPR1. Trying to Fix a process instead of Changing it2. Lack of focus on Business-critical Processes3. Lack of holistic approach4. Willingness to settle for minor results5. Quitting too early6. Limiting the scope of BPR by existing constraints7. Dominance of existing corporate culture8. Adopting bottom-up approach9. Poor leadership10. Trying to avoid making anyone unhappy11. Dragging the BPR exercise too long.

FOUR STAGES OF CHANGE

• Shock

• Anger

• Denial

• Acceptance

Conclusion• BPR is about Radical Redesign of business

processes

• BPR brings Efficiency, Effectiveness & Customer-friendliness

• BPR needs adoption of a structured methodology

• Top management commitment & Change Management are critical to success

8 Rules of Disruptive Technologies (1/2)

Information can appear at only one place at a time

SharedDatabases

Information can appear simultaneously

at all the places it is needed

Only experts can performComplex work

Expert SystemsA generalist can do

the work of an expert

We should choose between

Centralization &Decentralization

Networks

We can get the benefits ofCentralization &Decentralizationsimultaneously

Managers makeALL the decisions

DecisionSupportSystems

Decision-making is apart of everyone’s job

8 Rules of Disruptive Technologies (2/2)

Field personnel need a fixed place for communications

Wireless,Laptops & PDAs

Field personnel can send and receive

Information anytime, anywhere

Personal contact with customer

Is the best contact

Interactive Video

Virtual contact with Customer

is more conveneint

You have to find outwhere things are..

RFIDThings tell youwhere they are !

Plans get revisedperiodically

High PerformanceComputing

Plans get reviseddynamically