Transcript
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
Friday, April 7, 2023 Prof R S Mathur 3
Michael Hammer and James Champy
Friday, April 7, 2023 Prof R S Mathur 4
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
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• 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
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• 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
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• 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
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• 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
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• 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
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• 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
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