Business Processes

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Business ProcessesBusiness Processes

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

Business Process: Business Process: A group of logically related A group of logically related tasks that use the firm's resources to provide tasks that use the firm's resources to provide customer-oriented results in support of the customer-oriented results in support of the organization's objectivesorganization's objectives

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AA process process is a series of activities or steps used is a series of activities or steps used to transform input(s) into output(s). to transform input(s) into output(s).

An input or output may exist or occur in the form An input or output may exist or occur in the form of data, information, raw material, partially of data, information, raw material, partially finished units, purchased parts, a product or finished units, purchased parts, a product or service, or the environment. service, or the environment.

It is the steps used by an individual or a group to It is the steps used by an individual or a group to perform work or complete a task. perform work or complete a task.

It is sometimes referred to as a technique, It is sometimes referred to as a technique, method, or procedure. method, or procedure.

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PROCESS APPROACH TO MANAGEMENTPROCESS APPROACH TO MANAGEMENT

PROCESS

Output

Scrap

Corrective Action

Machines

Feedback

Methods

Materials

Men

Environment

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The Key Roles of Process ManagementThe Key Roles of Process ManagementEffective Process Management requires 4 Key Roles:

“The Process Sponsor” is the person who provides direction and ensures that there is sufficient resource available to improve process. He or She is normally at a senior level in an organization.

“The Process Owner” usually sits outside the process, and is directly and personally accountable for the end-to-end process. He or She is the final arbiter for the process and should drive any process improvement initiatives and activities.

“The Process Manager” works inside the process and is responsible for discrete parts of it. He or She ensures day-to-day production performance, directly manages process workers and suppliers relationships and provides the process owner with metrics, reports and improvement ideas.

“The Process Worker” works inside the process with responsibility for specific delivery to agreed standards. He or She may manage small teams of less experienced workers and provide the process manager with metrics, reports and improvement ideas.

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Types of ProcessesTypes of Processes

There are three types of processes, as follows:There are three types of processes, as follows:1.1. Management processManagement process — This entails the method(s) — This entails the method(s)

used by management in executing its management used by management in executing its management functions. Three key functional areas used by functions. Three key functional areas used by management are planning, organizing, and controlling.management are planning, organizing, and controlling.

2.2. Functional process Functional process — A functional process consists of — A functional process consists of the methods used to achieve functional objectives within the methods used to achieve functional objectives within a group or by an individual.a group or by an individual.

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Types of ProcessesTypes of Processes

3.3. Cross -functional processCross -functional process — This includes the — This includes the method(s) used to achieve objectives that require method(s) used to achieve objectives that require participation or input from more than one group or participation or input from more than one group or individual. For example, the problem of an adverse drug individual. For example, the problem of an adverse drug reaction in a hospital may require the involvement of the reaction in a hospital may require the involvement of the pharmacist, the ordering physician, a registered nurse, pharmacist, the ordering physician, a registered nurse, and a unit secretary. Each group or individual controls and a unit secretary. Each group or individual controls one or more of the sub-processes affecting the problem.one or more of the sub-processes affecting the problem.

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Process StatesProcess States

State 1 is the unknown state. In State 1 is the unknown state. In this state, the process this state, the process performance has not been performance has not been measured. There is no target.measured. There is no target.

State 2 shows the process out State 2 shows the process out of control. There is a target, but of control. There is a target, but the performance cannot be the performance cannot be predicted. In this state, the predicted. In this state, the process performance is an process performance is an element of chance.element of chance.

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ContdContd....

♣ State 3 displays a process in State 3 displays a process in control, but the process is not control, but the process is not capable. Performance can be capable. Performance can be predicted, but it will not always predicted, but it will not always hit the target. In this state, the hit the target. In this state, the process is not within limits. process is not within limits.

♣ State 4 is a process in control State 4 is a process in control and capable. Process and capable. Process performance can be predicted performance can be predicted within the target.within the target.

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ContdContd....

► State 5 is process improvement. In State 5 is process improvement. In this state, the process is improved this state, the process is improved to reduce variability to the target to reduce variability to the target value. The aim is to consistently hit value. The aim is to consistently hit the bull’s-eye or center of the the bull’s-eye or center of the target. target.

► State 6 is continuous improvement. State 6 is continuous improvement. In this state, the process is In this state, the process is constantly improved to its best constantly improved to its best possible performance. The target possible performance. The target keeps getting smaller and smaller keeps getting smaller and smaller while still continuously hitting the while still continuously hitting the bull’s-eyebull’s-eye..

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Process Measurement Process Measurement

♦ All process performance can be measured All process performance can be measured through process indicators. The major process through process indicators. The major process indicators focus on quality, cost, quantity, time, indicators focus on quality, cost, quantity, time, accuracy, reliability, flexibility, effectiveness, accuracy, reliability, flexibility, effectiveness, efficiency, and customer satisfaction. efficiency, and customer satisfaction.

♦ Each organization and process owner must Each organization and process owner must determine their own process performance determine their own process performance indicators. indicators.

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Process Chart SymbolsProcess Chart Symbols

Operation (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)

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Flow ChartsFlow Charts

Operation DecisionStart/ Finish

Start/ Finish

Operation

OperationOperation

Operation

Decision

Flow charts are nothing but graphical representation of steps involved in a process. Flow charts give in detail the sequence involved in the material, machine and operation that are involved in the completion of the process. Thus, they are the excellent means of documenting the steps that are carried out in a process.

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Concept of BPRConcept of BPR

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Business Process Reengineering Business Process Reengineering (BPR)(BPR)

Definition:Definition: Fundamental Rethinking and radical redesign of business processes to Fundamental Rethinking and radical redesign of business processes to

achieve dramatic improvements in critical contemporary measures of achieve dramatic improvements in critical contemporary measures of performance such as cost, quality service, job satisfaction, and speed.performance such as cost, quality service, job satisfaction, and speed.

BPR takes a process view of organization, and focuses on how work is BPR takes a process view of organization, and focuses on how work is accomplished.accomplished.

BPR is a methodological process that uses information technology to BPR is a methodological process that uses information technology to radically overhaul business process and thereby attain major business radically overhaul business process and thereby attain major business goals.goals.

BPR is the reconfiguration of business using IT as a central lever.BPR is the reconfiguration of business using IT as a central lever.

Overhauling the business processes and organization structure that limit the Overhauling the business processes and organization structure that limit the competitiveness, effectiveness, and efficiency of the organization.competitiveness, effectiveness, and efficiency of the organization.

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Critical issues that define BPR:Critical issues that define BPR: BPR consists of radical or at least significant BPR consists of radical or at least significant

change.change. BPR focuses on process not on department or BPR focuses on process not on department or

functional areas.functional areas. BPR tries to achieve major goals or dramatic BPR tries to achieve major goals or dramatic

performance improvement.performance improvement. IT is a critical enabler of BPR.IT is a critical enabler of BPR. Organizational changes are critical to BPR.Organizational changes are critical to BPR.

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““Fundamental”Fundamental”

Must ask “Why do we do what we do? (steps)Must ask “Why do we do what we do? (steps) Question the tacit rules and assumptions underlying Question the tacit rules and assumptions underlying

the organization’s culture.the organization’s culture. Begin with logical specification of what a company Begin with logical specification of what a company

must do. (Again goals and steps)must do. (Again goals and steps) Then specify the Then specify the physical designphysical design of how to perform of how to perform

these activities better and simplerthese activities better and simpler

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““Radical”Radical”

Must examine the “root” of business Must examine the “root” of business processes, structures, and policies.processes, structures, and policies.

Don’t fiddle with the old; cast it away and Don’t fiddle with the old; cast it away and begin anew. (rethink rather than only begin anew. (rethink rather than only change)change)

Reengineering is reinvention, not Reengineering is reinvention, not modification or enhancement.modification or enhancement.

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““Dramatic”Dramatic”

Not small, incremental improvements; Not small, incremental improvements; BPR seeks order of magnitude BPR seeks order of magnitude improvements in cost, quality, service, and improvements in cost, quality, service, and speed. Use of IT to assist in these.speed. Use of IT to assist in these.

Redecorating v. demolition and Redecorating v. demolition and reconstruction!(an analogy)reconstruction!(an analogy)

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Characteristics of BPR:Characteristics of BPR:Process Orientation Process Orientation An organization should be viewed and organized as a portfolio An organization should be viewed and organized as a portfolio

of processes, not as a functional hierarchy.of processes, not as a functional hierarchy. Radical and discontinuous Radical and discontinuous Improvement Improvement

Look only for dramatic returns and don’t use the present as a Look only for dramatic returns and don’t use the present as a basis for the redesigned solution.basis for the redesigned solution.

Customer Orientation Customer Orientation Process activities are evaluated in terms of the value they Process activities are evaluated in terms of the value they

create to the external/internal customer.create to the external/internal customer. Empowerment Empowerment Shift authority and accountability to the front line worker. Shift authority and accountability to the front line worker.

Top Down Top Down Top management initiates, controls, and monitors the exercise, Top management initiates, controls, and monitors the exercise, due to the broad cross-functional scope.due to the broad cross-functional scope.

IT enabled IT enabled Creative use of IT to enable process innovation, not just Creative use of IT to enable process innovation, not just

automate current activities.automate current activities.

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The Process for Radical RedesignThe Process for Radical Redesign The different approaches for radical redesign all include:The different approaches for radical redesign all include:

Begin with a vision of which performance metrics best reflect the Begin with a vision of which performance metrics best reflect the success of overall business strategy.success of overall business strategy.

Make changes to the existing process.Make changes to the existing process. Measure the results using the predetermined metrics.Measure the results using the predetermined metrics.

Tool used to understand a business process is a Tool used to understand a business process is a workflow diagram.workflow diagram.

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Dimensions of BPR:Dimensions of BPR:

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BPR is therefore an approach and takes the form of a project, typically having seven phases:-

1.Discover2.Analyze and Document the redesigned Process(es)3.Involve and rebuild4.Reorganize and re-train5.Establish the redesigned process(es) & redesign the work teams.6.Measure Performance7.Continuous redesign and improvement

BPR ImplementationBPR Implementation

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1.1. Discover PhaseDiscover Phase:-:-

A A problemproblem or or unacceptable outcomeunacceptable outcome is is identified and identified and desired outcome desired outcome determineddetermined. This includes:-. This includes:-

a)a) Business NeedsBusiness Needs

b)b) Processes InvolvedProcesses Involved

c)c) And Effectiveness of Monitoring & And Effectiveness of Monitoring & measurement Plans.measurement Plans.

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2.2. Analyze the Existing Process(es) and Analyze the Existing Process(es) and Document the Redesigned Process(es)Document the Redesigned Process(es):-:-

Analyze the current business process(es) & Analyze the current business process(es) & determine new & re-designed Process(es).determine new & re-designed Process(es).

Establish Process Flow Charting for Establish Process Flow Charting for Redesigned Process(es).Redesigned Process(es).

Measure, Test, Analyze, and Finalize the Measure, Test, Analyze, and Finalize the Redesigned Process(es).Redesigned Process(es).

Use Benchmarking Information, where Use Benchmarking Information, where required.required.

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3.3. Involve and Rebuild PhaseInvolve and Rebuild Phase:-:- Redesign & Rebuild the Work Teams.Redesign & Rebuild the Work Teams. The teams must rethink and fully understand the The teams must rethink and fully understand the

redesigned or new Process(es).redesigned or new Process(es). Everybody should be involved for the agreed Everybody should be involved for the agreed

Action Plan.Action Plan.

4.4. Reorganize and RetrainReorganize and Retrain:-:- For New Technology and New or Redesigned For New Technology and New or Redesigned

Processes.Processes. BPR may involve BPR may involve Substantial Investment in Substantial Investment in

TrainingTraining and and Top Management’s Commitment / Top Management’s Commitment / SupportSupport..

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5.5. Establish the Re-designed Process(es) Establish the Re-designed Process(es) With Re-designed Work TeamsWith Re-designed Work Teams:-:-

It is critical for the success of BPR and It is critical for the success of BPR and depends on the scope of the Business depends on the scope of the Business Process(es). It therefore includes:-Process(es). It therefore includes:-

Establish & Implement the Re-designed process(es) Establish & Implement the Re-designed process(es) with Re-designed work teams (where required)with Re-designed work teams (where required)

Overall Process Sponsor or Champion (Overall Process Sponsor or Champion (Effective Effective Managerial SkillsManagerial Skills))

Process Owner (Process Owner (Resolver of Process BottlenecksResolver of Process Bottlenecks)) Team Leader or Process Manager (Team Leader or Process Manager (Motivator & Motivator &

Resource ProviderResource Provider)) Facilitator (Facilitator (Coordinator & Support ServicesCoordinator & Support Services)) Team Members (Team Members (Knowledge, Skills, AttitudesKnowledge, Skills, Attitudes))

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Measurement of BPR outcomes:Measurement of BPR outcomes: There are no consistent reliable measures There are no consistent reliable measures

availableavailable BPR could be measured during the evaluation BPR could be measured during the evaluation

stage in terms of:stage in terms of: Process performance: cycle time, cost, customer Process performance: cycle time, cost, customer

satisfaction.satisfaction. IT performance: downtime, system use.IT performance: downtime, system use. Productivity indices: orders processed per hour.Productivity indices: orders processed per hour.

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Indicators for success:Indicators for success: Work units change from functional departments to Work units change from functional departments to

process teams.process teams. Task-oriented jobs become multi-dimensional, Task-oriented jobs become multi-dimensional,

process oriented roles.process oriented roles. Employees are empowered with authority and Employees are empowered with authority and

responsibility for a process and its outcome.responsibility for a process and its outcome. Comprehensive employee education replaces skill Comprehensive employee education replaces skill

training.training. Organizational culture shifts from protective to Organizational culture shifts from protective to

productive.productive.

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Results-oriented performance Results-oriented performance management and compensation systems management and compensation systems are established.are established.

Managers become coaches rather than Managers become coaches rather than supervisors.supervisors.

Hierarchy flattens as a result of Hierarchy flattens as a result of empowered process teams.empowered process teams.

Executives become leaders rather than Executives become leaders rather than scorekeepers.scorekeepers.

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Addressing people issues:Addressing people issues: Intervention for overcoming organizational resistance Intervention for overcoming organizational resistance

and political pressure.and political pressure. Intervention for culture change andIntervention for culture change and Dealing with the 'survivor syndrome' of the change Dealing with the 'survivor syndrome' of the change

receptionist.receptionist.

Survivor syndromeSurvivor syndrome appears after firing some employees appears after firing some employees when implementing BPR, other employees show when implementing BPR, other employees show decreased motivation and morale, guilt, anger, and decreased motivation and morale, guilt, anger, and skepticism.skepticism.

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Challenges associated with BPR:Challenges associated with BPR:

Poor LeadershipPoor Leadership Poor or inconsistent communicationPoor or inconsistent communication Exclusion of current employeesExclusion of current employees

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Information Technology and BPR:Information Technology and BPR:

Practically, IT is a key enabler of process change.Practically, IT is a key enabler of process change. Successful reengineering efforts require a partnership Successful reengineering efforts require a partnership

between business and IT professionals.between business and IT professionals. IT is accompanied by other organizational changes like IT is accompanied by other organizational changes like

structure, culture, and role.structure, culture, and role. Information sharing across an organization.Information sharing across an organization. Great demand among employees to learn new Great demand among employees to learn new

processes.processes.

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IT opportunities for process reengineering:IT opportunities for process reengineering:

Automation:Automation: eliminating human labor from a process. eliminating human labor from a process. Informational:Informational: capturing process information for the capturing process information for the

purpose of understanding.purpose of understanding. Tracking:Tracking: monitoring process status and objects. monitoring process status and objects. Analytic:Analytic: improving analysis of information and decision improving analysis of information and decision

making.making. Geographical:Geographical: coordinating process across distances. coordinating process across distances. Integrative:Integrative: coordination between tasks and processes. coordination between tasks and processes.

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Differences between traditional IT implementations and BPR:Differences between traditional IT implementations and BPR:

Basis for Basis for comparisoncomparison

Traditional IT ImplementationsTraditional IT ImplementationsBPR implementationsBPR implementations

EssenceEssenceProblem solving Problem solving Reinventing work Reinventing work

ApproachApproachIncremental improvement Incremental improvement Radical changeRadical change

StyleStyleAnalyticalAnalyticalCreative &innovativeCreative &innovative

PerspectivePerspectiveMicro perspective Micro perspective Macro perspectiveMacro perspective

GoalGoalEnhancement Enhancement Paradigm-breakParadigm-break

ChangeChangeLimitedLimitedWholistic scopeWholistic scope

DomainDomainFunctional area Functional area Entire business systemEntire business system

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Total Quality Management (TQM):Total Quality Management (TQM): It emphasizes the role of quality in meeting the needs of It emphasizes the role of quality in meeting the needs of

its customers.its customers.

TQM stresses customer satisfaction , continuous TQM stresses customer satisfaction , continuous improvement and to be the best in all functions. improvement and to be the best in all functions.

TQM focuses on incremental change and gradual TQM focuses on incremental change and gradual improvement of processes.improvement of processes.

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Comparison between TQM & BPRComparison between TQM & BPR

TQMTQMBPRBPR

ChangeChangeIncrementalIncrementalQuantum leapQuantum leap

FocusFocusCurrent PracticeCurrent PracticeStart againStart again

FrequencyFrequencyContinuousContinuousOne shotOne shot

ParticipationParticipationBottom-upBottom-upTop-downTop-down

Risk & RewardsRisk & RewardsLow & ModerateLow & ModerateHighHigh

Type of ChangeType of ChangeWork designWork designStructure, culture rolesStructure, culture roles

Role of ITRole of ITIncidentalIncidentalKey enablerKey enabler

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Critics to BPR:Critics to BPR: BPR assumes that the factor that limits organization's performance BPR assumes that the factor that limits organization's performance

is the ineffectiveness of its processes. This may or may not always is the ineffectiveness of its processes. This may or may not always be true. Also BPR offers no means to validate this assumption. be true. Also BPR offers no means to validate this assumption.

BPR assumes the need to start the process of performance BPR assumes the need to start the process of performance improvement with a "clean slate", i.e. totally disregard the status improvement with a "clean slate", i.e. totally disregard the status quo. quo.

BPR does not provide an effective way to focus the improvement BPR does not provide an effective way to focus the improvement efforts on the organization's constraints.efforts on the organization's constraints.

Sometimes, or maybe quite often, a gradual and incremental Sometimes, or maybe quite often, a gradual and incremental change may be a better approach. change may be a better approach.

BPR is culturally biased towards the US way of thinking.BPR is culturally biased towards the US way of thinking.

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Reengineering Recommendations:Reengineering Recommendations: BPR must be accompanied by strategic planning, which BPR must be accompanied by strategic planning, which

addresses leveraging IT as a competitive tool.addresses leveraging IT as a competitive tool.

Place the customer at the center of the reengineering Place the customer at the center of the reengineering effort -- concentrate on reengineering fragmented effort -- concentrate on reengineering fragmented processes that lead to delays or other negative impacts processes that lead to delays or other negative impacts on customer service.on customer service.

BPR must be "owned" throughout the organization, not BPR must be "owned" throughout the organization, not driven by a group of outside consultants.driven by a group of outside consultants.

Case teams must be comprised of both managers as Case teams must be comprised of both managers as well as those will actually do the work.well as those will actually do the work.

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The IT group should be an integral part of the The IT group should be an integral part of the reengineering team from the start.reengineering team from the start.

BPR must be sponsored by top executives, who are not BPR must be sponsored by top executives, who are not about to leave or retire.about to leave or retire.

BPR projects must have a timetable, ideally between BPR projects must have a timetable, ideally between three to six months.three to six months.

BPR must not ignore corporate culture and must BPR must not ignore corporate culture and must emphasize constant communication and feedback.emphasize constant communication and feedback.

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BPR is Not?BPR is Not? BPR may sometimes be mistaken for the following five tools:BPR may sometimes be mistaken for the following five tools:

1.1. AutomationAutomation is an automatic, as opposed to human, is an automatic, as opposed to human, operation or control of a process, equipment or a system; or the operation or control of a process, equipment or a system; or the techniques and equipment used to achieve this. Automation is techniques and equipment used to achieve this. Automation is most often applied to computer (or at least electronic) control of a most often applied to computer (or at least electronic) control of a manufacturing process. manufacturing process.

2. 2. DownsizingDownsizing is the reduction of expenditures in order to is the reduction of expenditures in order to become financial stable. Those expenditures could include but become financial stable. Those expenditures could include but are not limited to: the total number of employees at a company, are not limited to: the total number of employees at a company, retirements, or spin-off companies.retirements, or spin-off companies.

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BPR is Not?BPR is Not?

3. 3. OutsourcingOutsourcing involves paying another company to involves paying another company to provide the services a company might otherwise have provide the services a company might otherwise have employed its own staff to perform. Outsourcing is employed its own staff to perform. Outsourcing is readily seen in the software development sector.readily seen in the software development sector.

4. 4. Continuous improvementContinuous improvement emphasizes small emphasizes small and measurable refinements to an organization's and measurable refinements to an organization's current processes and systems. Continuous current processes and systems. Continuous improvements’ origins were derived from total quality improvements’ origins were derived from total quality management (TQM) and Six Sigma. management (TQM) and Six Sigma.

Business Processes

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