Business Process Reengineering and Information Technology
Objectives The impact of IT The reengineering of work IT and Business Process Redesign
The role of information technology
Information technology (IT) has historically played an important role in the reengineering concept.[10] It is considered by some as a major enabler for new forms of working and collaborating within an organization and across organizational borders[
Early BPR literature [11] identified several so called disruptive technologies that were supposed to challenge traditional wisdom about how work should be performed.
Shared databases, making information available at many places Expert systems, allowing generalists to perform specialist tasks Telecommunication networks, allowing organizations to be centralized and
decentralized at the same time Decision-support tools, allowing decision-making to be a part of everybody's
job Wireless data communication and portable computers, allowing field
personnel to work office independent Interactive videodisk, to get in immediate contact with potential buyers Automatic identification and tracking, allowing things to tell where they are,
instead of requiring to be found High performance computing, allowing on-the-fly planning and revisioning
Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterp
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.rises.
Business process re-engineering is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors.[1] In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so.
Business process re-engineering is also known as business process redesign, business transformation, or business process change management.
The Impact of IT To improve efficiency To improve effectiveness To facilitate transformation
The Impact of IT On individual
Efficiency Task mechanization
Word processingSpreadsheet
Effectiveness Work improvement
Using database to generate sales letters
Transformation Role expansion Doing what if analysis for investment client
The Impact of IT On individual
Efficiency Task mechanization
Word processingSpreadsheet
Effectiveness Work improvement
Using database to generate sales letters
Transformation Role expansion Doing what if analysis for investment client
The Impact of IT On functional unit
Efficiency Process automation
Order entry, credit checking
Effectiveness Functional enhancement
CAD, CAM
Transformation Functional redefinition
CD ROM disks for business research
The Impact of IT On the organization
Efficiency Boundary extension
Linking customers and suppliers
Effectiveness Service enhancement
Online diagnostics databases
Transformation Product innovation
videoconferencing
Reengineering of Work
Historically, organizations have become hierarchies of complex functions over time. The division of labor Command and control structure Nature of post-world war II market
What has changed?? BPR changes processes not functions , geographies,
department or tasks. It is not reorganizing or downsizing.
Reengineering of Work Customers have power over suppliers Competition has changed Technology
REASONS FOR RE-ENGINEERING :-. High demand , efficiency and control.Innovation , speed , service & quality.
Wal- Mart lets Proctar & Gamble know how much stock it moves from its distribution centers into its stores.
P&G inturn tells Wal-Mart how much it needs to order
P&G can anticipate the demand and schedule its production
Wal-Mart offloads its inventory mgmt. to vendor and receive inventory into its stores even before it pays P&G
Reengineering of Work (examples) Wal-Mart’s inventory management process
Reengineering of Work (examples) Ford’s accounts payable system
Traditional process Multiple deptts.
Reengineered process We pay when we rec.
the goodspurchasing
receiving
Accounts payable
vendor
Purchase order
Copy of
Purchase order
Rec.
doc
.
invoice
purchasing
Database
receiving
vendor
Purchase order
Acc. payable
paym
ent
goods
Technology is an important part of the new process. The shared purchasing/ rec./accounts
payable database integrates the three functions to accomplish the overall business process, order procurement, successfully
Reengineering of Work (examples) Ford’s accounts payable system
Organize around outcomes and not around tasks Assigning a person or a team to
accomplish a task, rather than using assembly line approach
Have those who use the output of the process actually perform the process
Reengineering Principles
Have those who use the output of the process actually perform the process Why does a marketing manager have
to be a customer of the purchasing deptt?
Reengineering Principles
Treat geographically dispersed units as if they are centralized Greatest inefficiencies occur because
decentralized divisions maintain their own information systems
Reengineering Principles
Link parallel activities during the process rather than at the end
Capture information once at the source At mutual benefit life, the same
information was entered into as many as five different databases. When the process was reengineered, integrated databases were designed.
Reengineering Principles
Sponsor Sees the big picture Provides the resources
Steering committee Oversees the reengineering project
Design teams Knowledgeable operating managers, creative
Champion Middle manager with leadership roleDirect line to sponsor
Implementation team Focuses on implementationOpen to change, motivate others
Roles in Business Reengineering
Steps in Business Process Redesign (case Mutual Benefit Life) Develop business vision and process
objectives To reduce time and cost of underwriting an
insurance policy in order to provide timely and competitive service to its customers
Identify processes to be redesigned Underwriting an insurance policy. The current
process involves 40 steps, more than 100 people, 12 functional areas and 80 separate jobs
Steps in Business Process Redesign (case Mutual Benefit Life) Understand and measure existing
processes Management established a goal of improving
productivity by 40 percent Identify IT levers
Created a new role, the case manager, to perform and coordinate all underwriting tasks centrally. This decision making process was made possible by work station based computer system capable of pulling data from all over the company to support under writing decisions
Steps in Business Process Redesign (case Mutual Benefit Life) Design and build a prototype of the process
In the prototyping process the company made some organizational changes. After a brief start up period, the firm learned that some underwriting cases needed two additional roles: specialists like lawyers and clerical assistance.
With the new roles and redesigned processes, senior managers believed the firm will reach the 40% productivity improvement goal
Management challenges in Business Process Redesign
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THANK YOU!!
Reference Book: MIS by Mary Summer and Robert