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BUSINESS PROCESS REENGINEERING CONCEPTS

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Title: BUSINESS PROCESS REENGINEERING CONCEPTS


1
BUSINESS PROCESS REENGINEERING CONCEPTS
Chapter 1 - Know Where You Are
2
Learning Objectives
  • At the end of the course, you will be able to
  • Define business process redesign
  • Describe the nine dimensions of BPR
  • Discuss the benefits of BPR
  • Identify and describe the situations in which BPR
    becomes necessary
  • Describe the warning signs of trouble that
    indicate the need for reengineering
  • Identify and describe the critical success
    factors for BPR projects

3
What is Business Process Reengineering or
Redesign?
  • Reengineering business processes means tossing
    aside existing process and starting over.

Business Process Reengineering is defined
as the fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvements in critical contemporary
measures of performance such as costs, quality
and speed. (Hammer and Champy, 1993)
Business process re-engineering is also known
as business process redesign, business
transformation, or business process change
management.
4
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5
This definition contains four key words
  • Fundamental
  • Fundamental implies that everything every
    assumption, every reason, every activity is
    challenged by asking why it should be continued.
    The implication is nothing should be accepted as
    scared. Over time, practices that were once
    required become obsolete and need to be removed.
  • Radical
  • Do not try to improve the existing situation,
    invent(create/design) completely new ways of
    accomplishing(complete/achieve) work.

6
This definition contains four key words
  • Dramatic
  • Do not use business process redesign to obtain
    marginal (small slight) improvements, aim at
    order-of-magnitude improvements (ten times). If
    the marginal gains 5 to 10 percent are the
    goal, then continuous improvement is a more
    appropriate path than reengineering.
  • Process
  • Focus on the business processes instead of
    organizational structures.

7
What is a Business Process?
  • A business process may be defined as
  • a set of logically related tasks performed to
    achieve a defined business outcome
    (Davenport, 1990)
  • OR
  • activities that takes one or more kinds of
    input and create an output that is of value to
    customer (Hammer and Champy, 1993)
  • OR
  • a set of business events that together enable
    the creation and delivery of an organizations
    products or services to its customers
  • (Gelinas et. al, 2004)

8
Dimensions of Business Reengineering
  • Reengineering takes time, larger project takes
    even more time.
  • Reengineering requires process, organization and
    technology changes. Reengineering also requires
    infrastructure changes and cultural
    transformation).
  • - Once the radical changes takes place, they
    must continuously improve the process, practices
    in the business operation to prevent future
    deterioration and ensure preventive maintenance.

Continuous Process Improvement
Implementation
Design
Time
Figure 1.1 The Business Reengineering Continuum
9
Dimensions of Business Reengineering
Physical Technical Layer
More concrete easiest to change
Process Structure
Technology Structure
Organization Structure
Infrastructure Layer
Reward Structure
Measurement Systems
Management Methods
Value Layer
Organizational Culture
Political Power
Individual Belief Systems
More difficult to change less concrete
Figure 1.2 The Dimensions of Business
Reengineering
10
Dimensions of Business Reengineering
  • 1.0 The Physical /Technical Dimensions are what
    people can easily see and do. Include
  • Process structure consists of the business
    processes, outcomes, policies, practices and
    procedures that support the processes. (process
    structure is what, when and how work is
    performed)
  • Process can be triggered by internal events,
    timing cycles, or external stimuli.
  • Some processes originate by designs, others may
    emerge informally to meet real or perceived
    organizational needs (that is why we need
    business process reengineering).
  • There are undocumented,
    inconsistently applied and personality dependent
    processes.
  • No single organization has the same processes
  • Process produce business outcomes.
  • Its true purpose is to produce a quality
    outcome in a timely and predictable manner.

11
Dimensions of Business Reengineering
  • b. Technology structure which consists of the
    automated communications, networking, and
    computer systems used to support the process
    structure.
  • The sensible (rational/reasonable) application
    of technology depends on the competent
    integration of technology with work processes.
  • Organization structure defines who performs,
    manages, and is accountable for each business
    process.
  • When process and organization structures are out
    of alignments, there are gaps in accountability.

12
Dimensions of Business Reengineering
  • 2.0 The Infrastructure Dimensions refers to
    interpretation of policies and procedures which
    heavily influences how the physical/technical
    dimensions on a day-to-day basis.
  • If the physical/technical dimensions change, the
    infrastructure must also change because they
    reinforce desired performance operational
    behavior.
  • a. Reward structure regulates behavior. Rewards
    may be formal or informal, financial or
    recognition based. Ideally, well-designed jobs
    provide a work environment that is rewarding in
    and of itself.

13
Dimensions of Business Reengineering
  • Measurement systems define the feedback that
    provide information on process performance.
  • - enables people to improve process
    performance
  • - must deliver appropriate information
  • - should uncover the need for change
  • - should be made available directly and
    simultaneously (at once) to process
    performers and managers

14
Dimensions of Business Reengineering
  • Management methods consist of the practices and
    techniques used to supervise, develop, and
    support the people who perform the business
    processes.
  • It is one of the most neglected (ignored) in
    reengineering because it is seen as outside the
    project scope.
  • Managers and supervisors must understand and
    learn how to support the new environment so as to
    gain benefits from the reengineering process.

15
Dimensions of Business Reengineering
  • 3.0 The Value Dimensions define the
    organizations culture and drive behavior.
    Leadership and improvement philosophies must
    emerge from these dimensions.
  • a. Organizational culture consists of the
    unspoken, collective rules and beliefs of the
    organization.
  • It can be discerned (perceive/see) through the
    organizations language, symbols, myths
    (legends) and rituals (ceremony).
  • It defines what is important to the
    organization more forcefully than any memo from
    the CEO.
  • Changing embedded corporate value is perhaps
    the most powerful form of change.

16
Dimensions of Business Reengineering
  • b. Political power refers to individual who
    manipulate and shape the actions and behaviors of
    others.
  • Both formal and informal leaders use power to
    promulgate (broadcast) and reinforce power.
  • Formal authority acquired through the position
    held in the organization.
  • Personal power acquired through expertise,
    knowledge, or connections.

17
Dimensions of Business Reengineering
c. Individual belief systems are the attitudes
and mental models that individuals apply to
themselves, those they work with, and the work
itself. Examples of mental models Impatience,
skepticisms, openness, control, rigidity, and
flexibility Aligning the value dimensions to
support the reengineered organization requires
organization executives to demonstrate leadership.
18
BENEFIT OF REENGINEERING
  1. Increase the organizations ability to customize
    products and services while retaining
    mass-production economics.
  2. Increase customer satisfaction with products and
    services so they prefer your products and
    services over those of your competitors.
  3. Make it easy and pleasant (enjoyable) for
    customers to do business with your organizations.
  4. Break organizational boundaries, bringing
    customers into the information channels through
    communication, networking, and computer
    technologies.

19
BENEFIT of REENGGINEERING
  • 5. Decrease response time to customers, eliminate
    errors and complaints, and reduce product and
    service development and manufacturing cycle time.
  • 6. Process more customer requests and higher
    volume from each customer, and deliver
    value-driven prices to customers without
    reducing profitability.
  • 7. Improve the quality of work life and
    individual capabilities for contribution so that
    people experience ownership of their work and of
    customers and see their contributions to the
    organizations.
  • 8. Improve the sharing and utilization of
    organization knowledge so the organization does
    not become/remain dependent on the expertise of a
    few people.

20
THE NEED FOR REENGINEERING
WARNING SIGNS OF TROUBLE 1. The explosion of
chaos and bureaucracy Organizations work
processes were not designed BUT they evolved out
of the chaos of doing business. Processes become
habitualized. From veteran to new staff without
realising it was a mistake (e.g. a team of
headquarters accountants visiting a field billing
office found clerks misapplying account codes to
expense vouchers. The team asked a clerk why?
She replied Listen, Ive been doing this job
for 20 years, and you are not going to tell me
Im doing it wrong.) 2. Thinking of customers
Too many companies design processes based on the
assumption that they know whats best for
customers, thus, organization becomes inflexible,
driving frustrated customers to competitors or
regulatory commissions. Employees who take the
initiatives to help customer would be penalised
for bypassing official procedures.
21
THE NEED FOR REENGINEERING
  • Automation of existing bureaucracy
    computerization reinforced bureaucracy rather
    that breaking through it.
  • (changing paper documents to electronic
    document, BUT company only duplicates existing
    processes, thus, maintaining both paper and
    electronic forms of data. E.g. an insurance
    companys claims department, automation created
    paper printouts to replace handwritten claim
    files, but paper continued to move from one desk
    to another as the claim was processed).
  • Bottlenecks and disconnects in critical
    cross-functional processes. Each unit operates as
    if it has no relationship to the other units.
  • (Each unit is part of the manufacturing stream,
    but they each operates in costly and cumbersome
    processes preparing work for processing,
    resolving problems and errors, tracking the work
    in progress, thru, creating duplicate and
    inaccurate data. E.g. large automobile
    manufacturing company each division reentered
    information about incoming work into its own
    systems, and sent paper with the outgoing work.
    Each department did not check with each other on
    what is going on in the manufacturing process).

22
THE NEED FOR REENGINEERING
  • WARNING SIGNS OF TROUBLE
  • Elusiveness of accountability Most organizations
    are structured by function (eg. Sales,
    manufacturing, etc.) but essential business
    process (eg. Customer service and support) cut
    across the functions. This makes it difficult, if
    not impossible, to establish accountability for a
    complete business process.
  • (e.g. in a manufacturing firm, the subprocesses,
    each assigned to different group. If any plans or
    budgets were late, inaccurate, or incomplete,
    customers programs could not be updated in time
    to avoid invoicing errors and deductions. As a
    result, in 5-years time, the number of changes in
    plans and budgets increased from 10 57, and
    the process deteriorated from lack of management,
    measurement and accountability.
  • 6. Chaos of downsizing It leaves survivors
    demoralized, the work environment inadequately
    staffed, and people with inadequate skills
    performing the work, and tasks can no longer be
    processed within their current configuration.
    (e.g. a large government organization downsized
    its headquarters by 40. 1 staff was left to
    take up a responsibility for 4 person, he has to
    work 16 hours a day and before long, demanded to
    transfer to another location.

23
THE NEED FOR REENGINEERING
  • 7. The turmoil of integration and merger This
    creates work processes that often duplicate or
    conflict with each other. (e.g. Purchase of 4
    companies gave the new company 4 different sets
    of policies, procedures and formula options for
    processing customer orders. In a 5-year period,
    over 80 million would be wasted supporting these
    overlapping redundant operations. Integrating the
    customers order management process will create
    massive difficulties as 3 of the 4 companies.
    Field work loads tripled, errors increased 50,
    and over 100 additional clerical people were
    hired to prepare inputs and correct errors.

24
DIAGNOSIS OF PROCESSES OF SUSPECT PRODUCTS AND
SERVICES
  • Possible findings
  • 1.0 Lack of a big picture concept and poor
    communication
  • 2.0 Inattention to detail
  • 3.0 Designer arrogance and customer exclusion
  • 4.0 Focus on correction, not error prevention
  • 5.0 Measurement problems
  • 6.0 Focus only on external customers

25
CREATING A BUSINESS CASE
  • Street-smart business reengineers know that it is
    critical to create a business case because it
    creates massive discomfort with status quo.
  • The initial business case must sell executives on
    the VALUE OF THE CHANGE.
  • must show that the cost of NOT changing is too
    high.
  • Street smart business reengineers dont ask
    people to put up with inconvenient and stressful
    changes without good reason. They makes two
    points
  • 1. The necessity for change.
  • Use quantitative data that translates what
    everybody already knows into facts and numbers
  • 2. The alternative to change.
  • Use hard and soft data to paint a picture of the
    future if the organization doesnt change

26
CREATING A BUSINESS CASE
  • 3. Once the facts are on the table, reengineers
    advocates must get commitments to
  • - Frame the projects so it is fully defined and
    understood
  • - Create a reengineered vision of the business,
    its values, and goals
  • - Build a detailed process redesign of the
    business operations
  • - Plan the implementation
  • - Conduct a proof of concept (if needed)
  • (once this has been laid out, reengineer
    advocate can ask for the big bucks for
    implementation)

27
CRITICAL SUCCESS FACTORS FOR BR PROJECTS
  • To have a successful BR, requires a strategy that
    incorporates these CSF
  • A business focus a focus on all dimensions.
    Success depends on integrating all three
    process, technology, and organization, plus
    supporting that integration with new
    infrastructure and values.
  • 2. A methodology and project approach requires
    discipline and structure methodology must be
    systematic and fact focused must articulate how
    to secure finding, manage power struggles, and
    sell the new ideas.
  • 3. Time - BR takes time. Executives must be able
    to stick with the program.

28
CRITICAL SUCCESS FACTORS FOR BR PROJECTS
  • Partnership participation BR is accomplished
    only as a result of efforts by people from all
    over the organization. Requires flexible and
    trained teams.
  • Visible, active leadership. This is the most
    important of all the critical success factors.
    Requires long-term commitment to BR in terms
    of dollars, people and executive visibility.
    (leaders must be careful not to use negative
    reinforcement, positive reinforcement is much
    more effective).
  • Executive leaders and middle managers must
  • (1) enable people to step back and evaluate how
    the work is done, this may mean changing work
    priorities,
  • (2) resist the temptation to silence dissident
    voices,
  • (3) simplify problem solving
  • (4) remove barriers and obstacles to peformance,
  • (5) reward and encourage ideas
  • (6) allow people to have fun at work.

29
CRITICAL SUCCESS FACTORS FOR BR PROJECTS
  • BR begins the process of transforming a
    dysfunctional organization into a learning,
    productive, quality-focused, customer driven
    organization.
  • BR must be customer driven.
  • Quality is defined in terms of added value, cost
    sensitivity, responsiveness, and functionality.
  • BR must enable people to handle more change
    successfully.
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