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BIG CHANGE VIA BUSINESS PROCESS REENGINEERING

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VIA BUSINESS PROCESS REENGINEERING Daniel F. Duran Whittier College Operations 342 What BPR Is: Two Parallel Definitions the FUNDAMENTAL rethinking and RADICAL ... – PowerPoint PPT presentation

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Title: BIG CHANGE VIA BUSINESS PROCESS REENGINEERING


1
BIG CHANGEVIA BUSINESS PROCESS REENGINEERING
  • Daniel F. Duran
  • Whittier College
  • Operations 342

2
What BPR Is Two Parallel Definitions
  • 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 It is more than automation.
  • BPR is a performance improvement philosophy
    that aims to achieve quantum improvements by
    primarily rethinking and redesigning the way that
    business processes are carried out.
  • (Omar. A. El Sawy, Redesigning Enterprise
    Processes for e-Business, McGraw-Hill, NY, 2001)

3
Fundamental
  • Must ask Why do we do what we do? (steps)
  • Question the tacit rules and assumptions
    underlying the organizations culture.
  • Begin with logical specification of what a
    company must do. (Again goals and steps)
  • Then specify the physical design of how to
    perform these activities better and simpler

4
Radical
  • Must examine the root of business processes,
    structures, and policies.
  • Dont fiddle with the old cast it away and begin
    anew. (rethink rather than only change)
  • Reengineering is reinvention, not modification or
    enhancement.

5
Dramatic
  • Not small, incremental improvements BPR seeks
    order of magnitude improve-ments in cost,
    quality, service, and speed. Use of IT to assist
    in these.
  • Redecorating v. demolition and reconstruction!(an
    analogy)

6
Dramatic Who Undertakes BPR?
  • Companies in deep trouble -- need order of
    magnitude improvements!
  • Companies who foresee trouble -- an ounce of
    prevention ....
  • Companies in peak condition who want to further
    their competitive advantage.
  • Very similar to reason why Systems Analysis
    Project Originate

7
Processes
  • a collection of activities that takes one or
    more kinds of inputs and creates an output that
    is of value to the customer.
  • Collection of activities -- the P of the IPO
    related by common goal.
  • Inputs -- raw material to be processed.
  • Output -- something that has value to the
    customer.
  • Customer -- internal or external.
  • Information Systems Data converted to Information
    that is useful to customer

8
Process Integration Value Chain
9
Process Integration
  • Two forms
  • within a single organization
  • between two or more organizations
  • Avoids over-the-wall thinking and silo-opia
    (Common in Legacy systems or old organizational
    structures)

10
What BPR Is NOT
  • Although BPR may cause or involve aspects of all
    of the following, it is
  • NOT downsizing
  • NOT restructuring
  • NOT paving cow paths
  • NOT reorganizing, delayering, ....
  • NOT TQM ...

11
BPR Is NOT TQM
12
Why BPR Is Necessary
  • The Virtual Organization Three Cs Driving
    Change
  • Customers take charge.
  • Mass market v. a market of one
  • Backward integration
  • Informed consumers
  • Competition intensifies.
  • More and different kinds
  • Big is not better
  • Technology changes the nature of competition.

13
Competitive Forces Model
14
Why BPR Is Necessary
  • The Three Cs (continued)
  • Change becomes constant.
  • reduced product cycles
  • reduced time to develop new products
  • more environment scanning
  • Companies created to thrive on mass production,
    stability, and growth cant be fixed to succeed
    in such a world.

15
Four Revolutions Affecting Business Today
New Technologies
New Competitors
New Work Force
New Rules of Competition
16
How the Information Age is Changing Business
  • Organization Breaking down old corporate
    barriers, allowing critical information to be
    shared instantly.
  • Operations Using IT to shrink cycle times,
    reduce defects, cut waste, streamline ordering
    and communications.
  • Staffing Eliminating management layers and
    cutting employment levels creating virtual
    offices.
  • New Products Collapsing development cycles.
  • Customer Relations Tapping into companywide
    databases to solve callers demands instantly

17
Info Technology Enabler
18
Info Technology Enabler
19
SUPPLY-CHAIN MANAGEMENT Porters Value Chain
20
BPR and E-Business
  • E-Business is a facilitator and an enabler.
  • EC is more than just automating existing
    processes.
  • EC creates new business models e.g. Dell Computers

21
PARADIGM SHIFT
  • PARADIGM IS A COMPLETE MENTAL MODEL OF HOW A
    COMPLEX SYSTEM FUNCTIONS
  • A PARADIGM SHIFT INVOLVES RETHINKING THE NATURE
    OF THE BUSINESS, THE ORGANIZATION A COMPLETE
    RECONCEPTION OF HOW THE SYSTEM SHOULD FUNCTION

22
BPR Objectives
  • Streamline remove waste, consolidate
  • Lose Wait squeeze out delays
  • Orchestrate let the most able enterprise
    execute, outsource
  • Mass Customize any time, any place, any way
  • Synchronize both the physical and virtual parts
    of the process, real time processing of data

23
BPR Objectives
  • Digitize and Propagate capture information
    digitally at the source and propagate it through
    the process
  • Vitrify provide glass like visibility of the
    process
  • Sensitize fit the process with sensors and
    feedback loops for prompt action
  • Analyze and Synthesize generate added value by
    enhancing the process, constant improvement and
    iteration.

24
RISKS REWARDS
25
BUSINESS REENGINEERING STEPS
  • 1. Develop business vision, process objectives
  • 2. Identify process to be redesigned
  • 3. Understand, measure performance of existing
    processes
  • 4. Identify opportunities for applying
    information technology
  • 5. Build PROTOTYPE of new process

26
FEASIBILITY
  • TECHNICAL Assess hardware, software, technical
    resources
  • ECONOMIC Will benefits outweigh costs?
  • OPERATIONAL Is solution desirable within
    existing conditions?
  • INFORMATION REQUIREMENTS Detailed statement of
    new system needs

27
Characteristics of Reeng. Processes
  • Several jobs are combined into one.
  • Compress the organization horizontally and
    vertically.
  • Replace several task specialists with one case
    worker.
  • Group task specialists into case teams.
  • Benefits improves efficiency, reduces errors
    and administrative overhead, and increases
    accountability.

28
Characteristics of Reeng. Processes
  • Workers make decisions.
  • Compress organization vertically to reduce chain
    of command.
  • Tie decision making to getting the work done
    Those who do the work make the decisions.
  • Benefits reduces delays, lowers overhead,
    provides better customer response, empowers
    workers.

29
Characteristics of Reeng. Processes
  • The process steps are performed in a natural
    order.
  • Eliminate process linearity and sequence where
    possible.
  • Perform tasks concurrently to reduce process
    cycle time.

30
Characteristics of Reeng. Processes
  • Processes have multiple versions.
  • Standardization is dead One size does NOT fit
    all.
  • Create multiple versions of the same process,
    each tuned to meet the needs of different inputs,
    situations, or markets.
  • Benefits eliminates complexity and exceptions
    that must be incorporated in a standardized
    process.

31
Characteristics of Reeng. Processes
  • Work is performed where it makes the most sense.
    (Manufacturing Example)
  • 100 in internal costs to purchase 3 worth of
    batteries or supplies!!!
  • Accountants buy their own pencils customers
    repair their own equipment spare parts are
    stored at the customer site.
  • Benefits eliminates administrative costs,
    reduces process cycle time, improves customer
    service.

32
Characteristics of Reeng. Processes
  • Checks and controls are reduced. (Tricky)
  • Checks and controls dont add value use them
    only when they make economic sense.
  • Tolerate limited, modest abuse to reduce costs of
    prevention.
  • Provide effective systems for detecting abuse,
    e.g., audits.

33
Characteristics of Reeng. Processes
  • Reconciliation is minimized. (Carefully)
  • Reconciliation doesnt add value.
  • Benefits reduce number of external contact
    points for each process, thereby reducing the
    likelihood of inconsistent data.
  • Fords accounts payable process eliminated
    vendors invoice.
  • WalMarts PO-less purchasing system.

34
Characteristics of Reeng. Processes
  • A case manager provides a single point of
    contact. (Loans or other service)
  • Acts as a buffer between a complex,
    multistep/multiperson process and the customer.
  • Accepts responsibility as though s/he were
    performing the whole process.
  • Requires access to process-related data and
    effective communication with process workers.

35
Characteristics of Reeng. Processes
  • Hybrid centralized/decentralized operations are
    prevalent.
  • Reap the advantages of both operating modes!
  • Operate as though units were autonomous
    (decentralized), yet enjoy the economies of scale
    that centralization creates.
  • Notebook equipped sales force software imposes
    controls to prevent unreasonable quotes or
    promised delivery dates.

36
People Issues
  • Fear of change
  • Emphasis on Team work
  • Viewing Big Picture rather than a job or step
    in a process
  • IS designers to act as facilitators

37
Technology Issues
  • Careful use of unproved technologies
  • Quick deployment of cost effective technologies
  • Resistance to Change from Old technology Why
    change when NOT Broke
  • Dealing with legacy systems
  • Changes in Information Systems Architectures.

38
Organizational Issues
  • Top Management Champion
  • High visibility and High Expectations
  • Structural and cultural changes Problems
  • Moving Decision Making and Control points may
    lead to replacement of organizational units
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