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Business Process Reengineering

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Title: Business Process Reengineering


1
Business Process Reengineering
  • The history of radical management

Presentation by Bhininder Kaur and Timothy
ODonnell MGMT390 -004 March 22, 2006
2
BPR Basics
  • BPR is defined as "the analysis and design of
    workflows and processes within organizations1
  • BPR has also been described as the critical
    analysis and radical redesign of existing
    business processes to achieve breakthrough
    improvements in performance measures.2

3
Who invented BPR?
4
Michael Hammer
  • Michael Hammer, besides being one of the founders
    of BPR, he is also the president of Hammer and
    Co., a management education company. Hammer
    started out as a engineer and was a professor at
    MIT in the computer science department. Both TIME
    (1996) and Business Week (2002) listed Hammer as
    one of the Top 25 most influential businessmen of
    all time.

5
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6
James Champy
  • James Champy is the co-author of Reengineering
    the Corporation with Michael Hammer. He started
    his career as a civil engineer at MIT. He also
    passed the bar at Boston College Law School and
    taught at MIT for some time. He was the CEO for
    CSC Index and is now the Chairman of Perot
    Systems consulting practice.

7
The third wheel?
Thomas H. Davenport is sometimes credited as a
co-creator of BPR. His articles in the Sloan
Management Review were coming out around the same
time as Hammers articles. Davenport was not
involved in Reengineering the Corporation
although many cite his definition of BPR.
Davenports thoughts on BPR are similar to
Hammerism (BPR as defined by Michael Hammer)
8
The Evolution of BPR
Hammer and Champy name Business Process
Reengineering and the craze begins. (1990s)
Adam Smiths Wealth of Nations (1776)
Scientific Management (1911)
1945
1900
2006
Total Quality Management in Japan (post-WWII)
Gilbreths Motion Studies (1910s)
9
The BPR of Nations?
  • In the introductory chapter of Reengineering the
    Corporation, the authors liken their book to Adam
    Smiths Wealth of Nations in terms of importance
    and continuing influence.

Hammer and Champy noted that Smith developed the
concept of work specialization during the
Industrial Revolution and his involvement in
early management techniques lead to Taylorism
and eventually to BPR. Even Smiths ideas needed
a reformation to fit into the 20th century.
10
Frederick Taylors influence
  • Business Process Reengineering was influenced by
    Taylors Scientific Management. However, the
    dehumanization of the workers under Taylorism
    created problems. Workers slaved for hours under
    difficult labor conditions and became little more
    than the machines they worked on. Taylors ideas
    provided a backbone for BPR, but drastic changes
    were necessary.

11
The Gilbreths Influence
  • BPR was also influenced by the Gilbreths Time
    and Motion Studies. Similar to Taylors ideas,
    the Gilbrethian efficiency studies increased both
    the workforce productivity and the dehumanization
    of the workplace. Changes needed to be made in
    order to make way for a new century of business.

12
Total Quality Management
  • Scientific Management lead William Deming to
    develop Total Quality Management, yet another
    efficiency strategy that helped Japanese business
    reform after WWII.

William Deming
13
Management for the future
Americas business problem is that it is
entering the twenty-first century with companies
designed during the nineteenth century - Hammer
and Champy (1993).
Even though nineteenth century management theory
is cited as an influence to BPR, it is still a
modern theory hoping to reform twenty-first
century business by rewriting the dogmatic
business procedures of the last hundred years.
14
In the beginning…
BPR began when Hammer and Champy noticed some
corporations dramatically improving their
performance in one or more areas of business
using techniques that were radically different
then those found in management at the time. This
observation heralded Hammer and Champy to
reevaluate popular management theories. Both
authors noticed that it wasnt gradual changes,
but radical reformation of businesses that led to
the greatest change.
15
Algorithm for programming real life
  • Hammer created reengineering as a logical
    extension of his computer science background. In
    an interview with Wired magazine, Hammer agreed
    to an interviewers analogy that a
    reengineering plan is an organizational hack
    an algorithm for programming real life. The bits
    are people. The routines are business processes.
    (Wired, 1995)
  • Hammer himself was a one of the famous Cambridge
    hackers during the 60s and 70s and parlayed
    his computer expertise into management with the
    Index Group, a management-consulting firm in
    Cambridge. There he met with James Champy,
    co-founder of Index, and from there the two
    co-authored their best-selling business bible…

16
Reengineering the Corporation
  • First published in 1993, Reengineering the
    Corporation became the handbook for businesses in
    the 90s.
  • It was subtitled A Manifesto for Business
    Revolution.
  • The tag line states Forget what you know about
    how business should work. Most of it is wrong!

17
The Reengineering Revolution
  • Michael Hammer also co-authored The Reengineering
    Revolution in 1995. When Hammer noticed companies
    succeeding when they implemented BPR, he wanted
    to document what techniques individual companies
    used to achieve their goal.
  • He also noticed companies doing badly after
    implementing BPR and wanted to know why they were
    failing.

18
Affecting the World
In only a year and a half after the publication
of Reengineering the Corporation , the book had
sold 1.7 million copies worldwide. To date, it is
estimated to have sold over 2 million copies
world wide. The book has also been translated
into nineteen (19) languages including Finnish,
Hebrew and Thai (Hammer 1995)
19
But…why has there been so much interest
in Business Process Reengineering?
20
Why organizations are interested in BPR
  • 1 reason cited by corporations
  • Improving efficiency

21
Additional attractions for corporations
  • Competitive pressure
  • Desire to improve poor customer satisfaction
  • Desire to improve poor quality of products and
    services

22
BPR real steps for real results
  • Develop the Business Vision and Process
    Objectives
  • Identify the Processes to be Redesigned
  • Understand and Measure the Existing Processes
  • Identify IT Levers
  • Design and Build a Prototype of the New Process

23
Proscis Best Practices in BPR (2002)
  • Third study in a series conducted over a five
    year period
  • 327 organizations participated
  • Companies encompassed 53 countries
  • According to Prosci, The results of the 2002
    study combine the most current findings with
    those of the past two studies to provide a
    comprehensive and comparative view of business
    process reengineering projects.

24
Geographic Distribution of Participants in 2002
Prosci Study
25
Industry Segment of Participants in Prosci Study
26
A sampling of the 327 companies that participated
in Prosci Study
  • Allstate
  • AutoZone
  • Best Buy
  • FedEx
  • Gulf Air
  • Hong Kong Productivity Council
  • Industry Practice, Tata Consultancy Services
  • Infosys Technologies Ltd - Quality (Corporate
    Services Group)
  • Institute for Technology and Management
  • Lockheed Martin Mission Systems
  • Management Consulting
  • Marriott Senior Living Services
  • University of Missouri
  • Vetri Software (India) Ltd

27
Because of BPR…
  • …American Express reported reducing its annual
    costs by over 1 billion through reengineering.
  • …ATTs Global Business Communications Systems
    unit turned a nine-figure loss into a nine-figure
    profit
  • …the Semiconductor Group of Texas Instruments
    reduced their cycle time of its order fulfillment
    process by more than half.
  • …Progressive Insurance reduced the cycle time of
    its claims process from weeks to days, and
    dramatically improved customer satisfaction while
    reducing costs. The revenue per employee
    increased by over 70 percent.

Figures based from the years 1993 1995,
(Hammer2)
28
CIGNA A BPR Success Story
  • Viewed BPR as a way of life
  • Not radical, all-or-nothing change rather, a
    realignment of strategy and agenda
  • Sustained "from the bottom up, with learning
    transferred "across.""3
  • Took into consideration the differences in
    management cultures in different countries

29
Things went as planned when…
  • Team members demonstrated strong dedication to
    the project.
  • The team had strong commitment and support from
    top management.
  • The team shared a clear vision of the objectives
    and goals and had a common focus and
    understanding of project success.
  • The team utilized consultants as part of its
    reengineering strategy.

30
On the flip side…
  • 70 of BPR projects fail3
  • Only 47 of the companies in Proscis study met
    their project objectives to within 10
  • According to one of the self-proclaimed
    creators of BPR, around 1993 the modest idea
    of BPR had become a monster.4

31
Possible Causes of BPR failure
  • Lack of sustained management commitment and
    leadership
  • Unrealistic scope and expectations
  • Resistance to change

32
No more excuses
  • When Hammer wrote The Reengineering Revolution,
    he said, Failure is not caused by cosmic rays,
    bad luck, or other factors outside of human
    control. Failure is caused by people who dont
    know what theyre doing and who dont pursue
    reengineering the right way.(Hammer2)
  • BPR has been used as the scapegoat for any and
    all problems if something did go wrong when
    implemented. Companies misused the term to sack
    people or downsize. Anyone could invoke the term
    BPR and it could mean anything. It was a buzz
    word that not enough people understood fully, and
    was therefore utilized improperly. Many
    criticisms of BPR that arose did so because they
    did not understand the processes.

33
Lessons Learned
  • People, not the bottom line, are the most
    important assets of a company
  • IT alone can not improve a companys financial
    status technology is only useful if it helps
    people do their work more efficiently.
  • Companies should underpromise and overdeliver4
  • Clarity is key

34
References
  • 1Davenport, T.H. Short, J.E. (1990). "The New
    Industrial Engineering Information Technology
    and Business Process Redesign," Sloan Management
    Review, pp. 11-27.
  • 2Grover, V., Jeong, S.R., Kettinger, W.J. Teng,
    J.T.C. (1995). "The Implementation of Business
    Process Reengineering," Journal of Management
    Information Systems, 12(1), pp. 109-144.
  • 3Malhotra, Y. (1998). Business Process Redesign
    An Overview, BRINT Institute.
    www.kmbook.com/bpr.htm
  • 4Thomas, A. (1995). The Fad That Forgot People,
    Mansueto Ventures LLC. www.fastcompany.com/online/
    01/reengin.html
  • Hammer, M. Champy, J. (1993) Reengineering the
    Corporation, Harper Business
  • Hammer, M. Champy, J. (1995) The Reengineering
    Revolution, Harper Business
  • www.prosci.com
  • www.brint.com
  • www.wired.com/wired/archive/3.08/reengineering_pr.
    html

35
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