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Title: MBA 731: Business Systems Analysis and Design


1
MBA 731 Business Systems Analysis and Design
  • Minder Chen, Ph.D.
  • School of Management
  • George Mason University
  • (O) 703-993-1788 (F) 703-993-1809
  • E-Mail mchen_at_gmu.edu
  • Web Site http//gunston.doit.gmu.edu/ecommerce/MI
    S731/

Organization
Technology
Process
  • Minder Chen, 1997-2004

2
Outline
  • Business Process Reengineering Introduction and
    Examples
  • Business Reengineering Definition and Principles
  • Business Reengineering Examples
  • Business Reengineering Framework
  • Managing Business Process Reengineering Life
    Cycle
  • Business Reengineering Project Life Cycle
  • Business Reengineering Teams and Infrastructures
  • IT Enables for Business Process Reengineering
  • IT Enablers
  • New Thinking for Taking Advantages of IT Enablers
  • Business Process Reengineering Tools Process
    Modeling with IDEF0
  • IDEF0 Notation and Diagramming Technique
  • IDEF0 Model Analysis
  • IDEF0 Tools Demonstration of Design/IDEF
  • Implementation of Business Process Reengineering
  • Total Quality Management vs. Business
    Reengineering
  • Culture Changes in a Reengineering Workplace
  • Critical Successful Factors of Implementing
    Business Reengineering

3
Books on BPR
  • Hammer, Michael and Champy, James, Reengineering
    the Corporation A Manifesto for Business
    Revolution, New York HarperCollins Publishers,
    Inc., 2001
  • Davenport, Thomas H., Process Innovation
    Reengineering Work through Information
    Technology, Harvard Business School Press, 1992.
  • Hammer, Michael, Reengineering Work Dont
    Automate, Obliterate, Harvard Business Review,
    July-August, 1990.
  • Davenport, Thomas H. and Short, James E., The
    New Industrial Engineering Information
    Technology and Business Process Redesign, Sloan
    Management Review, Summer 1990, pp. 11-27.
  • IBM System Journal, a special issue on Business
    Transformation through Information Technology,
    Vol 32, No. 1, 1993. Order Number G321-0110-00,
    (1-800-426-5687)
  • Hall, G., Rosenthal, J., and Wade, J., How to
    Make Reengineering Really Work, Harvard Business
    Review, November-December 1993, pp. 119-131.
    Reprint No. 93604.

4
BPR Introduction, Examples, Principles
  • Introduction to BPR
  • Problems
  • BPR Definition
  • Process Definition, Dimensions, and Examples
  • BPR Status Reports
  • Examples of BPR
  • Ford
  • Mutual Benefit Life Insurance
  • Capital Holding Co.
  • Taco Bell
  • Others
  • BPR Principles and Frameworks
  • Principles
  • A BPR Framework
  • Approaches

5
Industrial Revolutions Model of Organization and
Production
  • Complex work is broken down into simple and
    repetitive tasks that are performed in sequence
    by specialists.
  • Specialization of labor Individual jobs become
    simple
  • Sequential processes Coordinating people
    becomes more complex (The role of the hierarchy)
  • Narrow and repetitive jobs De-skilling the work
    forces
  • Managers job is to control the quantity, cost,
    and quality of the work performed.
  • Control as a dominant style
  • Financial-oriented scoreboard
  • Employees are organized by business function.
  • Hierarchical structure

6
Problems
  • Functional departments become barriers to change.
  • Too much time and money are spent in ineffective
    coordination and communication.
  • Too little time for doing work that really
    benefits customers.
  • Overheads are soaring.
  • Business processes are evolved over a period of
    time and are not designed to handle changing
    business environments or to take advantages of
    emerging technologies.

7
Process Evolution
  • "We are structured today by historical accident.
    As we added products, we added functional
    stovepipes."
  • "Processes in organizations have never been
    designed in the first place."

8
Definition of Reengineering
  • The fundamental rethinking
  • and radical redesign of
  • core business processes to
  • achieve dramatic improvements in critical
    performance measures such as quality, cost, and
    cycle time.

Source Adapted from Hammer and Champy,
Reengineering the Corporation, 1993
9
What Business Reengineering Is Not?
  • Automating Paving the cow paths. (Automate poor
    processes.)
  • Downsizing Doing less with less. Cut costs or
    reduce payrolls. (Creating new products and
    services, as well as positive thinking are
    critical to the success of BPR.)

10
A Cow Path?
11
Reengineering Is ...
Extremist's View
  • Obliterate what you have now and start from
    scratch.
  • Transform every aspect of your organization.

Source Michael Hammer, Reengineering Work
Dont Automate, Obliterate, Harvard Business
Review, July-August, 1990, pp. 104-112.
12
Gordian Knot
  • In a Greek legend, nobody could untie a knot tied
    by King Gordius of Phrygia. Many people tried to
    untie the knot, but nobody succeeded.
  • ... until Alexander the Great found a smart and
    direct solution.

13
Definition of Process
  • A process is simply a structured, measured set of
    activities designed to produce a specific output
    for a particular customers or market.
  • -- Thomas Davenport
  • Characteristics
  • A specific sequencing of work activities across
    time and place
  • A beginning and an end
  • Clearly defined inputs and outputs
  • Customer-focus
  • How the work is done
  • Process ownership
  • Measurable and meaningful performance

14
Types of Processes
Dimensions Type
Examples
Order from a supplier Develop a new
product Approve a bank loan Manufacture a
product Prepare a proposal Fill a
customer order Develop a budget
  • Organization Entity
  • Inter-organizational
  • Inter-functional
  • Inter-personal
  • Objects
  • Physical
  • Informational
  • Activities
  • Operational
  • Managerial

Adapted from Davenport, T. H. and Short, J. E.,
"The New Industrial Engineering Information
Technology and Business Process Redesign," Sloan
Management Review, Summer 1990, p. 17.
15
Processes Are Often Cross Functional Areas
"Manage the white space on the organization
chart!"
Customer/ Markets Needs
Supplier
Value-added Products/ Services to Customers
"We cannot improve or measure the performance of
a hierarchical structure. But, we can increase
output quality and customer satisfaction, as well
as reduce the cost and cycle time of a process to
improve it."
16
Process-Orientation
  • Process-orientation is the key to the BPR success
  • Remove stovepipe functions
  • Focus on cross-functional core process redesign
  • Link activities, functions, and information in
    new ways to achieve breakthrough improvements in
    cost, quality, and timeliness.

Source Dichter, Gagnon, and Alexander,
Leading Organizational Transformation, The
McKinsey, Quarterly, 1993, Number 1.
17
BPR Achieves Dramatic Improvement
  • Ford reduced its account payable department by
    75
  • Bell Atlantic cut the cycle time for installing
    carrier services for customer from 15 days to 3
    days.
  • IBM Credit Company reduce loan application turn
    around time from 6 days to 4 hours while loan
    applications increased by 100 times. No
    personnel was added.

18
Satisfaction with the Results of BPR
Source Deloitte Touche, Leading Trends in
Information Services, 1994.
50 to 70 of reengineering efforts fail to
achieve the goals set for them.
Source Thomas A. Stewart, Reengineering The
Hot New Managing Tool,
Fortune, August 23,
1993, pp.. 41-48.
19
BPR and Other Organizational Initiatives
  • Alias
  • Process Innovation
  • Core Process Redesign (CPR)
  • Relevant Initiatives in Organizations
  • TQM
  • Continuous Process Improvement
  • Information Strategy Planning and Information
    Engineering
  • IT for Competitive Advantages
  • Related Initiatives in Public Sectors
  • Reinventing the Government
  • Functional Process Improvement (DOD)

20
Benefits of Reengineering
Customer Service
Process Timeliness
Quality
Reduce Cost
Competitiveness
New/Improved Technology
Sales/Revenues
Source Delotte Touche, 1993
21
Reengineering for Achieving Strategic Goals
  • Source Gateway Information Services, Inc. New
    York,
  • Figures are based on responses from 121
    executives at US firms in the manufacturing,
    insurance, and utilities industries.
  • Joanne Cummings, "Reengineering is high on list
    but little understood," Network World, July 27,
    1992, p. 27.

22
BPR Examples
  • Ford Accounts Payable
  • Mutual Benefit Life New Life Insurance Policy
    Application
  • Capital Holding Co. Customer Service Process
  • Taco Bell Company-wide BPR
  • Others

23
Ford Accounts Payable Process
Purchasing
Vendor
Purchase order
Receiving
Goods
Copy of purchase order
Receiving document
Accounts Payable
Invoice
?
?
Payment
  • PO Receiving Doc. Invoice

Source Adapted from Hammer and Champy, 1993
24
Trigger for Fords AP Reengineering
  • Mazda only uses 1/5 personnel to do the same AP.
    (Ford 500 Mazda 5)
  • When goods arrive at the loading dock at Mazda
  • Use bar-code reader is used to read delivery
    data.
  • Inventory data are updated.
  • Production schedules may be rescheduled if
    necessary.
  • Send electronic payment to the supplier.

25
Ford Procurement Process
Purchasing
Vendor
Purchase order
Receiving
Goods
Purchase order
Goods received
Accounts Payable
Data base
Payment
26
Ford Accounts Payable
Before
  • More than 500 accounts payable clerks matched
    purchase order, receiving documents, and invoices
    and then issued payment.
  • It was slow and cumbersome.
  • Mismatches were common.

After
  • Reengineer procurement instead of AP process.
  • The new process cuts head count in AP by 75.
  • Invoices are eliminated.
  • Matching is computerized.
  • Accuracy is improved.

27
New Life Insurance Policy Application Process at
Mutual Benefits Life Before Reengineering
. . . .
Department A Step 1
Department A Step 2
Issuance Application
Department E Step 19
Issuance Policy
  • 30 steps, 5 departments, 19 persons
  • Issuance application processing cycle time
    24 hours minimum average 22 days
  • only 17 minutes in actually processing the
    application

Source Adapted from Rethinking the Corporate
Workplace Case Manager at Mutual Benefit Life,
Harvard Business School case 9-492-015, 1991.
28
The New Life Insurance Policy Application Process
Handled by Case Managers
Mainframe
Physician
Underwriter
LAN Server
Case Manager
PC Workstation
  • application processing cycle time 4 hours
    minimum 2-5 days average
  • Application handling capacity double
  • Cut 100 field office positions

29
Customer Credit Application Analysis
30
Capital Holding Co. - Direct Response Group
  • A direct marketer of insurance-life, health,
    property, and casualty-via television, telephone,
    and direct mail.
  • In 1988, DRG president Norm Phelps and other
    senior executives decided that for our company,
    the days of mass marketing were over.
  • Need to strengthen DRG's relationships with
    existing customers and target our marketing to
    those potential customers whose profiles matched
    specific company strategies.
  • A new vision for DRG The company needed to be
    exactly what most people didn't expect it to be
    an insurance company that cares about its
    customers and wants to give them the best
    possible value for their premium dollar.

Source Adapted from Capital Holding
Corporation-Reengineering the Direct Response
Group, Harvard Business School case 192-001,
1992.
31
Capital Holding Co. Vision
  • Caring, Listening, Satisfying... one by one

Each of us is devoted to satisfying the financial
concerns of every member of our customer family
by
  • Deeply caring about and understanding each
    members unique financial concerns.
  • Providing value through products and services
    that meet each members financial concerns.
  • Responding with the clear information, personal
    attention and respect to which each member is
    entitled.
  • Nurturing an enduring relationship that earns
    each members loyalty and recommendation.



32
Capital Holding Co. Vision
To carry out our vision we must
  • Find and serve people who have a strong sense of
    affiliation, reaching them through new or
    existing membership groups.
  • Provide our members with a broad range of
    insurance and savings products.
  • Communicate personally with each member through
    direct response, emphasizing telephone and
    technology to build close relationships.

33
DRG Cultural Audit Findings
  • Cultural Audit First initiative under
    reengineering umbrella.
  • It would be impossible to reengineer our systems
    and processes without an understand of the
    culture barriers - the people issue.
  • Trigger major changes in human resource
    management - redesigning of promotion and reward
    systems.
  • Assumption You can only trust your friends.
  • Implications
  • Lack of trust may indicate a lack of confidence
    in the organization and may impede the
    organizations ability to implement change
  • If ideas arent shared, there is likely to be
    less innovation.
  • Withholding bad news gives an incomplete
    picture which can result in poor decisions.

34
The Underwritten Rules of the Game
  • The most noble organization initiatives are
    doomed to failure if they require employees to
    behave in ways that conflict with water-cooler
    wisdom on how to get on in the company.

Source Adapted from Peter Scott-Morgan, The
Underwritten Rules of the Game mater Them,
Shatter Them, and Break Through the Barriers to
Organizational Change, McGraw-Hill Inc., 1994.
35
New Business Model A Conceptual Breakthrough
Market Management
Target Segment of Aggregate Market
I Think I Know.
Use Individual Information
Use Group Information
Prospects Customers

Sell Renew
I Know for Sure.
Capture Individual Information
Personalized Service
Customer Management
36
A High-Level Service Process Model Today
  • Increase my AH coverage
  • Give me information about my Life Policy
    beneficiaries

CSR Life AH Micro- Data
Letter- System Customer
Corres. Policy film Entry
shop Change
Day 8
Customer receives two separate responses
Action Request
Input Requested Change
Whats your policy s?
AH change confirmation letter mailed to
customer
Day 2
Day 5
Action Request
Challis 3
Day 6
Day 1
System Update
Life 70
Micro-film Request
Day 6
(Batch)
Life Policy beneficiaries letter mailed to
customer
Micro-film Response
Day 5
37
Customer Management Team (CMT) A Flavor of How
DRG Service Process Will Change
  • Increase my AH coverage
  • Give me information about my Life Policy
    beneficiaries

CMT Teleservice Representative
System Client-server architecture
Customer
Day 1
Day 1 Answers
Immediate Response to Customer
Day 1-2
Day 3-4
Outbound Paper
Send written acknowledgment
38
Taco Bell
  • We were going backwards - fast ... If something
    was simple, we made it complex. If it was hard,
    we figured out a way to make it impossible. -
    Taco Bell CEO, John E. Martin
  • Customer buy for 1 are worth about 25 cents. 75
    cents goes into marketing, advertising, and
    overhead.
  • Reengineering from the customers point of view.
    Are customer willing to pay for these
    value-added activities?

Source Adapted from Hammer and Champy, 1993
39
Taco Bell
  • Corporate Vision We want to be number one in
    share of stomach.
  • Slashed kitchen
  • Kitchens Seating capacity
  • 70 30 ð 30 70
  • Eliminate district managers. Restaurant
    managers are given profit-and-loss
    responsibility.
  • Moving cooking of meat and bean outside.
  • Boost peak serving capacity at average restaurant
    from 400 an hour to 1,500 a hour.
  • 500 millions regional company in 1982 to 3
    billion national company in 1992.

40
Reengineering Example
Cash Lane No more than 10 items
Which line is shorter and faster?
41
Reengineered Process
  • Key Concept
  • One queue for multiple service points
  • Multiple services workstation

42
BPR Principles
  • Organize around outcomes, not tasks.
  • Have those who use the output of the process
    perform the process.
  • Subsume information-processing work into the real
    work that produces the information.
  • Treat geographically dispersed resources as
    though they were centralized.
  • Link parallel activities instead of integrating
    their results.
  • Put decision points where the work is performed
    and build controls into the process.
  • Capture information once and at the source.

Source Michael Hammer, Reengineering Work
Dont Automate, Obliterate, Harvard Business
Review, July-August, 1990, pp. 104-112.
43
BPR Principles - Derived
  • Redesign process steps such that they are perform
    in a correct order. Combine several process
    steps into one.
  • Design for parallel subprocesses whenever
    possible to reduce waiting time between tasks.
    Integrate subprocesses.
  • Processes may have multiple versions. Remove
    complex, exceptions, and special cases.
  • Empower human potentials. Give front-line
    workers the responsibility to make decisions.
  • Provide mechanism in the process to encourage
    individual, team, and organizational learning

Source Derived from Michael Hammer and James
Champy, Reengineering the Corporation A
Manifesto for Business Revolution, HarperCollins
Publishers, Inc., 1993
44
Informating, Not Automation
  • An individual without information cannot take
    responsibility
  • an individual who is given information cannot
    help but take responsibility.
  • Jan Calzon
  • CEO, Scandinavian Airlines

45
BPR Principles - Derived (Continued)
  • Perform the work where it makes sense.
  • Reduce controls and checks. gt Build in
    feedback mechanisms at each steps to minimize the
    need for the checkpoints and control.
  • Minimize reconciliation.
  • Eliminate multiple external contact points. gt
    Use case managers to provide a single point of
    contact for customers. One-stop customer service
    or customer service center.
  • Design processes with centralized and
    decentralized operations.
  • Coordinate inventory, buffers, and other assets
    by sharing data cross organization boundaries.
    JIT, continuous replenishment, supplier shelf
    management.
  • Strive for doing things right the first time.
    Eliminate rework and iteration.

46
A BPR Framework
  • Technology
  • Enabling technologies
  • IS architectures
  • Methods and tools
  • IS organizations
  • Organization
  • Job skills
  • Structures
  • Reward
  • Values
  • Process
  • Core business processes
  • Value-added
  • Customer-focus
  • Innovation

47
Approaches to BPR
  • Focus on core business processes.
  • Use information technology to enable new business
    processes, not just to automate existing ones.
  • Start with a clean sheet of paper and think
    out-of-the-box.
  • Consider all aspects of the process.
  • Adopt a BPR methodology.
  • Use proven methods and tools in analyzing and
    redesigning the process.
  • Manage the implementation and change process from
    the beginning.

48
Managing BPR Projects
  • BPR Life Cycle Management
  • BPR Team Structures

49
Business Process Reengineering Life Cycle
  • The BPR life cycle approach decomposes business
    reengineering projects into inter-related phases
    in which a set of integrated structured methods
    and tools is applied to specific tasks in each
    BPR phases. Each phase and its detailed tasks
    contain clearly defined goals and deliverables.

50
Three Life Cycle Models of BPR
Davenport and Short
Wang
Hammer
Develop business vision process objectives
Mobilization (Get serious)
Define business goal
Identify processes to be redesigned
Analyze the business process
Diagnosis (Get started)
Understand and measure existing processes
Redesign the process
Redesign (Get crazy)
Identify information technology levers
Implement the new process
Design build a prototype of the process
Realization (Get real)
Measure the new process
51
Methodology Components
Work Breakdowns
Phase
Deliverable
Task
Step
Are Involved in
Apply to
BPR Team Structures
Methods and Tools
Role
Concept
Use
Participant
Method
Tool
52
Business Process Reengineering Life Cycle
53
Phase 1 Visioning
Define corporate vision and business goals
  • Apply to enterprise-wide reengineering effort.
  • Develop overview of current and future business
    strategies, organizational structure, and
    business processes.
  • Develop organizational commitment to
    reengineering.
  • Develop and communicate a business case for
    action.
  • Create a new corporate vision.
  • Set stretched goals.
  • Prioritize objectives.
  • Assess implementation capabilities and barriers.

54
Case for Action
  • Business context What is happening, what is
    changing, and what is newly important in the
    environment in which the company operates.
  • Business problem The major concern of the
    company.
  • Marketplace demands New performance requirements
    that cannot be met by the company.
  • Diagnostics Why the company cannot meet the new
    performance requirements? Why the incremental
    improvement is not enough?
  • Cost of inaction Consequences of not
    reengineering.

Source Hammer and Champy, 1993.
55
Objectives for Business Reengineering
  • Improve customer satisfaction
  • Shorten cycle time
  • Improve output quality
  • Cut down costs
  • Increase competitiveness
  • Maintain the leadership position

56
Business Vision, Strategy, and Processes
Determine who we are and what we are doing about
Enterprise-Wide Vision
Define the right things to do
Business Strategy
Do the right things right
Process Visualization
source John L. Barrett, Process Visualization
Getting the Vision Right Is Key, Information
Systems Management, Spring 1994, pp. 14-23.
57
Phase 2 Identifying
Identify business processes to be reengineered
  • Construct high-level process map
  • Develop a process hierarchy
  • Build enterprise-wide data models (optional)
  • Evaluate the processes
  • Select processes to be reengineered
  • Prioritize and schedule processes to be
    reengineered

58
TI Semiconductor Business Process Map
Customer Communication
Market
Customers
Concept
Development
Manufacturing
Customer Design Support
Strategy Development
Product Development
Order Fulfillment
Manufacturing Capability Development
Source Adapted from Hammer and Champy, 1993, p.
119.
59
A Generic High-Level Process Map
Market
Customer
Organization Learning
Develop strategy
Attract and retain customer
Understand customer needs develop solutions
Deliver products and services
Deliver supporting services
Source Adapted from Mark Youngblood, eating the
Chocolate Elephant Take Charge of Change Through
Total Process Management, Micrografx Inc., 1994,
p. 146.
60
Using Value Chain to Identify High-Level Processes
Corporate Infrastructure
Human Resource Management
Supporting Activity
Technology Deployment
Procurement
Added Value
Inbound Logistic
Service
Sales and Marketing
Outbound Logistic
Operation
Primary Activity
61
High-Level Process Diagram of Firm X
62
High Level Segmentations of Enterprise Processes
63
Logical Functional Process Model
64
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65
Methods Guidelines in Selecting Processes
  • Identify processes to be redesign
  • Systemic exhaustive approach Information
    engineering can be used to identify critical
    business processes using activity-data matrix.
  • High-impact intuitive approach Use facilitated
    workshops or extensive interviews involving
    senior management.
  • Guidelines
  • 25 business processes at a time
  • Identify owners of business processes.
  • Expand the scope of a process been analyzed

66
Criteria for Selecting Processes
  • Broken
  • Bottleneck
  • Cross-functional or cross-organizational units
  • Core processes that have high impacts
  • Front-line and customer serving - the moment of
    the truth
  • Value-adding
  • New processes and services
  • Feasible

67
The 9-Grid Model for Selecting Processes to
Reengineer
High
Process Impacts
Medium
Low
Woof!
High
Low
Medium
Implementation Difficulty
68
Phase 3 Analyzing
Analyze and Measure an Existing Process
  • Conduct preliminary scoping.
  • Develop a high-level AS-IS baseline process model
    (work flow model). Avoid analysis paralysis by
    conducting preliminary analysis at fairly high
    level.
  • Surface purpose and assumptions of the process
    (Ask WHY?).
  • Perform activity-based costing costs can be
    assigned based on actual activities and
    productivity.
  • Reveal hidden time and nonvalue-added
    activities.
  • Measure cycle-time and quality.
  • Measure profitability in terms of task, product,
    and customer type.

69
Interview Questions
  • What makes it go?
  • Is anyone else involved?
  • Does the name of the step accurately convey the
    result?
  • Are all outcomes shown?
  • If there is a handoff,how does it get there?

70
PROCESS of Gathering Requirements
  • P Plan to interview
  • R Rehearse interview
  • O Open interview
  • C Collect data
  • E End interview
  • S Summarize interview
  • S Synthesize interview

71
Establish a Common Base of Knowledge
  • The process and business strategies
  • Customer requirements
  • World-class benchmarks

72
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73
Process Model
  • Process decomposition
  • Process dependency or work flow
  • ICOM of a process as defined in IDEF
  • Inputs information and materials
  • Outputs Products and services
  • Controls Policy, specification, and timing
  • Mechanism Resources including people, tools, and
    facility.

74
Process Data
  • Basic Overall process data
  • Customers and customer requirements
  • Suppliers and suppliers qualifications
  • Breakthrough goals
  • Performance characteristics Cost, cycle time,
    reliability, and defect rate.
  • Systems constraints Budgetary, business, legal,
    social, environmental, and safety issues and
    constraints.
  • Measure critical process metrics
  • Cycle time
  • Cost
  • Input quality
  • Output quality
  • Frequency and distribution of inputs

75
Identified Broken Processes
  • Terminal Disease
  • Symptom Extensive data exchange , redundancy,
    rekeying
  • Disease Arbitrary fragmentation of a natural
    process
  • Just In Case
  • Symptom Excess buffers of assets, e.g.,
    inventory
  • Disease System slack to cope with uncertainty
  • Over-inspection
  • Symptom High ratio of checking and control to
    value adding
  • Disease Incompetence and mistrust because of
    fragmentation
  • Rework
  • Symptom Frequent rework and iteration
  • Disease Inadequate feedback along process chain
  • Special Cases
  • Symptom Too many exceptions and special cases
  • Disease Graduate accretion onto a simple process

Source Adapted from Hammer and Champy, 1993.
76
Analyzing a Process
  • Why? What are the underlying assumptions?
  • How do the assumptions affect process structure?
  • Are the assumptions still valid? Can you make
    them invalid?
  • How would changing the assumptions affect the
    work and its value?
  • Who does the work?
  • Are you assuming that a specialist must do the
    work?
  • When? What is the flow of the work?
  • Are you assuming that one group must finish
    (collecting all data) before another group can
    begin?
  • Where is the work performed?
  • Are you assuming that decision must be made at
    the headquarters?
  • What resources are required?
  • Are you assuming that local inventory is required
    for good service?

77
Phase 4 Redesigning
Identify enabling IT generate alternative
process redesigns
How can business processes be transformed using
IT?
Business Reengineering
Business-pulled
Technology-driven
Information Technology
How can IT support business processes?
Source Thomas H. Davenport and James E. Short,
The New Industrial Engineering Information
technology and Business Process Redesign, Sloan
Management Review, Summer 1990, pp. 11-26.
78
Phase 4 Redesigning
Business Vision Strategy
Business-pulled
How can IT support business strategies and
business processes?
Business Reengineering
How can business strategies be changed business
processes be transformed using IT?
Technology-driven
Information Technology
79
Three Steps in Redesigning Processes
  • Simplification
  • Task Change business rules or procedures of a
    specific task
  • Workflow A process chain is simplified by
    elimination of nonvalue-adding activities
  • Integration
  • Redesign tasks into a logical and effective
    process.
  • A reengineered process often crosses functional
    boundaries.
  • It offers opportunity for eradicating
    interdepartmental redundancies and restructuring
    the organization.
  • Automation
  • Usually accompanies nontechnical redesign of
    organization structures and procedures.
  • All reengineering costs and benefits can be
    projected into a model.
  • Reengineering often pays for itself - sources of
    funding for technology investments are frequently
    cost savings generated by organizational change.

80
Steps in Redesigning
  • Generate new visions for the process
  • Create ideas for dramatic changes
  • Identify core sub-processes
  • Identify enabling technologies
  • Design alternative new processes
  • Estimate cost/benefit/risk involved in
    alternative process redesigns

81
Phase 5 Evaluating
Evaluate and select a process redesign
  • Develop criteria of evaluating alternatives of
    redesigned processes
  • Evaluate design alternatives
  • Select and recommend a reengineered process

82
Evaluation Criteria
  • Costs
  • Design and implementing the business process
  • Hire and train employee
  • Develop supporting IS
  • Purchase of other equipment and facilities
  • Benefits
  • Customer requirements
  • Breakthrough goals
  • Performance criteria
  • Constraints
  • Risk
  • Technology availability and maturity
  • Time required for design and implementation
  • Learning curve
  • Cost and schedule overrun

83
Phase 6 Implementing
Implement the reengineered process
  • Plan IT implementation
  • Plan organization implementation
  • Conduct a pilot project
  • Develop a prototype system
  • Technical Design
  • Social Design
  • Evaluate results from the pilot project and the
    prototype
  • Prepare large-scale roll out

84
Phase 7 Improving
Improve the process continuously
  • Develop performance measurement and reward
    systems in the reengineered process
  • Monitor process performance constantly
  • Improve the process on a continuous basis

85
Elements of Integrated Process Management
Integrated Process Management
  • Process Reengineering

Process Monitoring
Process Improvement
86
Target Design Visioning Price Waterhouse
Vision
High-Level Goals
  • People culture
  • Processes
  • Systems IT
  • Organization Structure
  • Performance measures targets
  • Desired end state
  • Scope of vision

Visioning Workshop
Process Design
  • Facilitation
  • Participation
  • Consensus
  • Segment processes
  • Select high-return process redesign opportunities
  • Perform detailed redesign of business processes

External View
Target Environment Design
  • Best practices
  • BPR principles
  • Technologies
  • Industry functional
  • People culture
  • Processes
  • Systems IT
  • Organization structure

87
Rapid Re Approach
Solution Technical Design
Model data reexamine process linkages Instrument
and informate Consolidate interfaces
information Redefine alternatives Relocate
retime controls Modularize specify deployment
Apply technology Plan implementation
Preparation
Recognize need Develop executive consensus Train
team Plan change
Vision
Understand process structure Understand process
flow Identify value-adding activities Benchmark
performance Determine benchmark drivers Estimate
opportunities Envision and integrate the
internal external ideal
Transformation
Build test the system Train staff Pilot new
process Define transition Continuous improvement
Identification
Solution Social Design
Model customer Define measure
performance Define entities Model processes Map
organization Map resources Prioritize processes
Empower customer contact personnel Define jobs,
teams, skills, Specify management structure,
org. boundaries, transitional org. Specify job
changes career paths Deign change mgmt
prog. Design incentives Plan implementation
Source Adapted form Manganelli Klein, The
Reengineering Handbook, AMACOM, 1994.
88
Enterprise Engineering - A Framework for Change
Organization and Culture Development
Learning Organization
Strategic Visioning
Continuous Process Improvement
Business Process Redesign
Business Re-engineering
Information Infrastructure Development
Source Adapted from James Martin Co., Business
Re-engineering Quick Reference Guide, 1993.
89
BPR Team Structures
The LEADER appoints the PROCESS OWNER, who
convenes a REENGINEERING TEAM, with assistance
from the BPR CZAR and under the auspices of the
BPR STEERING COMMITTEE. (Hammer and Champy,
1993)
90
Stakeholders of the Reengineering Project
  • End users, operators, managers of the process
  • Gainers and losers of benefits
  • Employees who may be affected
  • Decision makers
  • Controllers of resources
  • Suppliers and customers of the process

91
BPR Team
  • Size up to 8 members in the core team augmented
    by subject-matter experts when needed.
  • Commitment half- to full-time.
  • Skills team skills, process engineering,
    quality, information systems, benchmarking,
    organizational and job design, and change
    management.
  • Composition Employees, customers, suppliers, and
    external consultants.

92
Facilitated BPR Meetings
  • Centered around a workshop It is an organized,
    controlled, and structured process
  • Participated by users, managers, and IS personnel
    (if necessary)
  • User orientation
  • Management direction
  • IS technical assistance
  • Facilitated by a BPR facilitator to ensure
    thorough analysis
  • Employ a BPR analysis and design methodology to
    ensure usable requirements or specifications
  • Focused on a consensus-based decision making
    process
  • Use multi-media audio-visual equipment or BPR
    tools to bridge knowledge gap among participants

93
Qualifications of a BPR Facilitator
  • Is skillful in team building and leading
  • Manages group process and dynamics
  • Has energetic and outgoing personality
  • Summarizes discussion
  • Is a good communicator (listening and speaking)
  • Has project management ability
  • Has mastered facilitation skills
  • Understands BPR methods

94
BPR Team Experiences at Charles Schwab
  • The real battle of reengineering is to learn how
    to translate the best intentions into the best of
    plans and, ultimately, into the best of products,
    processes and systems.
  • Current systems can not provide a single view of
    any one customers business with the firm.
  • Reengineer to survive, to sustain growth, to
    maintain leadership position, to transform
    businesses.
  • BPR should be driven by customer satisfaction.
  • You may need to reengineer the reengineering
    process.

Source Jeff Moad, Reengineering Report from
the Trenches, Datamation, March 15, 1994, pp.
36-40.
95
Lessons Learned
  • People tend to focus on the shortcoming of
    existing systems, rather than entirely new way to
    deliver services to customers.
  • Task-oriented people in BPR teams may not be able
    to see and change the big picture.
  • You need data about your customers, their needs,
    and your competitors before you start.
  • Work hard at building a consensus of purpose and
    an identity for the BPR team. Members should not
    see themselves as representatives of various
    functional units brought together to protect
    their interests. They should work as a team to
    benefit the business.
  • Insist on direct and active upper management
    participation such that the team will have the
    political cloud to actually reengineer and will
    know the changes in business strategies.

96
Vision
  • A statement of the future business environment
    and how the company will operate in that
    environment.
  • Vision is the result of dreams in action . It is
    a positive image of the future that is the
    strongest motivator for change.
  • Characteristics
  • Common purpose worth the effort
  • Positive feeling and diffuse fear
  • Clarity and values
  • Capture the imagination
  • Inspires and empowers
  • Should have "reach" and "range"

97
Mission
  • A statement of the basic purpose or reason for
    the company to exit.
  • Lines of questioning
  • What business are we in?
  • What is the geographic scope?
  • What markets do we serve?
  • What products and services do we provide?
  • What are the critical successful factors of the
    organization?
  • How can we achieve our competitive advantage?

98
Mission Examples
  • ATT Our business is service
  • Gerber Babies are our business
  • Du Pont Better things for better living through
    chemistry

99
Strategic Visioning Process
Visions
Stories
Context
Insight
Foresight
Future
Present
Past
100
Five Bold Steps Vision
Vision
Mission
1. step 2. 3. 4. 5.
Supporting Trends
Challenges
Value
Source The Grove Consultants International,
1996.
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