68869868-bpr-notesre- engineering

7/28/2019 68869868-BPR-NotesRe- engineering

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Explain BPR? When to take BPR ?

Davenport&Short (1990) define business process as "a set of logically related tasks performed to achieve a

defined business outcome.

Hammer (1990) has defined Business Process Reengineering "the fundamental rethinking and rad ica

redesign of business proce ss es to achieve dramat ic improvements in critical, contemporary measures o

performance, such as cost, quality, service, and speed".

This definition comprises four keywords: fundamental, radical, dramatic and processes.

Keywo r d 1: Fundamental

Understanding the fundamental operations of business is the first step prior to reengineering. Business peopl

must ask the most basic questions about their companies and how they operate: "Why do we do what we do?

and "Why do we do it the way we do?" Asking these basic questions lead people to understand the fundamenta

operations and to think why the old rules and assumptions exist. Often, these rules and assumptions are

inappropriate and obsolete.Keywo r d 2: Radical

Radical redesign means disregarding all existing structures and procedures, and inventing completely new way

of accomplishing work. Reengineering is about business reinvention, begins with no assumptions and takes

nothing for granted.

Keywo r d 3: Dramatic

Reengineering is not about making marginal improvements or modification but about achieving dramatic

improvements in performance. There are three kinds of companies that undertake reengineering in general. Firs

are companies that find themselves in deep trouble. They have no choice. Second are companies that foresee

themselves in trouble because of changing economic environment. Third are companies that are in the peak

conditions. They see reengineering as a chance to further their lead over their competitors.

Keywo r d 4: Processes

The final keyword "Process", though the most important in the definition, is the one that gives most corporate

managers the greatest difficulty. Most business people are not process-oriented; they are focused on tasks, on

jobs, on people, on structures, but not on processes.


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BPR is done by

1. Companies at its declining stages.

2. Companies in its stable stages.

3. Companies in their peak stages.

DDiifffferenerenccee bebettwweeneen conconttiinousnous iimmprovproveemmentent andand BBPRPR

Continuous improvement is an approach to improving the competitiveness, effectiveness and flexibility of

whole organization. It is essentially a way of planning, organizing and understanding each activity, and depend

on each individual at each level. CONTINOUS IMPROVEMENT involves placing the customer as the focapoint of operations. Its aim is to continuously improve process performance in order to satisfy custome

requirements. At the center of TQM is the concept of the management of processes, and the existence of

internal suppliers and customers within organizations.

BPR also emphasizes focus on the process. However, BPR is much more radical than CONTINOUS

IMPROVEMENT. Quality approaches concentrate on improving existing processes; process reengineering

starts from scratch to create new processes without the constraints of existing methods, people, technology

management systems, or organizational structures.

The major differences between Quality Improvement and Process Reengineering approaches are provided by

Chang (1994) in the following table:


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Differences Between Quality Improvement (TQM) and Process Reengineering (BPR)

Major Factor

Quality-Improvement

Approach Reengineering

Approach

Senior-

management

involvement

Hands-on initially,and

becoming

Hands-on, active involvement throughoutthe

effort

Intensity of team-

member

involvement

Ongoing involvement onan

as-needed, part-time basis

Ongoing involvement for a specifiedduration

on a full-time basis

Improvement goals Focus onincremental

improvements over a period

Focus on dramatic improvements in ashort

time frame

Implementation

approach

Emphasis onimproving

Emphasis on creating new ways ofdoing

Magnitude of

organizational

change

Limited disruption toexisting

systems and structures

Radical changes to existing systemsand

structures

Breadth of focus Addresses narrowlydefined

Addresses processes that span entirebusiness

Use of benchmark

data

Used afterprocess

Used on front end, to assist withprocess

Dependence on

informationsystems

Information systems usedfor

data collection

Information systems used as a centralenabler

with on-line access

Quality specialists tend to focus on incremental change and gradual improvement of processes, while

proponents of reengineering often seek radical redesign and drastic improvement of processes. On the other

hand, Davenport&Short (1990) suggest that CONTINOUS IMPROVEMENT and BPR can -and should- form

an integrated strategic management system within organizations.


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impact BPR has on existing information architectures. Once this reciprocal cycle is in place, IT can determine

exactly how to upgrade, redesign, or replace selected systems in order to implement reengineered business

processes. Figure one highlights key steps in a retooling strategy.

Finally, Attaran (2003) categorizes IT roles in BPR into threephases:

Phase 1: Before the process design (as an enabler)

" Create infrastructures and manage information that support evolving organization

" Foster process thinking in organizations

" Identify and select process for redesign

" Participate in predicting the nature of change and anticipate the information needs to support that change

" Educate IT staff in non-technical issues such as marketing, customer relationships, etc.

" Participate in designing measures of success/failures of reengineering

P ha s e 2: During the process design (as a facilitator)

" Bring vast amounts of information into the process

" Bring complex analytical methods to bear on the process

" Enhance employees' ability to make more informed decisions with less reliance on formal

vertical information flows

" Identify enablers for process design

" Capture the nature of proposed change and match IT strategy to that change

" Capture and disseminate knowledge and expertise to improve the process

" Communicate ongoing results of the BPR effort

" Transform unstructured processes into routinized transactions

" Reduce/replace labor in a process

" Measure performance of current process

"Define clear performance goals and objectives to drive the implementation

" Define the boundaries and scope of the process

P ha s e 3: During the implementation (as an implementer)

" Create a digital feedback loop

" Establish resources for critical evaluation of the reengineered process


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most likely one of these three elements (money, resources, or leadership) will not be present over the life of the

project, severely crippling your chances for success.

Strategic

Alignment

You should be able to tie your reengineering project goals back to key business objectives and the overall

strategic direction for the organization. This linkage should show the thread from the top down, so each person

can easily connect the overall business direction with your reengineering effort. You should be able to

demonstrate this alignment from the perspective of financial performance, customer service, associate

(employee) value, and the vision for the organization.

Business Case forChange

In one page or less you must be able to communicate the business case for change. Less is preferred. If

it requires more than this, you either don't understand the problem or you don't understand your customers.

The business case for change will remain the center piece that defines your project, and should be a living

document that the reengineering team uses to demonstrate success. Financial pay back and real customer

impact from major change initiatives are difficult to measure and more difficult to obtain; without a rigorous

business case both are unlikely.

Proven

Methodology

The previous module presented several BPR methodologies, and it is important to note that your methodology

does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these

projects have on processes and people.

Not only should your team members understand reengineering, they should know how to go about it. In short,

you need an approach that will meet the needs of your project and one that the team understands and supports.


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Change

Management


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One of the most overlooked obstacles to successful project implementation is resistance from those whom

implementers believe will benefit the most. Most projects underestimate the cultural impact of major

process and structural change, and as a result do not achieve the full potential of their change effort.

LineOwnership

The line operation probably cannot heal itself when it comes to major business re-design. Staff and consultants

have no lasting accountability for the solution, and never succeed at forcing solutions on line organizations.

You need both. You need the line organization to have the awareness that they need help, to contribute their

knowledge, and to own the solution and implementation. At the same time you need the expertise

and objectivity from outside of the organization.

Building this partnership is the responsibility of the line organization, stakeholders and re-design team.

No group is off the hook.

Reengineering Team

Composition

The reengineering team composition should be a mixed bag. For

example, some members who don't know the process at all,

some members that know the process inside-

out, include customers if you can,

some members representing impacted

organizations, one or two technology gurus,

each person your best and brightest, passionate and committed,

and some members from outside of your company.


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FACTORS DETERMINED TO HINDER REENGINEERING

SUCCESS

Fear of job

loss

Somewhere during this century, reengineering became synonymous with down sizing and worker layoffs.

However, many of the early corporate projects did not include such drastic measures.

Unfortunately, when companies take on a project that will cost extremely large amounts of capital, senior

management wants to see some hard evidence that there will be a huge savings some where. One of the easiest

ways to provide a cost/benefit to a BPR project is cut the workforce. Many cases have shown this only reduces

the available talent pool of an organization. Fear and anxiety fill the hearts of those workers remaining. Down

sizing can profoundly affect the lives and productivity of individuals, whether they leave the organization or

survive the down sizing

Therefore, BPR drives fear into the organization and destroys the to entire social segment of the socio-

technical system which produces the product or service

Inadequate skills of

workers

An organization can be categorized by people into three categories; eager adopters, prove-its, and

resisters. Only about 10 to 15 percent of people are considered eager adopters. These people like technology

and are stimulated by learning how to use it. The other 85% probably don't have the skills for BPR with IT, but

may not admit to it.

No reengineering effort will succeed without first reeducating and retraining the people who will

ultimately work with the new process The focus needs to be on the people not on the processes.

Lack of management

support

BPR became the method to wipe the slate clean and start over with business processes. However, far too often

this was applied to employees and middle managers. Senior management sometimes felt it was not

necessary for them to also change with IT. However, when employees found out the CEO has his secretary

retrieve and sends his E-mail; credibility for a new system project was lost. Management often allows money

to be thrown around purchasing technology, but then overlook financing training of people necessary to


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infuse or utilize the


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IT. Strong leadership is necessary if BPR projects are not to be ruined by psychological and political

disruptions that accompany change

Change of organizational structure and

culture

Human passions and emotions react strongly when the prospect of change intrudes on their familiar

working and living patterns. It is believed that the necessary cooperation to achieve success will not occur

unless people are assured they will not be working themselves out of a job. .

WhatWhat iiss aa BBususiinneessss

ProceProcesss?s?

Davenport&Short (1990) define business process as "a set of logically related tasks performed to achieve

a defined business outcome".

In their view, processes have two important

characteristics:

" They have customers, that is, processes have defined outcomes, and there are recipients of

the outcomes.

" They cross organizational boundaries, that is, they normally occur across or between

organizational subunits.

On the other hand,Hammer&Champy (1993) define business process as "a collection of activities that

takes one or more kinds of input and creates an output that is of value to the customer".

Examples of processes include: developing a new product; ordering goods from a supplier, creating

a marketing plan, processing and paying an insurance claim, etc.

Davenport&Short (1990) have categorized business processes according to three

dimensions:

" Organizational entities or subunits involved in the process (Interorganizational, Interfunctional, and

Interpersonal Processes)

" The type of objects manipulated (Physical and Informational Processes)

" The type of activities taking place (Operational and Managerial Processes)

Different process types require different levels of management attention and ownership, need different forms

of


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IT support, and have different business

consequences.


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A business process orbusiness method is a collection of related, structured activities or ta s ks that produce

a specific service or product (serve a particular goal) for a particular customer or customers. It often can be

visualized with af lo w chart as a sequence of activities.

The core business of an organization is an idea li zed construct intended to express that organization's "main"

or

"essential"

activity.

The corpora te trend in the mid-20th Century of acquiring new enterprises

and forming cong lo m era tes enabled corpora ti ons to reduce costs funds and similar investment vehicles,

and sometimes the following of a popular trend among corporate management seeking to appear

current and impress investors.

Core business process means that a firm's success depends not only on how well each department performs its

work, but also on how well the company manage to coordinate departmental activities to conduct the core

business process, which is;

1. The market-sensing process Meaning all activities in gathering marketing intelligence and acting on

the information.

2. The new-offering realization process Covering all activities in research, development and launching

new quality offerings quickly and within budget.

3. The customer acquisition process all the activities defining the target market and prospecting for

new customers

4. The customer relationship management processes all the activities covering building

deeper understanding, relationships and offerings to individual customers.

5. The fulfillment management process all the activities in receiving and approving orders, shipping out

on time and collecting payment.

To be successful, a firm needs to look for competitive advantages beyond its own operations. The firm needs to

look at the competitiveness value chain of suppliers, distributors and customers. Many companies today have

partnered with specific suppliers and distributors to create a superior value delivery network.
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Task and sub-

process

A business process is mainly formed by activities that need to be performed to complete the process. There are

two kinds of activities - task and sub-process. A task is an atomic activity which represents work that cannot be

broken down. On the contrary, sub-process represents work that can be broken down to a finer level of detail.

Flow

Chart

A flow process chart is a diagram that utilizes both text and symbols to show the actions required to complete a

given process. This type of chart lays out each step in chronological order, with symbols indicating

the beginning and ending of the process as well as decisions and actions that occur along the way. A flow

process chart is useful for visualizing the procedure in question and identifying areas ofw eakne s s .

Process flow symbols typically include three distinct shapes. An oval is used to signify the beginning

and ending points of the process. A rectangle indicates actions, and a diamond indicates a decision. Each shape

is connected to other shapes by an arrow, which leads the viewer from one process to the next. Each

shape contains words describing that step of the process.

A flow process chart typically has a single start point. This may be labeled "Start" or it may indicate the

purpose of the chart, such as "Cu s to m er Serv ice Call." From this point, arrows will lead to possible actions or

decisions. Continuing with the previous example, a flow process chart on dealing with customer service calls

may include questions that the caller should be asked, such as "What system are you operating on?" Each

question will branch out to possible answers. These answers may lead to another question to further clarify the

problem, or a solution which will effectively achieve the goal of the call.

After a series of decisions and actions, the flow process chart will ultimately lead to an end point. Some charts

will have a single beginning and end, while others can result in multiple conclusions. A customer service call

could end with a variety of solutions fitting for the problem. The chart may end there, or point each solution to

another action, such as a prompt to complete a survey on the effectiveness of the service.

Actions or decisions that apply to more than one scenario will not appear multiple times on a flow process

chart. The unifying process will appear once with multiple arrows leading up to it. If the final goal of the f low

chart is
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the same regardless of the process, the oval signifying the end point of the chart may be traced back to

multiple actions or decisions.

A flow process chart is a useful tool for businesses, as it can provide a visual of the actions that are taken

throughout the course of a process. If the process seems overly complicated, this chart will help identify weak

points where it can be clarified or improved. A flow process chart is also useful for making decisions. It can

provide easy-to-read instructions for following the correct procedure in a variety of situations.

Support Process - A c ti v it y or func ti on that s uppor ts the day-to-day opera ti ons of an organ iza t io n ,

such as accoun ti n g ,co mm un ica t ion s ,m a in tenan ce ,s a les .
http://www.businessdictionary.com/definition/activity.htmlhttp://www.businessdictionary.com/definition/function.htmlhttp://www.investorwords.com/4826/support.htmlhttp://www.businessdictionary.com/definition/operations.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/accounting.htmlhttp://www.businessdictionary.com/definition/communications.htmlhttp://www.businessdictionary.com/definition/communications.htmlhttp://www.businessdictionary.com/definition/maintenance.htmlhttp://www.businessdictionary.com/definition/sales.htmlhttp://www.businessdictionary.com/definition/activity.htmlhttp://www.businessdictionary.com/definition/function.htmlhttp://www.investorwords.com/4826/support.htmlhttp://www.businessdictionary.com/definition/operations.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/accounting.htmlhttp://www.businessdictionary.com/definition/communications.htmlhttp://www.businessdictionary.com/definition/maintenance.htmlhttp://www.businessdictionary.com/definition/sales.html

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