bpr chapter1 concept and principle know where you are3

7/29/2019 Bpr Chapter1 Concept and Principle Know Where You Are3

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Chapter 1 - Know Where You Are


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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

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Reengineering business processes means tossing aside existingprocess and starting over.

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Business Process Reengineering is defined as;

the fundamentalrethinking and radical redesign of businessprocessestoachieve dramaticimprovements 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.


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http://en.wikipedia.org/wiki/File:Business_Process_Reengineering_Cycle.jpg


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Fundamental

Fundamental implies that everything every assumption, everyreason, every activity is challenged by asking why it should be

continued. The implication is nothing should be accepted asscared. Over time, practices that were once required becomeobsolete and need to be removed.

Radical

Do not try to improve the existing situation,invent(create/design) completely new ways ofaccomplishing(complete/achieve) work.

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Dramatic

Do not use business process redesign to obtain marginal (smallslight) 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 thanreengineering.

Process

Focus on the business processes instead of organizationalstructures.

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A business process may be defined asa set of logically related tasks performed to achieve adefined business outcome (Davenport, 1990)

OR

activities that takes one or more kinds of input and createan output that is of value to customer

(Hammer and Champy, 1993)

OR

a set of business events that together enable thecreation and delivery of an organizations products orservices to its customers

(Gelinas et. al, 2004) 7


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Reengineering takes time, larger project takes even more time.

Reengineering requiresprocess,organization andtechnology changes. Reengineering

also requires infrastructure changes andcultural 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.

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Design ImplementationContinuous Process

Improvement

Time

Figure 1.1: The Business Reengineering Continuum


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ProcessStructure

TechnologyStructure

OrganizationStructure

RewardStructure MeasurementSystems

OrganizationalCulture

PoliticalPower

ManagementMethods

Individual BeliefSystems

Physical Technical Layer

Infrastructure Layer

Value Layer

More concrete

easiest to change

More difficult to

change less

concrete

Figure 1.2: The Dimensions of Business Reengineering


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1.0 The Physical /Technical Dimensionsare what people can easily see anddo. Include;

a. Process structureconsists of the business processes, outcomes, policies,

practices and procedures that support the processes. (process structure is what, whenand 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.

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Dimensions of Business Reengineeringb. Technology structurewhich consists of the automated

communications, networking, and computer systems used

to support the process structure.

The sensible (rational/reasonable) application of technologydepends on the competent integration of technology with

work processes.

c. Organization structuredefines who performs, manages,and is accountable for each business process.

When process and organization structures are out of

alignments, there are gaps in accountability.


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2.0 The Infrastructure Dimensions refers to interpretationof policies and procedures which heavily influences howthe physical/technical dimensions on a day-to-day basis.

If the physical/technical dimensions change, theinfrastructure must also change because they reinforcedesired performance operational behavior.

a. Reward structureregulates behavior. Rewardsmay be formal or informal, financial or recognitionbased. Ideally, well-designed jobs provide a workenvironment that is rewarding in and of itself.

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Dimensions of Business Reengineering


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b. Measurement systemsdefine the feedback that provideinformation 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

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c. Management methodsconsist of the practices and techniquesused to supervise, develop, and support the people who perform thebusiness processes.

It is one of the most neglected (ignored) in reengineering because itis seen as outside the project scope.

Managers and supervisors must understand and learn how tosupport the new environment so as to gain benefits from thereengineering process.

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3.0 The Value Dimensionsdefine the organizations culture anddrive behavior. Leadership and improvement philosophies mustemerge from these dimensions.

a. Organizational cultureconsists of the unspoken,collective rules and beliefs of the organization.

It can be discerned (perceive/see) through theorganizations language, symbols, myths (legends) andrituals (ceremony).

It defines what is important to the organization moreforcefully than any memo from the CEO.

Changing embedded corporate value is perhaps themost powerful form of change.

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b. Political powerrefers to individual who manipulate and shape theactions 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 theorganization.

Personal power acquired through expertise, knowledge, orconnections.

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c. Individual belief systems are the attitudes and mental modelsthat 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 demonstrateleadership.



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1. Increase the organizations abilityto customize products andservices while retaining mass-production economics.

2. Increase customer satisfaction with products and services so theyprefer your products and services over those of your competitors.

3. Make it easy and pleasant (enjoyable) for customers to do businesswith your organizations.

4. Break organizational boundaries, bringing customers into theinformation channels through communication, networking, andcomputer technologies.

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BENEFIT of REENGGINEERING

5. Decrease response time to customers, eliminate errors andcomplaints, and reduce product and service development andmanufacturing cycle time.

6. Process more customer requests and higher volume from each

customer, and deliver value-driven prices to customers withoutreducing profitability.

7. Improve the quality of work life and individual capabilities forcontribution so that people experience ownership of their workand of customers and see their contributions to the organizations.

8. Improve the sharing and utilization oforganization knowledge sothe organization does not become/remain dependent on theexpertise of a few people.


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THE NEED FOR REENGINEERING

WARNING SIGNS OF TROUBLE

1. The explosion of chaos and bureaucracy:Organizations workprocesses were not designed BUT they evolved out of the chaos ofdoing business. Processes become habitualized. From veteran tonew staff without realising it was a mistake

(e.g. a team of headquarters accountants visiting a field billing office found clerks misapplyingaccount codes to expense vouchers. The team asked a clerk why? She replied: Listen, Ivebeen 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 basedon the assumption that they know whats best for customers, thus,organization becomes inflexible, driving frustrated customers tocompetitors or regulatory commissions. Employees who take theinitiatives to help customer would be penalised for bypassing officialprocedures.


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3. Automation of existing bureaucracy: computerization reinforcedbureaucracy rather that breaking through it.

(changing paper documents to electronic document, BUT company only duplicates existingprocesses, thus, maintaining both paper and electronic forms of data. E.g. an insurancecompanys claims department, automation created paper printouts to replace handwritten claimfiles, but paper continued to move from one desk to another as the claim was processed).

4. Bottlenecks and disconnects in critical cross-functionalprocesses. Each unit operates as if it has no relationship to theother units.

(Each unit is part of the manufacturing stream, but they each operates in costly and cumbersomeprocesses preparing work for processing, resolving problems and errors, tracking the work inprogress, thru, creating duplicate and inaccurate data. E.g. large automobile manufacturingcompany each division reentered information about incoming work into its own systems, andsent paper with the outgoing work. Each department did not check with each other on what isgoing on in the manufacturing process).

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WARNING SIGNS OF TROUBLE

5. Elusiveness of accountability: Most organizations arestructured by function (eg. Sales, manufacturing, etc.) butessential 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 plansor budgets were late, inaccurate, or incomplete, customers programs could not be updated intime to avoid invoicing errors and deductions. As a result, in 5-years time, the number ofchanges in plans and budgets increased from 10 57%, and the process deteriorated fromlack of management, measurement and accountability.

6. Chaos of downsizing: It leaves survivors demoralized, the workenvironment inadequately staffed, and people with inadequateskills performing the work, and tasks can no longer be processedwithin their current configuration. (e.g. a large government organizationdownsized 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.


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7. The turmoil of integration and merger: This creates work processesthat often duplicate or conflict with each other. (e.g. Purchase of 4companies gave the new company 4 different sets of policies, procedures and formulaoptions for processing customer orders. In a 5-year period, over $80 million would bewasted supporting these overlapping redundant operations. Integrating the customersorder 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 werehired to prepare inputs and correct errors.

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Possible findings

1.0 Lack of a big picture concept and poorcommunication

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 customers24

DIAGNOSIS OF PROCESSES OF SUSPECT

PRODUCTS AND SERVICES


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Street-smart business reengineers know that it is critical to create a business case because itcreates massive discomfort with status quo.

The initial business case must sell executives on theVALUE 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 andstressful changes without good reason. They makes two points:

1. The necessity for change.

Use quantitative data that translates what everybody already knowsinto facts and numbers

2. The alternative to change.

Use hard and soft data to paint a picture of the future if theorganization doesnt change

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CREATING A BUSINESS CASE


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3. Once the facts are on the table, reengineers advocates must getcommitments to:

- Frame the projects so it is fully defined and understood

- Create a reengineered vision of the business, its values, andgoals

- 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 bigbucks for implementation)

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CREATING A BUSINESS CASE


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To have a successful BR, requires a strategy that incorporates these CSF:

1. A business focus a focus on all dimensions. Successdepends on integrating all three process, technology, andorganization, plus supporting that integration with new

infrastructure and values.

2.A methodology and project approachrequires disciplineand 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 withthe program.

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CRITICAL SUCCESS FACTORS FOR BR

PROJECTS


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PROJECTS

4. Partnership participationBR is accomplished only as aresult of efforts by people from all over the organization.

Requires flexible and trained teams.

5. 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 meanchanging 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.


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BR begins the process of transforming a dysfunctionalorganization into a learning, productive, quality-focused,customer driven organization.

BR must be customer driven.

Qualityis defined in terms of added value, cost sensitivity,responsiveness, and functionality.

BR must enable people to handle more change successfully.

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PROJECTS

bpr chapter1 concept and principle know where you are3

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