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Business Process

Re-engineering
Aspirations
 An organization
 Flexible enough to adjust to changing market
conditions
 Lean enough to beat any competitor’s price
 Innovative enough to keep its products & services
technologically fresh
 Dedicated enough to deliver maximum quality &
customer service
The Crisis
 So, if Managements want companies
 Lean, nimble, flexible, responsive, competitive,
innovative, efficient, customer-focused, &
profitable
 Why are so many companies bloated, clumsy,
rigid, sluggish, noncompetitive, uncreative,
inefficient, disdainful of customer needs & losing
money
The Problem
 Most companies can trace their work styles &
organizational roots to the prototypical pin
factory – based on division of labour
 Suddenly, the world is a different place
 In today’s environment nothing is constant or
predictable – market growth, customer
demand, product life cycles, rate of
technological change or the nature of
competition
What has Changed
 Three forces, separately & in combination, are
driving today’s companies deeper & deeper
into territory that most of their executives &
managers find frighteningly unfamiliar
 Three Cs
 Customer
 Competition
 Change
Customers take charge
 Dominant force in seller-customer
relationship has changed
 Seller no longer has upper hand
 Customers now tell suppliers what they want,
when they want it, how they want it & what
they will pay
Competition intensifies
 It used to be simple – the company that could
get to market with an acceptable product or
service at the best price would get a sale
 Now, not only does more competition exist, it
is of many different kinds
 Niche players
 Disparate bases of competition – price, selection,
quality, service before, during or after sale
 Foreign players
Change becomes constant
 Change has become pervasive and persistent
 It is normality
 Pace of change has accelerated
 Rapid technological change also promotes
innovation
A Change in the Meaning of Change

Operational processes and technology enabled


applications expected life as installed.
Traditional
7 Years
1975

Time Payback

Stability Change Stability Time

Emerging
2 Years
2001

Time Payback
Discontinuity

Time
Change
Projected to be 6 months by 2010
A Change in the Meaning of Change
Operational processes and technology enabled
applications expected life as installed.
Traditional
7 Years
1975

Cost amortization Time Payback


Value accrual
Organization stabilization
Stability Change
Maintaining Stability
market alignment Time
Maintaining strategy alignment
Strategy flexibility
Process flexibility
Emerging
2 Years
2001

Time Payback
Discontinuity

Time
Change
Projected to be 6 months by 2010
What is the Problem
 Factors beyond control?
 Economic mismanagement by Govt?
 Predatory pricing by foreign players?
 Regulations?
 Right products & services?
 Corporate strategies?
 Is automation the answer?
BPR
 “Starting Over”
 It does NOT mean tinkering with what already exists
or making incremental changes that leave basic
structures intact
 It means asking the question:
 If we were re-creating the company today, given what we
know and given current technology, what would it look
like?
 Re-engineering a company means tossing aside old
systems & starting over.
 It involves going back to the beginning & inventing a
better way of doing work
BPR
 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
BPR
 Four Key Words
 Fundamental
 Radical
 Dramatic
 Processes
Fundamental
 Why do we do what we do?
 Why do we do it the way we do?

 Re-engineering first determines what a


company must do, then how to do it.
 Re-engineering takes nothing for granted. It
ignores what is and concentrates on what
should be
Radical
 Radical derived from Latin word “radix”,
meaning root
 Radical redesign means getting to the root of
things
 Re-engineering is about reinvention – not
business improvement, business enhancement
or business modification
Dramatic
 Re-engineering is not about making marginal
or incremental improvements but achieving
quantum leap in performance
 Re-engineering should be brought in only
when a need exists for heavy blasting
 Marginal improvement requires fine-tuning;
dramatic improvement demands blowing up
the old and replacing it with something new
Processes
 A business process is a collection of activities that
takes one or more kinds of input & creates an output
that is of value to the customer
 Most business people are not “process-oriented”.
They are focused on tasks, on jobs, on people, on
structures, but not on processes
 Individual tasks within a process are important but
none of them matter one bit to the customer if the
overall process doesn’t work
What BPR isn’t
 Re-engineering is NOT automation – it may simply provide
more efficient ways of doing the wrong kind of things
 Re-engineering should NOT be confused with software re-
engineering – i.e. rebuilding obsolete information systems
with more modern technology
 Re-engineering is NOT restructuring or downsizing.
Reengineering means doing more with less
 Re-engineering is not the same as reorganizing, de-layering,
or flattening the organization
 Re-engineering is not the same as quality improvement or
TQM etc.
What is BPR – once again
 Two word definition – “starting over”
 Beginning again with a clean sheet of paper
 Rejecting conventional wosdom & received
assumptions of past
 Inventing new approaches to process
structures
 Search for new models of organizing work
Common Elements
 Several Jobs are combined into one
 Workers make decisions
 The steps in the process are performed in a natural order
 Processes have multiple versions
 Work is performed where it makes the most sense
 Checks & controls are reduced
 Reconciliation is minimized
 Case Manager or SPOC
 Hybrid centralized/decentralized operations are prevalent
Enabling Role of IT
 Inductive versus deductive thinking
 Think of IT as a solution waiting for a
problem and not the other way round
 Do not look at technology as solution to
existing processes or problems
Some IT solutions
 Old rule: Information can appear in only one
place at one time
 Disruptive Technology: Shared databases
 New rule: Information can appear
simultaneously in as many places as it is
needed
Some IT solutions
 Old rule: Only experts can perform complex
work
 Disruptive Technology: Expert systems
 New rule: A generalist can do the work of a
specialist
Some IT solutions
 Old rule: Businesses must choose between
centralization and decentralization
 Disruptive Technology: Telecommunication
networks
 New rule: Businesses can simultaneously reap
the benefits of centralization &
decentralization
Some IT solutions
 Old rule: Managers make all decisions
 Disruptive Technology: Decision support
tools
 New rule: Decision making is part of
everyone’s job
Some IT solutions
 Old rule: Field personnel need offices where
they can receive, store, retrieve & transmit
information
 Disruptive Technology: Wireless data
communication and portable computers
 New rule: Field personnel can send & receive
information wherever they are
Some IT solutions
 Old rule: Field personnel need offices where
they can receive, store, retrieve & transmit
information
 Disruptive Technology: Wireless data
communication and portable computers
 New rule: Field personnel can send & receive
information wherever they are
Current Position Assessment “Today”
Competitive Profile of Bank of Baroda
In addition, Baroda will need to dramatically change the composition and structure of its workforce in order to
meet the future demands and changing nature of the customer base and the restructuring of its banking
operations. This will also require a substantial investment in the development of the HR function within
Central Office.

VRS(1) GE project savings of 28% to


Workforce 48% over 30 months through
web-enablement of core
business processes
47054 Process Re-engineering

40000
VRS (n)

Web-enabled Processes

Projected 25000
Target
Core Banking Systems

Time Source: Market Guide (Yahoo Finance)


Analysts Reports, Gartner Analysis, Company
Reports
Current Position Assessment “Today”
Competitive Profile of Bank of Baroda

However, in the future it will need to modify its operating model to emphasize a fundamental shift in strategy
and business focus…..

Development of capital Development of a


management strategy comprehensive IT
strategy/
Development of a investment
Head Office Operations
comprehensive program
Human Resource Credit & Accounts
Human IT Operations
strategy Resources
Planning Risk &
& Services
Management Subsidiaries
Automation/
transformation/
Transformation of
consolidation of
the planning
Domestic Operations back-office
function to strategy
International operations
and performance Zones
Operations Subsidiary
management.
Operations
Country
Operations Regions
Treasury
Operations Fundamental
restructuring of
Branches Branches Branches
branch network and
development of
Development of a alternative
comprehensive distribution
Customer channels
Relationship Accounts Accounts Accounts Accounts
Management
Strategy
Business Strategy
New Baroda Business Model/ Strategic Recommendations

The New Business Model illustrates a critical change in focus - to a customer-centric organisation. Hence all recommendations contained in the
body of the Business Strategy are directed at achieving the following strategic goals and objectives;
 Domestic, International, and Subsidiary operations to be repositioned along Lines of Business - Rural, Personal, Business, and Corporate;
 Customer focus to be defined and re-positioned - to reflect that all existing/ new products and services are directed to customer segments
via a multitude of channels;
 Corporate Centre to reflect the proposed organisational structure/ corporate governance model; and
 Improve operational effectiveness and efficiency, resource management, and performance management.

HeadCorporate Centre
Office Operations
Group
Human Group Projects Group Group Performance Operations
Risk
Resources Strategy Office Technology Finance Management & Services
Management

Channels
Domestic Operations
Global Treasury Operations
Baroda Corporate

Corporate Baroda Business Subsidiary


International Operations
Operations Business Baroda Personal
(Subsidiaries/
Branches)
Personal Baroda Rural

Customers
Current Position Assessment “Today”
Competitive Profile of Bank of Baroda
Critical to the attainment of the target workforce numbers and associated productivity improvement will be the
transition of branch-based transaction processing to centralised data/ transaction processing centres within
India.
Westpac recently announced Back-office Processing
outsourcing of vouchers and (off-site/ outsourced)
cheques to Unisys

Teller Positions
Back-office
Processing

Teller Positions
Financial Advisor Insurance Agent

Domestic Operations

Zones Telephone WWW.Baroda.com


Subsidiary
Operations Banking
Regions

Branches Branches ATM

Call Centre
(off-site/ KIOSK
Accounts Accounts
outsourced)
Q&A
Thank you