Chapter 1 Introduction

Historical Triggers of BPR

In 1990, two articles appeared

simultaneously from Index Consulting
Group:
1.

Thomas Davenport and James Short (Sloan Management

Review)
- IT supports business processes
- IT is used to transform processes and enable new ones.
- and this is called the new industrial engineering and

2.

Michael Hammer (Harvard Business Review)

- Obliterate, dont automate
- Blow up your old processes, throw away your old rules,
start with a clean slate, and then use IT to radically
change.
- and this is called Business Process Reengineering

process innovation.

The huge investments in IT throughout the 1980s did not result

to corresponding increases in productivity and performance
improvement:
US corporations claimed were too narrowly defined and were

flawed when applied to service economy

They also claimed that the effects of IT on performance
improvement were lagging and would take many more years
to show up at the aggregate level.
Blame on IT itself and how it was being implemented:
Technophobic managers did not understand IT, culprits
user-unfriendly software; Technocentric information
systems professionals who did not understand business and
the faulty IT implementation.
Still in an antiquated organizational design, that become a
drag and often a complex mess; thus, automating the mess.

What is BPR?
In essence, performance improvement philosophy that aims to
achieve quantum improvements by primarily rethinking and
redesigning the way that business process are carried out.

P in BPR

B in BPR

1960s Organizational Structure

The organizational structure, processes and designs that
were started in this era were not work-friendly.
It was not possible to take advantage of IT to improve
business performance with rigid hierarchical structures and
complex procedures designed for the functionally oriented
command and control corporate environments (of the
1960s).

Challenges

The pressure for faster cycle times, cost cutting, and better
customer responsiveness intensified with accelerating
global competition in the 1980s.
There was a CRYING NEED to find new ways of doing
business that would yield QUANTUM LEAPS in performance.
This could only be done by both RADICALLY RETHINKING
how to do business and by the need to taking advantage of
the capabilities of IT.
The fire then of BPR business process reengineering had
been ignited.

Chapter 2 Introduction: What is

BPR?

Primary focus on essential processes that deliver outcomes

is the signature of all variants of BPR.
Looks at flows that move rather than at organizational
structures that sit.
Focal point HRIS process

Focus in BPR is on end-to-end business processes that

extend all the way to a customer who receives value from the
process.
Customer can be external and internal
What gives business value?
- Coordination of ensembles of tasks performed by many
rather than a narrow tasks performed by one person.

R in BPR
Assumptions:
1. BPR searches for quantum improvements rather than
incremental ones ( to find innovative out-of-the-box solution
rather than improving efficiencies through streamlining)
2. BPR effort will try to use IT to enable the process to be done
in new ways that are qualitatively different.
3. There is a focus on maximizing value-adding content of a
process and minimizing everything else.
4. Value has many forms >> speed, cost, quality, learning, and
return on investment.
5. The work environment (people skills, organizational designs,
and organizational structures) will also have to be
concurrently changed to fit the reengineered process.

What is BPR for E-Business?

Internet brings ubiquitous connectivity, real time access

Traditional enterprise are transformed into e-business by

reinventing the way business process is carried out.
BPR for e-business is more than Web-enabling.
It involves rethinking and redesigning business processes at
both the enterprise and supply chain level to take advantage
of internet connectivity and new ways of creating value.
Supply Chain:
a. Front office processes that interface with the customer, or
b. Back office processes
E Business is much more than electronic commerce
Context of BPR for E-Business >> it involves not only
organizational change, but BPR is also carried out within the
context of a process-centered approach to organizational
change. Thus the context includes:
a. People
b. Technology
c. Organizational form and structure

The Leavitt Diamond: Understanding

Organizational Adaptation

The work environment around the business process may

also need to be adjusted.
Four sets of organizational variables:
a. Information technology use
b. Organizational form
c. Requisite people skills
d. Business process
Ex. If a new information technology is used, business process
need to be changed in order to take advantage of the technology.

1980s TQM (Quality Circles)

1988 Reengineering by Michael Hammer
* The road to BPR >> Change Management Philosophies
... Change Management Philosophies because the business world
has been evolving:
1960s industry concentrated on how to produce more
(quantity)
1970s how to produce it cheaper (cost)
1980s how to produce it better (quality)
1990s how to produce it quicker (lead time)
21st century how to offer more (service)

Most agree that Hammer laid the foundation to the

reengineering approach, but many factors influenced the
birth and hype around BPR:
- TQM has brought the notion of process improvement
- The recession and globalization in the late 1980s and
early 1990s stimulated companies to seek new ways to
improve business performance
(flexibility and
responsiveness)

The Productivity Paradox:

a.

b.

That despite powerful market and service innovations

related to IT and increased computer power in the 1980s
there was little evidence that IT investments improved
overall productivity.
Organization were not able to utilize the capabilities of the
new technology Automating inefficient processes has
limited impact on productivity.

Many consultants/vendors
their own versions of BPR:
a.
b.

launched

All types of change programs were labeled reengineering

Gave BPR a bad name.

Key Words in the Definition of BPR:

Dramatic Improvement: Quantum leap in performance;

achieving breakthroughs
Radical: Means going to the roots. Starting with a clean slate
approach and reinventing
Process: A group of related tasks that together create value
for a customer. Ex: Order Fulfillment
Redesign: How work is done? A well designed process

Goals of BPR:

Chapter 3 - Evolution of BPR

The concept of reengineering traces its roots back to
management theories:
1920s Time and Motion Studies by Frederick Taylor
1930s Statistical Sampling by Walter Shewhart
1940s Statistical Quality Control Theory by W. Edwards
Deming and Joseph Juran
1950s Statistical Process Control (in Japan)
1960s Japanese Quality Movement (Ishikawa and
Taguchi)
1970s Zero Defects by Philip Crosby

Increase service level

Reduce total process cycle time
Increase throughput
Reduce waiting time
Reduce activity cost
Reduce inventory costs

Chapter 4 Properties of BPR

Since business process is a coordinated and logically sequenced
set of work activities and associated resources that produce

the following
PROPERTIES must be observed:

something of value to a customer,

1. Customer-facing
-

A business process must provide some value to the

recipient (person, organization, process) that is viewed
as the customer of that process. The outputs of the
process may be used by either the external or internal
customers.

2. Cross-Functional, Cross-Departmental &

Cross-Enterprise
-

A business process is typically cross-functional and

cuts across many different departments.
Ex: a sales process can constitute several sub
processes such as customer contact, order fulfillment,
shipping, invoicing, and collection, each of which could
be performed by one or more organizational units.

3. Hand-offs
-

Hand-offs occur when

o A completed task is handed off to another
person to carry out the next task in sequence.
o Hand-offs are a key element of a business
process and the vehicles of coordination
between different tasks.
o The cause of errors and delays

4. Information flow around the process

-

This is the information flow needed to produce the

outputs of the process and also the information
necessary to monitor the process.
Altering the dynamics of information flows is one way of
redesigning business process.

5. Knowledge created around the process

-

This includes knowledge about the process that the

participants have that enables them to execute the
process effectively under various conditions.
This also includes knowledge about the process (trends,
new exceptions, FAQ, improvement ideas) that can be
synthesized over time by gathering information from
those who interact with the process (employees,
suppliers, customers).

6. Multiple versions rather than one-size

fits all
-

Business process has multiple versions (called cases)

Each of which is performed based on particular
conditions (called triggers, type of customers)

7. Value adding mix of a process

-

A business process is made up of

o Value-adding work directly adds value for
the customer)

Non-value adding work enables value

adding but does not add it directly.
Waste neither adds nor enables values.

8. Degree of structure of a process

-

Highly structured business process follows a series of

well-defined predetermined steps every time the
process is enacted (eg. Order entry process).
Other process have much more fluidity and cannot be
tightly determined in advance (a new product
development process)
* Business process that include intensive knowledge
work are typically more difficult to tightly structure than
business processes that consist of mainly clerical or
production work.