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BUSINESS PROCESS
RE-ENGINEERING (BPR)

Lecture 4
 Overview
3

What is BPR?
Why BPR?

The BPR process

Succeeding at BPR

Role of IS/IT
 WHAT IS BPR?

Lecture 4
 Definition - Reengineering
5

Re-engineering is 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

Hammer and Champy (1994, p32)

 Fundamental
6

First determine what a company needs to do, then

determine how to do it
Takes nothing for granted
Ask basic questions regarding why things currently
happen they way they do in an organisation
 Radical
7

Getting to the root of the problem

Changes that are finally implemented are not

superficial

Thus the business is reinvented, not

modified/improved etc

MIS Lecture 4
 Process
8

Need for companies to no longer be task oriented but

more process oriented
Remember that though the individual tasks may be
important, together they constitute a process such that
it is the whole process that should be more important
that the individual tasks that make it up
Usually the most difficult concept for managers to
understand
 Definition - Process
9

Set of activities that, taken together, produces a

result of value to the customer (Hammer and Champy
1993)
Set of logically related tasks performed to achieve a
defined business outcome (Davenport and Short 1990)
Any sequence of pre-defined activities executed to
achieve a pre-specified type or range of outcomes
(Talwar 1993)
 Example # 1 of Process Focus
10

IBM Credit corporation, a subsidiary of IBM provides

finance to approved purchasers
Multi step processes were used, ie;
Step 1
Sales-people make sale and call IBM office
Receiver logs call and deal is noted
Step 2
Deal paper sent to credit dept and captured onto computer system. Credit
checks are then performed
Step 3
Once results received, the application is passed onto business practices
dept who draft contract
 Example # 1 of Process Focus (Contd)
11

Step 3 (contd)
Business practice recapture information
Step 4
Deal sent to pricer for interest calculation
Step 5
Quotation produced and mailed by courier to customer
This entire process took approx 6 days
 Example # 1 of Process Focus (Contd)
12

When the process was reviewed, it was found that

actual productive time was only 90 mins!
After several failed attempts to resolve the issue,
process was reengineered such that it could be
handled by one person
 Example # 2 of Process Focus
13

Kodak used technology to re-engineer their design

process.
Previously it took seventy weeks (min) to design a
new product.
As a result of competition from Fuji who invented the
first disposable camera, Kodak was forced to review
their design process.
 Example # 2 of Process Focus (Contd)
14

Process was initially a combination of parallel and

sequential development ie;
Product components were designed in parallel
Tooling of manufacturing components was done sequentially.
This process could only begin 28 weeks after first stage
To improve and shorten time to market, CAD/Cam was
used to speed up the design process
Using CAD/CAM, designers could work on a product
simultaneously and test linkages as well
 Example # 2 of Process Focus (Contd)
15

All designs/modifications were stored centrally and

could be reviewed as work in progress by design
team
This enabled the manufacturing process to begin 10
weeks after initial design phase
The process was termed concurrent engineering and is
now a commonly used process in many industries
 Dramatic
16

Changes made are not marginal

Companies that undertake reengineering are;
Introuble and have no choice
Companies whose management can foresee problems on
the horizon if changes are not implemented
Companies that are doing well, yet want to do even
better
 Thus BPR is;
17

Process Orientation
Organisations need to focus on the entire process instead
of individual tasks
Also called the one stop shop concept
Ambition
The goal is to radically alter the way you do business
Rule Breaking
You have to move away from the we have always done it
this way mentality
Creative use of IS/IT
Use of IS/IT as an enabler in the process.
 BPR is Not;
18

Downsizing or restructuring
Software re-engineering
Automation
De-layering/Flattening the organisation
Not quality control, improvement, TQM, JIT, or other
variants of the theme
 WHY BPR?

Lecture 4
 Problems with the Paradigm
20

Most business still operate around the principles of

division of labour
Rate of change is very high
Market trends are difficult to predict
Three Cs (Customers, Competition and Change) are
having a big impact on organisations
The task oriented approach to business is now obsolete.
Organisations need to look at their processes and
consider how to make them more efficient
 Customers
21

Expect/demand more and are more discerning

Demands are forcing business to change the way they
deliver services
As customers become more sophisticated they demand
more sophisticated services
Technology has made information available to all
people
 Competition
22

Has increased and become more complex

Business now face competition form organisations that
may not be their traditional competitors
Trade barriers are coming down around the world, i.e.
globalisation has changed how organisations compete
Technology has altered the way companies do business
eg through supplier-distributor integration
New entrants may not face the huge entry barriers that
may have existed before due to the availability of
technology
 Change
23

The only constant is change!

Companies now find themselves offering wide range
of services in order to stay competitive
Pace of change has accelerated, reduced
product/service life cycles
Organisations now have to think laterally if they are
to continue to exist
 Why BPR?
24

Appeals to senior managers because it promises the

quickest short cut to success and business excellence
Promises immediate benefits and major leaps in
competitive performance
Promoted as an alternative to other modern
management concepts such as TQM as it is supposed to
be less costly
 Therefore;
25

Organisations need to shed themselves of their;

Inflexibility
Unresponsiveness
Absence of customer focus
Obsession with activity rather than result
Bureaucratic paralysis
Lack of innovation
High overheads

BPR is mechanism that can be use to address many of

the above
 BPR Success/Failure
26

Hammer and Champy (1993) reported a 70%

failure rate (30% success rate)
Mashari et al. (2001) surveyed organisations is
Europe and USA and found success rate to be higher
at 55.46% overall, with US firms having a 61.44%
success rate and European firms having 49.48%
success rate.
 THE BPR PROCESS

Lecture 4
 Characteristics of Reengineering
28

Merging or combination of several jobs into one i.e. no

longer an assembly line of connected tasks
Workers are empowered to make decision, added
benefit of freeing managers to concentrate on planning
and other issues
Steps of a process are performed in their natural order
Process have multiple versions depending on situation
 Characteristics of Reengineering
29

Work is performed where it makes sense logically

Reduced number of checks and controls
Reconciliation minimised by cutting number of external
contact points
Single point of contact in organisation
Hybrid centralised/decentralised operations
 BPR Process Overview
30

Every company has its business processes

These can be fragmented or obscure
Focus must be on processes Redesign

Process
map Understand
Process

Choose Process
To reengineer
Identify
Processes
Hammer & Champy (1993)
 Other Proposed Approaches
31

1. Develop a vision
2. Identify performance gaps
3. Identify processes
4. Define process performance requirements
5. Identify IT capabilities
6. Measure performance achievements
7. Design prototype
Melliou and Wilson (1995)
 Other Proposed Approaches
32

1. Identify the process for innovation

2. Identify change levers
3. Develop process vision
4. Understand the existing process
5. Design and prototype new process

Davenport (1993)
 Identify Processes
33

Identify processes by given them names if these do not

already exist
Examples;
Product development
Sales
Order fulfilment
Service
Account opening
Etc

Map all process to show work flow through company

 Choose Process to Reengineer
34

This is a difficult task as process are inter-related

Use three criteria
Dysfunction: Where most problems are encountered, typified
by broken processes eg recapturing of data (target is STP)
Importance: Impact on customer

Feasibility: Identify process most susceptible to change and

whether the change will be successful
Data needs to be gathered about all these processes
from various sources
 Understand Process
35

Delegate a process owner/team once process has been

identified for reengineering
Team needs to look at data collected and seek to
understand existing processes in terms of
Why is it inefficient?
What does it do?

What are its inputs/outputs

Any dependencies

Etc
 Understand and Redesign Process
36

Use a variety of mechanisms

View from customers perspective
Use benchmarking

Observation

Redesign process
 SUCCEEDING AT BPR

Lecture 4
 Some Observations- Upside (+)
38

You dont need to be an expert to redesign a process

(although it helps)
Being an outsider helps
You have to discard preconceived notions
See thing through the customers eyes
Best done in teams
It easy to have great ideas
It can be great fun
You dont have to know much about the process

Hammer & Champy (1994)

 Some Observations- Downside (-)
39

People try to fix a process instead of changing it

Not focusing on the business process
Ignoring everything except process redesign
Neglecting values and beliefs
Settling for a minor result
Quitting too early
Placing prior constraints on the problem definition
Playing politics
Avoiding resistance to change issues
 Some Observations- Downside (-)
40

Allowing existing culture to cloud the process

Trying to make it happen from the bottom up
Poor facilitation
Lack of resources
Lack of appropriate focus
Too many projects at once
Trying to perform rush job
Failure to understand basis of BPR
Concentrating exclusively on design
 Other Problems with BPR Implementation
41

Gap between vision and action

Little management commitment esp. at tactical and
operational levels
Narrow focus on cost savings; often associated with
downsizing
Requires paradigm shift in thinking, people poorly
educated at this.
 ROLE OF IS/IT

Lecture 4
 IS/ITs Role
43

IS/IT plays many roles in BPR:

Facilitator

Communicator

Skills/tools provision
Provides cross functional perspectives
Provide technology t accomplish the vision
 Conclusion
44

BPR is not an IS/IT issue alone

Not a quick and simple miracle cure
Requires commitment from senior management
Requires for looking forward and must not be last
resort