Business Process Re-Engineering

Prof. R.S.Mathur

Monday, May 28, 2012

Prof R S Mathur

Agenda
1. 2. 3. 4. 5. 6. 7. What is BPR? Why BPR? Principles & Methodologies of BPR Issues & Challenges in BPR Critical Success/ Failure Factors in BPR An example of BPR Conclusion

Monday, May 28, 2012

Prof R S Mathur

Michael Hammer and James Champy

Monday, May 28, 2012

Prof R S Mathur

INTRODUCTION
A management tool popularised by Michael Hammer and James Champy. Business process re-engineering (BPR) is being attempted by many firms that are: either facing extinction because of their inability to face competition in the changed world, or by highly successful companies looking for high gains from the successful redesign of their processes to remain highly competitive. BPR is a high risk, expensive , time consuming activity, with no guarantee of success, and yet many businesses claim to be re-engineering their processes

What is Business Process Re engineering (BPR)?

Also called Business Process Redesign, Reinventing

What is BPR?
Business Process Re-engineering or BPR is the analysis and redesign of workflow and processes within and between Organizations
- Michael Hammer & James Champy, 1993

WHAT IS BPR? (Continued)

A radical change approach that integrates physical and technical solutions with organization structure, management infrastructure and organization cultural change solutions.

CHARACTERISTICS OF BPR
Radical redesign of business processes Deployment of information technology as an enabler Major disruption to the organization during the process of reengineering Attempts at achieving organization wide improvements in performance

Defining Business Process Reengineering

Reengineering 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 & Champy, 1993, page 13)
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Key Words
Fundamental

Why do we do what we do? Ignore what is and concentrate on what should be.
Business reinvention vs. business improvement

Radical

Key Words
Dramatic

Reengineering should be brought in when a need exits for heavy blasting.

Companies in deep trouble. Companies that see trouble coming. Companies that are in peak condition.

Business Process

a collection of activities that takes one or more kinds of inputs and creates an output that is of value to a customer.
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Key Words
Cost, quality, service and speed:
are strategic weapons for fighting and winning competition .

Monday, May 28, 2012

Prof R S Mathur

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BPR seeks dramatic improvements in:

Cost

Quality

Service

Speed

Customer Delight
http://www.open-source-erp-site.com

Why Reengineer
The 3 Cs
Customers Competition Change

Nothing is Constant or Predictable Change is the only constant

How Did We Get There

Processes and organisations designed in the 19th century could run businesses in the 20th century.

but we need entirely different PROCESSES & ORGANIZATIONS for Governance in the 21st Century

Problem restated
All processes are simple & efficient when originally designed
User-friendly Deploying contemporary tools & techniques

Processes become complex & inefficient with passage of time

with addition of sub-processes to handle exceptions We need to with changes in environment and Reinvent with increase in customer expectationsthe processes with increase in volumes

Why Reengineer?
Customers
-Demanding -Sophistication -Changing Need -well informed

Customer Expects US to
know everything make the right decisions do it right now do it with less resources make no mistakes be fully informed

Why Reengineer?
Competition
Local Global

Change
Technology Customer Preferences

Business Process Reengineering

WHY ?
Integrate people, technology, & organizational culture To Respond to rapidly changing technical & business environment and customers needs to achieve Big performance gains

Why Organizations Dont Reengineer?

Complacency
Political Resistance New Developments Fear of Unknown and Failure

BPR Examples
Ford: Accounts Payable Mutual Benefit Life: New Life Insurance Policy Application Capital Holding Co.: Customer Service Process Taco Bell: Company-wide BPR Others

Ford Accounts Payable Process*

Purchasing Purchase order Vendor

Receiving Copy of purchase order

Goods

Accounts Payable

Receiving document

Invoice

PO = Receiving Doc. = Invoice

Payment
*Source: Adapted from Hammer and Champy, 1993

Trigger for Fords AP Reengineering

Mazda only uses 1/5 personnel to do the same AP. (Ford: 500; Mazda: 5) When goods arrive at the loading dock at Mazda:
Use bar-code reader is used to read delivery data. Inventory data are updated. Production schedules may be rescheduled if necessary. Send electronic payment to the supplier.

Before

Ford Accounts Payable

More than 500 accounts payable clerks matched purchase order, receiving documents, and invoices and then issued payment. It was slow and cumbersome. Mismatches were common.

After
Reengineer procurement instead of AP process. The new process cuts head count in AP by 75%. Invoices are eliminated. Matching is computerized. Accuracy is improved.

Purchasing

Ford Procurement Process

Purchase order Vendor Receiving

Goods

Purchase order Goods received

Data base

Accounts Payable

Payment

New Life Insurance Policy Application Process at Mutual Benefits Life Before Reengineering*
Department A Step 1 Department A Step 2

....

Issuance Application

Mutual Benefits Life Before Reengineering*

Issuance Policy

Department E Step 19

30 steps, 5 departments, 19 persons Issuance application processing cycle time: 24 hours minimum; average 22 days only 17 minutes in actually processing the application
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.

The New Life Insurance Policy Application Process Handled by Case Managers

Mainframe

Underwriter

Physician

Case Manager

LAN Server

PC Workstation
application processing cycle time: 4 hours minimum; 2-5 days average Application handling capacity double Cut 100 field office positions

Capital Holding Co. - Direct Response Group*

A direct marketer of insurance-life, health, property, and casualty-via television, telephone, and direct mail.

In 1988, DRG president Norm Phelps and other senior executives decided that for our company, the days of mass marketing were over.
Need to strengthen DRG's relationships with existing customers and target our marketing to those potential customers whose profiles matched specific company strategies. A new vision for DRG: The company needed to be exactly what most people didn't expect it to be an insurance company that cares about its customers and wants to give them the best possible value for their premium dollar.
*Source: Adapted from Capital Holding Corporation-Reengineering the Direct Response Group, Harvard Business School case 192-001, 1992.

Caring, Listening, Satisfying... one by one Capital Holding Co.: Vision

Each of us is devoted to satisfying the financial concerns of every member of our customer family by: Deeply caring about and understanding each members unique financial concerns. Providing value through products and services that meet each members financial concerns. Responding with the clear information, personal attention and respect to which each member is entitled. Nurturing an enduring relationship that earns each members loyalty and recommendation.

Reengineering & TQM (Continuous Improvement)--Similarities

Reengineering Similarities Basis of analysis Process Performance measurement Rigorous Organizational change Significant Behavioral change Significant Time investment Substantial Process Rigorous Significant Significant Substantial

Continuous Improvement

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Continuous Process Improvement and redesign Process

Cont.Improvement Increment 30-50% Innovation/Reengineering Radical 10x-100x

Magnitude
Improvement Sought Starting base Top management commitment Role of IT

Existing Process Relatively low

Blank skeet High

Low

High

Risk

Low

High

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BPR Principles
Organize around outcomes, not tasks. Have those who use the output of the process perform the process. Subsume information-processing work into the real work that produces the information. Treat geographically dispersed resources as though they were centralized. Link parallel activities instead of integrating their results. Put decision points where the work is performed and build controls into the process. Capture information once and at the source.
Source: Michael Hammer, Reengineering Work: Dont Automate, Obliterate, Harvard Business Review, July-August, 1990, pp. 104-112.

Positive Preconditions for Reengineering

Senior management commitment and sponsorship Realistic expectations Empowered and collaborative workers Strategic context of growth and expansion Shared vision Sound management process Appropriate people participating full-time Sufficient budget

Source: Bashein, B. J., Markus, M. L., Riley, P., "Preconditions for BPR Success," Information Systems Management, Spring 1994, Vol. 11, No. 2, pp. 7-13.

Business Process Reengineering Life Cycle

Define corporate visions and business goals Identify business processes to be reengineered Analyze and measure an existing process

Visioning Identifying Analyzing

BPR-LC

Identify enabling IT & generate alternative process redesigns Evaluate and select a process redesign

Redesigning Evaluating Implementing

Implement the reengineered process Continuous improvement of the process

Improving

Manage change and stakeholder interests

Phase 1: Visioning
Define corporate vision and business goals Apply to enterprise-wide reengineering effort. Develop overview of current and future business strategies, organizational structure, and business processes. Develop organizational commitment to reengineering. Develop and communicate a business case for action. Create a new corporate vision. Set stretched goals. Prioritize objectives. Assess implementation capabilities and barriers.

Phase 2: Identifying
Identify business processes to be reengineered

Construct high-level process map Develop a process hierarchy Build enterprise-wide data models (optional) Evaluate the processes Select processes to be reengineered Prioritize and schedule processes to be reengineered

TI Semiconductor Business Process Map

Customer Communication Market Customers

Concept
Development Manufacturing

Strategy Development

Product Development

Customer Design & Support

Order Fulfillment

Manufacturing Capability Development

Source: Adapted from Hammer and Champy, 1993, p. 119.

Criteria for Selecting Processes

Broken Bottleneck Cross-functional or cross-organizational units Core processes that have high impacts Front-line and customer serving - the moment of the truth Value-adding New processes and services Feasible

Phase 3: Analyzing
Analyze and Measure an Existing Process
Conduct preliminary scoping. Develop a high-level AS-IS baseline process model (work flow model). Avoid analysis paralysis by conducting preliminary analysis at fairly high level. Surface purpose and assumptions of the process (Ask WHY?). Perform activity-based costing: costs can be assigned based on actual activities and productivity. Reveal hidden time and nonvalue-added activities. Measure cycle-time and quality. Measure profitability in terms of task, product, and customer type.

Phase 4: Redesigning
Identify enabling IT & generate alternative process redesigns
Business Vision & Strategy

Business-pulled
How can business strategies be changed business processes be transformed using IT?

How can IT support business strategies and business processes?

Business Reengineering
Technology-driven

Information Technology

Three Steps in Redesigning Processes

Simplification: Task: Change business rules or procedures of a specific task Workflow: A process chain is simplified by elimination of nonvalue-adding activities Integration: Redesign tasks into a logical and effective process. A reengineered process often crosses functional boundaries. It offers opportunity for eradicating interdepartmental redundancies and restructuring the organization. Automation: Usually accompanies nontechnical redesign of organization structures and procedures. All reengineering costs and benefits can be projected into a model. Reengineering often pays for itself - sources of funding for technology investments are frequently cost savings generated by organizational change.

Phase 5: Evaluating
Evaluate and select a process redesign

Develop criteria of evaluating alternatives of redesigned processes: Cost, Benefit, and Risk. Evaluate design alternatives Select and recommend a reengineered process

Phase 6: Implementing
Implement the reengineered process

Plan IT implementation Plan organization implementation Conduct a pilot project Develop a prototype system
Technical Design Social Design

Evaluate results from the pilot project and the prototype Prepare large-scale roll out

Phase 7: Improving
Improve the process continuously

Develop performance measurement and reward systems in the reengineered process Monitor process performance constantly Improve the process on a continuous basis

The Euphoria
Dont automate, obliterate Sweep away job definitions Break loose from outmoded thinking Conventional change is like rearranging the deck chairs on the Titanic The solution to bloated, clumsy, rigid, sluggish, non-competitive, uncreative, disdainful of their customers needs, and losing money (Hammer and Champy)

Business Process Reengineering (BPR)

Making processes
effective - producing the desired resulted efficient - minimising the resources used adaptable - to changing customer & business needs.

BPR Philosophy
Radical, cross functional, dramatic

Focus on & organise around outcomes Provide direct access to customers (internal & external) Harness technology Control through policies, practices and feedback Enable independent and simultaneous work Build in feedback channels

Hammer and Champy, Re-engineering the Corporation, Harper Collins, 1993

Features of BPR 1
Re-engineering determines
what an organisation should do how it should do it what the concerns should be ...

NOT what they currently are Radical change NOT gradual change

BPR covers:
Technology Jobs Structure Values Beliefs Management Measurement systems in addition to process redesign

Features of BPR 2
IT is as an important enabler of change - NOT a key driver of change

Process Innovation (Davenport 1993)

Develop the business vision and process objectives Identify the processes to be redesigned Understand and measure the existing process Identify the IT levers Design and build a prototype of the new process

Different Views on BPR

Focus on Customers Needs

BPR Projects

Focus on Internal Capacities

Focus on IT Systems

Involvement Ownership Motivation Prerequisites

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Streamlining the Business Cycle

Operating Cycle The activities through which an organization designs, produces, markets, delivers, and supports its product and services Management Cycle The activities through which an organization manages the design, produces, markets, delivers, and supports its product and services

Operational

Process

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Flattening the Organizational Structure

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BPR
Business Process Redesign Also known as Reengineering or Process Innovation is offered as an enabler of organizational transformation.
Organization embrace a BPR approach when they believe that a radical improvement can be achieved by marrying business process, organization structure, and IT change. Examples: Taco have embraced BPR to enable the redefinition of their business
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BPR

BPR Objectives:
To dramatically reduce cost Reduce time To dramatically improve customer services or to improve employee quality of life To reinvent the basic rules of the business e.g.

the airline industry taco bell from Mexican food to fast food to feeding people anywhere, anyhow.
Customer satisfaction Organizational learning
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BPR
Change:
To transform an organization, a deep change must occur in the key behavior levels of the organization: jobs, skills, structure, shared values, measurement systems and information technology.

Role of IT
BPR is commonly facilitated by IT e.g. Organizational efficiency Effectiveness Transformation
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BPR

Efficiency
Applications in the efficiency category allow users to work faster and often at measurable lower cost

Mere automation of manual tasks, resulting in efficiency gains (least deep)

Effectiveness
Applications in the effectiveness category allow users to work better and often to produce higher quality work.

Requires changes not only in technology, but in skills, job roles, and work flow (deeper).
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BPR

Transformation
Applications in the the transformation category change the basic ways that people and departments work and may even change the very nature of the business enterprise itself. A major change in the organization, including structure, culture, and compensation schemes (deepest).

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BPR

Process
A process is set of logically related tasks performed to achieve a defined business outcome

A collection of activities that, taken together, create value for customer e.g. new product for customer. This tasks are inter-related tasks

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BPR
How can Companies Identify their Business Processes. Examples
Manufacturing: As the procurement-to-shipment process
Product development as the concept-to-prototype process

Sales as the prospect-to-order process

Order fulfillment as the the order-to-payment process

Service as the inquiry-to-resolution process

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BPR

How can Companies Identify their Business Processes.

Dysfunction: Which process are in the deepest trouble Important: Which process have the greatest impact on customer

Flexibility: which process are the most susceptible to redesign.

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BPR

Embarking on Re-engineering
Persuade people to embrace or at least not to fight -the prospect of major change by developing the clearest message on: 1: A case for action- Here is where we are as a company and this is why we cant stay here show your balance sheet show competitors balance sheet 2: A vision statement - This is what we as a company need to become
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BPR
Simple Rules
Start with a clean sheet of paper.

With my current experience what can I do today

If I were to re-create this company today, given what I know and current technology, what would it look like. How will I be focusing, organizing and managing the company? Transition from a vertical functional departments to one that is horizontal, CUSTOMER focused and processoriented?
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BPR

Simple Rules
Listen to customer Enhance those things that bring value to the customer or eliminate those that dont Be ambitious, focus your commitment to radical change on the process

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Anatomy of a Traditional (Non-Integrated) Architecture

Interface Order Entry

Interface

Interface Billing

Interface A/R Finance

Inventory Mgmt.

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The Value Chain

Support activities

Primary activities
Inbound logistics Operations Outbound logistics Marketing and Sales Service Corporate infrastructure Human resources management Technology Development Procurement Materials receiving, storing, and distribution to manufacturing premises Transforming inputs into finished products. Storing and distributing products Promotions and sales force Service to maintain or enhance product value Support of entire value chain, e.g. general management planning, financing, accounting, legal services, government affairs, and QM Recruiting, hiring, training, and development Improving product and manufacturing process 68 Purchasing input

Value Chain Integration

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ANATOMY OF: AN ENTERPRISE SYSTEM

Managers & Stakeholders

Ext Int C u s t o m e r s

Sales & delivery App.

Int Ext
Reporting App . Financial App

Sales force & customer service reps.

Central database

Mfg. App

Back office admin. & workers

S u p p l i e r s

Service App.

HRM App

Inventory & supply App

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Impacts
Company
Increase product by an order of magnitude Examine process Vision Increase Profits

Customers
Benefit from better product Needs are met Tendency to return Loyalty

Employees
Teams Less

Workers More Work

Empowered Layoffs

Spectrum of Change

Automation
Rationalization of procedures Reengineering

Paradigm shift

Automation
refers to computerizing processes to speed up the existing tasks. improves efficiency and effectiveness.

Rationalization of Procedures
refers to streamlining of standard operating procedures, eliminating obvious bottlenecks, so that automation makes operating procedures more efficient. improves efficiency and effectiveness.

Business Process Reengineering

refers to radical redesign of business processes. Aims at eliminating repetitive, paper-intensive, bureaucratic tasks reducing costs significantly improving product/service quality.

Paradigm Shift
refers to a more radical form of change where the nature of business and the nature of the organization is questioned. improves strategic standing of the organization.

 To reengineer a company is to take a journey from the familiar into the unknown. The journey has to begin somewhere and with someone. Where and with whom?
P. 101

Keys
Leaders Staff Empowerment Broader Scope
Knowledge / Skills

Tasks to Process
Redesign of Systems

Information Technology Community

The 3 Rs
Redesign
Cross-function approach

Retool
Information Tools

Reorchestrate
Organization changes

What is a Business Process (BP)?

BP is a collection of activities that takes one or more kinds of input and creates an output that is of value to customers
Examples of BP, in the context of eGovernment, are:
Issuance of a Driving License or Passport Registration of a Company Audit of a Tax Return

What is a Process?
A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action.

Reengineering is not .
Automation of existing ineffective processes Sophisticated computerization of obsolete processes Playing with organization structures Downsizing doing less with less

BPR is Not?
BPR may sometimes be mistaken for the following five tools:
1. Automation is an automatic, as opposed to human, operation or control of a process, equipment or a system; or the techniques and equipment used to achieve this. Automation is most often applied to computer (or at least electronic) control of a manufacturing process.

2. Downsizing is the reduction of expenditures in order to become financial stable. Those expenditures could include but are not limited to: the total number of employees at a company, retirements, or spin-off companies.

BPR is Not?
3. Outsourcing involves paying another company to provide the services a company might otherwise have employed its own staff to perform. Outsourcing is readily seen in the software development sector.
4. Continuous improvement emphasizes small and measurable refinements to an organization's current processes and systems. Continuous improvements origins were derived from total quality management (TQM) and Six Sigma.

Effectiveness Vs Automation Automation : use technology to automate the AS IS process to make it happen faster often wrongly perceived as eGovernment.

Effectiveness: To improve service and satisfy customer needs, while lowering costs.
There is nothing more useless than to do efficiently that which shouldn't be done at all.
E.g. Shining Brass when the ship is sinking

Automation & BPR

Automation is using technological tools to perform OLD processes, in a NEW way.
Like putting OLD Wine in a NEW bottle.

BPR is about Innovation

Making NEW Wine and putting it in a NEW bottle

Process Innovation vs. Incremental Improvement

Process Innov.
Change Effects Involvement Investment Orientation Focus Abrupt, volatile Immediate Few champions

Incr. Improv.
Gradual, constant Long-term From few to everybody Low initially, high to sustain People Processes

High initially, less later Technology Profits

BPR & Quality Initiatives

Quality Initiatives attempt continuous improvement
Six Sigma TQM (Total Quality Management)

BPR attempts a radical redesign or transformation

Big Bang approach Quantum Leap

Reengineering & Continuous Improvement--Differences

Reengineering
Differences Level of change Starting point Participation Typical scope Risk Primary enabler Type of change Radical Clean slate Top-down Broad, cross-functional High Information technology Cultural and structural

Continuous Improvement
Incremental Existing process Bottom-up Narrow, within functions Moderate Statistical control Cultural

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GOAL OF REENGINEERING
Reengineering is typically chartered in response to a breakthrough goal for rapid, dramatic improvement in process performance.

Continuous improvement refines the breakthroug Breakthrough Improvement Continuous improvement activities peak; time to reengineer process

BPR Project
An organisational change project with three components : business strategy, business process and information systems BPR must be linked with business strategy and information system
Business Strategy Business Process Information System

Steps in process analysis

1. target the process area for change
Business process Task process

2. form a team. Select project leader 3. decide on the objectives of the analysis 4. define customers & suppliers 5. analyse (identify/ chart) the process elements & steps in the process flow 6. describe the existing transformation process

Participants in BPR Project

Process Owners Process Participants BPR Project Sponsors

Core BPR Project Team

BPR facilitators & consultants

IT & e-commerce specialists

Human resources specialist

Identify process elements

raw materials product (output) design job (sequence, simplification, discretion etc) processing steps used management control information equipment or tools people actors (direct/indirect staff, customers, supply relationships (internal & external)

PHASE 1: Organising for improvement Objective: build leadership, understanding

& commitment
Activities establish Executive Improvement Team (EIT) Appoint BPR champion provide executive training develop an improvement model

PHASE 2: Understanding & redesign the process

Objective: understand all dimensions of current business process

Activities define process mission, scope and boundaries provide team training develop a process overview define customer/business measurements & expectations for the process identify improvement opportunities errors and re-work high cost poor quality long time delays/backlog Record/chart the process collect cost, time & value data perform walkthroughs on new process resolve the differences (existing/new, ideal/realistic)

Process definition and charting

Analyse (identify and chart) the process elements and steps in the process flow

PHASE 3: Implementation
Objective:

secure efficiency, effectiveness and adaptability of the business process on implementation

Activities eliminate bureaucracy and no-value-added activities simplify the process and reduce process time standardise and automate up-grade equipment error proof the process and document it select and train the employees Plan/schedule the changes

PHASE 4: Measurements and Objective: controls

develop a process control system for ongoing improvement

Activities develop in-house measurements and targets establish a feedback system audit the process periodically establish a poor-quality cost system

PHASE 5: Continuous Objective: improvement

to implement a continuous improvement process

Activities Qualify/certificate the process perform periodic qualification reviews define and eliminate process problems evaluate the change impact on the business and on customers

Process Chart Symbols

Operation (a task or work activity) Inspection (an inspection of the product for
quantity or quality)

Transportation (a movement of material from

one point to another)

Storage (an inventory or storage of materials

awaiting the next operation)

Delay (a delay in the sequence of operations)

Method Study Questions for Process Analysis

What does the customer need?, operations are necessary? Can some
operations be eliminated, combined, or simplified?.

Who is performing the job? Can the operation be redesigned to use less
skill or less labor? Can operations be combined to enrich jobs? .

Where is each operation conducted? Can layout be improved? . When is each operation performed? Is there excessive delay or storage?
Are some operations creating bottlenecks? ..

How is the operation done? Can better methods, procedures, or equipment

be used? .

BPR and Bench-marking

The BPR team may benchmark another company's process to determine

process objectives innovative practices tried and tested methods

Benchmarking partners need not be from the same industry.

BPR Problems
Starting with a clean sheet Preoccupation & commitment to existing business processes Thinking the problem thru. in the light of new methods & technologies Choice of the target process - too big, too small The power and resourcing of the cross functional team BPR in isolation from strategic and ops plans will not work. Top commitment essential. Short-termism of decision makers Isolated efforts will lack direction and will get lost. John Gall, Done at times of stress and anxiety Systemantics Keeping the BPR team on target If it works, don't change it! BPR team as action researchers Costs of the change Vaccination against change + another quick fix Finding the time and energy We need to keep the old, existing core systems running

Is BPR different from CQI?

Continuous improvement Process focus-existing Incremental gradual change BPR Process focus-new Radical change

Low investment
People-practices focus

High investment
People & technology focus

Improvement on existing
Work-unit driven

Scrap and rebuild

Champion driven

IT in BPR
A corporation that does not understand the inductive power of Information Technology cannot succeed in BPR (Hammer and Champy, 1993)

Symptoms of Poor Governance

Air of Mystification about procedures Long Queues at delivery points Multiple Visits to Government Offices
Pillar-to-Post

Outcome is in Suspense
OK or NOT OK !

Gatekeepers at every turn Poor Quality of Service Service is a Mercy - not a Right Too many Intermediaries, Shortcuts

5 Symptoms of Poor Processes

1. Extensive information exchange, data redundancy and re-keying 2. Huge inventory, buffers and other assets 3. Too many Controls and Checks 4. Rework, Iteration & Duplication of work 5. Complexity, Exceptions & Special cases

Root Causes of Poor Service Delivery

Legislative Intent

Process Problems

Delivery Channel Problems

Delivery Problems

BPR is an important part of the Solution

3 Goals of BPR
1. Customer Friendliness
Meeting customer requirements closely Providing convenience Outcome-based approach Gaining loyalty of customers Image and branding

2. Effectiveness

3. Efficiency
Cost Time Effort

12 Attributes of Customer-friendly Services

1. 2. 3. 4. 5. Simple Need-based Certainty Speed Convenience
Place Time Channel

6. 7. 8. 9.

Equitable Responsive Customer-centric Quality of Service 10.Cost-effective 11.Accessible 12.Assisted

Principles & Methodologies of BPR

7 Basic Principles of BPR

1. Organize around outcomes, not tasks. 2. Identify all the processes in an organization and prioritize them in order of redesign urgency. 3. Integrate information processing work into the real work that produces the information. 4. Treat geographically dispersed resources as though they were centralized. 5. Link parallel activities in the workflow instead of just integrating their results. 6. Put the decision point where the work is performed, and build control into the process. 7. Capture information once and at the source.

The essence of BPR is Transformation

A 4-Pronged Approach to Transformation

Transforming Process
Eliminate Simplify Automate Base on Trust Integrate Join Up Legislate

Transforming Channels
Multiple Channels 24x7 Access Common Service Centres Mobile Self-Service Licensed Intermediaries Transforming People Training Change Management CRM skills Consultation Empowerment Education Awareness

Transformation

Using Technology
Enterprise Architecture Standards Unified Databases Unified Networks SOA Portals

4 Steps in BPR
1. Understanding the Current Processes

AS IS study mapping current processes Analysis of Root Causes for Inefficiencies Identifications of Problems, Issues

2. Inventing a NEW Process (TO BE Process)

Survey of Best Practices Consultation of Stakeholders

3. Constructing the NEW Process

Bringing in new Laws and Rules Adopting Disruptive Technologies

4. Selling the NEW way of functioning

Change Management Communication Strategy

Leavitt Diamond (adapted)

IT Use

A conceptual framework for evaluating & balancing IT-enabled change

Business Processes

Organisationl Form

Requisite People Skills

Change one variable & adjust others e.g. new IT & business processes need to be changed. New skills & organisational form to match the IT?

BPR
How can Companies Identify their Business Processes. Examples
Manufacturing: As the procurement-to-shipment process
Product development as the concept-to-prototype process

Sales as the prospect-to-order process

Order fulfillment as the the order-to-payment process

Service as the inquiry-to-resolution process

BPR Methodology
Core Processes Without Issues

Continuous Improvement

Phase 0

Strategy

Process Reengineering - Breakthrough Improve Core Processes ment Phase 2 Phase 3 With Issues Phase1 Process Planning Implementa
Project Def. Analysis & design tion

Phase 4 Process Management

Improved Process

Improvement Plan

Goals, Roles Boundaries

Implementation Plan

Implementing a BPR Strategy

The Cs related to
The 3Cs of organization Reengineering: - Customers

Organization Re-engineering Projects

The 4Cs of effective teams: - Commitment

- Competition
- Change

- Cooperation - Communication
- Contribution

Key Steps
Select The Process & Appoint Process Team
Understand The Current Process Develop & Communicate Vision Of Improved Process Identify Action Plan Execute Plan

1.

Select the Process & Appoint Process Team

Two Crucial Tasks

1. Select The Process to be Reengineered 2. Identify the Process Team, orient and train the team

-Appoint the Process Team to Lead the Reengineering Initiative

Select the Process

Review Business Strategy and Customer Requirements
Select Core Processes

Understand Customer Needs

Dont Assume Anything

Select the Process

Select Correct Path for Change
Remember Assumptions can Hide Failures Competition and Choice to Go Elsewhere Ask - Questionnaires, Meetings, Focus Groups

Appoint the Process Team

Appoint BPR Champion
Identify Process Owners Establish Executive Improvement Team Provide Training to Executive Team

Core Skills Required

Capacity to view the organization as a whole Ability to focus on end-customers Ability to challenge fundamental assumptions Courage to deliver and venture into unknown areas Ability to assume individual and collective responsibility

Evolution of BPR
Degree of enabling IT
Webenabled ebusiness

Knowledge Management

Time-based competition 1st-wave BPR TQM

2nd-wave BPR

Richness of business transformation

Challenges, Critical Success Factors & Critical Failure Factors in BPR

Challenges in a BPR Exercise

1. Identifying Customer Needs & Performance Problems in the current Processes 2. Reassessing the Strategic Goals of the Organization 3. Defining the opportunities for Re-engineering 4. Managing the BPR initiative 5. Controlling Risks 6. Maximizing the Benefits 7. Managing Organizational Changes 8. Implementing the re-engineered Processes

BPR
Embarking on Re-engineering
Persuade people to embrace or at least not to fight -the prospect of major change by developing the clearest message on: 1: A case for action- Here is where we are as a company and this is why we cant stay here show your balance sheet show competitors balance sheet 2: A vision statement - This is what we as a company need to become

BPR
Simple Rules
Start with a clean sheet of paper.

With my current experience what can I do today

If I were to re-create this company today, given what I know and current technology, what would it look like. How will I be focusing, organizing and managing the company? Transition from a vertical functional departments to one that is horizontal, CUSTOMER focused and processoriented?

BPR
Simple Rules
Listen to customer Enhance those things that bring value to the customer or eliminate those that dont Be ambitious, focus your commitment to radical change on the process

BPR
Process Improvement and redesign Process
Magnitude
Improvement Sought Starting base Top management commitment Role of IT Improvement Increment 30-50% Innovation/Reengineering Radical 10x-100x

Existing Process Relatively low

Blank skeet High

Low

High

Risk

Low

High

Magnitude of Change

Source: Adapted From O'Hara, Watson and Kavan

The Seven Phases of Process Regeneration

1. Strategy Linkage
kicks off project secure management commitment discover process opportunities identify IT enabling opportunities align with corporate strategy and select BPR project

2. Change Planning
inform stakeholders and organize re-generation team prepare project schedule and set performance goals

3. Process Pathology
document existing process uncover process pathologies

The Seven Phases of Process Regeneration

4. Social Re-Design -- 5. Technical ReDesign (reiterative until satisfied)
explore alternative designs design new process design HR architecture (x-func/multi-discipline) select IT platform prototype holistic process

The Seven Phases of Process Re-generation

6. Process Re-Generation implement HR changes develop & deploy IT support -- tug of war game -forces towards catastrophe and towards the ideal re-organizing:
teams jobs training

top management communication and persuasion critical here

7. Continuous Improvement measure performance link to quality improvement

9 Changes occasioned by BPR

1. 2. 3. 4. Work Units change
from functional departments to process teams

Jobs change

from simple tasks to multi-dimensional work

from controlled to empowered from training to education from activity to results from performance to ability

Peoples roles change Job preparation changes

5.
6. 7. 8. 9.

Measures of Performance & compensation change

Criteria for career advancement change Values change

from protective to productive

from hierarchical to flat from scorekeepers to leaders

Organizational Structures change Executives change

Critical Success Factors in BPR

1. 2. 3. 4. 5. 6. 7. 8. Clear Vision for Transformation Top management commitment Identification of Core Processes for BPR Ambitious BPR team Knowledge of Reengineering techniques Engaging external consultants Tolerance of genuine failures" Change Management

Critical Failure Factors in BPR

1. Trying to Fix a process instead of Changing it 2. Lack of focus on Business-critical Processes 3. Lack of holistic approach 4. Willingness to settle for minor results 5. Quitting too early 6. Limiting the scope of BPR by existing constraints 7. Dominance of existing corporate culture 8. Adopting bottom-up approach 9. Poor leadership 10. Trying to avoid making anyone unhappy 11. Dragging the BPR exercise too long.

FOUR STAGES OF CHANGE

Shock
Anger Denial Acceptance

Conclusion
BPR is about Radical Redesign of business processes BPR brings Efficiency, Effectiveness & Customer-friendliness BPR needs adoption of a structured methodology Top management commitment & Change Management are critical to success

8 Rules of Disruptive Technologies (1/2)

Information can appear simultaneously at all the places it is needed

Information can appear at only one place at a time

Shared Databases

Only experts can perform Complex work We should choose between Centralization & Decentralization Managers make ALL the decisions

Expert Systems

A generalist can do the work of an expert We can get the benefits of Centralization & Decentralization simultaneously Decision-making is a part of everyones job

Networks

Decision Support Systems

8 Rules of Disruptive Technologies (2/2)

Field personnel need a fixed place for communications Personal contact with customer Is the best contact Wireless, Laptops & PDAs Field personnel can send and receive Information anytime, anywhere Virtual contact with Customer is more conveneint

Interactive Video

You have to find out where things are..

RFID

Things tell you where they are !

Plans get revised periodically

High Performance Computing

Plans get revised dynamically