Business Process Reengineering

Contents
Introduction Origin of BPR Meaning and Definition Important questions before initiating BPR Why reengineering Objectives How to startup with reengineering A five-step approach to Re-engineering Role of IT Success factors in BPR Benefits of reengineering Critics of BPR Success stories Conclusion

FNF India 2010 Confidential

Introduction
Till the beginning of 1990s Indian businesses were operating in fairly protected market and limited global competition. Only few MNCs mostly from USA and Europe, were doing business in India. The customer had limited choices and the sellers used to dominate the market. There was a little concern for customers need, product/service quality and prompt delivery because the manufacturers/service providers were quite sure of finding customers queuing up for their product irrespective of quality, timelines or price.
Ex. Telecommunication operators, Automobile companies etc

As a result, very few Indian business organizations were world class.

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Origin of BPR : Michael Hammer of USA who coined the word re-engineering,
Michael Hammer and Jim Champy on BPR

- BPR means reinventing or starting from the Scratches

- The Heart of the BPR is discontinuous thinking

FNF India 2010 Confidential

Meaning and definition of BPR

Business Process Reengineering is defined as the fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance. Performance measured in terms of cost, quality, accuracy, service, speed etc. Business process means a group of logically related activities that use firms resources to provide an output that is valuable to customer in support of the organizations objectives The word fundamental attempts to examine why the particular task/job is being done and why it is being done in particular way.
Objective: 1. To ascertain the relevance of job. 2. To explore possibility of doing it in different and better way.

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Meaning and definition of BPR continuation

The word radical is derived from Latin word radix, which means root. Which tells to get in to the root of business processes. It is not concerned with the marginal or incremental improvements as envisaged in Kaizen. The word design has a strong engineering connotation. In BPR the word design has got to do with either work design or product design.
No matter how well the product/service is designed, if the activities involved in producing are not properly designed.

The word dramatic relates to radical improvements. It relates specially for those business processes which are totally inadequate & doing just marginal improvements just for survival. These need redesign to get dramatic change.

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Other Definitions
BPR :-is a systematic approach to radically improving the core business processes and key supporting processes. BPR is radical re-design of a business as whole or individual work process in order to maximize business effectiveness

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Important questions before initiating BPR

1)NATURE OF BUSINESS:- What business are we in ?
- How fast is our business changing and why? - What are our strengths and weakness?

2)THE CRITICAL SUCCESS FACTORS:- What are the key success factors customers are looking for?
- What are our customers asking us and other suppliers? - Will they be asking for it in future?

3)THE PROCESSES TO BE IMPROVED :-Where can the competition hurt us?

-Will only continuous process improvement work, without redesigning the technology? -Which process needs re-engineering ?

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Why Re-engineering?
It focuses on break through improvement to dramatically improve the quality and speed of work and to reduce its cost by fundamentally changing the processes by which work gets done. Competition Universal need & Environmental Demands Technological Advancement Customers are demanding for better and better products and services Sinking Profitability and Market Share

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Objectives

Cost reduction

Increase quality
Leverage Speed

Flexibility
Independence Faster Growth

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How to start up with Reengineering?

Make the Customer the starting point for Change Design work processes in light of Organizational Goals Restructure to support front line performance

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A five-step approach to Re-engineering

Develop the business vision and process objectives - Cost reduction
- Time reduction - Quality improvement

Understand and measure the existing processes - avoid the repeating of old mistakes
- provide a baseline for future improvements

Identify the business processes to be redesigned Design and build a prototype of the new process Identify change levers (Ex. IT)

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Process

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Role of Information technology

Shared & structured databases, making information easily available. Expert systems, allowing generalists to perform specialist tasks Decision-support tools, allowing decision-making to be a part of everybody's job

Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found
High performance computing, allowing on-the-fly planning and envisioning

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Success Factors in Reengineering

1. 2. 3. 4. 5. 6. 7. Setting an aggressive reengineering performance target. Review of customer needs, economic leverages & market targets. Top management commitment. Precise vision. Picking up of right process for reengineering. Empowering people & getting them to take initiative. Developing belongingness among the people in the organization.

FNF India 2010 Confidential

Benefits of Reengineering
Improvement in entire organization as a whole, Increased Profits By Reengineering, an Organization can achieve radical improvement in performance like Cost,Quality,Cycle time

It boosts Competitiveness through leaner and more productive processes

Reengineering encourages revolutionary thinking in an Organization Reengineering encourages abandoning of Conventional approaches in favor of problem solving

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Benefits of Reengineering(Contd)
Reengineering transform a rule driven, job centered Organization to Customer focused Organization

Reengineering generally results in radically new Organization designs that helps Companies to respond well to Competitive pressure
Reengineering helps to radically change the Corporate Culture Reengineering encourages workers at all level to make their suggestion for improvement Reengineering helps to create more Challenging and more rewarding jobs for employees

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Critics of the BPR approach

Label BPR was used for major workforce reductions Lack of management support for the initiative and thus poor acceptance in the organization. Exaggerated expectations regarding the potential benefits from a BPR initiative and consequently failure to achieve the expected results. Implementation of generic so-called best-practice processes that do not fit specific company needs.

Underestimation of the resistance to change within the organization.

Over trust in technology solutions.

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Success stories

General Motors Southwest Airlines Dell Ford Procter and Gamble American Airlines

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CONCLUSION
In todays competitive environment three forces viz.. Customer, competition & change play a significant role. The traditional organization can not meet the present challenges. So BPR plays an important role to deliver goods & services at competitive prize, quality & on time delivery. The benefits of re-engineering are very significant. The industrial engineers are the agents of the change & have several assets that make them good candidate for BPR team membership.

FNF India 2010 Confidential

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