Topic 6

Business Process Reengineering-BRP

Business Process Reengineering

Business Process Reengineering refers to a situation in which an organization fundamentally and radically redesigns its business process to achieve dramatic improvement.
Initially, attention was given to a complete restructuring of organizations. Later, the concept was changed due to failures of BRP projects and the emergence of Web-based applications. Today, BRP can focus on anything from the complete restructuring of an organization to the redesigning of individual processes. Major objective of BRP = Information Integration

Business Process Reengineering

Business Process Reengineering has taken industry by storm and there has been a burgeoning interest in it in Ireland. Proliferation of articles, papers, conference and books on the subject. Characterized by disagreement/ambiguity concerning its precise nature and confusion regarding its purpose ,techniques and underlying process.

The Enabling Role of IT

Old Rule Intervening Technology New Rule

Information appears in only one place at one time

Only an expert can perform complex work. Business must be either centralized or distributed Only managers make decision.

Shared data bases, client/server architecture, internet, intranets

Expert systems, neural computing. Telecommunication and networks: client/server, intranet Decision support systems, enterprise support systems, expert systems.

Information appear simultaneously whenever needed.

Novices can perform complex work. Business can be both centralized and distributed. Decision making is part of everyones job.

Tools for BRP

Simulation and visual simulation tools Flow diagrams Application development tools Integrated tool kits Work analysis Workflow software Business process design Comprehensive modeling tools Other Tools

BRP Failures
During the 1990 there were just as many cases of BRP failures as there were success stories. A survey conducted by the PROCSI organization indicates that a failure rate of 50% to 80%. Some of the reasons cited for failures are
High risks Inappropriate change management Failure to plan for internal politics High cost of retooling Lack of participation and leadership Inflexible software Lack of motivation

Empowering Using IT
Empowerment is the vesting of decision making or approval authority in employees where, traditionally, such authority was a managerial prerogative Empowerment can be enhanced through IT.
E.g. Empowerment employees are expected to perform better.

In addition to empowering employees, companies are empowering their customers, suppliers, and other business partners.
E.g. Federal Express uses the internet to empower its customers

What Reengineering Isnt

Downsizing Automation Work study Reorganizing Delaying Flattening TQM

Principal Features of BRP

Reduce Complexity Empowering of Staff Clear away previous approaches Add value to core Business processes New value system for customers New information and management system Structural reorganization Fundamental rethinking

Rethinking Business Process

Several jobs combined Workers make decision Process steps performed in logical order Processes have multiple versions Work is performed where it make more sense Checks and controls are reduced Reconciliation is minimized.

Changes through Reengineering

Work units change- from functional departments to process teams
Case teams, virtual teams

Job changes
From simple tasks to multi-dimensional work

Peoples Roles Change

From controlled to empowered

Job preparation changes

From training to education

Focus of performance Measures and compensation shifts

From Activities to results

Changes through Reengineering

Advancement criteria change
From performance to ability

Values change
From protective to productive

Managers change
From supervisors to coaches

Organizational structure change

From hierarchical to flat

Executives change
From scorekeepers to leaders

BRP-Origins and Contexts

Reengineering is not a new discovery, those that assume no one has gone before, are likely to repeat the mistakes of past. It is several products rolled into one, and its components have a long history.
Reorganization OVA-Overhead Value Analysis AVA-Activity Value Analysis STS- Socio Technical Systems CPR- Core Process Redesign

Duration of the Change Programe

Average 12 to 18 months Maximum 24 months

The Reasons for undertaking BRP

Improved product and service quality Improved customer satisfaction Mandate from parent company Redesign information systems Redesign outdated approaches Harnessing skill Cost reduction Declining sales Reduce cycle time

Cycle Time reduction

Cycle time refers to the it takes to complete a process from beginning to end. It helps to contribute to cycle time reduction Time is organized as a major element that provides competitive advantage.

Benefits of Change Program

Increased revenues Improved customer service Reduced delays or backlogs Disposal of excess assets Elimination of unnecessary jobs or staff Reduced staff costs

Difficulties Encountered
Inflexible information systems Over ambitious targets Absence of top management commitments Absence of change methodology Mapping and measuring existing processes Difficulty in designing new processes Working with the organizational control systems while trying to change them Absence of change champion Identify processes to change Resistance by staff and staff anxiety Resistance by managers

Critical Success Factors

Senior Management Commitment Good Project management Use of coaches and commitments Consultation with staff

Benefits Arising from Involvement in BRP

Increased visibility and viability Better understanding of business processes Increased role in performance measurement Improved data collection and analysis

A Six-step guide to BRP

Step-1: identify the processs customer driven objectives-create the visions Step-2: Map and measure the existing processBaseline and benchmarking Step-3: Launch problem solving Teams Step-4: Analyze and modify the existing process. Step-5: Roll out the new process Step-6: Measure and monitor new process.

Who will Reengineer

Executive sponsor Steering committee Operating sponsor/team leader Reengineering team Process owner Scribe Information systems accounting

Identify BRP Opportunity

Ability fragmentation of a Neural Process Inadequate feedback along chains Complexity exceptions and special cases Integrate the process (along grain of production) Use technology as the basis for new process and organization design Link parallel activities instead integrating their results Capture information once and at source Put the decision point and control where the work is performed

Elements of BPR Strategy

Physical technical Systems
Work structure(what, how and when things are done) Technology structure(data , application , communication platforms, and related computer technology) Organization and job structure(reporting and workgroup relationships , accountabilities , job content and skill and knowledge requirements )

Support systems
Reward systems motivation of individual and teams Measurement structure(feedback processes) Management structure (practices and procedure)

Value systems
Organizational culture Political culture Employee attitudes

Succeeding at Reengineering Avoiding the Dangers

Excessively detailed mapping of processes Ignoring second order effects Neglecting peoples values and beliefs Existing corporate cultures and management attitudes Too many reengineering projects Dragging out the efforts

Unlearn the past invent the future

Hammer & Champey

Critical Success Factors for BRP

Top level bravery, commitment, patience and active involvement Clear and consistent strategic focus and long term vision A willingness to rethink all aspects of business operations and create a totally integrated customer focused organization. Involve people at every level, encourage two way communication An emphasis on challenging the mindset to encourage creativity ,innovation, learning and communication at all levels. Recognize the value of carefully chosen and well managed consultants / facilitators for the change process Create a clear and well communicated structure and plan for the change process Involve and reward process owner Build cross-functional teams

Critical Success Factors for BRP

A reengineering project is not likely to succeed if the following preconditions exist.
The wrong sponsor A Do it to Me attitude executive want to hire an external swat team to come in and do the job, painlessly Cost-cutting focus Narrow technical focus Consensus management Unsound financial condition Too many improvement projects under way Fear and lack of optimism Animosity toward and by IS and Human Resource Specialists

Principles of Reengineering
Work systems have a customer focus internal tasks that do not contribute to meeting customer needs will be minimized. Work activities and processes will be performed in parallel Whole jobs with attendant responsibilities and commitments will be created. The role of management is to support those who are dealing directly with customers the front line Individual contributors will be able to play more than one role.

Principles of Reengineering
All management support information will be captured as a by product of doing work and not as an additional set of activities. Virtual functions will be created independent of location. Information will be able to answer customer inquiries at all time. Processors will be designed for flexibility. Where possible, work activities will be broadened to include all tasks that involve meeting a local or enterprise goal.

Principles of Reengineering
Hierarchal bureaucracy will be eliminated. Redundant activities will be searched and destroyed Saved time will be re invested and tasks delegated. Shadow function will be minimized Shadow records will be minimized Controlled access to source information will be provided.

Principles of Reengineering
Information delays will be reduced Coordination of work processes will be automated Backup resources of people and information will be established Any individual will be able to communicate with any other through participation in the corporate network.

Principles of Reengineering
Systems required for high performance work will be available to users. Focused job training and knowledge based systems support will be provided creating a worklearning environment. compensation will be linked to competency and to accomplishment rather than to positions in a hierarchy. the old will not be eliminated until a suitable new alternative has been forged.