Explain BPR? When to take BPR ?

Davenport&Short (1990) define business process as “a set of logically related tasks performed to achieve a
defined business outcome.
Hammer (1990) has defined Business Process Reengineering “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”.
This definition comprises four keywords: fundamental, radical, dramatic and processes.
Keyword 1: Fundamental
Understanding the fundamental operations of business is the first step prior to reengineering. Business people
must ask the most basic questions about their companies and how they operate: “Why do we do what we do?”
and “Why do we do it the way we do?” Asking these basic questions lead people to understand the fundamental
operations and to think why the old rules and assumptions exist. Often, these rules and assumptions are
inappropriate and obsolete.
Keyword 2: Radical
Radical redesign means disregarding all existing structures and procedures, and inventing completely new ways
of accomplishing work. Reengineering is about business reinvention, begins with no assumptions and takes
nothing for granted.
Keyword 3: Dramatic
Reengineering is not about making marginal improvements or modification but about achieving dramatic
improvements in performance. There are three kinds of companies that undertake reengineering in general. First
are companies that find themselves in deep trouble. They have no choice. Second are companies that foresee
themselves in trouble because of changing economic environment. Third are companies that are in the peak
conditions. They see reengineering as a chance to further their lead over their competitors.
Keyword 4: Processes
The final keyword “Process”, though the most important in the definition, is the one that gives most corporate
managers the greatest difficulty. Most business people are not process-oriented; they are focused on tasks, on
jobs, on people, on structures, but not on processes.
BPR is done by
1. Companies at its declining stages.
2. Companies in its stable stages.
3. Companies in their peak stages.

Difference between continous improvement and BPR

Continuous improvement is an approach to improving the competitiveness, effectiveness and flexibility of a

whole organization. It is essentially a way of planning, organizing and understanding each activity, and depends
on each individual at each level. CONTINOUS IMPROVEMENT involves placing the customer as the focal
point of operations. Its aim is to continuously improve process performance in order to satisfy customer
requirements. At the center of TQM is the concept of the management of processes, and the existence of internal
suppliers and customers within organizations.
BPR also emphasizes focus on the process. However, BPR is much more radical than CONTINOUS
IMPROVEMENT. Quality approaches concentrate on improving existing processes; process reengineering
starts from scratch to create new processes without the constraints of existing methods, people, technology,
management systems, or organizational structures.
The major differences between Quality Improvement and Process Reengineering approaches are provided by
Chang (1994) in the following table:
 Differences Between Quality Improvement (TQM) and Process Reengineering (BPR)
Quality-Improvement
Major Factor Approach Reengineering
Approach
Senior- Hands-on initially, and Hands-on, active involvement throughout the
management becoming more effort
involvement reinforcement-oriented
Intensity of team- Ongoing involvement on an Ongoing involvement for a specified duration
member as-needed, part-time basis on a full-time basis
involvement
Improvement goals Focus on incremental Focus on dramatic improvements in a short
improvements over a period of time frame
time
Implementation Emphasis on improving Emphasis on creating new ways of doing
approach current work processes things
Magnitude of Limited disruption to existing Radical changes to existing systems and
organizational systems and structures structures
change
Breadth of focus Addresses narrowly defined Addresses processes that span entire business
work processes units
Use of benchmark Used after process Used on front end, to assist with process
data improvement, to compare data selection
Dependence on Information systems used for Information systems used as a central enabler
information data collection and with on-line access
systems interpretation

Quality specialists tend to focus on incremental change and gradual improvement of processes, while
proponents of reengineering often seek radical redesign and drastic improvement of processes. On the other
hand, Davenport&Short (1990) suggest that CONTINOUS IMPROVEMENT and BPR can -and should- form
an integrated strategic management system within organizations.

Relationship Between BPR and Information Technology

 Information Technology (IT) refers to “the capabilities offered by computers, software applications, and
telecommunications”. (Davenport&Short, 1990)
Hammer (1990) considers IT as the key enabler of BPR, which he considers as "radical change." He
prescribes the use of IT to challenge the assumptions inherent in the work processes that have existed since
long before the advent of modern computer and communications technology.
Davenport&Short (1990) argue that BPR requires taking a broader view of both IT and business activity, and
of the relationships between them. IT and BPR have recursive relationship. IT capabilities should support
business processes, and business processes should be in terms of the capabilities IT can provide.
Davenport&Short (1990) refer to this broadened, recursive view of IT and BPR as “the new industrial
engineering”.
In order to more effectively respond to BPR, IT must play a more active role throughout a BPR project. IT
must:
 Increase their level of participation in all areas of a BPR initiative;
 Provide key information regarding automated processes to business analysts;
 Build a transition strategy that meets short and long-term retooling requirements;
 Enforce the integrity of redesigned business processes in the target system;
 Reuse business rules and related components that remain constant in a target application.

Factors driving a BPR project can include improving customer service, streamlining processes to cut costs, or
addressing inefficiencies in other high impact areas. For example, customers frustrated with having to speak to
multiple individuals regarding an insurance claim may switch to the competition. To address this problem, an
insurance provider determines that service functions must be consolidated to one point of contact. The
underlying systems that manage claims handling do not support single point of contact processing. In this case,
legacy systems have become a barrier to the success of the BPR initiative.

The relationship of BPR analysis and IT is reciprocal because business and technical analysts must devise a
continuous feedback communication loop for projects to work. This is particularly critical because current
systems analysis helps articulate the as-is business model while the redesigned business model dictates the
impact BPR has on existing information architectures. Once this reciprocal cycle is in place, IT can determine
exactly how to upgrade, redesign, or replace selected systems in order to implement reengineered business
processes. Figure one highlights key steps in a retooling strategy.
Finally, Attaran (2003) categorizes IT roles in BPR into three phases:
Phase 1: Before the process design (as an enabler)
 Create infrastructures and manage information that support evolving organization

 Foster process thinking in organizations

 Identify and select process for redesign

 Participate in predicting the nature of change and anticipate the information needs to support that change
 Educate IT staff in non-technical issues such as marketing, customer relationships, etc.

 Participate in designing measures of success/failures of reengineering

Phase 2: During the process design (as a facilitator)

 Bring vast amounts of information into the process

 Bring complex analytical methods to bear on the process

 Enhance employees’ ability to make more informed decisions with less reliance on formal vertical
information flows
 Identify enablers for process design
 Capture the nature of proposed change and match IT strategy to that change

 Capture and disseminate knowledge and expertise to improve the process

 Communicate ongoing results of the BPR effort

 Transform unstructured processes into routinized transactions

 Reduce/replace labor in a process

 Measure performance of current process

 Define clear performance goals and objectives to drive the implementation

 Define the boundaries and scope of the process

Phase 3: During the implementation (as an implementer)

 Create a digital feedback loop

 Establish resources for critical evaluation of the reengineered process

 Improve IT processes to meet increasing needs of those divisions that have gone under reengineering
processes
 Institute a program of ‘‘cleanup’’ and damage control in case of failure
 Communicate ongoing results of the BPR effort

 Help to build commitment to BPR

 Evaluate the potential investment and return of reengineering efforts

Reengineering Success Factors

More than half of early reengineering projects failed to be completed or did not achieve bottom-line business
results, and for this reason business process reengineering "success factors" have become an important area of
study.

Success factors are a collection of lessons learned from reengineering projects and from these lessons common
themes have emerged. The success factors that lead to successful outcomes for reengineering projects include:

1. Top Management Sponsorship (strong and consistent involvement)

2. Strategic Alignment (with company strategic direction)
3. Compelling Business Case for Change (with measurable objectives)
4. Proven Methodology (that includes a vision process)
5. Effective Change Management (address cultural transformation)
6. Line Ownership (pair ownership with accountability)
7. Reengineering Team Composition (in both breadth and knowledge)

Top Management Sponsorship

Major business process change typically affects processes, technology, job roles and culture in the workplace.
Significant changes to even one of these areas require resources, money, and leadership. Changing them
simultaneously is an extraordinary task. If top management does not provide strong and consistent support,
most likely one of these three elements (money, resources, or leadership) will not be present over the life of the
project, severely crippling your chances for success.

Strategic Alignment
You should be able to tie your reengineering project goals back to key business objectives and the overall
strategic direction for the organization. This linkage should show the thread from the top down, so each person
can easily connect the overall business direction with your reengineering effort. You should be able to
demonstrate this alignment from the perspective of financial performance, customer service, associate
(employee) value, and the vision for the organization.

Business Case for Change

In one page or less you must be able to communicate the business case for change. Less is preferred. If it
requires more than this, you either don't understand the problem or you don't understand your customers.

The business case for change will remain the center piece that defines your project, and should be a living
document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact
from major change initiatives are difficult to measure and more difficult to obtain; without a rigorous business
case both are unlikely.

Proven Methodology

The previous module presented several BPR methodologies, and it is important to note that your methodology
does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these
projects have on processes and people.

Not only should your team members understand reengineering, they should know how to go about it. In short,
you need an approach that will meet the needs of your project and one that the team understands and supports.

Change Management

One of the most overlooked obstacles to successful project implementation is resistance from those whom
implementers believe will benefit the most. Most projects underestimate the cultural impact of major process
and structural change, and as a result do not achieve the full potential of their change effort.

Line Ownership
The line operation probably cannot heal itself when it comes to major business re-design. Staff and consultants
have no lasting accountability for the solution, and never succeed at forcing solutions on line organizations.

You need both. You need the line organization to have the awareness that they need help, to contribute their
knowledge, and to own the solution and implementation. At the same time you need the expertise and
objectivity from outside of the organization.

Building this partnership is the responsibility of the line organization, stakeholders and re-design team. No
group is off the hook.

Reengineering Team Composition

The reengineering team composition should be a mixed bag. For example,

 some members who don't know the process at all,

 some members that know the process inside-out,
 include customers if you can,
 some members representing impacted organizations,
 one or two technology gurus,
 each person your best and brightest, passionate and committed, and
 some members from outside of your company.

FACTORS DETERMINED TO HINDER REENGINEERING SUCCESS

Fear of job loss

Somewhere during this century, reengineering became synonymous with down sizing and worker layoffs.
However, many of the early corporate projects did not include such drastic measures.
Unfortunately, when companies take on a project that will cost extremely large amounts of capital, senior
management wants to see some hard evidence that there will be a huge savings some where. One of the easiest
ways to provide a cost/benefit to a BPR project is cut the workforce. Many cases have shown this only reduces
the available talent pool of an organization. Fear and anxiety fill the hearts of those workers remaining. Down
sizing can profoundly affect the lives and productivity of individuals, whether they leave the organization or
survive the down sizing

Therefore, BPR drives fear into the organization and destroys the to entire social segment of the socio-technical
system which produces the product or service

Inadequate skills of workers

An organization can be categorized by people into three categories; eager adopters, prove-its, and resisters.
Only about 10 to 15 percent of people are considered eager adopters. These people like technology and are
stimulated by learning how to use it. The other 85% probably don't have the skills for BPR with IT, but may not
admit to it.

No reengineering effort will succeed without first reeducating and retraining the people who will ultimately
work with the new process The focus needs to be on the people not on the processes.

Lack of management support

BPR became the method to wipe the slate clean and start over with business processes. However, far too often
this was applied to employees and middle managers. Senior management sometimes felt it was not necessary
for them to also change with IT. However, when employees found out the CEO has his secretary retrieve and
sends his E-mail; credibility for a new system project was lost. Management often allows money to be thrown
around purchasing technology, but then overlook financing training of people necessary to infuse or utilize the
IT. Strong leadership is necessary if BPR projects are not to be ruined by psychological and political disruptions
that accompany change
Change of organizational structure and culture

Human passions and emotions react strongly when the prospect of change intrudes on their familiar working
and living patterns. It is believed that the necessary cooperation to achieve success will not occur unless people
are assured they will not be working themselves out of a job. .

What is a Business Process?

Davenport&Short (1990) define business process as “a set of logically related tasks performed to achieve a
defined business outcome”.
In their view, processes have two important characteristics:
 They have customers, that is, processes have defined outcomes, and there are recipients of the outcomes.
 They cross organizational boundaries, that is, they normally occur across or between organizational
subunits.
On the other hand, Hammer&Champy (1993) define business process as “a collection of activities that takes
one or more kinds of input and creates an output that is of value to the customer”.
Examples of processes include: developing a new product; ordering goods from a supplier, creating a
marketing plan, processing and paying an insurance claim, etc.
Davenport&Short (1990) have categorized business processes according to three dimensions:
 Organizational entities or subunits involved in the process (Interorganizational, Interfunctional, and
Interpersonal Processes)
 The type of objects manipulated (Physical and Informational Processes)

 The type of activities taking place (Operational and Managerial Processes)

Different process types require different levels of management attention and ownership, need different forms of
IT support, and have different business consequences.
A business process or business method is a collection of related, structured activities or tasks that produce a
specific service or product (serve a particular goal) for a particular customer or customers. It often can be
visualized with a flowchart as a sequence of activities.

The core business of an organization is an idealized construct intended to express that organization's "main" or
"essential" activity.

The corporate trend in the mid-20th Century of acquiring new enterprises and
forming conglomerates enabled corporations to reduce costs funds and similar investment vehicles, and
sometimes the following of a popular trend among corporate management seeking to appear current and
impress investors.

Core business process means that a firm's success depends not only on how well each department performs its
work, but also on how well the company manage to coordinate departmental activities to conduct the core
business process, which is;

1. The market-sensing process Meaning all activities in gathering marketing intelligence and acting on the
information.

2. The new-offering realization process Covering all activities in research, development and launching new
quality offerings quickly and within budget.

3. The customer acquisition process all the activities defining the target market and prospecting for new
customers

4. The customer relationship management processes all the activities covering building deeper
understanding, relationships and offerings to individual customers.

5. The fulfillment management process all the activities in receiving and approving orders, shipping out on
time and collecting payment.

To be successful, a firm needs to look for competitive advantages beyond its own operations. The firm needs to
look at the competitiveness value chain of suppliers, distributors and customers. Many companies today have
partnered with specific suppliers and distributors to create a superior value delivery network.
Task and sub-process
A business process is mainly formed by activities that need to be performed to complete the process. There are
two kinds of activities - task and sub-process. A task is an atomic activity which represents work that cannot be
broken down. On the contrary, sub-process represents work that can be broken down to a finer level of detail.

Flow Chart

A flow process chart is a diagram that utilizes both text and symbols to show the actions required to complete a
given process. This type of chart lays out each step in chronological order, with symbols indicating the
beginning and ending of the process as well as decisions and actions that occur along the way. A flow process
chart is useful for visualizing the procedure in question and identifying areas of weakness.

Process flow symbols typically include three distinct shapes. An oval is used to signify the beginning and
ending points of the process. A rectangle indicates actions, and a diamond indicates a decision. Each shape is
connected to other shapes by an arrow, which leads the viewer from one process to the next. Each shape
contains words describing that step of the process.

A flow process chart typically has a single start point. This may be labeled "Start" or it may indicate the purpose
of the chart, such as "Customer Service Call." From this point, arrows will lead to possible actions or decisions.
Continuing with the previous example, a flow process chart on dealing with customer service calls may include
questions that the caller should be asked, such as "What system are you operating on?" Each question will
branch out to possible answers. These answers may lead to another question to further clarify the problem, or a
solution which will effectively achieve the goal of the call.

After a series of decisions and actions, the flow process chart will ultimately lead to an end point. Some charts
will have a single beginning and end, while others can result in multiple conclusions. A customer service call
could end with a variety of solutions fitting for the problem. The chart may end there, or point each solution to
another action, such as a prompt to complete a survey on the effectiveness of the service.

Actions or decisions that apply to more than one scenario will not appear multiple times on a flow process chart.
The unifying process will appear once with multiple arrows leading up to it. If the final goal of the flow chart is
the same regardless of the process, the oval signifying the end point of the chart may be traced back to multiple
actions or decisions.

A flow process chart is a useful tool for businesses, as it can provide a visual of the actions that are taken
throughout the course of a process. If the process seems overly complicated, this chart will help identify weak
points where it can be clarified or improved. A flow process chart is also useful for making decisions. It can
provide easy-to-read instructions for following the correct procedure in a variety of situations.

Support Process - Activity or function that supports the day-to-day operations of an organization, such
as accounting, communications, maintenance, sales.