Paper 6: Management Information System

Module 11: Business Process Reengineering & Reverse Engineering

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Prof. Manu Sood

Paper Coordinator Chairman, Department of Computer Science
Himachal Pradesh University, Shimla.

Dr. Ashish Saihjpal

Content Writer Assistant Professor,
University Business School, Panjab University (RC), Ludhiana.
Items Description of Module
Subject Name Management
Paper Name Management Information System
Module Title Business Process Reengineering & Reverse Engineering
Module Id Module No.-11
Pre- Requisites To understand the basics of business processes and characteristics or need to update
them.
Objectives To understand the applicability of Business Process Reengineering and Reverse
Engineering in context of MIS.
Keywords Re-engineering, Redesign, Re-thinking, Reverse Engineering.

QUADRANT-I
Module-11 Business Process Reengineering & Reverse Engineering

1. Learning Outcome
2. Introduction to Business Process Reengineering
2.1 How Reengineering can be applied to Organizations.
2.2 BPR – Objectives and Components
3. Process Involved in BPR
4. Implementation of BPR at State Bank of India
5. Reverse Engineering
5.1 Need and Benefits of Reverse Engineering
5.2 Benefits of Reverse Engineering
6. Business Case
6.1 Innovation at Tata Motors.
6.2 Rebirth of Harman.
7. Summary

1. Learning Outcome:
After completing this module the students will be able to:
 Understand the basic concept of Business Process Reengineering (BPR)
 Understand the need of Reengineering and its usefulness to organizations
 The underlying objectives in BPR and the process involved
 Understand the fundamentals and need of Reverse Engineering
 Overview of successful implementation of BPR and reverse engineering cases in India

2. Introduction

In today’s dynamic business environment, price cuts, improved quality standards and the promptness in
delivery of products and services by the firms has lead the competition to intensify in the industry. The
firms need to work on new product developments, up-gradation of existing products, maintenance of
quality standards through technological innovations and to adopt industry’s best practices to maintain a
competitive edge over its rivals. All these changes necessitate the need for organizational re-structuring,
where the entire processes and organizational structure requires a change.

Companies cannot just sustain their competitive position by doing business in a single product or
safeguarding it supplies by manufacturing the products in advance so as to meet the future anticipated
demand. Today’s aspiring customers demand products that are specifically tailored as per their needs and
are delivered at the time when they actually need them. Responding to such needs of the customer
requires a high level of coordination and free flow of information with the functional areas of
organization and its business partners. Business Process Reengineering (BPR) suggests organizations to
restructure the complete process from the very inception and re-organize the structure rather than having
small improvements.

Business Process Reengineering involves bringing in the changes in the processes across various
functional departments of the organizations. The changes may be incorporated in the technical, financial,
operational, business, personnel and research departments of the organization.

For the first time, the re-engineering concept was defined by M. Hammer and J.A. Champy in 1990s as a
“fundamental rethinking and radical redesign of business processes to generate dramatic improvements in
critical performance measures – such as cost, quality, service and speed”.

In the context of information systems (IS), the main aim of aligning IS with business goals is to produce
best possible results using processes that are central to the organization while eliminating those that are
not central.

Mini Caselet

Taco Bell – Think Outside The

BUN

Exhibit1:
Image Source: www.tacobell.com

Taco Bell, the American fast food chain, restructured the conventional managerial and operational
process in the system. They introduced the concept of the (K-Minus) or kitchen less restaurant wherein
they moved the business model from being a manufacturing firm to a retail service restaurant.
Capitalizing on the new technology they advocated the idea of alternative points of distribution. At the
Taco Bell restaurants, the food ingredients are prepared only when an order is received. This not only
leads to motivate employees but also reduces the chances of accidents as the kitchen is located elsewhere.
This, therefore, renders more time to focus on the customer business process. They aim to take food
service delivery at stadiums, airports, universities, schools etc.
2.1 Business Process Re-engineering and its focus areas for implementation

Exhibit 2: British Telecom

Image Source: http://www.wordpress.wcdeaf.org.uk

While announcing their business plan at British Telecom, all competitors were looking forward to know
about their new Chief Executive Officer (CEO). To add to the curiosity and surprise of all, the new CEO,
was the customer. The company now decided to align its business operations the way its customers
wanted it to be. The strategic goal was to implement BPR to provide customer oriented services. BPR is a
technique used to implement this type of organizational structure.

While implementing BPR the organization essentially needs to look at the following action areas as
highlighted in Figure 1.

Mitigation
with IT

Maintenance Empowering
of Records Personnel

Paperless
Work
BPR Information
Repository
Functions Implementation

Facilitating
Training with Right
Tools
Removing
Inessential
Activities

Figure 1: BPR and its focus areas for implementation

 Mitigation with Information Technology – This enables employees, vendors, partners, and
suppliers to easily operate as a team using internets/extranets, workflow and groupware
applications despite being remotely located. It not only easy out flow of information but also the
movement of goods.
  Empowering personnel – This implies enabling people to do their work using the right
information, tools, training and the authority they need.

 Information repository – Integration with databases and data repositories helps in analysis and
report generation for business critical information.

 Facilitating with right tools – Automation of the process helps business processes to be more
streamlined and focus on analysis on business plans in a better way.

 Training the staff – Information systems not only fulfill the business needs of the organizational
staff but also provide unique training methods like simulations and virtual class rooms.

 Removing inessential activities – The emphasis is laid on tasks that yield timely output rather than
investment of time and effort in clerical activities.

 Paperless work functions – The aim is to have paperless work functions through implementation
of information systems as data when in electronic form is easier to store, maintain and share
rather than doing the same manually.

 Maintenance of records – Digitalization of data helps transmission, maintenance, analysis and

display of easier and reduces the hassle of record keeping.

2.2 Business Process Reengineering – Objectives & Components

The basic objectives of BPR are shown in Figure 2 and explained as under:

 Removing Redundancy – As time passes, organizations tend to add newer processes, without
deleting the old ones. As a result the organizations become process oriented rather than result
oriented. BPR aims at eliminating redundant processes by investigating the relevance of the
process to the core activities of the organization.

 Customer Centricity – The focus is to design processes that are customer centric so as to add
value for the customer and enhance their level of satisfaction.

 Reducing Cycle Time – The steps involved in an activity or a process are reduced with BPR. This
has a positive effect on the process time and enhances customer value.

Customer Value = (Quality/Cost) + (Service/Time)

 Flexibility – Flexibility implies that the organization needs to be on one hand customer focused so
as to enables them to spot weaknesses and simultaneously allow them to adapt to new
requirements of the market.
 Removing
Redundancy

Customer
Innovation
Focus

Reducing
Quality
Cycle Time

Flexibiity

Figure 2: Objectives of BPR

 Innovation – BPR encourages innovative leadership through creative changes which, provides a
competitive advantage to the organization.

 Quality assurance - The level of quality is always controlled and monitored by the processes.
BRP ensures the key performance indicators are met so that quality standards are well assured in
the organization.

The important pillars that build the BPR framework are redesign, retooling and re-orchestrating as shown
in Figure 3. It is necessary for an organization to look through these areas to focus on the business areas.

Re-Design Re - Tool Re - Ochestrate

•Simplify •Networks •Processes

•Standardize •Intranets •Information
•Empowering •Extranets Technology
•Measurements •Workflows •Human
•Groupware Resources

Figure 3: Components of BPR

3. Process involved in Business Process Re-engineering

Any business process is a transition between three steps - input, processing and output (Refer Figure 4).
The BPR concept lays its emphasis in the processing phase to make the activity more result oriented
thereby reducing any activity which is unnecessary and time consuming.

Input Output
Data such as customer Delivery of expected
inquiries result

Processing
Through several stages
utilizing time and money

Figure 4: Components of a Business Process

The BPR Model can be classified into the following stages:

 The Envision stage: This stage reviews the current strategy in use and makes suggestive
improvements and list areas of potential opportunities.

 The Initiation stage: In this stage each project team is assigned result oriented activities with an
agreed timeframe.

 The Diagnosis stage: The diagnosis stage comprises of essential documentation needed for
processing activities and roles & responsibilities.

 The Redesign stage: In the redesign stage innovative alternatives for design are formulated.

 The Reconstruction stage: This stage requires the amalgamation of all new processes and people
who are associated with these processes.

 The Evaluation stage: The last stage consists of monitoring of processes to ensure the business
objectives are met and resources are put to best use.
The following table summarizes the various changes that the organization undergoes when applying BPR:

Changes in the World of Work

From Conventional To Business Process Reengineering
Functional Departments Process Teams
Simple Tasks Empowered Employees
Controlled People Multidimensional work
Training of employees Education of employees
Compensation for skill and time spent Compensation for results
Increments based on promotions and seniority Performance related bonuses
Career progression based on ability Career progression based on performance
Protective organizational culture Productive organizational culture
Managers supervise and control Managers coach and advise
Hierarchical organizational culture Horizontal or flat culture
Separation of duties and functions Cross functional teams
Linear and sequential process Parallel Process
Mass production Mass customization
Exhibit 3: Business Process Reengineering
Source: Based on Hammer and Champy, 1993

We have understood the objectives, components and processes of BPR. However, the real question for an
organization is, “to reengineer or not to reengineer?” PricewaterhouseCoopers’ matrix is useful to select
process that needs to undergo reengineering (Dunn 2007).

Figure 5: Reengineering Decision Matrix

Source: Dunn, 2007

Referring to the Figure 5, the Strategic – Non-Strategic cells on x-axis describes how critical the proposed
processes are for the firm in achieving long term competitive advantage. While the second dimension,
Competitive – Non-Competitive cells as labeled on y-axis refers to the comparison as to how much the
processes under consideration for reengineering are performing when compared to the industry. This
gives a trade-off between the cost of a process and response time and yields four outcomes is illustrated in
the figure 5.
4. Implementation of Business Process Reengineering: Success Story of SBI

State Bank of India, World's Largest Centralized Core Processing Implementation

Exhibit 4: State Bank of India

State Bank of India is a banking behemoth, with nearly 18,354 branches in India and another 191 spread
overseas across 36 countries of the world. It is not only the oldest and largest public sector bank in India,
but the second largest in the world in terms of number of branches. SBI began the world’s largest core
banking system implementation ever undertaken in the banking industry to compete with its private sector
counterparts. Core banking solution offers a comprehensive, integrated solution catering to bank’s needs
and multiple business segments.

Mitigating the process with Information Technology has changed the organizational climate in terms of
operational activities and payments in the banking industry. Through the core banking system, the banks
can substantially reduce operational costs and build customer relationship. It enables banks to keep pace
with industry needs and offer the new product portfolio to a customer faster. It further helps manage
customer profiles as well as high transaction volumes.

TCS BaNCS – the Core Banking System created by Tata Consultancy Services is one of the largest core
banking deployments ever undertaken. This project is an exclusive set up for the State Bank of India.
While initially SBI intended to convert only 3,300 of its branches, the successful implementation later
scaled to include all of the more than 14,600 SBI and related bank branches.

The BPR implementation project at SBI was build around the four pillars as shown in Figure 6.

Centralized
Branch Re-
Processing
design
Centers

Alternate Customized
Delivery products
Channels

Figure 6: Pillars of BPR at SBI

State Bank of India's objectives for its project to modernize core systems included:

 Both banked and unbanked areas to receive new product capabilities.

 Process Unification to reduce operational efforts.
 Enhanced customer service.
 Single window view of necessary customer information.
 Affiliate Banks to be merged into SBI with ease.
 Product Support for all existing products.
 Improved response time for customers.
 Reduced customer churn.
 Integration and interface with other technologies (Figure 7).

Automated Teller Machines

SmartCards

Internet Banking

Mobile Banking

MICR & Automated Cheque Clearing

RFID Technology

Financial Inclusion

Figure 7: Banking Technologies integrated to the Core Banking System

5. Reverse Engineering

Engineering is the application of applied sciences for practical and industry purposes. This process
involves the designing, drafting, production and maintenance of a sustainable product or service.
Engineering can be classified as forward or reverse engineering. These are discussed below in detail:

 Forward engineering – It is the process which involves moving from high level abstraction to
lower level logical design and physical implementation. In simplest words, it is the
transformation from a concept model to the physical tangible product.

 Reverse engineering – It refers to deriving knowledge from a man-made product or service and
then re-producing it based on the information retrieved. The process involves disassembly of
another manufacture’s product and carrying a component analysis in detail. This can be
understood from Exhibit 5.
 Exhibit 5: Re-Engineering
Image Source: http://www.program-transformation.org/pub/Transform/ReEngineering/byrne.gif

Acquiring a Computer Aided Design (CAD) model from 3-D points by the digital transformation or
analysis of a product also refers to reverse analysis. The aim to reverse engineering is to make products
that are scalable, interoperable, robust and economically more viable. It leads to a more market driven
product which is an improvement in every sense than what was available in the market.

5.1 When does the need for Reverse Engineering arise?

Reverse engineering can be applied to various industries ranging from software, computing,
manufacturing, logistics, military equipment, academics and where even building new products seems
more economically viable. It is of paramount importance to understand the need for this technique from
the point of view of the industry:

 Interoperability – This technique is needed for opening up application programming interfaces

(API) to further integrate to another system or design a new system.

 Greater Research & Development - Dismantling a product, studying its prototype and divulging
into greater research and development leads to the introduction of this technique.

 Improve documentation shortcomings – Many situations may lead to the need for reverse
engineering. For instance, when the documentation such as product manuals, operative
guidelines, installation and maintenance and upgrades are not originally available.

 Obsolescence – A product that is no longer scalable and sustainable to operate on newer

technology is rendered obsolete. It then requires to be reengineered for improvements and usage.

 Software updates and upgrades – Software’s need upgrades and their newer versions to be
installed with ease. In the case this activity becomes cumbersome and time consuming it renders
the software’s to get outdated. Reverse Engineering is then needed to estimate the effort required
to convert the current “as is” state to a desired “to be” state.
  Academics knowledge- To create newer improved and sustainable designs it is required to reverse
engineer products.

 Competitive Edge – Lastly we need reverse engineering, to divulge into greater details about the
competition.

5.2 The Benefits of Reverse Engineering

Reverse engineering is the study of the technical aspects concerning the structure, functions and
operations. It involves the disassembly of a product followed by a careful analysis to develop a newer,
improved one. Reverse engineering is the process of learning the design of an object by studying its
implementation. Following are its benefits:

 Understanding – Using models is helpful in studying the product design and application
exhaustively. This is analyzed along with the database structure. If a model is not available,
reverse engineering enables to construct one, to better understand the scope and capability of a
product.

 Negotiation – The selling process tends to highlight only the product capabilities and strengths.
However, to be able to understand the critical lacunas and weaknesses, reverse engineering is
undertaken. This helps the firm to have a stronger hand in negotiations with the vendors.

 Conversion of Data – It is important to have a complete understanding of the source and target
before implementing upgrades and data migration, which is enabled and facilitated by reverse
engineering.

 Communication – It helps in establishing a clearer word with the vendor to understand his aspects
of product capabilities. The vendor may bring about their own assumptions and architectural
features to light while the business needs of the organization may require customized abilities to
serve their business needs better.

6. Success Stories of Reverse Engineering in India

Reverse-Engineering your Business: Start at the End

In the book, “Start at the End,” Dave Lavinsky (Exhibit 6) has interestingly detailed out the intelligence
behind reverse engineering. The strategy is to first identify the problem as to why reverse engineering is
needed. This is followed by a careful scrutiny of available resources at hand and constraints to be kept in
mind to achieve the goals. Let us see how the companies like Tata motors and Harman International have
adopted reverse engineering to gain a mileage in the industry.
Exhibit 6: Dave Lavinsky
Image Source: https://www.startattheendbook.com

6.1 Innovation at Tata Motors: Five Decades of Engineering and Research

Exhibit 7: Reengineering at Tata Motors

Image Source: http://www.tata.in/article/inside/50-years-of-research-and-engineering

The Engineering Research Centre (ERC) at the Pune campus of Tata Motors is a hub buzzing with
intellectual capital of engineering experts and designers. They invest their efforts on nearly 250 variants
of vehicles. It is one of the most technical facilities comprising state of the art machinery and is equipped
with facilities such as a noise, vibration and harshness (NVH) lab and a crash test lab.

Tracing back to 1977, despite having to invest in all that designing and production, Tata Motors had a
license to produce just 50,000 commercial vehicles a year. The cost of trucks was nearly Rs100, 000 and
the margin earned on each vehicle was just Rs1,000. Ranging from conveyor belts and cranes to machine
tools” has been manufactured under the most economically viable options. If the ERC aimed to produce a
gearbox, drawings from the Daimler-Benz era was studied thoroughly. Making Reverse Engineering a
habit, a Mercedes-Benz truck gearbox was torn apart and analyzed. Eventually, one of the senior
executives had built an ‘import library’ comprising components and parts that had been picked up from
various manufacturers in Europe.

Now, engineers customize and create vehicles as per the needs of the market. They interact with truck
owners and drivers to find out their need and like their vehicles to be designed. This enabled Tata Motors
to manufacture for the Indian market with a customer centric focus.
6.2 Rebirth of Harman

Exhibit 8: Harman Kardon

Image Source:
http://www.gadgetsnow.com/tech-news/How-Indian-engineers-have-transformed-
Harman/articleshow/52790931.cms
A lesser known brand in India, Harman International is
recognized by the brand- JBL; the audio systems line owning
high-end audio equipment brands like Harman Kardon and Mark
Levinson. To throw some light on the credibility, ranging from
Disney theme park that use Harman audio systems, to the world’s best performing arts venues like the
Lincoln Centre, John F Kennedy Centre have Harman installations. From the massive indoor arenas like
the Madison Square Garden to the world's biggest broadcasting units use it. The prestigious Grammys is
with Harman. Interestingly, majority i.e., 80% of the world's most luxurious cars like the Lexus, BMW,
Audi, Daimler, Mercedes, Bentley, Aston Martin, Ferrari, and Porsche have Harman Systems. Thus,
reverse engineering has been proved tremendously beneficial for many organizations.

Initially, the big majority of the Indian cars found a Harman system to be quite expensive. It is then that
their CEO turned the table round by changing the “cost structure" using India's software expertise. In his
words, "If you challenge Indians and say, here's the product, take this, reverse engineer it, bring down the
cost to a third of what it is, give me the same features but you can take out one or two useless features that
cost too much, but give me five extra features that people would like, they will do it,". Thus, the strategy
of reverse engineering has worked wonders for Harman.

It was for the first time that Toyota agreed upon a non Japanese supplier for its inbuilt music systems.
Today, the Harman platform is on numerous brands globally, including Fiat Chrysler, General Motors,
Volkswagen, Hyundai, Tata Motors and even Harley Davidson.

7. Summary

To survive in a limited market with increasing competition requires incremental changes; to excel takes
restructuring. Feasibility of operations is further hampered by limited resources and funds available.
Hence, breaking the conventional norms of production and inculcating newer techniques is the need of the
hour. In Business Process Reengineering, we start from scratch and rethink the procedure which shall
deliver more value to the customer.

Reverse engineering has numerous industry wide applications like manufacturing, industrial design, and
jewelry design to name a few. Reverse Engineering enables to create interoperable products as per
changing industry needs. It helps to remove obsolesce and redundancy in product functions and re creates
them at costs which are sustainable as efficient business case. In the intensely competitive global market,
manufacturers are constantly seeking new ways to shorten lead times to market a new product.