140 Business Process Re-Engineering

Business Process
Reengineering
(FOR PRIVATE CIRCULATION ONLY)

2018
Programme Coordinator
Dr. Padmpriya Irabatti
Course Design and Review Committee

Prof. D.H. Joshi Prof. Ranjan Joshi
Prof. Ashok Chaudhari Dr. Shailesh Kasande
Prof. Safia Farooqui Prof. Madhup Gandhi
Prof. Sudhir Deshpande Prof. Manisha Ketkar
Prof. Avinash Pawar Prof. Rajiv Shirke
Course Writer
Mr. Girish Phatak
Editor
Ms. Neha Mule
Published by Symbiosis Centre for Distance Learning (SCDL), Pune

July, 2007 (Revision 01, 2014)
Copyright © 2018 Symbiosis Open Education Society

All rights reserved. No part of this book may be reproduced, transmitted or utilised in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval
system without written permission from the publisher.
Acknowledgement
Every attempt has been made to trace the copyright holders of materials reproduced in this book. Should any
infringement have occurred, SCDL apologises for the same and will be pleased to make necessary corrections
in future editions of this book.
PREFACE
This SLM is written for the distance students, located far and wide and who wish to undertake
distance learning. It is assumed that the reader has no previous exposure to this subject and, therefore,
a person experienced in these areas may find it a little basic in parts, but good reference material.
It is not meant to be a comprehensive coverage of the subject, but an exercise in provoking interest
in the subject and giving glimpses of the BPR approach. The methodologies and techniques of BPR
have been discussed in details, which will facilitate proper understanding and practice.
The SLM is designed to give the readers an overview of BPR in manufacturing as well as services
and, hence, special units for BPR and ERP, BPR and SCM, and BPR in Banks have been included.
My experience as a consultant in BPR with several industries has advocated the use of BPR concepts
for setting up effective ERP systems. If the contents of this SLM spread knowledge about BPR
concepts and communicate the sense of urgency for implementing them, my purpose should be
fulfilled.
This SLM has been written in a very short span of time. Your suggestions on making the contents
more useful and readable are most welcome.
Girish G. Phatak
iii
ABOUT THE AUTHOR
Mr. Girish Phatak has been a trainer and consultant in the field of Quality Management Systems,
Information Systems and Business Process Reengineering since May, 1999. His firm, Infostar
Business Solutions, is based in Pune. He is a qualified lead assessor from BSI UK for ISO 9001.
As a consultant and trainer, he has experience in training and consulting in ISO 9000, TQM, Service
Quality, SW Quality Assurance, Business Process Reengineering, Enterprise Solutions such as ERP,
SCM and CRM for domestic as well as international clients.
A Mechanical Engineer and an alumnus of VJTI Mumbai (1986), Mr. Phatak also holds a Diploma in
Business Management and is a Master of Management Science (Pune University). He has worked in
the manufacturing industry as well as IT industry for 17 years. He is also a Visiting Faculty Member
at the Symbiosis Institutes.
iv
CONTENTS
Unit No. TITLE Page No.

1 Introduction to BPR 1-8
1.1 Introduction
1.2 Process Orientation of Business
1.3 Business Processes
1.4 Why Business Process Improvement
1.5 Concept of BPR
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
2 Business Processes and MIS 9-20
2.1 Introduction
2.2 Properties of Business Process
2.3 Managerial Functions
2.4 Managerial Roles
2.5 Levels of Management
2.6 Activities of an Organisation
2.7 Types of Information Systems
2.8 System Concepts
2.9 Business Objectives
Summary
Keywords
Suggested Reading
3 Strategic Planning and BPR 21-44
3.1 Introduction
3.2 Concept of Strategic Planning
3.3 Strategic Planning Process
3.4 Key Aspects of Strategic Planning
3.5 Contents of the Strategic Plan
3.6 Importance of Strategic Planning
3.7 Developing Mission, Vision, Values and Beliefs
3.8 Customer Groupings Identification
3.9 Strategic Benchmarking
3.10 SWOT Analysis
3.11 Performance Measures Identification
Summary
Keywords
Suggested Reading
v
4 Strategic Impact of IT and BPR 45-54
4.1 Introduction
4.2 The Impact of Information Technology on Process Innovation
4.3 Types of Business Processes and the Role of Information
Technology
4.4 Business Systems Planning
Summary
Keywords
Suggested Reading
5 BPR Principles 55-60
5.1 Introduction
5.2 Principles of BPR
5.3 Business Process Re-engineering in the Early 1990’s
Summary
Keywords
Suggested Reading
6 Business Process Reengineering Techniques and Methodologies 61-78
6.1 Introduction
6.2 Enablers of Re-engineering Project
6.3 Process Re-designing Techniques and Tools
6.4 Collaborative Tools of BPR
6.5 Business Re-engineering Project Management
6.6 Selecting BPR Methodologies
Summary
Keywords
Suggested Reading
7 BPR and QMS 79-86
7.1 Introduction
7.2 Total Quality Management and ISO-9001
7.3 Perspective of Re-engineering and ISO 9000
7.4 TQM and BPR
Summary
Keywords
Suggested Reading
vi
8 Organising and Implementing BPR 87-98
8.1 Introduction
8.2 Success Factors for BPR Implementation
8.3 Roles in the BPR Projects
8.4 Role of Information Technology in Process Re-engineering
Summary
Keywords
Suggested Reading
9 Managing Barriers to BPR Success 99-132
9.1 Introduction
9.2 Barriers to Business Re-engineering Implementation Success
9.3 Risks associated with Business Re-engineering Projects
9.4 Business Re-engineering Implementation Barriers
9.5 Hard Implementation Barriers
9.6 Soft Implementation Barriers
9.7 Relationship between Hard and Soft Barriers
9.8 Areas generating Barriers to Business Re-engineering Implementation
9.9 Root Causes for Implementation Barriers
9.10 Root Causes of Internal Individual Resistance
9.11 Manager’s Beliefs and Assumptions in BPR
9.12 Barrier Management in BPR Projects
Case Study
Summary
Keywords
Suggested Reading
10 BPR in Banks 133-142
10.1 Introduction
10.2 Business Process Re-engineering
10.3 Hammer Suggestions
10.4 BPR Model
10.5 Macro and Micro Level Process Re-engineering
Summary
Keywords
Suggested Reading
vii
11 ERP and BPR 143-158
11.1 Introduction
11.2 Concept of ERP
11.3 Evolution, Scope and Benefits of ERP
11.4 ERP and BPR
11.5 Business Transformation through ERP System
11.6 Process Modelling for ERP
11.7 ERP Implementation Plan
11.8 Making ERP Effective
11.9 Challenges of introducing ERP in India
Summary
Keywords
Suggested Reading
12 SCM and BPR 159-170
12.1 Introduction
12.2 Concepts of Supply Chain
12.3 Fundamentals of Supply Chain Management
12.4 Thrust Areas of SCM
12.5 Performance Measures for SCM
12.6 Key Components of Supply Chain Strategy
12.7 SWOT Analysis for SCM
12.8 IT Enabled Supply Chain
12.9 BPR and SCM
12.10 General Structure for SCM
Summary
Keywords
Suggested Reading
13 Evolution of BPR for E-Business 171-178
13.1 Introduction
13.2 Web Enabled E-Business and BPR
13.3 Managing E-Processes
13.4 Redesign Principles and Methods
Summary
Keywords
Suggested Reading
viii
Introduction to BPR
UNIT
1
Structure:
1.1 Introduction
1.2 Process Orientation of Business
1.3 Business Processes
1.4 Why Business Process Improvement
1.5 Concept of BPR
Summary
Keywords
Suggested Reading
Introduction to BPR 1
Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
●● State the concepts of Business Process Re-Engineering.
---------------------- ●● Explain the need for Business Process Re-Engineering.
---------------------- ●● State the Process Orientation for Business
---------------------- ●● Discuss the importance of Business Process Re-Engineering
----------------------
1.1 INTRODUCTION
----------------------
Globalisation has forced many manufacturing and service-oriented
---------------------- companies to adopt the lest practices in the words. Many companies are now
realising the need for developing world class systems and methodologies, as well
----------------------
as acquiring a “productivity tool” that will let them be in an offer competitive
---------------------- manufacturing resource planning, surely assuring customers of quality goods
and services and compliance with international quality requirements on different
---------------------- industry fields.
---------------------- In the competitive business environment of the twenty first century, many
companies are working and using Six Sigma, lean manufacturing tool. Business
---------------------- Process Reengineering or BPR offers the “answer” to the economic and
---------------------- productivity troubles of the manufacturing and service enterprises. Recently,
BPR has become very popular as an enterprise management tool.
----------------------
1.2 PROCESS ORIENTATION OF BUSINESS
----------------------
Process Orientation is a new paradigm for the organisation of a business.
----------------------
Instead of the traditional inward-bound functional orientation, which divides
---------------------- the company into functions like sales, production, procurement and product
development, process orientation organises companies around their processes.
---------------------- The basic idea is, to have everybody in the company in a systematic way
and directly serve the customer, who is at the receiving end of the business
----------------------
processes. Thinking in process management was introduced with the concept
---------------------- of Total Quality Management. Process thinking and managing is at the heart of
Business Reengineering. Members of them organisation are no longer looking
---------------------- upward into the hierarchy, but ahead to the customers, who ultimately drive
the organisation. A process orientation can be basically assessed in two ways,
----------------------
depending on the degree of change required: Process simplification and Process
---------------------- Reengineering. Simplification usually results in an incremental rather than a
major step change. Simplification exercises tend to take for granted an existing
---------------------- framework, the limits of installed Information Technology, as well as the current
attitudes and behaviours. In contrast Business Process Reengineering aims at
----------------------
fundamental or frame-breaking change. A reengineering exercise challenges the
---------------------- existing framework, questions attitudes and behaviours, and might suggest the
2 Business Process Reengineering

introduction of new Information Technology. In practice, though, simplification Notes
and reengineering can overlap and together form the process orientation of an
organisation (Coulson-Thomas, 1994). ----------------------
----------------------
1.3 BUSINESS PROCESSES
----------------------
Business processes are sequences and combinations of business activities.
They break into the external customer facing processes that deliver products and ----------------------
services of value, management, and support processes. Management processes
control and coordinate these activities and ensure that business objectives are ----------------------
delivered. Support processes, as the name implies, provide infra-structural ----------------------
and other assistance to business processes. Business Processes can be further
differentiated into knowledge-based and operational processes. ----------------------
1. Knowledge Based Processes ----------------------
Knowledge-based processes include product development, research
----------------------
activities, advertisement and management consulting. These processes
typically are of non-standard nature; instead, they rely on the knowledge ----------------------
and creativity of the persons involved. Knowledge-based processes are
not dominant in Business Process Reengineering projects (Davenport/ ----------------------
Jarvenpaa/Beers, 1996).
----------------------
2. Operational Processes
----------------------
Operational processes are at the heart of most Business Reengineering
efforts. Operational processes are classified by their relative stability, ----------------------
standardisation and repeatability. Typical operational processes are
customer service, procurement, and manufacturing. Operational processes ----------------------
are further classified into key and secondary processes. Key processes
----------------------
directly support the mission and the strategies of the company.
Prior to adopting process view, the companies were organised functionally. ----------------------
The traditional functional organisation gave top management the highest ----------------------
priority, whereas from a process viewpoint, the satisfaction of customer
requirements has the highest priority in the organization now. Thus the ----------------------
execution process, i.e. selling, producing and delivering goods and services
to the customer is at the heart of the reengineered company. Workers who ----------------------
are closer to the customer than managers and worker development are ----------------------
very important to success. The new-product-process fuels the execution
process, by assessing mid-term and long-term customer needs and ----------------------
technological innovations. The support process provides services - not
control - for the execution and new-product processes. The management ----------------------
process puts the top management in a position, where in the process ----------------------
executions and providing an environment of vision and trust are facilitated.
3. Teams ----------------------
Team working is a feature of product and service delivery to customers. ----------------------

Work teams as opposed to large departments are responsible for as
----------------------
Notes much of a business process as possible. Teamwork is more than rarely
friendly people being located in a single room. A team is a special group
---------------------- of people with complementary skills, highly dedicated to a common
process objective. A functioning team makes management control largely
---------------------- unnecessary this being the main reason, why middle-manager positions
---------------------- often become redundant in reengineered organisations with work teams
at the execution level.
----------------------
4. Business Reengineering Project
---------------------- A Business Reengineering project effects revolutionary changes in an
organisation. The project deliverables are radically improved business
----------------------
processes, which satisfy customer requirements much better than before and
---------------------- which achieve drastic improvements in the operational results of a company.
5. Project Management
----------------------
Project management is the discipline which cultivates the expertise to
---------------------- plan, monitor, track, and manage the people, the time, the budget and
---------------------- the quality of the work on projects. Project management is the means
by which to fit the many complex pieces of the project puszle together
---------------------- (Knutson/Bitz, 1991).
---------------------- Project management of a Business Reengineering project is a set of

principles, methods, tools, and techniques for the effective management
---------------------- of the introduction of new or drastically changed business processes in a
corporation (Hammer/Champy, 1993).
----------------------
Business Process Example
----------------------
If you have ever waited in a line at the grocery store, you can appreciate
---------------------- the need for process improvement. In this case, the “process” is called the
check-out process and the purpose of the process is to pay for and bag your
---------------------- groceries. The process begins with your stepping into line and ends with your
receiving your receipt and leaving the store. You are the customer (you have the
----------------------
money and you have come to buy food) and the store is the supplier.
---------------------- The process steps are the activities that you and the store personnel do to
complete the transaction. In this simple example, we have described a business
----------------------
process. Imagine other business processes: ordering clothes from mail order
---------------------- companies, requesting a new telephone service from your telephone company,
developing new products, administering the social security process, building a
---------------------- new home etc.
---------------------- Business processes are simply a set of activities that transform a set of
inputs into a set of outputs (goods or services) for another person or process,
---------------------- using people and tools. We all do them, playing the role of customer or supplier.
---------------------- You may see business processes pictured as a set of triangles as shown
below. The purpose of this model is to define the supplier and process inputs,
---------------------- your process and the customer and associated outputs. Also shown is the
---------------------- feedback loop from customers.

Notes
Check your Progress 1
----------------------
Fill in the blanks.
----------------------
1. In current business environment, Economy is ___________ and
market is liberalized. ----------------------
----------------------
Activity 1
----------------------
Consider a retailer for readymade clothing. Should he re-engineer his business/ ----------------------
business processes, in view of the upcoming malls? Please comment.
----------------------
1.4 WHY BUSINESS PROCESS IMPROVEMENT ----------------------
----------------------
Improving business processes is paramount for businesses to stay
competitive in today’s marketplace. Over the last 10 to 15 years, companies have ----------------------
been forced to improve their business processes because we, as customers, are
demanding better products and services. And if we do not receive what we want ----------------------
from one supplier, we have many others to choose from (hence the competitive
----------------------
issue for businesses). Many companies began business process improvement
with a continuous improvement model. This model attempts to understand and ----------------------
measure the current process and make performance improvements accordingly.
----------------------
The figure below illustrates the basic steps. You begin by documenting
what you do today, establish some way to measure the process based on what ----------------------
your customers want, do the process, measure the results and then identify
improvement opportunities based on the data that you have collected. You then ----------------------
implement the process improvements and measure the performance of the new
----------------------
process. This loop repeats over and over again and is called continuous process
improvement, business process improvement functional process improvement, ----------------------
etc.
----------------------
1. Continuous Process Improvement Model
This method for improving business processes is effective for obtaining ----------------------
gradual, incremental improvement. However, over the last 10 years, ----------------------
several factors have accelerated the need to improve business processes.
The most obvious is technology. New technologies (like the Internet) ----------------------
are rapidly bringing new capabilities to businesses, thereby raising the
competitive bar and consequently the need to improve business processes ----------------------
dramatically. ----------------------
Another apparent trend is the opening of world markets and increased
free trade. Such changes bring more companies into the marketplace and ----------------------
competing becomes harder and harder. In today’s marketplace, major ----------------------
changes are required to just stay even. It has become a matter of survival
for most companies. ----------------------
Notes As a result, companies are looking out methods for faster business process
improvement. Moreover, companies want breakthrough performance
---------------------- changes, not just incremental changes, they want it now. Because the
rate of change has increased for everyone, few businesses can afford
---------------------- a slow change process. One approach for rapid change and dramatic
---------------------- improvement that has emerged is Business Process Reengineering (BPR).
2. Why should we Reengineer?
----------------------
Economy is liberalised. The market is going global. Customers are
---------------------- becoming choosy. Competition is getting hot. A company cannot afford
any more profitless turnover and cashless profit. In fact, enterprises that
----------------------
do not reengineer their business processes will simply go out of business
---------------------- in the next few years. BPR is no more a choice. It is an imperative.
---------------------- Check your Progress 2

----------------------
Multiple Choice Single Response.
---------------------- 1. The new paradigm for the organization of a business is
---------------------- i. Process design
---------------------- ii. Process mapping
iii. Process orientation
----------------------
iv. Process analysis
----------------------
----------------------
Activity 2
----------------------
Visit Domino’s (the pizza shop). Write down the process for home delivery
---------------------- of pizza.
----------------------
---------------------- 1.5 CONCEPT OF BPR

---------------------- Business Process Reengineering is the fundamental rethinking and radical
redesign of business processes for achieving dramatic improvement in Critical
---------------------- Success factors like Cost reduction, Quality enhancement, Service improvement
---------------------- and Cycle time reduction.
Business Process Reengineering (BPR)
----------------------
BPR relies on a different school of thought than continuous process
---------------------- improvement. In the extreme, reengineering assumes that the current process is
irrelevant and that there is a need for a new process. Such a clean slate perspective
---------------------- enables the designers of business processes to disassociate themselves from the
---------------------- current process and focus on a new process. It is like projecting yourself into
the future and asking yourself: what should the process look like? What do my
---------------------- customers want it to look like? What do other employees want it to look like?

How do best-in-class companies do it? What might we be able to do with new Notes
technology?
----------------------
Such an approach is pictured below. It begins with defining the scope and
objectives of the reengineering project, then going through a learning process ----------------------
(with the customers, the employees, the competitors and non-competitors,
and with new technology). Given this knowledge base, you can create a ----------------------
vision for the future and design new business processes with the “to be” state
----------------------
defined, you can create a plan of action based on the gap between your current
processes, technologies and structures and where you want to go. It is a matter ----------------------
of implementing the solution.
----------------------
In other words,, the extreme contrast between continuous process
improvement and business process reengineering lies in where you start (with ----------------------
today’s process or with a clean slate) and with the magnitude and rate of the
resulting changes. ----------------------
Over a period of time, many derivatives of radical, breakthrough ----------------------
improvement and continuous improvement have emerged that attempt to
address the difficulties of implementing major changes in corporations. It is ----------------------
difficult to find a single approach that exactly matches a particular company’s
----------------------
needs; the challenge is to know what method to use, when and how to pull it off
successfully, such that bottom-line business results are achieved. ----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. The project deliverables in BPR projects are _____________.
----------------------
Activity 3 ----------------------
----------------------
Visit a Maruti car dealer. Comment on the processes that he adopts for
increasing the database of his customers. ----------------------
----------------------
Summary
----------------------
●● Business Process Reengineering is the fundamental rethinking and radical
redesign of business processes, to achieve a dramatic improvement in ----------------------
Critical Success Factors like Cost reduction, Quality enhancement, ----------------------
Service improvement and Cycle time reduction.
●● Enterprises that do not reengineer their business processes will simply go ----------------------
out of business in the next few years. BPR is no more a choice. It is an ----------------------
imperative.
●● BPR relies on a different school of thought than continuous process ----------------------
improvement. In the extreme, reengineering assumes that the current ----------------------
Notes process is irrelevant and that there is a need for a new process. Such
a clean slate perspective enables the designers of business processes to
---------------------- disassociate themselves from the current process and focus on a new
process
----------------------
---------------------- Keywords
---------------------- ●● eengineering: Reengineering is the fundamental rethinking and radical
R
redesign of business processes, to achieve a dramatic improvement in
----------------------
critical, contemporary measures of performance such as cost, quality,
---------------------- service and speed.
----------------------
----------------------
1. What is BPR? Explain.
---------------------- 2. Explain the necessity of BPR in today’s business scenario.
---------------------- 3. Explain the process orientation of business in brief.
----------------------
----------------------
---------------------- Fill in the blanks.
---------------------- 1. Economy is Globalised and market is liberalised.
----------------------
1. The new paradigm for the organization of a business is:
----------------------
iii. Process orientation
---------------------- 1. The project deliverables in BPR projects are radically improved business
processes.
----------------------
---------------------- Suggested Reading

---------------------- 1. Radhakrishnan, R, S. Balasubramanian. Business Process Reengineering:
Text and Cases. PHI Learning Pvt. Ltd.
----------------------
2. Robson, Mike. Philip Ullah. A Practical Guide to Business Process Re-
---------------------- engineering. Gower Publishing Ltd.
---------------------- 3. Sethi, Sethi Vikram. Organizational Transformation Through Business
Process Reengineering: Applying Lessons Learned. Pearson Education
---------------------- India.

Business Processes and MIS
UNIT
2
Structure:
2.1 Introduction
2.2 Properties of Business Process
2.3 Managerial Functions
2.4 Managerial Roles
2.5 Levels of Management
2.6 Activities of an Organisation
2.7 Types of Information Systems
2.8 System Concepts
2.9 Business Objectives
Summary
Keywords
Suggested Reading
Business Processes and MIS 9

Notes
Objectives
----------------------
----------------------
●● State the business processes.
---------------------- ●● Explain various managerial functions and roles.
---------------------- ●● Discuss the Levels and Activities of Management
---------------------- ●● Classify information systems at various levels.
----------------------
2.1 INTRODUCTION
----------------------
It is necessary to take an unbiased review of a company’s business
---------------------- processes, in order to gain competitiveness for satisfying customer needs.
Business Process Reengineering is now widely accepted as a new tool for
----------------------
(re-)achieving success in a dynamic world. In order to achieve the major
---------------------- improvements that BPR is seeking, a change of structural organisational
variables and other ways of managing and performing work is often considered
---------------------- insufficient. For being able to reap the achievable benefits fully, the use of MIS/
Information Technology (IT) is conceived as a major contributing factor.
----------------------
While MIS/IT has been traditionally used for supporting the existing
---------------------- business functions (i.e. it was used for increasing organisational efficiency) it
---------------------- now plays a role as an enabler of new organisational forms and patterns of
collaboration within and between organisations.
----------------------
2.2 PROPERTIES OF BUSINESS PROCESS
----------------------
A business process is a coordinated and logically sequenced set of work
----------------------
activities and associated resources that produces something of value to a
---------------------- customer.
---------------------- 1. Customer facing

A business process must provide some value to a recipient, who is viewed
---------------------- as the customer of that process. The output of a process can be used either
---------------------- by external customers or internal customers. Customers can also do some
of the work in a business process, when self-service techniques are used.
---------------------- 2. Cross functional, cross departmental and cross enterprise
---------------------- A business process is typically cross functional and cuts across many
different departments. A business process is not confined to one part of
----------------------
the functional hierarchy of an organization, but cuts horizontally across
---------------------- them.
----------------------
----------------------

3. Hands-offs Notes
Hands-offs occurs when a completed task is handed off to another
----------------------
person, for carrying out the next task in the sequence. Hands-offs is the
key elements of a business process and coordinates between different ----------------------
tasks. They are also the cause of errors and delays and are difficult to
manage. The effective management of Hands-Offs is critical for effective ----------------------
redesign of a process. Management of coordination, rather than improved
----------------------
efficiency of tasks, results in better process performance.
4. Information flow around the process ----------------------
This is the information flow needed to produce the output of the process and ----------------------
the information necessary to monitor the process. Altering the dynamics
of information flows is one way of redesigning business processes. ----------------------
5. Knowledge created around the process ----------------------
This includes the collective requisite knowledge about the process that the ----------------------
participants have, which enables them to execute the process effectively
under various conditions. This also includes knowledge about the process ----------------------
that can be synthesised over time by gathering necessary information from
those who interact with the process. Expanding the knowledge, creating ----------------------
capacity of a process is another way of redesigning a process. ----------------------
6. Multiple versions rather than one size fits all
----------------------
A business process has multiple versions, each of which is performed
based on particular conditions. Furthermore, each of these versions is ----------------------
executed many times.
----------------------
7. Value adding mix of a process
----------------------
A business process is made up of value adding work (directly adds value),
Non-value adding work (enables value adding but not it directly) and ----------------------
waste (neither adds value nor enables value). It is clear that waste is
undesirable. The balance between other two elements of the mix is tricky. ----------------------
8. Degree of structure of a process ----------------------
Some types of business processes are highly structured. That is, the ----------------------
process follows a series of well-defined predetermined steps every
time the process is enacted. Other business processes have much more ----------------------
fluidity and cannot be determined in advance. Redesign tactics will differ,
depending on the degree of the structure of a process. ----------------------
----------------------
2.3 MANAGERIAL FUNCTIONS
----------------------
In any organization, irrespective of the department as well the level
at which the employee is working, the following managerial functions are ----------------------
performed by every employee. The relative time spent and the importance of ----------------------
each managerial function will vary from employee to employee depending
upon the industry, department and the level at which he is working. ----------------------

Notes For example, a person working as Production Manager has to perform the
function of leading, while a person working as Human Resource Manager has to
---------------------- spend more time in organising. Similarly, the Corporate Planning Manager has
to spend more time in Planning, while a person working in Production Planning
---------------------- and Controlling (PPC) has to spend more time performing controlling function,
---------------------- along with that at planning.
The various managerial functions performed in any organisation are given
----------------------
below:
---------------------- 1. Planning
---------------------- ●● Establishing organisational goals
●● Developing strategies to achieve goals
----------------------
2. Organising
----------------------
●● Developing the structure of the organisation
---------------------- ●● Acquiring human resources
---------------------- 3. Leading
●● Directing employees and forming task groups
----------------------
●● Motivating and managing employees
----------------------
4. Controlling
---------------------- ●● Evaluating performance
---------------------- ●● Controlling the organisation’s resources

----------------------
Fill in the blanks.
---------------------- 1. Systems are composed of subsystems which are interrelated as well
---------------------- as ______________
----------------------
Activity 1
----------------------
List down a few activities performed by your manager at your work place.
----------------------
Categorise them into planning, organising, leading and controlling.
----------------------
---------------------- 2.4 MANAGERIAL ROLES

---------------------- Every individual performs various roles as given below. The amount of
time spent in each role as well as the relative importance of these roles varies
----------------------
from person to person, depending upon the type of industry, department and the
---------------------- level at which he is working.
----------------------

For example, a PPC Manager has to spend more time in his role as a Notes
Monitor i.e. monitoring planned vs. actual production, while the Purchase
Manager has to spend more time as a Negotiator e.g. negotiating the price of ----------------------
components with suppliers.
----------------------
The various roles performed by every individual in an organisation are
given below: ----------------------
1. Interpersonal ----------------------
●● Figurehead
----------------------
●● Leader
----------------------
●● Liaison
2. Informational ----------------------
●● Monitor ----------------------
●● Disseminator
----------------------
●● Spokesperson
3. Decisional ----------------------
●● Entrepreneur ----------------------
●● Disturbance handler ----------------------
●● Resource Allocator
----------------------
●● Negotiator
----------------------
Activity 2
----------------------
Write down the list of activities performed by you in the organisation that ----------------------
you work. Summarise your role in the organisation.
----------------------
2.5 LEVELS OF MANAGEMENT ----------------------
----------------------
In any organization, there are broad by three levels of management in
every department. ----------------------
●● Top Management
----------------------
●● Middle Management
----------------------
●● First line Management/Low Level Management
For example, in the Sales department at the top management level Vice ----------------------
President Sales; at the middle management level-Sales Manager, and, at the
----------------------
Operational level-Sales Officer are there.
----------------------
----------------------
----------------------

Notes
Activity 3
----------------------
Draw a flow chart indicating the hierarchy in your organisation. Clearly
----------------------
indicate the levels.
----------------------
---------------------- 2.6 ACTIVITIES OF AN ORGANISATION

---------------------- The various activities performed in any organisation are broadly classified
into three types, as given below -
----------------------
●● Strategic Planning
----------------------
●● Tactical
---------------------- ●● Operational
---------------------- Generally, The activities performed at the top management level are
called as Strategic Activities, activities performed at the middle management
---------------------- level are called as Tactical Activities and the activities performed at first line
management level are called as Operational Activities.
----------------------
For example, Vice President sales takes care of strategic planning for the
---------------------- sales department. The sales manager comprises planned sales vs. actual sales
and plan corrective actions if the actual sales are less than the planned sales.
----------------------
The sales officer is executes the job of actual selling and reporting the status of
---------------------- daily sales to the sales manager.
---------------------- 2.7 TYPES OF INFORMATION SYSTEMS

----------------------
Information systems, which cater to the need for information of the
---------------------- various types of activities listed are along:
●● Strategic Planning System
----------------------
●● Tactical System
----------------------
●● Operational System
---------------------- The information system, which caters to the need for information of
strategic activities, is called Strategic Planning System, the system that to the
---------------------- needs of tactical activities is called Tactical system; and the system that caters
---------------------- to the needs of operational activities is called Operational System.
Summary of Classification of Information System: The characteristics
----------------------
of Strategic, Tactical and Operational information systems with respect to
---------------------- various parameters, are given below:
----------------------
----------------------
----------------------

Characteristic Operational Tactical Strategic planning Notes
Frequency Regular, repetitive Mostly regular Often Ad-hoc
Dependability Expected results Some surprises Results often contain ----------------------
of results surprises
----------------------
Time Period The past Comparative The future
Covered ----------------------
Level of detail Very detailed Summaries of data Summaries of data
Source of data Internal Internal & external Mostly external ----------------------
Nature of data Highly structured Some unstructured Highly unstructured
Accuracy Highly accurate data Some subjective data Highly subjective data ----------------------
Typical user First line supervisor Middle managers Top management ----------------------
Level of decision Task oriented Oriented towards control Goal oriented
& Resource allocation ----------------------
2.8 SYSTEM CONCEPTS ----------------------
1. System ----------------------
A system is an integrated set of components or entities that interact to ----------------------

achieve a particular function or goal. Systems have characteristics such
----------------------
as boundaries, outputs, and inputs, methods of converting inputs into
outputs and system interfaces. Systems are composed of interrelated and ----------------------
interdependent subsystems.
----------------------
2. System Boundaries
Every system has a boundary that defines its scope of activities. ----------------------
3. System and Subsystems ----------------------
Systems may consist of numerous subsystems, each of which has elements, ----------------------
interactions and objectives. Subsystems perform specialised tasks related
to the overall objectives of the total system. ----------------------
4. Outputs and Inputs ----------------------
The inner working of a system or subsystem are organised to produce
----------------------
outputs from inputs. In this conversion process, some value or utility
should be added. The output of the one subsystem usually becomes the ----------------------
input of the next. An interface is a connection at the system or subsystem
boundaries. An interface serves as a medium to convey the output from ----------------------
one system to the input of another system.
----------------------
5. Systems and their environments
----------------------
The system’s environment consists of people, organisations and other
systems that supply data to or that receive data from the system. ----------------------
a. Open Systems ----------------------
These operate in an external environment and exchange information
and material with the environment. The external environment ----------------------
consists of the activities external to the system boundary with which ----------------------

Notes the system can interact. An open system needs to receive feedback
to change and to continue to exist in its environment.
----------------------
b. Closed Systems
---------------------- It is relatively self-contained and it does not exchange information
with its environment. Closed systems do not get the feedback from
----------------------
the external environment.
---------------------- 6. System Feedback
---------------------- It is an indicator of current performance rates, as compared to a set
of standards. With effective feedback, continuing adjustments in the
---------------------- activities of a system can be made to assure that the system achieves its
---------------------- goals.
---------------------- 2.9 BUSINESS OBJECTIVES

---------------------- It is necessary to identify the major business objectives of your
organisation. Business objectives are always derived from customer needs and
----------------------
expectations.
---------------------- 1. Departmental objectives which are derived from Business objectives
---------------------- Identify the major objectives of your department. This helps to integrate
and align the efforts of every individual department with the overall
---------------------- business requirements.
---------------------- 2. Functions/Activities performed to achieve departmental objectives
---------------------- Identify Functions/Activities performed in your department to achieve
the objectives of your department. This helps to integrate and align every
---------------------- individual effort with the overall departmental and organisational business
interest.
----------------------
3. Internal Customers and Suppliers
----------------------
It is necessary to identify every individual for every activity performed.
---------------------- ●● Who are my customers? What do I provide to them?
---------------------- ●● Who are my suppliers? What do they provide to me?
4. Identify major business processes in the organisation
----------------------
Generally, the following major business processes are identified in the
---------------------- following areas:
---------------------- 5. Customer Service and Supply Chain
---------------------- ●● Forecasting customer orders
●● Scheduling parts on suppliers
----------------------
●● Planning factory production
---------------------- ●● Making product in the factory and delivering it to the distribution centers
---------------------- ●● Customer ordering, delivering and invoicing

6. New Product Notes
●● Interviewing end users and understanding their needs
----------------------
●● New product planning
●● New product design and manufacturing ----------------------
●● New product marketing plans ----------------------
7. Sales and Marketing ----------------------
●● Market Research/Marketing Research
----------------------
●● Stimulation of end users interest
●● Excellent marketing execution with the customers ----------------------
●● Acquiring new customers ----------------------
●● Developing customer partnerships
----------------------
8. People
----------------------
●● Hiring, appraising, training, developing
●● Communicating ----------------------
●● Reward and recognition ----------------------
●● Developing the organisation to meet customers’ needs
----------------------
For managing these major business processes effectively, it is necessary
to identify information needs and to identify the various types of decisions to ----------------------
be taken. Also, it is necessary to identify the current problems faced in meeting
information needs and to identify decisions that are affected because of lack of ----------------------
information. ----------------------
Check your Progress 2 ----------------------
----------------------
Match the following.
----------------------
i. Production manager a. Controlling
ii. HR Manager b. Analysis and Planning ----------------------
iii. Corporate planning manager c. Training and Development ----------------------
iv. Business processes d. Degree of Output ----------------------
----------------------
Activity 4
----------------------
Visit a college canteen during peak hours. List the activities that the owner ----------------------
has to carry out in order to cater to the customer needs. Write down your
opinion on how they can be reengineered for better service. ----------------------
----------------------
----------------------

Notes Summary
---------------------- ●● business process is a coordinated and logically sequenced set of work
A
----------------------
customer.
---------------------- ●● Business processes have various properties, which must be taken
into consideration while redesigning business processes. Altering the
----------------------
dynamics of information flow around the business process is one way
---------------------- of redesigning of process. Hence, management information system and
business processes are highly interrelated.
----------------------
●● usiness Process Reengineering is now widely accepted as a new tool
B
---------------------- for achieving success in a dynamic world. In order to achieve the major
improvements that BPR is seeking, a change of structural organisational
---------------------- variables and other ways of managing and performing work is often
considered insufficient
----------------------
●● he activities performed at the top management level are called as
T
---------------------- Strategic Activities, activities performed at the middle management level
are called as Tactical Activities and the activities performed at first line
---------------------- management level are called as Operational Activities
----------------------
Keywords
----------------------
●● usiness process: It is a coordinated and logically sequenced set of work
B
----------------------
---------------------- customer or to the organisation.
----------------------
----------------------
1. What are the various properties of business processes? Explain.
---------------------- 2. Explain in brief the various levels of management, activities performed
---------------------- and information systems, with examples.
3. How are business processes and MIS interrelated? Discuss.
----------------------
---------------------- Answers to Check your Progress


1. Systems are composed of subsystems, which are interrelated as well as
----------------------
interdependent.
----------------------
----------------------
----------------------

Check your Progress 2 Notes
----------------------
i. -d
----------------------
ii. -c
iii. -b ----------------------
iv. -a ----------------------
----------------------
Suggested Reading
----------------------
1. Coleman, Kevin G. Reengineering MIS: Aligning Information Technology
and Business Operations. Idea Group Inc. ----------------------
2. Khosrowpour, Mehdi. Cases on Information Technology and Business ----------------------
Process Reengineering. Idea Group Inc.
----------------------
3. Tsai, Hui-Liang. Information Technology and Business Process
Reengineering: New Perspectives and Strategies. Greenwood Publishing ----------------------
Group.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
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----------------------
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Strategic Planning and BPR
UNIT
3
Structure:
3.1 Introduction
3.2 Concept of Strategic Planning
3.3 Strategic Planning Process
3.4 Key Aspects of Strategic Planning
3.5 Contents of the Strategic Plan
3.6 Importance of Strategic Planning
3.7 Developing Mission, Vision, Values and Beliefs
3.8 Customer Groupings Identification
3.9 Strategic Benchmarking
3.10 SWOT Analysis
3.11 Performance Measures Identification
Summary
Keywords
Suggested Reading
Strategic Planning and BPR 21

Notes
Objectives
----------------------
----------------------
●● Explain the key aspects of Strategic Planning.
---------------------- ●● escribe the importance of strategic planning to the success of BPR
D
---------------------- project.
●● Discuss the use of benchmarking in strategic planning process.
----------------------
●● Relate the SWOT Analysis
---------------------- ●● Identify Performance Measures
----------------------
---------------------- 3.1 INTRODUCTION

---------------------- Strategic planning and BPR are closely linked together. The development
of a suite of strategies is an iterative process and involves circular thinking on the
----------------------
basis that optimal strategies will evolve gradually and be very interdependent.
---------------------- Strategic planning process along with BPR calls for a review it in its entirety,
which is then used as a checklist and basis for brainstorming and systematic
---------------------- analysis. As the precursor to developing a strategic plan, it is desirable to clearly
identify the current status, objectives and strategies of an existing business or
----------------------
the latest thinking in respect of a new venture. It encompasses a deep analysis
---------------------- about Strengths, Weaknesses, Threats and Opportunities.
Strategic Planning Principles
----------------------
“Process innovation is meaningful only if it improves a business in ways
---------------------- that are consistent with its strategy. In fact, process innovation is impossible
or at least only accidental, unless the lens of process analysis is focused on a
----------------------
particularly strategic part of the business, with particular strategic objectives in
---------------------- mind.”
---------------------- — Thomas H. Davenport, Process Innovation: Reengineering Work Through

Information Technology
----------------------
3.2 CONCEPT OF STRATEGIC PLANNING
----------------------
The purpose of the strategic plan is to develop a planned response (over
----------------------
a specified planning horizon) to factors that are not within the organisation’s
---------------------- span of control but which will impact mission achievement. The strategic plan
relates the organisation’s mission to these external factors, taking into account
---------------------- the organisation’s baseline capabilities, resource availability and markets
(or customer base). The strategic plan identifies both the factors that can
----------------------
contribute to mission accomplishment and the factors that can inhibit mission
---------------------- accomplishment.
----------------------

A strategic plan is not simply a business plan that has a three to twenty Notes
years horizon. It contains different kinds of information than the annual business
plan and serves a different purpose. ----------------------
In a sense, strategic plan is not a plan at all; it is an assessment of the current ----------------------
or baseline situation of the enterprise, with respect to its mission, extended over
a specified period of time. The baseline situation describes the organisation as ----------------------
it presently is constituted: core-competencies, resources, products etc. and all
----------------------
of the external or environmental factors that impinge upon it: economic, social,
geo-political, technological etc. ----------------------
Each of the out-years is really a scenario of how things might look in that
----------------------
out-year, based on trend lines, and potential paradigm shifts or dislocations that
could affect the mission objectives or operations. In this context, a strategic plan ----------------------
is really an assessment and a “what-if” document. What if voice-recognition
becomes a useful technology in 1996? What if inflation jumps to eight percent ----------------------
next year? What if the reform program in Russia collapses? What if my
----------------------
department gets a new mission in three years? How will these things impact my
current situation? ----------------------
Obviously, the scope, extent and complexity of the strategic plan is
----------------------
dependent on the amount of time and resources devoted to the effort. This is
determined by the importance of the mission from which it is derived and the ----------------------
availability of resources. Therefore, most of the effort and expense take place at
the highest levels in the enterprise. But, very importantly, every business unit in ----------------------
the organisation must develop its own strategic plan or operate under a higher-
----------------------
level strategic plan adjusted to that business unit’s mission. Each lower level
strategic plan will be a sub set of the higher authority plan and consequently ----------------------
easier and less costly to develop.
----------------------
Strategic Plans, Quality and Process Reengineering
There is no difference between the terms Strategic Planning and Strategic ----------------------
Quality Planning. Strategic plan and quality plan are the same. Quality must be ----------------------
built-in to the organisation’s strategic and business plans, not tacked on as an
afterthought. Business unit managers manage successfully by following one ----------------------
plan that integrates all of the elements, including quality, which are important
to the organisation as a whole. ----------------------
Process reengineering is meaningful only if it improves a business in ----------------------

ways that are consistent with its strategy. Alignment between strategies and
----------------------
processes, is essential to radically change a business processes. Strategy and
process objectives must reinforce one another. A good strategic plan is the ----------------------
first phase of business process reengineering. Elements of the strategic plan
are eventually used to construct the annual business plan, which will include a ----------------------
section on process reengineering objectives. When this is done, every process
----------------------
reengineering initiative can be traced back to an objective in the strategic plan,
which, in turn, can be traced back to a mission requirement. ----------------------
----------------------

Notes The Malcolm Baldrige National Quality Award recognises the importance
of strategic planning by assigning 55 points to the Strategic Planning section. In
---------------------- a first-class organisation, strategic planning is tightly integrated with business
planning. Short and long-term goals can be developed through comparative
---------------------- benchmarking of world-class standards. Customers and suppliers (in a customer-
---------------------- centered organisation) must contribute to the planning process.
The strategic plan is the first step in developing an organisation that is
----------------------
mission-driven rather than rule-driven. The strategic plan begins with mission.
---------------------- All elements of the strategic plan, as well as elements in the annual business
plan, are directly connected to mission. The strategic plan documents how
---------------------- the organisation will shape itself to serve customer requirements within the
constraints of its mission. Rule-based organisations do not need a strategic plan
----------------------
because nothing in the plan can overcome what is already documented in the
---------------------- rules and regulations.
Only mission-driven, customer-centered organisations can reengineer
----------------------
processes in a sustainable way. In rule-driven organisations, the regulations,
---------------------- directives, and bureaucracy nullify meaningful attempts to improve processes,
because following the rules supercedes fulfilling the mission objectives and
---------------------- serving customer needs. To illustrate this difference, consider the scene from
the movie From Here to Eternity, where a sergeant is shown refusing to issue
----------------------
weapons to the soldiers as the Pearl Harbor raid is taking place because he does
---------------------- not have the official authorisation to do so. Mission-driven or Rule-driven?
Benefits of Strategic Planning
----------------------
●● To establish stability in an uncertain world
----------------------
●● To capitalise on the rapid changes in technologies
---------------------- ●● To evaluate limitations
---------------------- ●● To look for opportunities
●● To maintain competitive advantage
----------------------
What Strategic Planning Delivers
----------------------
●● n assessment of business trends - How the functional mission is
A
---------------------- changing.
●● An assessment of corporate trends - Corporate directions.
----------------------
●● n assessment of technological trends - What will be economically
A
---------------------- feasible for the future.
---------------------- ●● A plan that is aligned with the vision and objectives of the organisation.
●● A plan to satisfy the critical information requirements of the organisation.
----------------------
Benefits for the Organisation
---------------------- ●● Critical areas for mission success become the focus of strategic planning.
---------------------- ●● Risks are minimised.
----------------------

●● Resource utilisation improve. Notes
●● Flexibility improve.
----------------------
●● Redundancy reduce.
●● Business priorities are establish. ----------------------
●● Overall direction is establishes. ----------------------
●● Backlog is reduce.
----------------------
Cost of No Strategic Plan
----------------------
●● Loss of competitive edge.
●● Crisis management - reactive rather than proactive. ----------------------
●● Diverse directions and redundancy. ----------------------
●● At the mercy of outside influences.
----------------------
●● utomated information systems that are out of date and do not meet the
A
needs of customers. ----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. The scope, extent and complexity of strategic plan depends upon the
time and ____________ devoted to the efforts. ----------------------
----------------------
Activity 1
----------------------
1. Your college/company is organising an intercollegiate Technical ----------------------
Seminar/Annual Day function. List the activities that you will need to
do. ----------------------
2. From the list, which you have mentioned in the above task, categorise ----------------------
each and prepare an action plan for implementing the activities.
----------------------
3. State the benefits you achieved from action plan. Also, mention the
“Gap” in the plan vs actual. ----------------------
----------------------
3.3 STRATEGIC PLANNING PROCESS ----------------------
While not every organisational unit (business unit) is required to develop a ----------------------
strategic plan, every unit is governed by one. Subordinate strategic plans should
always be a subset of higher authority strategic plans. In general, the lowest ----------------------
organisational level requiring a strategic plan is the business unit or functional
area. Below this point, it is sufficient to perform an annual business planning. ----------------------
Let us talk about the concept behind strategic planning. The purpose of ----------------------
any organisation is to allocate resources to the problem of satisfying customer
----------------------
requirements, in the context of mission, taking into account the conditions found

Notes or assumed in the environment in which the organisation exists. The strategic
plan provides a vehicle for defining how the organisation intends to realise its
---------------------- purpose for existence, over a specified planning horizon.
---------------------- The strategic plan defines what an organisation is all about (mission
and vision), who it will serve (customers and other stakeholders), what needs
---------------------- it will fulfill (products and services), how well it will perform (goals and
objectives), and under what terms it will operate (values and beliefs). Strategic
----------------------
planning establishes the external boundaries of the enterprise with respect to the
---------------------- environment in which it operates.
The strategic plan is developed by considering the interrelationships of
----------------------
mission, customer base requirements and environment with respect to potential
---------------------- organisational performance. When there is a gap between the present and
potential performance, a reengineering effort may be required to close the
---------------------- gap. The requirements of the reengineering effort are expressed in terms of
breakthrough objectives. The strategic plan indicates the dimensions of the
----------------------
reengineering project and not the means.
---------------------- Most strategic planning requirements call for a planning horizon of three
to five years, although ten years is not uncommon. Considering that radical
----------------------
reengineering projects may take two to three years to complete and that the life
---------------------- cycle of the improved process is five to seven years, it is clear that the strategic
plan should be long-range in nature. Of course, strategic plans must be revisited
---------------------- and updated every year to capture changes in mission, customer requirements
and the external environment.
----------------------
The principal deliverable in the strategic planning step is the strategic
---------------------- plan itself. This step is considered complete, when the strategic plan has been
---------------------- reviewed and approved by a higher authority.
The following tasks are performed in the strategic planning step:
----------------------
●● Develop/validate the organisational articles of faith.
---------------------- ●● Identify major customer groupings and general customer requirements.
---------------------- ●● Conduct strategic benchmarking to establish performance targets.
---------------------- ●● Strength, weakness, opportunity & threat.

●● Conduct SWOT analysis.
----------------------
●● Identify core competencies.
---------------------- ●● Develop organisation-level assumptions.
---------------------- ●● Develop organisation-level goals & objectives.
●● Prepare breakthrough objectives.
----------------------
●● Identify performance measures.
---------------------- ●● Document the strategic plan.
---------------------- ●● Review and approve the strategic plan.
----------------------

Notes
Activity 2
----------------------
State the mission and vision of any organisation you know.
----------------------
----------------------
3.4 KEY ASPECTS OF STRATEGIC PLANNING
----------------------
Strategic planning begins with the definition or analysis of mission,
and cannot proceed until there is mission consensus among all the planning ----------------------
participants. Mission analysis identifies the spectrum of customers that the
organisation will serve, the broad categories of products and services it will ----------------------
produce, and the way it will measure success. ----------------------
Once a customer base is defined, the next step in strategic planning is to
develop a clear understanding of the characteristics of the groups or classes of ----------------------
customers in this customer base. Once this understanding is established, the ----------------------
organisation can define potential customer requirements, extending over the
planning horizon. ----------------------
Leading organisations have found that it is wise to include customers in the ----------------------
planning process, to increase the confidence level of the strategic plan. The best
organisations have extended the strategic planning process to include all major ----------------------
supplier organisations as well. When suppliers and customers are included in
the planning process, the concept of value-chain management becomes viable. ----------------------
The value-chain is a series of value-added activities and processes that begins ----------------------
within supplier’s organisations and extends to customer’s organisations.
----------------------
An organisation exists within, and must successfully operate within, an
external environment over which it has little or no control. Strategic planning ----------------------
attempts to understand the current environment by collecting and analysing
data; and then describe a potential future environment by reasoning techniques, ----------------------
plotting trend lines, searching for potential paradigm shifts, generating
----------------------
econometric computer models and utilising simulation techniques. Usually, the
future environment is described as a series of potential scenarios that will be ----------------------
obtained if certain specified conditions occur.
----------------------
Given a well-developed scenario, it is possible for strategic planners to
develop a recommended organisational response for that scenario and thus, ----------------------
provide planning guidance that can be used to develop annual business plans.
The annual business plans will then have the effect of moving the organisation ----------------------
in the desired direction.
----------------------
Given enough time and resources, the organisation can develop multiple
scenarios and planned response packages for each potential scenario. Then, as ----------------------
the events unfold, the organisation is prepared for the appropriate response,
----------------------
based on the scenario that seems to best describe reality.
When mission, customer base and the environment are properly considered, ----------------------
the strategic planning process produces a plan that contains, in general, a vision ----------------------

Notes to guide organisational decision making, a thorough situation analysis that can
be used to develop annual business plans and a series of breakthrough objectives
---------------------- that, when realised, will enable the organisation to make great strides forward.
---------------------- It is important to realise that more than half the value of a strategic plan
lies in the preparation. The act of producing a strategic plan sensitises managers
---------------------- to look forward in their thinking so that they can be more proactive, rather than
reactive, in their management practices. It trains their minds to look for clues,
---------------------- events and trends in the environment that may affect or shape the way in which
---------------------- they manage the business. It prepares them to seize opportunities that may
dramatically influence the way in which they can meet customer requirements.
---------------------- This is why it is important to perform strategic planning at several levels in the
organisation. It is critical that operating or line managers do their own planning
---------------------- rather than have it done.
---------------------- Strategic planning in large organisations
---------------------- Small to moderate size organisations generally require only one
strategic plan, which suffices as guidance for the entire organisation. But large
---------------------- organisations, which we can define as those having more than 5,000 employees,
need a strategic plan for every division or department. Otherwise, the strategic
---------------------- plan will either be so broad and general as to be meaningless or so complex
---------------------- and detailed as to be meaningless. If an organisational unit is large enough to
have a stated mission, it is large enough to have a strategic plan. As a guideline,
---------------------- strategic planning should proceed down to the fourth organisation level from
the bottom. At this point, the primary focus of organisational or business units
---------------------- should be on annual business planning within the context of an established
---------------------- strategic plan. So every individual in the organisation should have a copy of the
strategic plan that is in-force in his or her business unit.
---------------------- The Four C’s of a Strategic Plan
---------------------- Strategic plans at subordinate organisational levels must be subsets of the
parent organisational unit’s strategic plan. This should occur naturally, since
---------------------- the subordinate organisation will have a subordinate mission and will probably
---------------------- serve as a subset of the parent unit’s customer base.
Wherever the strategic plan defines a performance requirement, it must
---------------------- also define a means of measurement. These should be expressed in general
---------------------- terms in the strategic plan. The specifics and details of the requirements and
measures are more appropriate in the annual business plan.
---------------------- Subordinate strategic plans are prepared the same way, using the same
---------------------- techniques, as the top-level strategic plan. The form, structure and content of all
strategic plans should be consistent and mutually supporting.
---------------------- Finally, all participants in the strategic planning process should work
---------------------- to ensure that the resulting strategic plan satisfies the four “C’s” approach to
planning which stands for clear, consistent, coherent, and concise. Extracts from
---------------------- policy and marketing documents, working data, descriptions of the planning
process etc. should be excluded from the plan. If needed, these materials can be
---------------------- made available as supporting documents.

3.5 CONTENTS OF THE STRATEGIC PLAN Notes
There is no set table of contents for a strategic plan. The format and ----------------------
structure of the plan is highly dependent on the nature of the enterprise, the
way the plan will be used and the prerogative of the executives or managers ----------------------
responsible for it. In general, the strategic plan should contain the following.
----------------------
Where appropriate, projections for the out-years should be included.
●● Statement of Mission ----------------------
For example, the highest level mission of the Department of Defense ----------------------
(DoD) is to Provide for the Common Defense. All activities within the
DoD must contribute to this mission. As the strategic plan is filtered down ----------------------
through the organisation, each level and each component restates the ----------------------
mission in terms of its own purpose for existence and the way in which
it will contribute to mission fulfillment. The mission statement should ----------------------
define the criteria for mission success.
----------------------
Subordinate business units must not extend their mission statement
beyond the boundaries established by the higher-level business units. ----------------------
●● Vision and Values ----------------------
The vision is a statement of how an organisation intends to fulfill its
mission over the planning horizon. The vision statement is inspiring, ----------------------
provides a clear sense of direction and provides a basis for policy and ----------------------
decision-making. The values statement provides the ethical, moral and
social basis for how the organisation will move toward its vision. The ----------------------
vision statement defines the lines that the organisation will not cross in
pursuit of its mission. ----------------------
●● Delineation of customers and their major requirements ----------------------

Customers are identified, stratified and evaluated in terms of how much ----------------------
resource the organisation is willing to commit in meeting their defined
requirements. If an organisation has only one type of customer, then ----------------------
all of its resources should be committed to satisfying this customer’s
requirements. This section is the basis for analysing priorities and ----------------------
evaluating non-value added processes within the organisation, in terms of ----------------------
customer needs.
----------------------
“Few people in the government ever use the word customer. Most public
organisations do not even know who their customers are. We thought of our ----------------------
customers as the Secretary of Defense, or the Congress, or the American
taxpayer. But we figured out that the people we were supposed to serve ----------------------
were the troops...who defended America.” (Reinventing Government,
----------------------
Osborne/Gaebler, 1992)
●● Major products and services ----------------------
This section evaluates current products and services and identifies ----------------------
opportunities for developing new products and services, taking into
account the strength, weakness, opportunities and threats factor, ----------------------

Notes environmental factors and customer requirements and expectations.
Requirements statements related to customers, products and services
----------------------
must be expressed along with the means and methods that will be used to
---------------------- measure performance and results.
●● Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis
----------------------
This is a critical section of the strategic plan. When this section is
---------------------- well done, the organisation has a clear sense of its baseline condition
(strengths and weaknesses). and what it must do to progress toward its
----------------------
ideal state (capitalise on opportunities, overcome threats). This section
---------------------- provides the basis for setting meaningful business objectives for growth
and improvement.
----------------------
●● Organisation-level assumptions
---------------------- No one has an operational crystal ball that allows one to clearly see the
future. So how does one plan? One way is to create one’s own idea of
----------------------
what the future may hold. We do this by identifying certain aspects of
---------------------- the environment that relate to the organisation’s mission; then we make
an assumption that something is going to happen, thereby allowing us to
---------------------- plan our strategies around as real a future as we can make. Assumptions
form the foundation for our future action plans.
----------------------
●● Competencies
----------------------
Every successful organisation has a competency base that can be leveraged
---------------------- to provide superlative customer service. The strategic plan helps ensure
that the organisation devotes resource to preserving and strengthening its
---------------------- core competencies. This section can provide decision-making data with
respect to what work the business unit does in-house and what work it
----------------------
out-sources.
---------------------- ●● Organisation-level goals
---------------------- For any organisation to be successful in moving toward its vision, it
must have a way to measure whether or not it is on the proper track.
---------------------- Organisational goals form the guidelines on the basis of which the
organisation can measure the success or failure and keep on track.
----------------------
●● Key Technologies
----------------------
Technology is the bedrock of the information age. All organisations
---------------------- must have a strategic outlook on technology with regard to its processes,
products and services. The strategic plan helps prioritise the organisation’s
---------------------- pursuit of technological excellence by highlighting those technologies
that should be aggressively pursued.
----------------------
●● Human Resource Development
----------------------
This section outlines the broad policies and procedures that will be used
---------------------- to develop the employment base. Since process reengineering often has
an impact on people, it is important to define how the organisation intends
---------------------- to deal with people who may be helped or hurt by process reengineering.

Broad reward and recognition strategies should be developed in this Notes
section.
----------------------
Activity 3 ----------------------
Specify the elements to be considered while doing benchmarking for a ----------------------
toothpaste manufacturer.
----------------------
3.6 IMPORTANCE OF STRATEGIC PLANNING ----------------------
Strategic planning begins with the process of truly understanding the ----------------------
organisation. Without this understanding, no measurable improvements can be
----------------------
made. This has become a very important step in the BPR methodology because
it forms the foundation upon which all other procedures and actions are taken ----------------------
during process reengineering.
----------------------
Given below are the steps necessary to perform strategic planning:
1. Secure Executive Commitment ----------------------
Even though “Secure Executive Commitment” is not a formal step in the ----------------------
Strategic/Business Planning Phase, it is no less important to the success of
the before of strategic planning. Executive commitment must be obtained ----------------------
before strategic planning can begin. In fact, the senior executive must ----------------------
lead the planning effort.
----------------------
Executive commitment is essential for success in strategic planning. The
top executive in the organisation must personally support and participate ----------------------
in the effort. In a private sector environment, this will be the chief
executive officer. If the top executive officer does not endorse and get ----------------------
involved in the process, it is not likely that the effort will succeed. The
----------------------
top executive must be committed to the extent that he fully supports the
dedication of resources to complete this effort. The top executive must be ----------------------
fully informed of the money and human resources that will be necessary
to accomplish the effort. ----------------------
The importance of executive commitment cannot be overstressed. If the ----------------------
executives of the organisation do not give their complete approval and
involvement in the strategic planning process, the organisation will tend ----------------------
to interpret the planning process as a waste of time, thereby, increasing
----------------------
the possibility of the effort not succeeding.
2. Gaining and maintaining commitment ----------------------
It is very difficult to create and maintain a sense of commitment in oneself, ----------------------
and even more so, in others.
----------------------
Commitment in others is a perception. It is reinforced in human minds by
the application of psychologically oriented techniques and methodologies. ----------------------
Operational factors are less important than psychological ones, where the
determination or identification of commitment in others is the goal. ----------------------

Notes 3. The perception of Executive Commitment among employees
Commitment by executives is often a perceived condition, as far as the
----------------------
employees are concerned. Therefore, executives must translate what they
---------------------- say and display the commitment, which they have stated, into actions,
which the employees can see, evaluate and most importantly, accept.
----------------------
Research has demonstrated that the most convincing action which an
---------------------- executive can accomplish to convince the employees of has commitment
to a stated project or principle is to spend time doing the action and
---------------------- implementing the principle. Employees invariably equate the amount of
time spent by the executive on a task as evidence of commitment. In fact,
----------------------
this is probably the very best available indicator of executive commitment
---------------------- and prioritisation.
Other actions which the executive can take to emphasise his commitment
----------------------
to a program or principle include:
---------------------- ●● dequate, even over-generous, budgeting of funds for a specific
A
---------------------- program or principle;
●● llocation of scarce or unique assets to the program or principle,
A
---------------------- especially if these assets are high-ranking or what the organisation
perceives as important persons;
----------------------
●● lacing a higher priority on a given program or principle, especially
P
---------------------- if there are a large number of competing projects or principles and
when resources are scarce;
----------------------
●● ssigning additional funding to a given project or implementation
A
---------------------- of a principle, when it gets in to trouble. If other programs and
projects are also in trouble, such allocation will be seen as a proof
----------------------
of emphasis.
---------------------- Employees expect executives to walk their talk and if the executives
merely talk and do not walk, the executives’ lack of commitment will
----------------------
immediately be perceived by middle managers and workers’ who will
---------------------- institutionalise this attitude.
4. Maintaining Commitment in the face of adversity
----------------------
There are a myriad pitfalls which can be encountered when an executive
---------------------- attempts to demonstrate or to gain commitment a given program among
employees. In some instances, even the successful demonstration of
----------------------
strong leadership will not curtail the effects of some barriers. Enthusiasm
---------------------- and commitment of all concerned can be affected adversely.
---------------------- Dr. W. Edwards Deming has stated that as much as 85 percent of the
problems in an organisation result from the behaviour and decision of
---------------------- managers. This is especially true in the arena of actual and perceived
commitment. In this arena, perception plays a key role in determining the
---------------------- attitude of all organisational members.
----------------------

Secure Executive Commitment Notes
Opposition is everywhere!
----------------------
Opposition in the forms mentioned previously can quickly become a
barrier — sometimes an insurmountable barrier — to Strategic Planning and ----------------------
Business Planning and Implementation. It is, therefore, very important to
----------------------
attempt to up in the bud any lack of enthusiasm and opposition to new plans,
wherever they turn up. ----------------------
3.7 DEVELOPING MISSION, VISION, VALUES AND ----------------------

BELIEFS ----------------------
Every organisational unit must be guided by a mission statement that ----------------------
defines why the organisation exists and what it must do to justify its existence.
Everyone must understand the mission because it is the basis for decision ----------------------
making within the organisation. ----------------------
Every organisation should also have a vision statement. Vision is the
framework that guides those choices that determine the nature and direction ----------------------
of an organisation. It is a snapshot of what an organisation wants to be. Every ----------------------
decision and every action taken in the organisation supports either the mission
or the vision; otherwise, they become irrelevant. ----------------------
Mission and vision are organisational attributes. An organisation must ----------------------
also have a written statement of values and beliefs that are cultural attributes.
Values and beliefs govern conduct. They establish the ethical and moral basis for ----------------------
all decision making within the organisation. They define the lines that managers
and employees will not cross in times of adversity. Caution: Do not articulate ----------------------
values and beliefs that cannot or will not stand in the face of adversity. ----------------------
Mission Statement
----------------------
As we have mentioned earlier, the mission statement defines what the
purpose of the organisation is. It identifies in general terms the operations of ----------------------
the organisation, often identifies major products and services and for whom
----------------------
the product and services are provided. The mission statement must take into
account the available resources in the development of mission statement. ----------------------
Given below are a few things that must be kept in mind when developing
----------------------
a mission statement that is accurate and meaningful.
Identify higher authority mandates/constraints ----------------------
Review relevant policy ----------------------

Review applicable directives ----------------------
Review requirements/constraints
----------------------
Identify current resource availability
----------------------
A determination needs to be made as to the finance and manpower that is
and that will be available to the organisation. ----------------------

Notes Vision Statement
Critical questions to be answered:
----------------------
What business do we want to be in?
----------------------
What skills and capabilities do we want to bring to our mission in the future?
---------------------- What will our competitors do?
---------------------- What will we need to do to stay competitive?
---------------------- Critical Questions

A vision statement defines the future direction of the organisation; i.e.
----------------------
where the organisation wants to go. The vision statement defines the direction
---------------------- of the organisation in accordance with its values and beliefs.
Potential sources for identifying future vision are surveys, annual report,
----------------------
interviews, Commander’s Narrative in programming and budgeting documents,
---------------------- long-range planning documents.
Values and Beliefs
----------------------
Values and beliefs are the lifeline of a mission statement. They identify
---------------------- the manner in which the organisation will carry out the mission. Often these
---------------------- statements begin with the phrase: “We believe in....”
Along with the process vision and improvement objectives (to be discussed
---------------------- in later units), this step establishes a foundation for all process reengineering
---------------------- efforts. Process reengineering efforts must support mission, which is guided by
vision, and sustain values and beliefs.
----------------------
3.8 CUSTOMER GROUPINGS IDENTIFICATION
----------------------
---------------------- The next step is to identify and categorise the customer groups that
the organisational unit serves or intends to serve. While the interests of all
---------------------- stakeholders in the organisation must be accounted for, the starting point is
determining who the organisation customers are. Without a clear understanding
---------------------- of customers and their general needs, no other stakeholder interests can be
---------------------- served.
Like mission and vision, a knowledge of customers is fundamental to
---------------------- decision making within the organisation. Every decision serves customer
---------------------- interests in some way, directly or indirectly otherewise, it becomes irrelevant.
Customer identification is also the starting point for process reengineering
---------------------- efforts. Without a customer focus, all efforts at process reengineering are
destined to be futile.
----------------------
The more that is known about customers, individually or as groups, the
---------------------- more effective will be the organisation’s strategic planning and, eventually,
process reengineering efforts. In private-sector enterprises, technology is
----------------------
making it possible to evaluate and understand individual customer needs and
---------------------- customise services to fit these needs. In public-sector enterprises, this level of
precision is neither practical nor necessary.
To gain an understanding of your customer base. Notes
Identify your Customers
----------------------
Customers are identified based on the existing products and services,
which are identified in the mission statement. Particular care should be taken ----------------------
to identify all potential customer areas that may be opened as a result of the
----------------------
vision statement. The vision statement may take the organisation in different
directions with a different set of customers. Organisations have both external ----------------------
and internal customers.
----------------------
Who are External and Internal Customers?
External customers are located outside of the organisation. These are the ----------------------
“ultimate” customer; i.e. the customers that must be satisfied for the organisation ----------------------
to survive.
Internal customers are located within the organisation. These customers are ----------------------
no less important than the external customers because internal customers are ----------------------
dependent upon these products and services to support the external customers.
Establish critical customer requirements and needs ----------------------
The current level of service should be analysed. A matrix can be developed ----------------------
identifying which products and services are provided to each customer is
----------------------
developed. In identifying customers, it is helpful to separate them into two group
:Primary customers and other customers. This will be useful in determining the ----------------------
prioritising needs. The list of customers are identified in the left hand column
and the list of existing products and services identified in the top row. See figure ----------------------
3.1.
----------------------
Product #1 Product #2 Product #3 Product #4
----------------------
Primary Customer
----------------------
Customer A X X
Customer B X X ----------------------
Other Customer ----------------------
Customer C X X ----------------------
Fig. 3.1: Customer Matrix
----------------------
Customer surveys and interviews are useful in providing an indication of
what products and services they are interested in and the level of satisfaction in ----------------------
the quality of existing products and services.
----------------------
Another matrix can be prepared to identify new products and service
needs, products and services no longer required, and products and services which ----------------------
require improved quality. Customers are again identified in the left column and ----------------------
customer needs are identified in the top row. The relationship between customer
and need be indicated in each block. See fig. 3.2. ----------------------
----------------------

Notes Need A Need B Need C Need D
Primary Customer
---------------------- Customer A V - - S
Customer B S S - S
----------------------
Other Customer
---------------------- Customer C S - W -
Customer D S - S W
----------------------
“V” - indicates very strong relationship
---------------------- “S” - indicates strong relationship
---------------------- “W” - indicates weak relationship
---------------------- “.” - indicates no relationship

Fig. 3.2: Customer Need Matrix
----------------------
Prioritise customer requirements and needs. Based on surveys and
---------------------- interviews with customers, existing and potential products and services should
be prioritised. This will assist in identifying what the important areas of
---------------------- concentration for vision achievement are. It will be also useful in determining
---------------------- which processes should be analysed for potential improvement.
Current and potential competitors should be identified and ranked
----------------------
according to potential threat. Competitors are those organisations, which
---------------------- provide comparable products and service or have the potential to provide the
products and services needed by your organisation’s customers.
----------------------
Test customer requirements and needs against mission statement. Identify
---------------------- inconsistencies. For example: What are the customer needs the cannot be
supported within the existing mission? What mission is no longer supported by
---------------------- customer needs?
---------------------- Develop a prioritised list of customer requirements that will be met by the
new mission.
----------------------

---------------------- Multiple Choice Single Response.
---------------------- 1. The confidence level of strategic plan is increased by
i. Documenting, reviewing and approving it
----------------------
ii. Including customer in the process
----------------------
iii. Sending plan to customer for review
---------------------- iv. Proper planning
----------------------
----------------------
----------------------

Notes
Activity 4
----------------------
1. You are the Chairman of a supermarket chain in India. List all the
----------------------
elements of “Content of strategic plan”.
2. Yours is one of the leading management institutes in your area. Carry ----------------------
out SWOT analysis in the context of strategic planning process.
----------------------
----------------------
3.9 STRATEGIC BENCHMARKING
----------------------
Strategic benchmarking is now a fundamental component of strategic
planning and is absolutely necessary for the task of constructing a process ----------------------
vision. Strategic benchmarking is the basis for setting performance targets for
processes based on discovering what other organisations with similar processes, ----------------------
products or services and customer constituencies have done. ----------------------
Strategic benchmarking provides a breath of fresh air to counteract the
stagnation of looking only within the organisation for process improvement ----------------------
ideas and performance targets. It is quite possible that the results of strategic ----------------------
benchmarking will indicate a need to revisit the organisation’s vision statement,
which may look puny when compared to what others are accomplishing at ----------------------
present.
----------------------
The technique of strategic benchmarking is well documented. A complete
and rewarding strategic benchmarking program will take three to six months to ----------------------
complete, although it can be done parallel with other methodology tasks and
----------------------
steps. Strategic benchmarking is usually done on a peer-to-peer basis, that is the
senior executives in the benchmarking organisation meet with senior executives ----------------------
in the target organisations and junior managers with the junior managers. Best
results are obtained when the senior executive in the business unit writing the ----------------------
strategic plan is a full participant in the benchmarking program.
----------------------
3.10 SWOT ANALYSIS ----------------------
Once an organisation has articulated it mission, vision, values, and beliefs, ----------------------
understood who its customers are and what are their general needs are, and has
looked outward for ideas and inspiration, it is ready to analyse its situation ----------------------
with respect to the environment in which it operates. This is called a SWOT ----------------------
analysis, which is the acronym for the areas that are studied. The results of
the analysis are used to develop breakthrough objectives in the strategic plan, ----------------------
business plans and process reengineering plans. Combined with the results of
strategic benchmarking, this analysis is all that is required to establish process ----------------------
performance gaps, which, along with performance measures, is the essential ----------------------
input for processing reengineering projects.
----------------------
----------------------

Notes SWOT analysis is usually performed in a workshop environment by
functional managers assisted by staff analysts who have collected meaningful
---------------------- data on environmental factors, statistics, and measures. Strengths and
weaknesses supply the basis for understanding how the organisation can best
---------------------- respond to probable or potential opportunity and threat factors that exist in the
---------------------- external environment. Along a mainstay in military planning, SWOT is equally
valuable as a planning technique for business-type processes. While the geo-
---------------------- political factor is most important in military planning, the technical factor is
often the most critical in non-military planning.
----------------------
Identify core competencies
----------------------
Core competencies are those things that the organisation does best they
---------------------- are, in a sense, the capabilities that define the organisation. Core competencies
directly relate to mission and customer service and are those processes and
---------------------- functions, which could not be realistically outsourced without substantially
weakening the organisation. SWOT analysis, combined with strategic
----------------------
benchmarking, helps to crystalise just those functions and processes that make
---------------------- up the core business.
Recognising and defining core competencies are crucial because process
----------------------
reengineering efforts should focus on them first. If the core competency of
---------------------- an organisation is an outbound logistics, that should be the focus of process
redesign and process reengineering efforts. Other supporting processes should
---------------------- be subject only to streamlining and continuous improvement efforts, until the
core processes are world class.
----------------------
This task is a continuation of SWOT analysis and is best performed in
---------------------- a workshop environment. Strategic benchmarking projects should also focus
---------------------- on core competencies so that the organisation has a basis for evaluating status,
with respect to other organisations with similar processes, and identifying
---------------------- performance gaps that need attention in process reengineering projects.
---------------------- Develop organisation-level assumptions

With inputs from the results of the tasks described above, the organisational
---------------------- unit is ready to identify the specific assumptions that will guide the planning
---------------------- process. Predicting the future is difficult, if not impossible. But to plan for the
future, a baseline that describes these possible events has to be established.
----------------------
This becomes an exercise in educated guessing. However, from the
---------------------- information gathered from the SWOT analysis, it is possible together good idea
of what lies ahead. It is from this baseline that the actions necessary for the
---------------------- organisation to move toward its vision are defined.
---------------------- Another aspect of defining assumptions is the concept of contingency
assumptions. If, at the time of the development of its strategic plan, an organisation
---------------------- finds itself, in an environment of total instability, the organisation may want to
consider defining assumptions that would reflect more than one outcome of a
----------------------
particular event. If the second outcome actually comes to pass, the organisation has
---------------------- then developed objectives and action plans to deal with the contingency.

Define organisation-level goals and objectives Notes
Once the mission has been defined and a vision of established, the
----------------------
organisation must begin to describe how it is plans to accomplish its mission
and make progress toward the vision. An organisation’s goals are actually ----------------------
refinements to its mission, which address critical issues within the organisation.
Goals help describe the organisation’s purpose. Max Richards, in his book, ----------------------
Setting Strategic Goals and Objectives, describes goals as “open-ended
----------------------
statements of purpose to be used when managers do not want to become
entangled in specifics.” Goals may be translated as “What are we going to ----------------------
accomplish” and objectives as “How are we going to accomplish it”.
----------------------
Objectives, like goals, must support the achievement of the mission
and the furtherance of the vision. Objectives are characterised by four things: ----------------------
(1) They relate to a stated goal. (2) They provide a means for measuring the
progress towards the goal. (3) They are a set of targets for achieving the goal. ----------------------
(4) They set a timeframes within which the target will be achieved.
----------------------
Prepare Breakthrough Objectives
----------------------
While the results of strategic planning have many uses within the
organisation, one of the most important is to provide data that can be used to ----------------------
develop a series of breakthrough objectives that, if accomplished, move the
organisation toward its vision or desired future state. Breakthrough objectives ----------------------
along with process vision (developed later in the methodology), and performance ----------------------
measures (developed next in the methodology) are the only necessary inputs to
process reengineering. With this information, process reengineering teams can ----------------------
work out the details of how to achieve the breakthrough objectives.
----------------------
A breakthrough objective is one that describes a quantum leap in one or
more performance areas. If a logistics process averages two weeks to deliver a ----------------------
spare part, a breakthrough objective may be to reduce that time to one or two
days. Entire processes, companies, and even industries have been established ----------------------
on this principle (Automated Teller Machines, Federal Express, and personal ----------------------
computers are respective examples).
Because breakthrough objectives result in co mplete transformation from ----------------------
an organisational standpoint, they must be developed with or by the most senior ----------------------
leaders in the organisation. Breakthrough objectives can only be accomplished
as top-down initiatives. The impacts on every facet of the organisation are ----------------------
profound, and the risks associated with implementing them are substantial.
Also for the same reasons, there can be no more than one to three breakthrough ----------------------
objectives in the strategic plan. The strategic plan should not be cluttered ----------------------
with minor or incremental objectives best specified in lower level business or
operational plans. ----------------------
Breakthrough objectives are developed in a workshop environment using ----------------------
the outputs from the previous strategic planning tasks. The most important
input to this workshop is usually the strategic benchmarking report, which often ----------------------
establishes the basis or credibility for forming a breakthrough objective.
----------------------

Notes 3.11 PERFORMANCE MEASURES IDENTIFICATION
---------------------- Every strategic and business objective, whether it applies to maintaining
the status quo, incrementally improving a process, or radical process innovation,
---------------------- is defined in terms of measures. There is no way to define, monitor or manage
processes or process improvements without measures. There is no accountability
----------------------
for results because there is no way to determine results. Four categories of
---------------------- measures that must be defined for every strategic or business plan objective are
as follows:
----------------------
1. Fitness for Purpose (FFP): It provides a means of measuring the
---------------------- effectiveness of a process or product with respect to stakeholder interests.
---------------------- 2. Conformance to Standard (CTS): It provides a means of measuring the

quality aspects of a process or product.
----------------------
3. Process Time Measures (PTM): It quantifies the response and cycle time
---------------------- characteristics of a process.
4. Process Cost Measures (CST): It weighs the efficiency and productivity
----------------------
characteristics of a process.
---------------------- Furthermore, each measure category should be applied to each of the four
categories of process stakeholders, as appropriate. The process stakeholders are
----------------------
listed below:
---------------------- ●● Customers
---------------------- ●● Suppliers
●● Higher Authority
----------------------
●● Resource Providers
----------------------
This means that there are 16 possible measurement categories for a
---------------------- process, each of which will have more or less relevance or importance based
on the requirements in the strategic plan and the nature of the process itself.
---------------------- This is critically important for the breakthrough objectives defined in the plan.
Performance measures should be developed off-line by planning team members
----------------------
and reviewed and approved during a workshop session.
---------------------- ●● Document the Strategic Plan
---------------------- Once all the above tasks have been completed, the next task is to document
the results of strategic planning in the form of the strategic plan itself.
---------------------- The essence of a strategic plan is substance and clarity, not volume. A
complete strategic plan for a typical organisational unit should take no
----------------------
more than ten pages of text supplemented with charts, diagrams and
---------------------- drawings, wherever meaningful. Backup and substantiating data should
be maintained in separate files for reference and for use in the succeeding
---------------------- planning cycles.
---------------------- ●● Review and approval of the Strategic Plan
The strategic plan is subject to a final review and approval process by
----------------------

the organisational management and the higher authority. If the strategic Notes
plan is a valid subset of higher authority strategic plans, and if the senior
leadership participated in the planning process as recommended, then ----------------------
it should not take long to secure approval. Once the plan is approved,
everyone in the organisation should be briefed in whole or in part, only ----------------------
to the extent that each can direct his actions to fulfilling the strategic ----------------------
objectives.
----------------------
What makes a successful Strategic Planning Organisation?
Research has demonstrated that organisations which have successfully ----------------------
implemented Strategic Plans have some characteristics in common. All studies
----------------------
have demonstrated, for example, that without strong and enduring support
from the CEO or the Corporate Board, Strategic Plans are not effectively ----------------------
implemented.
----------------------
Other common characteristics include:
●● Most are small or medium-sized elements; ----------------------
●● ost (not unexpectedly) have a better-than-average good Strategic
M ----------------------
Plans, which contain assumptions with clearly and precisely established
milestones; ----------------------
●● ost have a willingness to tolerate change and an ability to withstand the
M ----------------------
uncertainties, which change can generate;
----------------------
●● any have systems, processes, or strategies which are worth hiding from
M
competitors. ----------------------
How Can An Ordinary Manager Cope With Pitfalls In Commitment and
----------------------
Enthusiasm?
Strategic Plan implementation, and indeed all of Management, is an ‘Art ----------------------
and not a Science.’ Therefore, one should not expect Ten-Easy-Steps-Program
----------------------
for the implementation of a Strategic Plan. This realisation is the first step
understanding what is required in strategy implementation. ----------------------
The responsibility for Strategic Plan implementation lies with the Chief ----------------------
Executive Officer (CEO) Commander or Director and it cannot be delegated.
Each leader must continuously guard against the resultant frustration, waning ----------------------
of enthusiasm and the evaporation of once strong commitment, which can occur
in a long-term implementation. ----------------------
Training is also essential, as it assists employees and managers to ----------------------
understand and bridge the problems and irritations which change brings.
----------------------
Communication, both up-and-down communication and lateral
communication, must be improved if employees and managers are to understand ----------------------
how and what is to be implemented. Good communication also assuages
employee’s fears which often can pervade an organisation. In an organisation ----------------------
where most important organisational decisions are made in secret, it is common ----------------------
to see fear running rampant among the employees.
----------------------

Notes Summary
---------------------- ●● he strategic planning phase delivers a set of business goals and
T
requirements, which are expressed in terms of customers (process
----------------------
beneficiaries) and customer needs. This phase takes into account, or
---------------------- guides the development of, the organisation’s mission, vision, values and
beliefs. The strategic plan defines what an organisation is all about; who
---------------------- it will serve, what needs it will fulfill, and under what terms it will operate
(values and beliefs).
----------------------
●● he development of a suite of strategies is an iterative process and involves
T
---------------------- circular thinking on the basis that optimal strategies will evolve gradually
and be very interdependent. Strategic planning process along with BPR
----------------------
calls for a review it in its entirety, which is then used as a checklist and
---------------------- basis for brainstorming and systematic analysis
●● he strategic plan must be consistent with the constraints placed upon the
T
----------------------
organisational unit by the higher authority. This means that no element of
---------------------- the strategic plan can conflict with the mission, vision, values and beliefs
expressed by the higher authority. Benchmarking to develop corporate
---------------------- goals and performance measurements is considered a part of strategic
planning.
----------------------
●● I t is very important understand the critical link planning that strategic
---------------------- planning has with the BPR process. To be able to ask “How am I going
to get there?” on first needs to where one is leaded.
----------------------
---------------------- Keywords
---------------------- ●● trategic Planning: Strategic planning is an organisation’s process
S
of defining its strategy and making decisions on allocating resources
----------------------
to pursue this strategy, including capital and people. The outcome is
---------------------- normally a strategic plan, which is used as a guidance to define functional
and divisional plans, including Technology, Marketing etc.
----------------------
●● enchmarking: It is not a mere act of copying others, but the art of
B
---------------------- finding out in a systematic and legal way, how others do something better,
so that the practices of these successful companies can be adapted (may
---------------------- be improved upon and used) to reach a higher level of excellence.
----------------------
----------------------
1. Why is Strategic Planning so important to the success of a BPR project?
----------------------
2. What are the key aspects of Strategic Planning?
---------------------- 3. What is benchmarking and how can it be used during the Strategic
---------------------- Planning process?
----------------------

Answers to Check your Progress Notes
Fill in the blanks. ----------------------
1. The scope, extent and complexity of strategic plan depends upon the time
and resources devoted to the efforts. ----------------------
----------------------
----------------------
1. The confidence level of strategic plan is increased by
----------------------
ii. Including customer in the process
----------------------
Suggested Reading ----------------------
1. Doumeingts, Guy, J. Browne. Modelling Techniques for Business Process ----------------------
Re-engineering and Benchmarking. Springer Science & Business Media.
----------------------
2. Grover, Varun, William J. Kettinger. Process Think: Winning Perspectives
for Business Change in the Information Age. Idea Group Inc. ----------------------
3. Johansson, Henry J. Business Process Reengineering Breakpoint ----------------------
Strategies for Market Dominance. Wiley Publication.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
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----------------------
----------------------
----------------------
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----------------------

Strategic Impact of IT and BPR
UNIT
4
Structure:
4.1 Introduction
4.2 The Impact of Information Technology on Process Innovation
4.3 Types of Business Processes and the Role of Information Technology
4.4 Business Systems Planning
Summary
Keywords
Suggested Reading
Strategic Impact of IT and BPR 45

Notes
Objectives
----------------------
----------------------
●● Explain the types of Business Processes
---------------------- ●● Discuss the strategic impacts of IT on Process innovation.
---------------------- ●● Relate business system planning and BPR.
----------------------
4.1 INTRODUCTION
----------------------
Re-engineering of business processes needs special attention, because the
---------------------- multi-faceted structure of multinational corporations increases the complexity
of business processes, thereby influencing the options for redesign.
----------------------
Information technology (IT) plays an important role in the reengineering
---------------------- concept. It is considered a major enabler of new forms of working and
collaborating within an organisation and across organisational borders.
----------------------
Workflow management systems are especially considered a significant
---------------------- contributor to improved process efficiency. Also, ERP (Enterprise Resource
Planning) vendors, such as SAP, positioned their solutions as vehicles for
---------------------- business process redesign and improvement.
---------------------- IT has to be monitored constantly to determine whether it can generate
new process designs or contribute to the performance of a business process. The
---------------------- breakthrough of BPR is closely connected with IT, which opens new dimensions
of process reorganisation. Moreover, those who take the initiative in process
----------------------
improvement/redesign, influence the role of IT.
---------------------- “Only processes can be reengineered. Before you can reengineer your
processes, you must identify them.” Michael Hammer, The Reengineering
----------------------
Revolution, A Handbook, 1995.
---------------------- Strategic impact of IT can be achieved in either of the following forms
----------------------
4.2 THE IMPACT OF INFORMATION TECHNOLOGY
---------------------- ON PROCESS INNOVATION
---------------------- Impact Explanation
---------------------- Automational Eliminating human labour from a process
---------------------- Informational Capturing process information for the purpose of
understanding
----------------------
Sequential Changing process sequence or enabling parallelism
---------------------- Tracking Closely monitoring process status
---------------------- Analytical Improving analysis of information and decision making
---------------------- Geographical Coordinating processes across distances

Integrative Coordination between tasks and processes Notes
Intellectual Capturing and disturbing intellectual assets
----------------------
Activity 1 ----------------------
Cite an example, from your experience, for each type of impact of Information ----------------------
Technology on Process Innovation. ----------------------
----------------------
4.3 TYPES OF BUSINESS PROCESSES AND THE ROLE
OF INFORMATION TECHNOLOGY ----------------------
----------------------
●● Inter-organisational Processes
These take place between two or more business organisations. For example, ----------------------
Process of Ordering from a supplier. The electronic linkages between the
----------------------
retailer and supplier and between the supplier and manufacturer enable all
parties to cut costs, maintain optimum inventories, and meet customers’ ----------------------
needs.
----------------------
●● Inter functional Processes
These cross several functional or divisional boundaries. IT can facilitate ----------------------
new product development by creating opportunities to work across
----------------------
geographical boundaries and by affording greater simultaneity.
●● Interpersonal Processes ----------------------
These involve tasks within and across small workgroups, typically within ----------------------
a function or a department. Network based applications such as electronic
mail support decision making in these processes. ----------------------
IT Applications improve business processes ----------------------
●● Applications supporting product development processes ----------------------
IT can support automated design processes that improve speed of design
and prototyping. It helps to coordinate the product development process ----------------------
by providing repositories of common information on product designs, ----------------------
components and specifications via electronic messaging and conferencing.
●● Applications supporting order fulfillment processes ----------------------
In terms of order fulfillment, IT can improve processes that begin when ----------------------
a customer makes a request and end when the revenue is collected. EDI
network enables corporate customers to send and receive orders, to check ----------------------
the shipment status on orders, and to exchange forms of various types. ----------------------
●● Applications supporting logistical processes
----------------------
Logistical processes deal with the transmission of goods between an
organisation and its suppliers and customers. IT can support logistical ----------------------
processes in a number of ways, using locational recognition, asset
management and logistical planning system. ----------------------

Notes
----------------------
----------------------
1.
Which of the following is one of the terms of strategic impact of IT
---------------------- achievement?
---------------------- i. MS word document
ii. Internet
---------------------- iii. Automation
---------------------- iv. Software
----------------------
Activity 2
----------------------
---------------------- Cite an example each, in your experience, for the use of IT in Business
Process. (For example, Product development process - Auto Cad, Pro – E,
---------------------- Solid Works etc.)
----------------------
---------------------- 4.4 BUSINESS SYSTEMS PLANNING
---------------------- The next major step in the planning process is the assessment of the
organisation from the perspective information management. During this step,
---------------------- you will identify the major processes that are necessary to accomplish the
mission successfully and the major information classes (categories of data) that
----------------------
are needed to support the processes. In addition, the organisation will begin a
---------------------- systematic look at its current and planned information system requirement.
Even though an organisation may have already conducted a study of
----------------------
this type in the past, it is necessary to validate and, if appropriate, update the
---------------------- information included in that study. The following will give you suggestions on
how to perform this assessment.
----------------------
Develop/Validate the Business Systems Plan
---------------------- The Business Systems Planning (BSP) methodology was introduced by
---------------------- IBM in the year 1970 as a way to incorporate information systems strategy into
organisational or business strategy.
---------------------- Many derivatives of the BSP methodology are in use today in the US
---------------------- federal organisations, under many different names. BSP is also referred to
as Information System Planning (ISP), Business Systems Planning (BSP),
---------------------- Information Requirements Study (IRS) and Information Strategy Planning
(ISP). We will refer to this step in the planning phase as business systems
---------------------- planning or BSP.
---------------------- Functional managers contemplating process reengineering will find
that performing or updating a business or information systems planning
----------------------

study provides valuable, time-saving information that will enhance process Notes
reengineering efforts.
----------------------
Business systems planning is concerned with understanding the inter-
relationships of process, organisation, data, application (functional) systems, ----------------------
and geo-technical computer and data communications platforms as they relate
to strategic and business goals, objectives and strategies. These entities already ----------------------
exist in many organisations and process reengineering efforts should understand
----------------------
how these structures may enable or constrain modifications to the existing
information infrastructure. ----------------------
The objectives of a business systems planning study are to -
----------------------
●● Determine information systems priorities
----------------------
●● Plan long-lived information systems based on enduring business processes
●● Manage systems resources to support business objectives ----------------------
●● Assign systems resources to high-return projects ----------------------
●● I mprove relationships between functional and technical organisational
units. ----------------------
The benefits of conducting a study include: ----------------------

●● oordination of process reengineering plans with technical improvement
C ----------------------
plans
●● Assurance that the data, application, and geo-technical architectures are ----------------------
aligned with the functional process requirements ----------------------
●● Directed information systems strategies
----------------------
●● ction plans and resource requirements for information systems
A
implementation strategies. ----------------------
Business systems planning studies are performed (or reviewed and ----------------------
updated) prior to the launching of process reengineering projects. Therefore, the
principal contribution of such a study is to establish a well-documented baseline ----------------------
for information systems architectures as an input to process reengineering efforts.
Later, as the process-reengineering project enters the Enterprise Engineering ----------------------
Phase, these architectures will be redesigned to accommodate the needs of the ----------------------
redesigned process. When the systems architectures are redesigned, technical
staff can ensure that systems improvements in support of a redesign process are ----------------------
properly integrated into the existing information systems infrastructure in such
a way that it does not adversely affect other functional processes. ----------------------
In addition, when the major processes are assessed against the critical ----------------------
success factors that were identified and defined in the strategic plan, the
organisation can get a better feel as to where it may want to initiate process- ----------------------
reengineering projects. This gives the organisation a set of prioritised process ----------------------
areas from which to select initiatives from.
It should be noted that business systems planning methods were ----------------------
developed long before the concept of process improvement came about. Now ----------------------

Notes that functional managers are expected to take the lead in directing information
systems support, business systems planning is reduced to a supporting role
---------------------- in process reengineering efforts. This does not invalidate its importance in
ensuring a stable and well-functioning information systems infrastructure.
----------------------
The following tasks are performed in the business systems planning step:
----------------------
●● Review/validate the current business systems planning architectures
---------------------- ●● Identify major business processes
---------------------- ●● Develop the business process/organisational map
●● Prepare/validate information systems architectures
----------------------
●● Review and approve the business systems plan.
---------------------- Step 1: Review/Validate Current Business Systems Plan
---------------------- Many federal organisations have an existing business systems plan that
should be reviewed and validated. It is critically important that this review takes
---------------------- the organisation’s Enterprise Model into consideration.
---------------------- Eventually, all functional and business processes and supporting
information systems will need to conform to this overarching view of the
----------------------
enterprise.
---------------------- During the review, the elements of the business systems plan that do
not conform to the organisation’s Enterprise Model, or are out of date, or may
----------------------
be affected by potential process reengineering projects, should be noted and
---------------------- scheduled for corrective action. If the existing business systems planning study
is over five years old, it would be worth the investment to conduct another
---------------------- study. It should be possible to do such a study in less than two calendar months.
Since business systems planning is no longer the primary engine driving
----------------------
reengineering projects.
---------------------- Step 2: Identify Major Business Processes
---------------------- The first objective of a business systems planning study is to develop or
validate a portfolio of current business or functional processes. Major processes
---------------------- are identified and defined from an enterprise-wide perspective, independent
---------------------- of process reengineering efforts to ensure that all functional managers in an
organisational unit agree with, what business processes exist and how they
---------------------- directly, or indirectly, support the mission. At this time, processes can be given
an acceptable name and decomposed into valid sub-processes.
----------------------
The strategic plan, completed in the previous task, is the starting point for
---------------------- process identification. Any mission changes or significant changes with respect
to customer service may result in the need for new processes.
----------------------
The rules for identifying processes include the following:
----------------------
●● Processes are independent of organisational structure.
---------------------- ●● Processes are significant to the nature and purpose of the enterprise.
----------------------

●● he naming convention for processes is verb followed by name, such as
T Notes
Design Project or Provide Spare Parts.
●● ell-defined processes can be either aggregated or disaggregated; in
W ----------------------
other words, they have a logical structure. ----------------------
●● Process redundancy is to be avoided.
----------------------
At this time, breakthrough objectives in the strategic plan should be
thoroughly studied to determine if their accomplishment may require any ----------------------
modifications to the portfolio of processes for the component. It is quite
possible that a radical improvement called for by the strategic plan may call for ----------------------
new levels of cross-functional process integration, or eliminate some processes ----------------------
or sub processes. Understanding potential impacts resulting from the strategic
planning process will help guide the completion of the next task. ----------------------
Step 3: Develop Process Map (Process/Organisation Matrix) ----------------------
A process map or matrix shows the relationships between business
processes and organisational (functional) entities. Table 4.1 illustrates such a ----------------------
matrix. ----------------------
With the Process vs. Organisational Matrix, it is easy to identify functional units
----------------------
that should be a part of any process reengineering effort. If the Plan Project
process is to be reengineered, the Planning Division, the Engineering Division ----------------------
and the Construction Division must be included in the cross-functional team for
process reengineering deliverables. ----------------------
Table 4.1: Process vs. Organisational Matrix ----------------------
Functional Unit Planning Engineering Construction Operating ----------------------
Process Division Division Division Division
Conduct Study D / ----------------------
Plan Project D M M
Design Project M D M ----------------------
Construct Project M D M
----------------------
Operate Project D
Maintain Project M M D ----------------------
D = Decision-maker/Primary Responsibility, M = Major Involvement,
----------------------
/ Minor Involevment
Step 4: Prepare/Validate Architectures ----------------------
Business systems planning continues with the preparation and/or ----------------------
validation of several other matrices:
----------------------
●● Process vs Data Class
●● Process vs Automated Information System (AIS) ----------------------
●● AIS/Geo-technical Platforms ----------------------
●● Business Strategy (Breakthrough Objective) vs Process
----------------------
●● Business Strategy (Breakthrough Objective) vs Organisation
----------------------

Notes ●● Business Strategy (Breakthrough Objective) vs Data Class.
The use of matrices can help to ensure that all the elements of process
---------------------- reengineering are understood in terms of their interrelationships. Some of the
---------------------- specific uses include the following:
●● nderstanding how data is shared throughout the organisation and
U
---------------------- between business processes.
---------------------- ●● Illustrating process and information system interdependencies.
---------------------- ●● etermining the relative importance of data with respect to business
D
strategies.
---------------------- ●● I dentifying organisational responsibilities and ensuring optimum
---------------------- participation in cross-business process reengineering projects.
●● nderstanding legacy and migration system impacts on process
U
---------------------- reengineering efforts.
---------------------- Step 5: Prepare, Review and Approve the Business Systems Plan
---------------------- The final task in this step is to prepare the formal documents for the
business systems planning study. These documents need not be as extensive as
---------------------- required in the BSP methodology, since the process reengineering methodology
supplants many of the functions of BSP.
----------------------
A reasonable business systems planning study report will have the
---------------------- following sections:
---------------------- ●●
Executive summary
●● B
ackground section explaining the objectives of the study and the methods
---------------------- used.
---------------------- ●● S
tudy perspective highlighting the objectives expressed in the strategic
plan, especially the breakthrough objectives.
----------------------
●● F
indings with respect to information system’s needs, requirements, and
---------------------- opportunities.
●● Potential constraints based on the information systems infrastructure that
----------------------
may hinder process reengineering efforts and suggested means of dealing
---------------------- with these constraints.
●● I nformation systems strategies and recommendations based on the
----------------------
implications of the strategic plan.
---------------------- ●● H
igh-level architectures and matrices for use in the process reengineering
projects.
----------------------
●● A
ppendices of detailed architectures, including the application portfolio
---------------------- and data structures.
---------------------- The business systems plan should be reviewed and approved by all
functional managers in the organisational units, covered by the plan. Once
---------------------- approved, this plan, along with the strategic plan, is passed to the next step in
the process reengineering methodology, namely business planning.
----------------------

Notes
----------------------
----------------------
1. BPR breakthrough can closely be linked to IT because
----------------------
i. It gives new designs of processes
ii. It suggests new product designs ----------------------
iii. It opens new dimensions of process recognition ----------------------
iv. It initiates process measurement ----------------------
----------------------
Activity 3
----------------------
Develop a process map to carry out a change in product features, based on ----------------------
customer feedback (market survey). Identify Decision maker/Responsibility,
Major and Minor Involvement. ----------------------
----------------------
Summary
----------------------
●● To sum up, business systems planning provides an excellent medium for
----------------------
synchronising the interests of functional users with those in the technical
support organisations. The matrices and other deliverables inherent in ----------------------
business systems planning ensure clarity and precision of terminology
and language, which are critical to the success of a process reengineering ----------------------
project.
----------------------
●● Information technology (IT) plays an important role in the reengineering
concept. It is considered a major enabler of new forms of working and ----------------------
collaborating within an organisation and across organisational borders.
----------------------
Workflow management systems are especially considered a significant
contributor to improved process efficiency ----------------------
●● IT has to be monitored constantly to determine whether it can generate
new process designs or contribute to the performance of a business ----------------------
process. The breakthrough of BPR is closely connected with IT, which ----------------------
opens new dimensions of process reorganisation
----------------------
Keywords ----------------------
●● usiness Systems Planning (BSP) and Business Information Control
B ----------------------
Study (BICS): These are two information system planning study
methodologies. BSP and BICS analyse data management problems that ----------------------
result from systems design approaches, to optimise the management of
----------------------
technology.
----------------------

Notes
----------------------
1. List and define the five key aspects of Business Systems Planning.
---------------------- 2. Describe the linkage of the processes identified in the Business Systems
Planning to the organisation’s Enterprise Model.
----------------------
3. What is the final result of a Business Systems Planning & how does it aid
---------------------- in conducting a BPR project?
---------------------- 4. What are the various impacts of IT on Process Innovation?
---------------------- 5. Explain the role of IT in different types of business processes.

---------------------- 1. What from the following is one of the terms of strategic impact of IT
achievement?
----------------------
iii. Automation
----------------------

1. BPR breakthrough can closely be linked to IT because:
----------------------
iii. It opens new dimensions of process recognition
----------------------

---------------------- 1. Grover, Varun, William J. Kettinger. Business Process Change: Concepts,
Methods, and Technologies. Idea Group Inc. (IGI).
----------------------
2. Mohapatra, Sanjay. Business Process Reengineering: Automation
---------------------- Decision Points in Process Reengineering. Springer Science & Business
Media.
----------------------
3. Papp, Raymond. Strategic Information Technology: Opportunities for
---------------------- Competitive Advantage.
---------------------- 4. Robson, Mike, Philip Ullah. A Practical Guide to Business Process Re-
engineering. Gower Publishing, Ltd.
----------------------
---------------------- Reengineering: New Perspectives and Strategies. Greenwood Publishing.
----------------------
----------------------

BPR Principles
UNIT
5
Structure:
5.1 Introduction
5.2 Principles of BPR
5.3 Business Process Re-engineering in the Early 1990’s
Summary
Keywords
Suggested Reading
BPR Principles 55
Notes
Objectives
----------------------
----------------------
●● State the various BPR principles
---------------------- ●● Explain the implementation of BPR
---------------------- ●● Discuss the Benefits of BPR
---------------------- ●● Review the development of BPR
----------------------
5.1 INTRODUCTION
----------------------
The ultimate goal of process design is to suggest one or many alternative
---------------------- solutions to the current situation. The best alternative should satisfy the
goal of organisation mentioned in the policy document. Also, the suggested
----------------------
alternative should take into account requirements already changed or are
---------------------- likely to be changed. Process design (or business re-engineering or balance
sheet engineering or process improvement) is still more of an art than a true
---------------------- engineering discipline. There are few guidelines and no natural laws. Discussed
below are some basic principles, which field better results in process design.
----------------------
---------------------- 5.2 PRINCIPLES OF BPR

---------------------- ●● Organise around outcomes, not tasks
---------------------- This principle means assigning one person or a team to accomplish a task,
rather than using the traditional assembly line approach with many people
---------------------- taking many different steps. The case manager at Mutual Benefit Life,
for example, was responsible for accomplishing an outcome; processing
----------------------
an insurance application. In an electronics company, a customer service
---------------------- representative is responsible for all order-filling, assembly, delivery and
installation tasks. It is important to organise around the outcome, i.e.
---------------------- the expected result. It means that the objective, which you want to be
achieved by the reengineering, should be clearly defined and organised
----------------------
internally in line with objective, to achieve the same. Do not spend time
---------------------- in merely organising around the task.
●● Have those who use the output of the process, to perform the process
----------------------
In most organisations, if a marketing manager wants to purchase something,
---------------------- he has to submit a purchase requisition to the purchasing department.
Why does the marketing manager have to be a customer of the purchasing
----------------------
department? In a reengineered system, department managers can make
---------------------- their own purchases using a shared database of approved vendors. This
system eliminates costly paper work involved in the traditional purchasing
---------------------- procedures, and safeguards the role of purchasing in negotiating the best
vendor terms.
----------------------

●● erge information processing work into the real work that produces
M Notes
the information
When the information processing work is merged into the real work ----------------------
that produces the information, the probability of errors is reduced. For ----------------------
example, the person who is actually inspecting the goods should also
prepare the inspection report on the computer system. ----------------------
●● reat geographically dispersed resources as though they were
T ----------------------
centralised
Some of the greatest inefficiencies occur because decentralised divisions ----------------------
maintain their own information systems. For example, each of Hewlett- ----------------------
Packard’s 50 manufacturing units had its own purchasing department. This
redundancy was costly and prevented HP from negotiating favourable ----------------------
prices. In redesigning the system, HP provided each manufacturing unit
with an access to a shared vendor database. Central purchasing officials ----------------------
maintained the database and used purchasing histories to negotiate ----------------------
contracts for the entire corporation.
----------------------
●● ink parallel activities during the process, rather than at the end of
L
the process ----------------------
In complex manufacturing, design and engineering projects, for example,
multiple activities can be accomplished by different teams working ----------------------
concurrently, using shared database that makes it possible to integrate ----------------------
the final result. Electronic communication systems are also useful in
coordinating work groups. One major defense contractor implemented a ----------------------
computer based video-teleconferencing network to enable workgroups in
dispersed locations to communicate the progress of various activities. ----------------------
●● ut the decision point where the work is performed and build control
P ----------------------
into the process
----------------------
Speed in decision-making is vital for survival. Decision making with
speed is possible only if proper delegation has been done. Empowered ----------------------
employees can take decisions with speed. However, it is necessary to
----------------------
build control into the processes, to avoid misuse of empowerment.
●● Capture information once at the source ----------------------
One of the problems with traditional information systems is that the same ----------------------
information may be created, maintained and used in many different places.
In the insurance application screening process at Mutual Benefit Life, for ----------------------
example, the same information was individually entered into as many as
----------------------
five different databases. When the process was reengineered, integrated
databases were designed. Integrated databases not only eliminated the ----------------------
repetitive data entry but also assured better data integrity.
----------------------
----------------------
----------------------
BPR Principles 57
Notes
----------------------
Fill in the blanks.
----------------------
1. Decision-making with speed is possible only if _____ is done.
----------------------
---------------------- Activity 1
----------------------
Cite a few examples in your day-to-day life or in your industry, classifying
---------------------- these examples as “objectives” and “tasks” in the context of the BPR
principle.
----------------------
---------------------- 5.3 BUSINESS PROCESS RE-ENGINEERING IN THE

---------------------- EARLY 1990’S
---------------------- The principles of Business Reengineering emerged during the early 1990s.
Given below is a list of some important principles (Coulson-Thomas, 1994).
----------------------
●● Externally, focus on end customers and the generation of greater value for
---------------------- customers.
●● Give customers and users a single accessible point of contact through
----------------------
which they can harness whatever resources and people are relevant to
---------------------- their needs and interests.
●● Internally, focus on harnessing more of the potential of people and

---------------------- applying it to those activities that identify and deliver value to customers.
---------------------- This principle tends to be overlooked.
●● Encourage learning and development by building creative working

---------------------- environments. This principle has been almost forgotten in many
organisations, the current emphasis being to squeeze more out of people
----------------------
and making them work harder, rather than improving the quality of work
---------------------- life and working more cleverly.
●● Think and execute as much activity as possible horizontally, concentrating
---------------------- on flows and processes (including communication) through the
---------------------- organisation.
●● Remove non-value added activities undertake parallel activities; speed up
---------------------- response and development times.
---------------------- ●● Concentrate on outputs rather than inputs and link performance measures
and rewards to customer related outputs.
---------------------- ●● Give priority to the delivery of value rather than the maintenance of
---------------------- management control. The role of the manager is being redefined and an
emphasis on command and control is giving way to empowerment and
---------------------- the notion of the coach and facilitator.
●● Network related people and activities and virtual corporations are

----------------------
becoming commonplace in some business sectors.

●● I mplement the system of work teams and case managers extensively Notes
throughout the organisation.
●● Move discretion and authority closer to the customer, and re-allocate ----------------------
responsibilities between the organisation, its suppliers and customers.
----------------------
●● Encourage involvement and participation. This requires error-tolerant
leadership. ----------------------
●● Ensure that people are equipped, motivated and empowered to do what is ----------------------
expected of them.
●● Wherever possible, people should assume full responsibility for managing ----------------------
and controlling themselves. This requires planning skills.
----------------------
●● Work should be broadened without sacrificing depth of expertise in
strategic areas. ----------------------
●● Avoid over-sophistication. Do not replace creative thinking with software
----------------------
tools.
●● Keep the number of core processes to a minimum (approximately 12). ----------------------
They should all be directed to external customers. Management processes
----------------------
such as corporate planning processes which deliver too late to have any
real impact, can lack both internal and external customers. ----------------------
●● Build learning, renewal, and short feedback loops into business processes.
----------------------
●● Ensure that continuous improvement is built into the implemented

solutions. Experience of Business Reengineering can re-awaken interest ----------------------
in TQM (Total Quality Management); both are natural complements. This
is widely overlooked. ----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. In complex projects, multiple activities are accomplished by ________
concurrently. ----------------------
----------------------
Activity 2 ----------------------
Draw a flowchart for booking a train ticket and mark decision points, in the ----------------------
context of the BPR principle.
----------------------
----------------------
Summary
----------------------
●● The goal of process design is to suggest one or many alternative solutions
to the current situation. Process design (or business re-engineering or ----------------------
balance sheet engineering or process improvement) is still more of an art
than a true engineering discipline ----------------------
----------------------
BPR Principles 59
Notes ●● It is important to understand the various BPR principles and implement
them while reengineering, as far as possible. The extent to which you
---------------------- succeed in implementing BPR principles will be directly proportionate to
the business gains received
----------------------
---------------------- Keywords
---------------------- ●● Process Design: The activity of etermining the workflow, equipment
needs, and implementation requirements for a particular process.
----------------------
---------------------- Self-Assessment Questions

---------------------- 1. What are the various principles of BPR? Explain.
---------------------- 2. Explain the principles of BPR in the early 1990s.
----------------------
----------------------
---------------------- 1. Decision-making with speed is possible only if proper delegation is done.
----------------------
----------------------
Fill in the blanks.
----------------------
1. In complex projects, multiple activities are accomplished by different
---------------------- teams concurrently.
----------------------
Suggested Reading
----------------------
1. Elzinga, D. Jack, Thomas R. Gulledge. Business Process Engineering:
---------------------- Advancing the State of the Art. Springer Science & Business Media.
---------------------- 2. Jacobson, Ivar, Maria Ericsson, Agneta Jacobson. The object advantage:
business process reengineering with object technology. Addison-Wesley
---------------------- Publisher.
---------------------- 3. Robson, Mike. Philip Ullah. A Practical Guide to Business Process Re-
engineering. Gower Publishing Ltd.
----------------------
4. Sethi, Sethi Vikram. Organizational Transformation Through Business
---------------------- Process Reengineering: Applying Lessons Learned. Pearson Education
India.
----------------------
5. Srinivasan, R. Business Process Reengineering. Tata McGraw-Hill
---------------------- Publication.
----------------------

Business Process Reengineering Techniques and
Methodologies UNIT
Structure: 6
6.1 Introduction
6.2 Enablers of Re-engineering Project
6.3 Process Re-designing Techniques and Tools
6.4 Collaborative Tools of BPR
6.5 Business Re-engineering Project Management
6.6 Selecting BPR Methodologies
Summary
Keywords
Suggested Reading
Business Process Reengineering Techniques and Methodologies 61

Notes
Objectives
----------------------
----------------------
●● Explain the factors associated with Re-engineering.
---------------------- ●● Discuss on Re-Engineering Project Management.
---------------------- ●● Enumerate Process Redesign tools and techniques.
---------------------- ●● Discuss various BPR methodologies.
----------------------
6.1 INTRODUCTION
----------------------
In BPR adoption of methodology assumes importance. The methodology
---------------------- helps in streamlining the plan for placing the various process elements in
synchronisation. One can formulate the standard methodology best suited for a
----------------------
particular process, which allows the organisation to build on prior experiences
---------------------- in the choice of activities, relations, products, team composition, timing, and
cost estimation. A BPR methodology gives us a structured framework, which
---------------------- provides a step-by-step roadmap best ensures consistent and correct results.
Methodologies are built from capturing strategies, techniques, methods and
----------------------
tools into this framework. Methods are encapsulated practices focusing on a
---------------------- specific structured approach (i.e., process-modeling methods, data modeling
methods, cost modeling methods). Tools are software packages that automate
---------------------- a method or methodology, enable the correct use of a method and aid the user
in faster application of the method. The following subsections detail such an
----------------------
approach.
---------------------- Process Project Management is normally divided into two steps as given
---------------------- below:
Project initiation activities are based on the external environment and
---------------------- external opportunities. Business vision is taken up in the first step. Goal setting
---------------------- and the selection of business process to be reengineered are the tasks included in
the first step. The second step serves to redesign the selected business process.
---------------------- This step takes into account the potential offered by Information Technology
(IT) and applies these potential to the business processes, selected for re-
---------------------- engineering.
---------------------- The next step concerns implementation of the redesigned business
processes into day-to-day operations. This step involves transition of work
---------------------- and attainment of perceived goals. The different processes and methodologies
---------------------- involved in Process Re-engineering are discussed in this chapter.
In the first step, the need for process re-engineering is stated in clear
----------------------
terms. A Vision statement that serves as a “light house” for the process re-
---------------------- engineering activities, to be taken up at a later stage is prepared. It is necessary
to define the responsibilities for stating the case for action and preparing the
---------------------- Vision Statement. Normally, this initiative needs to be taken at the higher level

of management, which sets the tone of the Process Re-engineering activities to Notes
be performed subsequently. To create a “vision”, careful planning is needed.
----------------------
Vision and goal setting for BPR projects
(a) The vision should be rooted in the guiding principles which are important ----------------------
for the organisation and they should clearly specify the intent of the top
----------------------
management in providing the ethical and model basis for any activity,
undertaken within the organisation. Unless this is ensured, there is a ----------------------
risk of the Process Re-engineering activity getting drifted from the basic
principles, for which the organisation stands. ----------------------
(b) The Vision Statement should be futuristic in approach and not to be ----------------------
based on the present constraints alone. It is desirable to position the
organisation in the future and then review the path, which is to be taken ----------------------
and the obstacles that are likely to be faced. For this purpose, the Vision
----------------------
Team should place itself in the future and look back to the person, as
if it reviewing the developments in the past to find out what were the ----------------------
difficulties faced and what were the choices for the projects that are
presently being implemented. ----------------------
(c) The scope for the Process Re-engineering Project as well as the objectives ----------------------
should be well defined and well understood. This is necessary because
there is a tendency to drift from the defined scope and objectives as the ----------------------
project progresses. ----------------------
(d) Further, although there may be very many activities and objectives, which
need to be attained, it is necessary that the Process Re-engineering Project ----------------------
should be an actionable project. ----------------------
(e) The Vision Statement should be the work of a team of which every
----------------------
member has different skills. It is desirable that the Vision Team should
have the following individuals: ----------------------
(1) Individuals who understand the business today.
----------------------
(2) Outsiders who are objective towards the business and the outcome
of the business, but who have no knowledge of the current processes ----------------------
and systems within the organisation.
----------------------
(3) A few technical experts or groups.
----------------------
(4) Some people, working very closely with the customers and business
partners of the organisations, executives and front line employees ----------------------
who would be implementing the Process Re-engineering Project.
----------------------
In order to ensure that the team works well, it is desirable to select as team
members people who are open-minded and optimistic, well respected within ----------------------
the organisation and those who are good team players.
----------------------
Although the team may be comprised as above, it is necessary that the
team should have a thorough knowledge of the subject concerned and for this, it ----------------------
is necessary to bring such knowledge in the team by learning about the business
----------------------

Notes customers, business partners and the best practices followed by the competitors
as well as non-competitors of the organisation. The Vision Statement is normally
---------------------- not a product of a “brain storming” session, because a vision should normally
go beyond what is known and even beyond what is not known.
----------------------
Identifying the processes for Re-engineering:
----------------------
In the second step of Process Re-engineering, the organisation should
---------------------- identify the processes that are fit for the Re-engineering Project. For identifying
the processes, the following criteria are normally applied:
----------------------
(a) What Processes are currently most problematic?
---------------------- (b) What Processes are critical accomplish the objectives of the organisation
---------------------- and have the greatest impact on the customers of the organisation?
(c) What processes are most likely to be successfully redesigned?
----------------------
(d) What is the scope of the Process Project and what is the total cost involved?
----------------------
(e) What are the strengths and weakness of the Re-engineering Team and
---------------------- what is the commitment level of the process owners and the sponsors of
the Process Re-engineering Project?
----------------------
(f) Can continuous improvement deliver the required improvements?
---------------------- (g) Is the process under question outdated or is the technology, which is used
---------------------- to implement the process is outdated?
---------------------- 6.2 ENABLERS OF RE-ENGINEERING PROJECT

---------------------- It is necessary to evaluate the factors that enable the Reengineering
Project. Normally, Information Technology (IT) and organisational factors
----------------------
are the enablers for the Process Reengineering Project. The potential of IT,
---------------------- delivering the desired outcome, should be carefully analysed before the Process
Reengineering Projects are taken up.
----------------------
Secondly, the skills of the Process Re-engineering practitioners, their
---------------------- knowledge and commitment, and their motivation level are very important
for the success of the Process Re-engineering Project. The organisational
---------------------- culture and procedures are equally important factors for the success of the Re-
---------------------- engineering Projects.
While taking up BPR Projects, it is necessary to understand the current
---------------------- processes thoroughly, to understand the performance capabilities of the current
---------------------- processes. The normal techniques, which can be used for understanding the
current processes, include “Flowchart Technique”, “Fish Bone Diagram” and
---------------------- “Quality Function Deployment Technique.” Normally, participant observations
as well as non-participant observation in the processes help in understanding the
---------------------- current processes. In participant observation, the analyst actually participates in
---------------------- the current processes as “member” of the processes, owning the team, whereas
in non-participant observation, the Process Analyst observes the flow of the
---------------------- processes as an external observer who is not any way party to the process

or process out-come. While it is necessary to study the current process, care Notes
should to be taken to avoid over-study of the current processes, since the current
processes are sought to be replaced by the new processes. ----------------------
Creation of New Processes Designs ----------------------
After studying the current processes, the team can start designing new
----------------------
business processes. The approach, normally followed in this regard, is to start
with a “clean slate”, without taking into account the legacy processes that are ----------------------
currently followed. Secondly, while devising the new processes, the current
rules, procedures and values need to be suspended, since BPR is all about new ----------------------
approach, rules and values.
----------------------
Implementation of Re-engineering Processes
----------------------
After the processes are re-designed, the implementation of the reengineered
processes is undertaken. During this step, “Management of Change” is a most ----------------------
important task. The management of change includes (a) management of IT
Project, (b) management of people and (c) management of the re-engineered ----------------------
processes. It is necessary that the top management provides leadership during ----------------------
the implementation of the processes and supports the re-engineered team during
the earlier steps as well as through all the phases of implementation. Normally, ----------------------
it is considered desirable that the introduction of re-engineered processes is
done in a phased manner, based on the pilot case and post implementation ----------------------
assessment of the pilot case. The post-implementation assessment in a Process ----------------------
Re-engineering Project is a continuous process, since the Business Process Re-
engineering itself is a continuous process. ----------------------
----------------------
6.3 PROCESS RE-DESIGNING TECHNIQUES AND TOOLS
----------------------
While creating new business processes, the following techniques are followed.
(a) Indicative thinking ----------------------
(b) Flowcharting ----------------------

(c) Creative Process Redesign ----------------------
(d) Process Benchmarking
----------------------
(e) Simulation
----------------------
(f) Re-engineering Software
Process Benchmarking can be done when a sufficient number of cases are ----------------------
reported and are available for the purpose of comparison of the reengineered ----------------------
processes.
Re-engineering and Continuous Improvement ----------------------
Process Re-engineering differs from the traditional continuous ----------------------

improvement approach in certain aspects, although in many aspects they are
----------------------
similar to each other, as can be seen below:
----------------------

Notes Sr. Similarities Re-engineering Continuous Improvement
No.
---------------------- 1. Basis of Analysis Process Process
2. Performance Measurements Rigorous Rigorous
----------------------
3. Organisational Change Significant Significant
---------------------- 4. Time Investment Significant Significant
[Harvard Business School for Process Innovation Re-engineering Work through
---------------------- IT by Thomas Daronport Boston]
---------------------- Re-engineering and Continuous Improvements: the differences
---------------------- Sr. Differences Re-engineering Continuous Improvement

No.
---------------------- 1. Level of Change Radical Incremental
2. Starting Point Clean Slate Existing Process
---------------------- 3. Participation Top-down Bottom-up
4. Typical Scope Broad, Cross-functional Narrow within function
----------------------
5. Risk High Moderate
---------------------- 6. Primary Enablers Information Technology Statistical Control
7. Type of Change Cultural and Structural Cultural
---------------------- It is also a practice to integrate re-engineering and process improvement
---------------------- activities by --
(a) Sequencing change initiative.
----------------------
(b) Creating a portfolio of process change programs.
----------------------
(c) Limiting the scope of work design.
---------------------- (d) Undertaking Improvement through Innovation.
---------------------- Vision
---------------------- The objectives of re-engineering should be stated in qualitative and
quantitative terms and the Vision Statement should include goals for -
----------------------
(a) cost reduction
---------------------- (b) time of mark
---------------------- (c) quality of the project
---------------------- (d) customer satisfaction level

(e) financial indicators.
----------------------
An example of a Vision Statement for a banking industry could be: “We
---------------------- will enable our customers to access their funds from anywhere and at any
time during the day and would also provide him the transfer of funds from
----------------------
anywhere to anywhere”. Normally, the top management within organisation
---------------------- has the responsibility to communicate these important messages to the Senior
Management and later on, to the rest of the firm. In the Process Re-engineering
---------------------- Project, the Vision Statement serves as the first communication. However, the
communication should be a continuing process.
----------------------

Notes
----------------------
Fill in the blanks.
----------------------
1. __________________ Framework is achieved through BPR
methodology. ----------------------
----------------------
Activity 1 ----------------------
Study the Vision and Goal Statement of any two companies you know. ----------------------
----------------------
6.4 COLLABORATIVE TOOLS OF BPR ----------------------
Collaborative Tools used for Process Re-engineering ----------------------
ITprovides a lot of computer-based tools, which can be used during the Process
Re-engineering Project, to enable different people to work together and share the ----------------------
information. These tools allow a virtual “on-line meeting” and “data sharing.” ----------------------
(Some examples of General Collaborative Tools are mentioned the end of this
----------------------
section.)
Collaborative Tools during the Planning Phase ----------------------
During the first phase, the Planning Phase, the following activities are ----------------------
included --
----------------------
(a) Ensure the support and sponsorship of the top management.
(b) Communicate the need for change. ----------------------
(c) Define the scope and boundaries of the project. ----------------------

(d) Select team members, who have the proper skills and attributes for the ----------------------
project.
----------------------
During this phase, the BPR Team has to reach the basic Senior Executives,
located at different places. ----------------------
Collaborative Tools such as e-mail, Electronic Related Board and Video ----------------------
Conferencing, can help disseminate information to the entire organisation.
For example, the Senior Management can use tools like Net-making, Video ----------------------
Conferencing, Bulletin Boards etc. for exchanging views with each other and
tools like e-mail can be used for faster communication amongst themselves. ----------------------
The electronic Whiteboard can be used to inform all the employees of the ----------------------
organisation about the new Processes of Re-engineering Project. The use of
Collaborative Tools during planning, avoids mistakes such as not involving all ----------------------
concerned directly with the project, failing to engage all management levels
in the change and in completing the communication or sending inconsistent ----------------------
signals. ----------------------

Notes During the second phase analysis, the following activities are performed.
(a) Conducting benchmarking,
----------------------
(b) Interviewing the employees, managers and senior managers,
---------------------- (c) Gathering customer data,
---------------------- (d) Understanding the present process and changed management.
During this phase, collaborative tools like chat (audio and text) can be used
---------------------- to contact the stakeholders in the process. A questionnaire can be mailed over
e-mail or a Web Page can be created, over which, responses may be solicited.
----------------------
The Benchmarking Stage can be conducted by coordinating cover-makers
---------------------- and non-disclosure agreement on a white-board before mailing or faxing the
---------------------- questionnaire. The tools mentioned in the Annexure help in collecting the
information, without physical movement of the team to remote locations. The
---------------------- use of such tools and means of communication enables the employees to know
what to expect and why the change is needed in the organisation.
----------------------
Devising and improving the new processes, after the earlier phase of
---------------------- analysis of current processes, BPR team takes up design and improvement of the
new processes. The activities included in this are generating new ideas, creating
---------------------- a vision of the ideal process to design the new processes, preparing cost-benefit
---------------------- analysis, obtaining approvals for the design and managing the change and the
communication related to the proposed process designs.
---------------------- Collaborative Tools
---------------------- Examples of Generic Collaborative Tools
---------------------- Tool Description
---------------------- Chat Use this to conduct toll-free conversations. No need to

wait for
---------------------- (Audio and Text) something to arrive in your mailbox.
---------------------- Whiteboard Permits real time display of drawings, pictures or
documents for group discussion and comment.
---------------------- Participants can annotate in real time as well.
---------------------- Bulletin Board Used to post notices and facilitate discussions on any
topic.
----------------------
Video Use video at a desktop computer or a video
---------------------- teleconferencing center to see the person or group with
whom you are working virtually.
----------------------
Discussion Groups Topics are posted to a website for discussion and
---------------------- comment where
---------------------- (newsgroups) participants can follow a line of discussion on a topic.
---------------------- File Sharing Tools Virtual file cabinets allow information to be stored on
web servers and are available to anyone having access
---------------------- to the site and electronic permission to use the files.

Presentation Tools These are used in a virtual auditorium and allow lectures Notes
and briefings to be given to an audience.
----------------------
Application Sharing Using this tool, an entire team can use an application
running on one computer to revise documents. ----------------------
Text Tools Allows live text input and editing by group members.
----------------------
Once complete, the text document can be copied into a
word processing software. ----------------------
E-Mail The most popular way of outrunning “snail-mail”.
----------------------
Persistent capability This is the ability to preserve files, briefings or other
team/project material for future reference. Properly ----------------------
organised, it becomes a knowledge management device ----------------------
and is invaluable in a long term effort.
Instant messaging Most popularly known as “text chat”, this allows real ----------------------
time exchange of notes and messages. ----------------------
Activity 2 ----------------------
----------------------
List the generic collaborative tools and state the most appropriate occasion
of using them (for example, White Board used in meetings, seminars etc.). ----------------------
----------------------
6.5 BUSINESS RE-ENGINEERING PROJECT
----------------------
MANAGEMENT
----------------------
One way to classify Business Reengineering projects is based on their
organisational scope (Ponce-de-Leon/Rai/Melcher, 1995), which can be ----------------------
narrow or broad. Another way is to classify by objective (Johansson/McHugh/
----------------------
Pendlebury/Wheeler III, 1993). Table 6.1 combines both views; matrix rows
describe the organisational view, columns describe the objectives view. ----------------------
Table 6.1: Classification of Business Reengineering Projects
----------------------
Project Type Process Achieving Break-Point
Improvement Best-In-Class Rewriting the ----------------------
Cost-Reduction Competitive Rules ----------------------
Parity
Intra-functional Example 1.1.: Example 1.2. Example 1.3.: A ----------------------
Projects are Eliminate costly Reengineer the company uses
----------------------
aimed at single paper work by sourcing process a digital voice
and isolated introducing an to ensure that recording system ----------------------
tasks, activities or e-mail system the lowest cost to streamline
single function. for internal suppliers are its acquisition ----------------------
communication. being selected. process, and
----------------------
to improve
communications. ----------------------

Notes Project Type Process Achieving Break-Point
Improvement Best-In-Class Rewriting the
---------------------- Cost-Reduction Competitive Rules
---------------------- Parity
Inter-functional Example: 2.1.: A Example 2.2.: Example 2.3.: A
---------------------- Projects target bank has created Introduce self- bank dissolves
cross functional a simplified, directed work all existing 120
----------------------
business one page teams to the orderbranches, and
---------------------- processes, but are form for loan management introduces an
contained within applications for process in a extremely user-
---------------------- a business unit. those customers, manufacturing friendly direct
seeking up to Rs. company. banking system
----------------------
50 k on the Internet.
---------------------- Inter- Example 3.1.: Example 3.2.: Example 3.3.:
organisational Link up with Reengineering An automotive
---------------------- Projects bridge one particular the delivery company
between two or vendor for cost process between a externalises
----------------------
more business saving purposes German machine all employees,
---------------------- units, such as the in product design manufacturer and except a staff
company and its and parts delivery all its European of thirty
---------------------- customers and (single source automotive people. Former
suppliers. concept). parts suppliers employees turn
----------------------
(just-in-time into entrepreneurs
---------------------- processes). and form a
network of
---------------------- suppliers together
---------------------- with other
vendors.
---------------------- Most Business Reengineering projects fall into the categories 1.2., 1.3.,
---------------------- 2.1., 2.2., 3.1. and 3.2.. Breakpoint projects of type 2.3. and 3.3. are rare, due
to high implementation risks associated with large-scale projects, as well as
---------------------- the aspirations of some project managers for quickly gaining project success
as a basis for career advancements. It is questionable, whether the small scope
---------------------- project type 1.1. can by classified as a Business Reengineering project at all.
---------------------- In noting the high failure rate for Business Reengineering efforts, Manganelli/
Raspa cite that many programs are poorly conceived and executed, focusing
---------------------- tactically on small-scale functional make-overs and not really well integrated.
They maintain that Business Reengineering can achieve potential success only
---------------------- if deployed strategically and linked to business goals (Manganelli/Raspa, 1995).
---------------------- There is a large number of different project management methodologies
available for Business Reengineering. Some are of a more theoretical nature,
---------------------- and others are of practical nature.
---------------------- Manganelli/Klein list and compare eleven important Business
Reengineering project management approaches (Manganelli/Klein, 1994).
----------------------

Hess/Brecht published a comprehensive study of fifteen Business Notes
Reengineering methodologies (Hess/Brecht, 1995). They concentrated on the
Information Technology elements of Business Reengineering. They conclude, ----------------------
that next to Information Technology, teamwork can be considered the key to
most methodologies. They also concluded, that there is no generally accepted ----------------------
way of analysing and defining business processes. ----------------------
Activity 3 ----------------------
----------------------
Classify following BPR projects.
1. To improve incoming material quality Index by 5% by the Quality ----------------------
Assurance Department. ----------------------
2. To reduce rework by 5% within the factory.
----------------------
3. Improve customer satisfaction index by 5% for all companies within
one group. ----------------------
----------------------
6.6 SELECTING BPR METHODOLOGIES ----------------------
Based on the above studies of Business Reengineering approaches, the ----------------------
author selected the following four representative methodologies from the
academic, consulting and user fields for review (Table 6.2). Government related ----------------------
approaches, such as the U.S. Department of Defense Business Reengineering
framework (DoD, 1997) have been omitted. ----------------------
Table 6.2: Selected Business Reengineering Methodologies ----------------------

Source Methodology ----------------------
Consultants (Academic Background) Hammer/Champy
----------------------
Academics Davenport
----------------------
Consultants Manganelli/Klein
Users Kodak ----------------------
The Hammer/Champy Methodology ----------------------

Hammer/Champy popularised Business Reengineering. Hammer, a ----------------------
former M.I.T. professor turned consultant, and Champy, president of the
worldwide consulting company CSC Index, define Business Reengineering ----------------------
as a fundamental rethinking and radical redesign of mission critical business
----------------------
processes (Hammer/Champy, 1993). Hammer/Champy see poor management
and unclear objectives as the main problems in the success of Business ----------------------
Reengineering. Recently they acknowledged people’s resistance as a major
obstacle to the successful implementation of Business Reengineering`s ----------------------
(Davenport, 1996). Their Business Reengineering methodology, which was
----------------------
fine-tuned by Champy`s consulting company, breaks the project into six steps
(Table 6.3). ----------------------

Notes Table 6.3: The Hammer/Champy Methodology
Project Steps Objectives
----------------------
1. Introduction The CEO initiates the project. She describes briefly
---------------------- to Business and pragmatically the current business situation,
Reengineering to begin actions. She introduces her vision to the
---------------------- employees of the company.
2. Identification This step looks at the broad picture of how processes
----------------------
of Business interact within the company and in relation to the
---------------------- Processes outside world. One deliverable is a graphical display
of all processes.
---------------------- 3. Selection The third step serves to select such processes,
of Business which-once reengineered - will lead to high value
---------------------- Processes for the company’s customers. Also, processes that
---------------------- lend themselves to easy reengineering are being
selected.
---------------------- 4. Understanding the This step does not dwell on a detailed analysis of
Selected Business the functioning of the selected business processes,
---------------------- Processes but concentrates on the performance of the current
---------------------- processes as opposed to what is expected from them
in the future.
---------------------- 5. Redesign of the The fifth step is according to Hammer/Champy,
Selected Business the most creative of all. It is characterised by
---------------------- Processes imagination and lateral thinking.
---------------------- 6. Implementation The last step covers the implementation phase of the
of Redesigned Business Reengineering project. Hammer/Champy
---------------------- Business do not talk about implementation as much as about
Processes project planning. They believe in the success of the
---------------------- implementation, once the five preliminary steps
---------------------- have been properly performed.
The Davenport Methodology
----------------------
Davenport places Information Technology at the heart of Business
---------------------- Reengineering. For Davenport, Information Technology plays the most important
role in innovating Business Processes. Despite his emphasis on innovation and
---------------------- technology, Davenport states, that organisational and human resource issues are
---------------------- more central than technology issues, to the issues of behaviour science, which
must occur within a business process. Davenport sees culture as a constraint,
---------------------- when there is a poor process innovation to cultural fit. With regard to managing
change, Davenport emphasises traditional management functions like planning,
---------------------- directing, monitoring, decision making and communicating (Davenport/Short,
---------------------- 1990 and Davenport, 1993).
Davenport is convinced that Business Reengineering should be better
----------------------
integrated with the other non-revolutionary (incremental) process approaches
---------------------- like Total Quality Management (TQM) (Davenport, 1996). His methodology
covers six steps (Table 6.4)
----------------------

Table 6.4: The Davenport Methodology Notes
----------------------
1. Visioning and Goal The first step is needed to focus all subsequent
Setting actions on company vision and process goals. ----------------------
Cost reduction is considered as important goal,
yet Davenport warns against concentrating ----------------------
too much on cost-cutting, because other goals, ----------------------
such as worker satisfaction, reduction of time
requirements and improvement of process ----------------------
performance might be discriminated against.
----------------------
2. Identification of This step identifies the business processes, which
Business Processes should be reengineered. Davenport advises ----------------------
Business Reengineering teams to concentrate
on a few, not more than 15, core processes. ----------------------
3. Understand and The third step studies the exact functioning and ----------------------
Measure Processes performance of the selected Business Processes.
This differentiates Davenport from the ----------------------
Hammer/Champy approach. Davenport wants
to make sure, that during the process redesign, ----------------------
old practices are not being “reinvented” and ----------------------
performance benchmarks for the redesigned
processes are being set up. ----------------------
4. Information The fourth step serves to study the applicability of
----------------------
Technology Information Technology tools and applications
for the newly designed work processes. ----------------------
5. Process Prototype This step covers the design of a functioning
prototype of the new Business Process. People ----------------------
in the company study this prototype, develop
----------------------
ideas for enhancements and make themselves
comfortable with the redesign of their work ----------------------
processes.
6. Implementation The last step serves to implement the tested ----------------------
prototype on a company-wide basis. Davenport ----------------------
considers this step crucial to the success of the
overall effort, since implementation roughly ----------------------
takes double the time (minimum one year) as
the foregoing steps. ----------------------
The Manganelli/Klein Methodology ----------------------

Manganelli/Klein advocate concentrating only on those Business ----------------------
Processes that directly support the strategic goals of the company and customer
requirements. Product development (a knowledge process) is such a preferred ----------------------
Business Process. They see organisational impact, time, risk and cost as
----------------------
obstacles to success. They claim that Business Reengineering is more successful
than incremental change initiatives, which tend to fail more often (Manganelli/ ----------------------
Klein, 1994).
Notes The Manganelli/Klein Business Reengineering methodology Rapid-Re
(tm), which is supplemented by the Rapid-Re Reengineering Software toolset
---------------------- for Microsoft Windows (tm), traces five steps (Table 6.5).
---------------------- Table 6.5: The Manganelli/Klein Methodology
----------------------
1. Preparation The first step asks all persons directly
---------------------- involved to define goals and to prepare for
the Business Reengineering project.
---------------------- 2. Identification This step defines a customer oriented process
model of the organisation, as well as select
----------------------
key business processes for redesign.
---------------------- 3. Vision The third step serves to define at which
performance level the processes currently
---------------------- delivers, and which higher level is required
for the future.
----------------------
4. e-Design This step breaks into two parallel sub-steps.
---------------------- The Technical
4.1. Technical Design Design deals with Information Technology
---------------------- Design to support
4.2. Social Design the new processes. The Social Design step
---------------------- serves to design new work environments
---------------------- for the people, including organisational and
personnel development plans.
---------------------- 5. Transformation The fifth step is meant to implement the
redesigned processes and work environments
---------------------- within the organisation.
---------------------- The Kodak Methodology
---------------------- The international Kodak organisation developed a Business Reengineering
methodology that is being applied to Kodak facilities around the world. Similar
---------------------- to other practitioner approaches, the Kodak methodology has been influenced
by Hammer/Champy. The Kodak methodology runs into five steps (Kodak,
---------------------- 1995):
---------------------- Table 6.6: The Kodak Methodology
---------------------- Project Steps Objectives
1. Project Initiation The first step is considered the key step. It
---------------------- covers project planning and definition of all
project administration rules and procedures.
----------------------
2. Process Understanding This step selects the project team, designs
---------------------- a comprehensive process model for the
organisation and assigns process managers,
---------------------- who will be responsible for the redesigned
process after implementation.
----------------------
----------------------

Project Steps Objectives Notes
3. New Process Design The third step covers the redesign of selected
Business Processes, taking into account ----------------------
the potential of Information Technology.
----------------------
This step ends with the planning of a Pilot
Implementation of the redesigned processes. ----------------------
4. Business Transition The fourth step is focused towards the
implementation of the newly designed ----------------------
processes within the organisation. A part of
----------------------
this step is the adaptation of the organisation’s
infrastructure to the requirements of the newly ----------------------
designed processes.
5. Change Management The last step is being performed parallel to ----------------------
the first four steps. The project team handles
----------------------
barriers, which crop up during the course of
the Business Reengineering project. ----------------------
Extract of the different methodologies
----------------------
The four representative methodologies assume that Business
Reengineering projects are being initiated by the top management and carried ----------------------
out by specially formed project teams. Business Reengineering projects are
----------------------
typically not considered collaborative efforts, but rather top-down power
driven projects. The General Accounting Office studied all available Business ----------------------
Reengineering methodologies and came to the conclusion that all of these can
be structured into three steps (US General Accounting Office, 1995) of Business ----------------------
Reengineering project management.
----------------------
Table 6.7: Comparison of Selected Business Reengineering Methodologies
----------------------
Step 1: Step 2: Step 3:
Project Preparation Redesign of Processes Implementation ----------------------
Hammer/Champy 1. Introduction 4. Understanding 6. Implementation
(Consultants / 2. Identification 5. Redesign ----------------------
Academics) 3. Selection
Davenport ----------------------
(Academic) 1. Vision and 3. Understand and 5. Prototyping
Goal setting measure 6. Implementation ----------------------
2. Identification 4. Information
Technology ----------------------
Manganelli/Klein 1. Preparation 3. Process Vision 5. Transformation
(Consultants) 2. Identification 4a. Technical ----------------------
Design
4b. Social Design ----------------------
Kodak 1. Project Initiation 2. Understanding 4. Business
Transition
----------------------
(Users) 3. New Process Design 5. Change Management
----------------------
The comparison of the four selected methodologies shows many
similarities. First, the overall approach is linear. Further, Business Reengineering ----------------------
projects will take a similar route as Information Technology implementation
----------------------

Notes projects. Within the three consecutive steps, the individual approaches differ
in the scope of project preparation. Davenport asks for a complete preparation
---------------------- including visioning, whereas the other methodologies contrast by hands-
on approaches right from the project start. Davenport, Manganelli/Klein and
---------------------- Kodak also address the people side of Business Reengineering, but only as
---------------------- far as the implementation issues are concerned. Taking the conclusion further
consultants seen to believe that Business Reengineering is yet another systematic
---------------------- and marketable approach for fast and cost-efficient implementation of planned
change. Technically oriented academics take a broader view, yet shy away from
---------------------- integrating social psychology into their linear approaches, because this might
---------------------- be considered unscientific by colleagues. Users prefer an eclectic approach.
They take proven elements both from consultants and academics and apply
---------------------- them as needed.
----------------------
----------------------
----------------------
1. Which is the most important factor for project initiation?
---------------------- i. Internal opportunities
---------------------- ii. External consultant
---------------------- iii. Internal development
iv. External environment
----------------------
----------------------
Activity 4
----------------------
Study the different BPR methodologies mentioned above. Discuss the
----------------------
central idea (focus) of each methodology.
----------------------
---------------------- Summary
---------------------- ●● arious methodologies and techniques can be used for conducting BPR
V
exercises in the organisation as considered appropriate. The project
----------------------
initiation activities are based on the external environment and external
---------------------- opportunities. Business vision is taken up in the first step. Goal setting
and the selection of business process to be re-engineered are the tasks
---------------------- included in the first step. The second step serves to redesign the selected
business process. This step takes into account the potential offered by
----------------------
Information Technology (IT) and applies the potential to the business
---------------------- processes selected for re-engineering.
●● PR methodology helps in streamlining the plan for placing the various
B
----------------------
process elements in synchronisation. One can formulate the standard
---------------------- methodology best suited for a particular process, which allows the

organisation to build on prior experiences in different activities. Notes
●● PR methodology gives us a structured framework, which provides
B
a step-by-step roadmap best ensures consistent and correct results. ----------------------
Methodologies are built from capturing strategies, techniques, methods ----------------------
and tools into business framework
----------------------
Keywords ----------------------
●● trategy: Strategy is a term that refers to a complex web of thoughts,
S ----------------------
ideas, insights, experiences, goals, expertise, memories, perceptions and
expectations that provide a general guidance for specific actions in the ----------------------
pursuit of particular ends.
----------------------
●● ision: A realistic Vision for the business means where you are and
V
where you want to reach. This comprises imagination and presentation ----------------------
of Target/landmarks to be achieved in three or more years, in terms of its
likely physical appearance, size, activities etc. ----------------------
●● ission: The nature of a business is often expressed in terms of its
M ----------------------
Mission, which indicates the purposes of the business, for example, “to
design, develop, manufacture and market specific product lines for sale ----------------------
on the basis of certain features to meet the identified needs of specified ----------------------
customer groups via certain distribution channels in particular geographic
areas.” ----------------------
●● alues: The next element is to address the Values governing the operation
V ----------------------
of the business and its conduct or relationships with the society at large,
customers, suppliers, employees, local community and other stakeholders. ----------------------
●● bjectives: The third key element is to explicitly state the Objectives
O
----------------------
of the business, in terms of the results it needs/wants to achieve in the
medium/long term. ----------------------
●● oals: These are specific interim or ultimate time-based
G
----------------------
measurements to be achieved by implementing strategies in
pursuit of the company’s objectives. Goals should be SMART i.e. ----------------------
S - Specific , M - Measurable, A - Achievable, R – Realistic, T - Time.
They can relate to factors like market (sizes and shares), products, ----------------------
finances, profitability, utilisation, efficiency.
----------------------
●● enchmarking: It is not a mere act of copying others, but the art of
B
finding out, in a systematic and legal way, how others do something ----------------------
better, so that the practices of can be adapted (may be improved upon and
----------------------
used) to reach higher level of excellence.
----------------------
----------------------
1. How is vision and goal setting for BPR projects done? ----------------------
2. What are the factors/enablers for BPR project?
----------------------

Notes 3. Explain various BPR tools and techniques.
4. Explain various BPR methodologies.
----------------------

1. Structured Framework is achieved through BPR methodology
----------------------
----------------------
----------------------
---------------------- 1. Which is the most important factor for project initiation?

iv. External environment
----------------------

---------------------- 1. Doumeingts, Guy, J. Browne. Modelling Techniques for Business Process
---------------------- Re-engineering and Benchmarking. Springer Science & Business Media.
2. Elzinga, D. Jack, Thomas R. Gulledge. Business Process Engineering:
----------------------
Advancing the State of the Art. Springer Science & Business Media.
---------------------- 3. Grover, Varun, William J. Kettinger. Business Process Change: Concepts,
Methods, and Technologies. Idea Group Inc. (IGI).
----------------------
4. Information Resources Management Association. Managing Information
---------------------- Technology in a Global Economy. Idea Group Inc.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

BPR and QMS
UNIT
7
Structure:
7.1 Introduction
7.2 Total Quality Management and ISO-9001
7.3 Perspective of Re-engineering and ISO 9000
7.4 TQM and BPR
Summary
Keywords
Suggested Reading
BPR and QMS 79

Notes
Objectives
----------------------
----------------------
●● Discuss the concept of Quality Management System
---------------------- ●● Explain QMS such as ISO 9001 and TQM
---------------------- ●● Discuss ISO 9001 with BPR
---------------------- ●● Relate TQM with BPR
----------------------
7.1 INTRODUCTION
----------------------
Continuous improvement (TQM) and BPR have always been considered
---------------------- mutually exclusive to each other. But on the contrary, if performed simultaneously,
they would complement each other wonderfully. In fact, TQM can be used as a
----------------------
tool to handle the various problems encountered during the BPR effort and to
---------------------- continuously improve the process. In corporations that have not yet adopted the
TQM culture, as application of TQM to the newly designed processes should be
---------------------- undertaken as a part of the reengineering effort.
----------------------
7.2 TOTAL QUALITY MANAGEMENT AND ISO 9001
----------------------
Total Quality Management (TQM) is management approach of an
---------------------- organisation, centered on quality, based on the participation of all its members
and aiming at long-term success through customer satisfaction and benefits to
----------------------
all members of the organisation and to society.
---------------------- The expression “all its members” refers to the personnel in all the
departments and at all the levels of the organisational structure.
----------------------
In Total Quality Management, the concept of quality relates to the
---------------------- achievement of all managerial objectives.
---------------------- The concept “benefits to society” implies, as applicable, fulfillment of the
requirements of society.
----------------------
The strong and persistent leadership of top management and the education
---------------------- and training of all members of the organisation are essential for the success of
this approach.
----------------------
Total Quality Management (TQM) or parts of it are sometimes called
---------------------- “Total Quality,” “CWQC” (company-wide quality control), “TQC” (total
quality control) and so on.
----------------------
TQM is a concept that goes beyond ISO 9000. It must be immediately
---------------------- made clear that TQM and ISO 9000 are not two different choices to be made.
There is no contradiction between the two. ISO 8402 has defined “Total Quality
----------------------
Management” as follows:
----------------------

TQM is the “Management approach of an organisation, centered on Notes
quality, based on the participation of all its members and aiming at long-
term success through customer satisfaction and benefits to all members of the ----------------------
organisation and to society.”
----------------------
The ISO 9000 Quality Management System provides a sound foundation
on which a complete structure of TQM may be built, with focus on customer, ----------------------
with involvement of all employees and culture of continuous improvement.
----------------------
In countries like India, it may be advisable for enterprises to first work
on ISO 9000 standard based quality systems and bring in the stability and ----------------------
consistency in the product and service quality which will win customer’s
----------------------
confidence in the global market in the developing stages. When such a system
is in place and the company has achieved certification, the management can ----------------------
embark further in the journey, according to the principles of Total Quality
Management, to become a world class company. ----------------------
ISO-9001 standard is a model for quality system, accepted by most of the ----------------------
world community for certification of an organisation, which can give consistent
product or service quality. This is based very closely on Deming cycle of “Plan- ----------------------
Do-Check Act (PDCA)” which can be partially expressed as follows:
----------------------
●● op Management is responsible for the Quality Systems and must plan
T
and provide for the resources required. ----------------------
●● mployees must understand their responsibilities and the authority that
E ----------------------
they are given.
----------------------
●● mployees should have adequate skills and instructions for their jobs and
E
must understand how their work affects customer satisfaction. ----------------------
●● The root causes of Quality System problems must be eliminated.
----------------------
●● he Quality Systems must be reviewed regularly and continually improved
T
in effectiveness. ----------------------
TQM is NOT a model, but a philosophy that can be partially expressed in ----------------------
the following statements:
----------------------
●● The Company’s focus must be on the customers.
●● mployees must be given increasing levels of responsibilities and
E ----------------------
decision-making ability.
----------------------
●● Measurements are central to a fact based decision-making process.
●● The company’s processes must be continually improved. ----------------------
●● uality is a strategic effort, directed at attaining business objectives,

Q ----------------------
through preventive actions.
----------------------
So, ISO-9000 is a model with an embedded set of principles and TQM is
a philosophy that can be expressed partially through models such as Malcolm ----------------------
Baldridge National Quality Award Criteria or European Foundation for Quality
Management award criteria or Deming award criteria. ----------------------
----------------------
BPR and QMS 81

Notes These two are neither contrary nor mutually exclusive.
How do we reengineer while working on ISO 9000?
----------------------
Generally companies are very happy with the idea of reengineering but
---------------------- hesitate to do so because they are already ISO 9001 certified. The procedures
and work instructions have been written down. Also, they are in the process of
----------------------
ordering a proven MRP-II package or some integrated software solution. They
---------------------- find it difficult to fit in BPR into it. Also, the senior management is diffident
about telling their employees that whatever procedures have been written for
---------------------- ISO 9001 certification are no longer good and hence they have to reengineer.
---------------------- Hence, a major issue immediately after getting certified for ISO 9001,
is how to convey the same and tell the employers to rewrite the procedures. If
---------------------- MRP-II or integrated software solution can provide the much needed integration,
what more can reengineering achieve? Let us handle this issue.
----------------------
As far as ISO 9000 certification in concerned, it is almost a minimum
---------------------- qualification criteria for participating in any bidding process as well as in the
---------------------- export market. Hence, a company must have ISO 9001 certification. But after
procuring ISO 9001 certification, business performance is not improved. On
---------------------- time delivery performance is still below standard, less than 95%. This is going
to affect the competitiveness of the company in the market.
----------------------
Reengineering emphasises on the process view of the enterprise with the
---------------------- customer as the focus. Thus, it can handle the issue of business performance
improvement much better.
----------------------

---------------------- 1. TQM and BPR complement each other only if
---------------------- i. Performed Independently

ii. Performed deliberately
----------------------
iii. Performed One by One
----------------------
iv. Performed Simultaneously
----------------------
---------------------- Activity 1
----------------------
Study the area covered by the following certifications:
---------------------- ISO 9001: 2000; 9002, 9003, 9004, ISO 9001:14000, OHSHA, TS 1694
----------------------
----------------------
----------------------

7.3 PERSPECTIVE OF RE-ENGINEERING AND Notes
ISO 9000
----------------------
Many company executives feel that ISO 9001 is very simple i.e. write
what you do, do what you write. This is because that is precisely what the ----------------------
auditors are interested in. After ISO 9001 certification, many companies ----------------------
introduce bureaucracy, which in turn stretches the decision making time. The
sales executive of a recently ISO 9001 certified company feels that he cannot ----------------------
quote a two week delivery, as he used to. His company is now an ISO 9001
certified company and there are a lot more procedures to comply with. As a ----------------------
customer, I wanted quick delivery and decided to go to the competitor company. ----------------------
Hence, it is important to reengineer certain processes that affect the
----------------------
performance of the ISO 9001 certified company to achieve targets with respect
to critical success factors. Because of our own mental blocks, we feel that it is ----------------------
very difficult. Actually it is not at all difficult to fit in reengineered processes as
per ISO 9001 requirements. ----------------------
----------------------
Activity 2
----------------------
Study the clause mentioned in ISO 9000:2001. State with example how
BPR can help in improvement in Purchasing activity. ----------------------
----------------------
7.4 TQM AND BPR ----------------------
Similarly TQM concentrates on step by step improvements i.e., ----------------------

incremental improvements and sustaining them, whereas BPR concentrates on
radical and dramatic improvements by organising around the outcome which ----------------------
is determined by critical success factors. TQM is an evolutionary approach ----------------------
towards improvement whereas BPR is a revolutionary approach towards
improvement. It is always advisable to begin with evolutionary approach for ----------------------
improvements in processes and products by using the TQM approach. After
the processes are established, revolutionary approach can be adapted to further ----------------------
reengineer the processes. After processes are further reengineered, to sustain ----------------------
the gains of reengineered processes, it is advisable to follow the evolutionary
approach for improvement i.e. TQM. ----------------------
BPR and TQM can complement each other, if implemented in the right ----------------------
perspective. In both the approaches, the issue of cultural change and change
management are common. The successful implementation of BPR and TQM is ----------------------
dependent on the ensuring right culture in the organisation.
----------------------
----------------------
----------------------
----------------------
BPR and QMS 83

Notes
----------------------
----------------------
1. Most important aspect of ISO 9000 is to provide
----------------------
i. Customer satisfaction
---------------------- ii. Stakeholder’s satisfaction
---------------------- iii. Sound foundation for TQM implementation
---------------------- iv. Employee Satisfaction
----------------------
Summary
----------------------
●● ompanies should not get carried away with jargons such as BPR
C
---------------------- and TQM. Instead, they should concentrate on getting real business
---------------------- improvements by creatively integrating these concepts.
●● ontinuous improvement (TQM) and BPR have always been considered
C
---------------------- mutually exclusive to each other and TQM can be used as a tool to
---------------------- handle the various problems encountered during the BPR effort and to
continuously improve the process
---------------------- ●● otal Quality Management (TQM) is management approach of an
T
---------------------- organisation, centered on quality, based on the participation of all its
members and aiming at long-term success through customer satisfaction
---------------------- and benefits to all members of the organisation and to society
----------------------
Keywords
----------------------
●● QM: Total Quality Management “is a cost effective system for
T
---------------------- integrating the continuous quality improvement efforts of people at all
levels in the organisation to deliver products and services which ensures
---------------------- customer satisfaction.”
----------------------
----------------------
1. Explain TQM and ISO 9000 Quality management systems in brief.
----------------------
2. How can ISO 9001 Certified companies implement BPR? Give suitable
---------------------- examples.
---------------------- 3. How are BPR and TQM interlinked with each other? Explain.
----------------------
----------------------
----------------------

Answers to Check your Progress Notes
Multiple Choice Single Response. ----------------------
1. TQM and BPR complement each other only if
----------------------
iv. Performed Simultaneously
----------------------

1. Most important aspect of ISO 9000 is to provide ----------------------
iii. Sound foundation for TQM implementation
----------------------
Suggested Reading ----------------------
1. Chang, James F. Business Process Management Systems: Strategy and ----------------------

Implementation. CRC Press. ----------------------
2. Chiarini, Andrea. From Total Quality Control to Lean Six Sigma. Springer
Science & Business Media. ----------------------
3. Dey, B. R. Business Process Reengineering & Change Management. ----------------------

Dreamtech Press.
----------------------
4. Oakland, John S. Total Quality Management and Operational Excellence.
Routledge Publications. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
BPR and QMS 85

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Organising and Implementing BPR
UNIT
8
Structure:
8.1 Introduction
8.2 Success Factors for BPR Implementation
8.3 Roles in the BPR Projects
8.4 Role of Information Technology in Process Re-engineering
Summary
Keywords
Suggested Reading
Organising and Implementing BPR 87

Notes
Objectives
----------------------
----------------------
●● Describe common success factors for BPR implementation
---------------------- ●● Discuss roles of various participants in BPR
---------------------- ●● Illustrate implementation of BPR by using Technology upgradation
----------------------
---------------------- 8.1 INTRODUCTION

---------------------- The earlier experiences of Process Re-engineering in the U.S.A. indicated
that over 50 per cent of the BPR Projects failed either completely or did not
---------------------- achieve the desired bottom-line of return on investment. The biggest problem
---------------------- that businesses usually faced with BPR was overzealous expectations. BPR
is a business tool with a high price and gradual returns. Sometimes BPR
---------------------- implementation is based on generic best practices by a business, not specific
to a particular company. BPR is also time sensitive. BPR is about the proper
---------------------- method of implementation. BPR, if implemented properly, can give huge
---------------------- returns. BPR has helped many companies to overcome financial drawbacks due
to competition.
----------------------
8. 2 SUCCESS FACTORS FOR BPR IMPLEMENTATION
----------------------
1. There have been numerous studies on what are the factors, which
----------------------
contribute to the success or failure of the Process Reengineering initiatives.
---------------------- The common success factors, which are reported by these studies, are as
under:
----------------------
(a) Strong and continued involvement of the top management for the
---------------------- Process Reengineering Project;
---------------------- (b) Strategic alignment between the Information Technology strategy

and business strategy;
---------------------- (c) Creating a convincing business case for Process Reengineering,
---------------------- with measurable objectives and goals;
(d) Use of proven methodology for Planning, Designing, Implementing
----------------------
and Evaluating the Process Reengineering;
---------------------- (e) Effective management of change which addresses the issues relating
to cultural transformation in the organisation;
----------------------
(f) Ensuring the involvement of the end-users, i.e. the owners of the
---------------------- process and making them accountable for the success of the project;
---------------------- (g) A proper composition of the Reengineering team with an in-depth
knowledge of the topic as well as expertise in different areas.
----------------------

2. There is a risk of the project failing on account of lack of resources. Notes
Although the Consultants and Re-engineering Managers are the experts
in the field, they are less likely to succeed in implementing Reengineering ----------------------
Projects, unless the Senior Managers in the operational area, who are
accountable for the business performance in terms of financial gains as ----------------------
well as customer satisfaction, are involved in the Process Reengineering ----------------------
Projects.
----------------------
3. Strategic Alignment between I.T. Strategy and Business Strategy
It is necessary that the business strategy of the organisation is aligned ----------------------
to the I.T. Strategy of the organisation, so that both complement each
----------------------
other. The Business Strategy as well as the I.T. Strategy have external
and internal domains, which need to be properly aligned for the success ----------------------
of the BPR Project (a detailed discussion on Strategic Alignment is given
separately). ----------------------
4. Unless there is a proper alignment between the companies or organisational ----------------------
strategic directions, the Reengineering Projects are likely to be counter-
productive, since the investment in BPR Project is quite sizeable. Further, ----------------------
without strategic alignment, the key stakeholders and sponsors may not be
----------------------
willing to provide the support level, which is necessary in terms of money
and other resources particularly considering the fact there are projects. ----------------------
5. Strong Business Test for change in successful implementation of the BPR ----------------------
Projects
It is necessary that everybody should be convinced about the need for ----------------------
undertaking these projects. The business case for change is the only way ----------------------
in which the convincing arguments can be put forth.
----------------------
A successful business case should discuss the current state and its impact
on the customers, associates and the business results. It should also state ----------------------
the reasons for the present condition. Further, the business case should
explain the vision and the plan for the future. It should have specific ----------------------
commitments in terms of objectives to be attained. The focus of the
----------------------
business case should always be on the customers and the measurable
objectives should be related to the customers, business associates, ----------------------
business results and the strategic direction of the organisation. It should
also state the time and money required for the project and the pay-back ----------------------
period for the same.
----------------------
6. The business case should be a brief and concise document, which should
serve as a centerpiece that defines the project and its use for assessing the ----------------------
outcome of the Project. Since cost-benefit analysis is difficult to measure,
----------------------
a lot of efforts are needed to make a strong business case.
7. Use of Proven Methodology ----------------------
It is necessary that the methodology which has worked elsewhere and ----------------------
with which the team members are well conversant should be used. If the
team members are not trained in the methodology, they should get trained ----------------------

Notes in it. The suitable methodology should decide the needs of the project,
which is also well understood by the team members.
----------------------
8. Successful Management of change
---------------------- Most of the BPR Projects have a strong impact on the major processes and
also on the organisational structure. This leads to a cultural impact on the
----------------------
organisation. Naturally, there is resistance for the project implementation
---------------------- from the operational level, for whom the project is supposed to be most
beneficial. Management of change is the discipline of managing the
---------------------- change of the process, with due consideration for the human aspects
of the organisation, which requires honest and regular communication
----------------------
between the BPR leadership and the others in the organisation. It is
---------------------- natural to expect some resistance for the change. However, successful
change management ensures transition without much pain.
----------------------
9. End-User Ownership
---------------------- Very often, Process Reengineering Processes are undertaken as the senior
---------------------- management plan, which is being implemented with the help of external
consultants and select staff within the organisation. Unfortunately, the
---------------------- ability of external consultants to implement significant changes in the
organisation is only marginal, whereas, in the case of internal staff
---------------------- groups, such as systems departments, it is only marginally better than the
---------------------- external consultants. This is mainly because at the end, the solution and
resolutions would be back to the organisational staff for the day-to-day
---------------------- execution of the Process Reengineering initiatives.
---------------------- The role of the consultants is definitely valuable and so is the case of
the internal systems staff. However, the involvement of the process
---------------------- owners is necessary, whether the BPR project is implemented in the
manufacturing organisation or service sectors like banks or sales or
---------------------- marketing organisations. However, the operational staff is too close to the
---------------------- process to see the problems in the process. They lack the external focus,
the objectivity and the technical knowledge for redesigning the process.
---------------------- However, they are good at the current processes and they also have first-
hand experience in using the existing processes. They are usually the
---------------------- front office, with whom the customers of the organisation interact. It is,
---------------------- therefore, necessary that they should be involved in the process designing
and should also be made accountable for implementation through
---------------------- persuasive means and convincing arguments.
---------------------- The involvement of end-users is necessary, since they contribute their
knowledge of the existing system. They own the solution, which is sought
---------------------- to be developed and they are the ones who implement the solution. At the
same time, the expertise and objectivity of the consultants from outside
---------------------- the organisation is also necessary. Therefore, it can be concluded that
---------------------- the BPR is the joint responsibility of the end-users and the stakeholders,
represented by the top management and the redesigning teams, which
---------------------- include the internal systems departments as well as the external consultants.

10. Composition of the Re-engineering Team Notes
The Re-engineering Team, which implements the BPR Project, needs to
----------------------
be a compact team, which should comprise –
(a) some members, who know the business process inside out; ----------------------
(b) some members, who do not know the business process at all; ----------------------
(c) members representing the impacted organisations; ----------------------
(d) technology experts;
----------------------
(e) outside members; such as observers or consultants.
----------------------
It is also desirable to include the customers/business associates, if it is
possible. Also the team members must be bright and committed to the cause. ----------------------
Activity 1 ----------------------
----------------------
Suppose you are responsible for the execution of a project involving the
construction of a new factory building. List, the inputs required by you from ----------------------
the top management, in the design phase.
----------------------
8.3 ROLES IN THE BPR PROJECTS ----------------------
(1) Role of Top Management ----------------------
As already mentioned, the involvement of the top management, all ----------------------

through the BPR Project, is necessary. The top management has different
responsibilities towards implementing the BPR Projects during different ----------------------
phases of the project implementation. ----------------------
(a) The top management should explain the case for the BPR Project,
----------------------
stating why the change is needed and also the cost or risk of not
undertaking the change initiatives, as contemplated under the BPR ----------------------
Project.
----------------------
(b) The top management should also define and communicate the
project objectives and scope of the project. It should also keep the ----------------------
employees informed about what can be expected from the project
and when it can be expected. ----------------------
(c) The top management should also, ensure adequate availability of ----------------------
manpower resources for adequate duration and also provide for
the needed budget for the design office, when selecting the team. ----------------------
The top management should also ensure the support of other senior ----------------------
managers and stakeholders. The top management is also required to
help the Project Team in the selection of their approach, their time ----------------------
lines and resolve start-up issues for the team.
----------------------
----------------------

Notes (2) Top Management and the Design Phase
During the Design Phase, the top management should —
----------------------
(a) listen and respond to the feedback received from the organisation;
----------------------
(b) seek input from all the levels of management;
---------------------- (c) create a positive network of conversation about the Project with the
---------------------- teams and the managers at all levels;
(d) provide the up-dates on the projects undertaken by the organisation,
---------------------- so that the employees first know about the progress of the Project
---------------------- and when it can expect the results;
(e) stay engaged and up-to-date with the project through key project
---------------------- meetings and key training sessions;
---------------------- (f) keep the other senior managers and stakeholders informed about the
projects and hold decision-making meetings with the stake-holders;
----------------------
(g) arrange for changed management training for the employees and
---------------------- also attend the same;
---------------------- (h) remove the obstacles encountered by the team.
---------------------- (3) Top management and the Implementation Phase

(a) The top management should share the change with all levels in the
---------------------- organisation by explaining why the change is happening and the
---------------------- priority for the business.
(b) It should answer all the queries relating to the change and its effect
----------------------
on the individuals.
---------------------- (c) Receive complaints and patiently respond to the feedback from the
organisation, thereby convincing those who resist change.
----------------------
(d) It should create a positive atmosphere about the project allocation,
---------------------- peers and the project stakeholders.
---------------------- (e) It should participate in implementation and planning and stay
involved in monitoring the progress of the project and remove any
---------------------- obstacles that may be noticed.
---------------------- (f) Ensure adequate resources or adjust the implementation plan to fit
the available resources.
----------------------
(g) Involve the middle management in the transition, by defining their
---------------------- roles through transition and setting the clear expectations.
---------------------- (h) Keep the other senior Managers and stake-holders informed about
the project, its status and the issues/obstacles involved in the project
---------------------- implementation.
---------------------- (i) It should recognise the observation which is consistent with the
change with the desired change and which weigh the goal models.
----------------------

(j) Measure the performance with the results which were expected Notes
earlier.
----------------------
(k) In addition to these responsibilities, the top management clearly
demonstrates its commitment and support for the project by playing ----------------------
visible and active roles, by removing the obstacles, monitoring the
progress and ensuring the speedy reviews at the key position points ----------------------
in the process. It should also provide the resources needed by the
----------------------
team by assigning the full-team staff members and also provide
necessary physical infrastructure in terms of space and equipments. ----------------------
(l) The top management should provide training programs in Process
----------------------
Reengineering and change management and allow adequate funds
to benchmark and research activities, undertaken by the BPR Team. ----------------------
(m) The top management should also be in touch with the external experts
----------------------
and consultants, as and when necessary. Most importantly the top
management should accept the responsibility and be a risk-taker by ----------------------
challenging the existing assumptions and processes, by setting new
standards and by encouraging the innovative approaches by others. ----------------------
(4) Role of the External Consultants ----------------------
For a successful BPR Project, the role of external consultants is very ----------------------
significant. The external consultants have the following advantages over the
in-house team or in-house groups. ----------------------
(a) Objectivity and immunity from internal politics, experienced in the ----------------------
Process Reengineering.
----------------------
(b) Knowledge and information about the best practices from other
companies and can act as good communication paths between ----------------------
the front line workers and customers as well as leaders of the
organisation. ----------------------
(c) Consultants can unintentionally create a barrier by being possessive ----------------------
about the project, weighing it as their solution, rather than the
organisation’s solution. ----------------------
(d) They can take too strong leadership role, thereby disengaging the ----------------------
organisation, for which they are taking up the Consultancy Project.
----------------------
(e) It is, therefore, necessary to define the proper role for the consultants.
Normally, three roles are suggested for the External Consultants. ----------------------
Role “A” A strong facilitator and experienced practitioner, who ----------------------
brings the methodology with him.
----------------------
Role “B” A team member, who can be an objective and unbiased
contributor, fill the gap in the team and act as someone knowledgeable ----------------------
in the concerned industry.
----------------------
Role “C” Subject expert, who is aware of the best practices of
similar organisations and processes can be very useful to the team, ----------------------
for meeting the performance level.
Notes However, the exact role to be played by the consultant needs to be
defined clearly and well in advance. Questions like whether the consultants
---------------------- will be writing the project documentation or making the presentation to the
stakeholders and business associates or making decisions for the project etc.
---------------------- need to be defined well in advance and the relationship with the consultant
---------------------- would depend on the roles played by the consultants.
The ProSci Benchmark Study with 248 projects indicates that the three
----------------------
roles assigned to the Consultants were -
---------------------- (i) Advisor to the Team
---------------------- (ii) Team Leader
---------------------- (iii) Facilitator

The other important roles included the role as a Trainer of the subject
---------------------- matter, expert, as also developer of the software.
----------------------
----------------------
----------------------
1. What kind of returns does BPR give while being a high price tool?
----------------------
i. Gradual
---------------------- ii. Immediate
---------------------- iii. Drastic
---------------------- iv. Continued
----------------------
Activity 2
----------------------
---------------------- Refer Activity 1 and discuss the role of top management in the implementation
phase.
----------------------
---------------------- 8.4 ROLE OF INFORMATION TECHNOLOGY IN

---------------------- PROCESS RE-ENGINEERING
---------------------- Process Re-engineering projects are based on the developments in I.T.
Therefore, the concerned I.T. Department of the organisation has an important
---------------------- role to play in Process Reengineering. The benchmarking report or the role of
---------------------- I.T. in the Process Re-engineering recommends the following I.T. strategies to
be adopted.
---------------------- (1) Customer Value Driven Strategy, wherein the business model based
---------------------- on customer’s requirements would be prepared and the technology
capabilities would be aligned to the business needs.
----------------------

(2) Innovation Lead, wherein I.T. should act as a catalyst for the application Notes
of new technology and should be a partner in the business process
improvement. ----------------------
(3) Create a standardised open systems environment and infrastructure, ----------------------
which leverages a common platform to maximise the speed and access
to information, rapid application development, which is flexible to the ----------------------
end-users requirements, streamlining the integration of commercial and
----------------------
customer application across the business.
(4) The strategy for each one of them can be developed by taking following ----------------------
steps.
----------------------
(a) Customer Value Driven
----------------------
1. The I.T. Department should open communication channels
with the customers, to ascertain their needs. ----------------------
2. Engage in joint strategy and planning session with the ----------------------
operational units and departments of the organisation.
3. Move to plan based consultative relationship. ----------------------
4. Educate the customers and end-users on the terminology as well ----------------------

as the concepts used in the I.T. in simple English language.
----------------------
Process Re-engineering by upgrading Management Information System
(MIS) and Intranet ----------------------
Various Intranets and Extranets are presently used for providing ----------------------
information and having services like Mail, Training, QMS, etc. The future trend
in Intranet development would be around applications, which are embedded ----------------------
in the core business processes of organisations. It is expected that the Intra- ----------------------
nets and Extra-nets would trigger another round of Process Reengineering,
which would be warmer than the one which was witnessed after the advent ----------------------
of net-working solution. Therefore, future applications in Intranet would be
more concerned with the business applications and, therefore, would require a ----------------------
significant amount of investment in the projects. ----------------------
Web-enabled applications will be posted on transaction oriented business
process, such as placing Orders or discharging goods and packing the delivery ----------------------
over the Intranets. When the business processes which are transaction oriented ----------------------
are developed, using all Intranet techniques, common Net applications will tend
to merge with Extranets, besides business to business transactions, Electronic ----------------------
Data Exchanging and Electronic campus transaction. This is an integration of
Web-technology with transaction oriented business applications, group ware ----------------------
solutions and infrastructure services provided by the Intranets. ----------------------
These developments would have an impact on the business and
organisational structure, since a lot of investment would be needed and ----------------------
more sophisticated skills would be required to develop the business oriented ----------------------
applications. The Intranets would become the Information Technology (IT)
infrastructure, thereby making the distributed quantity more open, simpler and ----------------------

Notes more manageable. This would make delivery of the services more flexible and
the business processes more distributed in nature.
----------------------
The need for integration of Web-based application for Management
---------------------- Information System would lead to the setting up of simpler cross platform
applications; simple to manage and more centralised IT infrastructure. The
---------------------- applications will tend to become cross platform, distributed applications. For
example, the Intranet Server would store the applications, which would be
----------------------
transported to the P.C. based client, using JAVA, APPLETS and concurrent
---------------------- objects, which would be used at the client’s side for capturing information
and for local processing, whereas the results would be transmitted back to the
---------------------- Application Server.
---------------------- The linkage between World Wide Web (WWW) Server and MIS
applications can be either detached loose or tight. In the detached mode, the
---------------------- data is transferred in a batch mode when there is an electrical connection with
the server. In the loose mode, the access to MIS is via WWW Inter-face and/or
----------------------
Telnet Protocol, wherein the data from the database is extracted and formatted
---------------------- in the form of MIS, before it is presented to the User. In the tight mode, both the
MIS and the WWW are integrated.
----------------------
---------------------- 1. The relationship expected between IT strategy and Business Strategy

should be
----------------------
i. Strategic Alignment
---------------------- ii. Descriptive Dependence
iii. Interdependence
----------------------
iv. Immediate Dependence
----------------------
---------------------- Activity 3
---------------------- Give five examples of BPR process being influenced by IT from your daily
---------------------- life. (Examples: Air travel - Internet booking & boarding pass)
----------------------
Summary
----------------------
●● It is absolutely necessary to study the common success factors of
---------------------- BPR project implementation. Lack of co-ordination between various
---------------------- departments may lead to a complete failure leading to the failure of a
BPR project, which will result in a deviation from the bottom-line of
---------------------- return on investment. It is also necessary to understand the role of the
various participants in BPR implementation project. It helps in proper
---------------------- organisation for the implementation of BPR.

●● BPR is a business tool with a high price and gradual returns. Sometimes Notes
BPR implementation is based on generic best practices by a business, not
specific to a particular company. BPR is also time sensitive. BPR is about ----------------------
the proper method of implementation. BPR, if implemented properly,
can give huge returns. BPR has helped many companies to overcome ----------------------
financial drawbacks due to competition ----------------------
Keywords ----------------------
----------------------
●● takeholders: A stakeholder is person having in his/her possession
S
(holding) money or property in which he/she has no interest, right or ----------------------
title, awaiting the outcome of a dispute between two or more claimants
to the money or property. The stakeholder has a duty to deliver to the ----------------------
owner or owners the money or assets once the right to legal possession is
----------------------
established by a judgment or agreement.
----------------------
----------------------
1. What are the various common success factors observed in BPR
----------------------
implementation?
2. Explain the role of various participants in BPR. ----------------------
3. How can BPR be implemented by upgrading MIS and Intranet? ----------------------
----------------------
----------------------
1. What kind of returns does BPR give while being a high price tool? ----------------------
i. Gradual ----------------------
----------------------
----------------------
1. The relationship expected between IT strategy and Business Strategy
should be ----------------------
i. Strategic Alignment ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
Suggested Reading
----------------------
1. Goyal, D. P. Enterprise Resource Planning. Tata McGraw-Hill Publication.
---------------------- 2. Jayaraman, M.S., Ganesh Natarajan. Implementing BPR: An Agenda for
the CEO Tata Mcgraw-Hill Publication.
----------------------
3. Mohapatra, Sanjay. Business Process Reengineering: Automation
---------------------- Decision Points in Process Reengineering. Springer Science & Business
---------------------- Media.
4. Venkatachalam, T.A., C.M. Sellappan, C. M. Sellappan. Business Process.
---------------------- PHI Learning Pvt. Ltd.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Managing Barriers to BPR Success
UNIT
9
Structure:
9.1 Introduction
9.2 Barriers to Business Re-engineering Implementation Success
9.3 Risks associated with Business Re-engineering Projects
9.4 Business Re-engineering Implementation Barriers
9.5 Hard Implementation Barriers
9.6 Soft Implementation Barriers
9.7 Relationship between Hard and Soft Barriers
9.8 Areas generating Barriers to Business Re-engineering Implementation
9.9 Root Causes for Implementation Barriers
9.10 Root Causes of Internal Individual Resistance
9.11 Manager’s Beliefs and Assumptions in BPR
9.12 Barrier Management in BPR Projects
Case Study
Summary
Keywords
Suggested Reading
Managing Barriers to BPR Success 99

Notes
Objectives
----------------------
----------------------
●● Discuss the concept of Barrier Management
---------------------- ●● Explain different types of barriers in BPR
---------------------- ●● Explain the barriers for the Success of Business Process Reengineering
---------------------- ●● Describe the Implementation Barriers for BPR
----------------------
9.1 INTRODUCTION
----------------------
“If you fail to plan, you plan to fail.” Planning and Preparation are
---------------------- vital factors for any activity or event to be successful and reengineering is no
exception. The implementation stage is where reengineering efforts meet the
----------------------
most resistance and, hence, it is by far the most difficult one. The first priority
---------------------- is to understand the expectations of your customers and where your existing
process falls short of meeting those requirements.
----------------------
As typical BPR projects involve cross-functional cooperation and
---------------------- significant changes to the status quo, the planning for organisational changes is
difficult to conduct without strategic direction from the top. ‘Winning the hearts
---------------------- and minds of everyone involved in the BPR effort is most vital for the success
of the effort. The important aspect of BPR (what makes BPR, BPR) is that the
----------------------
improvement should provide dramatic results.
----------------------
9.2 BARRIERS TO BUSINESS RE-ENGINEERING
----------------------
IMPLEMENTATION SUCCESS
----------------------
One of the biggest mistakes you can make in life is to accept the known
---------------------- and resist the unknown. You should, in fact, do exactly the opposite. Challenge
the known and embrace the unknown.
----------------------
Guy Kawasaki, Co-Founder Apple Computer, Inc., 1996.
----------------------
Potential Project Implementation Success
---------------------- The success of Business Reengineering Projects is measured by the
real attainment of project objectives. Companies undertaking Business
----------------------
Reengineering projects typically look for drastic improvements in business
---------------------- process results.
A recent study of Business Reengineering projects in 30 Mexican
----------------------
businesses, from among the largest 500 businesses in Mexico, demonstrated
---------------------- impressive results (Table 9.1). Business Reengineering had mainly impacted
management cost (82 %), production cost (57%) and distribution cost (39%)
---------------------- reductions (Lozano, 1996).
----------------------

Table 9.1: Achievements of Thirty Business Reengineering Projects Notes
Areas of Reported Achievements Improvements in % ----------------------
●● Cost Reduction 69
----------------------
●● Time Optimisation 62
----------------------
●● Better Service Efficiency 59
●● Productivity Increase 59 ----------------------
●● More Precise Information for 52 ----------------------
●● Decision Taking
----------------------
●● Quality Improvement 45
----------------------
●● Better Financial Control 41
●● Better Profitability 38 ----------------------
●● Hierarchical Levels Reduction 38 ----------------------

●● Technology Update 34 ----------------------
●● Personnel Motivation 34
----------------------
●● Sales Increase 28
----------------------
●● Market Survival 28
●● Reduction of Business Losses 21 ----------------------
●● Environment Impact 17 ----------------------
●● Increase Market Penetration 14
----------------------
Activity 1 ----------------------
----------------------
Refer Table 9.1. Write at least one example against “Area reported
achievement” in the context of BPR projects implementation. (For example, ----------------------
Cost Reduction: redefine the process for appropriate controlled use of
consumable.) ----------------------
----------------------
9.3 RISKS ASSOCIATED WITH BUSINESS ----------------------
RE-ENGINEERING PROJECTS
----------------------
The flip side of high success potential is high project risk. Thus, the
success of Business Reengineering projects is largely dependent on the ----------------------
knowledgeable management of Business Reengineering project risk factors. ----------------------
Table 9.2 categorises these risks (Clemons/Thatcher/Row, 1995).
----------------------
----------------------
----------------------

Notes Table 9.2: Business Reengineering Project Risk Categories
Project Risk Categories Definition
----------------------
●● Financial Risks The project does not yield the high Return-of-
---------------------- Investment expected.
●● Technical Risks Business process oriented Information
---------------------- Technology solutions are either not available or
not working.
---------------------- ●● General Project Risks The organisation is looking for solutions
---------------------- outside its competence or the project team is not
performing.
---------------------- ●● Functional Risks The organisation is confronted with a
reorganisation plan, which is not applicable to
---------------------- the kind of business the company is in.
---------------------- ●● Political Risks People confront the project (resistance) or
the commitment to the project from the upper
---------------------- management gradually begins to fade.
----------------------
9.4 BUSINESS RE-ENGINEERING IMPLEMENTATION
---------------------- BARRIERS
---------------------- Barriers are severe, unexpected and not planned for problems in Business
Reengineering projects. Barriers increase the impact of project risk factors.
---------------------- For example, it increases middle management resistance to the objective of
---------------------- introducing self-directed work teams, a political project risk.
Barriers hinder implementation efforts such that without intervention, the
----------------------
project falters or may even fail altogether. There are other problems, which are
---------------------- not considered barriers, because their impact on the project is not as dramatic.
They may present obstacles to be overcome on a day-to-day basis. These
---------------------- problems may surface in most other organisational projects as well. Among
them are illness of project members, malfunction of computer equipment etc.
----------------------
These problems are not further considered in this report.
---------------------- Barriers have to be eliminated, because they take away much needed
energy from the project team and the people affected. The energy for and against
----------------------
the barrier is not injected into the project steps and thus is lost to the project‘s
---------------------- outcome. It is the author’s experience that endless meetings, and associated
frustrations are detrimental to the potential positive results of a Business
---------------------- Reengineering project. Therefore, it is highly recommended not to pitch the
success factors hard against barriers, but rather to prevent the development of
----------------------
barriers right from the beginning of a project. It is not advisable to perform a
---------------------- Business Reengineering project on high pro and contra energy consumption
basis.
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Figure 9.1: Relationships between Potential Barriers and Potential
Causes of Barriers ----------------------
----------------------
9.5 HARD IMPLEMENTATION BARRIERS
----------------------
Hard barriers are those, which have to do with things and regulations.
Soft barriers are people problems. Hard barriers can be further broken into ----------------------
Information Technology problems, resource problems and legal obstacles.
----------------------
Information Technology software and hardware, which are not suited to
support a process based organisation, can evolve as a barrier. This barrier is ----------------------
typical for organisations that want to keep their high investments in hardware
----------------------
and software, hoping that the existing legacy systems will serve the process
requirements as well. The Information Technology suppliers, on the other hand, ----------------------
are overwhelmed by the run for process-oriented solution and have only just
recently directed their research and product development towards process based ----------------------
Information Technology solutions. A number of vendors, though, have not been
----------------------
able to protect their investments and faltered.
One typical resource problem is missing space for a work team to get ----------------------
together on a regular basis. Team-members that are physically separated
----------------------
should have easy access to electronic communication equipment, such as
teleconferencing. ----------------------
Legal obstacles can turn out to be severe barriers, not only in Brazil.
----------------------
In Germany various federal and state regulations hinder several Business
Reengineering projects. For example, Siemens Corporation is not able to reap ----------------------
as much success from its reorganisation efforts as it originally planned for,
because work-place regulations do not support work time flexibility (Siemens, ----------------------
1996).
----------------------
----------------------
----------------------

Notes 9.6 SOFT IMPLEMENTATION BARRIERS
---------------------- Soft barriers are people problems. People resist organisational changes.
Resistance to Business Reengineering change can be further differentiated into
---------------------- internal individual resistance, internal group resistance and external resistance.
Depending on the viewpoint, (there are two possible viewpoints), one can look
----------------------
at resistance:
---------------------- Type A: Resistance against Business Reengineering Implementation
---------------------- Resistance of Type A describes resistance against reasonable thinking and
actions. From the perspective of the initiators and the project team, affected
---------------------- people demonstrate Type A resistance (Brem-Gräser, 1993).
---------------------- Managers need to be aware of the four most common reasons why people
resist organisational change. These include a desire not to lose something of
----------------------
value, a misunderstanding of the change and its implications, a belief that the
---------------------- change does not make sense in the organisation, and a low tolerance for change
(Kotter/Schlesinger, 1979).
----------------------
Type B: Resistance against Business Reengineering Implementation
---------------------- Resistance of Type B describes resistance against indoctrination and
power usage. Affected people do not call themselves resisters. Resistance is an
----------------------
indirect way for subordinates to say NO to change (Nevis, 1987).
---------------------- Often initiators and project team members consider resistance as a
---------------------- necessary evil: “No change without resistance” and “Innovations represent a
history of resistance” Yet experience tells us that people resist change the most,
---------------------- when they have not been asked. This is too often overlooked by management.
---------------------- Internal individual resistance describes people behaviour in the

organisation – not accepting the project contents and/or management. This may
---------------------- take covert or overt forms. It is a common practice that management shortcuts
individual resistance with destructive personality explanations, instead of
---------------------- checking for the underlying reasons for the resistance.
---------------------- Internal group resistance describes group behaviour within the
organisation. These groups can be formally or informally organised. A group
---------------------- of electronic specialists, for example, may resist the plan of being split up into
---------------------- work teams where they have to work side by side with mechanical personnel.
They consider themselves superior in status.
----------------------
External resistance is usually from people outside the organisation.
---------------------- Customers, suppliers or the public may develop considerable resistance against
plans which interfere with their interests. If a trained company, for example,
---------------------- plans to replace service personnel with teller machines, this might cause severe
resistance by the customers.
----------------------
----------------------
----------------------

Notes
Activity 2
----------------------
List some examples of “Soft and hard barriers” from your daily life. How
----------------------
you will try to overcome them?
----------------------
9.7 RELATIONSHIPS BETWEEN HARD AND SOFT ----------------------

BARRIERS ----------------------
It is not always possible to differentiate precisely between hard and soft ----------------------
barriers. Consider the following example:
An application software package for material procurement may take more ----------------------
than two minutes, to respond to an time for placing an order placed online. ----------------------
When the package was initially selected, two seconds response time was the
average that had been expected and given in writing to the software supplier. ----------------------
The supplier explains that attaining a two second response will not be possible,
or that if it would cost an additional amount of money. The budget for this ----------------------
additional software has not been allocated. The purchasers, therefore, do not ----------------------
want the software package to be implemented for live operation.
----------------------
The analysis of this problem shows that purchasers had had enormous
flexibility before the software age. There were no restrictions whatsoever ----------------------
regarding their handling of purchase orders. They find that a purchasing software
potentially puts too many restrictions on their free decision making process. In ----------------------
reality, it is not the transaction response time that they find unacceptable; their
----------------------
objection is against the idea of introducing Information Technology altogether.
Definitely not a hard barrier, but a soft barrier. Obviously, it does not make ----------------------
sense to pour more money into the software. Instead, the resistance has to be
overcome. ----------------------
The opposite can be true as well. A soft barrier might be in reality a hard ----------------------
barrier in disguise. Consider the following example:
----------------------
The project plan of implementing self-directed assembly teams at a
machine manufacture asks electric and mechanic assemblers to work closely ----------------------
together. It is also required from the teams, that mechanics perform some
electronic tasks and vice versa. Many employees do not accept this. They ----------------------
resist the implementation of self-directed work teams. The project manager is
----------------------
planning punishing actions against this form of alleged resistance, yet overlooks
the fact that hard barriers prevent people from performing: Mechanics cannot ----------------------
turn into electricians overnight. They have to be properly trained in the basics
of electrical assembly tasks. The soft barrier in reality is a hard barrier. ----------------------
----------------------
----------------------
----------------------

Notes 9.8 AREAS GENERATING BARRIERS TO BUSINESS
RE-ENGINEERING IMPLEMENTATION
----------------------
All barriers to Business Reengineering implementation success are the
---------------------- result of underlying root causes. Sometimes these root causes are not self-
---------------------- evident. This is the reason why barriers are being attacked head-on, until it
is discovered that the underlying problems have not been purged and that the
---------------------- barriers keep on building. Therefore, it seems necessary to study the areas for
the potential root causes of barriers to Business Reengineering implementation
---------------------- success in sufficient detail.
---------------------- The following areas are potential triggers that can generate barriers to
Business Reengineering implementation success:
----------------------
Project Related Causes
---------------------- The Business Reengineering project setup may lead to barriers, which
---------------------- have to be dealt with. Project contents and project management can be such that
both hard and soft barriers evolve.
---------------------- Project contents are represented by project objectives, the selected
---------------------- business processes and the introduction of new Information Technology. The
project contents may lead to considerable resistance and hard barriers. For
---------------------- example the employees of a sales organisation at Newark airport resisted against
the implementation of new Point-of-Sales terminals at the airport, because they
---------------------- feared loss of jobs (CIO, 1996). A typical example for a hard barrier would be
the selection of a function oriented software package to support new processes.
----------------------
The project contents are particularly the source of many barriers, when they
---------------------- have not been properly and understandably defined.
Project management can be a source of severe barriers. If confusion
---------------------- reigns, doubt and, sometimes, fear develops. Doubt and fear lead to failing
---------------------- projects, because people who doubt or fear, do not take action towards attaining
the project objectives. Not recognising people’s issues in project management
---------------------- leads to project failure.
---------------------- In a number of Business Reengineering projects, external consultants are

being involved. They often have different attitudes, values and use different
---------------------- methods as their respective client-system. These differences may yield
considerable resistance: “He is not one of us.” On the contrary, if a consultant
---------------------- tries to adapt the client’s culture and be a part of the system, she may cause
resistance, because she offers not much innovative tension. This is the same
----------------------
situation, internal consultants may get into. Yet, there is no perfect answer to
---------------------- client-relationship in a Business Reengineering setting. Each relationship is
different and has to be established both by the consultant and management in
---------------------- a subtle way. What may never happen, though, is a consultant functioning as a
manipulation tool towards members of the organisation.
----------------------
People Related Causes
----------------------
People affected by the organisational change are the richest source of
---------------------- potential barriers. This is true for people on all levels in an organisation. Managers

may resist a change which jeopardises their job; workers may fear unemployment Notes
by being replaced through a computer system etc. People’s behaviour is based on
their personality and norms of the groups that they belong to. ----------------------
Some top-managers/owners believe that operative people are the worst ----------------------
resisters, yet this is mostly not the case. Managers often resist change more
intensely, because sometimes having sacrificed their lives (and that of their ----------------------
family) to their jobs, they have a lot to lose. Thus, many managers in Business
----------------------
Reengineering situations pay lip service to the change, but will not suffer
tolerate any personal drawbacks from the change. Workers, in contrast, mostly ----------------------
want to be told what is exactly expected from them. They typically do not play
with words and do not engage in micropolitics, as opposed to many managers. ----------------------
Organisation Related Causes ----------------------
The organisational structure may cause barriers by being inflexible
----------------------
towards a drastic change in operations. Large bureaucratic organisations tend
to let changes which potentially destroy the existing structure wither. The ----------------------
embedded culture of the organisation is another reservoir for potential barriers.
Culture unconsciously influences the thinking, decisions and actions of the ----------------------
people working in a given company. Thus culture may dictate the inability to
----------------------
escape the past and the inability to invent the future (Hamel/Prahalad, 1994). A
number of Business Reengineering efforts derail because the strategic context ----------------------
in which the project was positioned changed significantly, rendering the new
process design worthless (Nadler/Shaw/Walton, 1995). ----------------------
Environment Related Causes ----------------------
The environment of an organisation, which is undertaking a Business ----------------------
Reengineering project, may impede the success of implementation success
owing to laws, regulations, and public resistance. The organisation’s business ----------------------
partners, i.e. vendors and customers, may resist consciously or unconsciously
the objectives and contents of a Business Reengineering project that the ----------------------
organisation undertakes. Lastly the environment may rapidly change in a way ----------------------
that makes the Business Reengineering project redundant.
----------------------
9.9 ROOT CAUSES FOR IMPLEMENTATION BARRIERS
----------------------
Table 9.4 shows the relationships between potential barriers to Business ----------------------
Reengineering implementation success and areas, which hold the causes of
these barriers. The relationship between a barrier and its underlying cause is ----------------------
not one upon one; but several root causes may yield one particular barrier.
Similarly, one root cause may yield several barriers of different nature. We ----------------------
will not cover all the relationships between potential barriers and root causes. ----------------------
Using Information Technology barriers and individual resistance as examples,
we will explore several root causes. The root cause analysis process presented ----------------------
can easily be applied to other barriers and the root cause domains of individual,
groups, organisation and environment. ----------------------
----------------------

Notes Root Causes to Information Technology Barriers
Information Technology is an important enabler of Business Reengineering.
----------------------
Only through the introduction of Information Technology, innovative business
---------------------- processes become available. Consider the case of a virtual bookstore. Customer
related processes would not be possible without using the capabilities of the
---------------------- world-wide-web. On the other hand, Information Technology has the potential
to evolve as a barrier to Business Reengineering implementation. Information
----------------------
Technology barriers represent severe problems with the Information Technology
---------------------- infrastructure (hardware, software and networking). These problems typically
emerge in the implementation phase of Business Reengineering projects. Table
---------------------- 9.3 shows typical Information Technology barriers and root causes.
---------------------- Table 9.3: Typical Root Causes to Information Technology Barriers
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Barrier 1: Selected Software-Solutions are not Process-Oriented
----------------------
Example Manufact Inc.
----------------------
1. Situation
---------------------- Manufact Inc. produces and sells custom plastic injection machines. The
---------------------- company starts a Business Reengineering project. The main objective is
to increase customer satisfaction by setting up self-directed work teams.
---------------------- These work teams are responsible for the delivery of plastic injection
machines of high quality, low cost and fast delivery speed. The teams are
---------------------- supplied with an application software package meant to help in performing
---------------------- the new processes better than in the past. The chief information officer of
the company selected the package, based on an recommendations of other
---------------------- manufacturing companies.
---------------------- 2. Barrier
The team, being responsible for the whole process from customer inquiry
----------------------
to delivery, compares the software functionality with the process steps it
---------------------- has defined. The team finds out that processing an order from start to finish

requires more than eighty terminal transactions. Filling out ten different Notes
screen templates alone are required for defining a new customer order.
Additionally the team finds out that the software cannot be configured to ----------------------
support the whole process they are responsible for. The team concludes
that the software must have been developed for a different process oriented ----------------------
environment. ----------------------
Underlying causes can be looked for in the areas of project content,
----------------------
project management, and partner (supplier) responsibility:
Root Cause 1: Unsatisfactory Selection Process ----------------------
The software selection process may involve errors of project content and ----------------------
project management. Content errors arise, if it the criteria that the software
should adhere to has not been properly defined. Among the criteria ----------------------
for process oriented software are workgroup computing and database-
----------------------
integration requirements (Tapscott/Caston, 1993). A typical error in
project management could have been that the selection process was not ----------------------
properly performed. A proper selection would have required the vendor
to respond to the process related criteria. Instead, the company purchased ----------------------
the software based on the recommendation of another company. This
----------------------
company’s organisation and requirements could have been different.
Root Cause 2: Delivery Problems ----------------------
Depending on the correctness of the RFP (request for proposal) which the ----------------------
company sends to the software supplier, the supplier eager to book a much
needed new software order, could have promised software functionality, ----------------------
which in reality was not there. The company lost time and money by ----------------------
concentrating on a software not suited to their process needs.
Barrier 2: Users do not Accept System ----------------------
Example Media Partners ----------------------

1. Situation ----------------------
Media Partners produce print-media clippings. They observe German and ----------------------
Swiss papers and magazines on a daily basis, using key words provided by
their customers. The company employs ninety readers that scan the print ----------------------
media, as well as ten clippers, that clip the traced articles with scissors.
Forty percent of their income is based on the number of clippings that ----------------------
they produce monthly. All clippings are sent to the customers by mail ----------------------
on a daily or weekly basis. All business processes are done manually.
Media Partners plan to change that. They plan to introduce Information ----------------------
Technology to support the reading process and replace the manual
clipping process through an electronic clipping service. The company ----------------------
expects additional revenue by setting up an externally searchable clipping ----------------------
database.
----------------------
----------------------

Notes 2. Barrier
After the first training hours with the new Information Technology
----------------------
equipment, the readers find that they will be less productive with the
---------------------- computer. They fear their income will decrease. The clippers fear to
losing their jobs.
----------------------
Underlying causes can be looked for in the areas of project content,
---------------------- project management, people, organisation and public.
Root Cause 1: Wrong Information Technology Configuration
----------------------
The Information Technology Configuration can be faulty. For example,
---------------------- too large keyboards could hinder the process of fast reading and keying
---------------------- in at the same time. The terminal dialogue could be too slow or too
cumbersome. The hardware and network processes could be too slow
---------------------- or not be able to handle the workload. The system might not allow all
readers to work parallel with the new system.
----------------------
Root Cause 2: Not Enough Test-Runs
---------------------- A completely new computer application system has to be tested thoroughly
---------------------- (Lullies/Bollinger/Weltz, 1990). Volume-tests, performance-tests and
availability-tests have to be planned carefully. It is necessary to test the
---------------------- entire process. It might well be that the readers are not satisfied; some
personnel may be happy with the new system. The overall results are
---------------------- important.
---------------------- Root Cause 3: Knowledge and Skill Level Too Low
---------------------- Missing knowledge and skills regarding computers and computer
applications might be severe reasons for non-acceptance. In particular,
---------------------- older people might be afraid to touch the keyboard. It is necessary to take
away fear by thoroughly explaining the new system to all those affected.
----------------------
Also, ample room should be given for unsupervised training sessions.
---------------------- Root Cause 4: Resistance
---------------------- Resistance may develop out of missing knowledge or skills. Some people
believe that the introduction of new technology is always accompanied
---------------------- by resistance. This may or may not be true, since new technology is
---------------------- often accompanied by curiosity for the new. Connor/Lake trace people’s
resistance to a lack of understanding, a missing will to accept the change
---------------------- and missing skills (see root cause 3) or resources to carry out the change
(Connor/Lake, 1994).
----------------------
Root Cause 5: Micropolitics
----------------------
Micropolitics describe power-games in an organisation. The introduction of
---------------------- a new information technology often changes the complex power structure
in an organisation (Lullies/Bollinger/Weltz, 1990). This is particularly true
---------------------- for organisations undertaking global Business Reengineering projects,
such as Media Partners. Experienced readers may fear losing the seniority
----------------------
status to younger, more efficient colleagues.

Root Cause 6: Mistrust Notes
If the system is accessible from outside the organisation, people within
----------------------
the organisation may mistrust the system. Media Partners plan to have
their customers access the clipping database. Errors may immediately be ----------------------
traced back to the individual reader. There is a potential for mistrust.
----------------------
Barrier 3: Decentralisation not attainable
Example Trading Inc. ----------------------
1. Situation ----------------------
Trading Inc. plans to replace its centralised information management ----------------------
system by a decentralised client/server solution. The objective is to
give more responsibilities to their store managers. They are expected to ----------------------
operate as if they were owners of their stores. This is very different from
current processes, where store managers receive direct orders and close ----------------------
supervision from Trading Inc. headquarters. For example, the central ----------------------
marketing department decided local pricing by downloading article prices
to the store PC‘s. Now it is expected that store managers fix their own ----------------------
local prices and improve profitability at the same time.
----------------------
2. Barrier
----------------------
182 stores are switched over to the new decentralised system. It is
planned to have the old centralised system in operation as long as the ----------------------
new client/server system is not up and running. During implementation,
a large number of store managers claim that the new system has not been ----------------------
properly thought through. They maintain that they do not have enough
----------------------
time anymore to pursue their original job of increasing local sales.
They express concerns that headquarters puts more pressure on them by ----------------------
assigning more clerical work to the stores. Trading Inc’s top management
considers putting a hold on the project. ----------------------
Underlying causes can be looked for in the areas of project content, people ----------------------
and culture.
----------------------
Root Cause 1: Vague Project Goals
The project has not been properly explained to the store managers. ----------------------
They believe they are being forced to take additional load on their daily ----------------------
workload. Top management did not share the real intentions with the
store-managers. These call for more individual freedom for decision- ----------------------
making, more opportunities for personal development etc. If the store
managers knew the real project objectives, they would actively pursue ----------------------
project activities on their part. ----------------------
Root Cause 2: Missing Discipline
----------------------
In the past, store managers were always told what to do. Except from
keeping the store operations moving, keeping the store clean and taking ----------------------
care of their personnel, they had no major decisions to take. The new
----------------------
decentralisation concept requires more openness from them, more risk

Notes taking, more involvement, more training, and more teaching. Those store
managers, who are not accustomed to organisational changes of such a
---------------------- nature, miss the discipline necessary to make the project a success.
---------------------- Root Cause 3: Strong Control Culture
The Business Reengineering project requires a new culture within Trading
----------------------
Inc. Away from the strong centralised bureaucracy, with the virtue of
---------------------- efficient decisions and operations towards a more collaborative culture,
with the virtue of situational decision making based on local customer
---------------------- care. There is a large difference between both types of culture (Schneider,
1994). The store managers may think that headquarters will not really
----------------------
make the move. So they may think it is not worth the effort to get too
---------------------- heavily involved in the project. It might even be dangerous for one’s own
career within the company, once the old control culture is reestablished.
----------------------
---------------------- 1. These are observed to be the highest source of potential barriers is

due to
----------------------
i. Project related issues
---------------------- ii. Environment related issues
iii. People related issues
----------------------
iv. Customer related issues
----------------------
---------------------- Activity 3
---------------------- Develop the root cause analysis or fish bone diagram for “Barrier experienced
---------------------- in the implementation of information technology” in any typical organisation
on the basis of causes like people, technology, environment/training and
---------------------- Implementation method
----------------------
9.10 ROOT CAUSES OF INTERNAL INDIVIDUAL
----------------------
RESISTANCE
----------------------
The second area we are looking at is individual resistance (of type
---------------------- A) against project contents and project management. Next to Information
Technology problems, this area is the most often mentioned by practitioners
---------------------- when asked for Business Reengineering Implementation problems. It is also
the area of most wrong decisions within a Business Reengineering project.
----------------------
When asked to give a reason for individual resistance, managers responsible
---------------------- for effective Business Reengineering, often act as lay psychologists by reading
people´s character as being too rigid or too negative. On the other hand, affected
---------------------- people act the same: “This manager will never be able to change himself” often

needs misunderstanding and prejudice. There is ample room for improvement Notes
in changing the views of project teams and people affected in the organisation.
----------------------
Firstly, individual resistance can be broadly differentiated into constructive
and destructive resistance to Business Reengineering success. Constructive ----------------------
resistance is always positive towards the objectives of the project. Yet there is
a resistance against the ways and means and the behaviour of the people who ----------------------
run the project. Destructive resistance is meant to stop the project. Both types
----------------------
of resistance can be overt or covert. Overt means one can hear and see the
resistance. Covert means the resistance is not noticeable from the outside. This ----------------------
is definitely dangerous for the success of a Business Reengineering project,
particularly intense implementation situations. ----------------------
Figure 9.2 shows five roles associated with resisting behaviour. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Figure 9.2: Five Roles of resisting Behaviour ----------------------
●● The Behaviour of the Critic ----------------------

The critic communicates openly and demonstrates constructive behaviour ----------------------
towards the project goals. She is not in line with various aspects of the
project approach. She adds ideas to the project contents. Critics are ----------------------
valuable individuals for the successful outcome of a project. It is important
that the project initiator and the project team consider the critique closely. ----------------------
●● The Behaviour of the Skeptic ----------------------

The skeptic demonstrates behaviour similar to the critic. She does not tell ----------------------
everybody though. She is doubtful about various aspects of the project
content and project management, yet talks only when asked. She is a ----------------------
valuable source of ideas towards the projects outcome.
----------------------
●● The Behaviour of the Terrorist
The Terrorist seems to constantly warn everybody regarding the negative ----------------------
outcome of the project. She openly demonstrates her distaste for the ----------------------
project objectives and the way the project is run. Often the terrorist
announces her own actions against the project. These should be taken ----------------------
seriously, since in all likelihood the terrorist makes her announcement
come true (Watzlawik, 1976). ----------------------

Notes ●● The Behaviour of the Saboteur
The saboteur demonstrates an extremely negative behaviour.
---------------------- Communication is overt. The project team has to carefully watch out
---------------------- for saboteurs. Saboteurs should have no chance to covertly destroy the
outcome of the Business Reengineering project. Typically, only very few
---------------------- people turn out to be saboteurs.
---------------------- ●● The Behaviour of the Undecided
The undecided does not show clear signals of being covert or overt,
---------------------- constructive or destructive. That makes this behaviour dangerous to the
---------------------- project’s outcome. When the project turns to the positive side though, the
undecided tend to be constructive.
----------------------
Barrier 1: Constructive Resistance
---------------------- Both overt and covert constructive resistance can be traced back to the
domains of project management, the individual person and the culture of the
----------------------
organisation.
---------------------- Root Cause 1: Project Management Approach
---------------------- Constructive behaviour of affected people is based on the way the project
is being managed. If the project team asks for openness and behaves itself in
---------------------- such a way that people can communicate without fear, then it is likely people
---------------------- will freely discuss their ideas regarding the projects content.
Root Cause 2: Personalities of people affected by the Project
----------------------
Well-educated non-destructive personalities mostly express themselves
---------------------- in ways that truly help a project’s outcome. People are often known for their
character. They seem to be not easy, yet valuable members of the organisation.
----------------------
Root Cause 3: Former experiences
----------------------
Former experiences with organisational projects forms the behaviour of
---------------------- people. If the experience had been negative, then the behaviour towards the
new Business Reengineering project may be negative. If the experience had
---------------------- been positive, the behaviour towards the project is positive. Thus the behaviour
of new people to the organisation may collide with behaviour of incumbents.
----------------------
Former success may breed resistance in a way that people believe there is no
---------------------- need for change.
Barrier 2: Destructive Behaviour
----------------------
Both overt and covert destructive resistance can be traced back to the
---------------------- domains of project content, project management, the individual, groups and the
---------------------- structure of the organisation, which affects the culture in turn, and the public.
Root Cause 1: Project Objectives
----------------------
The approach of the project team, decides, to a large extent, the
---------------------- development of destructive behaviour. If the project objectives do not take
people into consideration and solely push the project towards technological
----------------------
goals, destructive behaviour evolves as a consequence. Psychologically,

people resist against objectives they do not accept as their own. Therefore, it Notes
is necessary to align personal goals with the project goals. This is particularly
true for those Business Reengineering projects which are set up to downsize the ----------------------
organisation.
----------------------
Root Cause 2: Missing Change Momentum
----------------------
A Business Reengineering project changes the way a company operates
on a daily basis. This change forces everybody affected to change her working ----------------------
style. As long as the working style is considered new, the management has to
keep pressure, to keep the change momentum up. If this is not the case, there is ----------------------
a tendency to go back to the old style.
----------------------
Root Cause 3: Destructive Personality
----------------------
Managers of Business Reengineering projects explain destructive
behaviour often with alleged destructive personality. Yet, as psychotherapist ----------------------
Erich Fromm pointed out, while destructive behaviour is increasing in the world
of today, only a minority of the people has a destructive personality. He claims ----------------------
it is the society, which, for a large part, is responsible for the destructive actions ----------------------
of people (Fromm, 1973). Society can allow destructive personalities under
the “right” circumstances. Therefore, before a person is accused of having a ----------------------
destructive personality, it should be checked, whether circumstances in the
organisation support destructive behaviour. ----------------------
Root Cause 4: Group Pressure ----------------------

Group pressure may cause destructive behaviour. Group norms may force ----------------------
the group member to behave destructively, even if as an individual, the group
member would have behaved otherwise. ----------------------
Root Cause 5: Loss of Power over people ----------------------
People who lose power over people may react with destructive actions.
----------------------
For example, take the care of person who lost is supervisory power, with
the introduction of self-directed work teams. The person reacted by covertly ----------------------
sabotaging the team’s working results. It is necessary to give the person a new
role with a new responsibility that will not to be identified with a loss of power. ----------------------
Root Cause 6: Loss of acceptance ----------------------
Often the loss of power over people is a loss of status in the world outside ----------------------
the work place. This feeling of loss by the affected person can influence her
decisions and actions in destructive ways. ----------------------
Business Reengineering is an approach to organisational renewal, which ----------------------
begins with customer needs and then moves to the work itself (Nadler/Shaw/
Walton, 1995). As a result, it tends to take a reductionist approach in the ----------------------
Proponents of Business Reengineering believe that everything else (structure,
culture, people’s behaviour and motivation) will fall into place, once the ----------------------
reengineering has been done. This engineering mentality offers tremendous ----------------------
benefits through crisp and clear-cut application of logic to the design of business
processes, but also has a down side. ----------------------

Notes A large majority of Business Reengineering efforts begins with the
redesign of processes and focus on the people side (members of the organisation
---------------------- and customers likewise) only to the extent needed to ensure that the technical
design can be implemented by humans. This is the same technically oriented
---------------------- approach to change, that Frederic Taylor and his disciples used to implement
---------------------- for mass manufacturing at the turn of the century (Schumacher, 1996).
---------------------- Activity 4
----------------------
You are planning for a get together of 25 people in your group, at a specified
---------------------- location. Your idea is accepted by a majority in the group but you are likely to
face constructive resistance and destructive barriers. Anticipate the barriers
---------------------- and it nature and suggest a solution for the same.
----------------------
---------------------- 9.11 MANAGER’S BELIEFS AND ASSUMPTIONS IN BPR

---------------------- I believe that change is linear. A leads to B, B leads to C.
---------------------- ●● I can plan and control all aspects of change.

●● I see change as a rational and objective process.
----------------------
●● motional and personal issues should play no part in organisational
E
---------------------- change.
---------------------- ●● If it‘s my idea, it must be good.

Typical Management Behaviours
----------------------
●● ses default strategies such as the use of power, manipulation and deal
U
---------------------- making in an attempt to influence or make people go along.
●● Avoids emotional and personal issues, so misses the message of resistance.
----------------------
Probable Results
----------------------
●● I f support is needed for the change, there is a strong likelihood that it will
---------------------- fail.
The management of barriers, particularly resistant behaviour, is a new
----------------------
task that should complement the management of Business Reengineering
---------------------- implementation projects. The traditional approach to the management of barriers
within Business Reengineering projects, masterminded by a top-down attitude to
---------------------- “people problems,” has to give way to a Change Management oriented approach
of recognising people’s valid concerns. Processes, systems and structures can be
----------------------
adjusted mechanistically, but it is the people who are the critical success factor in
---------------------- making the new business processes work (Burlton, 1995).
---------------------- Therefore, it is necessary to review the people and culture oriented

Change Management literature for intervention models, applicable to Business
---------------------- Reengineering projects.
----------------------

A Framework for the Identification and Removal of Barriers to Business Notes
Reengineering Success
----------------------
“To overcome pockets of resistance, I created a core group of 24 section
and department heads. They became a part of the strategy and bought into it; ----------------------
they then passed their commitment down to their subordinates. They were able
to counter resistance with one-on-one discussions. Peer pressure alone is not ----------------------
enough, though we had to be vigilant, identify problems before they started, and
----------------------
handle them sensitively.”
Max Strebel, President and CEO, Union Bank of Switzerland ----------------------
The Framework ----------------------
Barrier Management is a new task for managers of Business Reengineering ----------------------
implementation projects. It supplements the technically oriented project
steps with applicable Change Management intervention techniques. Barrier ----------------------
Management addresses complex people related implementation problems.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Figure 9.3: Relationships between Business Reengineering Projects
----------------------
9.12 BARRIER MANAGEMENT IN BPR PROJECTS
----------------------
Project Management
----------------------
Traditional Process management differentiates between process project
management and process development management (Österle, 1995). Process ----------------------
project management describes the project management tasks of Business
----------------------
Reengineering, whereas process development management deals with the
ongoing refinement of business processes. We concentrate on process project ----------------------
management and its relationship to Barrier Management.
----------------------

Notes Process project management has been broken into three steps, as defined
in chapter 2 of this report.
----------------------
The first step serves to prepare for the Business Reengineering project.
---------------------- The tasks are project initiation based on external triggers, visioning, goal setting
and selection of business processes to be reengineered.
----------------------
The second project step serves to redesign the selected business processes.
---------------------- This step takes into consideration, potential of Information Technology and
applies these to the business processes selected for reengineering.
----------------------
The third step concerns the implementation of redesigned business
---------------------- processes in day-to-day operations. Transition to new work habits and attainment
of the goals perceived are at the heart of this project step.
----------------------
Barrier Management
---------------------- Barrier Management is being performed parallel to the project management
---------------------- steps. Like a radar (Figure 9.3), it continuously checks the project environment
for symptoms of barriers, identifies root causes, applies suitable intervention
---------------------- methods and techniques to the domains of project, people, organisation and
environment; finally checks the results of these interventions.
----------------------
The closer the Barrier Management steps are to the project preparation
---------------------- step of process project management, the less costly possible barriers are to
the overall Business Reengineering effort. The more barriers expand into the
---------------------- implementation phase of Business Reengineering, the more cost and time is
---------------------- associated with their identification and removal.
This chapter of the report is meant to help practitioners in their efforts
----------------------
to identify and remove barriers to Business Reengineering. For this purpose,
---------------------- checklists have been developed, which are presented in the remaining part of
this chapter.
----------------------
Search for and Identify Barriers
---------------------- The successful identification of potential barriers depends on the successful
---------------------- search for symptoms of barriers. All events before and during the course of the
project are systematically analysed, in relation to the emergence of symptoms
---------------------- for barriers. As an example, Table 9.5 lists several symptoms regarding resistant
behaviour.
----------------------
Table 9.4: Typical Symptoms of Resistant Behaviour
----------------------
Symptoms of Constructive Symptoms of Destructive Resistance
---------------------- Resistance
●● A person often voices ●● Key people stay away from important
---------------------- concerns about how project meetings, which need their input
a particulars issue is
---------------------- being downplayed by
---------------------- the project team.
----------------------

●● Some complain, that ●● Some voice the alleged concerns of Notes
there is not planned enough information about the ithers: ‘I
change available to am Only saying, what these people don’t ----------------------
them. dare to say.” ----------------------
●● High level of sick ●● Some object only in private, whereas in
leave among affected public they stay quiet ----------------------
employees.
●● Muttering: “It does not ●● Project team receives outright threats. ----------------------
make sense that I present “If you carry on with this, the company
----------------------
my ideas, you (project definitely will go down the tubes.
team) have already ●● You are responsible for us losing our ----------------------
made your plans for me jobs.”
about my thoughts.” ----------------------
●● Requests for explaining ●● Loud, unsubstantiated opposition. Often
----------------------
the objectives of over and over again: “I don’t understand
the change. typical what this is all about, I have my job to ----------------------
question: “Where will do. Someone has to work around here.”
stand?” ----------------------
The language used in communication between resisters and project team ----------------------
plays an important role. Some believe, though, that quiet friendly voices stays
for constructive resistance and that loud explosive language stays for destructive ----------------------
resistance. Often this is not the case. The language used is depending on the
----------------------
character, the social environment and other factors alien to the issue.
It is important that the project team listens very carefully to the contents ----------------------
of the resisters’ talk. Thus, non-talkers must be given the opportunity to talk.
----------------------
For example, in a project team meeting, one person was always talking very
negatively about the project. Everybody else was quiet. He happened to be their ----------------------
boss. After the project team took their attention away from him and towards
the other people in the room, it turned out, that they were quite happy with the ----------------------
change.
----------------------
Identify Root Causes
----------------------
It is a mistake, to act upon barriers, without checking the root causes first.
Acting upon barriers without knowing the root causes may even cause additional ----------------------
barriers. Finding the roots, though, is not easy in project reality. A technique
known as the Stream Analysis technique can be applied successfully to identify ----------------------
root causes in the domains of project, people, organisation and environment ----------------------
(Porras, 1987). Figure 9.4 shows the Stream Analysis chart of the root tracing
for the barrier “Key person A stays away from important project meetings.” ----------------------
This is the first symptom of an alleged barrier for destructive resistance.
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Fig. 9.4: Root Cause Analysis applying the Stream Analysis Technique
---------------------- The root cause analysis starts out with the barrier: Key person A stays
away from important project meetings. The project content is to introduce work
---------------------- teams within an overall Business Reengineering effort. The analysis covers
---------------------- seven domains: project contents, project management, individual behaviour,
group induced behaviour, organisational structure and cultures, as well as the
---------------------- public.
---------------------- The tracing of the barriers to underlying causes yields the following root causes:
1. The Initiators did not define project objectives well enough to be prepared
---------------------- for culture clashes.
---------------------- 2. The project team did not yet explain to B his new role in the future
organisation. He was expected to be a coach to other people of the
----------------------
organisation.
---------------------- 3. The old organisation is still intact, i.e. A is acting along the lines of the old
structure. The new structure is not yet implemented.
----------------------
4. B‘s wife is influencing B, to be careful regarding his own future within
---------------------- the company, which is impacting their family’s future.
---------------------- Four root causes could be identified, based on one barrier of alleged
destructive behaviour of key person A. By tracing this problem to the root
---------------------- causes, a managerial shortcut punishing A, as would traditionally be the case,
---------------------- has been prevented.
The next step of Barrier Management is, to intervene at the root cause
---------------------- level. Eventually the barrier will disappear; A will participate in important
---------------------- project meetings, without being forced to do so by the project team.
----------------------

Intervene at Root Cause Level Notes
The objective of Interventions is, to remove root causes or to lessen their
----------------------
impact on the success of Business Reengineering efforts.
In the foregoing case, typical interventions include: ----------------------
1. The project team redefines and broadly distributes project objectives. ----------------------
2. The project team explains new roles to affected managers, in particular to ----------------------
B.
3. The project team (initiator) explains to everybody affected that the old ----------------------
organisational structure is in a state of transition, i.e. it is very important, ----------------------
to do today‘s work, yet equally important, to participate in forming the
new structure. ----------------------
4. The project team asks B to inform his wife about the changes taking place ----------------------
at the company, and to assure her that he will move to a new role within a
foreseeable future. This serves to take away her fear. ----------------------
Interventions have to be applied systematically for expected results to ----------------------
happen. Interventions are applied by the change agent, initiator and the project
team. ----------------------
Given below is a list of several questions, which help to facilitate the ----------------------
intervention process.
----------------------
●● How will the organisation address the resistant forces?
●● What steps will be taken to avoid taking the easy way out? ----------------------
●● ow will the strategic management tool, mission and strategy, be used to
H ----------------------
handle resistant forces?
----------------------
●● ow will the strategic management tool, organisational structure, be used
H
to handle resistant forces? ----------------------
●● ow will the strategic management tool, human resources management,
H
----------------------
be used to handle resistant forces?
●● How will roles be used to handle resistant forces? ----------------------
●● How will rules be used to handle resistant forces? ----------------------
●● How will responsibilities be used to handle resistant forces?
----------------------
●● How will responsiveness be used to handle resistant forces?
List of questions aimed at possible interventions ----------------------
The second list of questions helps to facilitate the intervention process ----------------------
during the transition period (Hubbard, 1995).
----------------------
●● ow will you constructively confront retrenching behaviour and identify
H
behavioural issues for moving ahead? ----------------------
●● What will the people affected be doing differently? ----------------------
●● ho will have to let go of something and what will they have to let go
W
(their roles, peer group, sense of competence, chance for promotion)? ----------------------

Notes ●● What will you do to handle each sign of grieving?
●● hat will you do or say to help employees through the disillusionment
W
---------------------- period of disenchantment?
---------------------- ●● hat will be done to address employee feelings regarding the “good old
W
days” ?
----------------------
●● hat will you do to provide disoriented employees with information,
W
---------------------- direction, and a strategy?
●● hat will be done to give employees extra support and opportunities to
W
----------------------
get things off their chests?
---------------------- ●● hat can you and the organisation do to compensate for the losses? What
W
can be given back to balance what has been taken away — status, turf,
----------------------
control, team membership, recognition and feelings of competence?
---------------------- ●● ow will you explain, what is over and what is not over (specifically what
H
is over and what is not, what policies and procedures are in force or not,
----------------------
what decisions still stand and which do not, what from the past stays and
---------------------- what goes )?
●● ow will you mark the end of the previous way (meetings with all
H
----------------------
employees, tearing down walls etc.)?
---------------------- ●● What methods will you use to identify the transition pace?
---------------------- ●● hat additional tools and support will you use to carry out (training, key
W
management support, etc.)?
---------------------- ●● hat will you do to deal with your own potential anxiety that the change
W
---------------------- appears not to be moving fast enough?
●● hat will you do with people who want to go back to the old ways
W
---------------------- (avoiding the neutral zone and the new beginning)?
---------------------- ●● hat will you do to train managers and employees in the new skills they
W
will need to succeed?
----------------------
●● hat will you do to strengthen intragroup connections (i.e., informal
W
---------------------- luncheons, open houses, videotaping key events, status articles, etc.)?
●● hat will you do to make sure the concerns voiced do not disappear (i.e.
W
----------------------
reporting back to them regularly, identifying what is being done on issues
---------------------- raised during each meeting, ensuring that at least some issues raised will
lead to visible action)?
----------------------
●● hat will you do to foster innovation in the organisation while in the
W
---------------------- neutral zone (i.e. creating opportunities and systems to encourage
employees to try new things, creating forums to question the way things
---------------------- are currently done, staff retreats, “no holds barred” policy reviews and
problem solving, surveys and suggestion campaigns)?
----------------------
●● hat will you do to provide training and practice in the techniques of
W
---------------------- discovery, experimentation, creativity and innovation?
---------------------- ●● What will you do to rebuild trust among employees?

●● hat will you do to keep the shared vision and mission in the front of the
W Notes
organisation?
●● hat will you do to create a technical institutionalising plan for the
W ----------------------
change to the new processes? ----------------------
●● hat will you do to create a political institutionalising plan for the change
W
to the new processes? ----------------------
●● hat will you do to create a cultural institutionalising plan for the change
W ----------------------
to the new processes?
----------------------
List of questions pertaining to interventions in the transition period
Based on the literature review of Change Management approaches, Table ----------------------
9.6 summarises the applicability of intervention methods and techniques to the ----------------------
root cause domains. High, medium and low in a field denotes the potential
impact an intervention has on the underlying root causes within the respective ----------------------
domain.
----------------------
Table 9.5: The Impact of Intervention Techniques on Domains of Root
Causes ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Control Intervention Success ----------------------
Intervention success is dependent on the time horizon and the complexity ----------------------
of a Business Reengineering effort (Figure 9.5). The situation is heavily
polarised (quadrants II vs. quadrant IV). ----------------------
While affecting changes in process redesign, structural redesign, ----------------------

project contents, and project management is not overly complex and can be
accomplished in a relatively short time frame, it is not so with the other domains ----------------------
of change. Interventions to affect changes in individual and group behaviour, as ----------------------
well as organisational culture, are both complex and time-consuming.

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 9.5: Impact of Interventions on Change Domains
---------------------- The changes in quadrant II are of a technical nature, whereas the
changes in quadrant IV are of a human nature. Most of the failings of Business
----------------------
Reengineering projects teach that human change efforts make the difference.
---------------------- Therefore, controlling intervention success means to measure changes in
individual and group behaviour and to measure changes of the organisational
---------------------- culture, i.e. to measure changes in the way people in the organisation behave
and work together.
----------------------
Table 9.6: Indicators of Cultural Change
----------------------
1. Jobs within a business process have overlapping responsibilities.
---------------------- Business processes are seamlessly executable. Short cycle time are
attainable through close cooperation within the business process.
----------------------
●● Work is seen as a platform on which people mature and achieve
---------------------- happiness (Flow) by developing their competencies and as well as
---------------------- contributing to the success of the team and the organisation.
●● Rewards (pay-system) are based on team and organisational
---------------------- performance.
---------------------- ●● Base pay is depending on competencies.
---------------------- ●● Work areas of people working together to perform a business

process are laid out so that people see each other. If this is
---------------------- physically not possible, there are provisions installed, for letting
people easily communicate with each other (e.g. e-mail, electronic
---------------------- conferences, regular face-to-face meetings).
---------------------- ●● Managers redesigned their own functions. Instead of micromanaging,
they facilitate team efforts, helping teams to perform. Managers see
---------------------- their premier goals, to help teams in providing resources to that end,
---------------------- that teams reach their business goals (e.g. short cycle times, delivery
on time, high quality levels, low transactional cost).
●● Managers are kept responsible for developing into leaders. There Notes
are programs, that help (or push) managers to leave the state of
----------------------
transactional leadership in favour of transformational leadership.
●● People who consistently did not support the organisation’s change ----------------------
for better performance, or even act in negative aggressive ways
----------------------
(covert or overt) have been expelled from the organisation.
●● Established work-procedures promote collaboration of employees ----------------------
among themselves, with managers, with customers and other
----------------------
partners of the organisation (e.g. suppliers).
●● The organisation’s infrastructure is supportive to team-work. ----------------------
●● Skill development is aggressively pursued by everybody. ----------------------
●● Continuous learning is a habit. There are learning programs
----------------------
implemented, which foster the systemic understanding of the
interconnectedness within the organisation and to the outside ----------------------
world.
----------------------
●● Open dialogue is enforced. Improvement opportunities resulting
from open dialogue between all people of the organisation are ----------------------
aggressively pursued.
----------------------
●● Peer-to-peer acknowledgements are not only words, but daily
practice. As an employee, a person is first seen as a human being, ----------------------
and second an instrument of production. People sense this and
devote their energy to achieving their team’s and the organisation’s ----------------------
goals.
----------------------
●● Continuous improvement is not a word, but a habit. A high
number of improvements are implemented month after month. ----------------------
Improvements are highly acknowledged by co-workers and the
management of the organisation. ----------------------
●● Downsizing, if part of the Business Reengineering effort is ----------------------
carefully executed, by giving affected people a real chance for
a future life elsewhere. Nobody is robbed of personal pride. ----------------------
“Survivors” do not live in fear, to be a potential target of the next
----------------------
round of downsizing.
●● Win-win as opposed to win-lose thinking is predominant. People ----------------------
know, that the organisation as a whole has to be successful in
----------------------
the marketplace. They act accordingly within the realms of their
responsibilities. ----------------------
A recent study of Business Reengineering projects in U.S. Electronic ----------------------
manufacturing companies found that managers and project teams often
underestimate the actions required to transform the way employees behave and ----------------------
work together (Majchrzak/Wang, 1996). Some believe that simply changing
organisational structures from functional units into process-based departments ----------------------
will let people shed their functional mind-sets and will forge them instantly into ----------------------

Notes fully functioning work-teams, achieving common process goals. Typically, this
is not the case.
----------------------
A number of critical factors, compiled from the study, and the author‘s
---------------------- Business Reengineering hands-on experience are indicators, whether cultural
changes actually took place (Table 9.6). The list can be used as a project audit
---------------------- tool.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 9.6: Core Cultures of an Organisation
----------------------
Table 9.7 displays major characteristics and differences between the four
---------------------- core cultures (Schneider, 1994).
---------------------- Table 9.7: Characteristics and Differences of Core Cultures

Core Culture Advantages Disadvantages
---------------------- Control Culture Control culture Restraints everywhere. The
---------------------- Structured in a organizations prevail culture is not attractive to
hierarchical fashion. in the history of individualists and innovators.
---------------------- Often bureaucratic. Roles successful companies. Breakthrough changes, which
and functions are clearly Orders (no questions require paradigm shifts are
---------------------- defined. Culture breeds asked) make things not easy to effect. This culture
functional specialists. happen immediately. breeds resistance to change.
----------------------
Power and control are
---------------------- prime motivators.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Core Culture Advantages Disadvantages Notes
Collaboration Culture Success is reached by If not focused by common
Springs from the family building, developing objectives, the culture tends ----------------------
and sports analogy. The and making use of to concentrate on people
individual motivation is effective teams. The issues, rather than on business ----------------------
the need of affiliation, to organisation brings in objectives. Lengthy discussion ----------------------
be a part of a successful and relies heavily on about the well-being of teams
team or organisation. people with diverse and individuals can hinder ----------------------
The culture emphasises capabilities. People business success.
building trust. interactions are key. ----------------------
Leaders pay attention
----------------------
to open dialogue.
Competence Culture High performance Taken to the extreme, the ----------------------
Often found in standards. The culture can lose direction. It
universities, the organisation offers might take people and their ----------------------
competence culture is considerable expertise, initiative for granted. People
based on the achievement and strives to enhance are treated insensitively, ----------------------
motive, which has to do those considerably. personal concerns may become ----------------------
with accomplishing more Great innovative annoyances. People may fear
and doing better than achievements can be to say that they do not know. ----------------------
others. The objective is to expected. Trendsetting, People feel they are constantly
create an organisation that highly productive underperforming. People may ----------------------
is best in product, people, and future oriented. be overworked and stressed out.
----------------------
technology, etc. The Good at adapting
organization feels best at and changing. ----------------------
what it does (world- class Individuals can stand
excellence) out. Ongoing further ----------------------
development.
Cultivation Culture The The culture does a In excess, the culture lacks ----------------------
base of this culture are good job of building direction and focus. Many
----------------------
religious organisations. It commitment among things may go undone, and
is one of faith. It heralds people, who feel cared projects may lay in the shelf. ----------------------
a system of beliefs or for. It values creativity People may become moralistic
expectations that the and people‘s and overly judgmental. ----------------------
organisation and it‘s aspirations. People Coordination of people may
people deem valuable. feel inspired. Training become cumbersome. The
----------------------
The cultivation culture and education have idealism may not take the ----------------------
organization acts the way a high value to the organisation further in solving
it does because it has a organisation. People real problems. Details are easily ----------------------
purpose. People in the can make mistakes, overlooked.
organization are often and not be punished. ----------------------
idealists, particularly in Unlike other cultures,
----------------------
their approach to other higher order values are
people. put into action. ----------------------
Most companies starting out Business Reengineering projects, own a
----------------------
control culture. They are attracted by the potential outcomes of controlling
their business processes much better, and making better use of their Information ----------------------

Notes Technology investments. Companies that do not understand the need to change
their control culture to take people more into account are prone to falter with
---------------------- their project. They may have change technically, but have not reaped the
potential benefits.
----------------------
So what is the right culture, a company with an engraved control culture,
---------------------- should strive for? Definitely it should move towards the collaboration culture
with some elements of the competence culture. There may be cases of highly
----------------------
charismatic leaders turning an organisation into a cultivation culture.
---------------------- To move towards a collaboration culture, revolutionary changes in
leadership is key. For managers, moving up the ladder of leadership to
----------------------
transformational leadership is mandatory.
----------------------
----------------------
---------------------- Multiple Choice Multiple Response.

1. Barrier management is required for:
---------------------- i. Achieving project objectives
---------------------- ii. Identifying quality problems
iii. Identifying root causes
----------------------
iv. Applying interventions
---------------------- 1. The objective of intervention in BPR is to remove
i. Root cause
----------------------
ii. Impact
---------------------- iii. Problem
iv. Resource
----------------------
----------------------
Activity 1
----------------------
1. Based on the study of constructive resistance and destructive resistance as
----------------------
barriers in BPR projects, list a few behavioral indicators of constructive
---------------------- collaboration/efforts, Team work, Positive attitude.
2. You are Manufacturing Head of a company. The company is going for
---------------------- automatic production line instead of complete manual assembly. The
---------------------- objective is to improve productivity and to cater to the increased market
demand with existing manpower but not to reduce manpower. You have
---------------------- to conduct a meeting with union representative to inform and get them
to participate in this process. Prepare your list of points/questionnaire for
---------------------- discussion. Mark the intervention points on the same.
---------------------- 3. Write down one example for each type of core culture in a typical
organisation.
----------------------

Notes
Case Study
----------------------
BUSINESS PROCESS REENGINEERING: A PROJECT FAILURE
----------------------
1. The Company
----------------------
PubliCorp (a pseudonym) was a large civil engineering organisation
owned by a local government in Brazil. The organisation was initially ----------------------
established to act as an inspection body, and later to supply the high
demand from the government for construction services. PubliCorp held a ----------------------
monopoly in the field. A threat, though, started to emerge. It came from
----------------------
the deregulation in the construction industry. The prospect of deregulation
called for a radical re-thinking and reengineering of PubliCorp‘s structure ----------------------
and business processes.
----------------------
2. The Project
PubliCorp hired two large consulting companies to join two project ----------------------
teams. One team (OR) tackled the redesign of processes and structure,
----------------------
the other team (IT) was assigned the task of setting up a new Information
Technology infrastructure, based on the redesign recommendations of the ----------------------
OR team. The centralisation of information systems in the central data
processing department (CPD) was one of the problems identified. CPD ----------------------
served as a bottleneck to the many departments processing public bids
----------------------
and coordinating construction projects. The OR and IT teams decided to
tackle this problem by downsizing applications from the CPD mainframe ----------------------
to a local area network. This was done within six months, despite the
fact that the PubliCorp staff had been incited by the CPD and its union ----------------------
members to boycott the new applications. The OR team had its work to
----------------------
re-engineer the core processes considerably hindered by the opposition.
The team analysed and modeled several processes with difficulty, which ----------------------
added uncertainty to the subsequent changes.
----------------------
Additionally, two pilot redesign attempts failed in the implementation
phase, mainly due to a lack of interest from the staff. Another problem ----------------------
faced was that some redesign proposals floundered on regulations
established by law. The process of setting up public bids, for example, ----------------------
was analysed and redesigned several times. Only slight changes in the ----------------------
process could really be implemented, without making the process prone
to be contested by lawyers representing companies that had lost bids ----------------------
to others. Four years after it had started, the reengineering attempt was
hailed as a successful Business Reengineering project by some, including ----------------------
the CEO, who believed he had taken over an old-fashioned organisation ----------------------
and turned it with the help of Information Technology into a modern one.
Others regarded the attempt as a failure from a reengineering perspective. ----------------------
No radical changes had been effected, the total investment being US$
8 Million. Staff had not been reduced, despite the fact that the number ----------------------
of construction contracts granted to PubliCorp had been reduced. This ----------------------

Notes meant that even the increase in efficiency achieved in some processes, did
not really matter.
----------------------
3. Why did this Business Reengineering Attempt Fail?
---------------------- The first reason was the leveling, by PubliCorp’s CEO, of political interests
with objective goals. The second was the gradual shift of the focus of
----------------------
the OR team from core Business Reengineering to problem solving and
---------------------- automating existing processes. The third reason was the hiding of failure
signs. This happened consciously at first, for self-preservation. Later,
---------------------- though, this became unconscious and was reinforced by social facilitation
(Kock/McQueen/Baker, 1996).
----------------------
The above case of a “successful failure” demonstrates several barriers
---------------------- and underlying reasons, which is the subject of the remainder of this
report. The author differentiates barriers to Business Reengineering
----------------------
implementation success into hard and soft barriers. Figure 9.1 classifies
---------------------- soft and hard barriers along with areas, which contain root causes for
barriers to Business Reengineering implementation success.
----------------------
---------------------- Summary
---------------------- ●● he Barrier Management framework can be considered a tool to secure
T
the success of a Business Reengineering initiative. It does not replace
---------------------- the project plan or project management altogether. Rather, it supplements
---------------------- both. But Barrier Management typically takes more of the project team‘s
time than the original project plan. This is, because Barrier Management
---------------------- is predominantly about people.
---------------------- ●● I t is interesting to see the paramount importance of changes in people‘s

behavior, group behaviour and in the organisation‘s culture as the prime
---------------------- indicators for the success of interventions. Lastly though, the economics
indicate the success or failure of a Business Reengineering project:
---------------------- Customer satisfaction measured by repetitive sales, profit per staff member,
---------------------- return on capital, cost/income ratio, revenue, and operating profits are but
a few “hard” indicators of project success. The author claims, that it is
---------------------- the right culture and goal oriented people behaviours that generate long
term “hard” success. This is often overlooked by supporters of technically
---------------------- oriented Business Reengineering. But as Business Reengineering co-
---------------------- inventor Davenport states, people make the difference (Davenport, 1996).
●● hat is the right culture, which underpins Business Reengineering success?
W
---------------------- William E. Schneider defines four core cultures, an organisation may own
---------------------- (Figure 9.13). By the concept of core culture he describes the nucleus
of an organisation‘s culture. At the periphery though, an organisation
---------------------- may display different cultural aspects (Schneider, 1994). Rephrasing
above question: What is the right core culture, which underpins Business
---------------------- Reengineering success?
----------------------

Keywords Notes
----------------------
●● Barrier: Obstruction to goal
●● roject management: Project management is the discipline of organising
P ----------------------
and managing resources in such a way that these resources deliver all the
work required to complete a project within defined scope, time and cost ----------------------
constraints. ----------------------
●● oot Cause analysis: The cause and effect diagram was developed by
R
Dr. K. Ishikawa to represent the relationship between effect or problem ----------------------
and all the possible causes influencing it. For every effect there are likely ----------------------
to be several causes.
----------------------
Self-Assessment Questions ----------------------
1. What is the basic classification of barriers? Explain in detail. ----------------------
2. What is barrier management? Elaborate.
----------------------
3. Why it is important to understand barriers in a successful implementation
of BPR? ----------------------
----------------------
----------------------
----------------------
1. These are observed to be the highest source of potential barriers is due to ----------------------
iii. People related issues ----------------------

Multiple Choice Multiple Response.
----------------------
1. Barrier management is required for:
----------------------
iii. Identifying root causes
iv. Applying interventions ----------------------

1. The objective of intervention in BPR is to remove
----------------------
i. Root cause
----------------------
----------------------
----------------------
----------------------

Notes
Suggested Reading
----------------------
1. Debela, Tesfaye, Atkilt Hagos. Implementation of Business Process
---------------------- Reengineering in the Ethiopian Public Sector: An Assessment of Four
Organizations.
----------------------
2. Janach, Sabine. Cultural Differences: A Barrier to Overcome the
---------------------- Singaporean Culture and its Characteristics.
---------------------- 3. Orlikowski, W.J. Information Technology and Changes in Organizational

Work. Springer Science & Business Media.
---------------------- 4. Radhakrishnan, R, S. Balasubramanian. Business Process Reengineering:
---------------------- Text and Cases. PHI Learning Pvt. Ltd.
5. Srinivasan, R. Business Process Reengineering. Tata McGraw-Hill
---------------------- Publication.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

BPR in Banks
UNIT
10
Structure:
10.1 Introduction
10.2 Business Process Re-engineering
10.3 Hammer Suggestions
10.4 BPR Model
10.5 Macro and Micro Level Process Re-engineering
Summary
Keywords
Suggested Reading
BPR in Banks 133

Notes
Objectives
----------------------
----------------------
●● Identify the necessity for BPR in Banks
---------------------- ●● Discuss BPR principles and activities
---------------------- ●● Describe BPR Model
---------------------- ●● Explain the phases of Business Process Reengineering
----------------------
10.1 INTRODUCTION
----------------------
The Narsimham Committee (1998) on Banking sector restructuring has
---------------------- dealt with the issues in technology upgradation in banks. The committee has
specifically suggested that the banks efforts for technology upgradation should
----------------------
precede the process reengineering so that the efforts in technology upgradation
---------------------- become more directed and bankers derive the maximum advantage out of their
technology projects.
----------------------
Bankers have been investing very significant amounts in their IT projects,
---------------------- since the induction of information of technology is considered necessary
for meeting new challenges, i.e. managing the risks in banking and being
---------------------- competitive in a globalising market. The main concern for bank management
today is to ensure proper return on investment (ROI) while large budgetary
----------------------
amounts are committed for technology upgradation. It is widely acknowledged
---------------------- that the technology should not be used as much for automating the existing
process and procedures, but for improvement in the existing processes and
---------------------- procedures, speeding up the service delivery, improving the control mechanism
and offering new products and services to the customers. While these concerns
----------------------
are important, the cost/benefit analysis is an overriding concern, since any
---------------------- improvement in the customer service should also be coupled with reduction
in the cost of service to the customer while improving the profitability of the
---------------------- banks.
---------------------- This paper released by Narsimham Committee seeks to examine principles
of process reengineering and different phases of process engineering, the role
---------------------- of technology in process reengineering and possible applications of process
---------------------- reengineering in banks.
---------------------- 10.2 BUSINESS PROCESS RE-ENGINEERING

---------------------- Business Process Reengineering or BPR is defined as “the search for
and the implementation of radical change in business process to achieve
----------------------
breakthrough results.”
---------------------- BPR or the process reengineering therefore is about searching for new
---------------------- business processes and implementing them to achieve “breakthrough” results.

The Information Technology is considered as a means to achieve these ends. Notes
The new business processes therefore, are built using Information Technology
and proper implementation of IT projects decides the success of process ----------------------
reengineering.
----------------------
A business process is defined as “a set of logically related tasks performed
to achieve a desired business outcome”. The business process therefore ----------------------
comprises equipment, material resources and business procedures and people
----------------------
combined to produce a specified result. The following are some of the business
processes in banking: ----------------------
●● Acceptance and Repayment of deposits.
----------------------
●● Sanction and disbursal of loans.
----------------------
●● Transfer of funds for the customer and for functional units of banks.
●● Handling foreign exchange transactions. ----------------------
●● Acceptance of deposits and making payments on demand. ----------------------
●● I nvesting and disinvesting the resources of the banks for statutory
requirements and investment. ----------------------
Every business process has following characteristics ----------------------
●● Each process demands a set of tasks. ----------------------
●● Each process requires diverse resources within the business.
----------------------
●● ach process has a desired customer who can be a person or a group of
E
persons who receives the outcome of the process. ----------------------
●● The outcome of a process can be report, an idea, a desire or a product.
----------------------
●● usiness processes cross organisational boundaries and require the
B
participation of different organisational groups in the “logically related ----------------------
tasks.”
----------------------
●● ach business process or system is a collection of hierarchy of sub
E
processes or business functions. ----------------------
----------------------
----------------------
----------------------
1. Most important benefit of BPR is about:
i. Finding out and removing defects ----------------------
ii. Getting Breakthrough results ----------------------

iii. Designing Quality Control ----------------------
iv. Maintaining Processesa
----------------------
----------------------
----------------------
BPR in Banks 135

Notes
Activity 1
----------------------
Withdraw money from an ATM centre and also from a bank in the
----------------------
conventional way. Comment on “ATM centers are an outcome of BPR in
---------------------- Banks.”
----------------------
10.3 HAMMER SUGGESTIONS
----------------------
Hammer suggests the following principles that guide the process
----------------------
reengineering activities
---------------------- ●● Organise around outcome and not around tasks:
---------------------- If the process reengineering is done around the tasks, without taking into
account the outcome of process re-engineering, it becomes difficult to
---------------------- debug the process in case of any problem.
---------------------- ●● Have those who use the output of the process, perform the process:
---------------------- Those who need the business output should control all the variables that
allow them to get the output in a timely manner. Lesser the number of
---------------------- constituents to a process, smoother and more rapid would be the outcome.
---------------------- ●● I ncorporate information processing work into the real work that
produces the raw information:
---------------------- The spread of IT makes it possible to locate information processing
---------------------- within the organisation. This localises control, reduces communication
time and puts computing power in the hands of those who are interested
---------------------- in information that is processed or produced.
---------------------- ●● reat geographically distributed resources as though they were

T
centralised:
---------------------- The networking of computers makes it possible to network different
---------------------- resources at different geographical locations into a “Virtual office”. For
example, it can be possible to have “global dealing rooms” functioning
---------------------- round the clock and located in three different cities in the world, with a
common back office located at a central place convenient for the bank.
----------------------
●● Link parallel activities instead of integrating their results:
---------------------- When different tasks in process are processed parallely, it is essential
---------------------- to design a process that demands continuing communication and
coordination. Put the decision part where the work is performed and build
---------------------- control into the process.
---------------------- It is possible to process the data for a structured decision making and also
incorporate organisational controls like limits approved lists etc. into the
---------------------- application software so that decision making can be speeded up.
----------------------

●● Capture data once at source: Notes
Since the data collected at one point is processed again and again for
process additions, it is advisable to capture the data only once so that ----------------------
multiple efforts to capture data are minimised and integrity of the data can ----------------------
be ensured. This principle is also known as source data automation.
The process redesigning is based on these principles. ----------------------
----------------------
Activity 2
----------------------
1. Give few examples of customer service processes given by banks. ----------------------
(For example, Auto Debit facility for Housing Loan)
----------------------
2. Visit any bank in your locality. Observe the various day to day activities
in the bank. List them and apply Hammer suggestions. Comment on ----------------------
the lag between them.
----------------------
----------------------
10.4 BPR MODEL
----------------------
A business process reengineering model has following main activities
Business Definition ----------------------
This is an activity where the business goals of the organisation are identified ----------------------
within the context of four key parameters cost reduction, time reduction, quality
improvement and personnel development and empowerment. The business goal ----------------------
may be defined at the business level or a specific component of the business. ----------------------
Process Identification
----------------------
Processes, which are critical to achieving the goals earlier, are identified.
These processes are prioritised by importance, by need for change or in any ----------------------
other way that is appropriate for reengineering activity.
----------------------
Process Evaluation
----------------------
The existing process is thoroughly analysed and measured. Process
tasks are identified, the cost and time consumed by tasks are noted and quality ----------------------
performance problems are isolated.
----------------------
Process specification and design
Based on the information obtained during the first three activities above, ‘Use ----------------------
case diagrams’ are prepared for each of the process. ----------------------
Use case identifies scenarios that deliver some outcome to a customer. With
----------------------
‘Use case’, as with the specification of the process, a new set of tasks as per the
principles of BPR are designed for the process. ----------------------
Prototyping
----------------------
A redesigned process must be prototyped before it is fully integrated into the
business. This activity “tests” the process so that refinement can be made. ----------------------
BPR in Banks 137

Notes Refinement and Instantiation
Based on feedback from the prototype, the business process is refined and
----------------------
the instantiated within a business system.
---------------------- The BPR activities are used in conjunction with workflow analysis.
The workflow analysis is an effort to understand existing process. In addition
----------------------
to workflow analysis, the modelling techniques commonly associated with
---------------------- Information Technology namely the Information Strategy Planning and business
area analysis can also be used to implement the first four activities described in
---------------------- the BPR model.
---------------------- The generic models for process engineering based on these four activities
are as given below:
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Phases of Process Reengineering

Research suggests that business transformation achieved through process
----------------------
reservation comprises three interdependent phases –
---------------------- In the first phase, the organisations strive for operational excellence,
---------------------- starting with automation and reengineering activities.
In the second phase, the organisation builds on the capabilities and
---------------------- infrastructure developed in the first phase. The organisations seek to expand,
---------------------- enrich and focus on the range of products and services which they offer to their
customers.
---------------------- In the third phase, new business units can appear as new product and
---------------------- service offerings become independent ventures.
The capability developed in the first phase of business transformation
----------------------
become core competencies that redefine the original business.
---------------------- The scope of business process reengineering expands, as the business
moves to next phase of process reengineering.
----------------------
----------------------

This can be graphically expressed as under: Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
10.5 MACRO AND MICRO LEVEL PROCESS
RE-ENGINEERING ----------------------
The risks in process engineering increase the focus shifts from micro level ----------------------
reengineering to macro level reengineering. However, the gains to organisation
are higher from the macro level reengineering as indicated below: ----------------------
Parameters Micro level reengineering Macro level reengineering ----------------------

i) Objective of reengineering Optimisation Transformation
----------------------
ii) Timeframe for improvement Short Long
iii) Leadership needed Local Senior ----------------------
iv) Infrastructure Diverse Integrated
Parameters Micro level reengineering Macro level reengineering ----------------------
v) Performance focus Financial Multiple benefit paths
----------------------
vi) Focus of improvement Single process Enterprise
vii) Scale of project Small Large ----------------------
viii) Projects Multiple Single focus
ix) Scope of reengineering Phase I Phase I, II and III ----------------------
----------------------
BPR in Banks 139

Notes Measures of process reengineering in an organisation
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

---------------------- 1. Based on the feedback from _________, the business process is
refined.
----------------------
----------------------
Summary
----------------------
●● bank effort for technology upgradation should precede the business
A
---------------------- process reengineering, so that the efforts in technology upgradation
become more directed and bankers derive the maximum advantage out of
---------------------- their technology projects.
---------------------- ●● he Narsimham Committee (1998) on banking sector restructuring has
T
dealt with the issues in technology upgradation in banks. The committee
---------------------- has specifically suggested that the banks efforts for technology upgradation
should precede the process reengineering so that the efforts in technology
----------------------
upgradation become more directed and bankers derive the maximum
---------------------- advantage out of their technology projects.
●● his chapter examines the principles of business process reengineering
T
----------------------
and the different phases of business process engineering, the role of
---------------------- technology in process re-engineering and possible applications of process
reengineering in banks.
----------------------
----------------------
----------------------

Keywords Notes
----------------------
●● Globalisation: A set of processes leading to the integration of economic,
cultural, political, and social systems across geographical boundaries. ----------------------
●● rototyping: Prototyping is the process of quickly putting together
P
a working model (a prototype ) to test the various aspects of a design, ----------------------
illustrate ideas or features and gather early user feedback. Prototyping is ----------------------
often treated as an integral part of the system design process, where it is
believed to reduce project risk and cost. ----------------------
●● reak Through: The solution to the problem where we cannot assign the
B ----------------------
cause of variation needs to be solved by the use of technology or radical
solution. These goals or solutions are termed as major, discontinuous ----------------------
(non-incremental) or “break through” improvements, usually in areas
most critical to an organisation’s future success. ----------------------
----------------------
----------------------
1. Why is BPR necessary in Banks?
----------------------
2. What are the various phases of BPR?
----------------------
3. What are the measures of BPR in organisations?
----------------------
----------------------
----------------------
----------------------
1. Most important benefit of BPR is about:
ii. Getting Breakthrough results ----------------------
----------------------
Fill in the blanks.
----------------------
1. Based on the feedback from prototyping, the business process is refined.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
BPR in Banks 141

Notes
Suggested Reading
----------------------
1. Information Resources Management Association. Managing Information
---------------------- Technology in a Global Economy. Idea Group Inc.
2. Khosrowpour, Mehdi. Cases on Information Technology and Business
----------------------
Process Reengineering. Idea Group Inc.
---------------------- 3. Ledgerwood, Joanna, Victoria White. Transforming Microfinance
---------------------- Institutions. World Bank Publications.
4. Sunarto, Hari. Understanding the role of bank relationships, relationships
---------------------- marketing and organizational learning. Rozenberg Publishers.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

ERP and BPR
UNIT
11
Structure:
11.1 Introduction
11.2 Concept of ERP
11.3 Evolution, Scope and Benefits of ERP
11.4 ERP and BPR
11.5 Business Transformation through ERP System
11.6 Process Modelling for ERP
11.7 ERP Implementation Plan
11.8 Making ERP Effective
11.9 Challenges of introducing ERP in India
Summary
Keywords
Suggested Reading
ERP and BPR 143

Notes
Objectives
----------------------
----------------------
●● Discuss the concept of ERP
---------------------- ●● Explain the relationship of ERP with BPR
---------------------- ●● Describe the process Modelling & Implementation of ERP
---------------------- ●● Discuss on effectiveness and challenges for ERP
----------------------
11.1 INTRODUCTION
----------------------
Business Process Reengineering is a pre-requisite for going ahead with
---------------------- a powerful planning tool, ERP. An in depth BPR study has to be done before
taking up ERP. Business Process Reengineering brings out deficiencies of the
----------------------
existing system and attempts to maximise productivity through restructuring
---------------------- and re-organising the human resources as well as divisions and departments in
the organisation.
----------------------
---------------------- 11.2 CONCEPT OF ERP
---------------------- Integrated Information systems built to meet the information and decision
needs of all the functional units of an enterprise are referred to as Enterprise
---------------------- Resource Planning Systems. It is used by industries to derive competitive
advantage.
----------------------
ERP Drivers
----------------------
To meet the challenges of globalisation, such as increased competitive
---------------------- pressure and shortened product life cycles, there is a call for, continuous
innovation in IT, which warrants
----------------------
– continuous design improvement, manufacturing flexibility
---------------------- – efficient logistics control, better Supply Chain Management (SCM)
---------------------- delivering quality products
All these need
----------------------
– faster access to accurate information from inside the organisation
----------------------
– faster access to accurate information from the entire supply chain outside.
---------------------- – organisation units to operate with a high level of integration without
losing flexibility
----------------------
– high decision making capability.
----------------------
ERP systems meet these demands effectively by bridging technologies to
---------------------- support business processes.
----------------------

11.3 EVOLUTION, SCOPE AND BENEFITS OF ERP Notes
Benefits of ERP ----------------------
It contributes towards achieving business objectives such as ----------------------
– Better customer satisfaction, improved vendor performance, reduced
quality costs, improved resource utility, improved market share, better ----------------------
employee satisfaction, improved profitability, reduction in inventory ----------------------
levels.
----------------------
Benefits from ERP come in three different forms – short term, mid term,
long term ----------------------
– Short term benefits, which include streamlining of operational areas such
----------------------
as purchase, production, finance, sales etc. This benefit is in the form
of automating the transactions, which promise accuracy, reliability, ----------------------
availability and consistency of data.
----------------------
– Mid term benefits by meaningful analysis of data and planning for major
resources, which include reduced working capital, reduced cycle time for ----------------------
order fulfillment, improved coordination, better financial forecasts.
----------------------
– Long term benefits by adopting the best business processes and providing
it the ability to change easily, which provide an organisation with ----------------------
competitive edge.
----------------------
Evolution of ERP
ERP systems has evolved from ----------------------
– MRP systems 1970s (Material Requirement Planning) ----------------------

– MRPII systems 1980s (Manufacturing Resource Planning) ----------------------
– ERP systems 1990s (Enterprise Resource Planning) ----------------------
ERP systems can be viewed as a logical extension of the evolution of
----------------------
– EDP (Electronic Data Processing)
----------------------
– MIS (Management Information System)
– DSS (Decision Support System) ----------------------
– KBS (Knowledge Base System) ----------------------
Scope of ERP ----------------------
The functional reach of most prevailing ERP packages extends to the
whole range of activities in the organisation’s value chain from inbound logistics ----------------------
to include operations, outbound logistics, sales and marketing to service. ----------------------
For an ERP system to be a strategic tool in the supply chain, it should
have appropriate interfaces to enable the use of cutting edge technologies such ----------------------
as mobile computing, handheld devices, electronic commerce (e-commerce) ----------------------
etc.
----------------------
ERP and BPR 145

Notes Future Trends
It includes
----------------------
– Web enabled ERP (SAP and other leading vendors ready with beta
---------------------- version)
---------------------- – Component ERP (ERP can be broken into reusable components that lead
to software downsizing and SAP, Baan are working on it)
----------------------
– ERP integration with supply chain and electronic commerce (SAP, Baan
---------------------- are working)
----------------------
----------------------
----------------------
1. Basic approach in ERP is about:
---------------------- i. Integrated evolution system
---------------------- ii. Collection of Enterprises
---------------------- iii. Integrated information system

iv. Collection of Resources
----------------------
----------------------
Activity 1
----------------------
A motor vehicle manufacturer has decided to implement ERP system in his
---------------------- organisation. Write down what will be the benefit, as an outcome of ERP
---------------------- implementation.
----------------------
11.4 ERP AND BPR
----------------------
BPR is the rethinking of the business processes to improve the speed,
---------------------- quality and output of products or services.
---------------------- BPR is a formal technique to reassess the existing processes, replace old
processes by new ones, combine processes, redistribute processes, change the
----------------------
sequence of processes or completely eliminate the few unwanted processes.
---------------------- It has played a major role in enabling the BPR exercise in many
organisations. Since ERP implements the organisational business processes, it
----------------------
is necessary to reengineer the business process before introducing ERP.
---------------------- ERP life cycle consists of following steps
---------------------- 1. ERP readiness assessment
---------------------- 2. Preparing the organisation for ERP

3. ERP feasibility study and business transformation
----------------------

4. Process modeling and documenting the AS-IS processes and TO-BE Notes
processes
----------------------
5. Detailed plan for ERP implementation (includes ERP software selection,
selection of implementation partners, implementation methodology and ----------------------
the final and precise extent of implementation)
----------------------
6. Detailed implementation
7. Preparing to ‘go live’ including data migration ----------------------
8. Going live ----------------------
9. Making ERP effective by Performance assessment, documentation, ----------------------
training (required at early stages also) and future plans
A ERP readiness assessment questionnaire provides a simple and practical ----------------------
reference to determine how much the company is ready for taking up the ----------------------
transformation today and positioned for tomorrow by assessing the organisational
readiness for ERP solution. ----------------------
The questionnaire should form the basis for an action plan to prepare the ----------------------
organisation for ERP implementation. An interdepartmental taskforce consisting
of the functional heads and headed by the CEO himself should evaluate the ----------------------
questionnaire and make an action plan to prepare the organisation to the stage
----------------------
where the score percentage for most of the answers will be at least 40% plus
and where the overall score percentage will be at least 50% plus. The output of ----------------------
the questionnaire evaluation process is the basis for organisation transformation
initiative. ----------------------
Then the next important step is Fit analysis. The purpose of Fit analysis ----------------------
is to study the performance gaps and to identify the underlying factors which
explain the causes of the gaps and provide the necessary fit. ----------------------
Both the above steps help to assess the ERP readiness of your organisation. ----------------------
Preparing organisation for ERP ----------------------
ERP is a mission critical application and organisation implementing ERP
requires ----------------------
– Significant investment in hardware and software ----------------------

– Good networking and data communication infrastructure ----------------------
– High end servers
----------------------
– High investment in managing the infrastructure
----------------------
Also ERP implementation should take into consideration, a possible clash
of interest between end users and the internal IT department. ----------------------
Implementation of ERP needs mostly customisation rather than software ----------------------
development.
----------------------
The skills for customisation are more process oriented rather than IT
skills. Hence, the role of IT staff is minimal in ERP implementation. Therefore, ----------------------
ERP and BPR 147

Notes it would be perceived as a threat by the IT department and in turn they would
resist the ERP implementation.
----------------------
To overcome this problem, some companies have decided to turn their
---------------------- IT departments into separate companies e.g. Telco started Tata Technologies,
Siemens started SISL.
----------------------
ERP feasibility study
---------------------- – Readymade ERP or Custom built ERP
---------------------- Custom Built ERP is developed through the traditional approach of
system life cycle. But in practice the major problems faced are high number
---------------------- of deficiencies in the system due to poorly understood requirements, User
---------------------- acceptance of the system is low. The IT department claims that users are
incapable of specifying their precise needs.
---------------------- Readymade ERP software is found to be more useful to meet the
---------------------- organisational needs than many of the Custom Built ERP because of the
flexibility, standardisation and speed of implementation.
---------------------- – Hardware requirements RAM size at least 1 GB and high speed discs with
---------------------- disc space of 100 GB and processor power and the cost of such hardware
– Cost of Software requirement such as
----------------------
Operating systems - Unix, Windows NT, IBM OS/400, IBM MVS
----------------------
DBMS - IBM DB2, Oracle, Informix, MS SQL Server, Sybase
---------------------- Application systems language- ABAP/4, VB, VC++, PL/SQL from
---------------------- Oracle
– Cost Benefit Analysis and availability of key human resources
----------------------
---------------------- 11.5 BUSINESS TRANSFORMATION THROUGH ERP

SYSTEM
----------------------
Impact of change on Enterprise Systems
----------------------
Organisations have learned that change is inevitable. These changes impact
---------------------- local economy as well as global market place. It affects not only technology but
every other aspect of business operations.
----------------------
The changes caused by the opening of the economy and increased
---------------------- competition results in product prices and margins falling and forcing companies
---------------------- to evolve new strategies to survive. The new state raises the following challenges
– The market turns into a buyer’s market, created by competitive choice
----------------------
– Companies have to differentiate, in order to be profitable and viable
----------------------
– Significant improvement in quality throughout the enterprise
---------------------- – Focus on fulfilling customer desires become essential
----------------------

Ways to tackle Change Notes
Organisations battling to survive in dynamic environments broadly
----------------------
focus on either the product or the process. Depending upon the organisation
and the environment, such changes can be evolutionary (gradual manner) or ----------------------
revolutionary (drastic changes).
----------------------
Hamel-Prahlad economic model
Organisation may be in one of four states ----------------------
– Mass production state ----------------------
– Developmental state ----------------------
– Mass Customisation state
----------------------
– Polymorph state
----------------------
Moving from mass production to developmental state requires significant
changes in business processes. Changing to a mass customisation state requires ----------------------
major improvements in the product. Polymorph is an undesirable state as it is
relatively unstable. ----------------------
Business Transformation trends ----------------------
– Companies prefer an evolutionary approach to business transformation, ----------------------
marked by continuous improvement (Kaizen, TQM).
– Business transformation is taking place rapidly in the global economy. ----------------------
– Information Technology is one of the key tools employed in the change ----------------------
process.
----------------------
Pitfalls of ERP implementation
----------------------
– Longer implementation times
– Communication gap ----------------------
– Inability to support continuous improvement and change management ----------------------
– Inability to take advantages of shared experiences ----------------------
– Inadequate training and documentation
----------------------
– High turnover among the IT consultants
----------------------
The challenge is of striking the right balance. This means allowing the
users to use the sophisticated functionality, at the same time ensuring that huge ----------------------
implementation overrun do not occur. It also means trying to avoid pitfalls of
ERP implementation while keeping pace with the growing needs of the changing ----------------------
business environment.
----------------------
How to transform business
----------------------
The following are some guidelines:
----------------------
– Map the current state of the organisation and its business processes
– Chart out the desired goals (to be stated) ----------------------
ERP and BPR 149

Notes – Develop high level process specifications and business requirements by
tapping the organisation’s internal knowledge and experience and using
---------------------- consultants
---------------------- – Choose application vendor with industry expertise
– Select the right ERP system. It is a very important step, because ERP
----------------------
acquisition and implementation exercise requires an enormous amount of
---------------------- resources in terms of cash, time and manpower efforts and its impact on
the business is significant
----------------------
– Map the trajectory from the ‘as-is’ to the ‘to-be state’ in the context of the
---------------------- implementation being undertaken
---------------------- – Seriously consider change management program

– Keep things simple
----------------------
– Start small and make changes if required
----------------------
---------------------- 1. Basic benefit of ERP to industries is for

i. Cost reduction
----------------------
ii. Quality improvement
----------------------
iii. Speed of production
---------------------- iv. Competitive advantage
----------------------
---------------------- Activity 2
---------------------- You have been asked to develop a customised ERP system for a typical
super mall. Write down the “as-is” and “to-be- state”.
----------------------
----------------------
11.6 PROCESS MODELING FOR ERP
----------------------
Why process modeling for ERP
----------------------
In any organisation situation, it is necessary to have a clear understanding
---------------------- of the objective of a process. On examining the current process in place, we
may need to redefine the objective and align with overall objective of the
---------------------- organisation.
---------------------- A process is set of activities
---------------------- – triggered by an input event

– designed to produce specific output to meet the defined objectives i.e.
---------------------- output event, which is the culmination of the process.

Therefore, it is process what delivers. This calls for a process oriented Notes
approach from the organisation and changing the conventional department
oriented approach. ----------------------
In order to define the business concept ----------------------
– we start with modeling the business processes as it is (Where are we?)
----------------------
– then modeling the ideal processes for the organisation (Where do we want
to go?) ----------------------
Ability to model processes effectively becomes crucial to the successful ----------------------
implementation of ERP.
----------------------
Process modeling methodology
One of the most commonly used methodologies in the implementation of ----------------------
SAP R/3 is that of the Architecture of Integrated Information System (ARIS). ----------------------
ARIS is based on an integration concept which is derived from a holistic
----------------------
analysis of business processes. A complex business process can be viewed in
terms of Function, Data, Organisation, Control. ----------------------
Function View
----------------------
It looks at the activities or functions and their static relationship.
----------------------
Data View
With every activity, we can associate one or more of the following – Data ----------------------
generated, Data transferred, Data retrieved, Data deleted, Data accessed, and ----------------------
Data updated.
----------------------
In data view, we model the objects and their relationship.
Organisation View ----------------------
The organisation view represents the people and the location. It can be ----------------------
represented by an organisation chart.
----------------------
Control View
It integrates all the three views and also imparts the time/logic dynamics ----------------------
of a process. It is also called as process view. One of the representative models ----------------------
used is the Event driven Process Chain (EPC).
EPC represents an event which triggers off a set of functions and the ----------------------
functions culminate in events and so on. This depiction of the process can be ----------------------
further enriched by representing the data and the organisation aspect of the
process. In such a case, it is called the extended EPC. ----------------------
Layers ----------------------
Each ARIS view is divided into three layers
----------------------
– Business concept level (Requirement definition)
----------------------
– Information system level (Design specification)
– Implementation level (Implementation description) ----------------------
ERP and BPR 151

Notes Benefits using ARIS methodology
– Easy handling of huge amount of information
----------------------
– Shift from function orientation to process orientation
----------------------
– Development of team feeling
----------------------
11.7 ERP IMPLEMENTATION PLAN
----------------------
ERP Software Selection
----------------------
ERP package demonstration by vendor, discussions with vendors,
---------------------- structured walkthrough of the features of the the product for the client’s
requirements, site visit to the vendor’s installations, references from other
----------------------
customers about the vendor, evaluation of the implementor
---------------------- Key Evaluation Criteria
---------------------- To infuse objectivity into the evaluation exercise, an overall evaluation
framework should be developed with weightage given to the various criteria to
---------------------- be evaluated.
---------------------- The ERP products should be scored on three major criteria
---------------------- – Product evaluation, Ease of implementation, Future road map
Product evaluation
----------------------
It includes the following:
----------------------
– Product functionality (Requirement driven evaluation, module interfaces,
---------------------- reports etc.)
---------------------- – Technical architecture (User interface, development tools, operating

systematic.)
----------------------
– Cost (Hardware, Software, Networking and communication, training,
---------------------- implementation, maintenance)
– Cost-Benefit analysis (Investments, profits, payback period, coverage,
----------------------
customisation)
---------------------- Ease of Implementation
---------------------- The following factors should be considered:
---------------------- – Service and support (Availability and willingness of vendor, availability

of strong implementation partners, ongoing support)
---------------------- – Ability to execute (Vendor’s experience, history, size, financial strength,
---------------------- expertise)
– Process changes required (Redesign of core processes, Reengineering of
----------------------
core processes, implement pre-configured best practices)
---------------------- – Change management (Readiness for change, availability of funds,
organisation culture, communication at all levels, resistance to change
----------------------
and program to handle resistance)
– Implementation methodology (Big Bang, Modular implementation and Notes
final and precise extent of implementation)
----------------------
Future road map
– Vendor’s vision (Functional enhancements planned over the next 3 to 5 ----------------------
years, ability to support cutting edge technologies, value addition made
----------------------
by past product upgrades)
– Technology trends (Use of Internet as a mode of communication in supply ----------------------
chain management, Use of e-commerce/EDI in order processing, power
----------------------
and popularity of desktop computing etc.)
The consultants play three different roles ----------------------
– Facilitator – In this role the consultant is an experienced practitioner who ----------------------

brings methodology with him. For this role, the client should look for
consultants who have strong facilitation skills and in depth knowledge of ----------------------
process modeling ----------------------
– Functional skills – In this role the consultant brings with him strong
industry experience and can contribute the functional knowledge required ----------------------
for the project. Consultants with functional skills are required to fill a gap ----------------------
in the team, which cannot be filled from within the organisation.
----------------------
– Best practice knowledge – In this role, the consultant possesses knowledge
of performance levels and best practices of similar organisations and ----------------------
processes.
----------------------
Role of consulting company in ERP implementation
Three approaches to implementing ERP ----------------------
– Pure BPR or Clean-slate BPR (First BPR exercise and then ERP ----------------------
implementation)
----------------------
– ERP-led BPR or Channeled BPR (Select ERP package and then BPR to
use its capabilities to achieve process improvements) ----------------------
– Pure ERP ----------------------
For successful ERP implementation by the above mentioned approaches, the
----------------------
involvement of an experienced consultant is very valuable.
Actual detailed implementation ----------------------
– Complete customisation ----------------------
– Create the right team for the implementation ----------------------
– Define an achievable project scope, using a phased and focussed approach
----------------------
– Do your data analysis homework as per the data requirement for your ERP
system and develop a strategy for data migration from legacy systems. ----------------------
– Tighten coordination of implementation process and do not underestimate ----------------------
integration efforts required
----------------------
ERP and BPR 153

Notes – Maintain focus on the task at hand
– Document of user procedures for using the ERP module, including
----------------------
preparation of training material and test cases
---------------------- – Create and maintain a vendor partnership with the software vendor
---------------------- – Carry out conference room pilot
---------------------- – Go for parallel run where necessary

Preparing to Go Live, including Data Migration
----------------------
Data Migration management during ERP implementation
----------------------
To complete the ERP implementation, one would need to transfer master
---------------------- data such as customer master, item master, vendor master, employee master etc.
from the legacy system. A large number of earlier transactions would also be
---------------------- transported to the ERP system.
---------------------- In a typical corporation, these would call for a significant amount of data
transport. Often, they may not be available in machine-readable form. Often,
---------------------- manual data will have inconsistencies such as incorrect part numbers, multiple
part numbers to represent the same item, misspellings etc. that needs data
----------------------
cleansing. Data cleansing itself could be a major activity.
---------------------- Even if data is available in machine-readable form, it may be distributed
---------------------- across heterogeneous hardware and software platforms. A reasonable amount of
effort must be spent in reconciling such data.
---------------------- Special utilities are available for data migration from ERP vendors as
---------------------- well as third party vendors. For the Indian IT industry, data migration itself
could present a major business opportunity.
---------------------- Going LIVE
---------------------- After many months on implementation plan, every organisation would
decide a particular date when they would shift from their legacy system to the
----------------------
ERP system. Up to that time, the ERP software would be under development,
---------------------- followed by testing and quality assurance.
Once the ERP implementation team feels convinced that the development
----------------------
is complete and testing is satisfactory, it will decide to ‘go live.’
---------------------- In a sense, the ‘going live’ date marks the end of ERP project. Generally,
most ERP projects go live at the start of the financial year namely April 1, in
----------------------
India. If for some reason it cannot be on April 1, many organisations go live on
---------------------- October 1, at the end of the half year. Technically, the ERP software does not
impose any restrictions. Any day is good enough to go live.
----------------------
----------------------
----------------------
----------------------

Notes
Activity 3
----------------------
A motor vehicle service station has decided to implement ERP system in
his organisation. Critically, evaluate the following elements of the ERP ----------------------
implementation.
----------------------
a. ERP Software Selection
b. Criteria for Selection ----------------------
c. Expected functionality
----------------------
----------------------
11.8 MAKING ERP EFFECTIVE
----------------------
Factors that make ERP effective
----------------------
– Establishing the need and setting the stage for ERP
Some of the actions required are as below: ----------------------
Educating and inculcating a sense of participation, ----------------------
Insisting on getting computer based information always ----------------------
Scientific codification of parts, subassemblies and finished products
----------------------
– Setting performance measures and reviewing them
----------------------
The effect of ERP implementation can be quantified as below:
Percentage reduction in inventories ----------------------
Percentage reduction in rejections ----------------------
Reduction in the number of days in the manufacturing cycle time ----------------------
– Assessing value to the company
----------------------
A company that implements ERP has to go beyond the conventional
inputs to ERP, to reap the full value from its implementation by involving ----------------------
at all stages.
----------------------
– View ERP as an integrated process
----------------------
Plug the gaps in the processes and integrate ERP with the entire process.
----------------------
----------------------
Match the following. ----------------------
i. Long-term benefit a. Reduced working capital ----------------------
ii. Short-term benefit b. Accuracy of data
iii. Mid-term benefit c. Best practice knowledge ----------------------
iv. Quick benefit d. Consistency
----------------------
e. Performance gaps
f. Easy change management ----------------------
ERP and BPR 155

Notes 11.9 CHALLENGES OF INTRODUCING ERP IN INDIA
---------------------- General challenges are
---------------------- – change management

– organisational intervention
----------------------
– shifting from a function view to process view
----------------------
– faith in package software
---------------------- Special challenges in India
---------------------- – Existence of large IS departments inside many Indian corporations, who
may view ERP as a threat to their very existence
----------------------
– Indian software companies also see a threat to their project based software
---------------------- business in ERP
---------------------- – Traditionally, organisations in India are more dependent more on IS
professionals than on business professionals, for commercial software
---------------------- development
---------------------- – ERP places more value on domain knowledge of the functions rather than
IT skills; this calls for a mindset change, which is a challenge
----------------------
– Lack of communication infrastructures which is often necessary to
---------------------- implement ERP
– IT infrastructure not in order
----------------------
Indian version of a specific ERP software
----------------------
ERP software must address all the enterprise needs of an organisation
---------------------- within the social context in which the enterprise operates.
---------------------- This would imply that the local accounting practices, locally applicable
taxation laws (excise, customs, sales tax and income tax) are fully adhered to in
---------------------- implementing the various business processes.
---------------------- The software vendor must incorporate India specific features before
selling the software. The specific ERP software that has been adopted to suit to
---------------------- Indian statutory laws is called India specific ERP.
----------------------
Summary
----------------------
●● Business Process Reengineering is a pre-requisite for going ahead with a
---------------------- powerful planning tool, ERP. An in depth BPR study has to be done before
taking up ERP. Business Process Reengineering brings out deficiencies
----------------------
of the existing system and attempts to maximise productivity through
---------------------- restructuring and re-organising the human resources as well as divisions
and departments in the organisation
---------------------- ●● ERP is an Integrated Information systems built to meet the information
---------------------- and decision needs of all the functional units of an enterprise are referred

to as Enterprise Resource Planning Systems. It is used by industries to Notes
derive competitive advantage.
●● For successful implementation of ERP and to derive full advantage from ----------------------
the ERP system it is necessary to carry out business process reengineering ----------------------
in the organisation. The business processes can be reengineered as per
the requirements of the ERP package or BPR is done first and a suitable ----------------------
ERP package is selected, which is as close as possible to implement
reengineered processes. ----------------------
----------------------
Keywords
----------------------
●● RP: Integrated Information systems built to meet the information and
E
decision needs of all the functional units of an enterprise are referred to ----------------------
as Enterprise Resource Planning Systems (ERP). ----------------------
●● RP: The Material Requirements Planning process is designed to take
M
the Master Production Schedule replenishment quantities, “explode” ----------------------
through the bill of materials to create component requirements which are ----------------------
netted against on-hand and on-order, level by level. It is a time-phased
process whereby the planned orders are driven by actual requirements by ----------------------
date.
----------------------
●● IS: A general term for the computer systems in an organisation that
M
provides information about its business operations. ----------------------
●● it analysis: The purpose of Fit analysis is to study the performance gaps
F ----------------------
and to identify the underlying factors, which explain the causes of the
gaps and provide the necessary fit. ----------------------
----------------------
----------------------
1. What do you mean by ERP? Explain in brief.
----------------------
2. What are the drivers of ERP? Give suitable examples.
3. How are ERP and BPR a interlinked with each other? ----------------------
4. Explain ERP life cycle activities. ----------------------
Answers to Check your Progress ----------------------
----------------------
1. Basic approach in ERP is about : ----------------------
iii. Integrated information system ----------------------
----------------------
----------------------
ERP and BPR 157

Notes Check your Progress 2
----------------------
1. Basic benefit of ERP to industries is for
----------------------
iv. Competitive advantage
----------------------
---------------------- Match the following.

i. –f
----------------------
ii. –d
----------------------
iii. –a
---------------------- iv. –b
----------------------
Suggested Reading
----------------------
1. Dey, B.R. Business Process Reengineering & Change Management.
----------------------
Dreamtech Press.
---------------------- 2. Goyal, D.P. Enterprise Resource Planning. Tata McGraw-Hill Publication.
---------------------- 3. Grover, Varun, M. Lynne Markus. Business Process Transformation.
M.E. Sharpe Publisher.
----------------------
4. Leon Alexis. ERP Demystified. Tata McGraw-Hill Publication.
----------------------
5. Sadagopan. ERP: A Managerial Perspective. Tata McGraw-Hill
---------------------- Publication.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

SCM and BPR
UNIT
12
Structure:
12.1 Introduction
12.2 Concepts of Supply Chain
12.3 Fundamentals of Supply Chain Management
12.4 Thrust Areas of SCM
12.5 Performance Measures for SCM
12.6 Key Components of Supply Chain Strategy
12.7 SWOT Analysis for SCM
12.8 IT Enabled Supply Chain
12.9 BPR and SCM
12.10 General Structure for SCM
Summary
Keywords
Suggested Reading
SCM and BPR 159

Notes
Objectives
----------------------
----------------------
●● Explain the fundamentals of SCM
---------------------- ●● Describe components and measures of SCM
---------------------- ●● Discuss the concept of IT enabled SCM
---------------------- ●● Relate the linkage between SCM and BPR
----------------------
12.1 INTRODUCTION
----------------------
Supply Chain Management (SCM) is the management of material and
---------------------- information flows both within and between chain members, such as vendors,
manufacturing plants, and distribution centers. SCM is currently one area that
----------------------
has received a great deal of attention in the worldwide business community.
---------------------- It is observed that, logistics costs account for approximately 30% of the cost-
of goods sold in an average manufacturing firm. The potential saving for a
---------------------- reduction in these costs cannot be ignored. The only way to reduce cost is to
improve the overall performance of the supply chain. Such improvements can
----------------------
increase the company’s profitability.
---------------------- BPR and SCM have a great deal in common. Both approaches analyse
the value-added implications of all business-related activities. BPR helps to
----------------------
address strategic planning problems within an electronic products supply chain.
----------------------
12.2 CONCEPTS OF SUPPLY CHAIN
----------------------
Logistics to Supply Chain Management
----------------------
Logistics management can be defined as, design and operation of the
---------------------- physical, managerial, and information systems needed to allow goods to
overcome time and space from the producer to the consumer.
----------------------
Supply chain management can be defined as, design and operation of the
---------------------- physical, managerial, informational and financial systems needed to transfer
---------------------- goods and services from the vendor to the customer in an effective and efficient
manner.
---------------------- Flows in Supply Chains
---------------------- Value Flow
---------------------- This is the most obvious and visible part of the supply chain, moving
largely from the vendor to the customer. Physically the flow manifests itself
---------------------- as goods flows and service flows. Goods flows constitute raw materials work
in process, finished goods, spares etc. Sometimes, there could be small reverse
----------------------
flows of materials due to returns, rework or recycling. Service flows follow
---------------------- a similar sequence, but being intangible, it cannot be stored. This brings the

transaction between actors more into focus. Notes
Information Flow
----------------------
This is a significant part of the supply chain. It is the enabler and driver of
the concept of supply chain. It consists of flows both from vendor to the customer ----------------------
and from the customer to the vendor. The major components of backward flow
----------------------
are inputs for forecasts, marketing plans, dispatch plans, production plans and
procurement quantities and timing, order from customers and dealers, quality ----------------------
feedback, warranties that are invoked etc. In the forward direction, there are
important components like capacity estimates for plans, stocks available, ----------------------
dispatch advices, stock transfer notes, quality assurance reports, warranties etc.
----------------------
Cash Flow
----------------------
This is the commercially significant part of the supply chain,
which is largely in a direction opposite that of the major value flow. ----------------------
The major part of this flow is the money paid for goods and services
received. But there are other features to the cash flow, such as credit ----------------------
periods/advances for payments from customers/dealers and to vendors. Any ----------------------
credit/advance is with respect to the transfer of the title and /or service delivery
in the supply chain. The cash flow determines how a given value flow is financed ----------------------
by the various actors in the supply chain.
----------------------
Activity 1 ----------------------
Consider a two-wheeler manufacturer, its ancillary units and service centers. ----------------------
Draw a flowchart depicting the flow (value flow and information flow) in
----------------------
supply chain.
----------------------
12.3 FUNDAMENTALS OF SUPPLY CHAIN ----------------------
MANAGEMENT
----------------------
Single Entity
----------------------
For a variety of planning and controlling functions across the supply
chain, the responsibility is made to rest with a single entity. For example, a ----------------------
group consisting of representatives from purchase, manufacturing, distribution ----------------------
and sales could be the entity for finalising the marketing plan, the dispatch plan,
the production plan, and the procurement plan. This has an impact on reducing ----------------------
administrative delays and improving empathy across the supply chain.
----------------------
Inventory Perspective
Inventory is a buffer used as a last resort after ensuring proper information ----------------------
sharing and coordination. For example, rather than quantifying the appropriate ----------------------
inventory to protect oneself against uncertain process yields, working with
lower and lower inventories will help to highlight the top problem areas where ----------------------
efforts for improving process yields need to be focused. This results in a leaner
and cleaner system, which is more responsive in the long run. ----------------------
SCM and BPR 161

Notes Strategic Decision Making
The decisions in the supply chain are viewed as having strategic
----------------------
implications rather than just operational. For example, rather than being
---------------------- concerned with just sourcing trucks from the market, one could consider long
term contracts with transporters or investing in their infrastructure to suit one’s
---------------------- purpose. This facilitates smoother and more reliable transport logistics in the
long run.
----------------------
Systems Approach
----------------------
The supply chain from vendor to customer is viewed as a single integrated
---------------------- system rather than as many subsystems interfacing with each other. For example,
traditionally the efforts would have been aimed at developing better interfaces
---------------------- between marketing and production or sourcing and conversion. While this
would have facilitated smooth operational functioning, issues like outsourcing
----------------------
which significantly cut across both, sourcing and conversion would not have
---------------------- been considered. The integrated concept of supply chain would enable this.
---------------------- Doing what one can do best

In the various activities of the supply chain, it is important to focus on
---------------------- doing what one can do best. This has implications on outsourcing or even in-
---------------------- sourcing and building effective partnerships. The more extensive the logistics
requirements and/or the more uncertainty due to logistics supply, in-sourcing
---------------------- would be in the right direction. The general norm in the business today is
outsourcing.
----------------------
---------------------- 12.4 THRUST AREAS OF SCM

---------------------- From the above fundamentals, we identify 15 key thrust areas of SCM,
which would lead to specific decision areas.
----------------------
1. Minimising uncertainty - Due to vendors, process, and demand.
---------------------- 2. Reducing lead times - At the stages of procurement, conversion and
---------------------- distribution.
3. Minimising the number of stages - And unification of tasks make the
----------------------
coordination of decisions easier.
---------------------- 4. Improving flexibility- In manufacturing and dispatch.
---------------------- 5. Improving process quality - To do the things right first time and it includes
SPC, 7 Quality Control tools and improvement of process capability.
----------------------
6. Minimising variety - To reduce inventory and standardise product and
---------------------- service offerings.
---------------------- 7. Managing demand - Demand generation, dealing with Variations in

demand.
----------------------
8. Delaying differentiation - Postponing finishing operations and assembling
---------------------- according to customer needs, which helps to reduce stocks in the entire
chain.
9. Kitting of supplies - Kitting of all components that are required to avoid Notes
delays in assemblies.
----------------------
10. Focusing on “A” category - Special attention to high annual usage value
items. ----------------------
11. Planning for multiple supply chains - For different customer segments
----------------------
based on response requirements.
12. Modifying performance measures - Retrieval time from warehouse is a ----------------------
primary measure and warehouse space utilisation is a secondary measure.
----------------------
13. Competing on service - Long term competitive advantage is on the service
aspect of value delivery to the customer. ----------------------
14. Moving from functions to processes - Integrated process orientation, ----------------------

flatter and leaner organisation.
----------------------
15. Taking initiatives at industry level - To deal with poor infrastructure e.g.
transport or warehousing inadequacies and help to develop appropriate ----------------------
service providers. For example, third party logistics (3 PL).
----------------------
Fill in the blanks. ----------------------

1. _____________ will reduce logistic cost in the organisation. ----------------------
----------------------
Activity 2
----------------------
Visit any courier center in your area. Study its working and list their thrust ----------------------
areas and objectives.
----------------------
12.5 PERFORMANCE MEASURES FOR SCM ----------------------
----------------------
●● Total supply chain cost
●● Process capability ----------------------
●● Customer retention ----------------------
●● Process lead time
----------------------
In a highly competitive and high growth environment, a market responsive
and physically efficient supply chain would be essential. ----------------------
----------------------
----------------------
----------------------
----------------------
SCM and BPR 163

Notes 12.6 KEY COMPONENTS OF SUPPLY CHAIN STRATEGY
---------------------- The key components of supply chain strategy are
---------------------- 1. Sourcing Strategy

●● Manufacturing Management
----------------------
Production Planning and Control optimise production processes to
---------------------- balance customer satisfaction and efficiency.
---------------------- ●● Make or Buy Decisions

Considerations of faster deliveries, easy access for service, repairs
---------------------- and replacements and customer preferences.
---------------------- ●● Capacity Management
---------------------- Cost of land, cost of power, government subsidies, availability
of labour and other manpower, proximity to customers, cost of
---------------------- distribution.
---------------------- 2. Distribution Strategy
●● Channel Selection
----------------------
The choice of appropriate channel depends upon the type of product
---------------------- or services to be marketed, the volume involved. These channels
include dealers, World Wide Web (www), direct selling etc.
----------------------
●● Supply Chain Configuration
----------------------
Supply chain has a number of participants such as sources of
---------------------- supplies, storage stations, distribution channels, till the supplies
reach the end customer. It takes into account factors such as volume
---------------------- of supplies, number of customers, their geographic locations, cost of
transportation, distribution cost and level of customer satisfaction.
----------------------
●● Distribution Planning
----------------------
Transportation cost, choice of transport mode, capacity, location,
---------------------- routing, schedules of distribution.
3. Inventory Strategy
----------------------
●● Demand Forecasting
----------------------
Demand planning is needed as it enables the company to organise
---------------------- its sourcing strategy and stocking policies. An accurate demand
forecast will result in total smooth operations.
----------------------
●● Inventory Planning
---------------------- Inventory planning is required to be carried out at all stocking points
---------------------- of the supply chain. A balance is required to be struck between the
cost of carrying inventory and delivery of goods from ready stock
---------------------- for customer satisfaction. Proper inventory management reduces
cost while raising the levels of customer satisfaction.
----------------------

●● Planning of Stocking Facilities Notes
The storing facilities should be sufficient to carry the inventory in
safe conditions and should be equipped with handling facilities for ----------------------
easy and quick receipts and issues. ----------------------
4. Customer Service Strategy
----------------------
●● Service Needs
----------------------
Identification of service needs call for segmentation of customers,
identification of segments unique to company, identification of ----------------------
service needs relevant to each customer segmentation/product/
geographic location. ----------------------
●● Cost of Service ----------------------
It calls for determining the service costs incurred by the firm to
----------------------
deliver the current level of service and the cost of providing newly
identified level of service to customers. ----------------------
●● Revenue Management
----------------------
It calls for determining the appropriate response to the identified
needs and expectations of the customer. In order to survive and ----------------------
thrive as a profit centre, a firm requires identified potential income
----------------------
and a break up of costs, which will have to be charged. Revenue
management takes into account such issues as well as connected ----------------------
problems such as third party service, splitting of fees, costs of
logistics and spares etc. ----------------------
5. Integration Strategy ----------------------
●● Information Integration ----------------------
Information plays the most crucial role in integration. The
participants share confidential and critical information. In a well ----------------------
implemented information system the participants are aware of the
----------------------
stocks, demands, and the availability of supplies at all times. The
supplier knows what the manufacturer needs and the manufacturer ----------------------
knows the stock and needs of the distribution channels. It also helps
to analyse product flows, order patterns, inventories, obsolescence, ----------------------
levels of production and supply costs.
----------------------
●● Decision Integration
----------------------
The participants are expected to meet at frequent intervals to take a
joint decision on issues such as inventories, distribution, trade off to ----------------------
strike a balance between contradictions and even pricing policies. It
also implies that a participant will have a right to exercise controls ----------------------
on operational activities of the other participants and raise a voice of
----------------------
discontent, in case the operations are contrary to decisions already
made. ----------------------
----------------------
SCM and BPR 165

Notes ●● Financial Integration
It implies that each of the participants has a financial stake in the
---------------------- operations of the other participants. Failure of one participant
---------------------- brings an immediate response from the other participants to correct
the situation. This is, no doubt, one of the strongest integration, but
---------------------- has been rarely practiced.
----------------------
Activity 3
----------------------
Make a visit to an electronic goods manufacturing company. Write down
---------------------- your comment on “Key components of SCM”.
----------------------
---------------------- 12.7 SWOT ANALYSIS FOR SCM

---------------------- This helps to review the current status of supply chain in the company.
Based on the SWOT Analysis, future strategies can be evolved in designing an
---------------------- appropriate logistical system for the company. SWOT Analysis will include
---------------------- following supply chain components.
●● Facility Structure
----------------------
●● Transportation
---------------------- ●● Inventory Control
---------------------- ●● Communication & IT
●● Warehousing and Packaging
----------------------
---------------------- 12.8 IT ENABLED SUPPLY CHAIN

---------------------- The main reasons for IT applications in the field of SCM are, the wide
spread of manufacturing and service activities and the time element in planning,
---------------------- both of which require data intensive decision making. To make such decision
---------------------- making possible, there has to be efficient , reliable, and timely data capture, data
availability at various locations and the ease with which it can be manipulated
---------------------- for the purpose of decision making. Another advantage of IT is that report and
statistics can be generated, which allows the monitoring of the supply chain
---------------------- performance.
---------------------- Segmentation of IT
---------------------- Identifying IT segments along the three dimensions: Scope of Application,
Functionality and Stage of technological development.
----------------------
Scope of application
---------------------- ●● Transaction Processing System (TPS)
---------------------- ●● Management Information System (MIS)
●● Decision Support System (DSS)
----------------------

●● Knowledge Based System (KBS) Notes
Functionality
----------------------
●● Data capture, display and organisation
●● Communication of data ----------------------
●● Processing data ----------------------
Stage of Technological Development ----------------------
●● tand alone applications such as dispatch advice, stock control, order
S
processing ----------------------
●● Firm level/inter-firm integrated systems such as MRP-I, MRP-II, ERP ----------------------
●● I ntegrated System such as EDI (Electronic Data Interchange) and ----------------------
Interactive Web sites along with ERP
----------------------
12.9 BPR AND SCM
----------------------
To implement IT enabled SCM, it is necessary to reengineer the entire
----------------------
supply chain. Especially with the evolution of Internet, it is important to
reengineer two major processes in the supply chain, i.e., Purchasing and sales ----------------------
order processing. The traditional approach of placing purchase orders and
receiving sales orders from dealers/customers has changed. More powerful, ----------------------
faster IT facilities such as Internet and EDI are available for placing and
----------------------
receiving orders. Hence, it has forced a change in the way purchase orders are
placed with the vendors. Now orders for raw materials and components can ----------------------
be placed online, similarly orders from the distributors and customers can be
received online. ----------------------
The effectiveness of the supply chain can be improved with reengineered ----------------------
processes. It is also possible to take full advantage of SCM software solution.
----------------------
Organisational Issues
●● o reengineer the supply chain activities, the following organisational
T ----------------------
issues need to be handled. ----------------------
Structure
----------------------
●● Inter-firm supply chain structure
●● Partnerships ----------------------
●● Organisational Structure ----------------------
●● Internal Supply Chains
----------------------
System
----------------------
●● Diagnostics to analyse supply chain performance include:
Clarity of objectives, Pareto analysis of items, cost trade offs, cost ----------------------
structure analysis, cycle time analysis, inventory analysis, uncertainty
----------------------
analysis, linkages with manufacturing methods and systems.
----------------------
SCM and BPR 167

Notes ●● rocesses important in the supply chain in providing value to the
P
customer:
---------------------- Forecasting, demand driven manufacturing and purchase, order
---------------------- processing, activity monitoring, vendor evaluation, after sales servicing,
cash collection, schemes and sales promotions.
---------------------- ●● etrics defining with right direction to effectively measure supply chain
M
---------------------- performance :
Move from those, which focus on one actor to those encompassing two
---------------------- actors, capturing their interface, e.g., order processing times rather than
---------------------- production volumes.
Measure outputs rather than inputs to a process e.g., number of customer
----------------------
complaints or response time for a service call rather than just number of
---------------------- employees trained.
Focus on distributions rather than averages e.g., measure age-wise profile
----------------------
of inventory rather than average inventory.
---------------------- Focus on service measures in addition to product measures e.g. delivery
time in addition to product quality aspect.
----------------------
●● Re-examining structural aspects to handle change management
----------------------
Job rotation
---------------------- Job definition
---------------------- Internal task force
---------------------- Cross functional team
Use of consultants
----------------------
Use of solution providers
----------------------

---------------------- 1. The following components of SCM are included in SWOT analysis.
i. Quality Management
----------------------
ii. Inventory control
----------------------
iii. Transportation
---------------------- iv. Strategic planning
----------------------
----------------------
----------------------
----------------------

12.10 GENERAL STRUCTURE FOR SCM Notes
The key paradigm is that all activities of planning, allocation, scheduling, ----------------------
transportation, storage and controlling are similar across the supply chain, to
ensure effective value, information and cash flows. Thus, a single function ----------------------
based called SCM looks after all these activities. Managerial expertise with
----------------------
perspectives of integration and coordination ought to supercede any technical
or departmental knowledge base. ----------------------
Such knowledge can reside in five key support functions, with a strategic ----------------------
perspective. These are:
●● Market (Market development, choice of market etc.) ----------------------
●● Purchase (Supplier development, choice of source etc.) ----------------------
●● echnology (Product and process development, choice of product design,
T ----------------------
technology etc.)
●● Human Resource Development ----------------------
●● Finance ----------------------
Summary ----------------------
●● upply Chain Management (SCM) is the management of material and

S ----------------------
information flows both within and between chain members, such as ----------------------
vendors, manufacturing plants, and distribution centers. SCM is currently
one area that has received a great deal of attention in the worldwide business ----------------------
community. It is observed that, logistics costs account for approximately
30% of the cost-of goods sold in an average manufacturing firm. ----------------------
●● PR and SCM have a great deal in common. Both approaches analyse the
B ----------------------
value-added implications of all business-related activities. BPR helps to
address strategic planning problems within an electronic products supply ----------------------
chain. ----------------------
●● PR and SCM are closely interlinked with each other. With the help of
B
BPR, it is possible to improve the effectiveness and efficiency of the ----------------------
entire supply chain. Reengineer the major processes in the supply chain ----------------------
to take full advantage of IT enabled supply chain.
----------------------
Keywords ----------------------
●● upply chain management: It can be defined as the design and operation
S ----------------------
of the physical, managerial, informational and financial systems needed
to transfer goods and services from the vendor to customer in an effective ----------------------
and efficient manner.
----------------------
●● ogistics management: It can be defined as the design and operation of
L
the physical, managerial, and information systems needed to allow goods ----------------------
to overcome time and space from the producer to the consumer.
----------------------
SCM and BPR 169

Notes
----------------------
1. What do you mean by SCM?
---------------------- 2. What are the thrust areas of SCM?
---------------------- 3. What is IT enabled supply chain?
---------------------- 4. How are BPR and SCM interlinked?
----------------------

1. Performance of supply chain will reduce logistic cost in the organisation.
----------------------
----------------------
---------------------- 1. The following components of SCM are included in SWOT analysis.
---------------------- i. Inventory control
ii. Transportation
----------------------

---------------------- 1. Ayers, James B. Handbook of Supply Chain Management. CRC Press.
---------------------- 2. Jespersen, Birgit Dam, Tage Skjott-Larsen. Supply Chain Management:
In Theory and Practice. Copenhagen Business School Press.
----------------------
3. Kulkarni, Sarika. Supply Chain Management: Creating Linkages for
---------------------- Faster Business Turnaround. Tata McGraw-Hill Publication.
---------------------- 4. Ross, David Frederick. Competing Through Supply Chain Management.
Springer Science & Business Media.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Evolution of BPR for E-Business
UNIT
13
Structure:
13.1 Introduction
13.2 Web Enabled E-Business and BPR
13.3 Managing E-Processes
13.4 Redesign Principles and Methods
Summary
Keywords
Suggested Reading
Evolution of BPR for E-Business 171

Notes
Objectives
----------------------
----------------------
●● Illustrate how web enabled e-business change the nature of BPR
---------------------- ●● Explain the concept of e-processes and its management
---------------------- ●● Discuss the Principles and tactics for redesign
----------------------
13.1 INTRODUCTION
----------------------
The first wave of BPR was focused on cost cutting and making enterprise
----------------------
processes lean and mean. The second wave of BPR the focused on redesigning
---------------------- the supply chain processes for collaborative advantage and creating value as
quickly as possible. It is Internet centered, taking increasing advantage of
---------------------- knowledge management around business processes and driven by the scramble
of enterprises, to move to e-business as quickly as possible.
----------------------
---------------------- 13.2 WEB ENABLED E-BUSINESS AND BPR

---------------------- BPR for e-business involves redesigning both enterprise and supply
chain processes around the internet. Redesigning collaborative supply chain
---------------------- e-processes will constitute a major focus of BPR for e-business. By an e-process
---------------------- we mean a process that will be executed through computer applications from
each enterprise communicating with each other through the Internet.
----------------------
The urgency of BPR will increase further as brick and mortar enterprises
---------------------- race to transform their processes for e-business. BPR for e-business will involve
reconfiguring business processes for new partners and new products much faster
---------------------- than in the past and redesigning these processes so that they execute faster and
provide learning faster.
----------------------
The change in business models for creating value quickly will further
---------------------- drive BPR for e-business. BPR for e-business will probably involve more
radical transformation than in the past, in terms of scale, scope and speed. There
----------------------
will be many more opportunities and ways to change the information flow and
---------------------- knowledge management around a business process as a method of BPR.
The ubiquity of BPR will increase, as the urgency of e-business permeates
----------------------
smaller companies. This will be the case for both business to business and
---------------------- business to consumer contexts.
---------------------- The process of carrying out BPR is changing to take better advantage of
the internet and Intranets to support collaboration on BPR projects. As BPR
---------------------- software tools are becoming increasingly compatible with each other, it will be
possible to exchange standard process templates in electronic form across the
---------------------- business community. Reusability of process designs will facilitate and speed up
---------------------- the design part of BPR for common processes such as order fulfillment. This

will be especially helpful for smaller companies that do not have entrenched Notes
business processes. They will be able to more easily gain access to best practices.
----------------------
For a majority of the enterprises, BPR for e-business will involve
redesigning both the electronic and physical aspects of business processes ----------------------
and how they interact together, although the electronic processes will play an
increasingly larger role in e-business. ----------------------
----------------------
----------------------
----------------------
1. In terms of BPR for e-business, what will be majorly transformed
radically? ----------------------
i. Quality, Size and delivery
----------------------
ii. Profit, Resources and levels
iii. Scale, scope and speed ----------------------
iv. Quantity, Ratios and Roles ----------------------
----------------------
Activity 1
----------------------
Visit any e-business website. Study and write down the e-process involved.
----------------------
----------------------
13.3 MANAGING E-PROCESSES
----------------------
The ubiquitous connectivity of the Internet and the need to organise
supply chain processes differently for e-business have given rise to a new ----------------------
form of enterprise called a portal. Portals have arisen at the interstices between
----------------------
enterprises, in e-business supply chains. A portal in the e-business world is a
coordinated access point in the form of a website that provides business solutions ----------------------
and services, knowledge and information, or software tools. Vertical portals
target particular industries (e.g. chemical industries) while horizontal portals ----------------------
provide a particular type of service to a broader market (e.g. travel agencies, car
----------------------
rental companies, online maps etc.)
Common types of portals include knowledge aggregators who aggregate ----------------------
knowledge about a fragmented market at one point and application service
----------------------
providers who host computer applications such as ERP and CRM through their
own website. ----------------------
Activity 1 ----------------------
----------------------
Gather information about various e-processes used in organisations.
Describe any one of them in a few lines. ----------------------
----------------------

Notes 13.4 REDESIGN PRINCIPLES AND METHODS
---------------------- There is a ground zero commonsense principle “Streamline”. Remove
waste, simplify and consolidate similar activities. But beyond this ground zero
---------------------- commonsense principle, there are many more principles that the designer can
follow especially in an e-business context.
----------------------
There are three types of Redesign Principles and Tactics.
----------------------
1. Principles and tactics for restructuring and reconfiguring around processes
----------------------
2. Principles and tactics for changing information flows around processes
---------------------- 3. Principles and tactics for changing knowledge management around
processes
----------------------
Principles and tactics for restructuring and reconfiguring around processes
----------------------
Principle 1: Lose Wait
---------------------- Squeeze out waiting time in process links to create value.
---------------------- Common tactics
---------------------- ●● Redesign time sequential activities to be executed concurrently.
●● Create close loop teams for quicker flexible interaction.
----------------------
●● o not allow a support activity or management activity to get a core value
D
---------------------- adding process.
---------------------- ●● Design for continuous flow rather than stop-start batches.
●● Modify upstream practice to relieve downstream bottlenecks.
----------------------
Principle 2: Orchestrate
---------------------- Let the swiftest and most able enterprise execute.
---------------------- Common tactics
---------------------- ●● Partner a process with another enterprise.
●● Outsource a process with another enterprise.
----------------------
●● Insource a process back into the enterprise.
---------------------- ●● Route the process through an infomediary.
---------------------- Principle 3: Mass customise
---------------------- Flex the process for any time, any place, and anyway.
Common tactics
----------------------
●● Flex access by expanding time window for the process.
----------------------
●● Flex access by migrating the physical space in which the process happens.
---------------------- ●● Create modular process platforms.
---------------------- ●● Push customisation to occur closest to the customer.
●● Enable dynamic customisation of product offerings.
----------------------

Principle 4: Synchronise Notes
Synchronise the physical and virtual parts of the process.
----------------------
Common tactics
----------------------
●● Match the offerings on the physical and virtual parts of the channel.
●● Create common process platforms for physical and electronic processes. ----------------------
●● Track the movements of physical products electronically. ----------------------
Principle 5: Digitise and Propagate
----------------------
Capture information digitally at the source and propagate it throughout the
process. ----------------------
Common tactics ----------------------
●● Shift the data entry to the customers and digitise it. ----------------------
●● Make the process as paperless as possible, as early as you can.
----------------------
●● ake information more easily accessible upstream and downstream it to
M
those who need it. ----------------------
●● Shrink the distance between information and decision.
----------------------
Principle 6: Vitrify
----------------------
Provide glass like visibility through fresher and richer information about
process status. ----------------------
Common tactics ----------------------
●● Provide on demand tracking information for customers of the process.
----------------------
●● Provide reporting capabilities that provide on the fly analysis.
●● esign standard partner interface processes for a seamless exchange of
D ----------------------
information.
----------------------
Principle 7: Sensitise
----------------------
Fit the process with vigilant sensors and feedback loops that can prompt action.
Common tactics ----------------------
●● Build in customer feedback loops to detect process dysfunctions. ----------------------

●● Enable software smarts to trigger quick business reflexes. ----------------------
●● Attach environmental probes to the process to monitor change.
----------------------
Principle 8: Analyse and Synthesise
Augment the interactive analysis and synthesis capabilities around a process to ----------------------
generate value added. ----------------------
Common tactics
----------------------
●● Provide “what-if” capabilities to analyse decision options
----------------------
●● Provide “slice and dice” data analysis capabilities that detect patterns
----------------------

Notes ●● rovide intelligent integration capabilities across multiple information
P
sources
---------------------- Principle 9: Connect, Collect and Create
---------------------- Grow intelligently reusable knowledge around the process through all who
touch it.
----------------------
Common tactics
----------------------
●● Create a community practice around the process.
---------------------- ●● Create expertise maps and yellow pages related to the process.
---------------------- ●● uild knowledge repositories that can be reused to enhance the
B
performance of the process.
---------------------- ●● evelop Frequently Asked Questions database through the doers of the
D
---------------------- process
●● mbed knowledge sharing spaces for interactive dialogues around the
E
---------------------- process.
---------------------- Principle 10: Personalise
---------------------- Make the process intimate with the preferences and habits of participants.
Common tactics
----------------------
●● earn the preferences of customers and doers of the process through
L
---------------------- profiling.
---------------------- ●● I nsert business rules in the process that are triggered, based on a dynamic
personal profile.
----------------------
●● Use automatic collaborative filtering techniques.
---------------------- ●● Keep track of personal process execution habits.
----------------------
----------------------
----------------------
i. New form of enterprise a. Documents Designing
---------------------- ii. Ubiquitous connectivity b. Portals
iii. Ground zero common sense c. Internet
----------------------
iv. Vertical portals include d. Electronics Analysis
----------------------
e. Streamline
---------------------- f. Application service providers for

---------------------- ERP and CRM
----------------------
----------------------
----------------------

Notes
Activity 3
----------------------
Study the process of Railway reservation at the booking window, an agent
----------------------
office and at home through Internet.
Write down the process. Highlight the activities, which are modified by ----------------------
using redesign principles and tactics. Also mention which principle is used.
----------------------
----------------------
Summary
----------------------
●● he first wave of BPR was focused on cost cutting and making enterprise
T
processes lean and mean. The second wave of BPR the focused on ----------------------
redesigning the supply chain processes for collaborative advantage ----------------------
and creating value as quickly as possible. It is Internet centered, taking
increasing advantage of knowledge management around business ----------------------
processes and driven by the scramble of enterprises, to move to e-business
as quickly as possible ----------------------
●● PR for e-business involves redesigning both enterprise and supply chain
B ----------------------
processes around the internet. Redesigning collaborative supply chain
e-processes will constitute a major focus of BPR for e-business. By an ----------------------
e-process we mean a process that will be executed through computer
----------------------
applications from each enterprise communicating with each other through
the Internet ----------------------
●● he evolution of BPR for e-business is inevitable. Various principle and
T
----------------------
tactics can be used to redesign the process. Many organisations redesign
enterprise processes with BPR software. ----------------------
----------------------
Keywords
----------------------
●● WEB: Abbreviation for World Wide Web.
●● -Processes: E-processes are typically designed, developed, and deployed
E ----------------------
by enterprises that want to compose internal capabilities with third-party
----------------------
capabilities, either for internal use or to expose them as (complex, value-
added) e-services to customers. ----------------------
●● eb Enabled E-Business: e-Business means integration of new or
W
----------------------
existing data and applications into the Web and Internet environment.
----------------------
----------------------
1. What are the various principle and tactics for redesigning business ----------------------
processes?
2. Explain in brief how web-enabled business changes the nature of BPR. ----------------------
----------------------

Notes Answers to Check your Progress

1. In terms of BPR for e-business, what will be majorly transformed
---------------------- radically?
---------------------- iii. Scale, scope and speed
----------------------
----------------------
----------------------
i. –b
---------------------- ii. –c
---------------------- iii. –e
---------------------- iv. –f
----------------------
Suggested Reading
----------------------
1. Combe, Colin. Introduction to e-Business. Routledge Publications.
----------------------
2. Cunningham, P, Miriam Cunningham. E-adoption and the Knowledge
---------------------- Economy: Issues, Applications, Case Studies. IOS Press.
3. Harmon, Paul, Michael Rosen, Michael Guttman. Developing E-business
----------------------
Systems & Architectures: A Manager’s Guide. Morgan Kaufmann
---------------------- Publisher.
----------------------
Reengineering: New Perspectives and Strategies. Greenwood Publishing
---------------------- Group.
---------------------- 5. Yuansheng, Zhong. Management of E-commerce and E-government.

Nova Publishers.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

140 Business Process Re-Engineering

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Business Process

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Course Design and Review Committee

Published by Symbiosis Centre for Distance Learning (SCDL), Pune

Copyright © 2018 Symbiosis Open Education Society

Unit No. TITLE Page No.

2 Business Process Reengineering

Team working is a feature of product and service delivery to customers. ----------------------

---------------------- Project management of a Business Reengineering project is a set of

4 Business Process Reengineering

1.4 WHY BUSINESS PROCESS IMPROVEMENT ----------------------

---------------------- Check your Progress 2

---------------------- 1.5 CONCEPT OF BPR

6 Business Process Reengineering

---------------------- Suggested Reading

8 Business Process Reengineering

Business Processes and MIS 9

---------------------- 1. Customer facing

10 Business Process Reengineering

Business Processes and MIS 11

---------------------- Check your Progress 1

---------------------- 2.4 MANAGERIAL ROLES

12 Business Process Reengineering

2.5 LEVELS OF MANAGEMENT ----------------------

Business Processes and MIS 13

---------------------- 2.6 ACTIVITIES OF AN ORGANISATION

---------------------- 2.7 TYPES OF INFORMATION SYSTEMS

14 Business Process Reengineering

2.8 SYSTEM CONCEPTS ----------------------

A system is an integrated set of components or entities that interact to ----------------------

Business Processes and MIS 15

---------------------- 2.9 BUSINESS OBJECTIVES

16 Business Process Reengineering

Check your Progress 2 ----------------------

Business Processes and MIS 17

---------------------- Answers to Check your Progress

---------------------- Fill in the blanks.

18 Business Process Reengineering

Business Processes and MIS 19

20 Business Process Reengineering

Strategic Planning and BPR 21

---------------------- 3.1 INTRODUCTION

---------------------- — Thomas H. Davenport, Process Innovation: Reengineering Work Through

22 Business Process Reengineering

Process reengineering is meaningful only if it improves a business in ----------------------

Strategic Planning and BPR 23

24 Business Process Reengineering

Strategic Planning and BPR 25

---------------------- ●● Strength, weakness, opportunity & threat.

26 Business Process Reengineering

Strategic Planning and BPR 27

28 Business Process Reengineering

●● Delineation of customers and their major requirements ----------------------

Strategic Planning and BPR 29

30 Business Process Reengineering

3.6 IMPORTANCE OF STRATEGIC PLANNING ----------------------

Strategic Planning and BPR 31

32 Business Process Reengineering

3.7 DEVELOPING MISSION, VISION, VALUES AND ----------------------

Review relevant policy ----------------------

Strategic Planning and BPR 33

---------------------- Critical Questions

Strategic Planning and BPR 35

---------------------- “.” - indicates no relationship