Business Process Re-engineering 01 – History & Introduction

BPR - Evolution

• Organisations aim to increase productivity & quality service and to reduce cost • Traditional organisation structure, customer services and business methods are out-dated • Low barriers to entry, hence stiffer competition - locally & globally • Current business are: – customer-focused and market driven – process-focused and team-oriented – Focused on speed & response time – focused on customer relationships
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BPR - Origins
• • • • • • Business concepts of 1990 Rework of TQM, continuous improvement Survey results shows that BPR was unsuccessful BPR leaders - James Champy; Thomas Davenport Deming and Juran discussed about BPR in TQM reports BPR was introduced in 70’s to the manufacturing environment

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Business Process
Davenport & Short’s definition ”a set of logically related tasks performed to achieve a defined business outcome . A structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization” - Davenport & Short, 1990

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Business Process
Generic Definition “ 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” • “ a collection of business activities that creates value for the customer”
Inputs Outputs

Supplier

Process

Customer

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Business Process
What are Business processes? • sequences and combinations of business activities. • management processes control and coordinate these activities and ensure that business objectives are delivered. • support processes, the name implies, provide infrastructural and other assistance to business processes. Business Processes can be further differentiated into knowledge-based and operational processes.
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Knowledge-based Processes
What are Knowledge-based processes? • Product development, research activities, advertisement, and management consulting. • These processes typically are of non-standard nature • They rely on the knowledge and creativity of the persons involved. Knowledge-based processes are not dominant in Business Reengineering projects. - Davenport; Jarvenpaa; Beers, 1996
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Operational Processes
What are Operational processes ? • Customer service, procurement, and manufacturing. They are at the heart of most Business Reengineering efforts. • They are classified by their relative stability, standardisation and repeatability. Operational processes are further classified into key and secondary processes. Key processes directly support the mission and the strategies of the company.

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Business Process Components

• • • •

They have people / customers (internal or external) They have information and decision made They have channels to transmit information They cross organizational boundaries, i.e., they occur across or between organizational sub-units

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Business Process Examples
• Generic Customer – Marketing & Sales – Product/Service Development – Manufacturing – Distribution – Billing – Order Processing – Customer Service

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Business Process Examples
• Industry-specific Customer – Loan processing (Banking) – Claims (Insurance) – Grant allocation (Government) – Merchandise return (Retail) – Food order & preparation (Restaurant) – Baggage handling (Airlines) – Reservations (Airlines)

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Business Process Examples
• Generic Administration – Budgeting – Training – Human Resource – Facilities Management / Maintenance – Purchasing – IT – Finance / Accounts

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Objectives & Drivers of BPR
Objectives • Process Streamlining • Flexibility & Responsiveness • Global competitiveness • Corporate rightsizing Drivers • Competition is Intense • Globalisation has become a norm • Change has become constant • Customers have become powerful
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Forces reshaping businesses

Previous • • • • • Competition: Markets: Operations: Focus: Performance: Local/regional Mass Controlled Performance Short term

Now National/Global Focused Flexible Best service Sustained

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What is BPR ?

• All things to all people? • Documenting procedures and processes to ISO standards? • Systems implementation? • IS strategy deployment?

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Business Process Re-engineering

Business Process Re-engineering is : “ the fundamental rethinking and radical design of entire business processes enabled by information technology to achieve dramatic improvements in business performance “ - Hammer & Champy

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Business Process Re-design

Business Process Re-design is : “ the analysis and design of workflows and processes within and between organizations “

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Fundamental Rethinking

• Why do we do what we do? • Why do we do it the way we do? • Re-engineering first determines what a company must do, then how to do it • It takes nothing for granted • It ignores what is and concentrates on what should be

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Radical Redesign

• It means getting to the root of things • It means starting all over again and isn’t about fixing things • It is low in cost with problem at the design stage rather than at the execution stage • It means enabling new or existing processes using IT

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BPR & Change
• BPR is an integrated program of change which has a major impact on an organization for several reasons: – Sponsored by senior management – Driven from the top down. Begins and ends with customer value – Applies to multiple business functions, departments and locations – Involves cultural, organizational and role changes that must be managed – Radical improvements will take place

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BPR – Challenging current practices
Conventional: Automate existing process
Outdated processes reinforced - no radical improvement

Analyse process. Fix if broken

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Automate process

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BPR: Challenge current practices
Understand current situation and future vision of the enterprise Invent new ways of working & design new process. Use IT to enable change

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Clearly defined processes integrated to meet customer needs and add value

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