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Critical review of existing BPR methodologies The need for a holistic approach University of the Aegean, Chios, Greece

Cambridge University, Cambridge, UK Keywords BPR, Methodology, Model Abstract A plethora of BPR methodologies have appeared in the literature during recent years, however, most of them present serious limitations mainly due to the need for a multi-disciplinary approach. In this paper we present an overview of existing work in the area of BPR with the aim of highlighting the different categories of BPR methodologies identified in the literature, their focus on the redesign process and the general BPR principles that emerge from them. We also present a BPR methodology called Agent Relationship Morphism Analysis (ARMA) that goes beyond the limitations of the existing BPR methodologies taking a holistic view of the organisation. In ARMA the modelling of the business environment is achieved with the use of three perspectives: the structural, behavioural and process. The use of these three perspectives provides insight to the relationship between organisational structure and organisational processes.

Need for a holistic approach

George Valiris

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Michalis Glykas

1. Introduction Methodologies exist due to the need of solutions to frequently occurring problems. According to Wilson (1984) a problem is any expression of concern about a situation. In this context a methodology represents a structured set of guide-lines (or principles) which enable an analyst to derive ways of alleviating this concern. The problem tackled by BPR is expressed in its definition. The concern that BPR methodologies try to alleviate is, any identified difference between: (1) business activities and organisational strategy; and (2) current and desired productivity of organisational resources. In order to achieve this a BPR methodology should provide a consistent set of techniques and guide-lines which will enable the business process redesigner to reorganise business activities and processes in an organisation. A plethora of BPR methodologies have been identified in the literature. These can be classified into two main categories depending on the perspective they take in BPR: the management accounting and the information system development categories (Figure 1). In the management

accounting perspective the analysts attempt to reorganise business processes and use IT as an enabler in their effort. In the Information System (IS) development perspective IS developers need to understand and possibly reorganise business processes so that the introduction Figure 1. The two different approaches in BPR

of IT has the highest possible impact on them. More recently some methodologies that view BPR from an organisational theoretic perspective have started emerging. These concentrate more on the understanding and analysis of the organisation based on principles like accountabilities and the roles of individuals that take part in business processes. If one would try to find a redesign process that satisfies most of the existing BPR methodologies the result would be as follows: (1) Establishment of the business vision and objectives. (2) Identification and focus on the core business processes that support them. (3) Modelling and analysis of the business environment. (4) Streamlining. (5) Continuous control and improvement of previous steps. Redesign can be achieved in two modes: incremental and radical. In the former case can be classified methodologies for improvement and simplification. These methodologies aim at improving what already exists in the organisation usually by eliminating non value added activities in order to achieve lower throughput times and best re-allocation of resources. In the latter case the redesign or rebuilding of the processes will usually emerge from the application of ``best practices'' that is achieved with the use of benchmarking. In radical change redesign will challenge the existing organisational framework and

might request the introduction of new technology regardless of the impact this Need for a might have on the personnel's behaviours and attitudes. holistic approach In the literature there has been some confusion regarding the use of terms like re-engineering, process improvement and redesign. In the context of this paper re-engineering is synonymous to radical change and process improvement to incremental change. Both re-engineering and process 67 improvement are included in the definition of redesign. Due to the rapid growth of interest in BPR a large number of existing methodologies have been individually upgraded or combined in order to fall under the BPR umbrella. Some redesigners resist methodologies and consider them as a constraint especially in the case of fundamental/radical change (COBRA, 1994). Their belief is that change management should be the focus from the beginning to the end of the BPR exercise. Others argue that the use of methodologies allow people to avoid mistakes and the use of their modeling techniques can be used as a medium for raising fundamental questions. In the next subsections we will present some characteristic examples of the BPR methodologies identified in the literature. The aim is to show the underlying principles and the stages of the redesign process that each one of the three categories of BPR methodologies focus on. The methodologies presented can be considered as ``GLOBAL'' in the sense that they try to redesign the organisation as a whole with all of its different aspects. 2. Management accounting methodologies BPR has been taken into consideration by the management accounting community (Morris and Brandon, 1993; Petrozzo and Stepper, 1994; Short and Venkatraman, 1992; Adnum, 1993; Butler-Cox, 1991; Lewis, 1993; Morrow and Hazell, 1992; Eccles, 1993; Davenport, 1993; Hammer, 1993; Smith, 1993). Accounting methodologies focus on steps 1, 2, 4 and 5 of the redesign process (as outlined in the numbered list on the previous page, and are primarily case study driven. In step 3 they concentrate more on business analysis rather than business modelling which is performed using very simplistic modelling techniques. 2.1 From manufacturing processes to business processes The philosophy is that BPR can be applied not only to the manufacturing processes but also to business processes. Business process redesign has its roots in the manufacturing industries (Davenport and Short, 1990; Woolfe, 1991). In manufacturing the emphasis is usually on the description of the flow of material through manufacturing processes. Often a process can be visualised by studying the floor plan of a plant. The focus is on activities and procedures and the role of people is seen as performing steps in these procedures and activities. In this context process management is oriented towards minimising process cycle and costs while maximising the quality of the end product (Hand, 1991).

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However, in accounting, business process management faces additional problems and an increased complexity in comparison to manufacturing. Due to the large number of business processes in the organisation the BPR exercise has to focus on the core processes that are valued by the customer, the shareholder or the regulator and are, therefore critical to competitive advantage. Each core business process is initiated by a need in the market and terminates when the need is satisfied (Eccles, 1993). 2.2 The process perspective and its characteristics Management accounting BPR methodologies view the organisation from a process perspective. According to Harrington (1991) the following characteristics can be assigned to each process. (1) Flow. The methods for transforming input into output. (2) Effectiveness. How well customer expectations are met. (3) Efficiency. How well resources are used to produce an output. (4) Cycle time. The time taken for the transformation from input to final output. (5) Economy. The expense of the entire process. Understanding these process characteristics is essential for three reasons. First, it helps identify the problem areas within the process. This information will provide the basis for redesigning the process. Second, it provides the database needed to make informed decisions about incremental or radical changes. We need to see the impact of changes not only on individual activities but also on the process as a whole and on the departments involved. And third, it is the basis for setting improvement targets for evaluating results (Harrington, 1991). 2.3 Streamlining and continuous improvement Simple process modelling techniques like process diagrams and flowcharts are utilised for business process modelling. The modelling of business processes provides a sound basis for setting performance indicators that measure the attainment of strategic goals and objectives by relating these goals and objectives to the core processes (Lewis, 1993). Key performance measures can be defined for each core activity within each process with reference to how they support attainment of critical success factors. One of the central techniques of target setting is benchmarking (Hammer, 1993; Butler-Cox, 1991). This entails comparing the operations performance at business unit, process or activity level with other direct competitors, other industry players or ``best in class'' companies which have recognised leadership in particular processes. The aim of this comparison is to identify the efficiency, effectiveness and adaptability of the organisational processes. This is called streamlining (Harrington, 1991). Processes are continually monitored to find improvement opportunities. People at all levels of the organisation continually work on core

business processes to improve their performance. Continuous improvement Need for a (Woolfe, 1991) has been an objective for many change management holistic approach programmes over the last few years. 3. IS influenced methodologies Researchers in the field of IS development have started realising the need for understanding the wider organisational environment within which the IS going to operate (Curtis, 1989). The design and planning of computer applications has rarely been performed with an initial consideration of the business processes that the application programs will support. Recently a number of IS development methodologies have started incorporating enterprise modelling or business analysis as an initial stage in IS development (Avison and Fitzgerald, 1988). Enterprise modelling constitutes steps 1, 2 and 3 of the general redesign process (see earlier list of steps of redesign process). One of the central arguments is that the evolution of information systems is, to a large extent, due to changes of the organisational environment and therefore, substantial improvements can be made in the development and evolution of systems if the business knowledge is explicitly captured and presented (Loucopoulos et al., 1991; Palaskas and Loucopoulos, 1989). Olle (1988) also argues that during the analysis stage of the IS lifecycle an examination of the existing state of affairs in a given business area of the enterprise should be undertaken. It may call for the analysis of what is done in the enterprise and, furthermore, of what needs to be done given the support of more advanced information systems (Lundeberg, 1982; McGaughey and Loucopoulos, 1993). They call this stage business analysis and it is regarded as descriptive rather than prescriptive. Business analysis includes both the modelling of the business environment and model analysis of the redesign process (stages 3 and 4). 3.1 IS development methodologies and business strategy In IS development methodologies strategic and IS planning could be the first stage of a methodology or could be assumed to have already been carried out. In the IS literature strategic issues have received less attention than organisational ones. However, according to Leavitt (1965) the two are inextricably linked as shown in Figure 2. In recent years some IS development methodologies have begun to deal directly with strategy (Filkenstain and Zmud, 1989; Mumford, 1983; Martin, 1990; Pava, 1983; Butler-Cox, 1992; Boynton and Zmud, 1987) and the matter has appeared in comparisons of methodologies (Avison and Fitzgerald, 1988; Olle et al., 1986; Olle et al., 1983; Olle et al., 1982; Fitzgerald et al., 1985; Maddison, 1983; Wood-Harper and Fitzgerald, 1982). In IS development methodologies the understanding of the business strategy is concerned with determining what the goals of the IS under development are in relation to a changing organisational environment (Noble, 1991). The terms

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Structure

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Strategy/ Task

Technology

Figure 2. The link between strategic and organisational issues according to Leavitt

People Source: Leavitt, 1965, p. 65

efficiency and effectiveness have a different meaning in the IS world. Methodologies that address effectiveness (are we doing the right product?) question the processes and procedures that the IS will affect and the organisational goals to which they relate (Filkenstain, 1989; Mumford, 1983; Martin, 1990; Pava, 1983; Bjorn-Andersen, 1984). Efficiency (are we doing the product right?) relates to business modelling, system design and implementation and questions the productivity of the people who are involved in these stages. Even the term redesign (re-engineering) is sometimes used in a different context. It refers to the best utilisation of the company's IT infrastructure that is achieved by reengineering existing IT resources. Effectiveness is closely related to strategic planning and business modelling. Some methodologies use the idea of critical success factors (Rockart and Crescenzi, 1984) or some variant in order to describe business strategy. Others utilise Porter's value chain (Porter, 1985) or any other technique. OLYMPIOS (Braesch, 1989; Maire, 1991) for example is a methodology that allows the design of an IS of a manufacturing enterprise in terms of a logical representation that it is linked to the company's strategy. The modelling technique is based on five main concepts: the domain of visibility, the supplierconsumer relationship, objectives, level of satisfaction and traceability. 3.2 The structural perspective IS methodologies usually add one more perspective to the process perspective of the accounting BPR methodologies. This is the structural (or data) perspective where static business elements are identified. IS methodologies which use modelling techniques that support both the process and data perspectives are called structured methodologies (Gane and Sarson, 1977; Jones, 1980; Avison and Fitzgerald, 1988; Avison, 1985). A characteristic example of structured methodologies

is SADT (Marco, 1988) used by the IDEF0 method that has in many instances been used for business process modelling and analysis. In

general, however, process elements are usually modelled using dataflow Need for a diagrams and data elements are usually modelled using the entity relationship holistic approach attribute technique developed by Chen (1976). 3.3 The behavioural perspective A third perspective called the behavioural perspective has also been identified by the IS community. In the behavioural perspective the lifehistories of entities in the data perspective are defined (Brodie and Silva, 1982). The conceptual framework developed by the ESPRIT project called CIM-OSA consists of a number of organisational views which together give a complete description of the organisation (Beeckman, 1989; Jorysz and Vernadat, 1990a; Jorysz and Vernadat, 1990b; Klittich, 1990). Certain modelling techniques are suggested in each view but none of them have been standardised giving the modeller complete freedom to select different techniques if needed. Enterprise information, functionality and behaviour have been separated into three different entities, so that changes in one set will have only limited impact on the other two. Zachman (1987) identified the need for a business model prior to information modelling for the design of information systems in his Information System Architecture (ISA). He suggested the use of ``entity-relationship-entity'' diagrams for modelling the business entities in the organisation. The purpose of the ISA framework is to show how different techniques that focus on one or few related aspects of software development fit together. It is a taxonomy with 30 boxes or cells organised into three columns (representing the data, process and network perspectives) and five rows (representing the different stages of the ISA lifecycle). The ISA framework is a superset of IBM's AD/Cycle[1] (Davidson, 1993; Mercurio et al., 1990). Most of the methodologies that include all three perspectives (structural, behavioural and process) can be viewed in a matrix form. Like both Zachman's and CIM-OSA, James Martin's Information Engineering framework can be viewed as a matrix (Martin, 1990). Martin's matrix has two columns representing data and activities. There are also five rows addressing: Strategy technology impact; Strategy Enterprise Model; Business Area Analysis (BAA); System Design; and System Construction and Cutover (Implementation). The GRAI (Akif, 1991) method[2] also uses a conceptual model that is based on the decomposition of a production system into three subsystems: the physical subsystem (employees, materials, machines etc. behaviour), the information subsystem (structure) and the decision making subsystem (process). 3.4 The use of object orientation. More recently object oriented descriptions are used during the business analysis stage, since these tend to be easily communicating with nonmodelling experts in organisations due to their anthropomorphic nature (Iivari, 1990a; Iivari, 1990b; Fichman and Kemerer, 1993; Ramackers and Verrijn, 1991).

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M.E.R.O.DE (Dedene, 1992) follows the ISA framework proposed by Zachman and puts emphasis on object oriented concepts based on the three perspectives (data, behaviour and process) of IS development. The main theme is that software systems development should start from a simulation of the business using object relations and structures. Once the business model is completed the information functions are developed and maintained around the business model. This aggregate model is then transformed into an implementation model. ALBERT[3] (Dubois et al., 1993; Dubois et al., 1994; Dubois et al., 1992) is a formal requirements specification language that favours the object oriented paradigm. The language is based on an informal framework called ERAE using an appropriate temporal logic with the addition of three new extensions: (1) the introduction of agents; (2) the introduction of actions; and (3) the identification of typical patterns or constraints. OORASS[4] (Hoydalsvik and Sindre, 1993) is an object oriented development methodology originating from the Centre for Industrial Research (SI) in Norway. The methodology is based on a metaphor from organisation theory and is composed of two parts, a role modelling technique and a type specification technique based on classes. 3.5 Comparison with the accounting methodologies In comparison with the accounting methodologies, IS methodologies provide richer organisational models by incorporating the two additional perspectives. However, IS methodologies which try to model all three of these currently face the problem of their integration. The most significant problem comes from the fact that different modelling techniques that were built at different points in time and for different purposes are amalgamated. The stress here is on modelling with an aim to understand the organisational environment. Issues like cost, cycle time reduction, streamlining and continuous improvement are not usually encountered in any IS methodology. This is what Jackson (Jackson and Zaue, 1993) calls the indicative side of systems development also known as domain analysis. Domain models should describe the domain explicitly; they should distinguish domain properties that are independent of the system from those that the system is required to enforce. 4. Organisational theory based methodologies Lately, a few methodologies have started to apply organisational theoretic principles to BPR. These attempts have mainly started due to the identification that accounting and IS methodologies do not provide models of the organisational setting based on organisation theory and as a consequence fail to understand the relation between organisational actors and business processes.

A few of the IS methodologies presented in the previous section have included Need for a some organisational theory concepts. CIM-OSA for example has included an holistic approach organisational view. ALBERT, OLYMPIOS and GRAI have also included organisational concepts in their methodologies. The organisational theory based methodologies add more elements to business modelling and analysis by addressing the need to focus on people, 73 their accountabilities and their roles. In a recent article, Sowa and Zachman (1992) have identified the need for expressing agency and accountabilities in the ISA framework developed by the latter. So they included a ``who'' column that expresses the need to abstract the concept of people out of the real world enterprise. In its recent form the methodology can be identified as organisational theory based. Scherr (1993) has discovered that a number of enterprises have started to apply process management principles to business processes. BPR methodologies based on the manufacturing and software development paradigms have proven to be more and more incomplete. Business processes occurring outside manufacturing situations are almost completely never defined. Scherr incorporates a focus on people and their accountabilities to resolve this problem. Accountability means what a person is held responsible for by others. He also pays particular attention to people's roles within the organisation. Driven by a similar objective the ORDIT project has devised a diagrammatic enterprise modelling language to represent the structure of the organisation (Dobson and McDermid, 1989). The three essential elements of the enterprise model are agency, activities and resources[5]. Yu, 1993 and Yu and Mycopoulos, 1994 have developed a methodology for organisation modelling based on the distinction of three main types of agent dependencies: goal, task and resource. In goal dependency, one agent, the depender, depends on another, the dependee, for the fulfilment of a goal. In task dependency, a depender agent depends on some dependee agent for the performance of a task. In resource dependency, a depender agent presupposes the availability of a resource, which is made available by the dependee agent. For each type of dependency, operators with three kinds of grades of strength are provided. On the depender side: general, committed and critical. These indicate the degree to which the agent will be affected if what the agent depends on fails. On the dependee side, the two grades of strength, general and committed, indicate the effort that the agent will put in to meet the dependency. Each dependency operator relates an agent to an object. RML concepts are utilised that distinguish among three basic types of objects: entities, activities and assertions. Each dependency operator relates an agent to an object. Requirements Modelling Language (RML) (Greenspan, 1984) concepts are utilised that distinguish among three basic types of objects: entities, activities and assertions. Recent research in software process modelling supports a wide range of objectives one of which is support for process improvement. According to Curtis et al. (1992) the three most frequently used constructs in process modelling are:

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(1) agent; (2) role; and (3) artifact (resources, transactions). He also argues that process modelling languages and representations usually present four identified perspectives: functional, behavioural, organisational and informational. STRIM (Ould, 1992) is a method for business process redesign which includes the modelling of organisational processes. STRIM contains a method for analysing processes and two languages with which a process can be described. The process modelling method has two phases: an informal fact gathering phase and a formal descriptive phase. KAOS[6] (Dardenne et al., 1994) is a metamodel for goal directed requirements acquisition that supports most of the concepts presented in organisational theory based methodologies. The KAOS approach is composed of three components: (1) a conceptual model for acquiring and structuring requirements models, with an associated acquisition language; (2) a set of strategies for elaborating models in this framework; and (3) an automated assistant to provide guidance in the acquisition process according to such strategies. Dietz (1994) has developed a class of methods called DEMO (Dynamic Essential Modelling of Organisations) based on the distinction between subjects (agents) and objects (resources), the analysis of human communication, a well defined rigorous system concept and a conception of system dynamics. The organisational theory based methodologies emerged in order to resolve the confusion created from IS methodologies and as a result focus on steps 1, 2 and 3 of the redesign process. Their focus is on people (agents), their accountabilities, their roles, their interactions, their activities and their use of available resources. In IS methodologies, techniques like entity relationship (Chen, 1976), dataflow diagrams, Jackson's data streams (Jackson, 1983) etc. were promoted to business analysis techniques. These actually represent a model of some business situations but lack a sufficient level of abstraction to represent the business independent of IS design and implementation issues. Employees and their roles for example appear as data entities in entity relationship diagrams. People's actions and interactions appear as processes and data flows respectively in dataflow diagrams. Zachman (1987) was one of the first researchers to identify this problem and proposed the attachment of a different meaning to concepts used in IS design techniques. In the ISA framework an entity in the business analysis stage represents a business entity and a relationship a business rule or strategy (Zachman, 1987).

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5. Limitations of existing BPR methodologies and the objective of Need for a this research holistic approach The forementioned methodologies were developed for other purposes and were later relabeled to fall under the BPR umbrella. Most of these re-labeled methodologies appear to have many limitations and there are only a few exemptions where methodologies were developed solely for BPR (Davenport, 75 1993; Harrington, 1991; Hammer, 1993; Morris and Brandon, 1993; Petrozzo and Stepper, 1994; Ould, 1992). However, even these methodologies are non systematic[7] and their emphasis is more on hands on experience and case studies. The limitations of existing methodologies can be summarised as follows: . There is a lack of systematic approach that can lead a process redesigner through a series of steps for the achievement of process redesign. Most of the existing methodologies are based either on real life experience with little attention on the modelling and analysis of the business environment or vice versa. . There is a big division in the BPR literature between methodologies that concentrate either on process improvement or process innovation. The main difference is on the way organisational change is understood. In the first case change is performed in an incremental fashion whereas in the latter in a radical way. However, in many cases a combination of the two approaches has yielded the most impressive results. . There is a need for an integrated holistic and individualistic view of the organisation.Mostmethodologiesconcentrateonorganisationalprocesses without paying any attention to the roles and responsibilities of the employees that carry out the activities that compose these processes. . Most methodologies are oriented towards specialists rather than being oriented to be used by organisational managers and people who want to carry out BPR in their organisation. . Most methodologies use a more black and white approach. For example, in some methodologies cost is the central issue whereas in others generic management and the use of IT is the main objective. . Most methodologies fail to recognise the importance of a diagnostic stage at the beginning of the redesign process. During this stage the BPR scope, mode and objectives are determined. . There is inadequate support for storage and access of gathered information during and after the redesign process, especially for non participants in the redesign exercise. . Business modelling[8] is performed using either inadequate descriptive notations from management accounting or through poor use of graphical notations that were created for software development and do not take into account organisational issues.

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Most of business analysis performed is based on subjective rather than objective analytical methods. There is a lack of integrated tool sets that allow modelling and analysis of the business environment. Most of the existing tools for modelling come from the area of software development and usually concentrate on conceptual business modelling. At present there is a lack of business analysis tools that are integrated with the business modelling ones. There is no formal underpinning to ensure consistency across models. When graphical notations are used in business modelling and business redesign there is no means of verifying the logical consistency of the resulting models. This creates a feeling of insecurity to the business process redesigner that his work might be undermined by the company's cynics. BPR is a new discipline that is in need of case studies that provide justification of the benefits it can provide to the organisation. BPR should be applied in different organisational contexts in different cultures and different organisation sizes. Most of the existing methodologies are applied in western countries where the business environment is more suitable to the BPR philosophy.

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The major objective of this research is to propose a systematic methodology that can help people to successfully carry out BPR in their organisation. The rest of this paper addresses and provides solutions to some of the forementioned limitations. 6. The Agent Relationship Morphism Analysis (ARMA) Methodology The major contribution of this research is a BPR methodology called Agent Relationship Morphism Analysis (ARMA). The methodology takes a holistic view of the organisation by combining accounting BPR principles (efficiency, effectiveness, cost etc.) with organisational theoretic concepts (roles, accountabilities etc.) and some powerful modelling techniques from IS development that have been upgraded to become systematic business modelling tools. An overview of ARMA is presented in Figure 3. Some of the main contributions of ARMA (and as a consequence this research) in the general

field of BPR include: (1) It provides a theoretical basis for BPR, which takes into account issues from accounting, organisational theory and IS development. (2) It highlights the importance of organisational strategy and its link to business processes throughout the redesign exercise. (3) It provides a set of modelling techniques, to support the modelling of business processes that go beyond the limitations of existing modelling techniques.

IS Methodologies

Accounting Methodologies Efficiency, effectiveness, cost etc.

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Three perspectives, object orientation etc.

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Focus on people, roles, accountabilities etc.

Organisation Theory Based Methodologies

Figure 3. The influence of existing methodologies in ARMA

(4) It views the organisation from both an individualistic (employee level) and a holistic (business process level) view and integrates both static and dynamic aspects of the organisation. (5) It provides a set of business analysis techniques that assist in objective analysis of the business models. (6) It provides guidance for successful redesign and setting up a system for continuous improvement. (7) It highlights the importance of BPR education and IT. (8) It has evaluated BPR in different cultures and organisational environments. Table I presents the stages of the methodology, the inputs, outputs as well as the benefits of each stage. The key issues of this research are described in the following sections. 6.1 A diagnostic phase at the beginning of BPR Although the alignment between business process and strategy has been noted in many methodologies only a few of them (Davenport, 1993; Woolfe, 1991) place significant emphasis on the development and communication of a broad strategic vision at the

beginning of the redesign effort. Our research has shown that widespread participation in the development of the vision is very critical to a company's ability to gain the best results out of BPR. During this diagnostic phase top management are obliged to determine the risk they are willing to undertake according to the future performance they want to achieve. The scope, and more importantly, the mode (being incremental or radical or a combination of the two) is determined and the BPR vision is created and communicated to all company employees.

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1. Establishing the vision and objectives, the scope and mode of BPR 1. Internal company data 1. Scope of BPR 1. 2. Management aspirations: interviews with 2. Mode of BPR middle management and top management (incremental, radical) 2. 3. Customer surveys 3. BPR vision and 3. 4. Benchmark data objectives 4.

2. Business modelling 1. Scope of BPR 2. Mode of BPR

3. Business analysis

Table I. The inputs, outputs and the benefits derived from the stages of the ARMA redesign process Input Output Benefit Clarification, determination and transmission of BPR objectives Understanding of corporate culture Minimisation of managements' risk in introducing BPR in the organisation Creation of the redesign team 1. Conceptual ARM, 1 Conceptual models . Understanding of the contractual ALC/OLC and relationships of organisational agents, operation schemata their responsibilities and transactions 2. Formal models of (the what) ARM, ALCs/OLCs . Understanding the roles and activities of organisational agents and the lifecycles of organisational resources Understanding of business process (the how) 2. The formal framework . Resolves ambiguities of the informal model by imposing greater precision . Adds the concept of business rules . Provides the option of verification of the resulting formal models (handling of personal risk) 1. Conceptual ARM, ALC/OLC and operation 1. Would be business 1. Holistic analysis of the organisation schemata models 2. Identification of areas that subsequent 2. Formal models of ARM, ALCs/OLCs 2. Solutions for redesign efforts will concentrate 3. Percent of effort per activity to determine redesign cost of activities and processes (continued)

Stage

Stage 1. Would be business models 2. Solutions for redesign 3. ARM and ALC/OLC models of existing processes 4. Presentations and discussions with employees

Input

Output

Benefit

4. Redesign

1. Finalised would be 1. Employee participation in redesign models 2. Process focus 2. Redesigned 3. Customer focus organisation 4. Process teams and their performance measurements 5. Market metaphor for organisational behaviour 6. Increase in levels of efficiency and effectiveness 7 Flexibility and timely response to market needs 1. Educated employees 2. IT systems and procedures for continuous improvement 1. Employee awareness for the need of continuous improvement 2. Continuous performance assessment 3. Continuous fundamental rethinking 4 Guarantee that the BPR philosophy will continue to flourish in the organisation 5. Proper communication, coordination and control established in the organisation

5. Continuous improvement

1. Finalised would be models 2. Redesigned organisations

Need for a holistic approach

Table I.

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6.2 A contractual view of BPR One of the main benefits that BPR brings to the organisation is the focus on core business processes. Organisations that have tried to focus on core business processes tend in many cases to subcontract non core support and in some cases management processes to smaller and more flexible organisations. In cases of extra capacity of capabilities companies try to outsource some of their extra capabilities and as a result new contractual arrangements are emerging. Focusing on the core processes, therefore, instantly raises the question of subcontracting and modified contractual arrangements in the business environment. For this reason we believe that BPR should be viewed from a contractual perspective. Moreover, we believe that the relationships (including the authority relationships) and processes internal to the organisation should be also viewed from a contractual perspective. This implants a sense of continuous improvement in the organisation since the value of organisational processes can be continuously assessed by their internal clients and their cost can be continuously compared against the cost of subcontracting this process to an outside vendor. 6.3 Relationship between organisational structure and processes Some methodologies try to provide some insight to the relationship between organisational structure and processes. In ARMA this is usually achieved with the use of three perspectives: the structural, the behavioural and process, in the business modelling stage. Structural aspects are described in the structural perspective whereas the dynamic aspects are described in the behaviour and process perspectives. However, all three perspectives identified are not fully addressed in most methodologies. In addition, organisational theory concepts are usually applied to isolated perspectives and the potential of a richer organisational methodology that supports all three perspectives has so far been unexplored. Existing methodologies are in their early stages and regard the issue of the relationship of organisational structure and processes as an area of further research rather than an achievement. In ARMA we have introduced and defined organisational theoretic concepts in all three perspectives in an integrated manner. The connection between structure and processes in business modelling in ARMA is shown in the following Figure 4. 6.4 Link between BPR, systems thinking and object orientation We believe that there are great benefits that can emerge from applying systems thinking ideas in BPR. This has been apparent in some BPR methodologies that model organisational processes using systems ideas. One of the main reasons for adopting systems thinking is the need for modelling the complexity of the organisational environment (Checkland and Scholes, 1990). Several researchers in Object Oriented (OO) analysis and design argue that object orientation is very suitable for business modelling because it takes a

Need for a holistic approach BEHAVIOUR/ PROCESS: Agent/Object Lifecycles

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STRUCTURAL: Agent Relationship Modelling

Figure 4. The three perspectives in ARMA

significantly anthropomorphic point of view (Wirfs-Brock et al., 1990; Taylor, 1992; Helm et al., 1990; Dedene, 1990). OO design methodologies of this type are called ``responsibility driven'' and encourage a view of the world as a system of cooperating and collaborating agents. In this research systems thinking and organisational theoretic concepts have been incorporated in OO modelling techniques to produce more rigid techniques suitable for business modelling. 6.5 Formalised BPR models Most BPR methodologies use diagrammatic notations (like dataflow diagrams, the entity relationship attribute technique etc.) for modelling business processes. These notations are valuable as informal frameworks in which intuitions about the enterprise may be expressed but they lack the semantic content necessary to support reasoning. Other methodologies use automata theoretic notations in which a system is modelled by its trajectories through a state space. However the composition of such models inevitably leads to the phenomenon known as ``state explosion''. Petri nets (Battiston et al., 1989) were designed to overcome this problem better than classical automata theory could. But composition and the combination of behaviour with information structure still pose severe problems (Cohen and Malteno, 1993). In this research we propose the use of formal mathematical notations as a means of introducing the concept of business rules and verifying the logical consistency of the diagrammatic models. 6.6 A different view of redesign Most BPR methodologies view the implementation of redesign as a means of transforming the organisational structure from a hierarchical to a process team based. Some methodologies (Butler-Cox, 1991) argue that for some period of

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time there will be a hybrid situation where process teams will coexist with functional units in a hierarchical form. In ARMA we believe that the main emphasis during business analysis and redesign should be the establishment of processes and structure that support each other. In this way we can create functional units that preserve the organisational cohesion provided by the organisational hierarchies and the flexibility of process thinking. 7. Conclusions In this paper, we presented a methodology called ARMA that goes beyond the limitations of the existing BPR methodologies. The major strength of ARMA in comparison to other BPR methodologies is its holistic and systematic approach to BPR. The holistic BPR approach is the result of incorporating principles from the three categories of BPR methodologies identified in the literature: the management accounting, the IS development and the organisational theoretic. These principles have been used in different stages in ARMA's redesign process and have contributed significantly in the development of tools and techniques that provide systematic support to the user in all stages. ARMA is not directed only towards BPR specialists. Its principles and tools are associated with the theoretical basis required to be understood by anybody who wants to get involved in redesign. Notes 1. IBM have also identified the need for enterprise modelling during the requirements stage of their Application Development (AD) Cycle architecture. The AD/Cycle methodology is based on the traditional lifecycle approach with Business/Enterprise Modelling in the Requirements elicitation stage. 2. French for ``Graphes a Resultats et Activities Interrlies``. 3. Agent-oriented Language for Building and Elicitating Requirements for real-Time systems (ALBERT) is a formal requirements specification language that was developed by the participants of the ESPRIT II project called Icarus. 4. Object Oriented Role Analysis, Synthesis and Structuring is a methodology used by the Norwegian company TASKON. 5. The objective of an ESPRIT project called ORDIT (Organisational Requirements Definition for Information Technology) is to create a methodology which supports a community of stakeholders who wish to consider the use of an IS in an organisational setting. 6. KAOS stands for Knowledge Acquisition in Automated Specification 7. With the exception of [Morris and Brandon, p. 93] and [Ould, p. 93] who have made an attempt to provide systematic methodologies. 8. A survey in the area of business modelling revealed that modellers use whatever methods and tools they do have to their best possible advantage and there is a great need for systematic modelling tools. References Adnum, D. (1993), ``Using performance indicators for effective public sector management'', Management Accounting, January.

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