Business Process Reengineering

Manoj Kumar Singh Research Scholar; Department of Management Studies Indian Institute of Technology, Delhi

Business Process Reengineering
• “Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service, and speed.” Hammer & Champy 1993

Key Words
• Fundamental – Why do we do what we do? – Ignore what is and concentrate on what should be. • Radical – Business reinvention vs. business improvement • Dramatic – Reengineering should be brought in “when a need exits for heavy blasting.”

Companies in deep trouble. Companies that see trouble coming. Companies that are in peak condition.

Thomas Davenport Business Process – a collection of activities that takes one or more kinds of inputs and creates an output that is of value to a customer. and clearly identified inputs and outputs: a structure for action. -. an end. with a beginning.Key Words Process: A specific ordering of work activities across time and space. .

But. as well as reduce the cost and cycle time of a process to improve it." Value-added Products/ Services to Customers .Processes Are Often Cross Functional Areas "Manage the white space on the organization chart!" CEO Supplier Marketing & Sales Purchase Production Distribution Accounting Customer/ Markets Needs "We cannot improve or measure the performance of a hierarchical structure. we can increase output quality and customer satisfaction.

What is a Business Process? • A group of logically related tasks that use the firm's resources to provide customeroriented results in support of the organization's objectives .

Characteristics of BPR: A specific sequencing of work activities across time and place A beginning and an end Clearly defined inputs and outputs Customer-focus How the work is done Process ownership Measurable and meaningful performance .

operation or control of a process. Those expenditures could include but are not limited to: the total number of employees at a company. or spin-off companies. or the techniques and equipment used to achieve this.BPR is Not? • BPR may sometimes be mistaken for the following five tools: • 1. as opposed to human. Downsizing is the reduction of expenditures in order to become financial stable. Automation is most often applied to computer (or at least electronic) control of a manufacturing process. • 2. Automation is an automatic. . equipment or a system. retirements.

Outsourcing involves paying another company to provide the services a company might otherwise have employed its own staff to perform. • 4. Continuous improvements’ origins were derived from total quality management (TQM) and Six Sigma. Outsourcing is readily seen in the software development sector. Continuous improvement emphasizes small and measurable refinements to an organization's current processes and systems. .BPR is Not? • 3.

. • Capture information once and at the source. not tasks. • Have those who use the output of the process perform the process. • Link parallel activities instead of integrating their results.BPR Principles • Organize around outcomes. • Treat geographically dispersed resources as though they were centralized. • Put decision points where the work is performed and build controls into the process. • Subsume information-processing work into the real work that produces the information.

Key Characteristics • • • • • • • Systems Philosophy Global Perspective on Business Processes Radical Improvement Integrated Change People Centred Focus on End-Customers Process-Based .

Business Process Reengineering Life Cycle Define corporate visions and business goals Identify business processes to be reengineered Analyze and measure an existing process Visioning Identifying Enterprise-wide engineering Analyzing Redesigning Evaluating Identify enabling IT & generate alternative process redesigns Evaluate and select a process redesign Process-specific engineering Implement the reengineered process Continuous improvement of the process Implementing Improving Manage change and stakeholder interests .

Determine Customer Requirements &Goals for the Process 2. Design a Reengineered Process 5. Implement the Reengineered Process . Analyze and Modify Existing Process 4. 3. Map and Measure the Existing Process 3. 2. 4. Develop technology solutions Methodology #2 1.Methodology #1 1. Activity# Develop vision & strategy Create desired culture Integrate & Improve enterprise 5.

Motivating Reengineering Justifying Reengineering Planning Reengineering Setting up for Reengineering As Is Description & Analysis: To-Be Design and Validation Implementation Methodology# 4 1. 7. Vision 4. 5. 6.Methodology#3 1. 3. Transformation . Preparation 2. 2. Technical & Social design 5. Identification 3. 4.

6. 2.Methodology # 1. 3. 5. 7. 4. 4 Set Direction Baseline and Benchmark Create the Vision Launch Problem Solving Projects Design Improvements Implement Change Embed Continuous Improvement .

Criteria for Selecting Processes Broken Bottleneck Cross-functional or cross-organizational units Core processes that have high impacts Front-line and customer serving .the moment of the truth • Value-adding • New processes and services • Feasible • • • • • .

• • • • . Gather performance metrics outside the industry. • Prioritize selected processes. • Select processes that should be reengineered.Identify BPR opportunities Identify the core/high level processes. Recognize potential change-enablers Gather performance metrics within the industry.

.Phase 4: Redesigning Identify enabling IT & generate alternative process redesigns How can business processes be transformed using IT? Business Reengineering Business-pulled Technology-driven Information Technology How can IT support business processes? Source: Thomas H. “The New Industrial Engineering: Information technology and Business Process Redesign. 11-26. Short. pp. Summer 1990.” Sloan Management Review. Davenport and James E.

T. Summer 1990. 17. .IT Enabling Effects Dimensions & Type Organization Entity • Interorganizational Examples Order from a supplier IT Enabling Effects Lower transaction costs Eliminate intermediaries • • Interfunctional Interpersonal Develop a new product Approve a bank loan Work across geography Greater concurrency Integrate role and task Objects • Physical • Informational Manufacture a product Increase outcome flexibility Control process Routinize complex decision Prepare a proposal Fill a customer order Develop a budget Activities • Operational • Managerial Reduce time and costs Increase output quality Improve analysis Increase participation Adapted from: Davenport. H. J." Sloan Management Review.. p. "The New Industrial Engineering: Information Technology and Business Process Redesign. E. and Short.

Reengineering & Continuous Improvement--Similarities Reengineering Similarities Basis of analysis Performance measurement Organizational change Behavioral change Time investment Process Rigorous Significant Significant Substantial Continuous Improvement Process Rigorous Significant Significant Substantial .

cross-functional High Information technology Cultural and structural Continuous Improvement Incremental Existing process Bottom-up Narrow.Reengineering & Continuous Improvement--Differences Differences Level of change Starting point Participation Typical scope Risk Primary enabler Type of change Reengineering Radical Clean slate Top-down Broad. within functions Moderate Statistical control Cultural .

• Transform every aspect of your organization.Reengineering Is . Extremist's View • Obliterate what you have now and start from scratch.. ..

True BPR is Not • Desire to Change Not Strong Enough • Start Point the Existing Process Not a Blank Slate • Commitment to Existing Processes Too Strong – REMEMBER .Common Problems with BPR • Process Simplification is Common .“If it isn’t broke …” .

Common Problems with BPR Process under review too big or too small Reliance on existing process too strong The Costs of the Change Seem Too Large BPR Isolated Activity not Aligned to the Business Objectives • Allocation of Resources • Poor Timing and Planning • Keeping the Team and Organization on Target • • • • .

• Case teams must be comprised of both managers as well as those who will actually do the work. not driven by a group of outside consultants. • BPR must be "owned" throughout the organization.How to Avoid BPR Failure • To avoid failure of the BPR process it is recommended that: • BPR must be accompanied by strategic planning. which addresses leveraging Information technology as a competitive tool. • Place the customer at the centre of the reengineering effort. . concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.

ideally between three to six months. • BPR projects must have a timetable. • BPR must be sponsored by top executives. who are not about to leave or retire. . • BPR must not ignore corporate culture and must emphasize constant communication and feedback. so that the organization is not in a state of "limbo".How to Avoid BPR Failure • The Information technology group should be an integral part of the reengineering team from the start.

Transforms competitive forces 4.Information Technology 1. Job Satisfaction and skill . Organisational Hierarchies 6. Changes the nature of work 2. Decision making (Centralization or Decentralization) 5.Enablers of BPR A. Integrates the Business Functions 3.

c.IT Capabilities a. d. f. . Storage Retrieval Sharing Transfer Transfer Forwarding b. e.

Organizational Activities and Tasks . Technology 4.B. People Empowerment and participation in decision making Culture and cultural change 3. Structure Self managing team work Cross functional teams Simple task team 2. Organisational 1.

Human Resource Enablers New Skills a. Training Programme b. Skill variety b. Training Assessment Motivation a. Task Identity c. Task significance d.C. Autonomy .

Total Quality Management It can act as foundation to BPR having similar underlying Principals focusing on : Customers Cultural Change Best Practices Integrated approach for doing work.D. .

Thank you .