Business Process

Reengineering
Presentation by:
Eesha Mehta

Business Process Reengineering

Process
a collection of
activities that takes
one or more kinds of
inputs and creates an
output that is of value
to a customer.

Business Process
a group of logically
related tasks using
the firm's resources
to provide customeroriented results to
support organisation's
objectives.

Definition of Process

A process is simply a structured, measured set of

activities designed to produce a specific output for a
particular customers or market.
-- Thomas Davenport

Characteristics:

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

Processes Are Often Cross Functional Areas

Manage the white space on the organization chart!
Customer/
Markets
Needs

CEO

Supplier
M a r k e tin g
& S a le s

P u rc h a s e

P r o d u c tio n

D is tr ib u tio n

A c c o u n tin g

"We cannot improve or measure the performance of a

hierarchical structure. But, we can increase output quality
and customer satisfaction, as well as reduce the cost and
cycle time of a process to improve it."

Value-added
Products/
Services to
Customers

What is Business Process

Reengineering?

An organizational change method used to redesign an organization

to drive improved efficiency, effectiveness, and economy.
Organizational change tools may include:
Activity based costing analysis
Baselining and benchmarking studies
Business case analysis
Functionality assessment
Industrial engineering techniques
Organization analysis
Productivity assessment
Workforce analysis
Others, as needed (e.g., human capital tools)

Business Process Reengineering

Definition

BPR first introduced in 1990 in a Harvard Business

Review article by Michael Hammer:

Hammer/Champy

Reengineering Work: Don't Automate, Obliterate.

Reengineering the Corporation (1993)

Provided this definition:

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.

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.

Key Words

Fundamental

Why do we do what we do?

Ignore what is and concentrate on what should be.
Need to understand why an organization does what it does
question all of the rules and assumptions that exist

Radical

Business reinvention vs. business improvement

Radical redesign means disregarding all existing structures and
procedures, and inventing completely new ways of accomplishing
work. Reengineering is about business reinvention, begins with
no assumptions and takes nothing for granted.

Key Words

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.

Not looking for marginal or incremental improvements

or modification
Goal is dramatic improvements in performance.

Key Words

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.
Focus on the way the organization adds value
through cross-functional business processes
Move away from function view; task based
thinking

GOAL OF REENGINEERING
Reengineering is typically chartered in
response to a breakthrough goal for rapid,
dramatic improvement in process
Continuous improvement
performance.
refines the breakthrough

Breakthrough
Improvement
Continuous improvement activities
peak; time to reengineer process

Competitive Forces Model

Threat of
substitute
products &
services

Threat of new
market
entrants

The firm

Bargaining
power of
suppliers

Intraindustry
competitors

Bargaining
power of
customers

Why BPR Is Necessary

The Virtual Organization: Three Cs Driving Change

Customers take charge.

Mass market v. a market of one

Backward integration
Informed consumers
Demanding
Sophistication
Changing Needs

Competition intensifies.

More and different kinds

Local
Global
Big is not better
Technology changes the nature of competition.

Why BPR Is Necessary

Change becomes constant.

reduced product cycles

reduced time to develop new products
more environment scanning
Technology
Customer Preferences

Companies created to thrive on mass production, stability, and

growth cant be fixed to succeed in [such] a world.

Integrate people, technology, & organizational culture to

Respond to rapidly changing technical & business
environment and customers needs to achieve Big
performance gains

Customer Demands

expect us to know everything

to make the right decisions
to do it right now
to do it with less resources
to make no mistakes
expect to be fully informed

Four Revolutions Affecting

Business Today
New
Technologies

New
Work Force

New
Competitors

New Rules of
Competition

The Cs related to
Organization Re-engineering Projects

The 3Cs of
organization Reengineering:
Customers
Competition
Change

The 4Cs of effective

teams:
Commitment
Cooperation
Communication
Contribution

Some of the BPR Objectives

Improve Efficiency e.g reduce time to market,

provide quicker response to customers
Increase Effectiveness e.g deliver higher
quality
Achieve Cost Saving in the longer run
Provide more Meaningful work for employees
Increase Flexibility and Adaptability to change
Enable new business Growth

Spectrum of Change

Automation

Rationalization of
procedures

Reengineering

Paradigm shift

Spectrum of Change

Automation- refers to computerizing processes

to speed up the existing tasks, improves
efficiency and effectiveness.
Rationalization of Procedures-refers to
streamlining of standard operating procedures,
eliminating obvious bottlenecks, so that
automation makes operating procedures more
efficient,improves efficiency and effectiveness.

Spectrum of Change

Business Process Reengineering- refers to radical

redesign of business processes.
Aims at
eliminating repetitive, paper-intensive, bureaucratic
tasks
reducing costs significantly
improving product/service quality.

Paradigm Shift-refers to a more radical form of change

where the nature of business and the nature of the
organization is questioned, improves strategic standing
of the organization.

RISKS & REWARDS

BPR is Not?

BPR may sometimes be mistaken for the following five

tools:

1. Automation is an automatic, as opposed to human,

operation or control of a process, equipment or a system;
or the techniques and equipment used to achieve this.
Automation is most often applied to computer (or at least
electronic) control of a manufacturing process.
2. Downsizing is the reduction of expenditures in order to
become financial stable. Those expenditures could
include but are not limited to: the total number of
employees at a company, retirements, or spin-off
companies.

3. Outsourcing involves paying another company

to provide the services a company might
otherwise have employed its own staff to
perform. Outsourcing is readily seen in the
software development sector.
4. Continuous improvement emphasizes small
and measurable refinements to an organization's
current processes and systems. Continuous
improvements origins were derived from total
quality management (TQM) and Six Sigma.

Reengineering & Continuous

Improvement--Similarities
Similarities
Basis of analysis
Performance measurement
Organizational change
Behavioral change
Time investment

Reengineering

Continuous Improvement

Process
Rigorous
Significant
Significant
Substantial

Process
Rigorous
Significant
Significant
Substantial

16

Reengineering & Continuous

Improvement--Differences
Differences
Level of change
Starting point
Participation
Typical scope
Risk
Primary enabler
Type of change

Reengineering

Continuous Improvement

Radical
Clean slate
Top-down
Broad, cross-functional
High
Information technology
Cultural and structural

Incremental
Existing process
Bottom-up
Narrow, within functions
Moderate
Statistical control
Cultural

17

Key Steps
SelectTheProcess&AppointProcessTeam
UnderstandTheCurrentProcess
Develop&CommunicateVisionOfImprovedProcess
IdentifyActionPlan
ExecutePlan

1. Select the Process & Appoint

Process Team

Two Crucial Tasks

Select

The Process to be Reengineered

Appoint

the Process Team to Lead the

Reengineering Initiative

Select the Process

Review Business Strategy and Customer

Requirements

Select Core Processes

Understand Customer Needs

Dont Assume Anything

Select the Process

Select Correct Path for Change

Remember Assumptions can Hide Failures

Competition and Choice to Go Elsewhere

Ask - Questionnaires, Meetings, Focus

Groups

Appoint the Process Team

Appoint BPR Champion

Identify Process Owners

Establish Executive Improvement Team

Provide Training to Executive Team

Core Skills Required

Capacity to view the organization as a whole
Ability to focus on end-customers
Ability to challenge fundamental
assumptions
Courage to deliver and venture into
unknown areas
Ability to assume individual and collective
responsibility

Use of Consultants
Used to generate internal capacity
Appropriate when a implementation is
needed quickly
Ensure that adequate consultation is
sought from staff so that the initiative is
organization-led and not consultant-driven
Control should never be handed over to
the consultant

2. Understand the Current

Process

Develop a Process Overview

Clearly define the process
Mission
Scope
Boundaries
Set business and customer measurements
Understand customers expectations from the
process (staff including process team)

2. Understand the Current

Process

Clearly Identify Improvement Opportunities

Quality
Rework
Document the Process
Cost
Time
Value Data
Carefully resolve any inconsistencies
Existing -- New Process
Ideal -- Realistic Process

3.

Develop & Communicate Vision

of Improved Process

Communicate with all employees so that

they are aware of the vision of the future
Always provide information on the
progress of the BPR initiative - good and
bad.
Demonstrate assurance that the BPR
initiative is both necessary and properly
managed

4. Identify Action Plan

Develop an Improvement Plan
Appoint Process Owners
Simplify the Process to Reduce Process
Time
Remove any Bureaucracy that may hinder
implementation
Remove no-value-added activities

4. Identify Action Plan

Standardize Process and Automate Where
Possible
Up-grade Equipment
Plan/schedule the changes
Construct in-house metrics and targets
Introduce and firmly establish a feedback system
Audit, Audit, Audit

5. Execute Plan
Qualify/certify the process
Perform periodic qualification reviews
Define and eliminate process problems
Evaluate the change impact on the business
and on customers
Benchmark the process
Provide advanced team training

Common Problems with BPR

Process Simplification is Common - 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

- If it isnt 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

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.
BPR must be "owned" throughout the organization, not driven
by a group of outside consultants.
Case teams must be comprised of both managers as well as
those who will actually do the work.

How to Avoid BPR Failure

The Information technology group should be an integral

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

Case Example: Kodak

In 1987
Kodaks arch-rival, Fuji came up with a new
35mm single-use camera
Kodak has no competitive offering
Kodaks Traditional Product Development
Process
Slow: would take 70 weeks to produce a
rival to Fujis camera!
Result: the new process, Concurrent
Engineering
Reduce turnaround time to 38 weeks

Case Example: Kodak

Key Redesign Strategy

Apply innovative use of CAD/CAM + integrated
product design database
Allow engineer to design at computer
workstations
Database collect each engineers work and
combines into overall design
Each morning, problems are resolved immediately
Manufacturing can begin tooling design just 10
weeks into product design instead of 28 weeks in
the past

Ford Motor Company

Accounts

Payable function
500 people
Most work on mistakes between

Purchase
Orders
Receiving
Documents

Invoices

Ford (cont)

Ford (cont)

WHY DOES
REENGINEERING FAIL?

Trying to fix a process instead of changing it

Ignoring everything except the process design
Quitting too early
Reengineering from the bottom up
Neglecting peoples values and beliefs
Being willing to settle for minor results
Assigning someone who does not understand
reengineering to lead the effort

FOUR STAGES OF CHANGE

Shock

Anger

Denial

Acceptance

Think about the transition from shock to acceptance and how an

organization may overcome them.
Shock- usually the first reaction once a change has been announced. "
Where in the world did this come from?" "Why?"
Anger- if change is viewed in a negative way, people may react in anger.
They blame other persons and begin to not accept or support the change.
"It wont work and I will not accept this." This can be very damaging to a
process and needs to confronted.
Denial- this person begins to make excuses as to why he or she should not
be held accountable for anything that may go wrong. " Dont blame me if this
doesn't work, it wasn't my idea."
Acceptance- this is the goal an organization needs to get all employees to.
This person has accepted the change and begins to invision his or her role
in the new situation. "How can I help my organization in this process."

HOW TO IMPLEMENT

3 steps to transition of change

1.

Discontinuation of the old way of doing

business

2.

Migration

3.

Starting the new way of doing business

Conclusion

BPR is a multi-discipline approach for strategic

change
Methodology provides missing how to that
must follow the why
BPR must be managed as a project
BPR must be owned by the organization, not
driven by consultants
BPR requires constant communication and
feedback