Business Process Reengineering

By:- Dr. Priyanka Rastogi

 Introduction

• In today’s ever-changing world, the only thing that doesn’t

change is ‘change’ itself. In a world increasingly driven by the
three Cs: Customer, Competition and Change,
• companies are on the lookout for new solutions for their
business problems[4]. Recently, some of the more successful
business corporations in the world seem to have hit upon an
incredible solution: Business Process Reengineering (BPR).
• Some of the recent headlines in the popular press read,
“Wal-Mart reduces restocking time from six weeks
• to thirty-six hours.”” Hewlett Packard’s assembly time for
server computers touches new low- four minutes.”
• The reason behind these success stories: Business Process
Reengineering!
What is 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”.
• BPR advocates that enterprises go back to the
basics and reexamine their very roots. It
doesn’t believe in small improvements. Rather
it aims at total reinvention.
• BPR focuses on processes and not on tasks,
jobs or people.
 What to reengineer? :
• “A business process is a series of steps
designed to produce a product or a service. It
includes all the activities that deliver
particular results for a given
Customer(external or internal)”.
• Talking about the importance of processes just
as companies have organization charts, they
should also have what are called process maps
to give a picture of how work flows through
the company.
 Why Reengineer?
• Historical ‘reality’ for organizations:
– High level of demand: organizations are order takers
– Management (and IT!) focus – efficiency and control
of operations
• Modern ‘reality’ since 1990s:
– Hyper-competiveness
– Globalization
– Very demanding customers
– Management and IT focus: Innovation,
responsiveness/speed, quality and service.
 Ford Motor Company
• Accounts Payable function
• 500 people
• Most work on mistakes between

Purchase
Orders

Receiving
Invoices
Documents
Ford (cont)
Ford (cont)
 BPR Principles
• Organize around outcomes, not tasks.
• Have those who use the output of the process perform the
process.
• Subsume information-processing work into the real work
that produces the information.
• Treat geographically dispersed resources as though they
were centralized.
• Link parallel activities instead of integrating their results.
• Put decision points where the work is performed and build
controls into the process.
• Capture information once and at the source.
Process of BPR
• Activity #1: Prepare for Reengineering:
• “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.
Before attempting reengineering, the question ‘Is BPR
necessary?’ should be asked?
• There should be a significant need for the process to
be reengineered.
• A cross-functional team is established with a game
plan for the process of reengineering.
• Another important factor to be considered is to
understand the expectations of your customers and
where your existing process falls short of meeting
those requirements.
• Having identified the customer driven objectives, the
mission or vision statement is formulated.
 Activity #2: Map and Analyze As-Is Process
• Before the reengineering team can proceed to redesign
the process, they should understand the existing
process.
• The important aspect of BPR (what makes BPR, BPR) is
that the improvement should provide dramatic results.
• A large manufacturer spent six million dollars over a
period of one year in a bid to develop a parts-tracking
system and was all set to go online. Only then did he
realize that he had totally overlooked a small piece of
information – ‘the mode of transmission of information
between the scheduling staff and the shop floor was
through a phone call.’
 Activity #2: Map and Analyze As-Is Process
• The main objective of this phase is to identify
disconnects (anything that prevents the process
from achieving desired results and in particular
information transfer between organizations or
people) and value adding processes.
• This is initiated by first creation and documentation
of Activity and Process models.
• Then, the amount of time that each activity takes
and the cost that each activity requires in terms of
resources is calculated through simulation and
activity based costing(ABC).
 Activity #3: Design To-Be process
• The objective of this phase is to produce one or
more alternatives to the current situation, which
satisfy the strategic goals of the enterprise.
• The first step in this phase is benchmarking.
“Benchmarking is the comparing of both the
performance of the organization’s processes and
the way those processes are conducted with those
relevant peer organizations to obtain ideas for
improvement”
• Having identified the potential improvements we
perform simulation and ABC to analyze factors like
the time and cost involved.
 Activity #3: Design To-Be process
• The several To-Be models that are finally arrived at
are validated. By performing Trade off Analysis the
best possible To-Be scenarios are selected for
implementation.
Activity #4:Implement Reengineered Process:

•The implementation stage is where reengineering

efforts meet the most resistance and hence it is by far
the most difficult one.
•The question that confronts us would be,’ If BPR
promises such breath taking results then why wasn’t
it adopted much earlier?’
 Activity #4:Implement Reengineered Process:
•requirements for the construction of the To-Be
components can be added and the result organized
into a Work Breakdown Structure (WBS).
•The benefit here is that we can now define the causal
and time sequential relationships between the
activities planned.
•Using prototyping and simulation techniques, the
transition plan is validated and it’s pilot versions are
designed and demonstrated.
• Training programs for the workers are initiated and
the plan is executed in full scale.
 Activity #5: Improve Process Continuously:
• A process cannot be reengineered overnight.
• very vital part in the success of every reengineering
effort lies in improving the reengineered process
continuously.
• Two things have to be monitored – the progress of
action and the results.
• The progress of action is measured by seeing how
much more informed the people feel, how much more
commitment the management shows and how well the
change teams are accepted in the broader perspective of
the organization.
•As for monitoring the results, the monitoring should
include such measures as employee attitudes, customer
perceptions, supplier responsiveness etc
 New Life Insurance Policy Application Process at
Mutual Benefits Life Before Reengineering*

Department A
Step 1
Department A
Step 2
....
Issuance
Application Mutual Benefits Life Before Reengineering*

Department E
Issuance
Step 19
Policy

• 30 steps, 5 departments, 19 persons

• Issuance application processing cycle time: 24 hours minimum;
average 22 days
• only 17 minutes in actually processing the application

*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at Mutual Benefit
Life, Harvard Business School case 9-492-015, 1991.
 The New Life Insurance Policy Application Process
Handled by Case Managers

Mainframe

Physician
Underwriter

LAN
Case Manager Server
PC
Workstation

• application processing cycle time: 4 hours

minimum; 2-5 days average
• Application handling capacity double
• Cut 100 field office positions
 Enabling IT to Consider
• Client/server technology
• Groupware and collaboration technologies
• Mobile computing (wireless LAN, pen-based computing, GPS, iPhone)
• Data capturing technology (scanner/barcode reader/RFID)
• Telephony: Integration of computer and telephone systems; VoIP;
Unified communications
• Web services and Service-Oriented Architecture (SOA)
• Imaging technology, work flow management systems, Business
Process Management (BPM)
• Decision support systems, Data warehouse, Business intelligence,
Data mining, Digital dashboard
• ERP, CRM, SCM
• Electronic Data Interchange (EDI), Electronic Commerce, WWW, and
Internet
 IT Enabling Effects
Dimensions & Type Examples IT Enabling Effects

Organization Entity
• Interorganizational Order from a supplier Lower transaction costs
Eliminate intermediaries

• Interfunctional Develop a new product Work across geography

Greater concurrency

• Interpersonal Approve a bank loan Integrate role and task

Objects Manufacture a product

• Physical Increase outcome flexibility
Control process

• Informational Prepare a proposal

Routinize complex decision

Fill a customer order

Activities
• Operational Reduce time and costs
Develop a budget Increase output quality

• Managerial Improve analysis

Increase participation
Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management
Review, Summer 1990, p. 17.
 The Reengineering Diamond
Customers & Competitors
Values and
Suppliers Beliefs

Enlighten Foster

Customers Management &

Business
Processes & & Measurement
Functions Info. Tech. Systems

Entail Demand

Jobs , Skills, &

Organizational
Culture Structures Markets
 Conclusion:

• An intense customer focus, superior process

design and a strong and motivated leadership
are vital ingredients to the recipe for the
success of any business corporation.
Reengineering is the key that every
organization should possess to attain these
prerequisites to success.