Introduction to BPR

Prepared By: Tejal Shah

What is Business Process
Reengineering
 According to Hammer and Champy (1993) “Reengineering is the
fundamental rethinking & radical redesign of business process to
achieve dramatic improvements in critical , contemporary
measures of performance, such as cost , quality, service and speed”
 Basic questions – why do we do it?
 Why is it done this way?
 Radical redesigning involves tossing out existing procedures and
reinventing the process.
 Example: IBM Credit Corporation cut the process of financing IBM
computers, software and services from seven days to four hours by rethinking
the process.
Why Reengineering
 It is focused on break through improvement to dramatically
improve the quality and speed of work and to reduce its cost
by fundamentally changing the process by which work gets
done
 Some of the symptoms that signals that it is time to start
reengineering are:
 It takes too long for an organization to move its products from
conception to the market place as compared to its competitor
 The budgeting process may be too complex
 The services provided by the organization are not compatible
with its customers’ needs
History of BPR
 History of BPR The business world has been evolving
 in the ‘60s industry concentrated on how to produce more
(quantity)
 in the ‘70s how to produce it cheaper (cost)
 in the ‘80s how to produce it better (quality)
 in the ‘90s how to produce it quicker (lead time)
 in the 21st century how to offer more (service)
History of BPR
History of BPR

History of BPR Most agree that Michael Hammer laid the
foundation to the reengineering approach… …
 But many factors influenced the birth and hype around BPR
 The origins can be traced back to a number of successful projects
undertaken by management consulting firms like McKinsey in the
80’s
 TQM had brought the notion of process improvement onto the
management agenda .
 The recession and globalization in late 1980’s and early 1990’s
stimulated companies to seek new ways to improve business
performance.
 Programs often aimed at increasing flexibility and responsiveness
Middle management under particular pressure
Definition to BPR
Michael Hammer, a former MIT professor in computer science
published an article in the Harvard Business Review, emphasizing
the need for fundamental organizational change and for the first
time using the term Business Process Reengineering Business
Process Reengineering (BPR)
The analysis and design of workflow and processes within and
between organizations.” Davenport and Short
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 and Champy
The use of information technology to radically redesign the business
processes in order to achieve dramatic improvements in their
performance.” Hammer
Introduction to Reengineering
 Key Words
 Dramatic Improvement : Quantum leap in performance,
achieving breakthroughs.
 Radical: Means going to the roots. Starting with a clean slate
approach and reinventing.
 Process : A group of related tasks that together create value
for a customer. Ex: Order Fulfilment
 Redesign : How work is done? – A well designed process.
An example of BPR
 A typical problem with processes in vertical organizational
structure is that customers must speak with various staff
members for different inquiries. For example, if a bank
customer enters into the bank determined to apply for a
loan, apply for an ATM card and open a savings account, most
probably must visit three different desks in order to be
serviced, as illustrated in figure 2.
 When BPR is applied to an organization
An example of BPR
 The implementation of "One Stop Shopping" as a major
customer service innovation, requires the close coordination
with a team of staff assigned to a process powered by IT for
exchanging information and documents in order to service
the customer's request. For instance a customer applying for
a loan "triggers" a team of staff assigned to service a loan
application. The customer communicates with only one
person, called "case manager", for all three inquiries, shown
in figure 3.
Benefits of BPR
 Increase Effectiveness.
 Meaningful job for employees.
 Improvement in organizational approach.
 Growth of business
BPR Guiding Principles
General Principles or rules of
reengineering
 Externally, focusing on end customers and the generation of
greater value for customers
 Internally, focusing on harnessing more of the potential of people
and applying it to those activities which identify and deliver value
to customers
 Encouraging learning and development by building creative
working environments.
 Thinking and executing as much activity as possible horizontally,
concentrating on flows and process through organization
 Removing non value added activities , undertake parallel activities,
and speed up response and development time
 Concentrating on outputs rather than inputs, and link
performance measures and rewards to customer related outputs
General Principles or rules of
reengineering
 Giving priority to the delivery of value rather than the
maintenance of management control
 Networking related people and activities.
 Moving discretion and authority closer to the customer
 Encouraging involvement and participation
 Ensuring that people are motivated, equipped and empowered to
do what is expecting from them
 Whenever possible, assuming full responsibility for managing and
controlling themselves
 Avoid over sophistication by not replacing creative thinking to the
software.
 Building learning, renewal, and short feedback loops into business
process
Key Targets of BPR
 Customer friendliness: One of the main goals of introducing
BPR is to get a competitive edge, and that can only be gained by
providing the customer more than what the others in the market
asking for.
 Effectiveness: How effective is the product or service that the
business or manufacturing company providing the customer? If
whatever product or service the business might be providing for
the customer is successful, then the customers would
automatically want to buy that service again.
 Efficiency: How efficient is the company that is manufacturing
the product in minimizing costs before introducing it to the
market? This is one of the questions that are believed to be very
important