WEEK

1a
INTRODUCTION TO
BUSINESS PROCESS
ENGINEERING

BCO5501
BUSINESS PROCESS ENGINEERING

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Changes in the Business Environment

• Pre Industrial Age (Pre 1750)

• Industrial Age (1750-198?)

• The Post Industrial Age (1980?- )

How do these periods compare?

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Pre-Industrial Age (Pre 1750)

• Cottage industry

• Every product custom made

• Craftsman designed, built, delivered product
• Costs to produce are high

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Industrial Age (1750 – 198?)

• Task model introduced, defines industrial age.

• Every employee has well defined activities
• Provides decreased costs though economy of scale
• Standardised products
• Limited choice, but reduced cost
• Many Businesses still implement the task (or function) model

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Problems (with Task-based Model):

• Bureaucracy (Chaos)
• Customers needs not met
• Automation of existing bureaucracy (file to file)
• Maintenance is too hard
• Focus on task, not product

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Function Oriented Organizational
Structure
Function 1 Function 2 Function 3 Function 4

Object 1

Objects 1,2,3

Objects 1,2,3

Object 1,2

Note: An Object could be a product for manufacture,

a item to be shipped, or any work item.

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The Post Industrial Age (post 198?)

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Business Changes

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Process Orientation

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Business Process Oriented
Organizational Structure
Process 1

Function 1 Function 2 Function 3 Function 4

Object 1 Object 1 Object 1 Object 1
Process 2

Function 1 Function 3 Function 4

Object 2 Object 2 Object 2
Process 3

Function 1 Function 4
Object 3 Object 3

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Examples of Processes vs Functions

Examples of Processes: Examples of Functions:

•Develop New Product •Research & Development

•Resolve Service Problem •Help Desk
•Fulfill Order •Sales Department

How are these different?

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Business Process Orientation Vs
Function Orientation

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Process vs Task Orientation

• All processes relate to customers and their needs contribute to such

processes

• Task orientation of business leads to a task being done to meet internal

demands (and nothing at all with meeting customer needs.)

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Process Orientation

Advantages:

•Focus on customer & outcomes

•Repeatability of defined processes can be measured
•Efficiency seen in overall context
•Greater individual ownership (and accountability) of output
•Richer & more fulfilling jobs

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Process Orientation

Disadvantages:

•Individual jobs are more demanding

• Entry level employees unavailable
• Multiskilled employees in high demand
•Large investment required to replace functionally oriented systems
•Difficult to implement & scale up.
•Harder to manage diverse personnel who comprise the process
•Constant change can cause lower efficiency, high levels of stress & burnout

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Business Process Reengineering

• Introduced the concept of radically

redesigning business on a process basis.
• Some dramatic successes
• Many dramatic failures
• To move from a task based model to a
process base requires radical change to
business structures
• The scope of change must be limited
• ‘Process Management’ is the new term

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BPR Features

• Forces examination of ‘givens’

• (ie Why check a customers credit rating to open a savings account?)
• Several jobs frequently combined into one
• Operational staff make decisions
• Steps in the process are performed in natural order
• Multiple versions of a process can be combined
• Checks and controls are reduced
• Radical redesign which disregards existing structures
• Used only when dramatic change can succeed

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Role of IT

• “The misuse of technology can block reengineering altogether by enforcing old

ways of thinking and old behaviour patterns.” (Hammer & Champy)
• IT is the essential enabler (Information is integrated)
• IT reduces the need for sequential design
• IT cuts across organisational boundaries
• Difficulties arise with old thought patterns

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Extra Material

• The remaining notes are extra material that is not always covered in the
lecture.

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Conceptual Shifts (1)

• GM gave access to its production schedule to various suppliers and pay when
goods are used.

• Old Rule: - Information occurs at one place at one time

• But with: - Shared databases
• New rule: - Information can appear simultaneously in as many places as
needed

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Conceptual Shifts (2)

• Old Rule: - Business must choose between centralised & decentralised

• But with: - Telecommunications advances
• New rule: - Business can reap the benefits of both

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Conceptual Shifts (3)

• Old Rule: - Managers make decisions

• But with: - DSS tools
• (database access + modelling software)
• New rule: - Decision making is part of everyone’s job (Employee
Empowerment)

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Conceptual Shifts (4)

• Old Rule: - Field personnel need offices to receive, store, transmit and retrieve
information
• But with : - Wireless datacomms & laptop/palm top computers, VOIP
• New rule: - Field personnel can send and receive information wherever they
are

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BPR Lifecycle

• Vision - Someone must recognise that it must be done

• Design

• Implementation

• Continuous process Improvement

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BPR Principles

• Organise work around outcomes

• Provide direct access to customers
• (eg customer -> analyst -> programmer,
• why not customer -> programmer

• Harness technology
• Control through policies, practice and feedback
• Enable independent and simultaneous work
• Give decision making power to workers
• Build in feedback channels: KPI - key performance indicators

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BPR Principles

How to do it
• Strong leadership
• Avoid analysis paralysis
• Reward creative thinking

Leadership
• Passion
• Communication (relentless)
• May be a consultant

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The Process Engineering Team

• Best Personnel
Process orientation Optimism
Able to see Big Picture Persistence
Creativity Tact
Restlessness Team Player
Communication Skills Enthusiasm

• (no one wants to release them)

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Making it Work

• Find what made the old way work

• Question its underpinning

• Identify:
• Problem: Associated with process
• (eg too slow, too expensive)
• Rule: Assumption which causes the problem
• (eg specialists must check each stage then hand off)

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Critical Success Factors

• Business focus

• Methodology and project approach

• Time

• Partnership Participation

• Visible Active Leadership

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Ten Ways to Fail

1. Don’t do it, but say that you are.

2. Don’t focus on processes.
3. Analyse current situation in depth.
4. Proceed without strong executive leadership.
5. Be timid in redesign.
6. Go directly from concept to implementation.
7. Reengineer slowly.
8. Place some aspects of the business off limits.
9. Adopt a conventional implementation style.
10. Ignore employee concerns.

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Resistance

• Is natural. Expect it.

• Doesn’t always show. Find it.
• Has many motivators. Understand it.
• Deal with peoples concerns rather than their arguments. Confront it.
• No one way to deal with it. Manage it.

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Mission driven organisations

(Government, Non-Profit Orgs).

• Carefully identify and understand customers.
• Clearly specify performance measures.
• Be sensitive to ‘higher purpose’
• Watch for resistance (eg safety)

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Further reading

• Andrews, D., & Stalick, S., 1994 Business Reengineering-The Survival Guide.

• Hammer, M., & Stanton, S., 1995. The Reengineering Revolution.

• Hammer, M. & Champy, J., 1993. Reengineering the corporation: a manifesto

for business revolution.

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Organisational Structures

Functional: Breaks Organization into Functional units

Organisation

VP, Engineering VP, Manufacturing VP,IT VP, Staff

Staff Staff Staff Staff

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Organisational Structures

Project: Breaks Organization into Project units

Organisation

Project A Manager Project B Manager Project C Manager

Staff Staff Staff

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Organisational Structures
Matrix Structure
Organisation

Program Manager VP, Enginneering VP, Manf. VP,IT VP, HR

Staff Staff Staff Staff Staff

Product Mangr A 2 Engineers 1 Manf 3.45 IT 0.5 HR

Product Mangr B 5 Engineers 3 Manf 10 IT 1 HR

Product Mngr C 1 Engineer 0 Manf 4 IT 0.1 HR

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