Business Process Reengineering

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What is a business process ?

A business process is a collection of activities which together produce something of value to a customer
e.g. Customer Order Entry
Customer Orders

Materials

Process Process Customer Customer Order Order

Goods Material Orders

Resources
David OSullivan, NUI Galway

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What is Business Process Reengineering ? The fundamental ... redesign of business processes to achieve dramatic improvements in performance
e.g. costs, quality, speed, efficiency
Business Strategies, BPR Goals

State of the Art Information

Redesign Redesign Process Process

New Resources

David OSullivan, NUI Galway

Modelling and Analysis Tools

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Reengineer and Operate a Business Process

Customer Orders

Materials Business Strategies, BPR Goals

Process Process Customer Customer Order Order

Goods Material Orders

New Resources State of the Art Information Redesign Redesign Process Process

Modelling and Analysis Tools

David OSullivan, NUI Galway

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Incremental vs. Radical Change

Many commentators agree that BPR means radical change
Reengineering strives to break away from old rules of continuous improvement A single step or radical change is required Objectives of 5% and 10% must give way to 50% and 100%

Some argue that some companies need more time to change i.e. incremental change
..this is one extreme of a wide spectrum of opinion regarding the most appropriate BPR strategies for a firm to adopt

In reality most companies want to manage change effectively so BPR methods and tools should allow for both incremental and radical change

David OSullivan, NUI Galway

Page 5

BPR and Information Technology

Reengineering is often lead by changes to the Information Technology infrastructure Information Technology should be viewed as an automating or mechanising force Rather than maximising the performance of individuals or individual business processes, BPR seeks to maximise interdependent activities
e.g. Computers and networks provide integration and coordination capabilities between people and processes e.g. Simplify processes first, then integrate, then automate e.g. PC Computer Networks, Software, Telecommunications

David OSullivan, NUI Galway

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Examples
IBM used BPR and information technology to reduce lead times for requests on one particular process from seven days to four hours. In addition the number of requests increased a hundred fold with no increase in headcount. Ford reduced the number of people involved in vendor payment from 500 to 125 by carrying of business process re-engineering and employing new information technology software and hardware systems Kodak reduced product development times by one half after using BPR on their product development process

David OSullivan, NUI Galway

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Elements of BPR
Methodology
Steps, guidelines, roadmaps

Modelling and Analysis Tools

Activity Modelling Organisation Modelling Object Modelling etc.

State of the Art Information

Information Technology Operational Paradigms Social Organisations

Experience
David OSullivan, NUI Galway

Page 8

Business Environment
Environment Exploding in Scope Demands on Modern Business Problems with Information Technology Radical versus Incremental Change IT as an Enabler for BPR

David OSullivan, NUI Galway

Page 9

Problems with I.T.

Almost 40% ($97b) of US capital went into IT in 1987 but in most cases work has simply been hastened rather than transformed Up to 75% of all IT projects fail to meet project goals Companies tend to use IT as a mechanism of change because they do not understand processes Huge investments in IT over the last decade have not made Western businesses better Emphasis on software development, computer network development has resulted in a lack of systems perspective from managers and designers The pace of development within IT has lead to moving goal posts and managers who are frightened to take decisions
David OSullivan, NUI Galway

Page 10

Incremental vs. Radical Change

Many commentators agree that BPR means radical change
Reengineering strives to break away from old rules of continuous improvement A single step or radical change is required Objectives of 5% and 10% must give way to 50% and 100%

Some argue that some companies need more time to change i.e. incremental change
..this is one extreme of a wide spectrum of opinion regarding the most appropriate BPR strategies for a firm to adopt

In reality most companies want to manage change effectively so BPR methods and tools should allow for both incremental and radical change
David OSullivan, NUI Galway

Page 11

IT as an Enabler for BPR

IT is seen as an essential enabler
IT should be viewed as a force to fundamentally reshape the way we do business BPR and IT are natural partners, yet their relationship has barely been exploited at all. Companies that have used IT to reengineer boundary crossing, customer driven processes have benefited enormously

Some companies need less IT and better processes

BPR is a multidisciplinary approach to implementing fundamental change in the way work is performed across the organisation with the goal of improving performance and shareholder value no mention of IT !

Clearly BPR can involve changes to processes, IT infrastructure, and organisations either on their own or together.
David OSullivan, NUI Galway

Page 12

Process Framework
Capabilities

Design Design
Designs/ Capabilities

Requirements

Designs

Product Mix Goods

Suppliers Suppliers
Orders

Raw Materials

Production/ Production/ Service Service

Customers Customers
Schedules

Plans/ Performance

Capabilities

Operations Operations Planning Planning

Queries

Co-engineering Process Supply Chain Process Design Co-ordination Process Order Fulfilment Process
David OSullivan, NUI Galway

Page 13

Methodologies
A methodology is a systematic or clearly defined way of accomplishing an end Individual experts tend to use a clean sheet approach to accomplishing an end Groups or complex systems development often require a methodology As a rule each design group should agree a methodology before a project is initiated Many methods exist from published references - others are available from consulting firms Ideally a design group develop their own after understanding the key stages and parameters
David OSullivan, NUI Galway

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Context for BPR

Develop Goals and Objectives Find Change Levers and Define Projects Cost and Implement Projects

Pre Pre BPR BPR

Business Strategies Performance Framework Management Culture Operations Philosophy

BPR BPR Post Post BPR BPR

Detailed Specifications Software Engineering Project Engineering Facilities Implementation

David OSullivan, NUI Galway

Page 15

Davenports Methodology
Step 1
Identify processes for innovation: Select top10-20 key processes, identify key processes for analysis.

Step 2
Identify change levers: IT, Structural, Cultural and Human Resource type levers.

Step 3
Develop Process Visions:Develop process objectives and key operational parameters

Step 4
Understand Existing Processes:Model existing processes in terms of performance, organisation, information, and skills

Step 5
Design and Prototype New Processes: Design at three levels - process level, subprocess level and activity level
David OSullivan, NUI Galway

Page 16

Manganellis Methodology
Stage 1
Preparation: Defining business goals and objective; defining reengineering project parameters; training of BPR team.

Stage 2
Identification: Develop customer-oriented models; identify value adding processes; maps organisation, processes, information.

Step 3
Vision: Identify breakthrough opportunities; analyse and structure ideas for change.

Step 4
Technical Solution: Workflow analysis; performance measurement; strategic automation Social Solution: Empowerment; skills modelling; team building; employee reward and incentives.

Step 5
Transformation: Launch pilot and implement full BPR plan
David OSullivan, NUI Galway

Page 17

iTeams Methodology
Understand Rqmts and Define Goals Engage Users and Model Processes Create Actions and Empower Teams Develop Migration Plan Implement Actions and Monitor Results
Requirements

Projects Results
David OSullivan, NUI Galway

Page 18

Understand Rqmts and Define Goals

Requirements

Results

Define Define Goals Goals

Goals

Statements Tool Requirements Tool Strategies Tool Indicators Tool

David OSullivan, NUI Galway

Page 19

Engage Users and Model Processes

Goals

Problems Process Data Benchmarking

Engage Users Engage Users and Model and Model Process Process

Models Ideas

Problems Tool Ideas Tool Models Tool

David OSullivan, NUI Galway

Page 20

Create Actions and Empower Teams

Goals

Ideas Models

Create Actions Create Actions and Empower and Empower Teams Teams

Quick Wins Projects Teams

Projects Tool Gantt Tool

David OSullivan, NUI Galway

Page 21

Develop Migration Plan

Goals

Quick Wins Projects Teams

Develop Develop Migration Plan Migration Plan

Project Portfolio

Portfolio Management Tool Project Scoring Tool

David OSullivan, NUI Galway

Page 22

Implement Actions and Monitor Results

Business Directives

Project Portfolio Process Results

Monitor Monitor Results Results

Results

Portfolio Management Tool Traffic Lights Tool Deployment Tool

David OSullivan, NUI Galway

Page 23

Implementation of Large Projects

(child of Implement Actions and Monitor Results)

Goals Bid Specification Vendor Selection Detailed Specification System Installation System Ramp-up

David OSullivan, NUI Galway

Page 24