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Business Process Reengineering

M. Parthiban Dept of Mech Engineering

Learning Objectives
Explain the role of Business Process Reengineering (BPR) within the organization Understand the origins and key characteristics of BPR Understand and be able to implement a BPR Strategy Understand the main challenges in implementing a BPR Strategy

BPR & The Organization

What is BPR?

Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. (Hammer & Champy, 1993)

BUSINESS PROCESS REENGINEERING


An organizational make-over Reengineering is new, and it has to be done. Peter F. Drucker

BUSINESS PROCESS REENGINEERING


The search for, and implementation of, radical change in business processes to achieve breakthrough results Synonyms: business process redesign, business transformation, process innovation, business reinvention, change integration Starting point: clean sheet of paper

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 Start from the future and work backwards

BPR is not easy - serious work


BPR is not free - financial & cultural

BPR often driven by fear and greed


Change is a struggle; BPR is a war

BPR: LESSONS LEARNED

Get the strategy straight first


Lead from the top

Create a sense of urgency


Design from the outside in (customer)

Combine top-down & bottom-up efforts

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BPR: STRATEGY*
Stakeholder Assessment - shareholders, customers, employees Determine which stakeholder expectations should be met to gain competitive advantage Determine how to redesign to meet expectations Map out IT solutions to support

Develop & implement new processes, etc.

* Adapted from A.D. Little Inc.

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SOFTWARE REENGINEERING
RESTRUCTURING - Transforming unstructured (spaghetti code) code into structured code equivalent [10% penetration] REENGINEERING - Gradually clean up old software without affecting user functionality REVERSE ENGINEERING - Uncover or rediscover the design specification from existing code; then apply forward engineering

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BPR is Not?
Automation Downsizing Outsourcing

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BPR Versus Process Simplification

Process Simplification Incremental Change Process-Led Assume Attitudes & Behaviors Management-Led Various Simultaneous Projects

Process Reengineering Radical Transformation Vision-Led Change Attitudes & Behaviors Director-Led Limited Number of Initiatives

(Source Coulson-Thomas, 1992)

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BPR Versus Continuous Improvement

Continuous Improvement Incremental Change People Focus Low Investment Improve Existing Work Unit Driven

Process Reengineering Radical Transformation People & Technology Focus High Investment Rebuild Champion Driven

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What is a Process?
A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action. (Davenport, 1993)

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What is a Business Process?


A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives

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Why Reengineer?
Customers
Demanding Sophistication Changing Needs

Competition
Local Global

Change
Technology Customer Preferences

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Why Organizations Dont Reengineer?


Complacency Political Resistance

New Developments
Fear of Unknown and Failure

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Performance
BPR seeks improvements of
Cost Quality Service Speed

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Origins
Scientific Management. FW Taylor (1856-1915). Frederick Herzberg - Job Enrichment Deming et al - Total Quality Management and Kaizen In Search of Excellence (Peters and Waterman) Value-Added Analysis (Porter).

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Key Characteristics
Systems Philosophy Global Perspective on Business Processes Radical Improvement Integrated Change People Centred Focus on End-Customers Process-Based

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Systems Perspective
Feedback

Inputs

Transformation

Outputs

Environment

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Process Based
Added Value
BPR Initiatives must add-value over and above the existing process

Customer-Led
BPR Initiatives must meet the needs of the customer

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Radical Improvement
Sustainable
Process improvements need to become firmly rooted within the organization

Stepped Approach
Process improvements will not happen over night they need to be gradually introduced Also assists the acceptance by staff of the change

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Integrated Change
Viable Solutions
Process improvements must be viable and practical

Balanced Improvements
Process improvements must be realistic

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People-Centred
Business Understanding Empowerment & Participation Organizational Culture

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Focus on End-Customers
Process improvements must relate to the needs of the organization and be relevant to the endcustomers to which they are designed to serve

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Implementing a BPR Strategy

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Business Process Reengineering (BPR)


An organization fundamentally and radically redesigns its business process to achieve dramatic improvement
From the restructuring of an organization To the redesigning of individual processes

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Key Steps

Select The Process & Appoint Process Team


Understand The Current Process Develop & Communicate Vision Of Improved Process Identify Action Plan Execute Plan

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Select the Process & Appoint Process Team

Two Crucial Tasks


Select The Process to be Reengineered Appoint the Process Team to Lead the Reengineering Initiative

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Select the Process


Review Business Strategy and Customer Requirements Select Core Processes Understand Customer Needs Dont Assume Anything

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Select the Process


Select Correct Path for Change Remember Assumptions can Hide Failures

Competition and Choice to Go Elsewhere


Ask - Questionnaires, Meetings, Focus Groups

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Appoint the Process Team


Appoint BPR Champion Identify Process Owners

Establish Executive Improvement Team


Provide Training to Executive Team

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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 Employ Bridge Builders

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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

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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)

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Understand the Current Process


Clearly Identify Improvement Opportunities
Quality Rework

Document the Process


Cost Time Value Data

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Understand the Current Process

Carefully resolve any inconsistencies


Existing -- New Process Ideal -- Realistic Process

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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

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Develop & Communicate Vision of Improved Process

Promote individual development by indicating options that are available Indicate actions required and those responsible

Tackle any actions that need resolution


Direct communication to reinforce new patterns of desired behavior

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Identify Action Plan


Develop an Improvement Plan

Appoint Process Owners


Simplify the Process to Reduce Process Time Remove any Bureaucracy that may hinder implementation

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Identify Action Plan


Remove no-value-added activities

Standardize Process and Automate Where Possible


Up-grade Equipment Plan/schedule the changes

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Identify Action Plan


Construct in-house metrics and targets Introduce and firmly establish a feedback system

Audit, Audit, Audit

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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

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BPR Example - Loan processing


Desk-to-desk approach
credit reporting

Origination of loan

prequalification

document generation

application processing

credit analysis & underwriting

approval & closing

Servicing of loan
payment processing escrow management customer service collections & foreclosures

Follow-up processing
valuation & risk analysis transfer to secondary mkt

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BPR example - Loan processing


Team approach
Loan origination team Field rep laptop

Regional production center Loan servicing team

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Information Technology & BPR

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Benefits From IT
Assists the Implementation of Business Processes
Enables Product & Service Innovations Improve Operational Efficiency Coordinate Vendors & Customers in the Process Chain

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Computer Aided BPR (CABPR)


Focus
Business Processes Process Redesign Process Implementation

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BPR Process

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BPR Process

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BPR Process

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BPR Comparison

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BPR Case studies

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BPR Examples

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BPR Challenges

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Common Problems
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 aint broke

Quick Fix Approach

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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

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Summary
Reengineering is a fundamental rethinking and redesign of business processes to achieve dramatic improvements BPR has emerged from key management traditions such as scientific management and systems thinking

Rules and symbols play an integral part of all BPR initiatives


Dont assume anything - remember BPR is fundamental rethinking of business processes

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