BPR

BPR Introduction

Why does so much IT investment seem not generate corresponding increase in productivity and performance? 1. Faulty measurements 2. Information Technology 3. Organizational process, structure and design

Hammer & Champy radically redesign key business processes Reengineering The Corporation: A Manifesto for Business Revolution Davenport & Short highlight the relationship between IT and BPR relationships: The New Industrial Engineering: Information Technology and Business Process Redesign

Business Process Reengineering

Making processes
effective - producing the desired resulted efficient - minimising the resources used adaptable - to changing customer & business needs.

Focus on & organise around outcomes to Provide direct access external) customers (internal & Harness technology Control through policies, practices and feedback Enable independent and simultaneous work Build in feedback channels

BPR Philosophy Radical, cross functional, dramatic

BPR Focus

on end-to-end business process that extends all to the way to a customer (external or internal) who receives some value from the process on essential processes that deliver outcomes - moving flow - cross-functional in scope within enterprise - cross-enterprises assumptions about performance improvement thru. reengineering 1. clean-sheet rethinking 2. quantum improvements > incremental improvements 3. use IT to re-engineer process in qualitatively different ways 4. maximum value-added in process, minimize everything else 5. measure value thru. surrogate performance measures 6. Change work environment to fit reengineered process

What is a Process?
Definition: A specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs: a structure for action (Davenport, 1993) A collection of activities that takes one or more kinds of input and creates an output that is of value to a customer (Hammer& Champy, 1993)

What is a business process?

. a group of logically related tasks using the firm's resources to provide customer-oriented results to support organisation's objectives. ..an operational or admin. system that transforms inputs into valued outputs - typically a task sequence arranged as a procedure perhaps involving machines, department & people. making sandwiches to order seeing a sales order through from beginning to end stock replenishment procedures aircraft maintenance e.g. in hanger or on tarmac between flights

. includes service support processes e.g. engineering change or payroll process, manufacturing process design.

Kinds of process:

Operational directly achieves operational objectives Control goal to maintain a state relating to another process Generic applicable to any group member (an abstraction or class, essentials of a process that may be shared) Customised adaptation of a generic process to suit specific objectives and using identified resources Enactable defined + executed using process technologies Meta-process concerned with another process(es)

System Thinking

Systemic: of a bodily system as a whole (medically oriented definition) of or concerning a system as a whole

A framework of thinking, analysis and synthesis

the ability to see the world as a complex system these are connected to those and everything else you cant just do this without those being affected

Systems view of business

Environment
Inputs

Entropy Transformation Process

Information Feedback Outputs/outcomes

Adaptation

Leavitt Diamond (adapted)

IT Use
A conceptual framework for evaluating & balancing IT-enabled change

Business Processes

Organizational Form
Change one variable & adjust others e.g. new IT & business processes need to be changed. New skills & organisational form to match the IT?

Requisite People Skills

Leavitt Diamond (cont.)

BPR as well as successful organizational change needs a balance of all these elements in a viable combination IT-driven perspectives emphasize importance of integrated IT architecture Organizational design perspectives focus on finding new organizational form Human resource perspective emphasize empowerment, rewards systems and training BPR perspectives focus primarily on business processes

Evolution of BPR
Degree of enabling IT Knowledge Management Web-enabled e-business Time-based competition

1st-wave BPR TQM

2nd-wave BPR

Richness of business transformation

BPR requirements

Need process owners - accountable for how well the process performs well-defined boundaries (process scope), internal & external interfaces & responsibilities well-documented procedures, work tasks & training measurement & feedback controls close to point of performance customer-related measurements & targets known cycle times formalised change procedures performers to know how good they can be.

BPR - process innovation

Existing, long-in-the-tooth practices (solutions to past problems) may no longer reflect core business concerns nor what the customer may actually want. Rethink & redesign BPs for sharp improvement (radical change) in performance, costs, cycle times & quality. "If you want to get to Heaven, I wouldn't start from here." Start with a clean sheet of paper Imperatives evaluate core business activities consider BPs cross-functionally re-design radically, don't just tinker aim for sharp improvements in performance levels

BPR serves

the aspirations of business strategy makers & implementors. target better operating ability to satisfy customers - radical change may be needed. a BPR programme is a tactic, a programme to achieve desired results. BPR in isolation from strategic plans will not work. Commitment of strategic managers is essential. isolated BPR efforts will lack direction and will get lost.

BPR and Information Processing Systems

Large software systems growing old, Limitations of early construction tools millions of lines of patched code to maintain. New tools (client server databases, graphic interfaces, 4GLs) cut development and maintenance costs more knobs, buttons, access & processing power Slow change in operational/administrative methods because of dependency on complex mainframe applications. New technologies timely to re-design business processes Why generate a new IT system without improving the business process it serves?

Is BPR different from CQI?

Continuous improvement Incremental gradual change Low investment People-practices focus Improvement on existing Work-unit driven BPR Radical change High investment People & technology focus Scrap and rebuild Champion driven

BPR Phases

Organising for improvement

Undestanding the Process

Streamlining

Measurements and Costs

Continuous improvement

BPR Project

An organizational change project with three components : business strategy, business process and information systems BPR must be linked with business strategy and information system

Business Strategy Business Process Information System

Steps in process analysis

1. Target the process area for change Business process Task process 1. Form a team. Select project leader 1. Decide on the objectives of the analysis 1. Define customers & suppliers 1. Analyse (identify/ chart) the process elements & steps in the process flow 1. Describe the existing transformation process 1. Develop improved process design 1. Gain management approval of the improved design 1. Implement new process design

Participants in BPR Project

Process Owners Process Participants BPR Project Sponsors

Core BPR Project Team

BPR facilitators & consultants

IT & e-commerce specialists

Human resources specialist

Identify process elements

raw materials product (output) design job (sequence, simplification, discretion etc) processing steps used management control information equipment or tools people actors (direct/indirect staff, customers, supply relationships (internal & external)

PHASE 1: Organising for improvement

Objective: Build leadership, understanding & commitment Activities Establish Executive Improvement Team (EIT) Appoint BPR champion Provide executive training Develop an improvement model Communicate goals to employees Review business strategy and customer requirements Select the critical processes Appoint process owners Select BPR Team members

PHASE 2: Understanding & redesign the process

Objective: understand all dimensions of current business process Activities Define process mission, scope and boundaries Provide team training Develop a process overview Define customer/business measurements & expectations for the process Identify improvement opportunities errors and re-work high cost poor quality long time delays/backlog Record/chart the process Collect cost, time & value data Perform walkthroughs on new process Resolve the differences (existing/new, ideal/realistic)

Process definition and charting

Analyse (identify and chart) the process elements and steps in the process flow

PHASE 3: Implementation
Objective: secure efficiency, effectiveness and adaptability of the business process on implementation Activities Eliminate bureaucracy and no-value-added activities Simplify the process and reduce process time Standardise and automate Up-grade equipment Error proof the process and document it Select and train the employees Plan/schedule the changes

PHASE 4: Measurements and controls

Objective: develop a process control system for on-going improvement Activities Develop in-house measurements and targets Establish a feedback system Audit the process periodically Establish a poor-quality cost system

PHASE 5: Continuous improvement

Objective: To implement a continuous improvement process Activities Qualify/certificate 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

Process Chart Symbols

Operation (a task or work activity) Inspection (an inspection of the product for
quantity or quality)

Transportation (a movement of material from

one point to another)

Storage (an inventory or storage of materials

awaiting the next operation)

Delay (a delay in the sequence of operations)

Method Study Questions for Process Analysis

What does the customer need?, operations are necessary? Can some operations be eliminated, combined, or simplified?. Who is performing the job? Can the operation be redesigned to use less skill or less labor? Can operations be combined to enrich jobs? . Where is each operation conducted? Can layout be improved? . When is each operation performed? Is there excessive delay or storage? Are some operations creating bottlenecks? .. How is the operation done? Can better methods, procedures, or equipment be used? .

BPR and Bench-marking

The BPR team may benchmark another company's process to determine

process objectives innovative practices tried and tested methods

Benchmarking partners need not be from the same industry. A photocopying firm on re-engineering its order processing system compared itself to mail-order firms as well rival photocopy companies.

BPR Problems

Starting with a clean sheet Preoccupation & commitment to existing business processes Thinking the problem thru. in the light of new methods & technologies Choice of the target process The power and resourcing of the cross functional team BPR in isolation from strategic and ops plans will not work. Top commitment essential. Short-termism of decision makers Isolated efforts will lack direction and will get lost. Done at times of stress and anxiety Keeping the BPR team on target BPR team as action researchers Costs of the change We need to keep the old, existing core systems running

BPR for e-Business

rethinking/ redesigning business processes at both enterprise & supply chain level to take advantage of Internet connectivity & new ways of creating value Redesign front-office processes that interact with customers & back-office processes (across entire supply chains) Changing the way the organisation operates, handling physical & e- business processes and how people work

Redesigning Business Processes

1. 2. 3. 4. 5. 6. 7. Customer-facing Provide value to business process end users Outputs of BPR used by external or internal customers Cross-functional, cross-department, cross-enterprise Completed task handed to another do next task in sequence Altering dynamics of information flows Knowledge that participants need created around the process (data, reports, trends, exceptions, FAQ & ideas) 8. Multiple versions of business processes rather than one-size-fits all 9. Degree of structure of a process highly structured or unstructured & not predetermined.