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BUSINESS PROCESS BUSINESS PROCESS REENGINEERINGREENGINEERING

CONCEPTSCONCEPTS

BUSINESS PROCESS BUSINESS PROCESS REENGINEERINGREENGINEERING

CONCEPTSCONCEPTS

OSM652OSM652

Office Business ProcessOffice Business Process

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ObjectivesObjectivesObjectivesObjectives

At the end of the course, you will be able to:

a. Define business process redesign.

b. Describe the nine dimensions of BR.

c. Discuss the benefits of BPR.

d. Identify and describe the situations in which BPR becomes necessary.

e. Describe the warning signs of trouble that indicate the need for reengineering.

f. Identify and describe the critical success factors for BR projects.

At the end of the course, you will be able to:

a. Define business process redesign.

b. Describe the nine dimensions of BR.

c. Discuss the benefits of BPR.

d. Identify and describe the situations in which BPR becomes necessary.

e. Describe the warning signs of trouble that indicate the need for reengineering.

f. Identify and describe the critical success factors for BR projects.

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What is Business Process What is Business Process Reengineering or Redesign?Reengineering or Redesign?

What is Business Process What is Business Process Reengineering or Redesign?Reengineering or Redesign?

Reengineering business processes means tossing aside existing

processes and starting over.

Business Process Reengineering is defined as

“the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed”.

(Hammer and Champy, 1993)

Reengineering business processes means tossing aside existing

processes and starting over.

Business Process Reengineering is defined as

“the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed”.

(Hammer and Champy, 1993)

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This definition contains four key This definition contains four key wordswords::

• FUNDAMENTAL

Fundamental implies that everything – every assumption, every reason, every activity – is challenged by asking why it should be continued.

The implication is that nothing should be accepted as sacred. Over time, practices that were once required become obsolete and need to be removed.

• RADICAL

Do not try to improve the existing situation, invent completely new ways of accomplishing work.

• FUNDAMENTAL

Fundamental implies that everything – every assumption, every reason, every activity – is challenged by asking why it should be continued.

The implication is that nothing should be accepted as sacred. Over time, practices that were once required become obsolete and need to be removed.

• RADICAL

Do not try to improve the existing situation, invent completely new ways of accomplishing work.

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This definition contains four key This definition contains four key wordswords::

• DRAMATIC Do not use business process redesign to obtain marginal improvements, aim at order-of-magnitude improvements (ten times). If the marginal gains – 5 to 10 percent – are the goal, then continuous improvement is a more appropriate path than reengineering.

• PROCESS

Focus on the business processes instead of organizational structures.

• DRAMATIC Do not use business process redesign to obtain marginal improvements, aim at order-of-magnitude improvements (ten times). If the marginal gains – 5 to 10 percent – are the goal, then continuous improvement is a more appropriate path than reengineering.

• PROCESS

Focus on the business processes instead of organizational structures.

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BUSINESS REENGINEERING BUSINESS REENGINEERING DIMENSIONSDIMENSIONS

1. The Physical/Technical Dimensionsa) Process Structureb) Technical Structurec) Organization Structure

2. The Infrastructure Dimensionsa) Reward Structureb) Measurement Systems c) Management Methods

3. The Value Dimensionsa) Organizational Cultureb) Political Powerc) Individual Belief Systems

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Dimensions of Business Dimensions of Business ReengineeringReengineering

Process Structure

Technology Structure

Organizational Structure

Reward Structure

Measurement Systems

Management Methods

Organizational Culture

Political Power

Individual Belief Systems

Physical Technical Layer

Infrastructure Layer

Value Layer

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1. PHYSICAL/TECHNICAL 1. PHYSICAL/TECHNICAL DIMENSIONSDIMENSIONS

• Most visible, most concrete

• Process, technology and organization structures– Provides organization’s

operational foundation

• Mistakenly focused because can easily see and do.

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a) Process Structure (cont)a) Process Structure (cont)• Consist of business process, their

outcomes (products/services) and the policies, practices and procedures (considerable control/rigidity or flexible and grouped or decomposed into smaller parts)

• Defines what, when and how work is performed

• Triggered by internal events, timing cycles, or external stimuli

• To produce a “quality” outcome in a timely, predictable manner

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a) Process Structurea) Process Structure

• If processes originate by design, reengineering would be unnecessary– Maintained to meet evolving business needs

• However, most are informal and spontaneous processes– They are not changed as business needs

change– Negative impact – work duplication, whole

process unorganized, undocumented, inconsistently applied and personality dependent

– These processes would need reengineering

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b) Technology Structureb) Technology Structure• Consists of the automated

communication, networking and computer systems, data, applications, and related technologies– support process structure

• Fast and cheap, eliminate time-consuming and error-producing data entry

• Application of technology depends on the competent integration of technology

• People depend on technology to solve business problems– People then blame the technology -

abandoned and not use effectively

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c) Organization Structurec) Organization Structure• Defines who performs,

manages, and is accountable for each business process

• Includes job structure, reporting and work-group relationships, accountabilities, job content, and skill/knowledge requirements

• If process and organization’ structure are out of alignment – gaps in accountability

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2. INFRASTRUCTURE 2. INFRASTRUCTURE DIMENSIONSDIMENSIONS

• Reward, measurement and management

• Support the physical/technical operational dimensions– If physical/technical change, infrastructure

must change

• Use reinforcement, provide new skills, managerial support, adequate incentives and feedback

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a) Reward Structurea) Reward Structure

• Regulate behavior

• Formal, informal, and financial or recognition based

• Often disconnection of the desired behaviors and behaviors that are actually rewarded, changing reward structures, policies and practices

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b) Measurement Systemsb) Measurement Systems• The feedback processes that provide

information on process performance

• However, there are too much of information and incomplete information

• Should uncover the need for change, reduce the randomness and unpredictability of process performance

• Should be made available directly and simultaneously to process performers and managers

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c) Management Methodsc) Management Methods• Consists of the practices and techniques

used to supervise, develop, and support the people who perform the business process

• Strongly affect business process performance (management support, empowerment, employee involvement)

• Most neglected because outside of the project scope

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3. VALUE DIMENSIONS3. VALUE DIMENSIONS• Least visible, most difficult to change

• Organizational culture, political power and individual belief systems

• Leadership and improvement philosophies must emerge– Initial implementation fails if these dimensions

left out

• Hard to reduce the natural resistance and reaction to change

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a) Organizational Culturea) Organizational Culture• Consists of the unspoken,

collective rules and beliefs of the organization

• Organization’s language, symbols, myths and rituals

• The older the culture, the more embedded the beliefs and values and the more difficult change becomes

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b) Political Powerb) Political Power

• Individual can manipulate and shape the actions and behaviors of others

• Originate from formal authority (position held in the organization) or personal power (expertise, knowledge or connections)

• Reengineering threats loss of power

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c) Individual Belief c) Individual Belief SystemsSystems

• Attitudes and mental models that individual apply to themselves, those they work with, and the work itself

• Shape their attitudes toward others and their behavior on the job

• Cultural characteristics – impatience, skepticism, openness, control, rigidity or flexibility

• Organization executives must demonstrate leadership

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WHEN IS THE REENGINEERING WHEN IS THE REENGINEERING THE ANSWER?THE ANSWER?

• Focus on changing customer relationship and repositioning the organization in the marketplace

• Situations in which reengineering benefit the organization:

1. Increase the organization’s ability to customize products and services

2. Increase customer satisfaction with products and services

3. Make it easy and pleasant for customers to do business with your organization

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Situations in which reengineering benefit the Situations in which reengineering benefit the organization:organization:

4. Bring customers into the information channels5. Decrease response time to customers,

eliminate errors and complaints, reduce time cycle

6. Process more customer requests and higher volume from each customer, and deliver “value-driven” prices to customers

7. Improve the quality of work life and individual capabilities

8. Improve sharing and utilization of organization knowledge

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WARNING SIGNS OF TROUBLE WARNING SIGNS OF TROUBLE FOR REENGINEERING.FOR REENGINEERING.

1. The explosion of chaos and bureaucracy

2. Thinking of customers

3. Automation of existing bureaucracy

4. Bottlenecks and disconnects in critical cross-functional processes

5. Elusiveness of accountability

6. Chaos of downsizing

7. The turmoil of integration and merger

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WARNING SIGNSWARNING SIGNS1.The explosion of chaos and

bureaucracy work processes were not designed – they

evolved out of the chaos of doing business informal work patterns break under stress develop a process and rule set to fix mistake procedures habitualized new untrained employees and veterans make

mistakes unknowingly

2.Thinking of customers based on assumptions that they know what is

best for customers, inflexible, customer frustrated, only the “rules” count

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WARNING SIGNSWARNING SIGNS3. Automation of existing bureaucracy Computerization reinforced bureaucracy rather than

breaking through it automation of existing manual procedures inexperience to computers more paper printouts

4. Bottlenecks and disconnects in critical cross-organizational work process

no relationship to other units, must time spent, duplication of work, systems in each department do not correspond with the

other units

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WARNING SIGNSWARNING SIGNS5. Elusiveness of accountability Most organizations are structured by function (eg. Sales,

manufacturing, etc) but essential business processes (eg. customer service and support) cut across the functions. This makes it difficult

no accountability lost of responsiveness and timeliness incomplete, inaccurate, late

6. Chaos of downsizing It leaves survivors demoralized the work environment inadequately staffed, and people

with inadequate skills performing the work tasks can no longer be processed within their current

configuration

7. The turmoil of integration and merger work processes that often conflict and duplicate

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DIAGNOSIS OF PROCESSES OF DIAGNOSIS OF PROCESSES OF SUSPECT PRODUCTS AND SUSPECT PRODUCTS AND

SERVICESSERVICES

Possible findings

1.0 Lack of a “big picture” concept and poor communication.

2.0 Inattention to detail.

3.0 Designer arrogance and customer exclusion.

4.0 Focus on correction, not error prevention.

5.0 Measurement problems.

6.0 Focus only on external customers.

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CREATING THE BUSINESS CASECREATING THE BUSINESS CASE

The alternative to changeThe alternative to change

The necessity for changeThe necessity for change

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1. The Necessary for Change1. The Necessary for Change

• Translate “what everyone already knows” into facts and numbers (quantitative data)

– revenues, customer complaints, direct and indirect processing costs, rates of absenteeism, volume of back orders, costs to correct errors and delays in deliveries.

– evaluate strategic industry trends, the economy, customer preferences and buying patterns and other market research.

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2. Alternative to Change2. Alternative to Change

• If not change, what will happen

– show change effect using hard and soft data of the future, if the organization doesn’t change.

– use current data to project today’s bottom line into tomorrow

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Commitments:Commitments:• Once the facts are on the

table:

1. Frame the project2. Create vision, values and

goals3. Build detailed process

redesign of the business operations

4. Plan the implementation5. Conduct a proof of concept

(if needed)

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CRITICAL SUCCESS FACTORS CRITICAL SUCCESS FACTORS FOR BR PROJECTSFOR BR PROJECTS..

1. business focus – a focus on all dimensions• Success depends on integrating all three – process,

technology and organization• plus supporting that integration with new infrastructure and

values

2. A methodology and project approach• requires discipline and structure• methodology must be systematic and fact focused• must articulate how to secure funding, manage power

struggles, and sell the new ideas

3. Time• BR takes time. Executives must be able to stick with the

program

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CRITICAL SUCCESS FACTORS FOR BR CRITICAL SUCCESS FACTORS FOR BR PROJECTSPROJECTS

4. Partnership participation• BR is accomplished only as a result of efforts by

people from all over the organization• Requires flexible and trained teams

5. Visible, active leadership• This is the most important of all the critical

success factors• Requires long-term commitment to BR – in terms

of dollars, people and executive visibility

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CRITICAL SUCCESS FACTORSCRITICAL SUCCESS FACTORS

• BR begins the process of transforming a dysfunctional organization into a learning, productive, quality-focused, customer driven.

• BR must be customer driven.

• Quality is defined in terms of added value, cost sensitivity, responsiveness, and functionality.

• BR must enable people to handle more change successfully.