BPR Overview
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Transcript of BPR Overview
Business Process Re-engineering
Business Processes by Functional Areas
Process Related Performance Variables
Capacity
Consistency
Productivity
Cycle Time
Flexibility
Security
Product Related Performance Variables
Cost
Quality
Responsiveness
Reliability
Conformance
Customer Satisfaction
What is a Business Process?
Set of logically related tasks
Defined business outcome
Internal or external customers
Cross organisational boundaries
More Efficient Business Processes
Empower People
Support Management
Eliminate Waste
Promote Best Practice
Automate Work
Integrate Across Functions
Business Process Reengineering
Ford (US) asked suppliers not to invoice them & paid on receipt of goods, leading to a staff reduction in their purchasing department of 250 to 50
Mutual Benefit Life simplified their life assurance application process, reducing the time to process an application from between 5 to 17 days to between 2 to 5 days. They eliminated 100 office jobs and the remaining staff could handle twice the volume of applications
Business Process Reengineering
Classical ReengineeringRadical redesignCross-functional processesHuge performance gainsIT enabled
General usagefrom
Any change to workTo
Organisational transformation
Why did BPR become popular?
Recession
Global competition
More demanding customers
Rise of white-collar worker
High IT spending
Desire to increase productivity
Hype
How new is BPR?
Components already existedImproving business processes – TQMGreenfield design – organisation designIT enabled – systems analysis
Component LimitationsTQM processes narrow & designed bottom-upGreenfield design too broad in scopeSystems analysis projects constrained to current
structure
BPR overcame limitations by using ‘business process’ as design unit
A Re-engineering Process
Selecting the processes for reengineering
Identify Change enablers
Developing a Business Vision & Process Objectives
Understanding & Improving Existing Processes
Designing the New Processes & the Organisation
Implementing the New Process-Based Organisation
Selecting the processes for reengineering
Enumerate Major Processes
Determine Process Boundaries
Prioritise Processes for Reengineering
Identifying Enablers of Change
Assess IT Enablers
Assess Organisational & Human Resource Enablers
Determine Which Constraints Will Be Accepted
Developing a Business Vision and Process Objectives
Assess Existing Business Strategy for Process Directions
Consult Process Customers to Determine Performance Objectives
Benchmarking for Process Performance Targets & Examples of Innovation
Formulate Process Performance ObjectivesDevelop Specific Process Attributes
Understanding & Improving Existing Processes
Assess Current Process FlowMeasure the Process in Relation to the New
Process Objectives & AttributesIdentify Problems with or Shortcomings of the
ProcessAssess Current Information Technology &
OrganisationIdentify Short-term Improvements in the
Process
Designing the New Processes & the Organisation
Brainstorm Design AlternativesAssess Feasibility, Risks & Benefits of
Design Alternatives & select the Preferred Process Design
Prototype the New Process DesignDevelop Migration StrategyImplement New Organisation Structures &
Systems
Reported Reengineering Successes
Company Process Reported BenefitSiemens Rolm Order Fulfillment Order/Installation cycle improved
60%, Field Inventory cut 60%Cigna Insurance Many Operating costs cut 40%
Application systems reduced 17 to 5CIGNA Many Fuel Processing Rate doubledEastman Chems Maintenance Order cycle time reduced by 80%
Savings > $1m/yearAmerican Express Many Cost reductions > $1.2bXerox Supply chain 30% inventory reductionRank Xerox Billing Cycle time reduction 112 to 3 days
Annual cash flow increase $5mAetna Many Annual savings $350mAT&T Bus Sys Many Product Quality Improvement X 10
75% reduction in key cycle times
BPR Paradoxes
Biggest potential for BPR in large organisations but these are least conducive to innovations
Cross-functional scope resisted by functional managers & local interestsSimultaneous change of many organisational characteristics leads to confusion &
‘identity crisis’Employee participation can produce alienation as they understand impact of changeDownsizing a common objective but corporate reward schemes (incl. pay) are ‘size’
relatedBPR encourages large scope projects but undermined by drive for short-term resultsBPR assumes breaking rules but bureaucratic rules need to be applied to rule-
breakingAutomation is catalyst for new process but often serves to cement old processes
BPR Implementation
Evolutionary Change Tactics Revolutionary Change TacticsEmployee Involvement
Use current mangers & employees Bring in new management teamManagement of Change Process
Use insiders Use outsidersCommunication
Broadly communicated plans Isolate the reengineering teamNeed for BPR
Self improvement Crisis or failureMilestones
Flexible Firm milestonesNeed to change current structure
Highly adaptive to needs of organisation Need to change root structure of organisation
Implementation Approaches
EvolutionaryImplementation
RevolutionaryImplementation
IncrementalImprovement
Quality, notreengineering
Don’t do
RadicalImprovement
PreferredApproach
Use only ifimminent crisis
Possible Futures
Process management
Reengineering Knowledge Work
Participative Reengineering
Rapid Reengineering
Reengineering for Value & Growth