Presentation_BPR_H Altun_E Çınar

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CE 58H - INNOVATION MANAGEMENT IN CONSTRUCTION

Hasan ALTUN - Emrah INAR

Business Process ReengineeringBusiness Process Redesign

Hasan Altun

Emrah nar

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Outline

1 Overview: What is, Why, and When BPR?

2 Characteristics of BPR

3 Implementation of BPR

4 Benefits/Barriers/Challenges

5 Case Study

GEODESY, ARCHITECTURE & CONSTRUCTION 2011 (GAC-2011), 24-26 NOVEMBER 2011, LVIV, UKRAINE Hasan Altun

6 Summary


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OverviewCharacteristics

of BPR

Implementation

of BPRCase Study Summary

Benefits Barriers

Challenges

What is BPR?

Process is 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)

Business Process is a group of logically related tasks that use the firm'sresources to provide customer-oriented results in support of the

organization's objectives

Business Process Reengineering (BPR) first introduced in 1990 in a Harvard

Business Review article by Michael Hammer:

Reengineering Work: Dont Automate, Obliterate.

Hammer/Champy

Reengineering the Corporation (1993)

CE 58H - INNOVATION MANAGEMENT IN CONSTRUCTIONHasan Altun

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What is BPR?

Business Process Reengineering is the fundamental rethinking and radical

redesign of business processes to achieve dramatic improvements in critical,

contemporary measures of performance, such as cost, quality, service and

speed. (Hammer & Champy, 1993)


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Processes Are Often Cross Functional Areas


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Marketing

& Sales

Purc ha se Producti on D istributi on Accounti ng

CEO

Supplier

Customer/

Markets

Needs

"We cannot improve or measure the performance of a hierarchical

structure. But, we can increase output quality and customer

satisfaction, as well as reduce the cost and cycle time of a process to

improve it."

Value-added

Products/

Services toCustomers


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What is BPR?


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Spectrum of Change

Automation

Rationalization of procedures

Reengineering Paradigm shift

BPR is NOT

Automation

Downsizing Outsourcing

TQM

ISO9000

Change Management


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What is BPR?


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Objectives of BPR


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Customer Focus

Speed

Compression

Flexibility

Quality

Innovation

Productivity


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Challenges

Alternatives to BPR


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Benefits Barriers

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Alternatives to BPR


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Why companies use BPR?


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Customers

Demanding

Sophistication

Changing Needs

Competition

Local

Global

Change

Technology

Customer Preferences

Why companies do NOT use BPR?

Complacency

Employees Resistance

Fear of Unknown and Failure


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Systems Philosophy

Input > Processing > Output

Process-Based

BPR Initiatives must add-value over and above the existing

process

BPR Initiatives must meet the needs of the customer

Radical Improvement

Process improvements need to become firmly rooted within

the organization

Integrated Change

Process improvements must be viable and practical

People Centred

Empowerment & Participation

Focus on End-Customers

Process improvements must relate to the needs of the

organization and be relevant to the end-customers to which

they are designed to serve


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The 3Rs of Reengineering


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Redesign (Readiness for change)

Retool (Transitioning to the change)

Re-orchestrate (Institutionalizing the change)


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Methodology of a BPR implementation


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In order to implement BPR to an enterprise the followings key actions need

to take place:

Selection of the strategic (added-value) processes for redesign.

Simplify new processes - minimize steps - optimize efficiency -.(modeling).

Organize a team of employees for each process and assign a role forprocess

coordinator.

Organize the workflow - document transfer and control.

Assign responsibilities and roles for each process.

Automate processes using IT(Intranets, Extranets, Workflow Management) Train the process team to efficiently manage and operate the new process

Introduce the redesigned process into the business organizational structure


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Methodology of a BPR implementation


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All methodologies could be divided in general 'model' stages:

The Envision stage: the company reviews the existing strategy and business processes

and

based on that review business processes for improvement are targeted and IT

opportunities are identified. The Initiation stage: project teams are assigned, performance goals , project planning and

employee notification are set.

The Diagnosis stage: documentation of processes and sub-processes takes place in

terms

of process attributes (activities, resources, communication, roles, IT and costs).

The Redesign stage: new process design is developed by devising process design alternatives and through brainstorming and creativity techniques.

The Reconstruction stage: management technique changes occur to ensure smooth

migration to the new process responsibilities and human resource roles.

The Evaluation stage: the new process is monitored to determine if goals are met and

examine total quality programs.


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Characteristics of Service providers


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Several surveys and benchmarking findings reveal the essential role of

consultants in the BPR process

This is due to the fact that consultants have the following attributes:

They are objective and immune to internal politics

They have followed the process before. They bring information and best practices from other companies.

They are good communication paths between front line workers and

customers, and

the leaders of the company or organization.


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Application of a BPR


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The technique was applied first to multinational cooperations, such as IBM, T&T,

SONY, GENERAL ELECTRIC, WALL MART, HEWLLET, PACKARD, DEC, KRAFT

FOODS having as a result major downsizing in their organizational structures.

Most of the times re-engineering is applied as a "must" when innovative IT

tools are introduced to SMEs, tools such as; SAP, BAAN and various ERP

systems.

that IT does not only support management, IT changes the organizational

structure


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Types of firms / organizations that BPR can be applied


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Business Process Reengineering could be applied to companies that confront

problems

such as the following:

High operational costs

Low quality offered to customers High level of ''bottleneck" processes at pick seasons

Poor performance of middle level managers

Inappropriate distribution of resources and jobs in order to achieve maximum

performance,


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Duration and implementation of BPR


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The BPR technique, in general, is not a time consuming process. The duration

of each BPR project varies from 6 -to 10 months.

The cost of a BPR for projects applied to SMEs for selective processes varies

depending on the complexity of the business environment and the number ofprocesses for reengineering


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Implementation Procedure Of BPR


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STEP ZERO - preparation and coordination of the project.

Objectives:

To establish a strong management support

To explain to the members of the BPR implementation team theimplementation

details of the project and their role in the successful outcome in the BPR effort.

Actions taken:

Explain to the top-level management the necessity to commit to the BPRproject.

Allocate the most capable employees to the BPR implementation team and

assign

roles for each one of them.


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STEP 1 - Business diagnosis & measurements.

Objectives:

To diagnose & identify problematic areas in the current processes

To measure the performance characteristics of the current processes based on

measurable factors such as average cycle time, delays, number of mistakes or

number of customer complaints.

Actions taken:

Diagram each process using a process management tool such as OPTIMA,

ADONIS or BONAPART Record physical on the site measurements for each step of a process related to

time, resources spent or efficiency

Input all measurements in the process management tool for further evaluation

and analysis.

Identify added value processes that have a major impact on customer service.


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STEP 2 - Selection of processes for change and modeling.

Objectives:

To identify the strategic processes that are feasible to change

To redesign and model the selected processes

Actions taken Set the characteristics of the processes that are more important to the

organizational goals

Based on the characteristics identify the processes that will change based on

the added value they provide and their feasibility for change. (see annex A-3).

Redesign processes based on the characteristics that serve the

organizational goals

Simulate the processes in running environment using the process

management tool

Model the new process using the diagramming tool of the process

management tool


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STEP 3 - Technical design of the solution.

Objectives:

To automate modeled business processes (step 2) using networks and workflow

tools

To redesign and model the selected processes

Actions taken:

Establish network connections between process team members.

Prepare intranet applications to exchange forms and documents between team

members Prepare workflow application that will implement each step in the redesigned

process automatically.


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STEP 4 - Personnel adjustment & training.

Objectives:

To train personnel in the new ways of working using IT in the redesigned

processes. To redesign and model the selected processes

Actions taken:

Adjust each position according to skills needed in the new process.

Provide training in the operation of new processes, so employees will feelcomfortable in the changing job environment


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STEP 5 - Management of change & employee empowerment.

Objectives:

To establish a positive attitude for the change between employees

To minimize the resistance to change between employees by empowering theirposition based on performance appraisal and bonus systems.

Actions taken:

Establish executive management determination for change and determinate any

attempts of resistance to change.

Facilitate the change process outlining the positive effects of change


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STEP 6 - Introduction of new processes into business operations.

Objectives:

To set the time and date of operating under the new processes, emphasizing the

factthat working under the old processes is not an acceptable practice

Actions taken:

Prepare and test all background resources (IT, documents, equipment)

Set time and date for operating under the new processes.

Do not allow any non-conformities in the operations of new processes


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STEP 7 - Continuous improvement.

Objectives:

To capitalize from the BPR project and develop internal experts for other BPR

projects

Actions taken:

Periodically evaluate the performance of business processes

Plan the time and the resources for the next reengineering project.


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Tools for BPR


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Simulation (Simulate organizational activities and scenarios)

Flow diagrams (Modeling of the flows of things through the organization)

Work analysis (Analysis of the existing process and proposed solutions)

Application development (Create application to support/institutionalize the

change) Workflow software (System controls into the hands of end-user help

automate business processes and provide a quality interface between

business systems)


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Common Benefits of BPR


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Enterprise integration

Departments are consolidated

Several jobs are combined into one job

Worker empowerment

There is both horizontal and vertical reorganizationThere are fewer rules and less coordination is required

Number of steps in a process are reduced

This is simplification

Inspections, checks and controls are reduced or eliminated

The steps are performed in a more natural order


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Common Benefits of BPR


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Work is performed where it makes the most sense

Wal-Mart moves the replenishment function to its suppliers

Hybrid centralized/decentralized operations are prevalent

IT enables decisions to operate autonomously

Reorganization of the company's structure (downsizing) and employeeempowerment.

Jobs and processes become flexible so as to be executed according to the

needs of each case, company's and customer's need's (hybrid

centralized/decentralized operations)

reductions of costs in the company,

better quality in the products and services provided to the customers.


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Challenges

Common Problems


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Commitment to Existing Processes Too Strong

Desire to Change Not Strong Enough

Process under review too big or too small

Reliance on existing process too strong

The Costs of the Change Seem Too Large Allocation of Resources

Poor Timing and Planning

Keeping the Team and Organization on Target


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How to Avoid BPR Failure


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BPR must be accompanied by strategic planning, which addresses leveraging

Information technology as a competitive tool.

Place the customer at the centre of the reengineering effort, concentrate on

reengineering fragmented processes that lead to delays or other negative

impacts on customer service.

BPR must be "owned" throughout the organization, not driven by a group ofoutside consultants.

Case teams must be comprised of both managers as well as those who will

actually do the work.

The Information technology group should be an integral part of the reengineering

team from the start.

BPR must be sponsored by top executives, who are not about to leave or retire.

BPR projects must have a timetable, ideally between three to six months

BPR must not ignore corporate culture and must emphasize constant

communication and feedback.


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Ford Motor Company


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The Existing System

Accounts Payable functionAccounts Payable function

500 people500 people

Most work on mistakes betweenMost work on mistakes between

When Fords purchasing department wrote a purchasing order, it sent a copy to

Accounts Payable. Meanwhile, the vendor sent an invoice to Accountants Payable. It

was up to accounts payable, then, to match the purchase order against the invoice. If

they matched, the department issued payment.

PurchaseOrders

Receiving

Documents Invoices

System Drawbacks

The department spent most of its time on mismatches, instances where the purchase

order, receiving document, and invoice disagreed.

In these cases, an accounts payable clerk would investigate the discrepancy, hold up

payment, generate document, and all in gum up the works.


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Ford Motor Company


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Ford Motor Company


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Ford Motor Company


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Ford Reengineered the Process > Now its Fast and Efficient

The new process cuts head count in accounts payable by 75%, eliminatesinvoices and improves accuracy. Matching is computerized.

Ford discovered that reengineering only the accounts payable department was

futile.

The Suggested Improvement

Ford instituted Ford instituted invoicelessinvoiceless processingprocessing

WWhen the purchasing department initiates an order, it enters the information intohen the purchasing department initiates an order, it enters the information into

an onan on--line database.line database.

The matching is done automatically, and the computer prepares the check, whichThe matching is done automatically, and the computer prepares the check, which

accounts payable sends to the vendor.accounts payable sends to the vendor.


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Reengineering is a fundamental rethinking and redesign ofbusiness processes to achieve dramatic improvements

BPR has emerged from key management traditions suchas scientific management and systems thinking

Rules play an integral part of all BPR initiatives

Dont assume anything - remember BPR is fundamentalrethinking of business processes


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2004-09-08 - SLIDE 39GEODESY, ARCHITECTURE & CONSTRUCTION 2011 (GAC-2011), 24-26 NOVEMBER 2011, LVIV, UKRAINE16 / 16 Hasan Altun


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2004-09-08 - SLIDE 40CE 58H - INNOVATION MANAGEMENT IN CONSTRUCTION

Hasan ALTUN - Emrah INAR

Business Process Reengineering

Business Process Redesign

Hasan Altun

E h

1 / 4113 12 2011

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