Business Process Reengineering

1. Business Process
Reengineering

2. Business Process Reengineering
 Process
a collection of
activities that takes
one or more kinds of
inputs and creates an
output that is of value
to a customer.
 Business Process
a group of logically
related tasks using
the firm's resources
to provide customer-
oriented results to
support organisation's
objectives.

3. Definition of Process
 A process is simply a structured, measured set of
activities designed to produce a specific output for a
particular customers or market.
-- Thomas Davenport
 Characteristics:
 A specific sequencing of work activities across time and place
 A beginning and an end
 Clearly defined inputs and outputs
 Customer-focus
 How the work is done
 Process ownership
 Measurable and meaningful performance

4. Processes Are Often Cross Functional Areas
“Manage the white space on the organization chart!”
Marketing
& Sales
Purchase Production Distribution Accounting
CEO
Supplier
Customer/
Markets
Needs
Value-added
Products/
Services to
Customers"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."

5. 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)

6. Business Process Reengineering
Definition
 BPR first introduced in 1990 in a Harvard Business
Review article by Michael Hammer:
 Reengineering Work: Don't Automate, Obliterate.
 Hammer/Champy
 Reengineering the Corporation (1993)
 Provided this definition:
 “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.”

7. Business Process Reengineering
 “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.”

8. Key Words
 Fundamental
 Why do we do what we do?
 Ignore what is and concentrate on what should be.
 Need to understand why an organization does what it does –
question all of the rules and assumptions that exist
 Radical
 Business reinvention vs. business improvement
 Radical redesign means disregarding all existing structures and
procedures, and inventing completely new ways of
accomplishing work. Reengineering is about business
reinvention, begins with no assumptions and takes nothing for
granted.

9. Key Words
 Dramatic
 Reengineering should be brought in “when a need
exits for heavy blasting.”
 Companies in deep trouble.
 Companies that see trouble coming.
 Companies that are in peak condition.
 Not looking for marginal or incremental improvements
or modification
 Goal is dramatic improvements in performance.

10. Key Words
 Business Process
 a collection of activities that takes one or
more kinds of inputs and creates an output
that is of value to a customer.
Focus on the way the organization adds value
– through cross-functional business
processes
Move away from function view; task based
thinking

11. GOAL OF REENGINEERING
Reengineering is typically chartered in
response to a breakthrough goal for rapid,
dramatic improvement in process
performance.
Continuous improvement activities
peak; time to reengineer process
Breakthrough
Improvement
Continuous improvement
refines the breakthrough

12. Why BPR Is Necessary
 Three C’s Driving Change
 Customers take charge.
 Mass market v. a “market of one”
 Backward integration
 Informed consumers
 Demanding
 Changing Needs
 Competition intensifies.
 More and different kinds
 Local
 Global
 Big is not better
 Technology changes the nature of competition.

13. Why BPR Is Necessary
 Change becomes constant.
 reduced product cycles
 reduced time to develop new products
 more environment scanning
 Technology
 Customer Preferences
 “Companies created to thrive on mass production, stability, and
growth can’t be fixed to succeed in [such] a world.”
 Integrate people, technology, & organizational culture to
Respond to rapidly changing technical & business
environment and customer’s needs to achieve Big
performance gains

14. Competitive Forces Model
Threat of new
market
entrants
Bargaining
power of
suppliers
Bargaining
power of
customers
Threat of
substitute
products &
services
The firm
Intra-
industry
competitors

15. Customer Demands
 expect us to know everything
 to make the right decisions
 to do it right now
 to do it with less resources
 to make no mistakes
 expect to be fully informed

16. Four Revolutions Affecting
Business Today
New
Competitors
New Rules of
Competition
New
Technologies
New
Work Force

17. The C’s related to
Organization Re-engineering Projects
The 3C’s of
organization Re-
engineering:
 Customers
 Competition
 Change
The 4C’s of effective
teams:
 Commitment
 Cooperation
 Communication
 Contribution

18. Some of the BPR Objectives
 Improve Efficiency e.g reduce time to market,
provide quicker response to customers
 Increase Effectiveness e.g deliver higher
quality
 Achieve Cost Saving in the longer run
 Provide more Meaningful work for employees
 Increase Flexibility and Adaptability to change
 Enable new business Growth

19. Spectrum of Change
 Automation
 Rationalization of
procedures
 Reengineering
 Paradigm shift

20. Spectrum of Change
 Automation- refers to computerizing processes
to speed up the existing tasks, improves
efficiency and effectiveness.
 Rationalization of Procedures-refers to
streamlining of standard operating procedures,
eliminating obvious bottlenecks, so that
automation makes operating procedures more
efficient,improves efficiency and effectiveness.

21. Spectrum of Change
 Business Process Reengineering- refers to radical
redesign of business processes.
Aims at
 eliminating repetitive, paper-intensive, bureaucratic
tasks
 reducing costs significantly
 improving product/service quality.
 Paradigm Shift-refers to a more radical form of change
where the nature of business and the nature of the
organization is questioned, improves strategic standing
of the organization.

22. RISKS & REWARDS

23. BPR is Not?
 BPR may sometimes be mistaken for the following five
tools:
1. Automation is an automatic, as opposed to human,
operation or control of a process, equipment or a
system; or the techniques and equipment used to
achieve this. Automation is most often applied to
computer (or at least electronic) control of a
manufacturing process.
2. Downsizing is the reduction of expenditures in order to
become financial stable. Those expenditures could
include but are not limited to: the total number of
employees at a company, retirements, or spin-off
companies.

24. 3. Outsourcing involves paying another company
to provide the services a company might
otherwise have employed its own staff to
perform. Outsourcing is readily seen in the
software development sector.
4. Continuous improvement emphasizes small
and measurable refinements to an organization's
current processes and systems. Continuous
improvements’ origins were derived from total
quality management (TQM) and Six Sigma.

25. Reengineering & Continuous
Improvement--Similarities
16
Reengineering Continuous Improvement
Similarities
Basis of analysis Process Process
Performance measurement Rigorous Rigorous
Organizational change Significant Significant
Behavioral change Significant Significant
Time investment Substantial Substantial

26. 17
Reengineering & Continuous
Improvement--Differences
Reengineering Continuous Improvement
Differences
Level of change Radical Incremental
Starting point Clean slate Existing process
Participation Top-down Bottom-up
Typical scope Broad, cross-functional Narrow, within functions
Risk High Moderate
Primary enabler Information technology Statistical control
Type of change Cultural and structural Cultural

27. Key Steps
Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan

28. 1. Select the Process & Appoint
Process Team
 Two Crucial Tasks
Select The Process to be Reengineered
Appoint the Process Team to Lead the
Reengineering Initiative

29. Select the Process
 Review Business Strategy and Customer
Requirements
 Select Core Processes
 Understand Customer Needs
 Don’t Assume Anything

30. Select the Process
 Select Correct Path for Change
 Remember Assumptions can Hide Failures
 Competition and Choice to Go Elsewhere
 Ask - Questionnaires, Meetings, Focus
Groups

31. Appoint the Process Team
 Appoint BPR Champion
 Identify Process Owners
 Establish Executive Improvement Team
 Provide Training to Executive Team

32. 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

33. 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

34. 2. 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)

35. 2. Understand the Current
Process
 Clearly Identify Improvement Opportunities
 Quality
 Rework
 Document the Process
 Cost
 Time
 Value Data
 Carefully resolve any inconsistencies
 Existing -- New Process
 Ideal -- Realistic Process

36. 3. 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

37. 4. Identify Action Plan
 Develop an Improvement Plan
 Appoint Process Owners
 Simplify the Process to Reduce Process
Time
 Remove any Bureaucracy that may hinder
implementation
 Remove no-value-added activities

38. 4. Identify Action Plan
 Standardize Process and Automate Where
Possible
 Up-grade Equipment
 Plan/schedule the changes
 Construct in-house metrics and targets
 Introduce and firmly establish a feedback
system
 Audit, Audit, Audit

39. 5. 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

40. Common Problems with BPR
 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 isn’t broke …”

41. 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

42. How to Avoid BPR Failure
 To avoid failure of the BPR process it is recommended
that:
 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 of outside consultants.
 Case teams must be comprised of both managers as
well as those who will actually do the work.

43. How to Avoid BPR Failure
 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, so that the organization is not in a
state of "limbo".
 BPR must not ignore corporate culture and must
emphasize constant communication and feedback.

44. Case Example: Kodak
 In 1987
Kodak’s arch-rival, Fuji came up with a new
35mm single-use camera
Kodak has no competitive offering
 Kodak’s Traditional Product Development
Process
Slow: would take 70 weeks to produce a
rival to Fuji’s camera!
 Result: the new process, “Concurrent
Engineering”
Reduce turnaround time to 38 weeks

45. Case Example: Kodak
 Key Redesign Strategy
 Apply innovative use of CAD/CAM + integrated
product design database
 Allow engineer to design at computer
workstations
 Database collect each engineer’s work and
combines into overall design
 Each morning, problems are resolved
immediately
 Manufacturing can begin tooling design just 10
weeks into product design instead of 28 weeks in
the past

46. Ford Motor Company
Accounts Payable function
500 people
Most work on mistakes between
Purchase
Orders
Receiving
Documents
Invoices

47. Ford (cont)

48. Ford (cont)

49. WHY DOES
REENGINEERING FAIL?
 Trying to fix a process instead of changing it
 Ignoring everything except the process design
 Quitting too early
 Reengineering from the bottom up
 Neglecting people’s values and beliefs
 Being willing to settle for minor results
 Assigning someone who does not understand
reengineering to lead the effort

50. FOUR STAGES OF CHANGE
 Shock
 Anger
 Denial
 Acceptance

51.  Think about the transition from shock to acceptance and how an
organization may overcome them.
 Shock- usually the first reaction once a change has been announced. "
Where in the world did this come from?" "Why?"
 Anger- if change is viewed in a negative way, people may react in anger.
They blame other persons and begin to not accept or support the change.
"It wont work and I will not accept this." This can be very damaging to a
process and needs to confronted.
 Denial- this person begins to make excuses as to why he or she should not
be held accountable for anything that may go wrong. " Dont blame me if this
doesn't work, it wasn't my idea."
 Acceptance- this is the goal an organization needs to get all employees to.
This person has accepted the change and begins to invision his or her role
in the new situation. "How can I help my organization in this process."

52. HOW TO IMPLEMENT
 3 steps to transition of change
1. Discontinuation of the old way of doing
business
2. Migration
3. Starting the new way of doing business

53. Conclusion
 BPR is a multi-discipline approach for strategic
change
 Methodology provides missing “how to” that
must follow the “why”
 BPR must be managed as a project
 BPR must be owned by the organization, not
driven by consultants
 BPR requires constant communication and
feedback