2. Objectives
Objectives
At the end of the course, you will be able to:
At the end of the course, you will be able to:
a. Define business process redesign.
a. Define business process redesign.
b. Describe the nine dimensions of BR.
b. Describe the nine dimensions of BR.
c. Discuss the benefits of BPR.
c. Discuss the benefits of BPR.
d. Identify and describe the situations in which BPR becomes
d. Identify and describe the situations in which BPR becomes
necessary.
necessary.
e. Describe the warning signs of trouble that indicate the need
e. Describe the warning signs of trouble that indicate the need
for reengineering.
for reengineering.
f. Identify and describe the critical success factors for BR
f. Identify and describe the critical success factors for BR
projects.
projects.
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3. 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)
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4. This definition contains four key
words:
•
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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5. This definition contains four key
words:
•
•
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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6. BUSINESS REENGINEERING
DIMENSIONS
1. The Physical/Technical
Dimensions
a) Process Structure
b) Technical Structure
c) Organization Structure
2. The Infrastructure
Dimensions
a) Reward Structure
b) Measurement Systems
c) Management Methods
3. The Value Dimensions
a) Organizational Culture
b) Political Power
c) Individual Belief Systems
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7. Dimensions of Business
Reengineering
Physical
Technical Layer
Infrastructure
Layer
Process
Structure
Technology
Structure
Organizational
Structure
Reward
Structure
Measurement
Systems
Management
Methods
Political
Power
Individual
Belief Systems
Organizational
Value Layer
Culture
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8. 1. PHYSICAL/TECHNICAL
DIMENSIONS
• 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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9. 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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10. a) 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
10
11. b) Technology Structure
• Consists of the automated
communication, networking and
computer systems, data,
applications, and related
technologies
– support process structure
• Fast and cheap, eliminate timeconsuming 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 -
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12. c) 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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13. 2. INFRASTRUCTURE
DIMENSIONS
• 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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14. a) 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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15. b) 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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16. c) 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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17. 3. 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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18. a) 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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19. b) 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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20. c) Individual Belief
Systems
• 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
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• Organization executives must demonstrate
leadership
21. WHEN IS THE REENGINEERING
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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22. Situations in which reengineering benefit the
organization:
4. Bring customers into the information channels
5. 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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23. WARNING SIGNS OF TROUBLE
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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24. WARNING SIGNS
1.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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25. WARNING SIGNS
3. 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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26. WARNING SIGNS
5. 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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27. DIAGNOSIS OF PROCESSES OF
SUSPECT PRODUCTS AND
SERVICES
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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28. The necessity for change
CREATING THE BUSINESS CASE
The alternative to change
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29. 1. 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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30. 2. 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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31. Commitments:
•
Once the facts are on
the table:
1. Frame the project
2. Create vision, values and
goals
3. Build detailed process
redesign of the business
operations
4. Plan the implementation
5. Conduct a proof of
concept (if needed)
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32. CRITICAL SUCCESS FACTORS
FOR 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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33. CRITICAL SUCCESS FACTORS FOR BR
PROJECTS
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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34. CRITICAL 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.
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