07. Business Process Reengineering

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Business ProcessReengineering


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David OSullivan, NUI Galway

What is Business Process Reengineering ?

The fundamental ... redesign ofbusiness processes to achieve dramaticimprovements in performance

e.g. costs, quality, speed, efficiency

RedesignProc ess

RedesignProc ess

Business Strateg ies,BPR Goals

Mod elling and Analy sis Tools

New Resource sState o f the ArtInformation


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Reengineer and Operate a Business Process

Proc essCustomer

Order

Proc ess

CustomerOrder

CustomerOrders

GoodsMaterials

MaterialOrders

RedesignProcess

RedesignProc ess

Business Strateg ies,BPR Goals

Mod elling and Analy sis Tools

New Resource s

State o f the ArtInformation


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Incremental vs. Radical Change

Many commentators agree that BPR means radical change

Reengineering strives to break away from old rules of continuousimprovement

A single step or radical change is required

Objectives of 5% and 10% must give way to 50% and 100%

Some argue that some companies need more time to changei.e. incremental change

..this is one extreme of a wide spectrum of opinion regarding themost appropriate BPR strategies for a firm to adopt

In reality most companies want to manage change effectivelyso BPR methods and tools should allow for both incrementaland radical change


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BPR and Information Technology

Reengineering is often lead by changes to theInformation Technology infrastructure e.g. PC Computer Networks, Software,

Telecommunications

Information Technology should be viewed as anautomating or mechanising force e.g. Simplify processes first, then integrate, then

automate

Rather than maximising the performance of individualsor individual business processes, BPR seeks to maximiseinterdependent activities e.g. Computers and networks provide integration and co-

ordination capabilities between people and processes


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Examples

IBM used BPR and information technology to reducelead times for requests on one particular process fromseven days to four hours. In addition the number ofrequests increased a hundred fold with no increase inheadcount.

Ford reduced the number of people involved in vendorpayment from 500 to 125 by carrying of businessprocess re-engineering and employing new informationtechnology software and hardware systems

Kodak reduced product development times by one halfafter using BPR on their product development process


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Elements of BPR

Methodology Steps, guidelines, roadmaps

Modelling and Analysis Tools Activity Modelling

Organisation Modelling

Object Modelling

etc.

State of the Art Information Information Technology

Operational Paradigms

Social Organisations Experience


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Business Environment

Environment Exploding in Scope

Demands on Modern Business

Problems with InformationTechnology

Radical versus Incremental Change

IT as an Enabler for BPR


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Problems with I.T.

Almost 40% ($97b) of US capital went into IT in 1987 -but in most cases work has simply been hastened ratherthan transformed

Up to 75% of all IT projects fail to meet project goals

Companies tend to use IT as a mechanism of changebecause they do not understand processes

Huge investments in IT over the last decade have notmade Western businesses better

Emphasis on software development, computer networkdevelopment has resulted in a lack of systemsperspective from managers and designers

The pace of development within IT has lead to moving

goal posts and managers who are frightened to takedecisions


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Incremental vs. Radical Change

Many commentators agree that BPR means radicalchange

Reengineering strives to break away from old rules ofcontinuous improvement

A single step or radical change is required

Objectives of 5% and 10% must give way to 50% and100%

Some argue that some companies need more time tochange i.e. incremental change

..this is one extreme of a wide spectrum of opinionregarding the most appropriate BPR strategies for a firm toadopt

In reality most companies want to manage changeeffectively so BPR methods and tools should allow forboth incremental and radical change


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IT as an Enabler for BPR

IT is seen as an essential enabler IT should be viewed as a force to fundamentally reshape

the way we do business

BPR and IT are natural partners, yet their relationship hasbarely been exploited at all. Companies that have used ITto reengineer boundary crossing, customer drivenprocesses have benefited enormously

Some companies need less IT and better processes BPR is a multidisciplinary approach to implementing

fundamental change in the way work is performed acrossthe organisation with the goal of improving performanceand shareholder value

no mention of IT !

Clearly BPR can involve changes to processes, IT

infrastructure, and organisations either on their own ortogether.


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Process Framework

DesignDesign

Production/Service

Production/Serv ic e

OperationsPlanning

OperationsPlanning

SuppliersSuppliers CustomersCustomers

Designs

Capabilities Requirements

Product Mix

RawMaterials

Goods

Designs/

Capabilities

Orders

Capabilities

Plans/

PerformanceSche dules

Queries

Co-eng ineering Process Supp ly Chain Proce ss Design Co-ordination Process Order Fulfilment Proce ss


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Methodologies

A methodology is a systematic or clearlydefined way of accomplishing an end

Individual experts tend to use a clean sheetapproach to accomplishing an end

Groups or complex systems developmentoften require a methodology

As a rule each design group should agree amethodology before a project is initiated

Many methods exist from published references- others are available from consulting firms

Ideally a design group develop their own afterunderstanding the key stages and parameters


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Context for BPR

PreBPR

Pre

BPR

BPRBPR

PostBPR

PostBPR

Business StrategiesPerformance Framew orkManagem ent CultureOperations Philosophy

Detailed SpecificationsSoftware Engineering

Project EngineeringFac ilities Impleme ntation

Develop Goals andObjectives

Find Cha nge Leversand Define Projects

Cost and ImplementProjects


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Davenports Methodology

Step 1 Identify processes for innovation: Select top10-20 key

processes, identify key processes for analysis.

Step 2 Identify change levers: IT, Structural, Cultural and Human

Resource type levers.

Step 3 Develop Process Visions:Develop process objectives and

key operational parameters

Step 4 Understand Existing Processes:Model existing processes in

terms of performance, organisation, information, and skills

Step 5 Design and Prototype New Processes: Design at threelevels - process level, subprocess level and activity level


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Manganellis Methodology

Stage 1 Preparation: Defining business goals and objective; defining

reengineering project parameters; training of BPR team.

Stage 2 Identification: Develop customer-oriented models; identify value

adding processes; maps organisation, processes, information.

Step 3 Vision: Identify breakthrough opportunities; analyse and

structure ideas for change.

Step 4 Technical Solution: Workflow analysis; performance

measurement; strategic automation

Social Solution: Empowerment; skills modelling; team building;employee reward and incentives.

Step 5 Transformation: Launch pilot and implement full BPR plan


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iTeams Methodology

Understand Rqmts and Define Goals

Engage Users and Model Processes

Create A c t i ons and Empower Team s

Develop Migration Plan

Implement Actions and Monitor Resul ts

Requirements

Projects

Results


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Understand Rqmts and Define Goals

DefineGoals

DefineGoals

Requirements

Results Goals

Statements Tool

Requirements ToolStrategies Tool

Indicators Tool


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Engage Users and Model Processes

Engage Usersand Model

Process

Engage Usersand Model

Process

Goals

Problems

Process Data

Benchmarking

Models

Ideas

Problems Tool

Ideas ToolModels Tool


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Create Actions and Empower Teams

Create Actionsand Empower

Teams

Create Actionsand Empower

Teams

Goals

Ideas

Models

QuickWins

Projects

Teams

Projects Tool

Gantt Tool


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Develop Migration Plan

DevelopMigration Plan

DevelopMigration Plan

Goals

Project Portfolio

QuickWins

Projects

Teams

Portfolio Management Tool

Project Scoring Tool


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MonitorResults

MonitorResults

BusinessDirectives

ResultsProject Portfolio

Process Results

Implement Actions and Monitor Results

Portfolio Management Tool

Traffic Lights ToolDeployment Tool


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Implementation ofLarge Pro j ects

(child of Implement Actions and Monitor Results)

Bid Specification

System Ramp-up

Vendor Selection

Detailed Specification

System Installation

Goals

07. Business Process Reengineering

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