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