BUSINESS PROCESS REENGINEERING

Definition of Reengineering

The fundamental rethinking and radical

redesign of core business processes to

achieve dramatic improvements in

critical performance measures such as

quality, cost, and cycle time.

- Hammer and Champy, Reengineering the Corporation, 1993

Fundamental Rethinking Radical Redesign Core Business Processes Dramatic Improvements

Underlying Features

Key Words

Fundamental : "Why do we do what we do?" and "Why do we do it the way we do?" Reengineering ignores what Is and concentrates on what should be.

Radical :Disregarding all existing structures and procedures and inventing completely new ways of accomplishing work

Dramatic : Reengineering should be brought in “when a need exits for heavy blasting.”

Process : The most important key word, Collection of activities taking multiple inputs to create an output that is of value to the customer

Model of Business Process Reengineering

Fundamental rethinking of business process

Radical redesign of business processes

Dramatic & sustainableimprovements in

performance

1. Business processes are simplified rather than being made more complex.

-Ends up dividing orgn into depts

-Puts together process teams-Handle work logically

-Size of team depends upon the work

2. Job descriptions expand and become multi-dimensional - people perform a broader range of tasks.

-Worker becomes part of team

-Full responsibility for the entire process

-Familiarity with each step in the process

-Work becomes multi-dimensional,more rewarding-Closely related with end result

Characteristics

3. People within the organization become empowered as opposed to being controlled.

-Don’t want people who follow the rules

-Value employees who can set their own rules to achieve results.-Employees are self-starters, self-disciplined and are motivated to achieve

-Focus on Satisfaction is given to customers (not to supervisors as in traditional case)

4. The emphasis within the organization moves away from theindividual and towards the team’s achievements.

-Removes the artificial boundaries put there by department structures

-A process team is formed which assumes total and complete ownership of the Process

-Responsibility and rewards for results need to be spread equitaly throughout the entire team

CharacteristicsContd……

5. The organizational structure is transformed from a hierarchy to a flatter arrangement.

-Decisions are made on a consensus basis rather than by a manager-Indirect effect of reducing a manager’s role.-Organizational structure is less of an issue at reengineered companies

6. Professionals become the key focus points for the organization, not the managers.

-Reengineering will always change the boundaries between different kinds of work

-The creation of value becomes the main focus point-The people who creates value most effectively will become the center of

focus-Teams will do whatever is required to maximize the efficiency of

professionals.-People are working because they’re motivated to achieve

CharacteristicsContd……

7. The organization becomes aligned with the end-to-end process rather than being focused on departments.

-Process team assumes responsibility for performing a job.

-Organization as a whole becomes focused on results rather than activity

CharacteristicsContd……

To succeed at reengineering, follow these guidelines:

1. Always start with the customer and work backwards.

2. Move fast. 3. Tolerate risk. 4. Accept imperfections along the way. 5. Don’t stop too soon.

The Keys To Reengineering Success

1. A focus on processes rather than Organizational Boundaries.

2. The ambition to create breakthrough performance gains.

3. A willingness to break with old traditions and rules. 4. The creative use of new information technology.

Themes of Successful Reengineering

Themes of Successful Reengineering

…..Contd.

Case StudyIBM Credit Corporation

IBM Credit finances the computers, software and services sold by IBM Corporation. Before Reengineering : 6 – 14 days to for processing an application Application move from credit dept. to pricing dept. From here an administrator wrote out an formal quote letter What leeds to Reengineering : IBM realizes that actual processing time requires only 90 minutes.

and Rest of time is spent by the Specialist for looking for pile of files

Themes of Successful Reengineering

…..Contd.

Case Study …contdIBM Credit Corporation

Process: Four specialists changed to a Data Structurer who processed the application from start to end using templates on a new computer system which provided all the data and tools each specialist commonly used. Asks the suppourt of Specialists for additional

expertise by Data Structurer in RARE CASES only

After Reengineering : Turnaround time was reduced from a typical 7-days to

4-hours. Achieve a hundred fold improvement in productivity

without any increase in staff members. Handle 100 times the number of credit applications

handles before reengineering was undertaken

Themes of Successful Reengineering

…..Cont.

Case Study…..ContdIBM Credit Corporation

‘‘IBM Credit achieved a dramatic performance breakthrough by making a radical change to the process as a whole. IBM Credit did not ask,

"HOW DO WE IMPROVE THE CALCULATION OF A FINANCING QUOTE?" or

“HOW DO WE ENHANCE CREDIT CHECKING?” It asked instead,

‘HOW DO WE IMPROVE THE CREDIT ISSUANCE PROCESS?’ ’’

-- Michael Hammer & James Champy

Increase Effectiveness.

Reduces cost.

Meaningful job for employees.

Improvement in organizational approach.

Growth of business

Benefits

Why BPR…….?

?

Integrate people, technology, & organizational

culture to Respond to rapidly changing technical & business environment and customer’s needs to achieve

BIG PERFORMANCE GAINS

Thank You