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Business Engineering and

Enterprise Optimization

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What is Business Engineering?

• Method for changing the way a company works based on best business practices and IT

• A complete re-thinking and reshaping of business processes based on structures native to IT

• Differs from BPR

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Business Process

Reengineering

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Why reengineering ?

• Driving force behind reengineering is 3 C's:

• CUSTOMER

• COMPETITION

• CHANGE

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What is Reengineering ?

The fundamental rethinking and radical redesign of business process to bring about dramatic improvements in performance.

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”Dramatic improvements”

• performance achieving

• Reduced cost

• Reduced cycle time

• Greater accuracy

• Increased inventory turns

• Reduce non value added activity in the organization

• Increased customer satisfaction

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“Radical”

• Means going to the root of the things and not about improving what already exists

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“Rethinking”

• It is the total rethinking. Beginning with proverbial clean slate and reinventing how you would do your work.

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“Process”

• Group of related tasks that together create a value for a customer

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Example: Receiving the order, entering into the computer, checking the customer credit, picking the goods out of stock, packing, loading into the truck and so on. None of these activities is of any value or interest to the customer. Customer is only interested in the end result of these tasks ie, DELIVER GOODS.

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What reengineering is not ?

• Reengineering is not down sizing

• Reengineering eliminates work, not jobs

• Reengineering is not “restructuring”

• Reengineering is not automation

• Reengineering is not reengineering an organization or a department in an organization

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BPR phases

• Focus phase

– as is - to be phase

• Design phase

– Design,develop and demonstrate

• Benefit phase

– Benefit, internalize and transform

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Focus Phase

• Identify critical process(s)

• Form core process reengineering group

• Define the as is process

• Carry out quantification of the benefit to the enterprise with process redesign

• define the to be process

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Design Phase

• Design the reengineered process

– identify all the change ownership

– identify all the information flows

– identify all non value added activities and examine how to eliminate them

• Assess the current IT level

• Demonstrate the working of reengineered process using prototypes

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Benefit Phase

• Simplify the work of each employee• Reduced cost• Reduced cycle time • Greater accuracy• Increased inventory turns• Reduce non value added activity in the

organization• Increased customer satisfaction

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One of the best known models of business is the ‘Value Chain’ framework developed by Harvard

Business School professor Michael porter who referred to processes as chains. Porter defined two

types of activities in which the firm engage in : primary activities and support activities.

Primary activities are those activities through which a company ‘adds value’ to its input for their customers

who are prepared to pay for its output .

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Success Story

• One of the Finance company found that it took 22 days to process an application for insurance, even though it was worked on for just 17 min.! In an ideal world the customer would need to wait only a few minutes, not even the full 17 minutes.

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So What is BPR?

• BPR is an important philosophy. It aims to achieve step improvements in performance by redesigning the processes through which an organization operates, maximizing their value-added content and minimizing everything else. This approach can be applied at an individual process level or to the whole organization.

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How does BE differ from BPR?

• BE integrates IT throughout the business process redesign

• IT is used as a tool to automate the processes dictated by the BPR redesign

• BE extends the use of IT by creating process models based on IT structures and applying these models to BPR’s vision of better business processes

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BPR and Business Modeling

• Objective: Reengineer your business according to the ERP system technology at hand

• Modeling activities include both system modeling, business modeling, and workflow modeling

• Requirements engineering a matching process:

ERP system technology

Business analysis

Model: Reengineered business supported by ERP system

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BPR -- IT is after the fact!

BE represents the true intersection between IT

and BPR!

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Summary of the Elements of BE

• Re-examination

• Simplification

• Re-organization

• Rethink existing business processes

• Distill business functions into efficient models

• Search for new ways to organize work

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Summary of the Elements of BE(continued)

• Integration

• Automation

• Communication

• Adaptation

• Integrate all critical business processes

• Use technology to automate redesigned business processes

• Increase communication to assist new holistic business processes

• Constantly reconsider and improve

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BE and Business Optimization

• The prerequisite for business optimization is an integrated information system. This system allows the business engineer to explore every pathway where value is added within a company and to design business processes that maximize value while minimizing cost. Using this the management can continuously realign business operations with company objectives.

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The Business Blueprint

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Business Blueprints. . .

• Illustrate complex processes in a way that business users can understand

• Assist business users who want to know more about processes but not about technical details

• Streamline complex business processes

• Do not prototype, generate code or screens, or design specs!

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Blueprinting vs. Modeling

• Blueprinting is business redesign using templates and industry solutions

• Modeling process creates new business processes without regard for the IS support– redefine company goals– create process models– program custom software or purchase closest

standard package

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Arguments for Blueprinting

• Companies can use it to identify processes that are the same and those that are unique– can then focus efforts more on optimizing

special processes– ex. Mail order firm finds they have strategic

advantages in speed of delivery and managing order risk

• They may decide to focus on “rush order” and “credit check” processes

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Standard Software Implementation Issues

• The business processes supported by the software are not documented

• The company’s existing business processes are inadequately known and/or documented

• No procedure exists for designing business processes

• The target concept is unknown or not documented

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Business Blueprint meets BE challenges by:

• Documenting standard software processes

• Making it easier for companies to document existing business processes

• Developing procedures for designing business processes

• Designing and documenting a “final state” of desired business processes using EPC