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Business Process

Reengineering & The


Organization
Learning Objectives
 Explain the role of Business Process Reengineering
(BPR) within the organization

 Understand the origins and key characteristics of BPR

 Identify and be able to use core BPR Symbols


 Understand and be able to implement a BPR Strategy

 Understand the main challenges in implementing a BPR


Strategy
Spectrum of Change
 Automation
 Rationalization
of procedures
 Reengineering
 Paradigm shift
Automation
 refers to
computerizing
processes to
speed up the
existing tasks.
 improves
efficiency and
effectiveness.
Rationalization of Procedures
 refers to streamlining
of standard operating
procedures,
eliminating obvious
bottlenecks, so that
automation makes
operating procedures
more efficient.
 improves efficiency
and effectiveness.
Business Process
Reengineering
 refers to radical redesign
of business processes.
 Aims at
 eliminating repetitive,
paper-intensive,
bureaucratic tasks
 reducing costs
significantly
 improving
product/service
quality.
Paradigm Shift
 refers to a more
radical form of
change where the
nature of business
and the nature of the
organization is
questioned.
 improves strategic
standing of the
organization.
What is BPR?

 Reengineering is the fundamental


rethinking and redesign of business
processes to achieve dramatic
improvements in critical, contemporary
measures of performance, such as cost,
quality, service and speed.
(Hammer & Champy, 1993)
Key Words
 Fundamental
 Why do we do what we do?
 Ignore what is and concentrate on
what should be.
 Radical
 Businessreinvention vs. business
improvement

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Key Words

 Dramatic
 Reengineering should be brought in when a
need exits for heavy blasting.
 Companies in deep trouble.
 Companies that see trouble coming.
 Companies that are in peak condition.

 Business Process
a collection of activities that takes one or more
kinds of inputs and creates an output that is of
value to a customer.
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BPR is Not?
 BPR may sometimes be mistaken for the following five
tools:

 1. Automation is an automatic, as opposed to


human, operation or control of a process, equipment or a
system; or the techniques and equipment used to
achieve this. Automation is most often applied to
computer (or at least electronic) control of a
manufacturing process.
 2. Downsizing is the reduction of expenditures in
order to become financial stable. Those expenditures
could include but are not limited to: the total number of
employees at a company, retirements, or spin-off
companies.
BPR is Not?
 3. Outsourcing involves paying another
company to provide the services a company
might otherwise have employed its own staff to
perform. Outsourcing is readily seen in the
software development sector.
 4. Continuous improvement emphasizes
small and measurable refinements to an
organization's current processes and systems.
Continuous improvements origins were derived
from total quality management (TQM) and Six
Sigma.
BPR Versus Process
Simplification
Process Simplification Process Reengineering

Incremental Change Radical Transformation


Process-Led Vision-Led
Assume Attitudes & Behaviours Change Attitudes & Behaviours
Management-Led Director-Led
Various Simultaneous Projects Limited Number of Initiatives

(Source Coulson-Thomas, 1992)


BPR Versus Continuous
Improvement
Continuous Improvement Process Reengineering

Incremental Change Radical Transformation


People Focus People & Technology Focus
Low Investment High Investment
Improve Existing Rebuild
Work Unit Driven Champion Driven
Reengineering & Continuous
Improvement--Similarities
Reengineering Continuous Improvement
Similarities
Basis of analysis Process Process
Performance measurement Rigorous Rigorous
Organizational change Significant Significant
Behavioral change Significant Significant
Time investment Substantial Substantial

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Reengineering & Continuous
Improvement--Differences
Reengineering Continuous Improvement
Differences
Level of change Radical Incremental
Starting point Clean slate Existing process
Participation Top-down Bottom-up
Typical scope Broad, cross-functional Narrow, within functions
Risk High Moderate
Primary enabler Information technology Statistical control
Type of change Cultural and structural Cultural

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What is a Process?
 A specific ordering of work activities
across time and space, with a beginning,
an end, and clearly identified inputs and
outputs: a structure for action.
(Davenport, 1993)
What is a Business Process?
 A group of logically related tasks that use
the firm's resources to provide customer-
oriented results in support of the
organization's objectives
Why Reengineer?
 Customers
 Demanding
expect us to know everything
 to make the right decisions

 Sophistication
to do it right now
 to do it with less resources

 to make no mistakes

 Changing Needs
 expect to be fully informed
Why Reengineer?
 Competition
 Local
 Global

 Change
 Technology
 Customer Preferences
Business Process
Reengineering - WHY ?
Integrate people, technology, &
organizational culture

To Respond to rapidly changing technical &


business environment and customers needs
to achieve Big performance gains
Complacency
Why Organizations Dont
Reengineer?
Complacency
 Complacency means:
satisfaction

 Political Resistance

 New Developments

 Fear of Unknown and Failure


Performance
 BPR seeks improvements of

 Cost
 Quality
 Service
 Speed
Key Characteristics
 Systems Philosophy
 Global Perspective on Business
Processes
 Radical Improvement
 Integrated Change
 People Centred
 Focus on End-Customers
 Process-Based
Systems Perspective
Feedback

Inputs Transformation Outputs

Environment
Process Based
 Added Value
 BPRInitiatives must add-value over and
above the existing process

 Customer-Led
 BPR Initiatives must meet the needs of the
customer
Radical Improvement
 Sustainable
 Process improvements need to become firmly
rooted within the organization

 Stepped Approach
 Process improvements will not happen over
night they need to be gradually introduced
 Also assists the acceptance by staff of the
change
Integrated Change
 Viable Solutions
 Process improvements must be viable and
practical

 Balanced Improvements
 Process improvements must be realistic
People-Centred
 Business Understanding
 Empowerment & Participation
 Organizational Culture
Focus on End-Customers
 Process improvements must relate to the
needs of the organization and be relevant
to the end-customers to which they are
designed to serve
BPR Symbols
Business Process Flowchart Symbols
An Activity

A Document

A Decision

Data (input as outputs)


Business Process Flowchart Symbols
A Predefined Process

Start The Start of a Process

End The End of a Process

Representing a Relation
Business Process Flowchart Symbols
Continuation of the process at the same page
at an equal symbol with the same number. Used
when a relation arrow crosses another relation arrow

Off-Page Connector - Process will continue on the


next page

Integration Relation - A relation to another module is


identified and described
Data Flowchart Symbols
An Activity

A Document

A Decision

Flat Data File (input as outputs)


Data Flowchart Symbols
Manual Data Item

A Database File

Representing a Relation

Continuation

Off-Page Connector
Rules For Data
Symbols
Rules For Data Symbols
Start Symbol used to identify the start of a business process

Generate
Purchase Activities must be described as a verb
Order

OK? Yes Decisions have only two possibilities (Yes & No)

No

Crossing lines are not allowed

End If one side of the decision has no further processes


defined this symbol has to be used
Rules For Data Symbols
I Continuation symbol within the same number must be
present twice on the same page

Purchase
Order Name the document

Off- Page Connector is used to continue a process at the


A next page or to let the process to flow over at the previous
to the next page. If more than one is needed use A, B, C,
D

Posting
of Bonus Name the data
Rules For Data Symbols
Predefined Processes always have a relation to level and
Sub-Process stream by a number in the line below a sub-process
Delivery description

BC 4.04 A predefined process must be described in a different


flowchart. To make the relation clear between the
predefined process and the belonging flowchart a unique
alpha numeric number should be assigned to this
predefined process.
Version Management
 For different versions of a business
process or data flow some mandatory
information must be on the flowchart.
 Name of the business process
 Unique number of the business process
 Revision number
 Date of last change
 Author
 Page number with total pages
Implementing a BPR
Strategy
Key Steps

Select The Process & Appoint Process Team

Understand The Current Process

Develop & Communicate Vision Of Improved Process

Identify Action Plan

Execute Plan
Select the Process & Appoint
Process Team
 Two Crucial Tasks

 Select The Process to be Reengineered

 Appointthe Process Team to Lead the


Reengineering Initiative
Select the Process
 Review Business Strategy and Customer
Requirements

 Select Core Processes

 Understand Customer Needs

 Dont Assume Anything


Select the Process
 Select Correct Path for Change

 Remember Assumptions can Hide


Failures

 Competition and Choice to Go Elsewhere

 Ask - Questionnaires, Meetings, Focus


Groups
Appoint the Process Team

 Appoint BPR Champion

 Identify Process Owners

 Establish Executive Improvement Team

 Provide Training to Executive Team


Core Skills Required
 Capacity to view the organization as a
whole

 Ability to focus on end-customers

 Ability to challenge fundamental


assumptions

 Courage to deliver and venture into


unknown areas
Core Skills Required
 Ability to assume individual and collective
responsibility

 Employ Bridge Builders


Use of Consultants
 Used to generate internal capacity
 Appropriate when a implementation is
needed quickly
 Ensure that adequate consultation is
sought from staff so that the initiative is
organization-led and not consultant-driven
 Control should never be handed over to
the consultant
Understand the Current Process
 Develop a Process Overview
 Clearly define the process
 Mission
 Scope
 Boundaries

 Set business and customer measurements


 Understand customers expectations from
the process (staff including process team)
Understand the Current Process

 Clearly
Identify Improvement
Opportunities
Quality
Rework
 Document the Process
Cost
Time
Value Data
Understand the Current Process

 Carefully resolve any inconsistencies


Existing -- New Process
Ideal -- Realistic Process
Develop & Communicate Vision of
Improved Process

 Communicate with all employees so that they


are aware of the vision of the future

 Always provide information on the progress of


the BPR initiative - good and bad.

 Demonstrate assurance that the BPR initiative is


both necessary and properly managed
Develop & Communicate Vision of
Improved Process
 Promote individual development by indicating
options that are available

 Indicate actions required and those responsible

 Tackle any actions that need resolution

 Direct communication to reinforce new patterns


of desired behavior
Identify Action Plan
 Develop an Improvement Plan

 Appoint Process Owners

 Simplify the Process to Reduce Process


Time

 Remove any Bureaucracy that may hinder


implementation
Identify Action Plan
 Remove no-value-added activities

 Standardize Process and Automate Where


Possible

 Up-grade Equipment

 Plan/schedule the changes


Identify Action Plan
 Construct in-house metrics and targets

 Introduce and firmly establish a feedback


system

 Audit, Audit, Audit


Execute Plan
 Qualify/certify the process
 Perform periodic qualification reviews
 Define and eliminate process problems
 Evaluate the change impact on the
business and on customers
 Benchmark the process
 Provide advanced team training
 EXAMPLE
Phases of BPR
1. Begin organizational change.
2. Building the reengineering organization
3. Identifying BPR opportunities.
4. Understanding the existing process.
5. Reengineering the process.
6. Blueprint the new business system.
7. Perform the transformation.
Phase 1: Begin Organizational
Change
 Asses the current state of organization.
 Explain the need for change.
 Illustrate the desired state.
 Create the communications campaign for
change.
Phase 2: Building the
Reengineering Organization
 Establish a BPR organizational structure
 Establish the rules for performing BPR
 Choose the personnel who will reengineer.
Phase 3: Identify BPR opportunities

 Identify the core/high level processes.


 Recognize potential change-enablers
 Gather performance metrics within the
industry.
 Gather performance metrics outside the
industry.
 Select processes that should be
reengineered.
 Prioritize selected processes.
Phase 4 contd
 Evaluate pre-existing business strategies.
 Consult with customers to know their
desires.
 Determine customers actual needs.
 Formulate new process performance
objectives.
 Establish key process characteristics.
 Identify potential barriers to
implementation.
Phase 4: Understand the existing
process.
 Understand why the current steps are being
performed.
 Model the current process.
 Understand how technology is currently used.
 Understand how information is currently used.
 Understand the current organizational structure
 Compare current process with the new
objectives.
Phase 5: Reengineer the Process

 Ensure the diversity of the reengineering


team.
 Question current operating assumptions.
 Brainstorm using change levers.
 Brainstorm using BPR principles.
 Evaluate the impact of new technologies.
 Consider the perspectives of stakeholders.
 Use customer value as the focal point.
Phase 6: Blueprint the New
Business System.
 Define the new flow of work.
 Model the new process steps.
 Model the new information requirements.
 Document the new organizational structure.
 Describe the new technology specifications.
 Record the new personnel management
systems.
 Describe the new values and culture required.
Phase 7: Perform the
Transformation.
 Develop a migration strategy.
 Create a migration action plan.
 Develop metrics for measuring
performance during implementation.
 Involve the impacted staff.
 Implement in an iterative fashion.
 Establish the new organizational
structures.
Phase 7 contd
 Assess current skills and capabilities of
workforce.
 Map new tasks and skill requirements to
staff
 Re-allocate workforce.
 Develop a training curriculum.
 Educate the staff about the new process.
 Educate the staff about the new
technology used.
Phase 7 contd
 Educate the management on facilitation
skills.
 Decide how the new technologies will be
introduced.
 Transition to the new technologies.
 Incorporate process improvement
mechanisms
Advantages of BPR
 Performance improvement
 Increase in profits
 Increase in productivity
 Better business practices
 Enormous cost reduction
 Speed up business processes
Advantages of BPR
 Improvement in employee satisfaction
 Improvement in quality
 Improvement in customer service
 Profitability
Disadvantages of BPR
 BPR has bad reputation for major layoffs.
 It never change management thinking.
 Lack of management support for the
initiative and thus poor acceptance in
organization.
 Exaggerated expectations regarding the
benefits of BPR
Disadvantages of BPR
 Underestimation of resistance to change
within organization.
 Implementation of generic best practices
that do not fit specific company needs.
 Over-trust in technology solutions.
Information
Technology & BPR
Benefits From IT
 Assists the Implementation of Business
Processes
 Enables Product & Service Innovations
 Improve Operational Efficiency
 Coordinate Vendors & Customers in the
Process Chain
Computer Aided BPR (CABPR)
 Focus
 Business Processes
 Process Redesign
 Process Implementation
BPR Challenges
Common Problems
 Process Simplification is Common - True
BPR is Not
 Desire to Change Not Strong Enough
 Start Point the Existing Process Not a
Blank Slate
 Commitment to Existing Processes Too
Strong
 REMEMBER - If it aint broke
 Quick Fix Approach
Common Problems with BPR
 Process under review too big or too small
 Reliance on existing process too strong
 The Costs of the Change Seem Too Large
 BPR Isolated Activity not Aligned to the
Business Objectives
 Allocation of Resources
 Poor Timing and Planning
 Keeping the Team and Organization on
Target
Summary

 Reengineering is a fundamental rethinking


and redesign of business processes to
achieve dramatic improvements

 BPR has emerged from key management


traditions such as scientific management
and systems thinking

 Rules and symbols play an integral part of


all BPR initiatives
Summary
 Dont assume anything - remember BPR is
fundamental rethinking of business
processes

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