business process reengineering powerpoint

business

1. 4-1
Business Process Reengineering
and Information Technology
Dr R D Kumbhar

2. 4-2
Basic Concepts
•Business process (What/why actions to produce outputs from inputs)
•Value added (Add value to organizational customers via values
added to products/services)
•Business Process Reengineering (BPR)
–Fundamental changes to people and culture, organizational structure,
policies/procedures, and technology
•Demand chain
–Pressures to produce products or provide services
•Supply chain
–Flow of materials, information, and services from raw material suppliers
through factories & warehouses to the end customers (also includes
organizations and processes that create and delivery those products,
information, and services to the end customers)

3. 4-3
Basic Concepts
•Supply chain management
–Planning, organizing, coordinating all supply chain activities
to reduce uncertainty and risks and positively affect inventory
levels, cycle time, business processes, and customer service
•Extended supply chain
–Combination of the push of the supply chain and the pull of
the demand chain
•Networked organization
–Linking functional components of the organization via
Intranets, Internet, LAN, and WAN
•Organizational transformation

4. 4-4
What is a Business Process???
•A collection of activities that take one or
more inputs and turn that into a product that
adds value to a customer

5. 4-5
Demand and Supply Chains
•DEMAND CHAIN--all activities that relate to obtaining an
order among all participants
•SUPPLY CHAIN--all activities that occur once you get an order
•EXTENDED SUPPLY CHAIN--both the demand and supply
chains taken together
–Corresponds to the value system concept with analysis of the values
chain components
•Supply chain analysis seeks to primarily maximize values and
support activities all along the extended value chain
•it is 5-6 times more difficult to get a new customer than it is to
retain an existing one

6. 4-6
The Need for BPR
•Customers (know what they want and are willing to pay for it)
•Competition (Continuous increase will result in changes to price,
quality, selective service, and delivery)
•Change (continues to occur in people&culture, organizational
structures, policies&procedures, and technology)
•Techniques lag behind technology (Technologically capable, but not
functionally operational)
•Problem of the stovepipe (lack of communication between vertical
functional areas)
•Fragmented piecemeal systems (focus on vertical functions, with the
existence of redundancies of effort and actions
•Integration across departmental and organizational boundaries
(information and operations are needed)

7. 4-7
Processes in Relation to
Departments

8. 4-8
The Principles of BPR
and The Role of IT
•Characteristics of BPR (Fundamental
change in organizations)
•Methodologies and frameworks for BPR
•Enabling role of IT

9. 4-9
Characteristics of Business
Process Reengineering
•Several jobs are combined into one
•Employees are empowered to make
decisions
•Steps in business process: natural order
•Process may have multiple versions
•Work is performed where it makes the most
sense

10. 4-10
Characteristics of Business
Process Reengineering
•Controls, checks, other non-value-added work
is minimized
•Reconciliation is minimized - minimize
external contact points
•Hybrid centralized / decentralized operation is
used
•A single point of contact is provided for the
customer

11. 4-11
Business Process Reengineering
and
Restructuring the Organization
•Redesign of processes (Fundamental change in business
processes)
•From mass production to mass customization (Mass production
of the same products --- Mass production of different products)
•Cycle time reduction (Change in the time it takes to complete a
process from start to end; time can provide competitive
advantage
•Restructuring organizations (May need to restructure the entire
organization to reap the benefits of BPR)

12. Common Benefits of BPR
•Enterprise integration
–Departments are consolidated
–Several jobs are combined into one job
•Worker empowerment
–There is both horizontal and vertical
reorganization
–Handoffs are eliminated
–There are fewer rules and less coordination
is required

13. Common Benefits of BPR, Cont’d
•Number of steps in a process are reduced
–This is simplification
–Inspections, checks and controls are reduced or
eliminated
•The steps are performed in a more
natural order

14. Common Benefits of BPR, Cont’d
•Like Process Improvement, steps are reassessed
–Can it be eliminated
–Can it be taken off line
–Can it be performed in parallel
–Can it be combined
–Is it a bottleneck
–Can its mean be reduced
–Can its variance be reduced
–WHAT IS ITS COST???

15. Common Benefits of BPR, Cont’d
•Processes differ by the type of job being
processed
–Not just one process but many are employed depending on the size
of the job
•Work is performed where it makes the most
sense
–Wal-Mart moves the replenishment function to its suppliers

16. Common Benefits of BPR, Cont’d
•Reconciliation is minimized
•A case manager provides a single point of
contact
•Hybrid centralized/decentralized
operations are prevalent
–IT enables decisions to operate autonomously

17. Benefits of elimination of
handoffs
•No transits
•No waiting for another operator
•No waiting in queues
•No setups
•No supervision/coordination required

18. 4-18
Cost and Quality in relation to
cycle time

19. 4-19
The Networked Organization
•Structure of networked organizations
–Informal, less structured, delegate/lead, ownership/participant, empower employee asset, shared
ownership of information, flatter/manageable organizations, risk management, team contributions
•Empowerment
–Vesting employees with traditionally held managerial authority for decision making or approval authority
–Empowerment may require training regarding new/existing skills
–Companies are also empowering customers, suppliers, and other business partners (Extranets support
external empowerment)
–IT / empowerment relationship
•IT important contribution is providing the correct information at the appropriate time with the correct quality and
appropriate costs
•IT can provide information that enhances the creativity and productivity of employees, as well as the quality of
their work
•Teams
–Self-managed teams are performing many organizational functions
•Permanent work group teams
•Problem solving teams
•Quality circles
•Management teams
•Virtual teams

20. 4-20
Virtual Corporations
A virtual corporation is an organization composed
of several business partners sharing costs and
resources for the purpose of producing a product or
service.
•Can be a Temporary or permanent virtual
corporation
•Composed of several components at different
locations that have different ownership of resources
at those different locations

21. 4-21
Major Attributes of Virtual Corporations
•Excellence (Different partners have different competencies)
•Utilization (Resources put to better use)
•Opportunism (Organized to meet market opportunities or meet
market threats)
•Lack of borders (Indeterminable border of VC)
•Trust (Much more reliance between business partners in VC)
•Adaptability to change (Quicker adaptation to change)
•Technology
–Networked IT is central to VC
–Inter-organizational systems (IOS) is often present between business partners
–IT facilitates communication and collaboration among dispersed business
partners

22. 4-22
Total Quality Management
and Reengineering
•Rate of change
•TQM: continuous improvement
•Reengineering: dramatic improvement

23. 4-23
TQM versus Reengineering

24. 4-24
Implementing Reengineering
•Redesign (Readiness for change)
•Retool (Transitioning to the change)
•Re-orchestrate (Institutionalizing the change)

25. 4-25
Tools for BPR
•Simulation (Simulate organizational activities and
scenarios)
•Flow diagrams (Modeling of the flows of things through
the organization)
•Work analysis (Analysis of the existing process and
proposed solutions)
•Application development (Create application to
support/institutionalize the change)
•Workflow software (System controls into the hands of
end-user – help automate business processes and provide
a quality interface between business systems)

26. TASKS of the Re-engineering
team
•1) determine measures of performance
•2) install measures of performance
•3) delineate entire existing process in all its
gory detail
•4) perform process value analysis and
activity-based costing
•5) benchmark processes by comparison with
other processes

27. TASKS of the Re-engineering
team, Cont’d
•6) design re-invented process
•7) simulate re-invented process
•8) prepare report with recommendations
•9) install re-invented process
•10) measure improvements

28. 4-28
HOW IS PROCESS REENGINEERING
DIFFERENT FROM CONTINUOUS
IMPROVEMENT?
•Process innovation endeavors to create
catastrophic improvement in a single sweep
whereas continuous improvement is incremental
improvement over a period of time?
•Process innovation is top-down, whereas
continuous improvement is bottom up
•Process improvement implies use of specific
change tools, specifically information technology

29. 4-29
HOW IS PROCESS REENGINEERING
THE SAME OR SIMILAR TO
CONTINUOUS IMPROVEMENT?
•Both focus on cultural change:
–Operational performance
–Measurement of results
–Empowerment of employees

30. 4-30
PROCESS REENGINEERING
VS PROCESS IMPROVEMENT
IMPROVEMENT
REENGINEERING
•Level of change Incremental Radical
•Starting point Existing process Clean slate
•Frequency of change Continuous One-time
•Time required short-term long-term
•Participation bottom-up top-down
•Typical scope Narrow Broad
–Risk Moderate High
•Primary enabler Statistical control IT
•Type of change cultural cultural/structural

31. 4-31
PROCESS REENGINEERING
INVOLVES
•Use of enabling technologies
–INFORMATION TECHNOLOGY
•Human and organizational development
–PROCESS OWNERSHIP
–EMPLOYEE EMPOWERMENT
–AUTONOMOUS TEAMS
–FLATTENED ORGANIZATIONAL STRUCTURES
–FUNCTIONAL AND COMPARTMENTAL
COMMUNICATION

32. 4-32
Implementation Issues
•Improvement comes out of TQM
•Continuous evaluation
•Eliminating jobs
Time
Costs
Quality

33. 4-33
Implementation Strategy
•Redesign
•Retool
•Re-orchestrate

34. 4-34
Re-orchestrate:
Organizational Change
•Leadership
•Corporate values
•Cultural change
•Incentives
•Accountability
•Zeal

35. 4-35
Re-orchestrate:
Organizational Change
•Communication
•Ambiguity
•Obstacles to change
•Celebrate success

36. 4-36
Continuous Evaluation
•Is reengineering truly transformational?
•Will reengineering improve customer relations?
•Has reengineering cut across the organization?
•Is information technology playing an integral
role in the reengineering solution?
•Does it hurt?

37. 4-37
When to Use BPR?
•Failure rate as high as 75-85%
•Improperly aligned BPR and IT
•Expensive
•Organizational resistance

38. 4-38
Managerial Issues
•Ethical issues (SCM or BPR projects may lead to the
need to lay-off, retrain, or transfer employees)
•BPR implementation (Few organization-wide BPR effort)
•Incremental improvement programs
•BPR tools (Often uses existing tools rather than creation
of new tools)
•Role of IT (IT should be a supportive, not lead role in
SCM and BPR projects)
•Failures (Big projects tend to increase failure rates)
•TQM and BPR