Project Report Report Subject: Business Process Reengineering

(BPR)
Submitted To: Submitted By:

Dr. Neetu Jain Sumit Khanna

(1021593906) MBA-2nd Sem. (In partial fulfillment of degree of Master of Business Administration of Guru Gobind Singh Indraprastha University) Evaluation of Project The project titled BUSINESS PROCESS REENGINEERING submitted by SUMIT KHANNA for M.B.A semester 2nd of GGSIP University, Delhi has been examined by the following examiner: Internal examiner Certificate This is to certify that the project prepared by SUMIT KHANNA is original & authentic. This has been carried / done under my supervision & guidance. Supervisor

Acknowledgement
I would like to thank everyone who made this project possible. I am grateful to the teachers, family-members and classmates who put in their valuable time and effort. I would like to profusely thank Dr. Neetu Jain, student faculty for Human Resource Management, Rukmini Devi Institute of Advanced Studies. Without her guidance, support and inspiration this report would not have materialized. I would also like to thank, Dr. Amit Gupta current faculty for Operations Management who introduce and elucidated the concept of Business Process Reengineering.

No project is possible without help from my classmates and relatives who gave innumerable ideas and suggestions. Lastly but certainly not the least I thank my family who helped me put this crisp report together. Once again I thank you all. I hope you find the following pages insightful and informative. Any suggestions would always be welcome. Happy Reading. Table of Contents Topic Index Methodology Introduction What Do We Want From Businesses? What Do We Usually Find in Businesses? Why Reengineer? What is Business Process Reengineering? Processes and More The Core of Business Reengineering BPR vs. TQM Steps in Process Reengineering I. Likely Objectives of Reengineering II. Identify Processes to be Redesigned III. Types of Processes to be Examined IV. New Tools Information Technology Page Number 05 06 07 08 09 10 11 13 15 17 19 19 20 21

IT Capabilities and Their Organizational Impacts 22 V. Design and Build a Prototype of the Process 23 Why BPR Projects Fail? What Can be Done About It? Where is BPR Headed? Conclusion Bibliography 24 26 27 28

Methodology In the first stage of the research programme I have used the secondary data method by which I have able to collect the data from various magazines, articles, newspapers and also from internet RESEARCH OBJECTIVES AND APPROACH The objectives of this study are as follows: 1. To find out what is Business Process Reengineering? 2. To know what are the reasons behind the failure of BPR projects? THE APPROACH The approach followed by me for the preparation of this project is ANALYTICAL RESEARCH. The first part of the research is focused on why we need to reengineer, the second part deals with what is BUSINESS PROCESS REENGINEERING, why we need it, what are the shortcomings and why BPR projectsfail? LIMITATIONS Although it has been my efforts to take all necessary precautions to ensure that the information gathered is authentic and maximum facts are covered and presented. This thesis also contains certain shortcomings. The nature of the report required detailed information gathering in this short time and was a restraint to accomplish the given task. . What Do We Want From Businesses? Agility Rapid spotting and response to changing conditions. Speed Dramatic compression of cycle times for key business process. Compression Shedding major chunks of cost and capital throughout the value chain. Flexibility Adaptive processes and structures. Quality Obsession with superior service and value to the customer. Innovation Leadership through imaginative change. What Do We Usually Find in Businesses?

Delay "We will sell no wine before its time." Poor quality and service "I'll have to check with the other department and get back to you." Unresponsiveness "I'll get to you when I can." Tunnel vision "It's not my job." Inflexibility "You can have any color as long as it's black." Inconsistency "I don't care what she told you, it can't be returned." Overhead "We'll need more people if we do that." Why Reengineer?

Reengineering is necessary for the following reasons: External Factors: Increasing global competition, Increasing domestic competition, Advent of new technologies and the realization that it can be applied in totally new ways, The new capabilities and plummeting prices of technology, Industry overcapacity, Shrinking markets, Product/service obsolescence, Increasing pressure from suppliers.

Internal Factors: Increasing cost structure, Declining profitability, Need to maintain industry lead, Less efficiency in operations, Flat / declining sales, Low productivity, Entering new markets, Inadequate employee skills, Failure of other improvement programs.

What is Business Process Reengineering? Redesign -

Business Process Redesign is "the analysis and design of workflows and processes within and between organizations The critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures." Reengineering Business Process Reengineering is the fundamental rethinking and radical redesign of an entire "business system" the business processes, jobs, organizational structures, management systems, and values and beliefs to achieve dramatic improvements in critical measures of performance. Dramatic: Order of Magnitude breakthroughs Radical: Using entirely new ways of working Processes: Davenport & Short define business process as "a set of logically related tasks performed to achieve a defined business outcome." A process is "a structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization". In their view processes have two important characteristics: i. ii. A business process is a sequence of activities that creates something of value for customers, be they internal or external. They cross-organizational boundaries, i.e., they occur across or between organizational sub-units.

Processes are generally identified in terms of beginning and end points, interfaces, and organization units involved, particularly the customer unit. High Impact processes should have process owners. The logical organization of people' materials, energy equipment, and procedures into work activities designed to produce a specified end result (work product). More on Processes Processes are generally independent of formal organizational structure, they cross-organizational boundaries.

Business processes are rarely reflected in organizational structures and are seldom defined or described in the same way by those who participate directly in them. Most business processes were developed before modern computers and communications even existed. When technology has been applied, it is usually to automate or speed up isolated components of an existing process. Redesign of entire processes should be undertaken with a specific business vision and related objectives in mind. Processes may be defined based on three dimensions

a. Entities: Processes take place between organizational entities. They could be Interorganizational, Interfunctional or Interpersonal.

b. Objects: Processes result in manipulation of objects. These objects could be Physical or c.

Informational. Activities: Processes could involve two types of activities: Managerial (e.g. develop a budget) and Operational (e.g. fill a customer order). Examples of Processes Developing a new product; Ordering goods from a supplier; Creating a marketing plan; Processing and paying an insurance claim; and Writing a proposal for a government contract.

Work & Process Who Does the Work? Function ------ P -------Where is the work performed? R O C E S S How is the work performed? The Practitioner's Perspective: The Core of Business Reengineering Three important Premises:

The objective of business reengineering is to make a significant contribution to an organization's competitive strength. The ultimate source of an organization's competitive strength springs from the excellence with which it designs and executes those few operational and/or management processes that are either critical to success in its industry or are chosen as a basis for differentiation. Consequently, the focus of business reengineering and the way that business reengineering initiatives make their most important contributions is to bring about dramatic changes in the performance of those few fundamental (core) business processes where major improvement is critical to competitiveness. Core Business Processes

A business will have relatively few core business processes through which it fulfills its business purpose Examples are: o o o o o Product development (the concept to market process) Order fulfillment (the order to collection process) Customer service (the inquiry to resolution process) Market management (strategic and tactical process of building and defending valuable market franchises) Planning, resourcing and control How Does BPR Differ from TQM? In recent years, increased attention to business processes is largely due to the TQM (Total Quality Movement). TQM and BPR share a cross-functional orientation. Experts observed that quality specialists tend to focus on incremental change and gradual improvement of processes, while proponents of reengineering often seek radical redesign and drastic improvement of processes. Quality management, often referred to as total quality management (TQM) or continuous improvement, refers to programs and initiatives that emphasize incremental improvement in work processes and outputs over an open-ended period of time. In contrast, Reengineering, also known as business process redesign or process innovation, refers to discrete initiatives that are intended to achieve radically redesigned and improved work processes in a bounded time frame. The following table provides contrast between the two. TQM Level of Change Starting Point Frequency of Change Time Required Incremental Existing Process One-time/ Continuous Short BPR Radical Clean Slate One-time Long

Participation Typical Scope Risk Primary Enabler Type of Change

Bottom-Up

Top-Down

Narrow, within functions Broad, cross-functional Moderate Statistical Control Cultural High Information Technology Cultural/Structural BPR Methodology

A seven step approach to BPR involves:

1. Defining the purpose and goal of the BPR project: BPR is driven by a business vision 2.
which implies specific business objectives such as Cost Reduction, Time Reduction, Output Quality improvement, QWL/Learning/Empowerment. Defining the scope of the project so as to include (or exclude) activities; A flowchart of the activities can assist to define the scope of the project.

3. Identifying the requirements that will meet the needs of the clients: This will help the
company in analyizing the kind of products consumer will require to satisfy their needs and which will lead to companys profit.

4. Assess the environment - the position of competitors, prospective changes in

technology, legislation or socio-economic factors.

5. Redesign the business processes and activities: Most firms use the High- Impact
approach which focuses on the most important processes or those that conflict most with the business vision. Lesser number of firms use the Exhaustive approach that attempts to identify all the processes within an organization and then prioritize them in order of redesign urgency.

6. Implement the redesigned processes: This process requires implementation of the

redesigned process for the effective use of the resources available and which have been used in the process of creating a new prototype.

7. Monitor the success/ failure of the redesign: The actual design should not be viewed
as the end of the BPR process. Rather, it should be viewed as a prototype, with successive iterations. The metaphor of prototype aligns the BPR approach with quick delivery of results, and the involvement and satisfaction of customers. Use of BPR in IT Industry (An Example) I. Likely Objectives of Reengineering Cost Reduction.

Time Reduction Output Quality of work life (QWL) / Learning / Empowerment II. Identify processes to be redesigned

Two Approaches: The exhaustive approach attempts to identify all processes within an organization and then prioritize them in order of redesign urgency. For example: "Information engineering" in which an organization's use of data dictates the processes to be redesigned. The high impact approach attempts to identify only the most important processes or those most in conflict with the business vision and process objectives. Can normally be identified using senior management workshops, or through extensive interviewing. High impact processes should have owners. In virtually all the process redesigns studied, an important step was getting owners to buy in to both the idea and the scope of process redesign at an early stage. Classify each redesign process in terms of beginning and end points' interfaces, and organization "nits (functions or departments) involved, particularly including the customer unit. III. Types of Existing Processes to be Examined Process Dimension and Type Typical Example Entities Interorganizational Interfunctional Interpersonal Objects Physical Informational Activities Operational Fill customer orders Reduce time and costs Increase Manufacture a product Create a proposal Increased flexibility Process Control Routinizing Complex Decisions Order from supplier Product Development Loan approval Lower Transaction Costs Eliminate intermediaries Work across geography Greater simultaneity Role and Task integration Typical IT Role

Output Quality Managerial Develop a Budget Improve Analysis Increase Participation

IV. New tools Information Technology Information Technology The capabilities offered by computers, software applications, and telecommunications IT plays a critical role in reengineering: it is the enabler of new business processes. It allows US to move from task oriented specialists to results oriented generalists. Information technology should be viewed as more than an automating or mechanizing force; it can fundamentally reshape the way business is clone. Business activities should be viewed as more than a collection of individual or even functional tasks; they should be broken down into processes that can be designed for maximum effectiveness, in both manufacturing and service environments. Thinking about information technology should be in terms of how it supports new or redesigned business processes rather than business functions or other organizational entities. And business processes and process improvements should be considered in terms of the capabilities information technology can provide. Individual tasks and jobs change faster than they can be redesigned. Today, responsibility for an outcome is more often spread over a group rather than assigned to an individual as in the past. Companies increasingly find it necessary to develop more flexible, team oriented, coordinative, and communication based work capability. In short, rather than maximizing the performance of particular individuals or business functions, companies must maximize interdependent activities within and across the entire organization. IT Capabilities and Their Organizational impacts Capability Transactional Geographical Organizational Impact / Benefits IT can transform unstructured processes into routinized transactions IT can transfer information with rapidity and ease across large distances, making processes independent of geography IT can replace or reduce human labor in a process IT can bring complex analytical method to bear on

Automational Analytical

a process Sequential IT can enable change in the sequence of tasks in a process' often allowing multiple tasks to be worked on simultaneously IT allows the capture and dissemination of knowledge and expertise to improve the process IT allows the detailed tracking of task status, input, and outputs IT can be used to connect two parties within a process that would otherwise communicate through an intermediary (internal or external)

Knowledge Management Tracking Disintermediation

V. Design and Build a Prototype of the Process Usually done by the same team that performed the previous steps Uses inputs from different constituencies (e.g., using brainstorming) Key factors to consider in process redesign and include: o using IT as an enabler o understand generic design criteria o consider issues of measurement and compensation, career paths, work enrichment, and new skills training The reengineered process design forms the basis for a pilot project that is followed by phased introduction

Post implementation assessment is usually made in relation to the objectives defined at the beginning of the reengineering project

Why BPR Projects Fail? What can be done about it? 70% of the BPR projects fail. Biggest obstacles that reengineering faces are: i. ii. iii. Lack of sustained management commitment and leadership; Unrealistic scope and expectations; and Resistance to Change.

Based on the BPR consultants' interviews, the positive preconditions for BPR success are: i. ii. iii. Senior Management Commitment and Sponsorship; Realistic Expectations; Empowered and Collaborative Workers;

iv. v. vi. vii. viii.

Strategic Context of Growth and Expansion; Shared Vision; Sound Management Practices; Appropriate People Participating Full-Time; and Sufficient Budget.

The negative preconditions related to BPR are: i. ii. iii. iv. v. vi. vii. viii. The Wrong Sponsor; A "Do It to Me" Attitude; Cost-Cutting Focus; and, Narrow Technical Focus. Unsound Financial Condition of the organisation; Too Many Projects Under Way; Fear and Lack of Optimism; and, Animosity Toward and By Information System and Human Resource Specialists.

The primary reason of BPR failure is overemphasis on the tactical aspects and the strategic dimensions being compromised. Most failures of reengineering are attributable to the process being viewed and applied at a tactical, rather than a strategic level. There are important strategic dimensions to BPR, notably, Developing and Prioritizing Objectives; Defining the Process Structure and Assumptions; Identifying Trade-Offs Between Processes; Identifying New Product and Market Opportunities; Coordinating the Reengineering Effort; and, Developing a Human Resources Strategy. Where is BPR Headed? Over the last few years, the reengineering concept has evolved from a "radical change" to account for the contextual realism, and to reconcile with more incremental process change methods such as TQM, towards a broader, yet more comprehensive process management concept. Based upon a theoretical analysis and survey of literature relevant to reengineering, experts outline some propositions to guide future inquiry into the phenomenon of BPR. Their propositions center around the concepts of knowledge management, employee empowerment, adoption of new IT's, and a shared vision. They have proposed a "process alignment model" that comprises four lenses of enquiry: process, strategy, Management Information System, and change management and control, and used it for developing an inductive taxonomy of BPR strategies. The key emphasis on these issues is based primarily on an integrative synthesis of the recent literature from organization theory, organization control, strategy, and Management Information System. They believe that although the current faddism of BPR may end, however, process reengineering, in some form or known by some other name would be of enduring importance.

Conclusion Ultimate success of BPR depends on the people who do it and on how well they can be motivated to be creative and to apply their detailed knowledge to the redesign of business processes. In order to achieve the major improvements BPR is seeking for, the change of structural organizational variables, and other ways of managing and performing work is often considered as being insufficient. For being able to reap the achievable benefits fully, the use of information technology (IT) is conceived as a major contributing factor. While IT traditionally has been used for supporting the existing business functions, i.e. it was used for increasing organizational efficiency, it now plays a role as enabler of new organizational forms, and patterns of collaboration within and between organizations

Bibliography For this project report material was taken from various sources. Below I have tried to list as many sources as possible. The primary sources used were 1. Books (i) Operation Management for Competitive Advantage by Richard B. Chase, Nicholas J. Aquilano and F. Robert Jacobs. (ii) Beyond Reengineering by

2. Internet
(i) www.answers.com/bpr (ii) www.brint.com/papers/bpr.html (iii) www.mason.gmu.edu/~mchen/bpr/syl.html (iv) www.bpubs.com/Management_Science/Business_Process_Reengineering