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Learning Objectives
Define business process redesign Describe the nine dimensions of BPR Discuss the benefits of BPR Identify and describe the situations in which BPR becomes necessary Different phases of BPR Describe the warning signs of trouble that indicate the need for reengineering Identify and describe the critical success factors for BPR projects
Reengineering business processes means tossing aside existing process and starting over.
***Business process re-engineering is also known as business process redesign, business transformation, or business process change management.
Definition of BPR:
The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed.
(Hammer and Champy, 1993)
Fundamental
Fundamental implies that everything every assumption, every reason, every activity is challenged by asking why it should be continued. The implication is nothing should be accepted as scared. Over time, practices that were once required become obsolete and need to be removed.
Radical
Do not try to improve the existing situation, invent(create/design) completely new ways of accomplishing(complete/achieve) work.
Dramatic
Do not use business process redesign to obtain marginal (small slight) improvements, aim at order-of-magnitude improvements (ten times). If the marginal gains 5 to 10 percent are the goal, then continuous improvement is a more appropriate path than reengineering.
Process
A business process may be defined as a set of logically related tasks performed to achieve a defined business outcome(Davenport, 1990)
OR
activities that takes one or more kinds of input and create an output that is of value to customer Hammer and Champy, 1993)
OR
a set of business events that together enable the creation and delivery of an organizations products or services to its customers (Gelinas et. al, 2004)
Infrastructure Layer
Reward Structure Measurement Systems
Managemen t Methods
Value Layer
More difficult to change less concrete Organizational Culture Political Power Individual Belief Systems
Process structure consists of the business processes, outcomes, policies, practices and procedures that support the processes. (process structure is what, when and how work is performed)
Process can be triggered by internal events, timing cycles, or external stimuli. Some processes originate by designs, others may emerge informally to meet real or perceived organizational needs (that is why we need business process reengineering). There are undocumented, inconsistently applied and personality dependent processes. No single organization has the same processes
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When process and organization structures are out of alignments, there are gaps in accountability.
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Measurement systems define the feedback that provide information on process performance. - enables people to improve process performance;
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Management methods consist of the practices and techniques used to supervise, develop, and support the people who perform the business processes.
It is one of the most neglected (ignored) in reengineering because it is seen as outside the project scope. Managers and supervisors must understand and learn how to support the new environment so as to gain benefits from the reengineering process.
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BENEFITS OF REENGINEERING
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Increase the organizations ability to customize products and services while retaining mass-production economics.
2.
Increase customer satisfaction with products and services so they prefer your products and services over those of your competitors.
Make it easy and pleasant (enjoyable) for customers to do business with your organizations. Break organizational boundaries, bringing customers into the information channels through communication, networking, and computer technologies.
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BENEFITS of REENGGINEERING
5. Decrease response time to customers, eliminate errors and complaints, and reduce product and service development and manufacturing cycle time. Process more customer requests and higher volume from each customer, and deliver value-driven prices to customers without reducing profitability. Improve the quality of work life and individual capabilities for contribution so that people experience ownership of their work and of customers and see their contributions to the organizations. Improve the sharing and utilization of organization knowledge so the organization does not become/remain dependent on the expertise of a few people.
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1.
The explosion of chaos and bureaucracy: Organizations work processes were not designed BUT they evolved out of the chaos of
doing business. Processes become habitualised. From veteran to new staff without realizing it was a mistake (e.g. a team of headquarters accountants visiting a field billing office found clerks misapplying
account codes to expense vouchers. The team asked a clerk why? She replied: Listen, Ive been doing this job for 20 years, and you are not going to tell me Im doing it wrong.)
2.
Thinking of customers: Too many companies design processes based on the assumption that they know whats best for customers, thus, organization becomes inflexible, driving frustrated customers to competitors or regulatory commissions. Employees who take the initiatives to help customer would be penalized for bypassing official procedures.
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Automation of existing bureaucracy: computerization reinforced bureaucracy rather that breaking through it. (changing paper documents to electronic document, BUT company only duplicates
existing processes, thus, maintaining both paper and electronic forms of data. E.g. an insurance companys claims department, automation created paper printouts to replace handwritten claim files, but paper continued to move from one desk to another as the claim was processed).
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Bottlenecks and disconnects in critical cross-functional processes. Each unit operates as if it has no relationship to the other units.
(Each unit is part of the manufacturing stream, but they each operates in costly and cumbersome processes preparing work for processing, resolving problems and errors, tracking the work in progress, thru, creating duplicate and inaccurate data. E.g. large automobile manufacturing company each division reentered information about incoming work into its own systems, and sent paper with the outgoing work. Each department did not check with each other on what is going on in the manufacturing process).
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5.
Elusiveness of accountability: Most organizations are structured by function (eg. Sales, manufacturing, etc.) but essential business process (eg. Customer service and support) cut across the functions. This makes it difficult, if not impossible, to establish accountability for a complete business process. (e.g. in a manufacturing firm, the subprocesses, each assigned to different group. If any plans
or budgets were late, inaccurate, or incomplete, customers programs could not be updated in time to avoid invoicing errors and deductions. As a result, in 5-years time, the number of changes in plans and budgets increased from 10 57%, and the process deteriorated from lack of management, measurement and accountability.
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Chaos of downsizing: It leaves survivors demoralized, the work environment inadequately staffed, and people with inadequate skills performing the work, and tasks can no longer be processed within their current configuration. (e.g. a large government organization
downsized its headquarters by 40%. 1 staff was left to take up a responsibility for 4 person, he has to work 16 hours a day and before long, demanded to transfer to another location.
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The turmoil of integration and merger: This creates work processes that often duplicate or conflict with each other.
(e.g. Purchase of 4 companies gave the new company 4 different sets of policies, procedures and formula options for processing customer orders. In a 5-year period, over $80 million would be wasted supporting these overlapping redundant operations. Integrating the customers order management process will create massive difficulties as 3 of the 4 companies. Field work loads tripled, errors increased 50%, and over 100 additional clerical people were hired to prepare inputs and correct errors.
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Begin organizational change. Building the reengineering organization. Identifying the BPR opportunities. Understanding the existing process. Reengineering the process. Blueprint the new business system. Perform the transformation.
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Assess the current state of the organization. Explain the need for change. Illustrate the desired state. Create a communications campaigns for change
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are:
Establish a BPR organizational structure. Establish the roles for performing BPR. Choose the personnel who will re-engineer.
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Identify the core/high level processes. Recognize potential change enablers. Gather performance metrics within industry. Gather performance metrics outside industry. Select processes that should be reengineered Prioritize selected processes
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Evaluate pre-existing business strategies Consult with customers for their desires. Determine customers actual needs. Formulate new process performance objectives Establish key process characteristics Identify potential barriers to implementation.
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The
Understand why the current steps are 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
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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 focal point.
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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 system. Describe the new values and culture required.
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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. Assess current skills and capabilities of workforce.
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Map new tasks and skill requirements to staff. Re-allocate workforce. Develop a training curriculum. Educate staff about the new process. Educate the staff about the new technology used. Educate management on facilitation skills. Decide how new technologies will be introduced. Transition to the new technologies. Incorporate process improvement mechanisms.
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A business focus a focus on all dimensions. Success depends on integrating all three process, technology, and organization, plus supporting that integration with new infrastructure and values.
2. A methodology and project approach requires discipline and structure; methodology must be systematic and fact focused; must articulate how to secure finding, manage power struggles, and sell the new ideas. 3. Time - BR takes time. Executives must be able to stick with the program.
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begins the process of transforming a dysfunctional organization into a learning, productive, quality-focused, customer driven organization. must be customer driven.
BR
Quality
is defined in terms of added value, cost sensitivity, responsiveness, and functionality. must enable people to handle more change successfully.
BR
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CHALLENGES
Resistance Tradition Time Cost Skepticism Job
requirements
lossess
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THANK YOU