Explain BPR? When to take BPR ?

Davenport&Short (1990) define business process as “a set of logically related tasks performed to achieve a

defined business outcome.

Hammer (1990) has defined Business Process Reengineering “the fundamental rethinking and radical

redesign of business processes to achieve dramatic improvements in critical, contemporary measures of

performance, such as cost, quality, service, and speed”.

This definition comprises four keywords: fundamental, radical, dramatic and processes.

Keyword 1: Fundamental

Understanding the fundamental operations of business is the first step prior to reengineering. Business people

must ask the most basic questions about their companies and how they operate: “Why do we do what we do?”

and “Why do we do it the way we do?” Asking these basic questions lead people to understand the fundamental

operations and to think why the old rules and assumptions exist. Often, these rules and assumptions are

inappropriate and obsolete.

Keyword 2: Radical

Radical redesign means disregarding all existing structures and procedures, and inventing completely new ways

of accomplishing work. Reengineering is about business reinvention, begins with no assumptions and takes

nothing for granted.

Keyword 3: Dramatic

Reengineering is not about making marginal improvements or modification but about achieving dramatic

improvements in performance. There are three kinds of companies that undertake reengineering in general. First

are companies that find themselves in deep trouble. They have no choice. Second are companies that foresee

themselves in trouble because of changing economic environment. Third are companies that are in the peak

conditions. They see reengineering as a chance to further their lead over their competitors.

Keyword 4: Processes

The final keyword “Process”, though the most important in the definition, is the one that gives most corporate

managers the greatest difficulty. Most business people are not process-oriented; they are focused on tasks, on

jobs, on people, on structures, but not on processes.

BPR is done by

1. Companies at its declining stages.

2. Companies in its stable stages.

3. Companies in their peak stages.

Difference between continous improvement and BPR Difference between continous improvement and BPR

Continuous improvement is an approach to improving the competitiveness, effectiveness and flexibility of a

whole organization. It is essentially a way of planning, organizing and understanding each activity, and depends

on each individual at each level. CONTINOUS IMPROVEMENT involves placing the customer as the focal

point of operations. Its aim is to continuously improve process performance in order to satisfy customer

requirements. At the center of TQM is the concept of the management of processes, and the existence of

internal suppliers and customers within organizations.

BPR also emphasizes focus on the process. However, BPR is much more radical than CONTINOUS

IMPROVEMENT. Quality approaches concentrate on improving existing processes; process reengineering

starts from scratch to create new processes without the constraints of existing methods, people, technology,

management systems, or organizational structures.

The major differences between Quality Improvement and Process Reengineering approaches are provided by

Chang (1994) in the following table:

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. On the other

hand, Davenport&Short (1990) suggest that CONTINOUS IMPROVEMENT and BPR can -and should- form

an integrated strategic management system within organizations.

Differences Between Quality Improvement (TQM) and Process Reengineering (BPR)

Major Factor

Quality-Improvement

Approach Reengineering

Approach

Senior-

management

involvement

Hands-on initially, and

becoming more

reinforcement-oriented

Hands-on, active involvement throughout the

effort

Intensity of team-

member

involvement

Ongoing involvement on an

as-needed, part-time basis

Ongoing involvement for a specified duration

on a full-time basis

Improvement goals Focus on incremental

improvements over a period of

time

Focus on dramatic improvements in a short

time frame

Implementation

approach

Emphasis on improving

current work processes

Emphasis on creating new ways of doing

things

Magnitude of

organizational

change

Limited disruption to existing

systems and structures

Radical changes to existing systems and

structures

Breadth of focus Addresses narrowly defined

work processes

Addresses processes that span entire business

units

Use of benchmark

data

Used after process

improvement, to compare data

Used on front end, to assist with process

selection

Dependence on

information

systems

Information systems used for

data collection and

interpretation

Information systems used as a central enabler

with on-line access

Relationship Between BPR and Information TechnologyRelationship Between BPR and Information Technology

Information Technology (IT) refers to “the capabilities offered by computers, software applications, and

telecommunications”. (Davenport&Short, 1990)

Hammer (1990) considers IT as the key enabler of BPR, which he considers as "radical change." He

prescribes the use of IT to challenge the assumptions inherent in the work processes that have existed since

long before the advent of modern computer and communications technology.

Davenport&Short (1990) argue that BPR requires taking a broader view of both IT and business activity, and

of the relationships between them. IT and BPR have recursive relationship. IT capabilities should support

business processes, and business processes should be in terms of the capabilities IT can provide.

Davenport&Short (1990) refer to this broadened, recursive view of IT and BPR as “the new industrial

engineering”.

In order to more effectively respond to BPR, IT must play a more active role throughout a BPR project. IT

must:

Increase their level of participation in all areas of a BPR initiative;

Provide key information regarding automated processes to business analysts;

Build a transition strategy that meets short and long-term retooling requirements;

Enforce the integrity of redesigned business processes in the target system;

Reuse business rules and related components that remain constant in a target application.

Factors driving a BPR project can include improving customer service, streamlining processes to cut costs, or

addressing inefficiencies in other high impact areas. For example, customers frustrated with having to speak to

multiple individuals regarding an insurance claim may switch to the competition. To address this problem, an

insurance provider determines that service functions must be consolidated to one point of contact. The

underlying systems that manage claims handling do not support single point of contact processing. In this case,

legacy systems have become a barrier to the success of the BPR initiative.

The relationship of BPR analysis and IT is reciprocal because business and technical analysts must devise a

continuous feedback communication loop for projects to work. This is particularly critical because current

systems analysis helps articulate the as-is business model while the redesigned business model dictates the

impact BPR has on existing information architectures. Once this reciprocal cycle is in place, IT can determine

exactly how to upgrade, redesign, or replace selected systems in order to implement reengineered business

processes. Figure one highlights key steps in a retooling strategy.

Finally, Attaran (2003) categorizes IT roles in BPR into three phases:

Phase 1 : Before the process design (as an enabler)

Create infrastructures and manage information that support evolving organization

Foster process thinking in organizations

Identify and select process for redesign

Participate in predicting the nature of change and anticipate the information needs to support that change

Educate IT staff in non-technical issues such as marketing, customer relationships, etc.

Participate in designing measures of success/failures of reengineering

Phase 2: During the process design (as a facilitator)

Bring vast amounts of information into the process

Bring complex analytical methods to bear on the process

Enhance employees’ ability to make more informed decisions with less reliance on formal vertical

information flows

Identify enablers for process design

Capture the nature of proposed change and match IT strategy to that change

Capture and disseminate knowledge and expertise to improve the process

Communicate ongoing results of the BPR effort

Transform unstructured processes into routinized transactions

Reduce/replace labor in a process

Measure performance of current process

Define clear performance goals and objectives to drive the implementation

Define the boundaries and scope of the process

Phase 3: During the implementation (as an implementer)

Create a digital feedback loop

Establish resources for critical evaluation of the reengineered process

Improve IT processes to meet increasing needs of those divisions that have gone under reengineering

processes

Institute a program of ‘‘cleanup’’ and damage control in case of failure

Communicate ongoing results of the BPR effort

Help to build commitment to BPR

Evaluate the potential investment and return of reengineering efforts

Reengineering Success Factors

 More than half of early reengineering projects failed to be completed or did not achieve bottom-line business

results, and for this reason business process reengineering "success factors" have become an important area of

study.

Success factors are a collection of lessons learned from reengineering projects and from these lessons common

themes have emerged. The success factors that lead to successful outcomes for reengineering projects include: 

1. Top Management Sponsorship (strong and consistent involvement) 

2. Strategic Alignment (with company strategic direction) 

3. Compelling Business Case for Change (with measurable objectives) 

4. Proven Methodology (that includes a vision process) 

5. Effective Change Management (address cultural transformation) 

6. Line Ownership (pair ownership with accountability) 

7. Reengineering Team Composition (in both breadth and knowledge)

Top Management Sponsorship

Major business process change typically affects processes, technology, job roles and culture in the workplace.

Significant changes to even one of these areas require resources, money, and leadership. Changing them

simultaneously is an extraordinary task. If top management does not provide strong and consistent support,

most likely one of these three elements (money, resources, or leadership) will not be present over the life of the

project, severely crippling your chances for success.

Strategic Alignment

You should be able to tie your reengineering project goals back to key business objectives and the overall

strategic direction for the organization. This linkage should show the thread from the top down, so each person

can easily connect the overall business direction with your reengineering effort. You should be able to

demonstrate this alignment from the perspective of financial performance, customer service, associate

(employee) value, and the vision for the organization.

Business Case for Change

In one page or less you must be able to communicate the business case for change. Less is preferred. If it

requires more than this, you either don't understand the problem or you don't understand your customers.

The business case for change will remain the center piece that defines your project, and should be a living

document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact

from major change initiatives are difficult to measure and more difficult to obtain; without a rigorous business

case both are unlikely.

Proven Methodology

The previous module presented several BPR methodologies, and it is important to note that your methodology

does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these

projects have on processes and people.

Not only should your team members understand reengineering, they should know how to go about it. In short,

you need an approach that will meet the needs of your project and one that the team understands and supports.

Change Management

One of the most overlooked obstacles to successful project implementation is resistance from those whom

implementers believe will benefit the most. Most projects underestimate the cultural impact of major process

and structural change, and as a result do not achieve the full potential of their change effort.

Line Ownership

The line operation probably cannot heal itself when it comes to major business re-design. Staff and consultants

have no lasting accountability for the solution, and never succeed at forcing solutions on line organizations.

You need both. You need the line organization to have the awareness that they need help, to contribute their

knowledge, and to own the solution and implementation. At the same time you need the expertise and

objectivity from outside of the organization.

Building this partnership is the responsibility of the line organization, stakeholders and re-design team. No

group is off the hook.

Reengineering Team Composition

The reengineering team composition should be a mixed bag. For example,

some members who don't know the process at all,

some members that know the process inside-out,

include customers if you can,

some members representing impacted organizations,

one or two technology gurus,

each person your best and brightest, passionate and committed, and

some members from outside of your company.

FACTORS DETERMINED TO HINDER REENGINEERING SUCCESS

Fear of job loss

Somewhere during this century, reengineering became synonymous with down sizing and worker layoffs.

However, many of the early corporate projects did not include such drastic measures.

Unfortunately, when companies take on a project that will cost extremely large amounts of capital, senior

management wants to see some hard evidence that there will be a huge savings some where. One of the easiest

ways to provide a cost/benefit to a BPR project is cut the workforce. Many cases have shown this only reduces

the available talent pool of an organization. Fear and anxiety fill the hearts of those workers remaining. Down

sizing can profoundly affect the lives and productivity of individuals, whether they leave the organization or

survive the down sizing

Therefore, BPR drives fear into the organization and destroys the to entire social segment of the socio-technical

system which produces the product or service

Inadequate skills of workers

An organization can be categorized by people into three categories; eager adopters, prove-its, and resisters.

Only about 10 to 15 percent of people are considered eager adopters. These people like technology and are

stimulated by learning how to use it. The other 85% probably don't have the skills for BPR with IT, but may not

admit to it.

No reengineering effort will succeed without first reeducating and retraining the people who will ultimately

work with the new process The focus needs to be on the people not on the processes.

Lack of management support

BPR became the method to wipe the slate clean and start over with business processes. However, far too often

this was applied to employees and middle managers. Senior management sometimes felt it was not necessary

for them to also change with IT. However, when employees found out the CEO has his secretary retrieve and

sends his E-mail; credibility for a new system project was lost. Management often allows money to be thrown

around purchasing technology, but then overlook financing training of people necessary to infuse or utilize the

IT. Strong leadership is necessary if BPR projects are not to be ruined by psychological and political disruptions

that accompany change

Change of organizational structure and culture

Human passions and emotions react strongly when the prospect of change intrudes on their familiar working

and living patterns. It is believed that the necessary cooperation to achieve success will not occur unless people

are assured they will not be working themselves out of a job. .

What is a Business Process?What is a Business Process?

Davenport&Short (1990) define business process as “a set of logically related tasks performed to achieve a

defined business outcome”.

In their view, processes have two important characteristics:

They have customers, that is, processes have defined outcomes, and there are recipients of the outcomes.

They cross organizational boundaries, that is, they normally occur across or between organizational

subunits.

On the other hand, Hammer&Champy (1993) define business process as “a collection of activities that takes

one or more kinds of input and creates an output that is of value to the customer”.

Examples of processes include: developing a new product; ordering goods from a supplier, creating a

marketing plan, processing and paying an insurance claim, etc.

Davenport&Short (1990) have categorized business processes according to three dimensions:

Organizational entities or subunits involved in the process (Interorganizational, Interfunctional, and

Interpersonal Processes)

The type of objects manipulated (Physical and Informational Processes)

The type of activities taking place (Operational and Managerial Processes)

Different process types require different levels of management attention and ownership, need different forms of

IT support, and have different business consequences.

A business process or business method is a collection of related, structured activities or tasks that produce a

specific service or product (serve a particular goal) for a particular customer or customers. It often can be

visualized with a flowchart as a sequence of activities.

The core business of an organization is an idealized construct intended to express that organization's "main" or

"essential" activity.

The corporate trend in the mid-20th Century of acquiring new enterprises and

forming conglomerates enabled corporations to reduce costs funds and similar investment vehicles, and

sometimes the following of a popular trend among corporate management seeking to appear current and

impress investors.

Core business process means that a firm's success depends not only on how well each department performs its

work, but also on how well the company manage to coordinate departmental activities to conduct the core

business process, which is;

1. The market-sensing process Meaning all activities in gathering marketing intelligence and acting on the

information.

2. The new-offering realization process Covering all activities in research, development and launching new

quality offerings quickly and within budget.

3. The customer acquisition process all the activities defining the target market and prospecting for new

customers

4. The customer relationship management processes all the activities covering building deeper

understanding, relationships and offerings to individual customers.

5. The fulfillment management process all the activities in receiving and approving orders, shipping out on

time and collecting payment.

To be successful, a firm needs to look for competitive advantages beyond its own operations. The firm needs to

look at the competitiveness value chain of suppliers, distributors and customers. Many companies today have

partnered with specific suppliers and distributors to create a superior value delivery network.

Task and sub-process

A business process is mainly formed by activities that need to be performed to complete the process. There are

two kinds of activities - task and sub-process. A task is an atomic activity which represents work that cannot be

broken down. On the contrary, sub-process represents work that can be broken down to a finer level of detail.

Flow Chart

A flow process chart is a diagram that utilizes both text and symbols to show the actions required to complete a

given process. This type of chart lays out each step in chronological order, with symbols indicating the

beginning and ending of the process as well as decisions and actions that occur along the way. A flow process

chart is useful for visualizing the procedure in question and identifying areas of weakness.

Process flow symbols typically include three distinct shapes. An oval is used to signify the beginning and

ending points of the process. A rectangle indicates actions, and a diamond indicates a decision. Each shape is

connected to other shapes by an arrow, which leads the viewer from one process to the next. Each shape

contains words describing that step of the process.

A flow process chart typically has a single start point. This may be labeled "Start" or it may indicate the purpose

of the chart, such as "Customer Service Call." From this point, arrows will lead to possible actions or decisions.

Continuing with the previous example, a flow process chart on dealing with customer service calls may include

questions that the caller should be asked, such as "What system are you operating on?" Each question will

branch out to possible answers. These answers may lead to another question to further clarify the problem, or a

solution which will effectively achieve the goal of the call.

After a series of decisions and actions, the flow process chart will ultimately lead to an end point. Some charts

will have a single beginning and end, while others can result in multiple conclusions. A customer service call

could end with a variety of solutions fitting for the problem. The chart may end there, or point each solution to

another action, such as a prompt to complete a survey on the effectiveness of the service.

Actions or decisions that apply to more than one scenario will not appear multiple times on a flow process chart.

The unifying process will appear once with multiple arrows leading up to it. If the final goal of the flow chart is

the same regardless of the process, the oval signifying the end point of the chart may be traced back to multiple

actions or decisions.

A flow process chart is a useful tool for businesses, as it can provide a visual of the actions that are taken

throughout the course of a process. If the process seems overly complicated, this chart will help identify weak

points where it can be clarified or improved. A flow process chart is also useful for making decisions. It can

provide easy-to-read instructions for following the correct procedure in a variety of situations.

Support Process - Activity or function that supports the day-to-day operations of an organization, such

as accounting, communications, maintenance, sales.