BUSINESS PROCESS REENGINEERING

Presented to Sir Faqir TajAgendaDefinition of BPRWhy Reengineer?Goals of BPRStages of BPR MethodologyBPR Life CycleWhat should be Reengineered?When Should be Reengineered?BPR FrameworksWhat Reengineering is not..ExamplesTransformationChallengesCritical Success FactorsConclusion

Business Process ReengineeringBPR is known by many namesSynonyms: business process redesign, business transformation, process innovation, business reinvention, change integration These concepts focus on integrating both business process redesign and deploying IT to support the reengineering work.

Business process reengineeringSherwood-Smith (1994),

seeking to devise new ways of organizing tasks, organizing people and redesigning IT systems so that the processes support the organization to realize its goals.

Redesign and analysis of workflow, in an effort tomake it more efficient.

Why Reengineer???

Objectives of BPR

Customer focusMeeting customer requirements closelyProviding convenienceProductivityOptimize productivityEfficiencyCostSpeed/TimeEffort

BPR MethodologyDevelop business vision and objectivesIdentify process to be re-designedUnderstand and measure existing processesIdentify IT leversDesign and build a prototype of the processStages in BPR Methodology

9Processes (not organizations) are reengineeredConfusion arises because organizational units are well defined, processes are often not.Formal processes are prime candidates for reengineeringFormal processes are guided by written policies; informal processes are not.Typically involve several departments and many employees.More likely rigid and therefore more likely to be based on invalid assumptions.What Should be Reengineered?

10Screening criteriaDysfunctionWhich processes are in deepest trouble (most broken or inefficient)?2.ImportanceWhich processes have the greatest impact on the companys customers?3.FeasibilityWhich processes are currently most likely to be successfully reengineered?What Should be Reengineered?

11Three forces are driving companies towards redesign (The three Cs, Hammer & Champy, 1993)Customers are becoming increasingly more demandingCompetitionhas intensified and is harder to predictChangein technology constant pressure to improve; design new products fasterflexibility and ability to change fast are requirements for survivalWhen Should a Process be Reengineered?

A BPR FrameworkOrganizationJob skillsStructuresRewardValues TechnologyEnabling technologiesIS architecturesMethods and tools IS organizationsProcessCore business processesValue-addedCustomer-focusInnovation

13Suggested Framework for BPR In general, keywords for successful BPR are creativity and innovationbut BPR projects also need structure and discipline, preferably achieved by following a well thought-out approach.

BPR Framework due to Roberts (1994)Starts with a gap analysis and ends with a transition to continuous improvement.The gap analysis focuses on three questions:The way things should beThe way things areHow to reconcile the gap between 1 and 2

14Roberts Framework for BPR

OpportunityassessmentCurrent capabilityanalysisProcess DesignRisk and impactassessmentTransition planPilot testInfrastructuremodificationsImplementationand transitionTracking andperformanceContinuous improvementprocessReengineering is not

Automation of existing ineffective processesSophisticated computerization of obsolete processesPlaying with organization structuresDownsizing doing less with less

BPR Examples Ford: Accounts Payable Mutual Benefit Life: New Life Insurance Policy ApplicationCapital Holding Co.: Customer Service ProcessTaco Bell: Company-wide BPROthers

Ford Accounts Payable Process*Accounts PayableVendor

GoodsReceivingPaymentInvoiceReceiving document

PurchasingPurchase orderCopy ofpurchase orderPO = Receiving Doc. = Invoice*Source: Adapted from Hammer and Champy, 1993??Ford Procurement ProcessAccountsPayableVendor

GoodsReceivingPaymentGoods receivedPurchasingPurchase orderPurchase order

Data base

Ford Accounts PayableBeforeAfterMore than 500 accounts payable clerks matched purchase order, receiving documents, and invoices and then issued payment. It was slow and cumbersome.Mismatches were common. Reengineer procurement instead of AP process.The new process cuts head count in AP by 75%.Invoices are eliminated. Matching is computerized. Accuracy is improved. ExampleExample of a customer in bank to Apply for loanApply for ATM cardAnd to open a savings account

The essence of BPR is Transformation

A 4-Pronged Approach toTransformationTransformation Eliminate Simplify Automate Base on Trust Integrate Join Up LegislateTransforming Process Multiple Channels 24x7 Access Common Service Centres Mobile Self-Service Licensed Intermediaries

Transforming Channels Enterprise Architecture Standards Unified Databases Unified Networks SOA PortalsUsing Technology

Training Change Management CRM skills Consultation Empowerment Education Awareness

Transforming PeopleChallenges,Critical Success Factors &Critical Failure Factors in BPR

Challenges in a BPR ExerciseIdentifying Customer Needs & Performance Problems in the current ProcessesReassessing the Strategic Goals of the OrganizationDefining the opportunities for Re-engineeringManaging the BPR initiativeControlling Risks Maximizing the BenefitsManaging Organizational ChangesImplementing the re-engineered Processes

9 Changes occasioned by BPRWork Units changefrom functional departments to process teamsJobs changefrom simple tasks to multi-dimensional workPeoples roles changefrom controlled to empoweredJob preparation changesfrom training to educationMeasures of Performance & compensation changefrom activity to resultsCriteria for career advancement changefrom performance to abilityValues changefrom protective to productiveOrganizational Structures changefrom hierarchical to flatExecutives changefrom scorekeepers to leaders

Critical Success Factors in BPRClear Vision for TransformationTop management commitmentIdentification of Core Processes for BPRAmbitious BPR teamKnowledge of Reengineering techniquesEngaging external consultantsTolerance of genuine failures"Change Management

Critical Failure Factors in BPRTrying to Fix a process instead of Changing itLack of focus on Business-critical ProcessesLack of holistic approachWillingness to settle for minor resultsQuitting too earlyLimiting the scope of BPR by existing constraintsDominance of existing corporate cultureAdopting bottom-up approachPoor leadershipTrying to avoid making anyone unhappyDragging the BPR exercise too long.

ConclusionBPR is about Radical Redesign of business processes

BPR brings Efficiency, Effectiveness & Customer-friendliness

BPR needs adoption of a structured methodology

Top management commitment & Change Management are critical to success