Let’s get horizontal!

Toward a process view of organizations

objectives present the process view of

organization describe business processes discuss business process reengineering

reinventing organizations

old view…

new view

definition of business process

a specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs

Davenport, 1993

focus on “what” focus on “how”

vertical; chain of command horizontal; workflow

static; slice-in-time dynamic

task-centered customer-oriented

individual; specialist team; generalist

parochial holistic

So, what’s the difference?

Function Process

typical business processes product development customer acquisition manufacturing order management human resource management planning & resource allocation

cross-functional processes: product development

MARKETING PRODUCTIONR & D

product developmentproduct development

com

petit

or a

nalys

ism

arke

t res

earc

h

new

prod

uct

prot

otyp

e

needs analysisresearchmarket test

component designproduct testproduct release

process designequipment designproduction start

cross-functional processes: order management

SALES FINANCELOGISTICS

order managementorder management

sale

s or

der

paym

ent

proposalcommitment

configurationdelivery

credit checkingbillingcollection

example:sales logistics

sales order

delivery

payment

SAP event process model:sales logistics

xor

V

V

Arrival of orderw/o reference to

quotation

Arrival of orderw/o reference to

quotation

Quotation is valid

Quotation is valid

Arrival of orderwith reference

to quotation

Arrival of orderwith reference

to quotation

Standard orderprocessing

Standard orderprocessing

processing

xor

Orderconfirmation

is sent

Orderconfirmation

is sent

Material requirements

planning

Rejection issent to

customer

Rejection issent to

customer

Deliveryprocessing

Deliveryprocessing

Material isissued

Material isissued

Billing documentproceessing

Order is released

Order is released

Sales requirements are

determined

Sales requirements are

determined

Createbilling document

Createbilling document

value chain

stream of activities part of larger “value system” applies to both products and services

pro

fit

mar

ginsupport:

primary:

infrastructure, hr, r&d, procurement

inboundlogistics

operationsoutboundlogistics

marketing& sales

service

inter-organizational processes

The 2000’s will be about breaking down external walls: integrating and redesigning inter-enterprise processes using the Internet

-Michael Hammer

real triviality quiz

Who is Michael Hammer?

Michael Hammer“Father of Reengineering”

“Don’t automate…

business process reengineering

......OBLITERATEOBLITERATE!”!” fundamental redesign of processes

“clean sheet of paper”

leveraging technology upgrading skill levels (aka fewer jobs)

Hammer’s principles

outcomes over tasks users of output: do it yourself! process information at the source geography doesn’t matter coordinate activities empower workers

servicing of loan

follow-up processing

origination of loanpre-

qualificationdocumentgeneration

applicationprocessing

credit analysis& underwriting

approval& closing

paymentprocessing

escrowmanagement

customerservice

collections& foreclosures

valuation &risk analysis

transfer tosecondary mkt

loan processingdesk-to-desk approach

creditreporting

loan processingteam approach

field replaptop

regionalproduction

center

loanorigination

team

loanservicing

team

BPR success stories Ford A/P

eliminated invoices reduced headcount: from 500 to 125

Mutual Benefit Life revised application processing (from 30

steps, five departments, 19 people, 5 to 25 days to one person + expert system, 4 hours)

eliminated 100 positions

summary presented the process view of

organization described business processes discussed business process

reengineering