BUSINESS PROCESS

REENGINEERING

(BPR)

RADICAL

REDESIGN

RETHINKING

COREPROCESS

FORMULATESTUDY

IMPLEMENT

IDENTIFY

OUTCOME SPEED

ACCURACY

ADAPTABILITY

INTEGRATION

DRAMATIC IMPROVEMENT

Presented By :ADITI WALIA

CONSUMER

SATISFACTION

RADICALCRITICAL

SUCCESS

FACTOR

AUTOMATIC SIMPLER

TIME SAVING

RETOOL

REORCHESTRATE

Business Process Reengineering ( BPR ) refers to the analysis & redesign of workflows & processes both within and between the organizations. The orientationof BPR is “radical”. Itis a total deconstruction & a total rethinking of the business process in its entirety, unconstrained by its present business structure & pattern. Its objective is to gain quantum gains in the performance of the processes in terms of time, cost , output , quality and responsiveness to the customer.

A business process comprise of a combination of number of much independent & interrelated processes such as :

Developing new product. Customer order processing. Bill payment system.

The structural elements that constitute a process provide a basis for its analysis, appraisal & redesign for achieving higher levels of efficiency & effectiveness, economy, speed, quality & output.

• Simplify

• Standardize

• Empowering

• Measurements

REDESIGN

• Network

• Intranets

• Extranets

• Workflow

RETOOL

• Processes

• Information Technology

• Human ResourcesREORCHESTRATE

THE 3 R OF REENGINEERING

ISSUES POINTING

TOWARDS NEED FOR BPR

It is very much possible to achieve a higher level of process performance byredesigning the process. A company resorting to reengineering of businessprocesses is able to doublethe speed of normal production, utilise productsseveral times more productively & respond to consumer’s needs and expectations more rapidly.

This could be achieved by effecting a total change in the process instead of a piecemeal change.It is, therefore, imperative thatfor many organizations on the decline, changing the process or redesigning the process may be the only viable alternative forturnaround. They must breakthemselves free from theirprimitive and archaic work processes that drag them down.

Issues that emerge from the forgoing discussions on the need for change form the underlying premises of BPR.

They may be outlined as follows :

❖ The operational excellence of a company is a major basis for its competitiveness.

❖ The business strategy of a company should be oriented towards leveraging its operational excellence into the marketplace.

❖ Process needs to be managed, not functions.

❖A customer focused organization needs to be realigned in terms of process orientation.

❖Continuous improvement is a deficient approach when a company is far behind the industry standards & needs rapid quantum leaps in performance.

❖ Dramatic improvement in performance is the prerequisite for overcoming competition.

❖ For considering totally new ways of redesigning processes, each & every concept, assumption, purpose and principle needs to be abandoned.

IDENTIFYING CORE

PROCESSES

A set of interconnected processes comprise a business system. The performance of the business firm, is thus, the outcome of the interrelated operation of its constituent work processes. The redesign of processes, therefore, provides apowerful basis for improving the process of a business enterprise.

Some processes turn out to be extremely critical for the

success & survival of the enterprise. BPR focuses on

such critical business processes out of the many

processes that go on in any company. These are the

“core” business processes of the company.

They are vital for success in the industry sector within which the company is positioned. They are crucial for generating competitive advantage for a firm in the market place.

While some core business processes are easily identifiable while others may not be immediately apparent.

The following instances serve to show that “core processes” need to be identified carefully in terms of their bearing on the firm’s competitiveness.

▪In a fast moving consumer good industry, marketing & brand management is a core process.

▪In the Electronics & semi-conductor industry, new product development is a core process.

▪In the Banking industry, the activities that help mobilise deposits and generate funds for advances to customer.

▪ In the Insurance industry, the actual work that leads to a balance of competitive premium for customers & profit after claims for the company is a core process.

Development & Delivery Processes

of product or service

• Include research, design, engineering, manufacturing & logistics.

Interface with customer processes

• Include marketing, advertising, order fulfillment & service.

Process involving Management

Activities

• Include strategy formulation, planning & budgeting, performance measurement & reporting.

Generic

Business

Processes

APPLICATION HISTORY

Many Public & Private sector organizations & SMEs worldwide had gone under major reengineering efforts.

The technique was first applied to multinational corporations, such as :

▪ IBM▪ AT&T▪ SONY▪ GENERAL ELECTRIC▪WALL MART▪ HEWLETT PACKARD▪ DEC

▪ KRAFT FOODSHaving as a result major downsizing in

their organizational structures.

Later, the BANKING sector began to reengineer with a great

degree of success such as CITIBANK, NORTHWESTERN BANK, BANK OF

AMERICA and others.

Major utility companies used reengineering as a

technique to improve service like OTE, ELTA.

First, the government cabinet of Egypt reengineered many of its processes along withmany municipals in Europe.The public health sector hasundergone a major re-engineering in Europeusing the CORBA methodology.

As the technique was becoming well known to the business sectors, smaller enterprises were using the technique for “organizational upgrade”.

BPR is also being used to change the organizational structure of the public services.

ORDER

INPUT

OUTPUT

STANDARDISE

PARTICIPATION

ACTIVITIES

BPR DIAGRAM

GENERAL “MODEL” STAGES

Most reengineering methodologies share common elements but simple differences can have a significant impact on the success or failure of a project.

After a project area has been identified, the methodologies for reengineering business processes may be used. In order of a company, aiming to apply BPR, to select the best methodology, sequence processes and implement the appropriate BPR plan, it has to create effective and actionable visions.

All methodologies could be divided in the following “general” stages.

Envision Stage

Initiation Stage

Diagnosis Stage

Redesign Stage

Reconstruction Stage

Evaluation Stage

BPR Stages

STAGE 1 : ENVISION STAGE

The company reviews the existing strategy &

business processes and based on that review

business processes for improvement are

targeted & IT opportunities are

identified.

STAGE 2 : INITIATION

STAGE

In this stage, project teams are assigned. The performance goals along with project planning and employee notification are set.

STAGE 3 : DIAGNOSIS

STAGE

Here, the documentation and sub-

documentation takes place in terms of

physical attributes ( activities, resources,

communications, roles, IT and costs ).

STAGE 4 : REDESIGN

STAGE

In this stage, new process design is developed by devising process design alternatives and through brainstorming and creativity techniques.

STAGE 5 :

RECONSTRUCTION STAGE

Here, management technique changes

occur to ensure smooth migration to

the new process responsibilities and

human resource roles.

STAGE 6 : EVALUATION

STAGE

The new process is monitored to determine if goals are met and examine total quality programs.

ROLE OF INFORMATION

TECHNOLOGY(IT) IN BPR

A re-engineered business process characterised by IT-assisted speed, accuracy, adaptability and integration of data and service points, is focused on meeting the needs & expectations of the consumer quickly and adequately thereby enhancing his/her satisfaction level.

With the help of tools of IT, organizations can modify their processes to make them automatic, simpler and time saving.

Various studies have conclusively established the role of IT in transformation of business processes.

IT initiatives, thus, provide business values in their distinct areas :-

▪ Efficiency – by way of increased productivity.▪ Effectiveness – by way of better management.▪ Innovation- by way of improved products and services.

All these can bring about a radical change in the products and services, thereby improving competitiveness and customer satisfaction. It is a critical factor in the success of bringing this change.

When applying the BPR management technique to a business organization the implementation team effort is focused on the following objectives :

❖ CUSTOMER FOCUS : Customerservice oriented processesaiming to eliminate

customer complaints.

OBJECTIVES OF BPR

❖ SPEED : Dramatic compression of time it takes to complete a task for

key business processes. For instance, if process before BPR had

an average cycle time of 5 hours and after BPR it came down to just 1

hour.❖ FLEXIBILITY: Adaptive processes and Structures to changing conditions & competition. Being closerTo customer the company develops the awarenessMechanism to rapidly spotThe weak points & adaptTo new requirements of the market.

❖ Quality : Obsession with the superior service and value to the customer. The level of same quality is always controlled & monitored by the processes and does not depend mainly on the person who is serving the customer.

❖ Innovation : Leadership through imaginative change providing to organization a competitive advantage over others.

❖Compression : Cutting major tasks of cost and capital, throughout the value chain. Organizing the processes the company develops transparency throughout the operational level reducing cost.

❖Productivity : Improve drastically effectiveness and efficiency.

DIFFERENCES

BETWEEN BUSINESS

PROCESS

REGINEERING (BPR)

AND OTHER

CONVENTIONAL

METHODS OR

PROCESSES

TQM BPRCase ForAction

Assumed to be necessary. Compelling.

Goals Small scale improvements in many places having cumulative

effects.

Outrageous.

Scope and Focus

Attention to tasks, steps, processes across the board.

Select but broad business processes.

Degree Of Change

Incremental and Continual. Order of magnitude and periodic.

Senior Mgt.Involvement

Important up front. Intensive throughout.

Role Of IT Incidental Cornerstone.

BASIS

BUSINESS UNDER CONVENTIONAL WORK

BUSINESS UNDER BPR

Functional departments Process teams

Simple tasks( division of labour)

Empowered employees

Controlled people ( by management )

Multidimensional work

Training of employees Education of employees

Compensation for time & skill spent

Compensation for results

Pay raises on the base of promotions & seniority

Low pay plus high performancerelated bonuses

Advancement based on ability Advancement based on performance

Protective organizationalculture

Productive organizational structure

Managers supervise and control Managers coach and advise

Hierarchical organizational structure

Horizontal ( flat ) structure

Executives as scorekeepers Executives as leaders

Separation of duties & function Cross-functional teams

Linear & sequential process Parallel process

Mass production Mass customization

Process Innovation

IncrementalImprovement

Change Abrupt, volatile Gradual, constant

Effects Immediate, dramatic Long-term, more subtle

Involvement A few champions From few to everybody

Investment High initially, less later Low initially, high to sustain

Orientation Technology People

Focus Profits Processes

Basis

STEPS IN BPR

In a crude sense, companies began business process improvement with a continuous improvement model. This modelattempts to understand &

measure the current processes & make performance improvements.

However, some companies make reengineering efforts under the assumption that current processes are wrong & irrelevant. Under such perspective, designers of business processes disassociate themselves from existing processes. This helps in looking at the problem with a clean mind, free of any biases.

Determine Objectives & Framework

Identify The Customers & Define Their Needs

Study The Existing Process

Formulate A Redesign Process

Implement The Redesign

STEP 1 : Determine Objectives & Framework

Objectives are the desired end results of the redesign process

which the management & organization attempt to realise.

This will provide the required focus, direction, motivation for

the redesign process. It helps in building a comprehensive

foundation of the redesigning process.

STEP 2 : Identify The Customers & Define Their Needs

The designers have to understand the customers – their profile, their steps inacquiring, using anddisposing a product.The purpose is toredesign businessprocess that clearlyprovides added value tothe customer.

STEP 3 : Study The Existing Process

The existing process will provide an important base for

the redesigners. The purpose is to gain an understanding of

“what” and “why” of the targeted process. However, as

discussed earlier, some companies go through the

reengineering process with a clean perspective without

laying emphasis on the past processes.

STEP 4 : Formulate A Redesign Process

The information gained through the earlier steps is translated into an ideal redesign process. Formulation of redesignplan is the main crux of the

reengineering efforts. Customer focused redesigned processes are identified and formulated. In this crucial step, alternative processes are considered and the most optimum is selected.

STEP 5 : Implement The Redesign

It is easier to formulate a new process than to implement it.

Implementation of the redesigned process and the

application of other knowledge gained from the previous steps is

the key to achieve dramatic improvement. It is the joint

responsibility of the designers and the management to

operationalise the new process.

OUTCOMES OF BPR

➢ Several jobs combined into one. Decision Making becomes part of the job of the employees ( Employee Empowerment ).

➢Processes have multiple versions. This enables the economies of scale that result from mass production, yet allows customization of products or services.

➢Steps in the processes are performed in the natural order and several jobs get done simultaneously. Work is performed where it makes the most sense.

➢Controls & Checks and other non-value-added works are minimized.

➢ Reconciliation is minimized by cutting back the number of external contact points and by creating business alliance.

➢ A single point of contact is provided to the customer.

➢ A hybrid centralized or decentralized operation is used.

PROBLEMS IN

IMPLEMENTING BPR

Only a limited number of companies are able to have enough courage of having business processes redesigned because of the challenges posed.

It disturbs established hierarchiesand functional strategies that

creates serious repercussions and involves resistance among the workforce.

Reengineering takes time & expenditure, atleast in the short run, that’s why many companies are reluctant to go through the exercise.

Even there can be aloss of revenue duringthe transition period.

Setting of targets is tricky & difficult. If the targets are not properly set or the whole transformation not carried out properly carried out, reengineering efforts may turn out as a big failure.

CONCLUSION

In view of the massive organizational changes involved in reengineering, it is imperative that a reengineering

drive is supported by the vision and commitment of the organization’s top leadership to see through its

successful completion.

Also faster & efficient reengineered business process provide a firm with many more opportunities

for trying, testing, modifying and learning.