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Business Process ReengineeringBusiness Process ReengineeringBusiness Process ReengineeringBusiness Process Reengineering
Chao-Hsien Chu, Ph.D.School of Information Sciences and Technology
The Pennsylvania State UniversityUniversity Park, PA 16802
BPR Theory Vs. PracticeBPR Theory Vs. PracticeBPR Theory Vs. PracticeBPR Theory Vs. Practice
BPR
PromiseFundamental change
Reality75% Failure rate
Misunderstanding- What BPR is.- How to go about doing it.
BPR Definition (1)BPR Definition (1)BPR Definition (1)BPR Definition (1)
Reengineering is 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.
Hammer and Champy 1993
BPR Definition (2)BPR Definition (2)BPR Definition (2)BPR Definition (2)
The fundamental rethinking and redesign of operating processes and organizational
structure, focused on the organization’s core competencies, to achieve dramatic
improvements in organizational performance.
Lowenthal 1994
BPR Definition (3)BPR Definition (3)BPR Definition (3)BPR Definition (3)
Reengineering is the rapid and radical redesign of strategic, value-added business processes — and the systems, policies and
organizational structures that support them — to optimize the work flows and productivity
in an organization.
Manganelli and Klein 1994
ProcessesProcessesProcessesProcesses
A process is an interrelated series of activitiesThat converts inputs into outputs.
Activity
ActivitiesActivitiesActivitiesActivities
Value-adding Activities Important to the customer A customer is willing to pay for them
Hand-off Activities Move work across functional or departmental
boundaries Control Activities
They control hand-off activities
Process FlowProcess FlowProcess FlowProcess Flow
Marketing Operations Finance
CEO
Customerrequest
Orderfulfillment
Features of Business ProcessesFeatures of Business ProcessesFeatures of Business ProcessesFeatures of Business Processes
Greater margin for improvementHands-off and lost controlWaste and inefficiency are difficult to
detectCross-functional problemsLow percentage of value-adding activitiesCustomers are very sensitive to poor
business processes
Some Business ProcessesSome Business ProcessesSome Business ProcessesSome Business Processes
Order Processing Billing Purchasing Shipping Receiving Auditing Business Planning Warranty and claims
processing
Budget planning Accounts payable Accounts receivable Performance appraisal Proposal development Credit approval Vendor certification New employee
processing
Attributes of a BPR MethodologyAttributes of a BPR MethodologyAttributes of a BPR MethodologyAttributes of a BPR Methodology
It should develop a clear statement of corporate goals.
It should be process-oriented. It should facilitate the classification of
activities. It should lead to fundamental change. It should develop a plan to deliver final
results within a year.
Reasons for ReengineeringReasons for ReengineeringReasons for ReengineeringReasons for Reengineering
Your continuous improvement activities have hit a dead end.
The competition has grabbed your customers.
You are approaching the top of the “S Curve.”
Your customer’s requirements have changed.
Technological advances expand the possibilities.
Fundamental shifts in industry.
Motivation for RedesigningMotivation for RedesigningMotivation for RedesigningMotivation for Redesigning
BPR
ImprovedCustomer Focus
ImprovedCycle Time
ImprovedProcess Efficiency
Building BlocksBuilding BlocksBuilding BlocksBuilding Blocks
CurrentCurrentprocessprocessreviewreview
Transformthe business
BaselineBaselineanalysisanalysis
CustomerCustomerrequirementrequirement
analysisanalysis
Designspecifications
Designoptions High-levelHigh-level
designdesign
Detaileddesign
Model andModel andvalidate thevalidate thenew designnew design
Build inBuild inCI feedbackCI feedback
Pilot thenew design
Designprinciples
AnalysisAnalysisPhasePhase
DesignDesignPhasePhase
ImplementationImplementationPhasePhase
Process SelectionProcess SelectionProcess SelectionProcess Selection
Broken Processes: Broken Processes: Which processes are in Which processes are in the deepest trouble?the deepest trouble?
Important Processes: Important Processes: Which processes Which processes have the greatest impact on the company’s have the greatest impact on the company’s customers?customers?
Feasible Processes: Feasible Processes: Which processes are at Which processes are at the moment most susceptible to successful the moment most susceptible to successful redesign?redesign?
Broken Processes - SymptomBroken Processes - SymptomBroken Processes - SymptomBroken Processes - Symptom
Extensive information exchange, data Extensive information exchange, data redundancy, and rekeyingredundancy, and rekeying
Inventory, buffers, and other assetsInventory, buffers, and other assets High ratio of checking and control to value-High ratio of checking and control to value-
addingadding Rework and iterationRework and iteration Inadequate feedback along chainsInadequate feedback along chains Complexity, exceptions, and special casesComplexity, exceptions, and special cases
Important ProcessesImportant ProcessesImportant ProcessesImportant Processes
Customer Issues
Product CostOn-time DeliveryProduct Features
Market
Processes
Product DesignOrder Processing
Procurement
Company
Feasible ProcessesFeasible ProcessesFeasible ProcessesFeasible Processes
ReengineeringEffort
Process Scope Project Cost
Team StrengthOwnerCommitment
Common ThemesCommon ThemesCommon ThemesCommon Themes
Use reengineering to grow the business.
Service the customer: Competing with quality of products and services.
Increase revenue instead of simply cutting back through cost reduction and downsizing.
Reengineering Cast MembersReengineering Cast MembersReengineering Cast MembersReengineering Cast Members
Operations Operations research teamsresearch teams
Benchmarking Benchmarking teamsteams
Voice of the Voice of the client data client data collection teamscollection teams
Workflow Workflow design teamsdesign teams
Application Application design teamsdesign teams
Pilot teamsPilot teams
Implementation Implementation teamsteams
Transition Transition teamsteams
Executive SponsorExecutive Sponsor
Project TeamProject Team
DesignDesign(3-6 months)(3-6 months)
AnalysisAnalysis(2-4 months)(2-4 months)
ImplementationImplementation(12-24 months)(12-24 months)
Understanding and Rethinking Understanding and Rethinking Business ProcessesBusiness Processes
Understanding and Rethinking Understanding and Rethinking Business ProcessesBusiness Processes
Understand theCustomer
Understand theProcess
Benchmarking
Understanding The CustomerUnderstanding The CustomerUnderstanding The CustomerUnderstanding The Customer
What are the customers’ real requirements?
What do they say they want and what do they really need?
What problems do they have?
What processes do they perform with the output?
Understanding ProcessesUnderstanding ProcessesUnderstanding ProcessesUnderstanding Processes
Why does this particular process need to exist versus some alternative solution or no process at all?
Why does the process require this much time to achieve certain results?
Why is the process organized this way? What aspects of the process are truly
important to the customer?
Revisiting Process ActivitiesRevisiting Process ActivitiesRevisiting Process ActivitiesRevisiting Process Activities
Process
Real ValueAdded
Business ValueAdded
No ValueAdded
Process Evaluation and AnalysisProcess Evaluation and AnalysisProcess Evaluation and AnalysisProcess Evaluation and Analysis
Existing Process
Measures ofPerformance
The TechnologyTrap
Activity-BasedCosting
“Do not automate somethingthat should not have beendone manually.”
Some Characteristics of Some Characteristics of Reengineered ProcessesReengineered Processes
Some Characteristics of Some Characteristics of Reengineered ProcessesReengineered Processes
Several jobs are combined into one Case worker Case team
Workers make decisions The steps in the process are performed in a
natural order Processes have multiple versions
Some Characteristics ofSome Characteristics ofReengineered ProcessesReengineered ProcessesSome Characteristics ofSome Characteristics ofReengineered ProcessesReengineered Processes
Work is performed where it makes more sense
Checks and controls are reduced Reconciliation is minimized A case manager provides a single point of
contact Hybrid centralized/decentralized
operations are prevalent
Ways to Structure the OrganizationWays to Structure the OrganizationWays to Structure the OrganizationWays to Structure the Organization
Flattening Organizational StructuresFlattening Organizational Structures
Team Design: Baseball, Football, and Team Design: Baseball, Football, and Tennis DoublesTennis Doubles
Job Design: Generalists Vs. SpecialistsJob Design: Generalists Vs. Specialists
Compensation Schemes: Paying for Compensation Schemes: Paying for performance and/or business results.performance and/or business results.
Primary RoadblocksPrimary RoadblocksPrimary RoadblocksPrimary Roadblocks
Failure to develop the necessary leadership.
Not helping people to think in terms of business processes.
Neglecting to align measures and rewards with the new business process thinking.
Most Common Errors (1)Most Common Errors (1)Most Common Errors (1)Most Common Errors (1)
Trying to fix the process instead of Trying to fix the process instead of changing itchanging it
Don’t focus on business processesDon’t focus on business processes Ignore everything except process redesignIgnore everything except process redesign Neglect people’s values and beliefsNeglect people’s values and beliefs Be willing to settle for minor resultsBe willing to settle for minor results Quit too earlyQuit too early
Most Common Errors (2)Most Common Errors (2)Most Common Errors (2)Most Common Errors (2)
Assign someone who does not understand Assign someone who does not understand reengineering to lead the effort.reengineering to lead the effort.
Skimp on the resources devoted to Skimp on the resources devoted to reengineering.reengineering.
Bury reengineering in the middle of the Bury reengineering in the middle of the corporate agenda.corporate agenda.
Dissipate energy across a great many Dissipate energy across a great many reengineering projects.reengineering projects.
Most Common Errors (3)Most Common Errors (3)Most Common Errors (3)Most Common Errors (3)
Attempt to reengineer when the CEO is two Attempt to reengineer when the CEO is two years from retirement.years from retirement.
Fail to distinguish reengineering from other Fail to distinguish reengineering from other business improvement programs.business improvement programs.
Concentrate exclusively on design.Concentrate exclusively on design. Try to make reengineering happen without Try to make reengineering happen without
making anybody unhappy.making anybody unhappy.
Most Common Errors (4)Most Common Errors (4)Most Common Errors (4)Most Common Errors (4)
Pull back when people resist making Pull back when people resist making reengineering changes.reengineering changes.
Drag the effort out.Drag the effort out. Try to make reengineering happen from the Try to make reengineering happen from the
bottom up.bottom up.