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 (Hammer & Champy, 1993)
Reengineering is implemented when a company deems the current system is no longer efficient or failing to compete with other companies.
Reengineering can be disastrous without proper analysis of business’ needs.
What is Reengineering?
Selecting the Processes for Reengineering
Identify Change Enabler
Developing a Business Vision and Process Objectives
Understanding and Improving Existing Processes
Designing the New Processes and Organization
Implementing the New Process-Based Organization
How to Reengineer a Business Process?
1. Selecting the Process for Reengineering
Enumerate major
process
Determine process
boundaries
Prioritize process for reengineeri
ng
Key to identify the number of processes : the level of process
Most of the companies that have identified their processes in the context of reengineering have enumerated between 10 & 20
Enumerate Major Processes
Incremental improvement
• Narrowly-defined• Low rewards and
risk of failure
Radical process change
• Broadly-defined• Improving handoffs
between functions• Great possibility of
innovation• Should be broken
down into its subprocesses
The process that becomes the focus for a reengineering must have clearer boundaries and relative importance
Most companies that have worked on their processes for a number of years have revised their original lists.
Determine Process Boundaries
When might the process owner
begin&stop worrying about the process?
When should process customers’
involvement begin and end?
Where do subprocesses begin&end?
Is the process fully embedded within another process?
Are performance benefits likely to result from combining the process with other
processes or subprocesses?
Prioritize Processes for Reengineering
Five criteria to guide process selection• The process’s centrality to the
execution of the firm’s business strategy
• The state of the process’s health• The process’s culture and leadership• The current cost of the process• Manageable project scope
Assess IT enablers of
reengineering
Assess organizational & HR enablers
of reengineering
Determine which
constraints will be
accepted
2. Identifying Enablers of Change
Assess IT Enablers of Reengineering
Opportunities
Constraints
Modeling Tools
System&Information Engineering
IT as enabler
New Process Design
IT as implementer
Organizational
•Involve in change in structure & culture•Structural changes can facilitate new, process-oriented behaviors•Cultural changes can facilitate new process design and empower process participants to make decisions about process operations•Companies adopt Cross-functional skills team in single work units•Companies must pay careful attention to cultural compability issues in selection of team members
Human Resource
•Involve in the way individual workers are skilled, motivated, compensated, evaluated, and so forth•Firms can begin to train workers for skills that are likely to be necessary in a reengineered environment•Motivation levels of employees are another key determinant of process performance
Assess Organizational & HR Enablers of Reengineering
The analysis of constraints tailors the process to a systems environment from the beginning.
Many “change management” methodologies focus on identifying and removing organizational and HR constraints.
Determine Which Constraints Will Be Accepted
Organizational constraints• Organizational structure
and culture that support management along individual functions rather than cross-functional processes
HR constraints• Lack of required skills• HR management systems
that are highly functional rather than process oriented
• Career path and rewards that do not favor acquisition of broad skills
Aspects of the system that should be analyzed:
Determine Which Constraints Will Be Accepted (Cont’d)
Who are the system’s
intended users?
What are its inputs and outputs?
What process tasks is the
system designed to support?
How difficult is it to add task
functionality to the system?
What interfaces to other systems
are possible?
What processes do other firms use with the
system?
Assess Existing Business
Strategy for Process
Directions
Consult with Process
Customers to Determine
Performance ObjectivesBenchmarking
for Performance Targets and Examples of Innovation
Formulate Process
Performance Objectives
Develop Specific Process
Attributes
Developing a Process Vision (1)Key Activities:
Assess Existing Business Strategy for Process DirectionsConsider:Address nonfinancial goals in addition to financial
ones?Measurable?Focus attention on specific processes of the
business? Inspire efforts to change?
Developing a Process Vision (2)
Consult with Process Customers to Determine Performance ObjectivesConsider customer’s perspective on the process on finding:What they require of our processes serves
multiple purposes?What customer’s desire for a close relationship?What specific areas in which improvement should
take place?
Developing a Process Vision (3)
Benchmarking for Performance Targets and Examples of Innovation (1)Benchmarking could help to: Determine process objectives Identify innovative process attributesLook outside for alternative ways of designing
processBreak a company’s inwardly focused mindset
Developing a Process Vision (4)
Benchmarking for Performance Targets and Examples of Innovation (2)Consider:Traditional competitive benchmarkingBest practice or innovation benchmarking, by:
Selecting companies on the basis of the performance of a particular process
Address specific innovations and uses of change enablers
Sources of benchmarks (contact benchmarked organizations directly)
Developing a Process Vision (5)
Formulate Process Performance Objectives (1)Process objectives key component of the visionConsider:Overall process goalSpecific type of improvement desiredNumeric target for innovationTime frame in which the objectives are
accomplishedAnalysis on the functions and value of the process
is expected to bring customers
Developing a Process Vision (6)
Formulate Process Performance Objectives (2)
Developing a Process Vision (6)
What business objective is this process supposed to accomplish?
Reduce new drug
development cycle time by 50% in three
years
Reduce processing costs for
customer orders by 60% over three years
Reduce processing costs for customer orders by 60% over
three years
Double customer service satisfaction level in two
years
Develop Specific Process AttributesProcess attributes the descriptive, non-quantitative adjunct to process objectivesUse: Categorization of attributes as technology, people, process
outputs, and so on. Multiple sources, such as:
Analysis of corporate strategy and vision High-level overviews of the roles of technology and
people Customer interviews Benchmarking of the best processes in other companies Firm’s performance objectives
Developing a Process Vision (6)
The reason:1. Facilitates communication among participants in
the reengineering initiative2. As essential input to migration and
implementation planning3. Useful for understanding the magnitude of
anticipated change and the tasks required4. Can help to ensure that existing processes are
not repeated in the new process5. Can provide a measure of the value of the
proposed innovation
Understanding and Improving Existing Processes (1)
Assess the Current
Process Flow
Measure the Process in
Relation to the New Process
Objectives and Attributes
Identify Problems with
or Shortcomings of the Process
Asses Current Information Technology
and Information
Identify Short-Term
Improvements in the Process
Understanding and Improving Existing Processes (1)
Key Activities:
Assess the Current Process FlowConsider: Consultation with the performer Documents of captured process Scope
Measure the Process in Relation to the New Process Objectives and AttributesConsider: Same criteria employed for the new design Reducing the time and effort required for the current
process analysis
Understanding and Improving Existing Processes (2)
Identify Problems with or Shortcomings of the ProcessConsider: Long-standing problems that have gone unrecognized Avoidance of them in the new design Customers as a key source
Asses Current Information Technology and InformationConsider: IT architecture (applications, databases, technologies, and
standards) Job descriptions, skills inventory, and any recent
organizational changes
Understanding and Improving Existing Processes (3)
Identify Short-Term Improvements in the Process
Useful for: Document problems known for years (by analysis
activity) Short-term benefit A way to begin to deliver results Funding reengineering
Understanding and Improving Existing Processes (4)
The Output:1. Detailed process and information flows2. Detailed technology architectures and human
resource plans3. Prototypes of the process and its key enablers
Designing and Prototyping the New Processes and Organization (1)
Brainstorm Design
Alternatives
Assess Feasibility,
Risk & Benefits of
Design Alternatives,
and Select the Preferred
Process DesignPrototype of New Process
Design
Develop the Migration Strategy
Implement New
Organization Structure and
Systems
Designing and Prototyping the New Processes and Organization (2)
Key Activities:
Brainstorm Design Alternatives
Consider: Generating several different process designs (meet
the process vision) Design innovation through a series of workshop or
brainstorming Emphasis on creativity and idea generation Non-judgmental atmosphere
Designing and Prototyping the New Processes and Organization (3)
Assess Feasibility, Risk & Benefits of Design Alternatives, and Select the Preferred Process Design
Consider: Graphic representation (for communication and recording)
Large whiteboards and large pieces of colored paper and string affixed to walls
Computer-based tools Feasibility analysis (benefits, costs, risks, and time frames) Comparison in terms of structure, technology, and
organization Optimum design
Designing and Prototyping the New Processes and Organization (4)
Prototype of New Process DesignOutput: organizational prototype
Goal gradually shape the organizational environment or revise the technology
Consider: Simulation and Testing Refinement the fit between new process structure,
information technology, and organization (iterative) Many iterations (must not be viewed as failure)
Designing and Prototyping the New Processes and Organization (5)
Develop the Migration StrategyConsider: The firm may not want to risk a full and abrupt transition
if: the new process involves customers, revenues, or
valued employees the process change will be highly visible internally of
externally A pilot (implementation in a unit that most capable of
achieving successful change) as the beginning A phased introduction (implementation of new systems
capabilities and skills as they become available) Employee’s ability to handle the change
Designing and Prototyping the New Processes and Organization (6)
Implement New Organization Structures and Systems
1. Create an entirely new organization if constraints within the existing environment are too great
2. Run the organization parallel to the existing one
3. Make the organization as locus of specific products, channels, or customers
Example: Midland Bank
a. establish First Direct to service retail customers without the usual branches
b. CS processes rely on telephone and ATM
c. extensive use of IT
d. offer 24-hour service and higher interest rates
Designing and Prototyping the New Processes and Organization (7)
Challenges: Structured organizations that mitigates against the success
of the new process designs Most organizational structures based on either function or
product, with little or no process orientation Functionally organized firm have difficulty in meeting
customer needs seamlessly across different functions A firm organized around product structure have difficulty in:
ascertaining total business done with individual customers cross-selling different products to the same customer
Very few firms that have adopted a fully horizontal organization
Well-known problems in an organization with matrix structures
Implement New Organization Structure and Systems (1)
Complete innovation cycle:
Caution:
a. Use highly iterative fashion in execution
b. Do not use rigid partitioning of the activities
c. Must manage the benefit of reengineering over time
d. Carefully monitor key behaviors, process operational performance, and key financial indicators
Implement New Organization Structure and Systems (2)
Process Visioning
Detailed Process Design
System Constructio
nDeployment
1. Reengineering business processes has six steps. They are selecting the processes for reengineering, identify change enabler, developing a business vision and process objectives, understanding and improving existing processes, designing the new processes and organization, implementing the new process-based organization.
2. After reengineering business process, we should execute complete innovation cycle which shown below.
CONCLUSION
Process Visioning
Detailed Process Design
System Constructio
nDeployment
THE END