Bpr Akd Final

7/29/2019 Bpr Akd Final

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Business ProcessBusiness ProcessReengineeringReengineering

Created byCreated byDr. A. K. DeyDr. A. K. Dey


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Business ProcessBusiness ProcessReengineeringReengineering

The history ofThe history ofradicalradical

managementmanagement

Presentation by: Dr. A. K. Dey

Jan 31, 2008


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BPR BasicsBPR Basics

BPR is defined as "theBPR is defined as "the analysisanalysis andand

designdesign of workflows and processesof workflows and processes

within organizationswithin organizations11

BPR has also been described asBPR has also been described as

thethe critical analysiscritical analysis andand radicalradical

redesignredesign of existing businessof existing businessprocesses to achieve breakthroughprocesses to achieve breakthrough

improvements in performanceimprovements in performance

measures.measures.22


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Who invented BPR?Who invented BPR?


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Michael HammerMichael Hammer

Michael Hammer, besidesMichael Hammer, besides

being one of the foundersbeing one of the founders

of BPR, he is also theof BPR, he is also the

president of Hammer andpresident of Hammer andCo., a managementCo., a management

education company.education company.

Hammer started out as aHammer started out as a

engineer and was aengineer and was a

professor at MIT in theprofessor at MIT in the

computer sciencecomputer science

department. Both TIMEdepartment. Both TIME

(1996) and Business Week(1996) and Business Week

(2002) listed Hammer as(2002) listed Hammer as

one of the Top 25 mostone of the Top 25 most

influential businessmen ofinfluential businessmen ofall time.


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James ChampyJames Champy

James Champy is theJames Champy is theco-author ofco-author ofReengineering theReen

gineering the

CorporationCor

poration withwithMichael Hammer. HeMichael Hammer. Hestarted his career asstarted his career asa civil engineer ata civil engineer atMIT. He also passedMIT. He also passedthe bar at Bostonthe bar at Boston

College Law SchoolCollege Law Schooland taught at MIT forand taught at MIT forsome time. He wassome time. He wasthe CEO for CSCthe CEO for CSCIndex and is now theIndex and is now the

Chairman of PerotChairman of PerotSystems consultingSystems consulting


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The thirdwheel?

Thomas H. Davenport is sometimes credited asa co-creator of BPR. His articles in the SloanManagement Review were coming out around

the same time as Hammers articles. Davenportwas not involved in Reengineering theCorporation although many cite his definition ofBPR. Davenports thoughts on BPR are similarto Hammerism (BPR as defined by Michael

Hammer)


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Americas business problem is thatit is entering the twenty-first

century with companies designedduring the nineteenth century -Hammer and Champy (1993).

Even though nineteenth centurymanagement theory is cited as aninfluence to BPR, it is still a moderntheory hoping to reform twenty-first

century business by rewriting the

Management for the futureManagement for the future


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In theIn the

beginningbeginning

BPR began when Hammer and Champynoticed some corporations dramatically

improv[ing] their performance in one ormore areas of business usingtechniques that were radically differentthen those found in management at thetime. This observation heralded Hammerand Champy to reevaluate popularmanagement theories. Both authors

noticed that it wasnt gradual changes,


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Algorithm forAlgorithm for

programming real lifeprogramming real life

Hammer created reengineering as a logicalHammer created reengineering as a logicalextension of his computer science background. Inextension of his computer science background. Inan interview with Wired magazine, Hammeran interview with Wired magazine, Hammer

agreed to an interviewers analogy that [a]agreed to an interviewers analogy that [a]reengineering plan is an organizational hack reengineering plan is an organizational hack an algorithm for programming real life. The bitsan algorithm for programming real life. The bitsare people. The routines are business processes.are people. The routines are business processes.(Wired, 1995)(Wired, 1995)

Hammer himself was a one of the famousHammer himself was a one of the famousCambridge hackers during the 60s and 70sCambridge hackers during the 60s and 70sand parlayed his computer expertise intoand parlayed his computer expertise intomanagement with the Index Group, amanagement with the Index Group, amanagement-consulting firm in Cambridge. Theremanagement-consulting firm in Cambridge. Therehe met with James Champy, co-founder of Index,he met with James Champy, co-founder of Index,

- -


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Reengineering theReengineering the

CorporationCorporation

First published in 1993,First published in 1993,Reengineering theReengineering the

Corporation becameCorporation becamethethe handbook forhandbook forbusinesses in thebusinesses in the90s.90s.

It was subtitled AIt was subtitled A

Manifesto forManifesto forBusiness Revolution.Business Revolution.

The tag line states:The tag line states:Forget what youForget what you

know about howknow about howbusiness should work.business should work.


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The Reengineering RevolutionThe Reengineering Revolution

Michael Hammer also co-Michael Hammer also co-

authoredauthoredTheThe

ReengineeringReengineering

RevolutionRevolution in 1995.in 1995.

When Hammer noticedWhen Hammer noticed

companies succeedingcompanies succeeding

when they implementedwhen they implemented

BPR, he wanted toBPR, he wanted to

document whatdocument whattechniques individualtechniques individual

companies used tocompanies used to

achieve their goal.achieve their goal.

He also noticed companiesHe also noticed companies

doing badly afterdoing badly after
http://rds.yahoo.com/S=96062857/K=The+Reengineering+Revolution/v=2/SID=e/l=II/R=6/SS=i/OID=d8d2b0420b128c72/;_ylt=A9iby4MQKiBEXxgBMLqJzbkF;_ylu=X3oDMTBjcDR2NTN2BHBvcwM2BHNlYwNzcg--/SIG=1f4gt6qet/EXP=1143045008/*-http%3A//images.search.yahoo.com/search/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3DThe%2520Reengineering%2520Revolution%26fr%3DFP-tab-web-t-376%26toggle%3D1%26cop%3D%26ei%3DUTF-8&w=93&h=140&imgurl=www.colombus.ch%2Fbookstore%2Fcovers%2F0887307361.m.gif&rurl=http%3A%2F%2Fwww.colombus.ch%2Fbookstore%2Fbooks%2Freengineering_revolution.html&size=6.1kB&name=0887307361.m.gif&p=The+Reengineering+Revolution&type=gif&no=6&tt=26&ei=UTF-8


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Affecting theAffecting the

WorldWorld

In only a year and a half after the publicationof Reengineering the Corporation , the book

had sold 1.7 million copies worldwide. To date,it is estimated to have sold over 2 millioncopies world wide. The book has also beentranslated into nineteen (19) languagesincluding Finnish, Hebrew and Thai (Hammer1995)


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Butwhy has there been so muchinterest in

Business ProcessReengineering?


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Why organizations areWhy organizations are

interested in BPRinterested in BPR

#1 reason cited by corporations:#1 reason cited by corporations:

Improving efficiencyImproving efficiency


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Additional attractions forAdditional attractions for

corporationscorporations

Competitive pressureCompetitive pressure

Desire to improve poor customerDesire to improve poor customer

satisfactionsatisfaction

Desire to improve poor quality ofDesire to improve poor quality of

products and servicesproducts and services


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Because of BPRBecause of BPR**

American ExpressAmerican Express

reported reducing itsreported reducing its

annual costs by overannual costs by over

$1 billion through$1 billion throughreengineering.reengineering.

AT&Ts GlobalAT&Ts Global

BusinessBusiness

CommunicationsCommunications

Systems unit turned aSystems unit turned a

nine-figure loss into anine-figure loss into a

nine-figure profitnine-figure profit

the Semiconductorthe Semiconductor

Group of TexasGroup of Texas

Progressive InsuranceProgressive Insurance

reduced the cycle timereduced the cycle time

of its claims processof its claims process

from weeks to days,from weeks to days,and dramaticallyand dramatically

improved customerimproved customer

satisfaction whilesatisfaction while

reducing costs. Thereducing costs. The

revenue per employeerevenue per employee

increased by over 70increased by over 70

percent.percent.

Figures based from the years 1993 1995, (Hammer2)


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CIGNA:CIGNA:

A BPR Success StoryA BPR Success Story

Viewed BPR as a way of lifeViewed BPR as a way of life

Not radical, all-or-nothing change;Not radical, all-or-nothing change;

rather, a realignment of strategyrather, a realignment of strategyand agendaand agenda

Sustained from the bottom up,Sustained from the bottom up,

with learning transferred across.with learning transferred across. Took into consideration theTook into consideration the

differences in managementdifferences in managementcultures in different countriescultures in different countries


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Things went as plannedThings went as planned

whenwhenTeam members demonstrated strongTeam members demonstrated strong

dedication to the project.dedication to the project.

The team had strong commitmentThe team had strong commitmentand support from top management.and support from top management.

The team shared a clear vision of theThe team shared a clear vision of theobjectives and goals and had aobjectives and goals and had a

common focus and understanding ofcommon focus and understanding ofproject success.project success.

The team utilized consultants as partThe team utilized consultants as partof its reengineering strategy.of its reengineering strategy.


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On the flip sideOn the flip side

70% of BPR projects fail70% of BPR projects fail

Only 47% of the companies in ProscisOnly 47% of the companies in Proscis

study met their project objectives tostudy met their project objectives towithin 10%within 10%

According to one of the self-proclaimedAccording to one of the self-proclaimed

creators of BPR, around 1993 thecreators of BPR, around 1993 the

modest idea [of BPR] had become amodest idea [of BPR] had become a

monster.monster.


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Possible Causes of BPRPossible Causes of BPR

failurefailure

Lack of sustained managementLack of sustained management

commitment and leadershipcommitment and leadership Unrealistic scope andUnrealistic scope and

expectationsexpectations

Resistance to changeResistance to change


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No more excusesNo more excuses

When Hammer wroteWhen Hammer wroteThe Reengineering Revolution,The Reengineering Revolution,he said, Failure is not caused by cosmic rays, badhe said, Failure is not caused by cosmic rays, bad

luck, or other factors outside of human control.luck, or other factors outside of human control.

Failure is caused by people who dont know whatFailure is caused by people who dont know whattheyre doing and who dont pursue reengineeringtheyre doing and who dont pursue reengineering

the right way.(Hammer2)the right way.(Hammer2)

BPR has been used as the scapegoat for any and allBPR has been used as the scapegoat for any and all

problems if something did go wrong whenproblems if something did go wrong when

implemented. Companies misused the term toimplemented. Companies misused the term to

sack people or downsize. Anyone could invokesack people or downsize. Anyone could invoke

the term BPR and it could mean anything. It wasthe term BPR and it could mean anything. It was

a buzz word that not enough people understooda buzz word that not enough people understood

fully, and was therefore utilized improperly. Manyfully, and was therefore utilized improperly. Manycriticisms of BPR that arose did so because thecriticisms of BPR that arose did so because they


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Lessons LearnedLessons Learned

People, not the bottom line, are thePeople, not the bottom line, are the

most important assets of a companymost important assets of a company

IT alone can not improve a companysIT alone can not improve a companysfinancial status; technology is onlyfinancial status; technology is only

useful if it helps people do their workuseful if it helps people do their work

more efficiently.more efficiently.

Companies should underpromise andCompanies should underpromise and

over deliverover deliver

Clarity is keyClarity is key


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BUSINESS PROCESSBUSINESS PROCESSREENGINEERINGREENGINEERING

An organizational make-overAn organizational make-over

Reengineering is new, and it has to beReengineering is new, and it has to be

done.done.

Peter F. DruckerPeter F. Drucker


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For a moment and continue


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What is BPR?What is BPR?

What is a process?What is a process?

What is a business process?What is a business process?

Why re-engineer?Why re-engineer?

Why organizations dont re-engineering?Why organizations dont re-engineering?

BUSINESS PROCESS REENGINEERINGBUSINESS PROCESS REENGINEERING


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Reengineering is the fundamentalReengineering is the fundamental

rethinking and redesign of businessrethinking and redesign of business

processes to achieve dramaticprocesses to achieve dramaticimprovements in critical, contemporaryimprovements in critical, contemporary

measures of performance, such as cost,measures of performance, such as cost,

quality, service and speed.quality, service and speed.(Hammer & Champy, 1993)(Hammer & Champy, 1993)


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BPR is Not?BPR is Not?

AutomationAutomation

DownsizingDownsizing

OutsourcingOutsourcing


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BPR Versus Process SimplificationBPR Versus Process Simplification

Process Reengineering

Radical Transformation

Vision-Led

Change Attitudes & Behaviors

Director-LedLimited Number of Initiatives

Process Simplification

Incremental Change

Process-Led

Assume Attitudes & Behaviors

Management-LedVarious Simultaneous Projects

(Source Coulson-Thomas, 1992)


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BPR Versus ContinuousBPR Versus Continuous

ImprovementImprovement

Process Reengineering

Radical Transformation

People & Technology Focus

High Investment

RebuildChampion Driven

Continuous Improvement

Incremental ChangePeople Focus

Low Investment

Improve Existing

Work Unit Driven


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What is a Process?What is a Process?

A specific ordering of work activitiesA specific ordering of work activities

across time and space, with a beginning, anacross time and space, with a beginning, an

end, and clearly identified inputs andend, and clearly identified inputs andoutputs: a structure for action.outputs: a structure for action.

(Davenport, 1993)(Davenport, 1993)


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What is a Business Process?What is a Business Process?

A group of logically related tasks that useA group of logically related tasks that use

the firm's resources to provide customer-the firm's resources to provide customer-

oriented results in support of theoriented results in support of theorganization's objectivesorganization's objectives


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Why Reengineer?Why Reengineer?

CustomersCustomers DemandingDemanding

SophisticationSophistication Changing NeedsChanging Needs

CompetitionCompetition LocalLocal GlobalGlobal


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Why Reengineer?Why Reengineer?

ChangeChange TechnologyTechnology

Customer PreferencesCustomer Preferences


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Why Organizations Dont Reengineer?Why Organizations Dont Reengineer?

ComplacencyComplacency

Political ResistancePolitical Resistance

New DevelopmentsNew Developments

Fear of Unknown and FailureFear of Unknown and Failure


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PerformancePerformance

BPR seeks improvements ofBPR seeks improvements of

CostCost

QualityQuality

ServiceService

SpeedSpeed


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Key CharacteristicsKey Characteristics

Systems PerspectiveSystems Perspective

Global Perspective on Business ProcessesGlobal Perspective on Business Processes

Radical ImprovementRadical Improvement

Integrated ChangeIntegrated Change

People CentredPeople Centred

Focus on End-CustomersFocus on End-Customers

Process-BasedProcess-Based


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Hammer and Champy definitionHammer and Champy definition the fundamental rethinking and radical redesign ofthe fundamental rethinking and radical redesign of

business processes to achieve dramatic improvements inbusiness processes to achieve dramatic improvements incritical contemporary measures of performance, such ascritical contemporary measures of performance, such as

cost, quality, service, and speed.cost, quality, service, and speed.


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Hammer/Champy methodology 6 stepsHammer/Champy methodology 6 steps

1.1. EnvisioningEnvisioning

2.2. InitiateInitiate

3.3. Process DiagnosisProcess Diagnosis

4.4. Process RedesignProcess Redesign

5.5. ReconstructionReconstruction6.6. Process MonitoringProcess Monitoring

* BPR process loops back to step 3* BPR process loops back to step 3


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Detailed view of 6 stepsDetailed view of 6 steps


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Relationship to ISRelationship to IS

Use of information systems is often keyUse of information systems is often key

contributing factors to BPR successcontributing factors to BPR success

Information technology is considered aInformation technology is considered amajor enabler in providing new ways ofmajor enabler in providing new ways of

working and collaboratingworking and collaborating


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Relationship to ISRelationship to IS

Studies indicate that over 50% of allStudies indicate that over 50% of all

reengineering efforts are initiatedreengineering efforts are initiated

because of a perceived informationbecause of a perceived informationtechnology opportunitythe actualtechnology opportunitythe actual

technological solution is far less importanttechnological solution is far less important

than educating employees to use IT as boththan educating employees to use IT as botha strategic initiative and as a tool in thea strategic initiative and as a tool in the

reengineering process. (Weicher 5)reengineering process. (Weicher 5)


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Alternative approaches to BPRAlternative approaches to BPR

Davenport MethodologyDavenport Methodology Emphasizes IT as driverEmphasizes IT as driver

Manganelli/Klein MethodologyManganelli/Klein Methodology focuses on business processes that directlyfocuses on business processes that directly

support the strategic goals of the company andsupport the strategic goals of the company and

customer requirementscustomer requirements Kodak MethodologyKodak Methodology

Stresses change management as keyStresses change management as key


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Alternative approaches to BPRAlternative approaches to BPR

Alternatives are very similarAlternatives are very similarStep 1:tep 1:Project Preparationroject Preparation

Step 2:tep 2:Redesign of Processesedesign of Processes

Step 3:tep 3:Implementationmplementation

Hammer/ChampyHammer/Champy 1. Introduction1. Introduction

2. Identification2. Identification3. Selection3. Selection

4. Understanding4. Understanding

5. Redesign5. Redesign

6. Implementation6. Implementation

DavenportDavenport 1. Visioning and1. Visioning and

GoalsettingGoalsetting

2. Identification2. Identification

3. Understand and3. Understand and

measuremeasure

4. Information4. Information

TechnologyTechnology

5. Prototyping5. Prototyping

6. Implementation6. Implementation

Manganelli/KleinManganelli/Klein 1. Preparation1. Preparation

2. Identification2. Identification3. Process Vision3. Process Vision

4a. Technical Design4a. Technical Design

4b. Social Design4b. Social Design

5. Transformation5. Transformation

KodakKodak 1. Project Initiation1. Project Initiation

5. Change5. Change

ManagementManagement

2. Understanding2. Understanding

3. New Process Design3. New Process Design

5. Change Management5. Change Management

4. Business Transition4. Business Transition

5. Change Management5. Change Management


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Key Factors to SuccessKey Factors to Success

Most business analysts tend to agree thatMost business analysts tend to agree that

successful implementation of BPR requiressuccessful implementation of BPR requires

the ability to effectively lead change.the ability to effectively lead change. John P. Kotter has written several books forJohn P. Kotter has written several books for

the Harvard Business Review on how tothe Harvard Business Review on how to

lead effective change in an organization.lead effective change in an organization. In his book,In his book, Leading ChangeLeading Change, Kotter has, Kotter has

outlined 8 steps that must be followed inoutlined 8 steps that must be followed in

order to successfully bring about change.order to successfully bring about change.


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Step 1 Establish a Sense of UrgencyStep 1 Establish a Sense of Urgency

Set a Burning Platform AtmosphereSet a Burning Platform Atmosphere

5.5. Send more data about customer satisfaction compared to competitors.Send more data about customer satisfaction compared to competitors.

6.6. Insist people talk to unsatisfied customers, unhappy suppliers, andInsist people talk to unsatisfied customers, unhappy suppliers, and

disgruntled shareholders.disgruntled shareholders.7.7. Use consultants to force relevant data and honest discussion intoUse consultants to force relevant data and honest discussion into

management meetings.management meetings.

8.8. Eliminate senior management happy talkEliminate senior management happy talk

9.9. Bombard people with information on future opportunities and theBombard people with information on future opportunities and theorganizations current inability to pursue those opportunities.organizations current inability to pursue those opportunities.

1.1. Expose Weaknesses compared to competitorsExpose Weaknesses compared to competitors

2.2. Eliminate signs of excessEliminate signs of excess

3.3. Set high unachievable targetsSet high unachievable targets

4.4. Stop measure subunit performanceStop measure subunit performance


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Step 2 Create a Guiding CoalitionStep 2 Create a Guiding Coalition

Team must be comprised of the right individuals.Team must be comprised of the right individuals.

These individuals must posses 4 key qualities.These individuals must posses 4 key qualities. Position PowerPosition Power

ExpertiseExpertise

CredibilityCredibility LeadershipLeadership


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Step 3 Develop a Vision & StrategyStep 3 Develop a Vision & Strategy Vision refers to a picture of the future with someVision refers to a picture of the future with some

implicit or explicit commentary on why peopleimplicit or explicit commentary on why peopleshould strive to create that futureshould strive to create that future

Six Key Characteristics with a good vision.Six Key Characteristics with a good vision. ImaginableImaginable

DesirableDesirable

FeasibleFeasible

FocusedFocused FlexibleFlexible

Easy to CommunicateEasy to Communicate


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Step 4 Communicate the VisionStep 4 Communicate the Vision Vision must be communicated effectively in orderVision must be communicated effectively in order

for individuals to act.for individuals to act. Several key elements in effective communication.Several key elements in effective communication.

SimplicitySimplicity Use of Metaphors / AnalogiesUse of Metaphors / Analogies Use of Multiple ForumsUse of Multiple Forums

Constant RepetitionConstant Repetition Leadership by exampleLeadership by example Explanation of InconsistenciesExplanation of Inconsistencies Two-way communicationTwo-way communication


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Step 5 Empower EmployeesStep 5 Empower Employees


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Step 6 Generate Short-Term WinsStep 6 Generate Short-Term Wins

Set up project milestonesSet up project milestones

Celebrate wins frequentlyCelebrate wins frequently

Acknowledge failuresAcknowledge failures

Make adjustments to BPMake adjustments to BP


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Step 7 Consolidate Gains & Produce MoreStep 7 Consolidate Gains & Produce More

ChangeChange

Never declare final victoryNever declare final victory Keep change alive!Keep change alive!

This eliminatesThis eliminates

complacent attitudescomplacent attitudes

DAveni Hyper-DAveni Hyper-

competition Modelcompetition Model


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Step 8 Anchor New Approaches in CultureStep 8 Anchor New Approaches in Culture

Transform BP to align with visionTransform BP to align with vision

Promote Individuals in Upper ManagementPromote Individuals in Upper Management

that live and breathe the visionthat live and breathe the vision

Hire Individuals that believeHire Individuals that believe

in the new culturein the new culture

Remove the bad applesRemove the bad apples


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Management ResponsibilitiesManagement Responsibilities

Start with a visionStart with a vision

Course of actionCourse of action

Current condition analysisCurrent condition analysis

Readiness for changeReadiness for change

Build credibility with the rest of theBuild credibility with the rest of the

organizationorganization


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The Changes of BPRThe Changes of BPR

Work flow processWork flow process

Creation of a new processCreation of a new process

The objectiveThe objective



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ContCont

Identify metricsIdentify metrics

Choosing metricsChoosing metrics

Measure the effectiveness of any newMeasure the effectiveness of any new

processesprocesses


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Managements Final steps to BPRManagements Final steps to BPR

Transition PlanTransition Plan

Implementation PlanImplementation Plan


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Company BackgroundCompany Background

Started in 1595 in Amsterdam, NetherlandsStarted in 1595 in Amsterdam, Netherlands

Major product Heineken beerMajor product Heineken beer

Second largest brewer in the worldSecond largest brewer in the world

Operates in 170 countries worldwideOperates in 170 countries worldwide

Started in the United States in 1931Started in the United States in 1931

1 of over 300 imported beer in the US1 of over 300 imported beer in the US


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Business EnvironmentBusiness Environment

Heinekens market share was 2%Heinekens market share was 2%

Over 300 imported beers in the USOver 300 imported beers in the US

Local breweries gaining popularityLocal breweries gaining popularity

Lead-time for Heineken beer was 12wksLead-time for Heineken beer was 12wks

Order processing labor intensiveOrder processing labor intensive

Customs clearanceCustoms clearance


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BPR StrategyBPR Strategy

A new business modelA new business model

Market the business model to employeesMarket the business model to employees

Overhaul of business operationsOverhaul of business operations

New technology should be easy to use andNew technology should be easy to use and

require minimal supportrequire minimal support

Distributors should not have to pay to useDistributors should not have to pay to use

the technologythe technology


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The TechnologyThe Technology

Heineken Operational Planning SystemHeineken Operational Planning System

Web based system built around supply-chainWeb based system built around supply-chain

softwaresoftware Form of collaborative planning ,forecasting andForm of collaborative planning ,forecasting and

replenishment softwarereplenishment software

Provides customized forecasting dataProvides customized forecasting data

Does not require proprietary software, equipmentDoes not require proprietary software, equipment

or supportor support

Uses Oracle database,SSL2,runs on Windows orUses Oracle database,SSL2,runs on Windows or

Unix and supports all Windows applicationsUnix and supports all Windows applications


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The BPR ImplementationThe BPR Implementation

One company developed the entire systemOne company developed the entire system

Required no work by distributorsRequired no work by distributors

Distributors need only internet accessDistributors need only internet access

Full implementation completed in 12Full implementation completed in 12

months and all distributors had access inmonths and all distributors had access in

another 12 months.another 12 months.

Reduced lead-time by 50%Reduced lead-time by 50%

Increased sales by 10%Increased sales by 10%


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Success factorsSuccess factors

Senior management commitmentSenior management commitment

Employee InvolvementEmployee Involvement

Distributors involvementDistributors involvement

Choice of technology mixChoice of technology mix

Cost of technology to distributorsCost of technology to distributors


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Some more BPR success storiesSome more BPR success stories

CSC Index, an information systemsCSC Index, an information systemsconsulting group foundconsulting group found

Cost reduced by 48%Cost reduced by 48% Response time reduced by 80%Response time reduced by 80% Defects decreased by 60%Defects decreased by 60%

Citibank re-engineered credit analysisCitibank re-engineered credit analysissystem resultsystem result Employees could spend more time (43%) inEmployees could spend more time (43%) in

soliciting new businesssoliciting new business

Profits increased by 750% over two yearsProfits increased by 750% over two years


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Datacard Corporation re-engineered itsDatacard Corporation re-engineered its

customer service operations salescustomer service operations sales

increased by seven foldincreased by seven fold Bell Atlantic reduced both time (15 days toBell Atlantic reduced both time (15 days to

a few hours) and the costs ($68 million aa few hours) and the costs ($68 million a

year to $6 million) required to connectyear to $6 million) required to connectcustomers to long distance carrierscustomers to long distance carriers

Some more BPR success storiesSome more BPR success stories


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Principles of Re-engineeringPrinciples of Re-engineering

Michael Hammer set forth seven principlesMichael Hammer set forth seven principles

of BPR toof BPR to

Minimize the costs of BPRMinimize the costs of BPR Maximize the benefitsMaximize the benefits

Seven Principles of ReSeven Principles of Re


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Organize around processes and outcomes.Organize around processes and outcomes.Not tasks and departmentsNot tasks and departments

Have output users perform the processesHave output users perform the processes Have those who produce information,Have those who produce information,

process itprocess it

Centralize and disperse dataCentralize and disperse data Integrate parallel activitiesIntegrate parallel activities Empower workers and use built-in controlsEmpower workers and use built-in controls

Capture data once at the sourceCapture data once at the source

Seven Principles of Re-Seven Principles of Re-

engineeringengineering


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IBM Credit Corp. before BPRIBM Credit Corp. before BPR

Used to have five distinct steps in credit approvalUsed to have five distinct steps in credit approval

processprocess

Check customers credit, determine interest rate,Check customers credit, determine interest rate,etc.etc.

Used to take six days to several weeksUsed to take six days to several weeks

Sales executives never able to get an answerSales executives never able to get an answer

about the approvalabout the approval

Result: dissatisfied sales staff and customers Result: dissatisfied sales staff and customers

lost saleslost sales


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IBM Credit Corp. after BPRIBM Credit Corp. after BPR

Re-engineered the process of credit approvalRe-engineered the process of credit approval

Now one individual called Deal StructurerNow one individual called Deal Structurer

process an application from beginning to endprocess an application from beginning to end Uses common data base that contains allUses common data base that contains all

information needed to process a normalinformation needed to process a normal

applicationapplication

In case of complexities calls on a small group ofIn case of complexities calls on a small group of

specialistsspecialists

Result less people, quick response, betterResult less people, quick response, better

tracking, higher customer satisfactiontracking, higher customer satisfaction


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IBM Credit Corp.IBM Credit Corp.

IBM Credit Corp.IBM Credit Corp. Re-engineering was organized aroundRe-engineering was organized around

processes (credit approval) and outcomesprocesses (credit approval) and outcomes(quick response & tracking status)(quick response & tracking status)

Not tasks and departmentsNot tasks and departments

Phoenix Designs Inc beforePhoenix Designs Inc before


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Phoenix Designs Inc beforePhoenix Designs Inc before

BPRBPR

Used to sell customized furnitureUsed to sell customized furniture

Customer ideas were captured by sales personsCustomer ideas were captured by sales persons

sent by independent dealerssent by independent dealers Ideas were submitted to design teamsIdeas were submitted to design teams

Sales would take draft to customer for approvalSales would take draft to customer for approval

Customer would ask for some changes and theCustomer would ask for some changes and theprocess would go onprocess would go on

Cost and customer dissatisfaction both wouldCost and customer dissatisfaction both would

riserise


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Phoenix Designs Inc after BPRPhoenix Designs Inc after BPR

Process of capturing idea, designing andProcess of capturing idea, designing and

obtaining approval were re-engineeredobtaining approval were re-engineered

Sales person with the help of PC andSales person with the help of PC andspecial design software would design thespecial design software would design the

furniture in customers officefurniture in customers office

Revised system increased dealer sales byRevised system increased dealer sales by1000% and boosted after income by 27%1000% and boosted after income by 27%


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Phoenix Designs IncPhoenix Designs Inc

Phoenix Designs IncPhoenix Designs Inc In the re-engineered processIn the re-engineered process

Made output users perform the processesMade output users perform the processes


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FORD Motors before BPRFORD Motors before BPR

Accounts Dept. prepared three-part purchaseAccounts Dept. prepared three-part purchaseorder one each for themselves, vendor &order one each for themselves, vendor &accounts payableaccounts payable

Goods were received, multi copy GRN were raisedGoods were received, multi copy GRN were raised one copy for the accounts payable one copy for the accounts payable

Vendor prepared multi copy invoice and sent aVendor prepared multi copy invoice and sent acopy to accounts payablecopy to accounts payable

More than 500 people worked in accountsMore than 500 people worked in accountspayable matching 14 different data items in thepayable matching 14 different data items in thethree documents and trying to reconcile all thethree documents and trying to reconcile all the

mismatchesmismatches


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FORD Motors after BPRFORD Motors after BPR

At MAZDA, of course for a much less volume, theAt MAZDA, of course for a much less volume, theentire accounts were having only five people!entire accounts were having only five people!

Re-engineered systemRe-engineered system

Purchasing agents entered orders in an online systemPurchasing agents entered orders in an online systemand electronic copy was forwarded to the vendorand electronic copy was forwarded to the vendor

Vendors sent the goods but no invoiceVendors sent the goods but no invoice Upon receipt of the goods, the clerk would enter onlyUpon receipt of the goods, the clerk would enter only

three items part number, unit oa measure and thethree items part number, unit oa measure and the

supplier codesupplier code Computer matched the information with outstandingComputer matched the information with outstanding

ordersorders If they do not match goods were returned otherwiseIf they do not match goods were returned otherwise

goods are accepted and payments sent electronicallygoods are accepted and payments sent electronically

to the vendorto the vendor


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FORD MotorsFORD Motors

At FORD Motors At FORD Motors Re-engineered processRe-engineered process

Have those who produce the information,Have those who produce the information,process itprocess it

Hewlett Packard Centralize & DisperseHewlett Packard Centralize & Disperse


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Hewlett-Packard Centralize & DisperseHewlett-Packard Centralize & Disperse

datadata

Decentralized purchase for fifty different manufacturing unitsDecentralized purchase for fifty different manufacturing units Could not take advantage of extensive buying power toCould not take advantage of extensive buying power to

negotiate quantity discountsnegotiate quantity discounts Re-engineered and created corporate purchasing departmentRe-engineered and created corporate purchasing department

it tracked all purchases & maintained list of approved it tracked all purchases & maintained list of approvedvendorsvendors

Each plant continued to met its unique needs by making its ownEach plant continued to met its unique needs by making its ownpurchases from approved vendorspurchases from approved vendors

Corporate office tracked all purchases and used the data ofCorporate office tracked all purchases and used the data of

fifty plants to negotiate quantity discounts and resolvefifty plants to negotiate quantity discounts and resolveproblemsproblems Result: Significantly lower cost, 50% reduction in lead time, 75%Result: Significantly lower cost, 50% reduction in lead time, 75%

reduction in failure rates & 150% improvement in on-timereduction in failure rates & 150% improvement in on-timedeliverydelivery


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Remaining principlesRemaining principles

Integrate parallel activities New productIntegrate parallel activities New product

developmentdevelopment

Empower workers those who do the workEmpower workers those who do the workshould be empowered to take decisions should be empowered to take decisions

results in faster response and increasedresults in faster response and increased

quality of the task performedquality of the task performed Capture data once at its source ITCapture data once at its source IT

enables achieving thisenables achieving this


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ConclusionConclusion


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ReferencesReferences

http://www.siemon.com/us/company/case_studies/heineken.asphttp://www.siemon.com/us/company/case_studies/heineken.asp www.wikipedia.comwww.wikipedia.com Smith, M., & Wintermyer, P. (2000). Distribution supply chainSmith, M., & Wintermyer, P. (2000). Distribution supply chain

management. Connector specifier, May 24, available formmanagement. Connector specifier, May 24, available form

http://www.csmag.comhttp://www.csmag.com.. Stalk, G. (1988, July/August). Time The next source of competitiveStalk, G. (1988, July/August). Time The next source of competitive

advantage.advantage. Harvard Business ReviewHarvard Business Review, 4151., 4151. Venkatraman, N. (1994, Winter). IT-enabled business transformation:Venkatraman, N. (1994, Winter). IT-enabled business transformation:

From automation to business scope redefinition.From automation to business scope redefinition. Sloan ManagementSloan ManagementReviewReview, 7387., 7387.

Weston, R. (1997). Heineken taps online ordering.Weston, R. (1997). Heineken taps online ordering. ComputerworldComputerworld,,3131(9), 69(9), 69 Kotter, John P., Leading Change, Harvard Business School Press 1stKotter, John P., Leading Change, Harvard Business School Press 1st

edition, 1996.edition, 1996. Schumacher, Wolf D. (2004, February).Schumacher, Wolf D. (2004, February). Managing Barriers to BusinessManaging Barriers to Business

Reengineering SuccessReengineering Success. March 17, 2007.. March 17, 2007.

http://www.prosci.com/w_2.htmhttp://www.prosci.com/w_2.htm..
http://www.siemon.com/us/company/case_studies/heineken.asphttp://www.siemon.com/us/company/case_studies/heineken.asphttp://www.wikipedia.com/http://www.wikipedia.com/http://www.csmag.com/http://www.csmag.com/http://www.prosci.com/w_2.htmhttp://www.prosci.com/w_2.htmhttp://www.prosci.com/w_2.htmhttp://www.csmag.com/http://www.wikipedia.com/http://www.siemon.com/us/company/case_studies/heineken.asp


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Implementation ofImplementation of

Business ProcessBusiness ProcessRe-engineeringRe-engineering


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IntroductionIntroduction Market dynamics are forcing firms to adopt managementMarket dynamics are forcing firms to adopt managementconcepts such as BPR, TQM, QFD, ISO, ERPconcepts such as BPR, TQM, QFD, ISO, ERP

For successful implementationFor successful implementation

Clear understanding of concepts among employeesClear understanding of concepts among employees Success depends to a great extent on the degree ofSuccess depends to a great extent on the degree of

congruence between organizational goals andcongruence between organizational goals andreengineered processesreengineered processes

Create an environment of awarenessCreate an environment of awarenessTopTopmanagement should openly support the BPR movesmanagement should openly support the BPR moves Each group may be assigned few departmentsEach group may be assigned few departments

Group members should use facts and figures to highlightGroup members should use facts and figures to highlightunsatisfactory performanceunsatisfactory performance

Through brainstorming or otherwise prepare a list ofThrough brainstorming or otherwise prepare a list ofpossible queries likely to be raised by employees and theirpossible queries likely to be raised by employees and theiranswersanswers


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IntroductionIntroduction Many managers have risento senior positions by using

existing processesefficiently many may findis difficult to accept changes

Resistance may not bevisible BPR leader should

persuade them to cooperate if it does nor work BPRleader should not hesitateto take stern measures

It is difficult ot suggest a

structured and systematicstandard procedure forimplementation of BPR thatwill work for everyorganization


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Implementation of BPRImplementation of BPR

Step 1: Development ofbusiness vision andProcess objectives

Step 2: Identification of

processes to bereengineered

Step 3: Understanding andmeasurement of existingprocesses

Step 4: Utilization ofinformation technology asan enabler

Step 5: Design andevaluation of process

prototype

Davenport & Shorthave suggestedfive step procedurefor Implementation


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Step 1: Development of business vision andStep 1: Development of business vision and

Process objectivesProcess objectives Business Process: a set oflogically related tasksperformed to achieve adefined business objective

Before BPR tasks wererationalized or simplified byindustrial engineer

Simply rationalizing tasksdoes not ensure efficient

processEven when tasks areperformed satisfactorily, theprocess comprising thesetasks may remain

unsatisfactory


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Step 1: Development of business vision and ProcessStep 1: Development of business vision and Process

objectivesobjectives

Business vision should emphasize

Current/future competition

Product/service quality

Customer requirement

Customer oriented organization

Make every body aware of the visionstatement and strategies of the firm

Vision statement must contain

process objective: cost reduction,time reduction, Quality improvement,work life, learning, empowerment,responsiveness

Step2: Identification of processes to beStep2: Identification of processes to be


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reengineeredreengineered

Top management to identify twoTop management to identify twoapproachesapproaches Exhaustive approach all possibleExhaustive approach all possible

processes are identified andprocesses are identified andprioritizedprioritized

High Impact approach identify onlyHigh Impact approach identify onlythose processes which are inthose processes which are inconflict with business vision andconflict with business vision andprocess objectivesprocess objectives

All employees must develop clearAll employees must develop clearunderstanding of the activities and tasksunderstanding of the activities and tasksinvolved in such processesinvolved in such processes

Each employee must understand thatEach employee must understand thattheir tasks are linked to whole processtheir tasks are linked to whole processand how the process gets affected byand how the process gets affected by

what they dowhat they do Process owner is responsible for theProcess owner is responsible for the

implementationimplementation


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reengineeredreengineered

Desired performance level of identifiedDesired performance level of identifiedprocesses must be quantifiedprocesses must be quantified Without process orientation no one isWithout process orientation no one isresponsible for the whole process customersresponsible for the whole process customersconcern may remain unattendedconcern may remain unattended

Processes require flexibility for:Processes require flexibility for: Different marketsDifferent markets Different situationsDifferent situations Resource variationsResource variations Special customer requestsSpecial customer requests

Reengineered process contains:Reengineered process contains: Simple, standard path (80% - 90%)Simple, standard path (80% - 90%) Exception handling path (8% - 18%)Exception handling path (8% - 18%) Large complex path (2%)Large complex path (2%)


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Step 3: Understanding and Measurement ofStep 3: Understanding and Measurement of

existing processesexisting processes Assess the current state ofAssess the current state of

performanceperformance In task oriented organization as longIn task oriented organization as long

as tasks conform to the set norm ofas tasks conform to the set norm ofquality no one finds fault such aquality no one finds fault such afragmented view results intofragmented view results into

inefficient process and cantinefficient process and cantwithstand competitive pressurewithstand competitive pressure

Time taken or costincurred to be quantifiedbefore and after thereengineering to highlightthe improvements

Quantified outcomes alsohelp in silencing theskeptics


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Step 4: Utilization of IT as an enablerStep 4: Utilization of IT as an enabler

When It is made available When It is made available

people try to apply to presentpeople try to apply to present

tasktask

Task orientation rather thanTask orientation rather than

process orientation dominatesprocess orientation dominates

Due to its speed and ability toDue to its speed and ability to

deal with complex activities ITdeal with complex activities IT

has become an inseparablehas become an inseparable

part of BPRpart of BPR

Crucial role of IT is not only toCrucial role of IT is not only to

improve present tasks but alsoimprove present tasks but also

perform tasks that areperform tasks that are

presently not performedpresently not performed

IT capabilities

Transactional

Geographical

Automational

AnalyticalInformational

Sequential

Knowledge Management

TrackingDisintermediation

Step 5 Design & Evaluation of processStep 5: Design & Evaluation of process


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Step 5: Design & Evaluation of processStep 5: Design & Evaluation of process

prototypeprototype

In BPR prototype of a process and not aIn BPR prototype of a process and not aproduct objective is sameproduct objective is same

Used to test if it fulfills the desired technicalUsed to test if it fulfills the desired technicaland other requirementsand other requirements

Changes, if required, will cost lessChanges, if required, will cost less

During implementation resources may notDuring implementation resources may not

be available in time chances of facingbe available in time chances of facinguncertainties is greatly reduced if processuncertainties is greatly reduced if processviability is tested in a simulatedviability is tested in a simulatedenvironmentenvironment


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Step 5: Design & Evaluation of processStep 5: Design & Evaluation of process

prototypeprototype

Advantages of process prototypeAdvantages of process prototype

Inexpensive in comparison to theInexpensive in comparison to the

processes that might fail duringprocesses that might fail during

implementationimplementation Develops process orientedDevelops process oriented

mindset among peoplemindset among people Improves process further based onImproves process further based on

prototype members suggestionsprototype members suggestions

Computers play a major role inComputers play a major role in

developing process prototypedeveloping process prototype


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Introduction & Definition of BPRIntroduction & Definition of BPR

Some examplesSome examples

Dr. A. K. DeyDr. A. K. Dey


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Need for BPR for Indian industryNeed for BPR for Indian industry

Till 1990 operated in protected environmentTill 1990 operated in protected environment Little choice for customers sellers dominatedLittle choice for customers sellers dominated

Low concern for needs, quality, timely deliveryLow concern for needs, quality, timely delivery Very few Indian businesses were world classVery few Indian businesses were world class Liberalization & Globalization lowered entry barriersLiberalization & Globalization lowered entry barriers Indian businesses faced competition from global giantsIndian businesses faced competition from global giants Question of survival & growthQuestion of survival & growth

To become globally competitive incremental improvements mayTo become globally competitive incremental improvements maynot worknot work Need for radically redesigning business practicesNeed for radically redesigning business practices


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Definition of BPRDefinition of BPR

It is the fundamental rethinking and radical redesign ofIt is the fundamental rethinking and radical redesign of

business processes to bring about dramaticbusiness processes to bring about dramatic

improvements in performance.improvements in performance.

Performance is measured in terms of cost, quality,Performance is measured in terms of cost, quality,accuracy, service, speed etc.accuracy, service, speed etc.

--- Hammer & Champy--- Hammer & Champy

Let us analyze the words used in this definitionLet us analyze the words used in this definition


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FundamentalFundamental

Attempts to examineAttempts to examine Why a particular task or job is needed?Why a particular task or job is needed? Why is it done in a particular way?Why is it done in a particular way?

Objectives beingObjectives being To ascertain the relevance of the jobTo ascertain the relevance of the job To explore the possibility of doing it in different way aTo explore the possibility of doing it in different way a

better waybetter way

Even if a job is relevant close scrutiny may revealEven if a job is relevant close scrutiny may reveal

its redundancy or need for modificationits redundancy or need for modification If redundant should be obliterated; If essential If redundant should be obliterated; If essential

should be modifiedshould be modified


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A new word: ObliterateA new word: Obliterate

MeaningsMeanings Wipe outWipe out

DestroyDestroy DemolishDemolish EliminateEliminate EradicateEradicate

AnnihilateAnnihilate Reduce to nothingReduce to nothing

Refer to the article: Dont Automate; ObliterateRefer to the article: Dont Automate; Obliterate


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RadicalRadical

Radical from Latin Radix meaning rootsRadical from Latin Radix meaning roots

BPR attempts to get to the roots of the businessBPR attempts to get to the roots of the businessprocessesprocesses

As against Kaizen BPR is not incrementalAs against Kaizen BPR is not incrementalimprovementimprovement

BPR does not operate at surface level whereBPR does not operate at surface level whereimprovements are of minor natureimprovements are of minor nature

Ishikawa Cause & Effect Diagram is usedIshikawa Cause & Effect Diagram is used Management may have toManagement may have to

Dispense with some of the tasks/sub processes/processesDispense with some of the tasks/sub processes/processes Reinvent them for significant improvements in performanceReinvent them for significant improvements in performance


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Re -designRe -design

BPR concerned with work designBPR concerned with work design

The way a job is doneThe way a job is done

No matter how well a product is designed if theNo matter how well a product is designed if theactivities involved in its manufacture are notactivities involved in its manufacture are not

properly designed Quality likely to sufferproperly designed Quality likely to suffer

Only two factors influence Quality of a jobOnly two factors influence Quality of a job

Process by which it is doneProcess by which it is done

People who are doing itPeople who are doing it


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Re design .Re design . Contd.Contd.

Fundamental & Redesign words are linkedFundamental & Redesign words are linked

Fundamental attempts to look in the wayFundamental attempts to look in the way

work is donework is done It is possible need to redesign some jobsIt is possible need to redesign some jobs

may emerge as a result of such enquirymay emerge as a result of such enquiry


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ProcessProcess

Process a group or collection of relatedProcess a group or collection of relatedtasks or activities which are performed in atasks or activities which are performed in alogical sequence to create an output that islogical sequence to create an output that isof value to the customerof value to the customer

Emphasis in Value to the customer leadsEmphasis in Value to the customer leadsto Customer satisfactionto Customer satisfaction

If customers are dissatisfied with an outputIf customers are dissatisfied with an output(product/service) all processes(product/service) all processesassociated with it needs scrutinyassociated with it needs scrutiny


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DramaticDramatic

Relates to radical improvementRelates to radical improvement In globally competitive world marginalIn globally competitive world marginal

improvements are totally inadequateimprovements are totally inadequate Particularly in organizations where decadesParticularly in organizations where decades

of indifference to customers needs requiresof indifference to customers needs requiresmajor changes for survival & growthmajor changes for survival & growth

Although Kaizen improvements are notAlthough Kaizen improvements are notdramatic the fact that it is continuousdramatic the fact that it is continuoussustained effort at every level of organizationsustained effort at every level of organizationensures better output and customerensures better output and customer

satisfactionsatisfaction


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Examples: Highway constructionExamples: Highway construction

After the slow way, the express way:After the slow way, the express way:Reengineered highways construction process Reengineered highways construction process Business Standard, March 22, 2003Business Standard, March 22, 2003

In past fifty years PWD could built 556 KM ofIn past fifty years PWD could built 556 KM ofhighway average 11 KM per yearhighway average 11 KM per year

NHAI plans in nine year to build 14,846 KM NHAI plans in nine year to build 14,846 KM average of 1650 KM per yearaverage of 1650 KM per year

Reduce project completion time: Outsourcing,Reduce project completion time: Outsourcing,Pre fabricated modules, Better processes &Pre fabricated modules, Better processes &Higher productivityHigher productivity


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Some moreSome more

VoltasVoltas 1998 28.5 days to supply & install and AC in Mumbai1998 28.5 days to supply & install and AC in Mumbai

2000 Only 3 days during peak season; 24 hours in off-2000 Only 3 days during peak season; 24 hours in off-peak seasonpeak season

Leasing & Finance Co. in South IndiaLeasing & Finance Co. in South India Reengineered sales closing process and reduced fromReengineered sales closing process and reduced from

seven days to just one dayseven days to just one day

Manufacturing Co. in Western IndiaManufacturing Co. in Western India Reduced order fulfillment process from eight weeks toReduced order fulfillment process from eight weeks to

eight dayseight days


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