Business Process Re-Engineering


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Business Process Re-Engineering is a vast and large concept. Trying to simplify BPR in this article with research done extensively on the subject. Also have tried to shed light on its cohesion with IT, comparison with PI and criticism around BPR.

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  • Business Process Re-Engineering

    1. 1. Business Process Re-Engineering Intent: Define the concept of BPR Date: 28/Jan/2013 Applicable at: Any Business House
    2. 2. What are we going to discuss… Defining BPR History of BPR BPR vs. Process Improvement BPR Methodology Key Pointers Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:2
    3. 3. What next… Defining BPR History of BPR BPR vs. Process Improvement BPR Methodology Key Pointers Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:3
    4. 4. Defining BPR Re-Engineering Re-Engineering simply means to design the existing procedure of tasks once again so that that the cost, quality, service and speeds improves. Business Process Re-Engineering Again, simplify put, BPR is applying the above approach to the complete Business Unit, including all the processes that are a part of the Business. Business Process Redesign is "the analysis and design of workflows and processes within and between organizations. - Davenport & Short 1990 The critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures. – Teng et al. 1994 So, let’s safely define Business Process Re-engineering as a holistic approach, which concentrates on analysing and designing all the existing workflows and processes in a Business to excel in customer service, cut operational costs, and give cutting edge competition in market to similar service/goods providers. Let’s deep dive more into the BPR A FieryAir Venture Slide:4
    5. 5. What next… Defining BPR  History of BPR BPR vs. Process Improvement BPR Methodology Key Pointers Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:5
    6. 6. History of BPR 1990 1993 1994 1995 onwards Michael Martin The idea was The authors Martin Once popular, the Hammer, former MIT adapted fast by huge Hammer and James critics blamed BPR Professor claimed in number of Champy published a for putting too much his paper in Harvard Businesses. Well book called control in Business Review established Business Reengineering the Management and that Managers are Thinkers like Peter Corporation. being misused for using IT to automate Druker and Tom They promoted the Downsizing. BPR non value add Peters argued in idea that sometimes now started as a processes rather favor of BPR that it radical redesign and Business Process than eliminating helps counteract reorganization of with Business them. competition an enterprise was Analysis and Re- He argued that non managing squeezed necessary to lower design as its aspects. value add processes cost. costs and increase Later, BPM (Business should be By 1993 nearly 60% quality of service; Process obliterated and of Fortune 500 and IT was the key Management and made fast using help companies initiated enabler for that ERP (Enterprise of IT. the process of BPR. radical change. Resource Planning) took center stage. A FieryAir Venture Slide:6
    7. 7. What next… Defining BPR  History of BPR  BPR vs. Process Improvement BPR Methodology Key Pointers Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:7
    8. 8. BPR vs. Process ImprovementBusiness Process Re-Engineering Vs. Process ImprovementBPR relates to re-structuring the Business Process Process Improvement are Quality Deploymentat granular level so that non value add tasks are Initiatives to either increase the efficiency ofeliminated, costs are minimized, effectiveness existing Process or to identify and eliminate anincreased and customer experience is enhanced. undesirable aspect of the process. The other points of differences are…Process Re-engineers often seek radical redesign Process Improvement champions tend to focus onand drastic improvement of over all Business incremental change and gradual improvement ofprocesses. processes.Business process redesign or process Process Improvements centres around programsinnovation, refers to discrete initiatives that are and initiatives that emphasize incrementalintended to achieve radically redesigned and improvement in work processes and outputs overimproved work processes in a bounded time frame. an open-ended period of time. Parameters BPR PI Level of Change Radical Incremental Starting Point Clean Slate Existing Process Frequency of Change One time One time/Continuous To summarize in bulleted points, the Table shows pointers from Time Required Long Short Davenport’s publication in 1993. Participation Top Down Bottom Up Typical scope Broad, Cross Functional Narrow, within Boundaries Risk High Moderate Primary Enabler IT Statistical Control Type of Change Cultural/Structural Cultural Slide:8 A FieryAir Venture
    9. 9. What next… Defining BPR  History of BPR  BPR vs. Process Improvement  BPR Methodology Key Pointers Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:9
    10. 10. BPR MethodologyThere has been a lot of suggestions around the stages of or approach to Business Process Re-Engineering.However, the basic model or Cycle would be as below: Evolve Implementation Plan. Prototype & Simulate Transition Build Cross Functional Team. Identify Customer Driven Objective. Plans. Develop Strategic Purpose. Initiate Training Programs. Implement Transition Plan. Test and Identify Implement Processes ‘To-Be’ Design Review, Upda ‘To-Be’ te & Analyze ‘As-Is’ Create Activity Models. Create Activity Models. Create Process Models. Create Process Models. Simulate and Perform Activity based Simulate and Perform Activity based Costing. Costing. Identify Disconnects and Value Identify Disconnects and Value Adding Processes. Adding Processes. A FieryAir Venture Slide:10
    11. 11. BPR Methodology contd.. There are other approaches like below which are also practiced… Refocus company values on customer Prepare for BPR needs; Redesign core Improve business processes, often using Improve processes across the information Map & Analyze As-Is Continuously organization. technology to enable improvements; Implement Re- Reorganize biz into Design To-Be Rethink basic Engineered Process cross-functional teams organizational and with e2e responsibility people issues; for a process; A FieryAir Venture Slide:11
    12. 12. BPR Methodology contd..Some entities also practice elaborate steps for BPR, focusing on explaining each step and documenting them.Organize around outcomes, not tasks. Identify all the processes in an organization and prioritize them in order of redesign urgency. Integrate information processing work into the real work that produces the information. Treat geographically dispersed resources as though they were centralized. Link parallel activities in workflow instead of integrating their results. A FieryAir Venture Slide:12
    13. 13. BPR Methodology contd..Davenport and Short, in their publication in 1990 prescribed a Five Step Approach to BPR. High-Impact approach focusing on most important processes or ones thatBPR is driven by a business conflict most with thevision which implies specific vision. Exhaustive approachbusiness objectives such as that attempts to identify allCost Reduction, Time the processes and thenReduction, Output Quality prioritize them in order of Design andimprovement, QWL (Quality redesign urgency. Build aof Work Identify IT Prototype ofLife), Learning, Empowerm Levers the Newent etc. Understand Process and Measure Identify the the Existing Processes to Processes The actual design is Develop the be not the end of the BPR Business Redesigned process, rather it is a Vision and prototype, with Process Any re-design and re- successive iterations. Objectives structure in the existing As- The metaphor of Is Process can be prototype aligns the Measuring As-Is Process BPR approach with accelerated and efficiency would ensure that quick delivery of ensured if awareness of IT repeating of old mistakes results, and the capabilities assessed and does not happen and it involvement and are used to influence would also provide a satisfaction of process design. baseline for future customers. improvements. A FieryAir Venture Slide:13
    14. 14. What next… Defining BPR  History of BPR  BPR vs. Process Improvement  BPR Methodology  Key Pointers Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:14
    15. 15. Key Pointers The seven basic steps we could identify for a successful BPR are: 1. A complete Analysis and Documentation of the current Process. 2. Comparison with the Mission and Vision, one that is to be followed now. 3. Identifying the molecular level As-Is Processes which are non or less value Add and the ones which are Value Add. 4. Planning prototypes of To-Be Processes that would replace or amend the required As-Is Processes. 5. Leveraging IT capabilities to implement the Prototypes. 6. Planning the Implementation, either phase-vise or complete, depending on tolerability of the Business. 7. Implementing To-Be as per plan. A FieryAir Venture Slide:15
    16. 16. What next… Defining BPR  History of BPR  BPR vs. Process Improvement  BPR Methodology  Key Pointers  Role of IT in BPR Criticism of BPR End notes A FieryAir Venture Slide:16
    17. 17. Role of IT in BPRInformation Technology is the enabler or driver for Business Process Re-Engineering. The essence of BPR isrecognizing and breaking away from the existing rules and fundamental assumptions of the underlying Processof a Business. IT drives this essence with innovation and technology. BPR and IT are recursive.IT should be used to challenge the Processes that existed before the current technology came up. The heart ofRe-engineering is the notion of discontinuous thinking. It means, recognizing and breaking away from the out-dated rules and fundamental assumptions underlying operations... These rules of work design are based onassumptions about technology, people, and organizational goals that no longer hold. – Hammer (1990)BPR requires taking a broader view of both IT and business activity, and of the relationships between them. ITshould be viewed as more than an automating or mechanizing force: to fundamentally reshape the waybusiness is done. Business activities should be viewed as more than a collection of individual or even functionaltasks: in a process view for maximizing effectiveness. IT and BPR have recursive relationship. IT capabilitiesshould support business processes, and business processes should be in terms of the capabilities IT canprovide. – Davenport & Short (1990) A FieryAir Venture Slide:17
    18. 18. Role of IT in BPR contd.. As per Hammer, the Principles of Re-Engineering Davenport and Short listed the role IT can play from IT point of view are: In BPR crisply: Organize around outcomes, not tasks Transactio nal Have those who use the output of the process perform the process Geographical Subsume information processing work into Automatical the real work that produces the information Role of IT in Analytical Treat geographically dispersed resources as though they were centralized BPR Informational Link parallel activities instead of Sequential integrating their results Put the decision point where the work is performed, and build control into the process Capture information once and at the source. A FieryAir Venture Slide:18
    19. 19. What next… Defining BPR  History of BPR  BPR vs. Process Improvement  BPR Methodology  Key Pointers  Role of IT in BPR  Criticism of BPR End notes A FieryAir Venture Slide:19
    20. 20. Criticism of BPRTowards 1991 and until today, some Business Organizations take the refuge of BPR to shield CorporateDownsizing. According to Hammer, lack of sustained management commitment and leadership, unrealisticscope and expectations and resistance to change prompted management to abandon the concept of BPR andembrace the next new methodology, Enterprise Resource Planning (ERP)Re-Engineering has not always lived up to its expectations. Some prominent reasons include:1. Re-Engineering assumes that the factor that limits an organizations performance is the ineffectiveness of its processes (which may or may not be true) and offers no means of validating that assumption.2. Re-Engineering assumes the need to start the process of performance improvement with a "clean slate," i.e. totally disregard the status quo.3. According to Eliyahu M. Goldratt (and his Theory of Constraints) Re-Engineering does not provide an effective way to focus improvement efforts on the organizations constraintLater, the pioneers of Re-Engineering had to state in defense of BPR the following:I wasnt smart enough about that. I was reflecting my engineering background and was insufficient appreciativeof the human dimension. Ive learned thats critical. - HammerWhen I wrote about "business process redesign" in 1990, I explicitly said that using it for cost reduction alonewas not a sensible goal. And consultants Michael Hammer and James Champy, the two names most closelyassociated with reengineering, have insisted all along that layoffs shouldnt be the point. But the fact is, onceout of the bottle, the reengineering genie quickly turned ugly. - Davenport A FieryAir Venture Slide:20
    21. 21. What next… Defining BPR  History of BPR  BPR vs. Process Improvement  BPR Methodology  Key Pointers  Role of IT in BPR  Criticism of BPR  End notes A FieryAir Venture Slide:21
    22. 22. End NotesBPR is to Strategic Management is probably what TQM is to Quality. However, it requires a very strong andpeople conscious Leadership to carry it out and get most out of it. Though two decade old, still it holds itsrelevance in today’s Business, where the challenges have existed and rather steepened in last two decades.Sources used in Research:Search CIO, Wiki, Brint, Wichita State Univ. Paper, Bain Publication, Inno Regio Project, and Baruch MBA Paper.For any query on the Research or to implement BPR in your Organization, please contact sevenSolutions.Or simply drop in an email to Thanks… A FieryAir Venture Slide:22