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Business process reengineering


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slides is about management information system's(MIS) sub topic enterprise resource planning's(ERP) sub topic business process re-engineering.

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Business process reengineering

  1. 1. Nitin gulgulia MBA Fin.(iibs) • BUSINESS PROCESS RE-ENGINEERING Nitin gulgulia
  2. 2. Objectives • Explain what business process reengineering is ?? • Why it is important??? • Present different options that organizations can use to reengineer processes within their organizations Nitin gulgulia
  3. 3. Why Reengineer? • Historical ‘reality’ for organizations: – High level of demand: – Management (and IT!) focus – efficiency and control of operations • Modern ‘reality’ since 1990s: – Hyper-competiveness – Globalization – Very demanding customers – Management and IT focus: Innovation, responsiveness/speed, quality and service. Nitin gulgulia
  4. 4. What is Reengineering? • Business Process Reengineering (BPR) is a management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes that exist within and across organizations. • It is a fundamental and radical approach by either modifying or eliminating non-value adding activities. (Wikipedia). • Reengineering can be accomplished through the implementation of ERP systems…..but is this the best approach? Nitin gulgulia
  5. 5. Business Process Reengineering Definition • BPR first introduced in 1990 in a Harvard Business Review article by Michael Hammer: – Reengineering Work: Don't Automate, Obliterate. • Hammer/Champy – Reengineering the Corporation (1993) • Provided this definition: – “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.” Nitin gulgulia
  6. 6. Business Process Reengineering- TYPES • Fundamental – Need to understand why an organization does what it does – question all of the rules and assumptions that exist • Radical – Radical redesign means disregarding all existing structures and procedures, and inventing completely new ways of accomplishing work. Reengineering is about business reinvention, begins with no assumptions and takes nothing for granted. • Dramatic – Not looking for marginal or incremental improvements or modification – Goal is dramatic improvements in performance. • Processes – Focus on the way the organization adds value – through cross- functional business processes – Move away from function view; task based thinking Nitin gulgulia
  7. 7. Ford Motor Company • Accounts Payable function • 500 people • Most work on mistakes between Purchase Orders Receiving Documents Invoices Nitin gulgulia
  8. 8. Ford (cont) Nitin gulgulia
  9. 9. Ford (cont) Nitin gulgulia
  10. 10. Risks in BPR • Advocates report failure rates of 50% to 70% • Some RISKS are:: – Employee resistance to change – Inadequate attention to employee concerns – Inappropriate staffing – Inadequate technologies – Mismatch of strategies used and goals – Lack of oversight – Failure of leadership commitment Nitin gulgulia
  11. 11. BPR best practices • Combine multiple tasks and assign a single point of contact for each process. EMPOWERMENT – An important feature of BPR is integrating activities and assigning business process responsibility to one individual – a ‘generalist’. • Allow workers to make decisions. Avoid decision hierarchies that require workers to go through layers of management for decisions about the work they are doing. • Perform process steps in their natural order. Rather than following a linear sequential set of tasks, perform process activities as needed, sometimes in parallel. Nitin gulgulia
  12. 12. How do you figure out what processes to reengineer? • What’s broken the most? • What process has the greatest impact on the customer? • Which of the processes are most susceptible to successful redesign? (feasibility and scope) Nitin gulgulia
  13. 13. How do you know if it’s broken (or at least in major trouble?) • Extensive information exchange, data redundancy, and re-keying of data into multiple systems • High ratio of checking and control to value adding • Reworking and iteration Nitin gulgulia
  14. 14. Reengineering/Redesign Choices • What are the choices? • What are the advantages / disadvantages of each? • Who should or does use which? Nitin gulgulia
  15. 15. Reengineering/Redesign Choices • Technology Enabled (Constrained) Reengineering – Choices are a direct function of the software – Not altering software makes time and cost lower – Also called “Concurrent Transformation” • Clean Slate Reengineering – “Start from scratch” with no structures or documents – Software must be made to fit the “needs” of the firm – Costs in terms of time and dollars is generally greater Nitin gulgulia
  16. 16. Technology Enabled (Constrained) Reengineering • A particular technology (or portfolio of technologies) is chosen as a tool to facilitate reengineering. – Thus, reengineering choices are a function of the technologies chosen. – The technology drives the reengineering. Nitin gulgulia
  17. 17. Technology Enabled (Constrained) Reengineering Advantages (cont) • ERP provides the tool and structure to facilitate change • Proven and based on best practices • Forces change to happen • ERP bounds the design • Design is feasible and we know it works (it’s been proven – in other companies) • Cheaper than clean slate • Designs likely can be implemented in a timely manner • Less risky Nitin gulgulia
  18. 18. Clean Slate Reengineering • Process design starts with a clean slate • Also referred to as “starting from scratch” or green field. • Theoretically, no limits Nitin gulgulia
  19. 19. Advantages of Clean Slate • Provides freedom from tools constraints – Avoids tool biases by using a portfolio of tools – Not limited by the constraints of a single software package • Provides freedom from predefined structures – Can develop own unique, leading-edge processes – Not limited to the ‘configuration options’ within a single software package • Separates BPR and technology implementation – Clearly defines costs as one or the other • Permits immediate use of new technology – Don’t have to wait for the software company to ‘catch up’ with an advance Nitin gulgulia
  20. 20. Advantages of Clean Slate (cont) • Competitive advantage: – Allows an organization to develop innovative software that is not available through existing ERP software • May be the only option: – For some firms in ‘niche’ industries, clean slate reengineering is the only option Nitin gulgulia
  21. 21. Need for BPR • O’Leary [2000] survey of SAP R/3 users –Technology enabled strategy dominated –Prior to ERP implementation, 16% thought BPR needed prior to SAP implementation • 33% thought BPR unnecessaary –After ERP implementation, 35% thought BPR needed prior to SAP implementation • 10% thought BPR unnecessary • So BPR seems to be a useful exercise Nitin gulgulia
  22. 22. Which Firm Should Use Which Approach? Depends on • Firms Size • Available Resources • Time Pressure • Strategic Gain • Uniqueness of solution Nitin gulgulia
  23. 23. Blend - Somewhere Between the Two • The approach claimed to be used by most firms is Technology Enabled Reengineering, simultaneous with ERP software implementation. • In actuality, there are few projects that are “purely” clean slate or technology enabled • More of a spectrum Technology Enabled MOST FIRMS Clean Slate Nitin gulgulia
  24. 24. Implementation methodology Of ERP • Assuming a decision on an ERP has been taken, the implementation normally consists of five stages: • Design • Implementation • Stabilization • Continuous improvement • Transformation Nitin gulgulia
  25. 25. STEPS TO IMPLEMENT ERP • The structured implementation programme can speed system deployment and return on investment. This can be done in the following manner: • Conducting an effective gap assessment • Business and technical processes • Organizational measures Nitin gulgulia
  26. 26. STEPS TO IMPLEMENT ERP • Data conversion and data clean-up • Agreeing on the implementation boundaries • Project sponsorship and governance • The implementation strategy is ultimately built on a foundation of people, processes and product • implemenation.htm Nitin gulgulia
  27. 27. Nitin gulgulia
  28. 28. Thank you Nitin gulgulia