This document defines business process reengineering as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in key performance measures like cost, quality, and speed. It discusses four key aspects of the definition: being fundamental, radical, dramatic, and focusing on processes rather than organizational structures. The document then outlines the business process reengineering life cycle methodology and lists some benefits of reengineering like increased customer satisfaction and cost/time reductions. It analyzes reengineering across physical/technical, infrastructure, and value dimensions and provides examples of how reengineering was implemented at Ford and a life insurance company.

1. Business Process Re Engineering
Keshav Trikha
Shoaeb Sheikh
Mudit Dave
Rakshit Pungalia
Prabhansh Singh

2. Definition
• “the fundamental rethinking and radical redesign of business processes
to achieve dramatic improvements in critical contemporary measures of
performance such as costs, quality and speed”.
• (Hammer and Champy, 1993)

3. This definition contains four key words:
Fundamental
• Fundamental implies that everything – every assumption, every reason,
every activity – is challenged by asking why it should be continued. The
implication is nothing should be accepted as scared. Over time, practices
that were once required become obsolete and need to be removed.
Radical
• Do not try to improve the existing situation, invent(create/design)
completely new ways of accomplishing(complete/achieve) work.

4. This definition contains four key words:
Dramatic
• Do not use business process redesign to obtain marginal (small slight)
improvements, aim at order-of-magnitude improvements (ten times).
• If the marginal gains – 5 to 10 percent – are the goal, then continuous
improvement is a more appropriate path than reengineering.
Process
• Focus on the business processes instead of organizational structures.

5. PROCESS REENGINEERING LIFE CYCLE (PRLC) METHODOLOGY
• Define Objective & Framework
Identify the customer needs
Study The Existing process
Formulate the redesign Plan
Implement the redesign plan

6. BENEFIT OF REENGINEERING
• Increase the
organization’s ability
• Increase customer
satisfaction
• Simplicity
• IT efficient process
• Cost Reduction
• Time Reduction
• Improve the quality of
product/Services

7. The Dimensions of Business Reengineering
Process
Structure
Technology
Structure
Organization
Structure
Reward
Structure
Measurement
Systems
Organizational
Culture
Political
Power
Management
Methods
Individual Belief
Systems
Physical Technical Layer
Infrastructure Layer
Value Layer
More concrete
easiest to change
More difficult to
change less
concrete

8. 1.0 The Physical /Technical Dimensions are what people can easily see and do. This include:
a. Process structure consists of the business processes, outcomes, policies,
practices and procedures that support the processes. (process structure is
what, when and how work is performed)
• Process can be triggered by internal events, timing cycles, or external stimuli.
• Some processes originate by designs, others may emerge informally to meet
real or perceived organizational needs (that is why we need business process
reengineering).
• There are undocumented, inconsistently applied and personality dependent
processes. No single organization has the same processes
Dimensions of Business Reengineering
(Physical/Technical Layer)

9. Dimensions of Business Reengineering
(Physical/Technical Layer)
b. Technology structure which consists of the automated communications,
networking and computer systems used to support the process structure.
• The sensible (rational/reasonable) application of technology depends on the
competent integration of technology with work processes.
c. Organization structure defines who performs, manages, and is accountable for each
business process.
• When process and organization structures are out of alignments, there are gaps in
accountability.

10. Dimensions of Business Reengineering
(Infrastructure Layer)
2.0 The Infrastructure Dimensions refers to interpretation of policies and procedures
which heavily influences how the physical/technical dimensions on a day-to-day
basis.
• If the physical/technical dimensions change, the infrastructure must also change
because they reinforce desired performance operational behavior.
a. Reward structure regulates behavior. Rewards may be formal or informal, financial or
recognition based. Ideally, well-designed jobs provide a work environment that is
rewarding in and of itself.
b. Measurement systems define the feedback that provide information on process performance.
• enables people to improve process performance;
• must deliver appropriate information;
• should uncover the need for change;
• should be made available directly and simultaneously (at once)to process performers
and managers

11. Dimensions of Business Reengineering
(Infrastructure Layer)
c. Management methods consist of the practices and techniques used to supervise,
develop, and support the people who perform the business processes.
• It is one of the most neglected (ignored) in reengineering because it is seen as
outside the project scope.
• Managers and supervisors must understand and learn how to support the new
environment so as to gain benefits from the reengineering process.

12. Dimensions of Business Reengineering
(Value Layer)
3.0 The Value Dimensions define the organization’s culture and drive behavior.
Leadership and improvement philosophies must emerge from these dimensions.
a. Organizational culture consists of the unspoken, collective rules and beliefs of the
organization.
• It can be discerned (perceive/see) through the organization’s language, symbols, myths
(legends) and rituals (ceremony).
• It defines what is important to the organization more forcefully than any memo from
the CEO.
• Changing embedded corporate value is perhaps the most powerful form of change.

13. Dimensions of Business Reengineering
(Value Layer)
b. Political power refers to individual who manipulate and shape the actions and
behaviors of others.
• Both formal and informal leaders use power to promulgate (broadcast) and reinforce
power.
• Formal authority – acquired through the position held in the organization.
• Personal power – acquired through expertise, knowledge, or connections.
C. Individual belief systems are the attitudes and mental models that individuals
apply to themselves, those they work with, and the work itself.
• Examples of mental models: Impatience, skepticisms, openness, control, rigidity, and
flexibility
• Aligning the value dimensions to support the reengineered organization requires
organization executives to demonstrate leadership.

14. Ford Accounts Payable Process*
PO = Receiving Doc. = Invoice
Accounts
Payable
Vendor
GoodsReceiving
Payment
Invoice
Receiving
document
Purchasing
Purchase order
Copy of
purchase
order
*Source: Adapted from Hammer and
Champy, 1993
? ?

15. Ford Procurement Process
Accounts
Payable
Vendor
GoodsReceiving
Payment
Goods
received
Purchasing
Purchase order
Purchase
order
Data base

16. Ford Accounts Payable
Before
• More than 500 accounts payable clerks matched purchase order,
receiving documents, and invoices and then issued payment.
• It was slow and cumbersome.
• Mismatches were common.
After
• Reengineer “procurement” instead of AP process.
• The new process cuts head count in AP by 75%.
• Invoices are eliminated.
• Matching is computerized.
• Accuracy is improved.

17. • 30 steps, 5 departments, 19 persons
• Issuance application processing cycle time: 24 hours
minimum; average 22 days
• only 17 minutes in actually processing the application
New Life Insurance Policy Application Process at
Mutual Benefits Life Before Reengineering*
Department A
Step 1
Department A
Step 2
Department E
Step 19
. . . .
Issuance
Application
Issuance
Policy
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at
Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.
Mutual Benefits Life Before Reengineering*

18. The New Life Insurance Policy Application Process
Handled by Case Managers
Case Manager
Underwriter
Physician
Mainframe
LAN
Server
PC
Workstation
• application processing cycle time: 4 hours minimum;
2-5 days average
• Application handling capacity double
• Cut 100 field office positions

19. Management Information Systems (MIS)
MIS is a computer-based system that optimizes the collection, collation, transfer,
and presentation of information throughout an organization.
Intranet
Business transactions
Transaction processing
system
Business Transactions
Extranet
Databases of
valid
transactions
Databases of
external
data
An
organization’s
MIS
Financial MIS
Accounting
MIS
Marketing MIS
Human
Resources MIS
Drill down
reports
Exception
report
Key indicator
report
Schedule
report

20. Thank You