Business Process Re-Engineering Intent: Define the concept of BPR Date: 28/Jan/2013 Applicable at: Any Business House

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

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

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 http://www.brint.com/bpr.htm http://en.wikipedia.org/wiki/Business_process_reengineering 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

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

History of BPR 1990 1993 1994 1995 onwards Michael Martin Hammer, former MIT Professor claimed in his paper in Harvard Business Review that Managers are using IT to automate non value add processes rather than eliminating them. He argued that non value add processes should be obliterated and made fast using help of IT. The idea was adapted fast by huge number of Businesses. Well established Business Thinkers like Peter Druker and Tom Peters argued in favor of BPR that it helps counteract competition managing squeezed cost. By 1993 nearly 60% of Fortune 500 companies initiated the process of BPR. The authors Martin Hammer and James Champy published a book called Reengineering the Corporation. They promoted the idea that sometimes radical redesign and reorganization of an enterprise was necessary to lower costs and increase quality of service; and IT was the key enabler for that radical change. Once popular, the critics blamed BPR for putting too much control in Management and being misused for Downsizing. BPR now started as a Business Process with Business Analysis and Re-design as its aspects. Later, BPM (Business Process Management and ERP (Enterprise Resource Planning) took center stage. http://en.wikipedia.org/wiki/Business_process_reengineering A FieryAir Venture

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

BPR vs. Process Improvement Business Process Re-Engineering Vs. Process Improvement BPR relates to re-structuring the Business Process at granular level so that non value add tasks are eliminated, costs are minimized, effectiveness increased and customer experience is enhanced. Process Improvement are Quality Deployment Initiatives to either increase the efficiency of existing Process or to identify and eliminate an undesirable aspect of the process. The other points of differences are… Process Re-engineers often seek radical redesign and drastic improvement of over all Business processes. Process Improvement champions tend to focus on incremental change and gradual improvement of processes. Business process redesign or process innovation, refers to discrete initiatives that are intended to achieve radically redesigned and improved work processes in a bounded time frame. Process Improvements centres around programs and initiatives that emphasize incremental improvement in work processes and outputs over an open-ended period of time. http://www.brint.com/bpr.htm Parameters BPR PI Level of Change Radical Incremental Starting Point Clean Slate Existing Process Frequency of Change One time One time/Continuous Time Required Long Short 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 To summarize in bulleted points, the Table shows pointers from Davenport’s publication in 1993. A FieryAir Venture

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

Review, Update & Analyze Test and Implement ‘To-Be’ BPR Methodology There 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: Build Cross Functional Team. Identify Customer Driven Objective. Develop Strategic Purpose. Evolve Implementation Plan. Prototype & Simulate Transition Plans. Initiate Training Programs. Implement Transition Plan. Identify Processes Review, Update & Analyze ‘As-Is’ Design ‘To-Be’ Test and Implement ‘To-Be’ Create Activity Models. Create Process Models. Simulate and Perform Activity based Costing. Identify Disconnects and Value Adding Processes. Create Activity Models. Create Process Models. Simulate and Perform Activity based Costing. Identify Disconnects and Value Adding Processes. A FieryAir Venture

BPR Methodology contd.. There are other approaches like below which are also practiced… Refocus company values on customer needs; Redesign core processes, often using information technology to enable improvements; Reorganize biz into cross-functional teams with e2e responsibility for a process; Rethink basic organizational and people issues; Improve business processes across the organization. Prepare for BPR Map & Analyze As-Is Design To-Be Implement Re-Engineered Process Improve Continuously A FieryAir Venture

BPR Methodology contd.. 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. Some entities also practice elaborate steps for BPR, focusing on explaining each step and documenting them. A FieryAir Venture

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 that conflict most with the vision. Exhaustive approach that attempts to identify all the processes and then prioritize them in order of redesign urgency. BPR is driven by a business vision which implies specific business objectives such as Cost Reduction, Time Reduction, Output Quality improvement, QWL (Quality of Work Life), Learning, Empowerment etc. Develop the Business Vision and Process Objectives Identify the Processes to be Redesigned Understand and Measure the Existing Processes Identify IT Levers Design and Build a Prototype of the New Process The actual design is not the end of the BPR process, rather it is a prototype, with successive iterations. The metaphor of prototype aligns the BPR approach with quick delivery of results, and the involvement and satisfaction of customers. Any re-design and re-structure in the existing As-Is Process can be accelerated and efficiency ensured if awareness of IT capabilities assessed and are used to influence process design. Measuring As-Is Process would ensure that repeating of old mistakes does not happen and it would also provide a baseline for future improvements. A FieryAir Venture

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

Key Pointers The seven basic steps we could identify for a successful BPR are: A complete Analysis and Documentation of the current Process. Comparison with the Mission and Vision, one that is to be followed now. Identifying the molecular level As-Is Processes which are non or less value Add and the ones which are Value Add. Planning prototypes of To-Be Processes that would replace or amend the required As-Is Processes. Leveraging IT capabilities to implement the Prototypes. Planning the Implementation, either phase-vise or complete, depending on tolerability of the Business. Implementing To-Be as per plan. A FieryAir Venture

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

Role of IT in BPR BPR IT Information Technology is the enabler or driver for Business Process Re-Engineering. The essence of BPR is recognizing and breaking away from the existing rules and fundamental assumptions of the underlying Process of 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 of Re-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 on assumptions 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. IT should be viewed as more than an automating or mechanizing force: to fundamentally reshape the way business is done. Business activities should be viewed as more than a collection of individual or even functional tasks: in a process view for maximizing effectiveness. IT and BPR have recursive relationship. IT capabilities should support business processes, and business processes should be in terms of the capabilities IT can provide. – Davenport & Short (1990) A FieryAir Venture

Role of IT in BPR contd.. Role of IT in BPR Transactional Geographical Automatical Analytical Informational Sequential As per Hammer, the Principles of Re-Engineering from IT point of view are: Davenport and Short listed the role IT can play In BPR crisply: Organize around outcomes, not tasks Have those who use the output of the process perform the process Subsume information processing work into the real work that produces the information Treat geographically dispersed resources as though they were centralized Link parallel activities instead of 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

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

Criticism of BPR Towards 1991 and until today, some Business Organizations take the refuge of BPR to shield Corporate Downsizing. According to Hammer, lack of sustained management commitment and leadership, unrealistic scope and expectations and resistance to change prompted management to abandon the concept of BPR and embrace the next new methodology, Enterprise Resource Planning (ERP) Re-Engineering has not always lived up to its expectations. Some prominent reasons include: Re-Engineering assumes that the factor that limits an organization's performance is the ineffectiveness of its processes (which may or may not be true) and offers no means of validating that assumption. Re-Engineering assumes the need to start the process of performance improvement with a "clean slate," i.e. totally disregard the status quo. According to Eliyahu M. Goldratt (and his Theory of Constraints) Re-Engineering does not provide an effective way to focus improvement efforts on the organization's constraint Later, the pioneers of Re-Engineering had to state in defense of BPR the following: I wasn't smart enough about that. I was reflecting my engineering background and was insufficient appreciative of the human dimension. I've learned that's critical. - Hammer When I wrote about "business process redesign" in 1990, I explicitly said that using it for cost reduction alone was not a sensible goal. And consultants Michael Hammer and James Champy, the two names most closely associated with reengineering, have insisted all along that layoffs shouldn't be the point. But the fact is, once out of the bottle, the reengineering genie quickly turned ugly. - Davenport A FieryAir Venture

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

End Notes BPR is to Strategic Management is probably what TQM is to Quality. However, it requires a very strong and people conscious Leadership to carry it out and get most out of it. Though two decade old, still it holds its relevance 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 ask@sevensolutions.in Thanks… A FieryAir Venture