The Hammer Definition of BPR l Radical redesign of business processes l What BPR is l What BPR is not l Hammer, Michael, et al., REENGINEERING THE CORPORATION: A Manifesto for Business Revolution, New York: Harper Collins, Publishers Inc., 1993.

Other References on BPR l Champy, James, REENGINEERING MANAGEMENT, New York: Harper Business, l Hammer, Michael, et al., THE REENGINEERING REVOLUTION, New York: Harper Business, l Jacobson, REENGIENEERING WITH OBJECT TECHNOLOGY, l Taylor, David A., BUSINESS ENGINEERING WITH OBJECT TECHNOLOGY, wILEY, 1995.

Some Common Benefits of BPR l There is enterprise integration n Departments are consolidated n Several jobs are combined into one job l Workers are empowered n There is both horizontal and vertical reorganization n Handoffs are eliminated n There are fewer rules and less coordination is required

Some Common Benefits of BPR, Cont’d l Number of steps in a process are reduced n This is simplification n Inspections, checks and controls are reduced or eliminated l The steps are performed in a more natural order

Some Common Benefits of BPR, Cont’d l Like Process Improvement, steps are reassessed n Can it be eliminated n Can it be taken off line n Can it be performed in parallel n Can it be combined n Is it a bottleneck n Can its mean be reduced n Can its variance be reduced n WHAT IS ITS COST???

Some Common Benefits of BPR, Cont’d l Processes differ by the type of job being processed n Not just one process but many are employed depending on the size of the job l Work is performed where it makes the most sense n Wal-Mart moves the replenishment function to its suppliers

Some Common Benefits of BPR, Cont’d l Reconciliation is minimized l A case manager provides a single point of contact l Hybrid centralized/decentralized operations are prevalent n IT enables decisions to operate autonomously

Benefits of elimination of handoffs l No transits l No waiting for another operator l No waiting in queues l No setups l No supervision/coordination required

EXAMPLES: l Ford l IBM Credit l McKesson Pharmacueticals l Kodak l XEROX l Motorola

How information technology provides important business solutions l Managers must learn to think inductively l Information can appear instantaneously in as many different places as needed l Generalists can do the work of experts with expert systems l {{LET’S EXAMINE THESE MORE CLOSELY}}

Information can appear in as many places as needed simultaneously l Shared databases make this possible

A generalist can do the work of an expert l Expert systems make this possible

Business can simultaneously reap the benefits of centralization and decentralization l Wide-area, data-communication networks make this possible

Decision-making is part of everyone’s job l Decision support tools (database access combined w/ modeling software)

Field personnel can send and receive information wherever they are l They don’t need an office at headquarters any more l To receive and send mail, all they need is a notebook with cellular telephone technology modem

Contacts with potential buyers need no longer be personal l enables detailed interaction l Southwestern Bell gets their C++ programmers out of India at $10-$15 per hour

Planning is instantaneous and continuous due to IT l Manufacturers gather data on n product sales, raw materials price and availability, labor supply and produces a master production schedule n This can now be done instantaneously by computer based on real-time data

Planning is instantaneous, Cont’d l Companies must make technology exploitation one of there core competencies if they are to succeed in a period of ongoing technological change l If you can buy it, its not new

Planning is instantaneous, Cont’d l Know what you’re going to do with technology before it becomes available l It is entirely possible to stay three years ahead of the market on technology

Who will re-engineer l Leader l Process owner l Re-engineering team l Steering Committee l Re-engineering czar

TASKS of the Re-engineering team l 1) determine measures of performance l 2) install measures of performance l 3) delineate entire existing process in all its gory detail l 4) perform process value analysis and activity-based costing l 5) benchmark processes by comparison with other processes

TASKS of the Re-engineering team, Cont’d l 6) design re-invented process l 7) simulate re-invented process l 8) prepare report with recommendations l 9) install re-invented process l 10) measure improvements

Re-engineering Opportunities l Product development: concept to prototype l Sales: prospect to order l Order fulfillment: order to payment l Service: inquiry to resolution

Symptoms of a sick process l Extensive information exchange, data redundancy -- process fragmentation l Inventory buffers and other assets -- slack to cope with uncertainty l High levels of checking, inspection and control -- fragmentation

Symptoms of a sick process, Cont’d l Lots of rework and iteration -- inadequate feedback l Complexity, exceptions and special cases -- accretion onto simplicity

Principles of good process design l Start with a vision l Decide upon approach l As few people as possible involved in the final process l Lots of involvement, empowerment and ownership

Principles of good process design, Cont’d l Simplicity, simplicity, simplicity l Make it fun, make it easy l Focus on outcomes n Shortened cycle times n Lower cost n Higher quality n Higher throughput l Simulate the prototype