Copyright 2002 Monash University IMS5042 Information Systems Strategic Planning Week 7: Elements of IS planning Theory: 4. Business Process Re-engineering

Copyright 2002 Monash University 2 Agenda 1. Introduction to BPR (Hammer version) 2. Doing BPR (Hammer version) 3. BPR after Hammer: How do you do it? 4. BPR and its Implications for IS Planning 5. BPR and planning philosophy

Copyright 2002 Monash University 3 Business Process Re-engineering (BPR): References Hammer M (1990), ‘Re-engineering work: Don’t automate, obliterate’, HBR, Jul-Aug, pp Hammer M & Champy J (1993), Re-engineering the Corporation: A manifesto for business revolution, Harper Business Hammer M & Stanton S (1995), The Re-engineering revolution, Harper Collins Al-Mashari M & Zairi M (1999) ‘BPR Implementation process: an analysis of key success and failure factors’, Business Process Management Journal, Vol 5, No 1, pp Davenport T & Stoddard D (1994) 'Re-engineering: Business change of mythic proportions?', MIS Quarterly, Vol 18, No 2, pp Kettinger W, Teng J & Guha (1997), 'Business process change: A study of methodologies, techniques and tools', MIS Quarterly, March, pp55-79 Strassmann P (1994), 'The Hocus-pocus of re-engineering',

Copyright 2002 Monash University 4 1. Introduction to BPR (Hammer version) BPR achieved its initial fame/notoriety largely through the works of Michael Hammer His works (listed in references) became huge best-sellers world-wide Hammer was head of an IT consulting firm based near Harvard Business School; most of his work is industry-based Style is that of a consultant rather than an academic (references? Supporting material?!)

Copyright 2002 Monash University 5 What is BPR? Hammer’s “Official” Definition Re-engineering is “… the fundamental rethinking and radical re-design of business processes to bring about dramatic improvements in performance”. (Hammer and Stanton, 1995) Key terms: ‘dramatic’ = quantum leaps in some aspect of performance ‘radical’ = don’t improve; throw away and start again ‘processes’ = group of related tasks that create value ‘ redesign’ = change in how work is done - independent of employees

Copyright 2002 Monash University 6 Rationale for need for BPR IT investments have not given the expected improvements in outcomes Companies have used IT to automate and speed up old processes, but otherwise leave them intact Old processes are geared towards efficiency and control; new need is for speed/innovation/service /quality “It is time to stop paving the cow paths”. Use IT to create new business processes which are geared to current needs

Copyright 2002 Monash University 7 Why did organisations design their existing inefficient processes? Sometimes they didn’t. Processes were not designed, but just happened Special cases and quick fixes became entrenched practice Ad hoc and temporary arrangements became standard Work arrangements persisted long after the special circumstances which created the need for them had passed Processes which were designed are usually old Design goals were usually related to control (like the typewriter keyboard) Processes preceded modern IT and were based around ‘information poverty’

Copyright 2002 Monash University 8 Organisational outcomes of poor process design Processes are treated as separate and fragmented - each controlled by a different organisational unit Poor integration of processes and information “Tunnel vision” among groups who have goals related only to their own processes Lack of accountability to overall outcome No-one really understands the ‘big picture’ of how it all fits together

Copyright 2002 Monash University 9 Inadequacy of traditional remedies Managers try to run their tasks as efficiently as possible, but this often has adverse effects on the next task in line (and the overall outcome) Managers’ adaptations to changing circumstances tend to add new problems Attempts to improve poor outcomes usually involve adding an extra task to the process (eg quality control procedures) which worsens the situation

Copyright 2002 Monash University 10 The BPR remedy Don’t try to improve existing processes. Destroy them! Break free of out-moded principles on which existing processes are based and develop new ones relevant to current circumstances Re-design processes from a cross-functional perspective Challenge conventional wisdom and constraints; focus on the desired end result and look for the best way to achieve it

Copyright 2002 Monash University 11 Outcomes of BPR Replace people and tasks Eliminate geography as an issue Integrate processes across functions Manage and administer data across processes IS/IT function - friend or foe of process change? Outsourcing Examples: Ford Motor Company accounts payable processing (see diagrams, Hammer (1990)) Mutual Benefit Life Insurance application processing

Copyright 2002 Monash University Doing BPR (Hammer version) Almost all organisations have to do BPR in order to remain competitive. “reengineering is the only solution” (H&S, p12) “No-one in an organisation wants re-engineering. It is confusing and disruptive and affects everything people have grown accustomed to.” (H, p112) “… the strain of implementing a re-engineering plan can hardly be over-estimated” (H, p112) “Re-engineering cannot be planned meticulously and accomplished in small and cautious steps. It’s an all- or-nothing proposition with an uncertain result.” (H, p105)

Copyright 2002 Monash University 13 Success and failure in BPR 50-70% of re-engineering efforts fail This has been interpreted as a normative statement, but it was not meant to be so BPR has no inherent failure rate; failure is due to not knowing what you are doing or not doing it properly

Copyright 2002 Monash University 14 The top ten rules for successful BPR (H&S 1995) Make sure you know what BPR is Re-engineer only processes; identify them first Limit the time spent analysing existing processes Get strong committed top-level leadership Be bold, creative and innovative in re-design Test new ideas before implementing them Do it quickly; one year maximum Allow no limits on what can be changed Don’t use standard implementation approaches; be fast, improvisational and iterative Take account of the concerns of the affected people

Copyright 2002 Monash University BPR after Hammer: How do you do it? A tidal wave of literature in the business and IS/IT worlds describing: Variations on Hammer’s definition of BPR; Case studies demonstrating the success or failure of BPR Methods for conducting and implementing BPR studies Issues in BPR implementation and philosophy Considerable controversy over whether BPR is possible or desirable and whether Hammer or anyone else’s version is better

Copyright 2002 Monash University 16 BPR after Hammer For a good overview of literature on some of the key issues in BPR, see Al-Mashari & Zairi (1999) Changing systems and culture Management support Organisational structure Project management IT infrastructure Figure 1 from p106

Copyright 2002 Monash University 17 Methods for doing BPR? Hammer’s ‘rules’ and principles for BPR are extremely vague (and in parts contradictory). Clear on what to do, but not much advice on how to do it The academic literature which followed produced nothing much more specific Consultants produced lots of methodologies, but often without much justification

Copyright 2002 Monash University 18 Methods for doing BPR: Kettinger & Teng (1998) Attempted a consolidation of existing BPR practice Reviewed academic literature Examined case studies Analysed consultants’ methodologies Produced a composite BPR framework comprising the most popular elements of existing approaches

Copyright 2002 Monash University 19 Kettinger & Teng method for doing BPR (just one example!) See diagram (p96/97 Phase 1: Strategy linkage Phase 2: Change planning Phase 3: Process problems Phase 4: Social redesign Phase 5: Technical redesign Phase 6: Process re-generation Phase 7: Continuous improvement

Copyright 2002 Monash University Implications for ISP IT and IS are critical to the success of BPR Not much written about the specifics of what IS could/should contribute, but the IS is a key element of business process re-design Some key issues begin to emerge about IS and IT infrastructure

Copyright 2002 Monash University Planning with CSFs: Assumptions and implications What does the CSF approach assume about IS and IS strategy? What does the CSF approach assume about planning? How does BPR compare with the other methods?

Copyright 2002 Monash University 22 BPR: Some of its assumptions about IS strategy Strong concern with explicitly tying IS strategy to business planning (IS and business inter-linked) IS strategy is concerned with improving the efficiency of internal operations IS is the enabling force behind revolutionary change in business processes Implementation of IS initiatives to support dramatic business change is non-problematic

Copyright 2002 Monash University 23 BPR: Some of its assumptions about planning The basic objective of strategic planning is to completely re-design business processes to improve operational efficiencies Planning is a visionary creative design activity Achievement of change will be resisted by established organisational interests which must be fought and overcome Planning is a process of constant on-going revolutionary change Revolution is a necessity; stagnation means death

Copyright 2002 Monash University 24 Planning philosophy behind the BPR approach?? Formalised Unified Comprehensive Utopian Rational Deterministic Directed Dictatorial Democratic Emergent Political Contingent Pluralist Pragmatic Ad hoc Incrementalist

Copyright 2002 Monash University 25 How does BPR compare with the other methods? ??