2. Let’s get horizontal! Toward a process view of organizations

3. objectives  present the process view of organization  describe business processes  discuss business process reengineering

4. reinventing organizations old view… new view

5. definition of business process a specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs Davenport, 1993

6. focus on “what”focus on “how” vertical; chain of commandhorizontal; workflow static; slice-in-timedynamic task-centeredcustomer-oriented individual; specialistteam; generalist parochialholistic So, what’s the difference? FunctionProcess

7. typical business processes  product development  customer acquisition  manufacturing  order management  human resource management  planning & resource allocation

8. cross-functional processes: product development MARKETING PRODUCTION R & D product development competitor analysis market research new product prototype needs analysis research market test component design product test product release process design equipment design production start

9. cross-functional processes: order management SALES FINANCE LOGISTICS order management sales order payment proposal commitment configuration delivery credit checking billing collection

10. example: sales logistics sales order delivery payment

11. SAP event process model: sales logistics xor V V Arrival of order w/oreference to quotation Arrival of order w/oreference to quotation Quotation is valid Quotation is valid Arrival of order with reference toquotation Arrival of order with reference toquotation Standardorder processing Standardorder processing xor Order confirmation is sent Order confirmation is sent Material requirements planning Rejection is sent to customer Rejection is sent to customer Delivery processing Delivery processing Materialis issued Materialis issued Billing document proceessing Orderis released Orderis released Sales requirements are determined Sales requirements are determined Create billing document Create billing document

12. value chain  stream of activities  part of larger “value system”  applies to both products and services profit margin support: primary: infrastructure, hr, r&d, procurement inbound logistics operations outbound logistics marketing & sales service

13. inter-organizational processes The 2000’s will be about breaking down external walls: integrating and redesigning inter-enterprise processes using the Internet -Michael Hammer

15. real triviality quiz Who is Michael Hammer?

16. Michael Hammer “Father of Reengineering” “Don’t automate… business process reengineering...OBLITERATE!”  fundamental redesign of processes  “clean sheet of paper”  leveraging technology  upgrading skill levels (aka fewer jobs)

17. Hammer’s principles  outcomes over tasks  users of output: do it yourself!  process information at the source  geography doesn’t matter  coordinate activities ‘ empower workers

18. servicing of loan follow-up processing origination of loan pre- qualification document generation application processing credit analysis & underwriting approval & closing payment processing escrow management customer service collections & foreclosures valuation & risk analysis transfer to secondary mkt loan processing desk-to-desk approach credit reporting

19. loan processing team approach field rep laptop regional production center loan origination team loan servicing team

20. BPR success stories  Ford A/P  eliminated invoices  reduced headcount: from 500 to 125  Mutual Benefit Life  revised application processing (from 30 steps, five departments, 19 people, 5 to 25 days to one person + expert system, 4 hours)  eliminated 100 positions

21. summary  presented the process view of organization  described business processes  discussed business process reengineering