Business Process Reengineering by Lampathaki F., Koussouris S., Psarras J

Introduction
Business Process Reengineering
by
Lampathaki F., Koussouris S., Psarras J.

MBA in Techno-Economic Systems - 2013
Top 5 Questions on BPR
•  What is Reengineering Really?
•  Why do I need to Reengineer?
•  When should I Reengineer?
•  How should I do It? Are there different BPR

approaches?
•  How Drastic Should I Reengineer?

Definition 1/2
“in order to take a leap to improve the cost, quality,

service, speed and other operational foundation of the
modern enterprise, enterprise should take fundamental
rethinking and radical reform in business process.”
Hammer and Champy, Corporate Restructuring - Enterprise Revolution Declaration
"Business Process Reengineering, seeks radical rather than merely

continuous improvement. It escalates the efforts of JIT and TQM
to make process orientation a strategic tool and a core
competence of the organization. BPR concentrates on core
business processes, and uses the specific techniques within the JIT
and TQM toolboxes as enablers, while broadening the process
vision.”
Johansson et al. (1993)

Definition 2/2
“Business Process Reengineering (BPR),

a fundamental rethinking and a radical redesign of
a business process to achieve dramatic
improvements”
Michael Hammer& Champy, Reengineering the Corporation: A Manifesto for Business
Revolution (New York: Harper Business, 1993)
A systematic approach/ methodology for analyzing

business processes for improving the organization's
alignment with strategic goals, its effectiveness,
efficiency, competitiveness……
The 4 Keywords of BPR
“a fundamental rethinking and
a radical redesign of
a business process to achieve
dramatic improvements ”

Fundamental Rethinking
Ground-breaking questions
•  Why do we do what we do?
•  Why do we do it the way we do?
•  How can we do things more efficiently?
BPR determines firstly what a company must do,

then how to:
•  Nothing is for granted, everything is questioned
•  Focus is on the “utopic” scenario

Radical Redesign
•  Re-invent, don’t modify!
•  Don’t care to fix things; focus on re-building things the
way they should be.
•  Dive into the bottom to seek the roots of issues!
•  Starting from scratch, with a carta blanca!
•  Ignore existing structures & procedures and develop the
new methods of work
•  Usually it’s less expensive as the effort is on the design
phase and the execution flows smoothly
•  Enable new or existing processes using IT
Dramatic Improvements
Get rid of the old approach/mentality
Introduce a NOVEL method of work
Big Decision to achieve Extraordinary Impact
Improvement in business results not of 5-20%, but

in term of quantum leaps of 100%, 300%, 500%
Business Process
A set of logically related tasks performed to
achieve a defined business outcome.
A structured, measured set of activities designed to

produce a specified output for a particular customer
or market.
It implies a strong emphasis on how work is done

within an organization
Davenport & Short, 1990

Business Process
•  Busines Processes: Sequences and combinations of
business activities
•  Management processes: control and coordinate business
processes and ensure delivery
•  Support processes: infrastructural and other assistance
to business processes
a set of linked activities that take an input and transform

it to create an output. The transformation that occurs in
the process should add value to the input and create an
output that is more useful and effective to the recipient
Johansson et al. 1993
Inputs Process
Outputs
Characteristics of a Process
•  A structured, measured set of activities
•  A specific workflow path (sequencing)
•  Spans across time and place
•  Has a beginning and an end
•  Clearly defined inputs
•  Clearly defined outputs
•  Has an end-customer
•  Has an owner
•  Has measurable Performance Indicators

Business Process Components
•  People
•  Information
•  Decision Points
•  Communication Channels
•  Boundaries

Business Processes Examples
Generic Customer Industry-specific Customer
•  Marketing & Sales •  Loan processing (Banking)
•  Product/Service •  Claims (Insurance)
Development •  Grant allocation (Education)
•  Manufacturing •  Merchandise return (Retail)
•  Distribution •  Food order & preparation
•  Billing (Restaurant)
•  Order Processing •  Cargo Loading (Shipping)
•  Customer Service •  Reservations (Lodging)

The Modern Business Reality
•  Organizations in Crisis (as the whole world)
•  No company is safe
•  Market Leads are reversable in seconds!
•  Traditional business relationships and operational
models are evolving or collapsing
•  IT offers new opportunities for businesses
Market expectations and pressures are changing
•  Global business opportunities

Forces reshaping businesses
Now

Competion: Global
Competition: Local

Markets: Mass

Markets: Focused

Operations: Flexible
Operations:
Focus: Best service
Controlled

Performance: Focus: Performance

Sustained

Performance: Short
term

Before

Business Pressures
Technological Pressures
•  Technological innovation and

obsolescence
Market Pressures
•  Information overload Societal Pressures
•  Global economy -
strong competition •  Social responsibility
•  Government regulations
•  Changing nature of •  Government deregulation
the workforce •  Shrinking budgets and
subsidies
•  Powerful customers •  Ethical issues
Enterprise


The “3Cs” of the Modern
Business
Change Customers
• Technology • Demanding
• Customer • Sophistication
Preferences • Changing Needs
• Legislation
Competition
• Local
• Global

Towards the BPR Evolution
Need to increase productivity, quality service
Need to reduce cost
Traditional organisation structure, customer services and business

methods are out-dated
Need to face the increased competition rising due to low barriers of

entry
Current business are:

•  customer-focused and market driven OR process-focused and
team-oriented
•  focused on speed & response time OR focused on customer
relationships

Purpose of the Reengineering
The tool to prepare the organization to:
•  run effectively in the globally competitive

environment
•  maintain competitiveness
•  add value in its services and products

BPR in a Nutshell
1.  Start from ground zero
2.  Determine what things the business must do
3.  Ignore “as is” and concentrates on “what should be”
4.  Seek the best way to do achieve these targets
BPR aims to:
•  overcome the shortcoming of seeking incremental

improvements
•  radically improve a process instead of patching up

WHAT DOES BPR SEEK?
Improvement
Reduction

•  Quality
•  Cost

•  Service
•  Complexity

•  Speed
•  Fragmentation


Reengineering Example
In which queue should I stand to end up faster?


Reengineered Process
Key Concept:

•  One queue for
multiple service points

•  Multiple services
workstation

•  Benefits for all!


BPR Changes
BPR is an integrated program of change
Resulting changes may include

•  Organizational structure
•  Roles and responsibilities
•  Supplier relations
•  Customer interfaces
•  Other stakeholder relationships
Often a cultural change within the organization!

Why is there an Impact?
The impact on an organization is achieved because:
•  Sponsored by senior management

•  Driven from the top down. Begins and ends with
customer value
•  Applies to multiple business functions, departments
and locations
•  Involves cultural, organizational and role changes that
must be managed
•  Radical improvements will take place

Common Characteristics
Not the same from business to business!
•  Critical rethinking of the business.

•  View of the business as a set of processes, not as
functional department.
•  Customer focused
•  Holistic planning, design & implementation
•  Merging of positions/roles
•  Jobs are compressed (both horizontaly and vertically)
•  Empowerement and Decision Power to Employees
•  Natural Order of Processes, not straigh-line sequence
The C s needed for BPR
The “3Cs” of an organisation The “4Cs” for effective BPR
Commitment
Customers
Cooperation
Competition
Communication
Change
Contribution

Why Businesses need to BPR 1/2
To respond to rapidly changing technical & business

environment and customer’s needs to achieve Big
performance gains
Integrate people, technology & organizational culture
BPR has been implemented in various industries

1.  Increase skill and knowledge
2.  Reduce time
3.  Introduction of technology makes tasks easier and
more efficient
Why Businesses need to BPR 2/2
Market Share/
Competition Technology Stock Price
Profits
More Important Less Important

Restraining BPR Factors 1/2
•  Complacency of “as-is” situation

•  Resistance of Personnel to changes
•  New Developments are scary
•  Fear of Unknown Failure

Restraining BPR Factors 2/2
Organisation Time Risk Cost
More Important Less Important

BPR vs Conventional Practices
Conventional BPR
Automate existing process Challenge current practices
Analyse Understand
process.
current
situation
Fix if and future
Broken
vision
Clearly
Upgrade defined
Existing processes
Process
integrated to
meet
Similar to customer
OS patches J
needs and
Invent new
ways of add value
Automate
working &
design new
process.

BPR vs Incremental Improvement 1/3
Continuous Improvement
Process Reengineering

•  Incremental Change
•  Radical Transformation

•  People Focus
•  People & Technology Focus

•  Low Investment
•  High Investment

•  Improve Existing
•  Rebuild

•  Work Unit Driven
•  “Owner” Driven

Performance BPR, then

Improvement continuous
improvement
Incremental
improvement
Time

BPR Incremental Improvement
Similarities
Basis of Analysis Process Process
Performance Measurement Rigorous Rigorous
Organisationa Change Significant Significant
Behavioral Change Significant Significant
Time Investment Significant Significant
Differences
Level of Change Radical Incremental
Starting Point Clean Slate Existing Process
Participation Top-Down Bottom-up
Typical Scope Broad, cross-functional Narrow, within functions
Risk High Moderate
Primary Enabler Information Technology Statistical Control
Type of Change Cultural and Structural Cultural
Reengineering vs. Other Methods
Dimension Reengineering Rightsizing Restructuring TQM Automation
Customer’s
Assumptions Reporting Technology
Fundamental Staffing wants and
Questioned relationship applications
needs
Scope of Staffing, job

Radical Organization Bottom-up Top-down
Change responsibilities
Orientation Process Functional Functional Process Procedure
Improvement
Dramatic Incremental Incremental Incremental Incremental
Goals

What is BPR NOT!
1.  Automating: BPR is not just automating/replacing processes with
IT procedures.
2.  Downsizing: BPR does not focus on cutting down costs in an

enterprise
3.  Outsourcing: There are no apriori thoughts of handing job to

third parties
4.  Continuous improvement: Focus is on big and radical changes,

not small “patches”
5.  Restructing: There is no point to shuffle things around instead of

fixing them from scratch

Thinking of BPR means
1.  Not transfering responsibility of its impact to the BPR consultant
2.  Not a trend for eliminating the redundant positions
3.  Not a radical redesign of functional department or radically

redesign people
4.  Not expecting personel to cooperate while facing the risk to get
washed out
5.  Not thinking that everything will be resolved from Day#1

Preparation for BPR
•  Identify and quantify process improvement
opportunities
•  Establish objectives "stretching" the existing activities
•  Identify benefits for the organization
•  Identify the necessary changes

BPR Principles
•  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 decision points where the work is performed and build
controls into the process
•  Capture information at the source
Michael Hammer, Reengineering Work: Don t Automate, Obliterate, Harvard Business

Review, July-August, 1990, pp. 104-112
A BPR Framework
Job skills

Structures

Organization

Reward

Values

Core business processes

Value-added

Process

Customer-focus

Innovation

Enabling technologies

IS architectures

Technology

Methods and tools

IS organizations


IT is here to help!
•  Groupware and collaboration technologies
•  Mobile computing
•  Data recodring and analysis technologies
•  Telephony
•  Web services and Service-Oriented Architecture
•  Imaging technology
•  Workflow Management, Business Process Management
•  Decision support systems, Digital dashboards
•  ERP, CRM, SCM
•  Social Media
•  Serious Games
Business Process ….
•  Reengineering
Examples of Benefits from IT
Dimensions & Type Example IT Enabling Effects
Lower transaction costs

Interorganizational Order from a supplier Eliminate intermediaries
Organisation
Interfunctional Work across geography

Develop a new product Greater concurrency
Interpersonal
Approve a bank loan Integrate role and task
Increase outcome flexibility

Physical Manufacture a product
Objects
Control proces
Informational Prepare a proposal Routinize complex decision
Operational Reduce time and costs. Increase

Activities
Fill a customer order

output quality
Improve analysis
Managerial Develop a budget Increase participation
Business Process Reengineering Adapted from: Davenport, TShort, J. E., "The New Industrial Engineering: Information
Technology and Business Process Redesign," Sloan Management Review, Summer 1990, p.
17.
Flowchart Example Symbols
Annotation
Activity Delay
Direction of
process flow
Movement/ Storage
Transportation
Connector Transmission
Decision Point
Paper Begin/End
document

Order Processing Example
Flowchart
A
C P
T R
Customer Customer Credit Shipping
I O C
Inventory V C Y
Service Checking I
T
E
S
C
L
Y S E
1 2
Enter 1 1 1
Begin
Order Check 2 0.1 4
Credit 3 0.2 1
4 ... ...
No ...
Yes
Order Update
Processing Inventory
Wait for
shipping
Ship
End order

Siloed Processes & Islands of Automation
Order processing Custom

CMS
Inventory
management SAP R/3
Shipping & Sharepoint

distribution Server
Accounting Oracle

Data Flow vs Problem Tracing
Order processing
Flow of Problem Tracing

Inventory
Data Flow
management
Shipping &
distribution
Accounting

Front-End Integration
Order processing Custom CMS
Inventory
management SAP R/3
Shipping & Sharepoint

A single-system distribution Server
view of the
process and the
customer
Accounting Oracle

BPR is strongly related to IT
How can business

processes be Business
Reengineering
transformed using IT?
Business-pulled Technology-driven
Information How can IT support

Technology business processes?
Business Process Reengineering Source: Thomas H. Davenport and James E. Short, The New Industrial Engineering: Information
MBA in Techno-Economic Systems - 2013 technology and Business Process Redesign, Sloan Management Review, Summer 1990, pp. 11-26.
Leavitt Diamond: BPR Perspectives
Technology

•  Facilitates change – Does not drive it!

•  Enabler for a new organization

•  Customer-oriented distributed systems

•  Knowledge sharing – collective intelligence

Strategy
•  Redefinition
Procedures
•  Adapted to market needs
•  Simplification

•  Motivation and incentives
•  Radical transformation

•  New, homogeneous culture

•  Driven by the needs of customer

Human resources
KPIs •  New philosophy
•  Financial •  No hierarchies
•  Customers •  More responsibilities
•  Procedures
•  Training
•  Innovation
•  Knowledge
Source: Omar A. El Sawy, Redesigning Enterprise Processes for eBusiness, McGraw-Hill

Results of BRP
•  Redefinition of the business domain
•  Redefinition of roles and responsibilities
•  Deployment of Information Systems
•  Elimination of obsolete Processes
•  Innovation in Processes
•  Training for achievement motivation

Prerequisities for effective BPR
•  Commitment of Management
•  Trust and Believe in the changes
•  Engagement of the whole organisation
•  Realistic Expectations
•  Training for new methods of work
•  Sound Management Practices
•  Sufficient Budget
•  Sufficient Time

Risky Conditions for BPR
•  Uncertain Financial Condition
•  Low Capacity of Organisation (too much work)
•  Fear of Changes
•  Lack of Optimism
•  Bad relationships with employees
•  Uncoordinated IS and HR departments

Major Success Factors
•  Senior Management, Commitment and Sponsorship
•  Realistic Expectations
•  Empowered and Collaborative Workers
•  Strategic Context of Growth and Expansion
•  Shared Vision
•  Sound Management Practices
•  Appropriate People Participating Full-Time
•  Sufficient Budget

Major Failure Factors
•  Cost-cutting focus
•  Narrow technical knowledge and focus
•  Lack of sustained management commitment and
leadership
•  Unrealistic scope and expectations
•  Resistance to change
•  Lack of Communication
•  Lack of Patience

BPR’s Common Problems
“If it isn’t broke …”
•  Weak Desire to Change

•  Strong Commitment to Existing Processes
•  Starting from the Existing Process Not a Blank Sheet

•  Process Simplification is Common - True BPR is Not
•  Process under review too big or too small
•  Costs Seem Too High
•  Unfortunate Allocation of Resources
•  Poor Timing and Planning
•  Disorientation from Target
Evaluation Criteria
Costs
•  Design and implementing the business process
•  Hire and train employee
•  Develop supporting IS
•  Purchase of other equipment and facilities
Benefits
•  Customer requirements
•  Breakthrough goals
•  Performance criteria (KPIs)
•  Constraints
Risk
•  Technology availability and maturity
•  Time required for design and implementation
•  Learning curve
•  Cost and schedule overrun
Survival Tips 1/2
•  Design a Strategic Plan
•  See IT as the tool to move on
•  Place the customer at the center
•  Concentrate on fragmented processes that lead to

delays or other negative impacts
•  Share the BPR process with your organisation
•  Build Multidisciplinary teams

Survival Tips 2/2
•  Integrate the IT team to the BPR team
•  Top Managers should be there all the time
•  Draw a Timeline (3-6monyhs)
•  Don’t ignore company culture
•  Improve communication
•  Seek for feedback

Conclusions 1/2
•  A strategic, cross-functional
activity
•  Needs to be integrated with

Strategy
other aspects of management
•  First understand current Technology Business Processes

business processes, then
decide for BPR KPIs
•  IT can provide huge support

Human Resources
•  Customer needs should always
be considered

Conclusions 2/2
“Reengineering is a fundamental rethinking and

redesign of business processes to achieve dramatic
improvements”
Take nothing for granted!!!
But not forget the lessons from Felix the Flying

Frog....
BPR-related quotes
“To improve is to change;
to be perfect is to change often.”
-- Winston Churchill
“Μanagers . . . must abandon the organizational and operational principles and procedures
they are now using and create entirely new ones.... Business reengineering means starting
all over, starting from scratch.... It means forgetting how work was done.... Old job titles
and old organizational arrangements . . . Cease to matter. How people and companies did
things yesterday doesn't matter to the business reengineer .... Reengineering ... can't be
carried out in small and cautious steps. It is an all-or-nothing proposition."
Reengineering the Corporation
(quotes gathered by Paul Strassmann in “The Hocus-Pocus of Reengineering, 1994)
Today firms must seek not fractional, but multiplicative levels of improvement – 10x rather
than 10%.
Thomas H. Davenport , 1993

Questions?
bpr@epu.ntua.gr
Dr. Lampathaki F. - flamp@epu.ntua.gr

Dr. Koussouris S. - skous@mail.ntua.gr


Business Process Reengineering by Lampathaki F., Koussouris S., Psarras J

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Introduction

Business Process Reengineering

Business Process Reengineering

• Why do I need to Reengineer?

• When should I Reengineer?

• How should I do It? Are there different BPR

• How Drastic Should I Reengineer?

Business Process Reengineering

“in order to take a leap to improve the cost, quality,

"Business Process Reengineering, seeks radical rather than merely

Business Process Reengineering

“Business Process Reengineering (BPR),

A systematic approach/ methodology for analyzing

“a fundamental rethinking and

a business process to achieve

Business Process Reengineering

BPR determines firstly what a company must do,

Business Process Reengineering

Introduce a NOVEL method of work

Big Decision to achieve Extraordinary Impact

Improvement in business results not of 5-20%, but

A structured, measured set of activities designed to

It implies a strong emphasis on how work is done

Business Process Reengineering

a set of linked activities that take an input and transform

Business Process Reengineering

Business Process Reengineering

Business Process Reengineering

Business Process Reengineering

• Technological innovation and

Business Process Reengineering

Business Process Reengineering

Need to reduce cost

Traditional organisation structure, customer services and business

Need to face the increased competition rising due to low barriers of

Current business are:

Business Process Reengineering

• run effectively in the globally competitive

• add value in its services and products

Business Process Reengineering

BPR aims to:

• overcome the shortcoming of seeking incremental

• radically improve a process instead of patching up

Business Process Reengineering

Business Process Reengineering

• Benefits for all!

Business Process Reengineering

Resulting changes may include

Often a cultural change within the organization!

Business Process Reengineering

• Sponsored by senior management

Business Process Reengineering

• Critical rethinking of the business.

Business Process Reengineering

To respond to rapidly changing technical & business

Integrate people, technology & organizational culture

BPR has been implemented in various industries

More Important Less Important

• Complacency of “as-is” situation

Business Process Reengineering

Organisation Time Risk Cost

More Important Less Important

Business Process Reengineering

•  Why do I need to Reengineer?

•  When should I Reengineer?

•  How should I do It? Are there different BPR

•  How Drastic Should I Reengineer?

•  Technological innovation and

•  run effectively in the globally competitive

•  add value in its services and products

•  overcome the shortcoming of seeking incremental

•  radically improve a process instead of patching up

•  Benefits for all!

•  Sponsored by senior management

•  Critical rethinking of the business.

•  Complacency of “as-is” situation

2.  Downsizing: BPR does not focus on cutting down costs in an

3.  Outsourcing: There are no apriori thoughts of handing job to

4.  Continuous improvement: Focus is on big and radical changes,

5.  Restructing: There is no point to shuffle things around instead of

2.  Not a trend for eliminating the redundant positions

3.  Not a radical redesign of functional department or radically

5.  Not thinking that everything will be resolved from Day#1

•  Establish objectives "stretching" the existing activities

•  Identify benefits for the organization

•  Identify the necessary changes

•  Redefinition of the business domain

•  Redefinition of roles and responsibilities

•  Deployment of Information Systems

•  Elimination of obsolete Processes

•  Training for achievement motivation

•  Uncertain Financial Condition

•  Low Capacity of Organisation (too much work)

•  Bad relationships with employees

•  Uncoordinated IS and HR departments

•  Weak Desire to Change

•  Starting from the Existing Process Not a Blank Sheet

•  Design a Strategic Plan

•  See IT as the tool to move on

•  Place the customer at the center

•  Concentrate on fragmented processes that lead to

•  Share the BPR process with your organisation

•  Build Multidisciplinary teams

•  Integrate the IT team to the BPR team

•  Top Managers should be there all the time

•  Draw a Timeline (3-6monyhs)

•  Don’t ignore company culture