Business Process Re-engineering

GGSIPU
Course Code : MS (WE)
MBA
Lecture 1

By
Deepak Virmani

Content
Introduction and Overview
Process
Significance of BPR
Rationale of BPR
Process Improvement & Redesign
BPR and ERP
BPR Vs Total Quality Management
Kaizen & Quality Function Deployment

Real Life Process

If Grocery store : The process begins with you

stepping into line, and ends with you receiving

your receipt and leaving the store. You are the
customer (you have the money and you have
come to buy food), and the store is the supplier.
The process steps are the activities that you and
the store personnel do to complete the
transaction. This is business process.
Business processes are simply a set of activities
that transform a set of inputs into a set of
outputs (goods or services) for another person
or process using people and tools.

What is a Business Process (BP)?

BP is a collection of activities that takes one or more kinds of
input and creates an output that is of value to customers
Inputs -- raw material to be processed.
Output -- something that has value to the customer.
Customer -- internal or external.
Information Systems Data converted to Information that is
useful to customer
Examples of BP, in the context of e-Government, are:

Issuance of a Driving License

Issuance of Passport
Registration of a Company
Payment of a Tax , Bills etc
Release of a Grant

The Process
A group of related tasks that together create value for a
customer is called a business process. Common corporate
goals include:
(a) Customer satisfaction,
(b) Return on investment, and
(c) Market share

These goals require process inter-dependencies and system

dependencies that are established through the integration of various
business processes.
Another definition of a business process is the type of commodity
that flows through the system. For example, a product development
and its transformation into a final product can be viewed as a
process.
`Process as a set of logically related tasks performed to achieve a
defined business outcome and suggest that processes can be divided
into those that are operationally oriented (those related to the
product and customer) and management oriented (those that deal
with obtaining and coordinating resources).

Process Integration
Two forms:
within a single organization
between two or more organizations

Why Business Process Improvement?

Improving business processes is paramount for businesses to stay
competitive in today's marketplace.
Continuous Improvement Model:- This model attempts to
understand and measure the current process, and make performance
improvements accordingly. You begin by documenting what you do
today, establish some way to measure the process based on what
your customers want, do the process, measure the results, and then
identify improvement opportunities based on the data you collected.
You then implement process improvements, and measure the
performance of the new process. This loop repeats over and over
again, and is called continuous process improvement.

This method for improving business processes is effective to obtain gradual,

incremental improvement. However, over the last 10 years several factors have
accelerated the need to improve business processes. The most obvious is technology.
New technologies (like the Internet) are rapidly bringing new capabilities to
businesses, thereby raising the competitive bar and the need to improve business
processes dramatically.

 Another apparent trend is the opening of world markets and

increased free trade. Such changes bring more companies into
the marketplace, and competing becomes harder and harder.
In today's marketplace, major changes are required to just
stay even. It has become a matter of survival for most
companies.
As a result, companies have sought out methods for faster
business process improvement. Moreover, companies want
breakthrough performance changes, not just incremental
changes, and they want it now. Because the rate of change
has increased for everyone, few businesses can afford a slow
change process. One approach for rapid change and dramatic
improvement that has emerged is Business Process
Reengineering (BPR).

BPR relies on a different school of thought than continuous process improvement.

In the extreme, reengineering assumes the current process is irrelevant - it
doesn't work, it's broke, forget it. Start over. Such a clean slate perspective
enables the designers of business processes to disassociate themselves from
today's process, and focus on a new process. In a manner of speaking, it is like
projecting yourself into the future and asking yourself: what should the process
look like? What do my customers want it to look like? What do other employees
want it to look like? How do best-in-class companies do it? What might we be able
to do with new technology?
Such an approach is pictured below. It begins with defining the scope and
objectives of your reengineering project, then going through a learning process
(with your customers, your employees, your competitors and non-competitors,
and with new technology). Given this knowledge base, you can create a vision for
the future and design new business processes. Given the definition of the To Be"
state, you can then create a plan of action based on the gap between your current
processes, technologies and structures, and where you want to go. It is then a
matter of implementing your solution.

The extreme contrast between continuous process improvement and business process
reengineering lies in where you start (with today's process, or with a clean slate), and
with the magnitude and rate of resulting changes.

The Process
Radical process change is the first major step in BPR. Therefore, a
process improvement team should be established with the objectives of
analysing the whole process, identifying non-value-added activities such
as storage and inspection, and eliminating them. The delivery process
emphasizes cross-functional performance rather than encouraging
departmental optimization and consequently system-wide suboptimization.
Three levels of BPR: product, process and system.
Most companies are function- or department-oriented , and not processoriented. Often, many people are involved in order fulfillment, but no
one tracks a product and reports the status of an order directly.
Reengineering makes one individual responsible for the complete
business process . The success of BPR is related to the creativity of the
people in the organization . Some of the factors that will prevent
reengineering and hence innovation and growth are:

correcting the process instead of changing it;

change of company champion;
settling for minor results;
culture, attitudes and skill base;
pulling back when people resist change.

BPR- Definition
Business process reengineering (BPR) is, an approach
aiming at improvements by means of elevating
efficiency and effectiveness of the business process
that exist within and across organizations.
BPR is to look at their business processes from a
"clean slate" perspective and determine how they can
best construct these processes to improve how they
conduct business.

BPR is : The fundamental rethinking and radical redesign of business

processes to achieve dramatic improvements in critical
contemporary measures of performance, such as cost, quality,
service, and speed."
envisioning of new work strategies, the actual process design
activity, and the implementation of the change in all its
complex technological, human, and organizational dimensions"

BPR- Definition
Key concepts of BPR, is that it is fundamental and
radical.

The
alternative
business
improvement
methodology
is
Continuous
Process
Improvement, which emphasizes small and
measurable refinements to an organization's
current processes and systems.
BPR, as a term and as a practice, has a tarnished
history.
Reengineering became very popular in the early
1990s, however, the methodology and approach
was not fully understood nor appreciated. Many
times, improvement projects labeled with the title
"BPR" were poorly planned and executed.

 The
practice
of
redesigning
business
processes and the associated technology and
organizational structure is more popular today
than ever. Companies continue to reexamine
and fundamentally change the way they do
business.
Competitive pressures and a
sluggish economy provide the impetus for
continued efforts to "deliver more with less."
Reengineering remains an effective tool for
organizations striving to operate as effectively
and efficiently as possible

Concept
Business Process Reengineering is a
management
approach
that
examines aspects of a business and
its interactions, and attempts to
improve the efficiency of the
underlying processes. It is a
fundamental and radical approach
by either modifying or eliminating
non-value adding activities.

Overview
Business process reengineering (BPR) began
as a private sector technique to help
organizations fundamentally rethink how they
do their work in order to dramatically improve
customer service, cut operational costs, and
become world-class competitors. A key
stimulus for reengineering has been the
continuing development and deployment of
sophisticated
information
systems
and
networks.

 BPR is a structured approach to analysing

and continually improving fundamental
activities
such
as
manufacturing,
marketing, communications and other
major elements of a companys operation
BPR should analyse the processes that
support products and services, highlight
opportunities for both radical and
incremental
business
improvements
through the identification and removal of
waste and inefficiency, and implement
improvements through a combination of
IT and good working practices.

 A conceptual model explaining the major components of BPR is shown

in figure . This model demonstrates the link between organizational
restructuring and behavioral changes with the help of Information
Technology for reengineering business processes, and hence effective
process delivery systems, with the objective of improving customer
satisfaction
BPR requires organizational restructuring (include location, capacity,
types of products, technology, people) and changes in employees
behavior (training, education, job enrichment, job enlargement, and
employee empowerment) with a view to accommodating and
facilitating radical changes for achieving dramatic improvements in
business performance. IT, such as the Internet, E-Commerce,
CAD/CAM, Multimedia, ERP and WWW and EFT, would help to
restructure an organization and promote changes with acceptance
Organizational on
from employees
any radical changesBehavioral
in the company. The
Structuring
Changes
reengineering of a business process will result in improved process
delivery systems and hence
an improved customer service level.
Information
Technology
Business Process
Reengineering
Process Delivery Systems
Improved Customer Service Level

 Organizational
restructuring
by
standardization
and
simplification eliminates barriers for a smooth flow of
information and materials along the supply chains. The
smooth flow of information can be facilitated by the use of
various ITs to improve the integration of various functional
areas. The basic aim of BPR is to deliver quality goods at
competitive prices in a timely fashion. Therefore, a
manufacturing system as well as a business organization
should be modified emphasizing coordination of the basic
business processes in the chain, from suppliers to customers,
as opposed to the existing complex structures of the functional
hierarchies. The behavioral changes should precede the
reengineering. Therefore, issues such as training and
education, employee empowerment, teamwork and incentive
schemes should be given priority in BPR

 In order to reengineer a business

process, both internal and external
process capabilities, such as product
development, production, distribution,
suppliers and markets, and interorganizational relationships, especially
in
a
global
manufacturing
environment, need to be integrated.
Reengineering helps to achieve lean
production through the integration of
production activities into self-contained
units along the production flow. IT is
an
important
element
in
such
integration.

Why BPR
Business process reengineering is the redesign of business
processes and the associated systems and organizational
structures to achieve a dramatic improvement in business
performance. The business reasons for making such
changes could include poor financial performance, external
competition, erosion of market share or emerging market
opportunities. BPR is not - downsizing, reorganization,
automation, new technology, etc. It is the examination and
change of five components of the business:
Strategy
Processes
Technology
Organization
Culture

 The purpose of reengineering is to

"make all your processes the best-inclass.".
Reengineering is: "To conduct the
undertaking toward its objectives by
seeking
to
derive
optimum
advantage
from
all
available
resources."

 Information technology plays an important role in

the reengineering concept. It is considered as a
major enabler for new forms of working and
collaborating within an organization and across
organizational
borders.
Especially
workflow
management systems were considered as a
significant contributor to improved process
efficiency. Also
ERP
(Enterprise
Resource
Planning) vendors, such as SAP, positioned their
solutions as vehicles for business process
redesign and improvement.

BPR Objectives
Streamline
[remove
waste,
consolidate]
Lose Wait [squeeze out delays]
Orchestrate [let the most able
enterprise execute, outsource]
Synchronize both the physical and
virtual parts of the process, real time
processing of data

BPR Objectives
Digitize and Propagate capture
information digitally at the source and
propagate it through the process
Transparent provide glass like visibility
of the process
Analyze and Synthesize generate
added value by enhancing the process,
constant improvement and iteration.

Characteristics of Re-engg.
Processes
Several jobs are combined into one.
Compress the organization horizontally
and vertically.
Replace several task specialists with one
case worker.
Group task specialists into case teams.
Benefits: improves efficiency, reduces
errors and administrative overhead, and
increases accountability.

Characteristics of Re-engg.
Processes
Workers make decisions.
Compress organization vertically to
reduce chain of command.
Tie decision making to getting the work
done: Those who do the work make the
decisions.
Benefits: reduces delays, lowers
overhead, provides better customer
response, empowers workers.

Characteristics of Re-engg.
Processes
The process steps are performed in a
natural order.
Eliminate process linearity and
sequence where possible.
Perform tasks concurrently to reduce
process cycle time.

Characteristics of Re-engg.
Processes
Processes have multiple versions.
Standardization is dead: One size does
NOT fit all.
Create multiple versions of the same
process, each tuned to meet the needs
of different inputs, situations, or
markets.
Benefits:
eliminates complexity and
exceptions that must be incorporated in
a standardized process.

Characteristics of Re-engg.
Processes
Work is performed where it makes the
most sense. (Manufacturing Example)
Accountants buy their own pencils;
customers repair their own equipment;
spare parts are stored at the customer
site.
Benefits: eliminates administrative costs,
reduces process cycle time, improves
customer service.

Principles for Process Reengineering

- How to reduce total cycle time
- How to reduce cost to citizens
- How to reduce touch points
- How to improve responsiveness
- How to bring transparency (MIS)
- How to bring accountability (MIS)
- How to improve citizen satisfaction
BPR Cycle
(which requires strong human input at every stage of cycle)
Feedback

Conceptualisation

Implementation

Identifying process

Redesign

Process mapping

Analysis
30

Thanks
Questions