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Business Process
Reengineering

What is a Business
Process?
A

business process is a collection

of activities which together produce
something of value to a customer
e.g. Customer Order Entry

Definition

Reengineering 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.

What to reengineer?

BPR changes processes, and

not
functions, departments,
geographies or tasks.

What it is not?

Reengineering is not reorganizing.

Modifying how an organization is structured and

redesigning an organizations business processes are two
different things.

An organizational structure should be designed so that it

best supports redesigned business processes.

Reengineering is not downsizing either.

Downsizing focuses on the reduction of workforce to

achieve short-term cost savings.

Reengineering, on the other hand, focuses on rethinking

from the ground up, finding more efficient ways of
working including eliminating work that is unnecessary.

Reasons for Reengineering

Old Era

New Era

High Demand

High Competition

Efficiency
Control

Innovation
Speed
Service &Quality

Examples

Examples

Benefits of
Reengineering
The rewards of reengineering are many including:
1)

empowering employees;

2)

eliminating waste, unnecessary management overhead, and

obsolete or inefficient processes;

3)

producing often significant reductions in cost and cycle times;

4)

enabling revolutionary improvements in many business

processes as measured by quality and customer service; and

5)

helping top organizations stay on top and low-achievers to

become effective competitors.

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Imperative in India

The first country realized the value of destruction and

destroyer.

Quality competitions by

ISO 9000 and TQM

Computerization of processes

Many reasons for lacking:

Blaming technology by system professionals

Users blame technology and system professionals

Top management blames both users and system professionals.

Consultants blame all others.

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Global environment is pulling Indian organizations into

- Customer orientation
- quick response time
- quality imperatives
- cost minimization

Conclusion:
- environmental pull
- technology push
- Economic liberalization

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BPRE
Examples from Indian
Corporate World

BANK OF INDIA

INTRODUCTION

Founded on 7th September, 1906.

Is an Indian state-ownedcommercial bank

HQ - Mumbai,Maharashtra

Pan-India presence

Controlled through 50 zonal offices.

In the forefront, introducing various innovative services and systems

First among the nationalised banks to establish a fully computerised

branch and ATM facility at the Mahalaxmi Branch at Mumbai in 1989.

Founder member ofSWIFT(Society For Worldwide Inter Bank Financial

Telecommunications)

One of the top five banks in India

REASON FOR BPR INITIATIVE

For faster work

To face competition

For secure data transfer

For making banking very easy for a retail as well as

corporate customer

Core banking system and centralized data system

Automate all its branches across the country

Team invloved

The Boston Consulting Group

Finacle of Infosys

Project design

To streamline its growing business globally

Increasing branch network of 3159 to about 50007000 over the nextfive years.

To meet the credit need of the corporate sector and

help in faster decision making on the loans, the bank
would set up one corporate branch in every state.

The bank would recruit 3295 employees which would

include 2250 officers in various departments like
agriculture, statistics, and marketing among others.

Supporting tools and techniques

Core Banking Solution

Core banking basically is depositing and lending ofmoney

CORE stands for "Centralized Online Real-time Exchange".

Core banking functions- recording of transactions,

passbookmaintenance, and interest calculations on loans and
deposits, customer records, balance of payments and withdrawal.

Banks make these services available across multiple channels

like ATMs, Internet banking, andbranches.

The core banking applications run on Finacle from Infosys and the
database is set up using theOracle Financial Service Architecture

This software was installed at different branches of bank and

then interconnected by means of communication lines like
telephones, satellite, internet etc.

PROCESSES

The bankfollows processes such asinformation

profiling which involves classification ofinformation
into categories, such as- secret, confidential,
corporate confidential, offices and public.

Every new process is scanned for its risks and

vulnerabilities and various other security clearance
aspects.

Contd...

The core banking applications run on multiple HP Superdome

servers while the storage solutions have been migrated to a HP
StorageWorks XP1024 disk array.

This is further connected through leased lines to various Cisco

switches and routers deployed across the country with the
branches forming a hub and spoke model that uses a central point
to co-ordinate activities between variousbranches and the
datacentre.

At present, the operations at about 2,433 branches across the

country are computerized out of which 108 operate in a partiallycomputerized mode.

The bank is a member of the RBIs VSAT Network and has installed
about 39 VSATs linking strategic branches and offices adding
redundancy during disaster.

To fulfil its deployment objectives BoI chose HP as consultants and

network integrators for the project

IMPACT OF PROJECT AS IS & TO

BE

Operations are carried out fast and customers are

happy with the quick service of the bank

The technological advancement has the changed

the working of bank of India totally

Account opening is done on the same day

Implementation of internet banking (more

secure), (wireless application protocol) banking,
SMS banking with no extra cost to the customer

Forms can be downloaded from the website itself

and a virtual keyboard is present on thelogin site
(in case of internet banking) toavoid hijacking of
passwords.

INTRODUCTION

M&M was started off by two brothers J.C and K.C Mahindra

The company started off as manufacturer of general purpose

utility vehicles and carried a production capacity of 75 jeeps
In 1948

Over the period they diversified into hotels financial services

auto components IT Infrastructure and trading.

In 1994 the co established Mahindra USA to promote

tractor sales worldwide.

Top management philosophy was strengthen the competitive

position in the domestic market before launching an
ambitious globalization program

Contd..

The top management realized that they had the

opportunity to become a truly global brand

In 1994 a BPR exercise started - a change in

functional to SBU structure

As a result 6 autonomous SBUs were formed with

empowered presidents for each sbu

The intention was to provide direction for the future

growth of various business lines

Restructuring Farm equipment business

Project Vishwajeet- a major restructuring program

conceptualized by MC Kinsey to turn M&M into a leading
tractor producer by 2005

As part of this strategy Farm equipment business was

divided into five divisions

- Marketing and customer relations , manufacturing and

supply chain , product development & r &d services,
performance management and international operations.

Project blue chip

In 2002 M&M reached a low point in its history- depressed

revenues and high costs reduced profits margins

Share price fell from 322 in 2000 to 114 in 2002, ROCE fell from
17.09 to 8.92

M&M set up a Corporate turnaround Program Office and

articulated need for a sharper focus on financial returns

Due to this a restructuring exercise called blue chip was

initiated to raise the bar on performance

What did blue chip do?

Benchmarks like market share sales and profits were

replaced by ROCE

A policy was imposed which stated that businesses had

to compete for capital- those with the highest returns
would get the capital

Operations were overhauled, M&M undertook cost

cutting and steramlined its manufacturing facility

Prior to bpr HR was not a key element

of strategy formulation

The results

Tractor division undertook a major cost cutting exercise

and bought down Bep from 54000 to 35000 units

Net sales for first half of 2004 increased by 28% , operating

profit was up by 34%

M&M stock touched a high of Rs 390 from a Rs112 a year

ago

Thank you