lecture 1 _ presentation on bpr

Business Process Re-engineering Business Process Re-engineering

GGSIPUGGSIPUCourse Code : MS (WE) Course Code : MS (WE)

MBA MBA Lecture 1Lecture 1

By

Deepak Virmani

Content 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

• 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.

Real Life Process

What is a Business Process (BP)?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

• 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).

The Process

Process IntegrationProcess Integration

• Two forms:– within a single organization– between two or more organizations

Why Business Process Improvement?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.

• 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 sub-optimization.

• Three levels of BPR: product, process and system.• Most companies are function- or department-oriented , and not process-

oriented. 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.

The Process

BPR- DefinitionBPR- 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"

• 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.

BPR- DefinitionBPR- Definition

• 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

ConceptConcept• 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.

OverviewOverview• 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 company’s 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 from employees on any radical changes in the company. The reengineering of a business process will result in improved process delivery systems and hence an improved customer service level.

Business ProcessReengineering

BehavioralChanges

InformationTechnology

OrganizationalStructuring

Improved Customer Service Level

Process Delivery Systems

• 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 inter-organizational 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.

• 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

Why BPR

• The purpose of reengineering is to "make all your processes the best-in-class.".

• 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 ObjectivesBPR 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 ObjectivesBPR 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. Characteristics of Re-engg. ProcessesProcesses

• 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.


• 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.


• The process steps are performed in a natural order.

• Eliminate process linearity and sequence where possible.– Perform tasks concurrently to reduce

process cycle time.


• 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.


• 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.

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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)

Conceptualisation

Identifying process

Process mapping

Analysis

Redesign

Implementation

Feedback

Thanks

Questions

lecture 1 _ presentation on bpr

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