1. Business Process Reengineering:
Principles, Methods, Tools and Implementation
Minder Chen, Ph.D.
MS-5F4
School of Management
George Mason University
Fairfax, VA 22030
Phone:
Internet:
Organization
Technology
Process

2. Processes Are Often Cross Functional Areas
"Manage the white space on the organization chart!"
Customer/
Markets
Needs
Supplier
Value-added
Products/
Services to
Customers
"We cannot improve or measure the performance of a hierarchical structure. But, we can increase output quality and customer satisfaction, as well as reduce the cost and cycle time of a process to improve it."

3. Definition of Reengineering
The fundamental rethinking
and radical redesign of
core business processes to
achieve dramatic improvements in critical performance measures such as quality, cost, and cycle time.
Source: Adapted from Hammer and Champy, Reengineering the Corporation, 1993

4. What Business Reengineering Is Not?
Automating: Paving the cow paths. (Automate poor processes.)
Downsizing: Doing less with less. Cut costs or reduce payrolls. (Creating new products and services, as well as positive thinking are critical to the success of BPR.)

5. Obliterate what you have now and start from scratch.
Reengineering Is ...
Extremist's View
Obliterate what you have now and start from scratch.
Transform every aspect of your organization.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July-August, 1990, pp

6. New Life Insurance Policy Application Process at Mutual Benefits Life Before Reengineering*
Department A
Step 1
Department A
Step 2
Issuance
Application
Department E
Step 19
Issuance
Policy
19 steps, 5 departments, 19 persons
Issuance application processing cycle time: hours minimum; average 22 days
only 17 minutes in actually processing the application
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at Mutual Benefit Life, Harvard Business School case , 1991.

7. The New Life Insurance Policy Application Process Handled by Case Managers
Mainframe
Physician
Underwriter
LAN
Server
Case Manager PC
Workstation
application processing cycle time: hours minimum; 3.5 days average
Application handling capacity double
Cut 100 field office positions

8. 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 once and at the source.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July-August, 1990, pp

9. Business Process Reengineering Life Cycle
Define corporate visions and business goals
Visioning
BPR-LC
Identify business processes to be reengineered
Identifying
Analyze and measure an existing process
Analyzing
Identify enabling IT & generate alternative process redesigns
Redesigning
Evaluate and select a process redesign
Evaluating
Implement the reengineered process
Implementing
Continuous improvement of the process
Improving
Manage change and stakeholder interests

10. Phase 1: Visioning Define corporate vision and business goals
Apply to enterprise-wide reengineering effort.
Develop overview of current and future business strategies, organizational structure, and business processes.
Develop organizational commitment to reengineering.
Develop and communicate a business case for action.
Create a new corporate vision.
Set stretched goals.
Prioritize objectives.
Assess implementation capabilities and barriers.

11. Construct high-level process map Develop a process hierarchy
Phase 2: Identifying
Identify business processes to be reengineered
Construct high-level process map
Develop a process hierarchy
Build enterprise-wide data models (optional)
Evaluate the processes
Select processes to be reengineered
Prioritize and schedule processes to be reengineered

12. TI Semiconductor Business Process Map
Customer Communication
Market
Customers
Concept
Development
Manufacturing
Customer
Design &
Support
Strategy
Development
Product
Development
Order
Fulfillment
Manufacturing Capability Development
Source: Adapted from Hammer and Champy, 1993, p. 119.

13. Criteria for Selecting Processes
Broken
Bottleneck
Cross-functional or cross-organizational units
Core processes that have high impacts
Front-line and customer serving - the moment of the truth
Value-adding
New processes and services
Feasible

14. Phase 3: Analyzing Analyze and Measure an Existing Process
Conduct preliminary scoping.
Develop a high-level AS-IS baseline process model (work flow model). Avoid analysis paralysis by conducting preliminary analysis at fairly high level.
Surface purpose and assumptions of the process (Ask WHY?).
Perform activity-based costing: costs can be assigned based on actual activities and productivity.
Reveal hidden time and nonvalue-added activities.
Measure cycle-time and quality.
Measure profitability in terms of task, product, and customer type.

15. Business Vision & Strategy
Phase 4: Redesigning
Identify enabling IT & generate
alternative process redesigns
Business Vision & Strategy
Business-pulled
How can IT support business strategies and business processes?
How can business strategies be changed business processes be transformed using IT?
Business
Reengineering
Technology-driven
Information
Technology

16. Three Steps in Redesigning Processes
Simplification:
Task: Change business rules or procedures of a specific task
Workflow: A process chain is simplified by elimination of nonvalue-adding activities
Integration:
Redesign tasks into a logical and effective process.
A reengineered process often crosses functional boundaries.
It offers opportunity for eradicating interdepartmental redundancies and restructuring the organization.
Automation:
Usually accompanies nontechnical redesign of organization structures and procedures.
All reengineering costs and benefits can be projected into a model.
Reengineering often pays for itself - sources of funding for technology investments are frequently cost savings generated by organizational change.

17. Evaluate and select a process redesign
Phase 5: Evaluating
Evaluate and select a process redesign
Develop criteria of evaluating alternatives of redesigned processes: Cost, Benefit, and Risk.
Evaluate design alternatives
Select and recommend a reengineered process

18. Implement the reengineered process
Phase 6: Implementing
Implement the reengineered process
Plan IT implementation
Plan organization implementation
Conduct a pilot project
Develop a prototype system
Technical Design
Social Design
Evaluate results from the pilot project and the prototype
Prepare large-scale roll out

19. Phase 7: Improving
Improve the process continuously
Develop performance measurement and reward systems in the reengineered process
Monitor process performance constantly
Improve the process on a continuous basis

20. The Quest of Competitiveness
Downsizing Headcount & Restructuring the Portfolio
Smaller
Total Quality Management &
Continuous Process Improvement
Better
(Kaizen)
Enterprise-Wide Reengineering &
Business Process Reengineering
Much Better
Reinventing Industries &
Regenerating Strategies
Different
Adapted from: Gary Hammel and C. K. Prahalad, Competing for the Future, Harvard Business School Press, 1994.

21. Criteria for BPR Projects
Improvement Goals
Status Quo
Radical
Cross Function/
Organization
Fundamental
Business
Reengineering
Scope
Functional
Process Improvement
Role
of IT
Function
Business
as Usual
Incidental
Task
Symbolic
Intense
Senior Management Involvement

22. Dual Roles of Information Technology in BPR
Existing
Business
Process
Conduct
Reengineering
Project
Reengineered
Business
Process
Supporting Tools
IT Enablers
Process modeling tools
Process simulation tools
Group requirement elicitation tools
Activity-based costing tools
Data base systems
Expert systems
Client/server technology
Groupware
Work flow management systems
EDI
Enterprise-wide networking
Mobile computing

23. Breakthrough Thinking
Old Assumption
Enabling Technology
Breakthrough Thinking
Field operations are on their own
High bandwidth networks, remote access, wireless network
Simultaneous
centralization and
decentralization
Only specialists can
perform complex
work
Knowledge base
systems, expert systems
Case managers handle a case with no hands-off
Managerial hierarchy
is required for control
& supervision
Accessible data & analytic tools, exception
monitoring
Self-managed teams
Product development is a sequential activity
Common CAD/CAM
systems
Concurrent engineering
IS developed should
be driven by IS
personnel
I-CASE and JAD
Rapid application development

24. A Framework of Integrating Methods & Tools for BPR
cost and performance data compared to the baseline
Analyze the activity costs of the process
activity
cost data
information
of a
process
ABC Tools
(IDEFCost, Easy ABC)
Elicit semi-formal
process and data models
Construct/
revise
static business process models
performance data
Analyze the dynamics of the process
semi-formal
process model
Process Modeling Tools
(Design/IDEF, IDEFine, BDF)
Simulation Tools
(SIMPROCESS)
GDSS
(GroupSystems V)
Target information system generated
finalized process model
Construct/
revise
business data models
Construct formal IS models & generate information systems
semi-formal
data model
Data Modeling Tools
(ERwin, BDF)
CASE, C/S Tools, DBMS, Work Flow Software, & other Enabling Technologies

25. An IDEF box and its ICOM can be described as: "Inputs are transformed
ICOM in IDEF0
The ICOM of a function represents certain system principles: Inputs are transformed into outputs, controls constrain or dictate under what conditions transformations occur, and mechanisms describe how the function is accomplished.
An IDEF box and its ICOM can be described as: C
"Inputs are transformed
by the function
into outputs
according to controls,
using mechanisms." O I M

26. An Example of an IDEF0 Diagram

27. IDEF0 Model Structure C1 I1 O1 I2
A-0
GENERAL C1 I1 1 I2 2 3
Abstraction O1 4 A0 1
The diagram A0 is the "parent" of the diagram A4. 2 3 A4
Refinement 1 2
DETAILED 3
A42

28. Attributes of Processes
Basic
Name
Description
Author
Audit trails
Performance data
Importance: Core, Critical
Value Added: Business, Customer, None
Cycle time: Mean, Variance, and Distribution
Cost/Unit

29. Standard Flowchart Symbols
Annotation
Activity
Delay
Direction of
process flow
Storage
Movement/
Transportation
Connector
Transmission
Decision Point
Begin/End
Paper
document

30. Functional Flowchart (Process Mapping)
ACTIVITY
CYCLE
Customer
Service
Credit
Checking
Customer
Inventory
Shipping 1 2
Enter
Order
Check
Credit
...
Begin No
Yes
Order
Processing
Update
Inventory
Wait for
shipping
Ship order
End

31. TeamFlow from CMF at www.teamflow.com

32. The Reengineering Diamond
Customers &
Suppliers
Values and
Beliefs
Competitors
Enlighten
Foster
Customers
&
Info. Tech.
Business
Processes & Functions
Management & Measurement
Systems
Entail
Demand
Jobs , Skills, & Organizational Structures
Culture
Markets

33. Positive Preconditions for Reengineering
Senior management commitment and sponsorship
Realistic expectations
Empowered and collaborative workers
Strategic context of growth and expansion
Shared vision
Sound management process
Appropriate people participating full-time
Sufficient budget
Source: Bashein, B. J., Markus, M. L., Riley, P., "Preconditions for BPR Success," Information Systems Management, Spring 1994, Vol. 11, No. 2, pp