Presentation on theme: "Business Process Reengineering:"— Presentation transcript:
1 Business Process Reengineering: Principles, Methods, Tools and ImplementationMinder Chen, Ph.D.MS-5F4School of ManagementGeorge Mason UniversityFairfax, VA 22030Phone:Internet:OrganizationTechnologyProcess
2 Processes Are Often Cross Functional Areas "Manage the white space on the organization chart!"Customer/MarketsNeedsSupplierValue-addedProducts/Services toCustomers"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 rethinkingand radical redesign ofcore business processes toachieve 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 ViewObliterate 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 AStep 1Department AStep 2IssuanceApplicationDepartment EStep 19IssuancePolicy19 steps, 5 departments, 19 personsIssuance application processing cycle time: hours minimum; average 22 daysonly 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 MainframePhysicianUnderwriterLANServerCase ManagerPCWorkstationapplication processing cycle time: hours minimum; 3.5 days averageApplication handling capacity doubleCut 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 goalsVisioningBPR-LCIdentify business processes to be reengineeredIdentifyingAnalyze and measure an existing processAnalyzingIdentify enabling IT & generate alternative process redesignsRedesigningEvaluate and select a process redesignEvaluatingImplement the reengineered processImplementingContinuous improvement of the processImprovingManage 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: IdentifyingIdentify business processes to be reengineeredConstruct high-level process mapDevelop a process hierarchyBuild enterprise-wide data models (optional)Evaluate the processesSelect processes to be reengineeredPrioritize and schedule processes to be reengineered
12 TI Semiconductor Business Process Map Customer CommunicationMarketCustomersConceptDevelopmentManufacturingCustomerDesign &SupportStrategyDevelopmentProductDevelopmentOrderFulfillmentManufacturing Capability DevelopmentSource: Adapted from Hammer and Champy, 1993, p. 119.
13 Criteria for Selecting Processes BrokenBottleneckCross-functional or cross-organizational unitsCore processes that have high impactsFront-line and customer serving - the moment of the truthValue-addingNew processes and servicesFeasible
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: RedesigningIdentify enabling IT & generatealternative process redesignsBusiness Vision & StrategyBusiness-pulledHow can IT support business strategies and business processes?How can business strategies be changed business processes be transformed using IT?BusinessReengineeringTechnology-drivenInformationTechnology
16 Three Steps in Redesigning Processes Simplification:Task: Change business rules or procedures of a specific taskWorkflow: A process chain is simplified by elimination of nonvalue-adding activitiesIntegration: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: EvaluatingEvaluate and select a process redesignDevelop criteria of evaluating alternatives of redesigned processes: Cost, Benefit, and Risk.Evaluate design alternativesSelect and recommend a reengineered process
18 Implement the reengineered process Phase 6: ImplementingImplement the reengineered processPlan IT implementationPlan organization implementationConduct a pilot projectDevelop a prototype systemTechnical DesignSocial DesignEvaluate results from the pilot project and the prototypePrepare large-scale roll out
19 Phase 7: ImprovingImprove the process continuouslyDevelop performance measurement and reward systems in the reengineered processMonitor process performance constantlyImprove the process on a continuous basis
20 The Quest of Competitiveness Downsizing Headcount & Restructuring the PortfolioSmallerTotal Quality Management &Continuous Process ImprovementBetter(Kaizen)Enterprise-Wide Reengineering &Business Process ReengineeringMuch BetterReinventing Industries &Regenerating StrategiesDifferentAdapted from: Gary Hammel and C. K. Prahalad, Competing for the Future, Harvard Business School Press, 1994.
22 Dual Roles of Information Technology in BPR ExistingBusinessProcessConductReengineeringProjectReengineeredBusinessProcessSupporting ToolsIT EnablersProcess modeling toolsProcess simulation toolsGroup requirement elicitation toolsActivity-based costing toolsData base systemsExpert systemsClient/server technologyGroupwareWork flow management systemsEDIEnterprise-wide networkingMobile computing
23 Breakthrough Thinking Old AssumptionEnabling TechnologyBreakthrough ThinkingField operations are on their ownHigh bandwidth networks, remote access, wireless networkSimultaneouscentralization anddecentralizationOnly specialists canperform complexworkKnowledge basesystems, expert systemsCase managers handle a case with no hands-offManagerial hierarchyis required for control& supervisionAccessible data & analytic tools, exceptionmonitoringSelf-managed teamsProduct development is a sequential activityCommon CAD/CAMsystemsConcurrent engineeringIS developed shouldbe driven by ISpersonnelI-CASE and JADRapid application development
24 A Framework of Integrating Methods & Tools for BPR cost and performance data compared to the baselineAnalyze the activity costs of the processactivitycost datainformationof aprocessABC Tools(IDEFCost, Easy ABC)Elicit semi-formalprocess and data modelsConstruct/revisestatic business process modelsperformance dataAnalyze the dynamics of the processsemi-formalprocess modelProcess Modeling Tools(Design/IDEF, IDEFine, BDF)Simulation Tools(SIMPROCESS)GDSS(GroupSystems V)Target information system generatedfinalized process modelConstruct/revisebusiness data modelsConstruct formal IS models & generate information systemssemi-formaldata modelData 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 IDEF0The 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 transformedby the functioninto outputsaccording to controls,using mechanisms."OIM
33 Positive Preconditions for Reengineering Senior management commitment and sponsorshipRealistic expectationsEmpowered and collaborative workersStrategic context of growth and expansionShared visionSound management processAppropriate people participating full-timeSufficient budgetSource: Bashein, B. J., Markus, M. L., Riley, P., "Preconditions for BPR Success," Information Systems Management, Spring 1994, Vol. 11, No. 2, pp