Business Process Reengineering Radical redesign of business processes
Example: Processing a Loan Receive Request. Date/Time. Dept. A Bill Pappas Dept. B Dept. C Dept. D Dept. E Dept. F John Malone Sharon Dabaloosky Trisch Mashius June Wayne Tom Mooka Verify Employmt. & Eligibil. Verify Acct. Status for amount. Term & Amount approval. Create amort. schedule. Process & send check.
Tom Lauer HR Database: Employment & Eligibility Account Database: Amounts Amortization Program 17 Minutes vs. 22 days!!
BASIS FOR REENGINEERING (source: Hammer) The usual methods for boosting performance - process rationalization and automation - have not yielded the dramatic improvements companies need. Companies tend to use technology to mechanize old ways of doing business. Often, existing processes are left intact, and computers are used simply to speed them up. Many processes are geared toward efficiency and control. BUT, new watchwords are innovation, speed, service, and quality.
WHAT IS REENGINEERING? (source: Hammer) Discontinuous thinking - recognize and break away from outdated rules and fundamental assumption that underlie operations. Looking at fundamental processes of the business from a cross-functional perspective. Striving for dramatic levels of improvement. Using IT not to automate an existing process but to enable a new one.
Processing a Loan Receive Request. Date/Time. Dept. A Bill Pappas Dept. B Dept. C Dept. D Dept. E Dept. F John Malone Sharon Dabaloosky Trisch Mashius June Wayne Tom Mooka Verify Employmt. & Eligibil. Verify Acct. Status for amount. Term & Amount approval. Create amort. schedule. Process & send check.
PRINCIPLES OF REENGINEERING (source: Hammer) 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 information. Treat geographically dispersed resources as though they were centralized. Link parallel activities instead of integrating their results. Put the decision point where the work is performed. Capture information once at the source.
Example: Ford - BEFORE and After Purchasing Vendor Receiving Accounts Payable Receiving Document Goods Purchase Order Copy of Purchase Order Invoice 500 AP employees! Most time spent on mismatches. Payment
Example: Ford - Before and AFTER Purchasing Vendor Receiving Accounts Payable Goods Purchase Order Database Payment “Don’t send us invoices” 75% reduction in head count.
Characteristics of Analysis Strategies BusinessBusinessBusiness ProcessProcessProcess AutomationImprovementReeingineering Potential BusinessLow-ModerateModerateHigh Value Project CostLowLow-ModerateHigh Breadth of AnalysisNarrowNarrow-ModerateVery Broad RiskLow-ModerateLow-ModerateVery High