ASM652 Business Process Reengineering Concepts PDF

ASM652 Business Process BUSINESS PROCESS REENGINEERING CONCEPTS 1  Objectives At the end of the course, you will be able to: a. Define business process redesign. b. Describe the nine dimensions of BR. c. Discuss the benefits of BPR. d. Identify...

ASM652 Business Process BUSINESS PROCESS REENGINEERING CONCEPTS 1  Objectives At the end of the course, you will be able to: a. Define business process redesign. b. Describe the nine dimensions of BR. c. Discuss the benefits of BPR. d. Identify and describe the situations in which BPR becomes necessary. e. Describe the warning signs of trouble that indicate the need for reengineering. f. Identify and describe the critical success factors for BR projects. 2  What is Business Process Reengineering or Redesign? Reengineering business processes means tossing aside existing processes and starting over. Business Process Reengineering is defined as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed”. (Hammer and Champy, 1993) 3  This definition contains four key words: FUNDAMENTAL Fundamental implies that everything – every assumption, every reason, every activity – is challenged by asking why it should be continued. The implication is that nothing should be accepted as sacred. Over time, practices that were once required become obsolete and need to be removed. RADICAL Do not try to improve the existing situation, invent completely new ways of accomplishing work. 4  This definition contains four key words: DRAMATIC Do not use business process redesign to obtain marginal improvements, aim at order-of-magnitude improvements (ten times). If the marginal gains – 5 to 10 percent – are the goal, then continuous improvement is a more appropriate path than reengineering. PROCESS Focus on the business processes instead of organizational structures. 5 BUSINESS REENGINEERING DIMENSIONS 1. The Physical/Technical Dimensions a) Process Structure b) Technical Structure c) Organization Structure 2. The Infrastructure Dimensions a) Reward Structure b) Measurement Systems c) Management Methods 3. The Value Dimensions a) Organizational Culture b) Political Power c) Individual Belief Systems 6  Dimensions of Business Reengineering Process Technology Organizational Physical Technical Layer Structure Structure Structure Reward Measurement Management Infrastructure Structure Systems Methods Layer Organizational Political Individual Value Layer Culture Power Belief Systems 7  1. PHYSICAL/TECHNICAL DIMENSIONS Most visible, most concrete Process, technology and organization structures – Provides organization’s operational foundation Mistakenly focused because can easily see and do. 8 a) Process Structure (cont) Consist of business process, their outcomes (products/services) and the policies, practices and procedures (considerable control/rigidity or flexible and grouped or decomposed into smaller parts) Defines what, when and how work is performed Triggered by internal events, timing cycles, or external stimuli To produce a “quality” outcome in a timely, predictable manner 9  a) Process Structure If processes originate by design, reengineering would be unnecessary – Maintained to meet evolving business needs However, most are informal and spontaneous processes – They are not changed as business needs change – Negative impact – work duplication, whole process unorganized, undocumented, inconsistently applied and personality dependent – These processes would need reengineering 10  b) Technology Structure Consists of the automated communication, networking and computer systems, data, applications, and related technologies – support process structure Fast and cheap, eliminate time- consuming and error-producing data entry Application of technology depends on the competent integration of technology People depend on technology to solve business problems – People then blame the technology - 11 abandoned and not use effectively  c) Organization Structure Defines who performs, manages, and is accountable for each business process Includes job structure, reporting and work-group relationships, accountabilities, job content, and skill/knowledge requirements If process and organization’ structure are out of alignment – gaps in accountability 12  2. INFRASTRUCTURE DIMENSIONS Reward, measurement and management Support the physical/technical operational dimensions – If physical/technical change, infrastructure must change Use reinforcement, provide new skills, managerial support, adequate incentives and feedback 13  a) Reward Structure Regulate behavior Formal, informal, and financial or recognition based Often disconnection of the desired behaviors and behaviors that are actually rewarded, changing reward structures, policies and practices 14 b) Measurement Systems The feedback processes that provide information on process performance However, there are too much of information and incomplete information Should uncover the need for change, reduce the randomness and unpredictability of process performance Should be made available directly and simultaneously to process performers and managers 15  c) Management Methods Consists of the practices and techniques used to supervise, develop, and support the people who perform the business process Strongly affect business process performance (management support, empowerment, employee involvement) Most neglected because outside of the project scope 16  3. VALUE DIMENSIONS Least visible, most difficult to change Organizational culture, political power and individual belief systems Leadership and improvement philosophies must emerge – Initial implementation fails if these dimensions left out Hard to reduce the natural resistance and reaction to change 17  a) Organizational Culture Consists of the unspoken, collective rules and beliefs of the organization Organization’s language, symbols, myths and rituals The older the culture, the more embedded the beliefs and values and the more difficult change becomes 18  b) Political Power Individual can manipulate and shape the actions and behaviors of others Originate from formal authority (position held in the organization) or personal power (expertise, knowledge or connections) Reengineering threats loss of power 19  c) Individual Belief Systems Attitudes and mental models that individual apply to themselves, those they work with, and the work itself Shape their attitudes toward others and their behavior on the job Cultural characteristics – impatience, skepticism, openness, control, rigidity or flexibility Organization executives must demonstrate leadership 20  WHEN IS THE REENGINEERING THE ANSWER? Focus on changing customer relationship and repositioning the organization in the marketplace Situations in which reengineering benefit the organization: 1. Increase the organization’s ability to customize products and services 2. Increase customer satisfaction with products and services 3. Make it easy and pleasant for customers to do business with your organization 21 Situations in which reengineering benefit the organization: 4. Bring customers into the information channels 5. Decrease response time to customers, eliminate errors and complaints, reduce time cycle 6. Process more customer requests and higher volume from each customer, and deliver “value-driven” prices to customers 7. Improve the quality of work life and individual capabilities 8. Improve sharing and utilization of organization knowledge 22  WARNING SIGNS OF TROUBLE FOR REENGINEERING. 1. The explosion of chaos and bureaucracy 2. Thinking for customers 3. Automation of existing bureaucracy 4. Bottlenecks and disconnects in critical cross-functional processes 5. Elusiveness of accountability 6. Chaos of downsizing 7. The turmoil of integration and merger 23  WARNING SIGNS 1.The explosion of chaos and bureaucracy ◼ work processes were not designed – they evolved out of the chaos of doing business ◼ informal work patterns break under stress ◼ develop a process and rule set to fix mistake ◼ procedures habitualized ◼ new untrained employees and veterans make mistakes unknowingly 2.Thinking for customers ◼ based on assumptions that they know what is best for customers, inflexible, customer frustrated, only the “rules” count 24  WARNING SIGNS 3. Automation of existing bureaucracy ◼ Computerization reinforced bureaucracy rather than breaking through it ◼ automation of existing manual procedures ◼ inexperience to computers ◼ more paper printouts 4. Bottlenecks and disconnects in critical cross-organizational work process ◼ no relationship to other units, ◼ must time spent, ◼ duplication of work, ◼ systems in each department do not correspond with the other units 25  WARNING SIGNS 5. Elusiveness of accountability ◼ Most organizations are structured by function (eg. Sales, manufacturing, etc) but essential business processes (eg. customer service and support) cut across the functions. This makes it difficult ◼ no accountability ◼ lost of responsiveness and timeliness ◼ incomplete, inaccurate, late 6. Chaos of downsizing ◼ It leaves survivors demoralized ◼ the work environment inadequately staffed, and people with inadequate skills performing the work ◼ tasks can no longer be processed within their current configuration 7. The turmoil of integration and merger ◼ work processes that often conflict and duplicate 26  DIAGNOSIS OF PROCESSES OF SUSPECT PRODUCTS AND SERVICES Possible findings 1.0 Lack of a “big picture” concept and poor communication. 2.0 Inattention to detail. 3.0 Designer arrogance and customer exclusion. 4.0 Focus on correction, not error prevention. 5.0 Measurement problems. 6.0 Focus only on external customers. 27  The necessity for change CREATING THE BUSINESS CASE The alternative to change 28  1. The Necessary for Change Translate “what everyone already knows” into facts and numbers (quantitative data) – revenues, customer complaints, direct and indirect processing costs, rates of absenteeism, volume of back orders, costs to correct errors and delays in deliveries. – evaluate strategic industry trends, the economy, customer preferences and buying patterns and other market research. 29  2. Alternative to Change If not change, what will happen – show change effect using hard and soft data of the future, if the organization doesn’t change. – use current data to project today’s bottom line into tomorrow 30 Commitments: Once the facts are on the table: 1. Frame the project 2. Create vision, values and goals 3. Build detailed process redesign of the business operations 4. Plan the implementation 5. Conduct a proof of concept (if needed) 31 CRITICAL SUCCESS FACTORS FOR BR PROJECTS. 1. business focus – a focus on all dimensions Success depends on integrating all three – process, technology and organization plus supporting that integration with new infrastructure and values 2. A methodology and project approach requires discipline and structure methodology must be systematic and fact focused must articulate how to secure funding, manage power struggles, and sell the new ideas 3. Time BR takes time. Executives must be able to stick with the program 32 CRITICAL SUCCESS FACTORS FOR BR PROJECTS 4. Partnership participation BR is accomplished only as a result of efforts by people from all over the organization Requires flexible and trained teams 5. Visible, active leadership This is the most important of all the critical success factors Requires long-term commitment to BR – in terms of dollars, people and executive visibility 33 CRITICAL SUCCESS FACTORS BR begins the process of transforming a dysfunctional organization into a learning, productive, quality-focused, customer driven. BR must be customer driven. Quality is defined in terms of added value, cost sensitivity, responsiveness, and functionality. BR must enable people to handle more change successfully. 34  https://www.youtube.com/watch?v= _YXqnEXnnBk 35