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Business Process

Reenginering
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Agenda

BPR Definition
Generic Reengineering Methodology
Related Change Programs
BPR Techniques & Tools
BPR Decision Support Systems
Role of IT
BPR Project Problems
Examples & Cases
Conclusion

Definition of BPR - I

Champions of BPR, Hammer and Champy state, A business


process is a collection of activities that takes one or more kinds of
input and creates an output that is of value to the customer

BPR Definitions
the analysis and design of workflows and processes within
and b/w organizations
a methodological process that uses information technology
to radically overhoul business process and thereby attain major
business goals
the reconfiguration of the business using IT as a central
lever
overhouling of business processes and organization
structures that limit the competitiveness, effectiveness, and
efficiency of the organization
the fundamental analysis and radical redesign of business
processes to achieve dramatic improvements

Definition of BPR - II

Four Elements of Reengineering


Radical or at least significant changes
Business process as opposed to departments or functional areas
Achieving major goals or dramatic performance improvements
IT as a critical enabler

Different Terms
Business process improvement (Harrington, 1991a)
Core process redesign (Kaplan and Murdoch, 1991)
Process innovation (Davenport and Short, 1990)
Business process transformation (Burke and Peppard, 1993)
Breakpoint business process redesign (Johanssen et al., 1993)
Organisational reengineering (Lowenthal, 1994)
Business process management (Duffy, 1994)
Business scope redefinition (Venkatraman, 1994)
Organisational change ecology (Earl et al., 1995)
Structured analysis and improvement (Zairi, 1997)

Generic Reengineering Methodology

Preparation planning
Process - Think Existing Strategic Processes

Analys

& Prioritization

Creation process elements and visualization


Technical Design resources
Social Design empowerment, morale, communication
Implementation realization of technical and social
plans

Related Change Programs - I

Rightsizing refers to adjustments in staffing requirements


Restructuring refers to changes in formal structural relationships
Automation refers to application of technologies to automate existing
procedures without questioning their appropriateness
TQM involves bottom-up participation and continous evaluation of
current practices resulting in incremental changes

Related Change Programs - II


However;
Reengineering
is typically initiated from the top down
focus on processes
questions the logic of existing designs
is usually a one-shot attempt at achieving
improvements

BPR Techniques & Tools - I

Flow chart technique (Flowcharter, Flowmark)


Data Flow Diagrams (CASE Tool, 4Keeps)
Role activity diagram (RADitor)
Role interaction diagrams (RADitor)
Gantt Chart (Project Scheduler7, Workflow BPR)
IDEF (Design IDEF, IDEF Tools)
UML (Magic Draw UML, Visual UML)
Simulation (Metis, Arena)

BPR Techniques & Tools II


Flow Chart Technique

It is a graphical representation which uses symbols to


represent such things as operations, data, flow direction,
and equipment, for the definition, analysis, or solution of a
problem.

BPR Techniques & Tools III


Data Flow Diagrams

Data Flow Diagrams (DFDs) describe the processes showing


how these processes link together through data stores and
how the processes relate to the users and the outside world.

BPR Techniques & Tools IV


Role Activity Diagrams-RAD

Role Activity Diagrams (RADs) are based around a graphic


view of the process from the perspective of individual roles,
concentrating on the responsibility of roles and the
interactions between them .

BPR Techniques & Tools V


Role Interaction Diagrams - RID

Role Interaction Diagrams are composed of a matrix that


represents the processes by using text and symbols.

BPR Techniques & Tools VI


Gannt Charts

Gannt Chart is a matrix representation that shows the flow


of activities and durations.

BPR Techniques & Tools VII


IDEF

Integrated Definition of Function Modelling (IDEF)


is a family of methods that can be used to
describe operations in an enterprise.

BPR Techniques & Tools VIII


Unified Modelling Language - UML

UML is a language for specifying, visualization, constructing


and documenting artefacts of software systems, as well as
for business modelling and other non-software systems.

BPR Techniques & Tools IX


Simulation

Simulation is collection of methods and


applications to imitiate the behaviour of
real systems.
Simulation can be classified, according to
certain characteristics, in deterministic,
stochastic, static, dynamic, continous, and
discrete.

BPR Decision Support System

Decision Support System (DSS) can be


modelled for BPR by using some software
packages (Crowe, Rathi, and Rolfes, 1997).
They implement the model by using the
software package DPL by ADA Decision
Systems, Inc.
They reduce risks with the help of this
model.

Role of IT
an initiator, a facilitator, or an
enabler

Role of IT - Initiator

Agent of change
New requirements
e.g. Imaging technology, Internet
An important technology first creates a
problem then solves the problem
Hammer & Champy

Role of IT - Facilitator

Make work/workload easier


e.g. Flow of Information

Role of IT - Enabler

Most attention
Offers the ability/necessary assistance to
accomplish

Role of IT E-Commerce

Personalized service
Lower transaction & material costs
e.g. E-tickets
Save cost of print/mail
Reduce need for telephone reservation staff
Reduced commission payable to travel
agency

Role of IT - Coordination

Shared Databases
Information dissemination
Facilitate distribution

Networking
Assists collection/dissemination
Rapid implementation of decisions

Telecommunication

IT in Integration
Functional Area

Information Technologies

Marketing

Multimedia, Internet, database

Distribution

Online Inventory and shipment controls,


Internet, Database, Barcodig, satellite
positioning

Accounting

Computerized Data collection, shared


Database, Spread Sheets

Design & Engineering

CAD

Purchasing

Internet, Database, ERP

Production

CAM, Database, Scheduling, barcoding,


ERP, EDI

Maintenance

Expert Systems, Scheduling

Benefits of IT

Cost reduction
Time elimination
Error minimization
Enabling Paralelism
Facilitating Integration
Enhancing decision Making
Minimizing Points of contact

Role of IT

Examples

Dominant motivations for E-Commerce are improving customer service and cost cutting to
be followed by building customer loyalty, boosting revenue and offering a new sales channel.
Estimated growth from the present $800 million in plane tickets sales to $8.9 billion in 2002.
Estimated growth from the present $216 million in online books sales to $2.2 billion in 2002.
75 extranet projects in Boeing (expected to save millions) for such use as receiving $100
million in spare part orders from airlines through one Web site; sending documents to
government.
50 percent of order time reduced in Adaptec Inc., from 16 weeks to 55 days; purchase
orders processing fell from six days to minutes; suppliers do not need to manually re-enter
faxed-orders; saved $1 million in costs and $9 million from work-in-process.
General Electric bought over $1 billion in goods and services via its Trading Process
Network; estimated to save $500 million over the next three years.
Projected to have 5-10 percent cost reduction overall in economy in 2002.
Dell used the Internet for messages to suppliers and reduced inventory on hand to eight
days (versus Compaq's 26 days).
Internet-based audio-video conferencing, integrating voice, data, and video over the
network: Ford shares documents in real time; estimated to have shortened average car
design time from 36 months to 24 months; L.L. Bean uses the network for customer service
calls as well as customer Web browsing at the same time using the same line.

Role of IT
IT Changed Business Processes

Internet / Data Networks


EDI
CAD/CAM
Expert Systems
Barcoding
Database

BPR Project Problems


70% of the
BPR projects
fail
Biggest obstacles that reengineering faces are
(i) Lack of sustained management commitment and
leadership
(ii) Unrealistic scope and expectations
(iii) Resistance to Change.
Other problems:

the danger of another inefficient system


ignoring the embedded system knowledge accumulation over many years
hidden agendas of top management and discontinues in the leadership
poor choice of metaphors in the organizational language
lack of communication
selecting wrong IT vendors
lack of awareness of the lead times associated with IT

Examples & Cases - I


A few success stories
Ford cuts accounts payable headcount by
75%
Xerox redesigns its order fulfillment
process and improves service levels by 75
to 97% and cycle times 70% with inventory
savings of $500 million
Detroit Edison reduces payment cycles
for work orders by 80%

Examples & Cases - II


EX1: FORD
Ford cuts accounts payable headcount by 75%

Examples & Cases - II


EX2: BPR failure of TELECO
Discontinues in leadership, top managements hidden agenda, lack
of knowledge in BPR tools and lack of communication contribute
the BPR failure at TELECO

Conclusion

BPR must be seen as a strategic, cross-functional


activity that needs to be integrated with other
aspects of management
The key requirement is that managers understand
in detail the current business processes before
embarking on a BPR project.
The application of IT can provide major
improvements in the performance of business
systems, and while considered a major part of the
reengineering activity, must be integrated with the
needs of all stakeholders in mind.

REFERENCES

V. Grover, M.K. Malhotra Business Process Reengineering Journal of Operations


Management pg. 201-205
A. Gunasekaran, B.Nath The role of information Technology in business process
reengineering
Stephen L. Chan Business Process Management Bradford: 2000
Majed Al-Mashari, Mohamed Zairi Creating a fit between BPR and IT Infrastructure
Boston:2000
Ruth Sara Aguilar-Savn Business process modelling: Reviewand framework
Archie Lockamy, Wilbur I. Smith, A strategic alignment approach for effective business
process reengineering: linking strategy, processes and customers for competitive
advantage
Thomas J. Crowe, Krishnakant Rathi, and Joseph D. Rolfes, Selecting Business
Process Reengineerng Projects Strategically
Peter ONeill, Amrik S. Sohal Business Process Reengineering: A review of recent
literature
Suprateek Sarkera, Allen S. Lee IT-enabled organizational transformation: a case study
of BPR failure at TELECO
Ann Lindsay, Denise Downs, Ken Lunn, Business processesattempts to find a
definition

THANKS & QUESTIONS