Business Process Re-engineering

Business Processes by Functional Areas

Process Related Performance

Variables
Capacity
Consistency
Productivity
Cycle Time
Flexibility
Security

Product Related Performance

Variables
Cost
Quality
Responsiveness
Reliability
Conformance

Customer Satisfaction

What is a Business Process?

Set of logically related tasks
Defined business outcome
Internal or external customers
Cross organisational boundaries

More Efficient Business Processes

Empower People
Support Management
Eliminate Waste
Promote Best Practice
Automate Work
Integrate Across Functions

Business Process Reengineering

Ford (US) asked suppliers not to invoice them &
paid on receipt of goods, leading to a staff
reduction in their purchasing department of 250
to 50
Mutual Benefit Life simplified their life assurance
application process, reducing the time to
process an application from between 5 to 17
days to between 2 to 5 days. They eliminated
100 office jobs and the remaining staff could
handle twice the volume of applications

Business Process
Reengineering
Classical Reengineering
Radical redesign
Cross-functional processes
Huge performance gains
IT enabled

General usage
from

Any change to work

To

Organisational transformation

Why did BPR become popular?

Recession
Global competition
More demanding customers
Rise of white-collar worker
High IT spending
Desire to increase productivity
Hype

How new is BPR?

Components already existed
Improving business processes TQM
Greenfield design organisation design
IT enabled systems analysis

Component Limitations
TQM processes narrow & designed bottom-up
Greenfield design too broad in scope
Systems analysis projects constrained to current
structure

BPR overcame limitations by using business

process as design unit

A Re-engineering Process
Selecting the processes for reengineering
Identify Change enablers
Developing a Business Vision & Process Objectives
Understanding & Improving Existing Processes
Designing the New Processes & the Organisation
Implementing the New Process-Based Organisation

Selecting the processes for reengineering

Enumerate Major Processes

Determine Process Boundaries
Prioritise Processes for Reengineering

Identifying Enablers of Change

Assess IT Enablers
Assess Organisational & Human Resource
Enablers
Determine Which Constraints Will Be
Accepted

Developing a Business Vision and

Process Objectives
Assess Existing Business Strategy for Process
Directions
Consult Process Customers to Determine
Performance Objectives
Benchmarking for Process Performance Targets
& Examples of Innovation
Formulate Process Performance Objectives
Develop Specific Process Attributes

Understanding & Improving

Existing Processes
Assess Current Process Flow
Measure the Process in Relation to the New
Process Objectives & Attributes
Identify Problems with or Shortcomings of the
Process
Assess Current Information Technology &
Organisation
Identify Short-term Improvements in the
Process

Designing the New Processes

& the Organisation
Brainstorm Design Alternatives
Assess Feasibility, Risks & Benefits of
Design Alternatives & select the
Preferred Process Design
Prototype the New Process Design
Develop Migration Strategy
Implement New Organisation Structures
& Systems

Reported Reengineering
Successes
Company
Siemens Rolm

Process
Order Fulfillment

Cigna Insurance

Many

CIGNA
Eastman Chems

Many
Maintenance

American Express Many

Xerox
Supply chain
Rank Xerox
Billing
Aetna
AT&T Bus Sys

Many
Many

Reported Benefit
Order/Installation cycle improved
60%, Field Inventory cut 60%
Operating costs cut 40%
Application systems reduced 17 to 5
Fuel Processing
Rate doubled
Order cycle time reduced by 80%
Savings > $1m/year
Cost reductions > $1.2b
30% inventory reduction
Cycle time reduction 112 to 3 days
Annual cash flow increase $5m
Annual savings $350m
Product Quality Improvement X 10
75% reduction in key cycle times

BPR Paradoxes
Biggest potential for BPR in large organisations but these are least conducive to
innovations
Cross-functional scope resisted by functional managers & local interests
Simultaneous change of many organisational characteristics leads to confusion &
identity crisis
Employee participation can produce alienation as they understand impact of change
Downsizing a common objective but corporate reward schemes (incl. pay) are size
related
BPR encourages large scope projects but undermined by drive for short-term results
BPR assumes breaking rules but bureaucratic rules need to be applied to rulebreaking
Automation is catalyst for new process but often serves to cement old processes

BPR Implementation
Evolutionary Change Tactics
Revolutionary Change Tactics
Employee Involvement
Use current mangers & employees Bring in new management team
Management of Change Process
Use insiders
Use outsiders
Communication
Broadly communicated plans
Isolate the reengineering team
Need for BPR
Self improvement
Crisis or failure
Milestones
Flexible
Firm milestones
Need to change current structure
Highly adaptive to needs of organisation
Need to change root structure of
organisation

Implementation Approaches

Incremental
Improvement
Radical
Improvement

Evolutionary
Implementation
Quality, not
reengineering
Preferred
Approach

Revolutionary
Implementation
Dont do
Use only if
imminent crisis

Possible Futures
Process management
Reengineering Knowledge Work
Participative Reengineering
Rapid Reengineering
Reengineering for Value & Growth