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Business Process Re-Engineering by ADITI WALIA

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Business Process Re-Engineering by ADITI WALIA

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For the first time ever, this presentation on BPR has a wide coverage of so many topics regarding BPR, it includes not only definition + issues affecting BPR + about core processes of business + history about BPR + General Model + Role of IT in BPR + its objectives + Outcomes as well as problems related to BPR in a very simple and fluent manner along with interactive diagrams and figures so as to aid even the naive or first time reader.

For the first time ever, this presentation on BPR has a wide coverage of so many topics regarding BPR, it includes not only definition + issues affecting BPR + about core processes of business + history about BPR + General Model + Role of IT in BPR + its objectives + Outcomes as well as problems related to BPR in a very simple and fluent manner along with interactive diagrams and figures so as to aid even the naive or first time reader.


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Business Process Re-Engineering by ADITI WALIA

  2. 2. Business Process Reengineering ( BPR ) refers to the analysis & redesign of workflows & processes both within and between the organizations. The orientation of BPR is “radical”. It is a total deconstruction & a total rethinking of the business process in its entirety, unconstrained by its present business structure & pattern. Its objective is to gain quantum gains in the performance of the processes in terms of time, cost , output , quality and responsiveness to the customer.
  3. 3. A business process comprise of a combination of number of much independent & interrelated processes such as :  Developing new product.  Customer order processing.  Bill payment system. The structural elements that constitute a process provide a basis for its analysis, appraisal & redesign for achieving higher levels of efficiency & effectiveness, economy, speed, quality & output.
  4. 4. • Simplify • Standardize • Empowering • Measurements REDESIGN • Network • Intranets • Extranets • Workflow RETOOL • Processes • Information Technology • Human Resources REORCHESTRATE THE 3 R OF REENGINEERING
  5. 5. ISSUES POINTING TOWARDS NEED FOR BPR It is very much possible to achieve a higher level of process performance by redesigning the process. A company resorting to reengineering of business processes is able to double the speed of normal production, utilise products several times more productively & respond to consumer’s needs and expectations more rapidly.
  6. 6. This could be achieved by effecting a total change in the process instead of a piecemeal change. It is, therefore, imperative that for many organizations on the decline, changing the process or redesigning the process may be the only viable alternative for turnaround. They must break themselves free from their primitive and archaic work processes that drag them down.
  7. 7. Issues that emerge from the forgoing discussions on the need for change form the underlying premises of BPR. They may be outlined as follows : ❖ The operational excellence of a company is a major basis for its competitiveness. ❖ The business strategy of a company should be oriented towards leveraging its operational excellence into the marketplace. ❖ Process needs to be managed, not functions. ❖A customer focused organization needs to be realigned in terms of process orientation.
  8. 8. ❖Continuous improvement is a deficient approach when a company is far behind the industry standards & needs rapid quantum leaps in performance. ❖ Dramatic improvement in performance is the prerequisite for overcoming competition. ❖ For considering totally new ways of redesigning processes, each & every concept, assumption, purpose and principle needs to be abandoned.
  9. 9. IDENTIFYING CORE PROCESSES A set of interconnected processes comprise a business system. The performance of the business firm, is thus, the outcome of the interrelated operation of its constituent work processes. The redesign of processes, therefore, provides a powerful basis for improving the process of a business enterprise.
  10. 10. Some processes turn out to be extremely critical for the success & survival of the enterprise. BPR focuses on such critical business processes out of the many processes that go on in any company. These are the “core” business processes of the company. They are vital for success in the industry sector within which the company is positioned. They are crucial for generating competitive advantage for a firm in the market place.
  11. 11. While some core business processes are easily identifiable while others may not be immediately apparent. The following instances serve to show that “core processes” need to be identified carefully in terms of their bearing on the firm’s competitiveness.
  12. 12. ▪In a fast moving consumer good industry, marketing & brand management is a core process. ▪In the Electronics & semi-conductor industry, new product development is a core process. ▪In the Banking industry, the activities that help mobilise deposits and generate funds for advances to customer. ▪ In the Insurance industry, the actual work that leads to a balance of competitive premium for customers & profit after claims for the company is a core process.
  13. 13. Development & Delivery Processes of product or service • Include research, design, engineering, manufacturing & logistics. Interface with customer processes • Include marketing, advertising, order fulfillment & service. Process involving Management Activities • Include strategy formulation, planning & budgeting, performance measurement & reporting. Generic Business Processes
  14. 14. APPLICATION HISTORY Many Public & Private sector organizations & SMEs worldwide had gone under major reengineering efforts. The technique was first applied to multinational corporations, such as : ▪ IBM ▪ AT&T ▪ SONY ▪ GENERAL ELECTRIC ▪ WALL MART ▪ HEWLETT PACKARD ▪ DEC
  15. 15. ▪ KRAFT FOODS Having as a result major downsizing in their organizational structures. Later, the BANKING sector began to reengineer with a great degree of success such as CITIBANK, NORTHWESTERN BANK, BANK OF AMERICA and others. Major utility companies used reengineering as a technique to improve service like OTE, ELTA.
  16. 16. First, the government cabinet of Egypt reengineered many of its processes along with many municipals in Europe. The public health sector has undergone a major re-engineering in Europe using the CORBA methodology. As the technique was becoming well known to the business sectors, smaller enterprises were using the technique for “organizational upgrade”. BPR is also being used to change the organizational structure of the public services.
  18. 18. GENERAL “MODEL” STAGES Most reengineering methodologies share common elements but simple differences can have a significant impact on the success or failure of a project. After a project area has been identified, the methodologies for reengineering business processes may be used. In order of a company, aiming to apply BPR, to select the best methodology, sequence processes and implement the appropriate BPR plan, it has to create effective and actionable visions. All methodologies could be divided in the following “general” stages.
  19. 19. Envision Stage Initiation Stage Diagnosis Stage Redesign Stage Reconstruction Stage Evaluation Stage BPR Stages
  20. 20. STAGE 1 : ENVISION STAGE The company reviews the existing strategy & business processes and based on that review business processes for improvement are targeted & IT opportunities are identified.
  21. 21. STAGE 2 : INITIATION STAGE In this stage, project teams are assigned. The performance goals along with project planning and employee notification are set.
  22. 22. STAGE 3 : DIAGNOSIS STAGE Here, the documentation and sub- documentation takes place in terms of physical attributes ( activities, resources, communications, roles, IT and costs ).
  23. 23. STAGE 4 : REDESIGN STAGE In this stage, new process design is developed by devising process design alternatives and through brainstorming and creativity techniques.
  24. 24. STAGE 5 : RECONSTRUCTION STAGE Here, management technique changes occur to ensure smooth migration to the new process responsibilities and human resource roles.
  25. 25. STAGE 6 : EVALUATION STAGE The new process is monitored to determine if goals are met and examine total quality programs.
  26. 26. ROLE OF INFORMATION TECHNOLOGY(IT) IN BPR A re-engineered business process characterised by IT-assisted speed, accuracy, adaptability and integration of data and service points, is focused on meeting the needs & expectations of the consumer quickly and adequately thereby enhancing his/her satisfaction level.
  27. 27. With the help of tools of IT, organizations can modify their processes to make them automatic, simpler and time saving. Various studies have conclusively established the role of IT in transformation of business processes.
  28. 28. IT initiatives, thus, provide business values in their distinct areas :- ▪ Efficiency – by way of increased productivity. ▪ Effectiveness – by way of better management. ▪ Innovation- by way of improved products and services. All these can bring about a radical change in the products and services, thereby improving competitiveness and customer satisfaction. It is a critical factor in the success of bringing this change.
  29. 29. When applying the BPR management technique to a business organization the implementation team effort is focused on the following objectives : ❖ CUSTOMER FOCUS : Customer service oriented processes aiming to eliminate customer complaints. OBJECTIVES OF BPR
  30. 30. ❖ SPEED : Dramatic compression of time it takes to complete a task for key business processes. For instance, if process before BPR had an average cycle time of 5 hours and after BPR it came down to just 1 hour. ❖ FLEXIBILITY: Adaptive processes and Structures to changing conditions & competition. Being closer To customer the company develops the awareness Mechanism to rapidly spot The weak points & adapt To new requirements of the market.
  31. 31. ❖ Quality : Obsession with the superior service and value to the customer. The level of same quality is always controlled & monitored by the processes and does not depend mainly on the person who is serving the customer. ❖ Innovation : Leadership through imaginative change providing to organization a competitive advantage over others.
  32. 32. ❖ Compression : Cutting major tasks of cost and capital, throughout the value chain. Organizing the processes the company develops transparency throughout the operational level reducing cost. ❖ Productivity : Improve drastically effectiveness and efficiency.
  34. 34. TQM BPR Case For Action Assumed to be necessary. Compelling. Goals Small scale improvements in many places having cumulative effects. Outrageous. Scope and Focus Attention to tasks, steps, processes across the board. Select but broad business processes. Degree Of Change Incremental and Continual. Order of magnitude and periodic. Senior Mgt. Involvement Important up front. Intensive throughout. Role Of IT Incidental Cornerstone. BASIS
  35. 35. BUSINESS UNDER CONVENTIONAL WORK BUSINESS UNDER BPR Functional departments Process teams Simple tasks( division of labour) Empowered employees Controlled people ( by management ) Multidimensional work Training of employees Education of employees Compensation for time & skill spent Compensation for results Pay raises on the base of promotions & seniority Low pay plus high performance related bonuses Advancement based on ability Advancement based on performance
  36. 36. Protective organizational culture Productive organizational structure Managers supervise and control Managers coach and advise Hierarchical organizational structure Horizontal ( flat ) structure Executives as scorekeepers Executives as leaders Separation of duties & function Cross-functional teams Linear & sequential process Parallel process Mass production Mass customization
  37. 37. Process Innovation Incremental Improvement Change Abrupt, volatile Gradual, constant Effects Immediate, dramatic Long-term, more subtle Involvement A few champions From few to everybody Investment High initially, less later Low initially, high to sustain Orientation Technology People Focus Profits Processes Basis
  38. 38. STEPS IN BPR In a crude sense, companies began business process improvement with a continuous improvement model. This model attempts to understand & measure the current processes & make performance improvements. However, some companies make reengineering efforts under the assumption that current processes are wrong & irrelevant. Under such perspective, designers of business processes disassociate themselves from existing processes. This helps in looking at the problem with a clean mind, free of any biases.
  39. 39. Determine Objectives & Framework Identify The Customers & Define Their Needs Study The Existing Process Formulate A Redesign Process Implement The Redesign
  40. 40. STEP 1 : Determine Objectives & Framework Objectives are the desired end results of the redesign process which the management & organization attempt to realise. This will provide the required focus, direction, motivation for the redesign process. It helps in building a comprehensive foundation of the redesigning process.
  41. 41. STEP 2 : Identify The Customers & Define Their Needs The designers have to understand the customers – their profile, their steps in acquiring, using and disposing a product. The purpose is to redesign business process that clearly provides added value to the customer.
  42. 42. STEP 3 : Study The Existing Process The existing process will provide an important base for the redesigners. The purpose is to gain an understanding of “what” and “why” of the targeted process. However, as discussed earlier, some companies go through the reengineering process with a clean perspective without laying emphasis on the past processes.
  43. 43. STEP 4 : Formulate A Redesign Process The information gained through the earlier steps is translated into an ideal redesign process. Formulation of redesign plan is the main crux of the reengineering efforts. Customer focused redesigned processes are identified and formulated. In this crucial step, alternative processes are considered and the most optimum is selected.
  44. 44. STEP 5 : Implement The Redesign It is easier to formulate a new process than to implement it. Implementation of the redesigned process and the application of other knowledge gained from the previous steps is the key to achieve dramatic improvement. It is the joint responsibility of the designers and the management to operationalise the new process.
  45. 45. OUTCOMES OF BPR ➢ Several jobs combined into one. Decision Making becomes part of the job of the employees ( Employee Empowerment ). ➢Processes have multiple versions. This enables the economies of scale that result from mass production, yet allows customization of products or services.
  46. 46. ➢Steps in the processes are performed in the natural order and several jobs get done simultaneously. Work is performed where it makes the most sense. ➢Controls & Checks and other non-value-added works are minimized. ➢ Reconciliation is minimized by cutting back the number of external contact points and by creating business alliance. ➢ A single point of contact is provided to the customer. ➢ A hybrid centralized or decentralized operation is used.
  47. 47. PROBLEMS IN IMPLEMENTING BPR  Only a limited number of companies are able to have enough courage of having business processes redesigned because of the challenges posed.  It disturbs established hierarchies and functional strategies that creates serious repercussions and involves resistance among the workforce.
  48. 48.  Reengineering takes time & expenditure, atleast in the short run, that’s why many companies are reluctant to go through the exercise.  Even there can be a loss of revenue during the transition period.  Setting of targets is tricky & difficult. If the targets are not properly set or the whole transformation not carried out properly carried out, reengineering efforts may turn out as a big failure.
  49. 49. CONCLUSION In view of the massive organizational changes involved in reengineering, it is imperative that a reengineering drive is supported by the vision and commitment of the organization’s top leadership to see through its successful completion. Also faster & efficient reengineered business process provide a firm with many more opportunities for trying, testing, modifying and learning.