BUSINESS PROCESS REENGINEERING

Presented by: Parth Shukla (BE Automobile Engineer / ME Industrial Engineer)

OVERVIEW • Business process re-engineering is a business management strategy, originally

pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization.

• BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors.

• BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes.

• Business Process Reengineering is also known as business process redesign, business transformation, or business process change management.

DEFINITIONS ….

• the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary modern measures of performance, such as cost, quality, service, and speed.

• encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions.

FACTORS RESPONSIBLE FOR BPR FAILURE• One department may be optimized at the

expense of another.

• Lack of time to focus on improving business process.

• Lack of recognition of the extent of the problem

• Lack of training.

• People involved use the best tool they have at their disposal.

• Inadequate infrastructure.

• Overly bureaucratic processes.

• Lack of motivation.

• BPR team composition.• Business needs analysis.• Adequate IT infrastructure.

• Effective change management.• Ongoing continuous improvement

FACTORS IMPORTANT FOR BPR SUCCESS

THE ROLE OF INFORMATION TECHNOLOGYInformation technology (IT) has historically played an important role in the reengineering concept.

• Shared databases, making information available at many places.

• Expert systems, allowing generalists to perform specialist tasks.

• Telecommunication networks, allowing organizations to be centralized and decentralized at the same time.

• Decision-support tools, allowing decision-making to be a part of everybody's job.

• Wireless data communication and portable computers, allowing field personnel to work office independent.

• Interactive videodisk, to get in immediate contact with potential buyers.

• Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found.

• High performance computing, allowing on-the-fly planning and revisioning.

In the mid-1990s, especially workflow management systems were considered as a significant contributor to improved process efficiency. Also ERP (Enterprise Resource Planning) vendors, such as SAP, JD Edwards, Oracle, PeopleSoft, positioned their solutions as vehicles for business process redesign and improvement.

WHY???A BPR initiative is a risky undertaking and several factors have to be considered for a

successful effort.

A very important success factor is the top management sponsorship. A BPR Project usually requires many resources, money and leadership, which can be assured only by a strong and consistent top management sponsorship.

Another important success factor is the alignment of the transformation effort with the organisation’s strategic direction demonstrated from the perspective of financial performance, customer service, associate employee value, and the vision of the organisation.

BPR IMPLEMENTATION METHODS

THE HAMMER/CHAMPY METHODOLOGY• A BPR effort changes practically everything in the organization: people, jobs, managers and

values, because these aspects are linked together.

• They believed that instead of first defining a problem and then seeking and evaluating different solutions to it, it is more efficient to first recognize a powerful solution and then seek the problems it might solve.

• Earlier Hammer and Champy consider poor management and unclear objectives as the main problems to BPR success , but then they acknowledge people’s resistance as a major obstacle to a successful BPR undertaking.

HAMMER/CHAMPY 6-PHASE METHODOLOGY

Introduction into Business Reengineering:

The first step in reengineering is to prepare and communicate the “case for action” and the “vision statement”.

The “vision statement” describes how the organization is going to operate and outlines the kind of results it must achieve.

This qualitative and quantitative statement can be used during a BPR effort, as a reminder of reengineering objectives, as a metric for measuring the progress of the project, and as a prod to keep reengineering action going.

Identification of Business Processes:

During this phase, the most important business processes are identified and are described from a global perspective using a set of process maps.

The output of this phase is a number of process maps reflecting how these high-level processes interact within the company and in relation to the outside world.

Selection of Business Processes:It is unrealistic to reengineer all the high level processes of an organization at the same time.

Therefore, it has to be decided which are the processes to be redesigned.

According to an organization‟s strategic objectives more criteria could be defined for selecting processes for redesign, such as whether a process contributes to the organization‟s strategic direction, has an impact on customer‟s satisfaction e.t.c.

Understanding of Selected Business Processes:Before proceeding to redesign, the reengineering team needs to gain a better understanding of

the existing selected processes, concerning what they do, how well or how poorly they perform, and the critical issues that govern their performance.

The objective is the provision of a high level view of the process under consideration, in order for the team members to have the intuition and insight required to create a totally new and superior design.

Redesign of the Selected Business ProcessesThis is the most creative phase of the methodology, because new rules and new ways of work

should be invented. Imagination and inductive thinking should characterize this phase.

Implementation of Redesigned Business Processes:The last phase covers the implementation phase of the BPR project. Hammer/Champy believe

that the success of the implementation depends on whether the five preliminary phases have been properly performed.

DAVENPORT’S AND SHORT’S METHODOLOGYDavenport and Short position IT at the heart of BPR. They recognise the

existence of a recursive relationship between IT capabilities and BPR.

Despite their emphasis on innovation and technology, they recognise the importance of organisation and human resource issues as to change management, and suggest the use of traditional management approaches like planning, directing decision making and communicating.

Believing that BPR should be integrated with approaches like Continuous Process Improvement (CPI) , Davenport and Short suggest that the redesign effort of an organisation involve five major steps.

5 MAJOR STEPSThe first three steps are very similar to Hammer‟s methodology:

Develop Business Vision and Process Objectives.

Identify Processes to Be Redesigned.

Understand and Measure Existing Processes.

Identify IT levers:IT is a powerful tool not only for supporting processes but also for creating new process

design options.

Design and Build a Prototype of the Process:The final step in a redesign effort is the design of the new process. The actual design of the new process should be

viewed as a prototype and successive iterations should be expected.

Three key factors and tactics are considered in process design and prototype:

1.using IT as a Design Tool .

2.understanding generic design criteria.

3.creating organizational prototypes.

INDIAN RAILWAYS PROBLEMS• Long queues for ticket booking.• Long waiting to know the confirmation.• Mismanagement.• Dissatisfaction among passengers.

•Miscommunication.•Untimely delays in train arrival.•Longer queues at inquiry counters.

CASE STUDY : BPR IN RAILWAYS150 years old.17 lakh workers. 12000 trains every day. Carries 1.4 crore passengers & 16 lakh tonnes of goods everyday.

INDIAN RAILWAYS

BPR outcome

FINANCIAL PERFORMANCE

Growth of 17.30 % in one year

Major increase in the income achieved due to • licensee catering

• quantum jump in internet ticketing• tourism activities

2007-2008Total Income : Rs. 527.66 Cr

2008-2009Total Income: Rs. 618.77Cr

USAGE OF IT IN RAILWAYS

A large complex Infrastructure System with Large Geographical Dispersion such as the Indian Railways can benefit greatly from the intelligent use of IT

-Freight Operations Information system ( FOIS)

-Passenger Reservations System (PRS)

-Unreserved Ticketing System (UTS)

-Instant voice response system (IVRS)

-Rail Net

-E- Ticketing

REENGINEERING SERVICES PROVIDED

Passenger InformationRailway Reservation and ticketingRetiring rooms facilities at Stations Railway claims and refundsCatering and vending services

M&M'S PROBLEM PLANTS• In the mid-1990s, India's largest multi utility vehicle (MUV) and tractor manufacturer

M&M was facing serious problems at its Igatpuri and Kandivili plants in Maharashtra. The plants were suffering from manufacturing inefficiencies, poor productivity, long production cycle, and sub-optimal output.

• During this period, M&M was in the process of considering the implementation of a Business Process Reengineering (BPR) program throughout the organization including the manufacturing units.

• The programe was first implemented on an experimental basis at the engine plant in Igatpuri. Simultaneously, an exercise was initiated to assess the potential benefits of implementing BPR and its effect on the unions.

CASE STUDY: BPR @ MAHINDRA & MAHINDRA

BPR IMPLEMENTATION• In 1994, a major restructuring exercise was initiated as part of a BPR program. M&M

introduced a new organizational model, in which various divisions and companies were regrouped into six distinct clusters of related businesses, each headed by a president.

• M&M's core activities, automotive and tractors were made autonomous business units.

• The other activities of the group were organized into infrastructure, trade and financial services, telecommunication and automotive components.

• According to company sources, the whole exercise was intended to develop a conceptual map to provide direction for the future growth of various business lines.

• It was decided that, in future, the group would confine its expansion to the identified thrust sectors.

FEAR FORM HUMAN FACTOR:

• Fear of downsizing• Several jobs were combined into one.• Management accepting union demands every time.• Inflexibility of workers.• Idle time available to workers due to unorganised process.

HURDLES:

M&M's management was not surprised to learn that the unions expressed extreme displeasure at the decision to implement BPR and soon went on a strike.

But the management made it clear that it would not succumb to union demands. Soon, the workers were surprised to see the company's senior staff come down to the plant and work in their place.

COUNTER MEASURES:

Once the workers knew that their resistance won’t make a difference, they agreed to accept the change.

• Training and motivating the workforce.

• Identifying leaders.

• Creating conducive environment and changing work culture.

OUTCOME

• Productivity change- 100 employees produced 35 engines against 1200 produced 70 engines before BPR.

• Productivity of Nasik plant improved by 125%.

• Value added per employee- 0.46 against 0.3.

• Better inventory control, better sourcing, etc. are additional benefits.

• Anand Mahindra said, “Let me put it in a simple way. If we have facilities in Kandivili today, which are not just surviving but thriving, it is all due to BPR”

“It is not the strongest of the species that survive, nor the most intelligent, but is the one most responsive to change.”

“Revolutions don’t last, but Evolution does”

Thank you