business process reengineering.ppt -...
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Business Process ReengineeringBPR
BPR Prof. Dr Majed El-Farra 2009 ١
Business Process Redesign
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Definition of BPR
� The analysis and design of work flows and processes within and between organizations.
BPR Prof. Dr Majed El-Farra 2009 ٢
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Aspect of BPR
� Revolutionizing the way they were doing business
� Radically redesigning or reengineering key business activities
BPR Prof. Dr Majed El-Farra 2009 ٣
reengineering key business activities
� They apply the concept of process which is input-output activity not functional
� Exploiting IT to redesign the process.
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How BPR developed (factors)?
1- Competitiveness:
Revenue – Cost = profit/loss
2- Information Technology: reduced the cost of coordination and across organizational boundaries
BPR Prof. Dr Majed El-Farra 2009 ٤
organizational boundaries
3- Strategic management concentrating on improving performance, BPR connects with the business turnaround\spin-off
4- Organizational rethinking:
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Fundamentals of BPR
1- Transformation: BPR cause quantum leap in business performance.
There spirit of revolution more than evolution.
Frequency One shot
BPR Prof. Dr Majed El-Farra 2009 ٥
Frequency One shot
Scope Broad, cross-functional
Participation Top-Down
Risk and rewards High
Type of change Structure, culture roles
Role of IT Key enabler
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Fundamentals of BPR
2- Process: A set of logically related tasks performed to achieve a defined business outcome.
“It is a collection of tasks that together
BPR Prof. Dr Majed El-Farra 2009 ٦
“It is a collection of tasks that together create value for a customer”
� Characteristics of BP:
1. They have internal and external customers
2. They cross organizational boundaries
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Types of process
1. Core processes: Relate directly to external customers and central to business functions.
2. Support processes: They have internal
BPR Prof. Dr Majed El-Farra 2009 ٧
2. Support processes: They have internal customers and back-up of core-processes.
They are more administrative, secondary activities
3- Management processes: by which plan, organize and control.
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Function versus process-based organisation
Sales
New Product Development
R&D Manufacturing Customer
BPR Prof. Dr Majed El-Farra 2009 ٨
Order Fulfillment
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Cross-Functionality of Processes
Process: New product development processNeeds ResearchDesign
Test
Produ
Process
Design
Equip
design
Product
start
BPR Prof. Dr Majed El-Farra 2009 ٩
Produ Design design start
Marketing R&D Manufacturing
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BPR
� Means starting all over from scratch
� means asking this question:
“If I were re-creating this company
today, given what I know and given
BPR Prof. Dr Majed El-Farra 2009 ١٠
today, given what I know and given current technology, what would it look like”?
� It is concerned with focusing, organizing and managing a company around its processes.
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How can companies identify their business process?
� One way is to give them names that express their beginning and end state. Therefore, it would be better to call:
- Manufacturing as the procurement-to-shipment
BPR Prof. Dr Majed El-Farra 2009 ١١
- Manufacturing as the procurement-to-shipment process,
-Product development as the concept-to-prototype process,
- Sales as the prospect-to-order process,
-Order fulfillment as the order-to-payment process
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How can companies identify the processes to reengineer?
First, no company can reengineer all its process simultaneously.
Second, companies typically use three criteria to help them make their choice:
� Dysfunction: which processes are in the deepest
BPR Prof. Dr Majed El-Farra 2009 ١٢
� Dysfunction: which processes are in the deepest trouble?
� Importance: Which processes have the greatest impact on customers?
� Feasibility: Which processes are the most susceptible/dispose to redesign?
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Fundamentals of BPR
3- IT: Enablers of redesign business processes: shared database, networking allow integration and coordination.
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coordination.
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IT opportunities in BPR
Process OpportunitiesEconomic scopeTechnology
Eliminating activitiesReduce costs of production
Computation
BPR Prof. Dr Majed El-Farra 2009 ١٤
Integrating tasks and process would reduce time and space
Reduce costs of coordination
Communication
Monitoring processes and task analyzing information
Reduce cost of information
Infoware
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Fundamentals of BPR
4- Business Change: BPR requires fundamental shift in the way the whole business thinks and works.
Change in responsibility and authority
BPR Prof. Dr Majed El-Farra 2009 ١٥
Change in responsibility and authority distribution from vertical to horizontal lines, empowerment, semiautonomous work groups
5- Change management: knowledge of Organisational behavior
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PBR
� Where is the Strategic sense in PBR?
1- Reduce cost
2- customer satisfaction
BPR Prof. Dr Majed El-Farra 2009 ١٦
2- customer satisfaction
3- improve competitiveness
4- excellent capability advantages
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Processing life insurance application
The old way:
� Long, sequential process involving credit checking, quoting, rating, underwriting/insuring, …
BPR Prof. Dr Majed El-Farra 2009 ١٧
underwriting/insuring, …
� Work spanned 5 departments & involved 19 people
� Turnaround/amount time: ranged from 5 to 25 days
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Processing life insurance application
After reengineering:� creation of “Case managers”: total responsibility for an
application from receipt to policy issuing
� Use of expert systems as a support technology
When need, assistance from a senior underwriter or
BPR Prof. Dr Majed El-Farra 2009 ١٨
� When need, assistance from a senior underwriter or physician
� Turnaround time: on average 2 to 5 days (for some cases less than 4 hours)
� Increased productivity / empowerment
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Embarking on reengineering
� Persuade the people to embrace - or at least not to fight - the prospect of major change by developing the clearest messages on:
1- A “Case for action”:
BPR Prof. Dr Majed El-Farra 2009 ١٩
1- A “Case for action”:
“Here is where we are as a company and this is why we cannot stay here”.
2- A “Vision statement”:
“This is what we as a company need to become”
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Simple rules to BPR:
� Start with a clean sheet of paper
� Listen to your customer
� Enhance those things that bring value to the customer and change or
BPR Prof. Dr Majed El-Farra 2009 ٢٠
value to the customer and change or eliminate those that do not
� Focus your commitment to radical change on the process
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Organizational implications of reengineering
� Work unit change: from functional departments to process teams
� Job change: from simple tasks to multidimensional work
� Roles change: from controlled employees to
BPR Prof. Dr Majed El-Farra 2009 ٢١
� Roles change: from controlled employees to empowered workers
� Job preparation change: from training to education
� Managers change: from supervisors to coaches
� Org. structure change: from hierarchy to flat
� Values change: from protective to productive (employees work for their customers, not their bosses).
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Development methodology for BPR
1- Develop vision and objectives
2- Identify process for redesign
3- Understand and measure existing process
4- Identify IT levels
BPR Prof. Dr Majed El-Farra 2009 ٢٢
4- Identify IT levels
5- Pilot\ trial new process
6- Develop supply solution
7- Make new process operational
8- On going continuous improvement
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Rethinking the Traditional Organization
� When looking beneath the surface at any company: You will find 3 different businesses:
1- Customer relationship management
BPR Prof. Dr Majed El-Farra 2009 ٢٣
1- Customer relationship management
2- Product innovation
3- Infrastructure
One company three businesses
Traditional org. believes the three bus. must be combined within a single company.
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Features of Each business
� Customer relationship management:
The role is to find customer and build relationship with him.
Cultural: customer comes first, aims economies of scope by gaining large share
BPR Prof. Dr Majed El-Farra 2009 ٢٤
economies of scope by gaining large share of customer’s wallet. Requires a variety of products.
� Product innovation : Conceive/consider of attractive of new products and services
Cultural: Employee centered.
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Features of Each business
� Infrastructure Management: The role is to build and manage facilities for high-volume.
Cultural: Cost focused, it stresses on
BPR Prof. Dr Majed El-Farra 2009 ٢٥
Cultural: Cost focused, it stresses on standardization and efficiency. It focuses on the operation.
Managers should talk about processes rather than functions.
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If bundling them into single company
� The result: It forces management to compromise the performance of each process.
� Example: Unbundling is making the
BPR Prof. Dr Majed El-Farra 2009 ٢٦
� Example: Unbundling is making the newspaper business much less capital intensive.
� Example, banking industry
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Why Reengineering sometimes fail?
Variety of reasons examples:
1- Failure to focus on parts important to customer.
2- Failure to integrate IT.
3- Underestimate the actions required by
BPR Prof. Dr Majed El-Farra 2009 ٢٧
3- Underestimate the actions required by employees.
Managers may assume that the change will cause employees to shed their functional mind-sets and will forge them instantly into a team aiming to achieve common goals.
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TQM
� It emphasizes the role of quality in meeting the needs of its customers.
TQM stresses customer satisfaction , continuous improvement and to be
BPR Prof. Dr Majed El-Farra 2009 ٢٨
continuous improvement and to be the best in all functions.
� TQM focuses on incremental change and gradual improvement of processes.
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Comparison between TQM & BPR
BPRTQM
Quantum leapIncrementalChange
Start againCurrent PracticeFocus
One shotContinuousFrequency
BPR Prof. Dr Majed El-Farra 2009 ٢٩
One shotContinuousFrequency
Top-downBottom-upParticipation
HighLow & ModerateRisk & Rewards
Structure, culture roles
Work designType of Change
Key enablerIncidentalRole of IT