QUALITY THROUGH

REENGINEERING

By

Prof.E.Sreenivas Reddy

Principal,ANUCET

FOUR STAGES OF CHANGE

Shock

Anger

Denial

Acceptance

THE ROAD AHEAD

Reengineering Definitions

Brainstorming Exercise

Goal of Reengineering

The Nut and Bolts

Why does reengineering fail?

When should be reengineered

What should be reengineered

Use and Implementation

Example

Summary

References

WHAT IS REENGINEERING?

“The fundamental rethinking and radical

redesign of the existing process to achieve

dramatic improvements in critical,

contemporary measures of performance,

such as cost, quality, service and speed.”

WHAT IS REENGINEERING? (Continued)

“A radical change approach that integrates

physical and technical solutions with

organization structure, management

infrastructure and organization cultural

change solutions.”

WHAT IS REENGINEERING?“Quotes”

“ It’s basically taking an axe and a machine

gun to your existing organization.” Computerworld, Jan. 24, 1994

“ Reengineering must be initiated by

someone who has enough status to break

legs.” Planning Review, May/June 1993

“ Reengineering will require a personality

transplant. . . . a lobotomy.” Computerworld, June 1, 1987

GOAL OF REENGINEERING

Reengineering is typically chartered in response to

a breakthrough goal for rapid, dramatic

improvement in process performance.

Continuous improvement activities

peak; time to reengineer process

Breakthrough

Improvement

Continuous improvement

refines the breakthrough

BRAINSTORMING EXCERCISE

How can an organization increase the

likelihood that a reengineering process

will provide lasting improvements for the

agency?

NUTS AND BOLTSThe Reengineering Process

Select a reengineering team

• Vital to the communication of the project

• Important that they have the support and

resources from top management

• They should work as a team, and not focus on

individuals

• Recognition that the total redesign is

necessary

NUTS AND BOLTSThe Reengineering Process

Establish Goals

• Define and communicate what actions will be

used

• Vision of the results stated clearly

• Analyze the gap between the current

performance and desired performance

• Focus on goals not specifications

NUTS AND BOLTSThe Reengineering Process

Identify the processes that need to be

reengineered.

• Determine the order in which processes must

be changed

• Priorities highlighted

• Create time schedules

NUTS AND BOLTSThe Reengineering Process

Understand how reengineering may affect

people and their jobs

• Communication within the organization is vital

• Reengineering should involve the people,

management must be open to their

suggestions

• The people involved must be for, not against

the reengineering process.

NUTS AND BOLTSThe Reengineering Process

Grasp the current process

• Create outlines and maps of the current

process

• Diagnose the real problems

• Better understanding of the current process

will enrich the process of reengineering

NUTS AND BOLTSThe Reengineering Process

Redesigning of the Process

• Think with fresh ideas

• Creativity

• Confidence

NUTS AND BOLTSThe Reengineering Process

Use the available tools

• Benchmarking

• Flowcharting

• Computer simulation

• Live simulation

• Models

• Surveys

• Statistics

NUTS AND BOLTSThe Reengineering Process

Implement the reengineered process

• Phase introduction

• Pre-training

NUTS AND BOLTSThe Reengineering Process

Constantly evaluate the reengineered

processes

• Are employees adequately trained

• Is the process working as hoped for

WHY DOES REENGINEERING FAIL?

Trying to fix a process instead of changing it

Ignoring everything except the process design

Quitting too early

Reengineering from the bottom up

Neglecting people’s values and beliefs

Being willing to settle for minor results

Assigning someone who does not understand

reengineering to lead the effort

Why does reengineering fail

• Lack of support from senior management

• Poor understanding of the organization and the infrastructure

• Inability to deliver necessary technology

• Lack of guidance, motivation and focus

• Quitting too early

• Allowing existing corporate cultures and mgmt attitudes to prevent

redesign

• Not assigning enough resources

• Working on too many projects at the same time

• Trying to change processes without making anyone unhappy

• Pulling back when people resist change

When should be reengineered

• Three forces are driving companies towards redesign (The three C’s,

Hammer & Champy, 1993)

Customers

– are becoming increasingly more demanding

Competition

– has intensified and is harder to predict

Change

– in technology

– constant pressure to improve; design new products faster

– flexibility and ability to change fast are requirements for

survival

When should be reengineered

• Useful questions to ask (Cross et al. (1994))

– Are customers demanding more for less?

– Are your competitors providing more for less?

– Can you hand-carry a job through the process much faster than

the normal cycle time (ex five times faster)?

– Have your incremental improvement efforts been stalled?

– Have technology investments been a disappointment?

– Are you planning to introduce radically new products/services

or to serve new markets?

– Are you in danger of becoming unprofitable?

– Have cost-cutting programs failed to turn the ship around?

– Are operations being merged or consolidated?

– Are the core business processes fragmented?

What should be reenineered

• Processes (not organizations) are reengineered

– Confusion arises because organizational units are well

defined, processes are often not.

• Formal processes are prime candidates for reengineering

– Formal processes are guided by written policies; informal

processes are not.

– Typically involve several departments and many employees.

– More likely rigid and therefore more likely to be based on

invalid assumptions

HOW TO IMPLEMENT

3 steps to transition of change

• 1. Discontinuation of the old way of doing

business

• 2. Migration

• 3. Starting the new way of doing business

HOW TO IMPLEMENT

3 steps to transition of change

1. Discontinuation of the old way of doing

business

• Don’t be surprised by overreaction and

resistance

• Identify who is losing what and help them

accept the importance of the loss

• Communicate what is over and what is not

• Mark the ending and avoid dragging it out

• Compensate for losses

How to implement

3 steps to transition of change

2. Migration- letting go of the old way and

beginning a new way

• Communicate and keep people informed of

progression

• Strengthen and encourage intragroup

connections

• Create temporary systems or ways to deal with

this period

How to implement

3 steps to transition of change

3. Starting the new way of doing business

• Be consistent

• Ensure quick success

• Reward new behaviors, not old ones

• Celebrate the success

Real World Examples

Founded on 7th September, 1906.

Is an Indian state-owned commercial bank

HQ - Mumbai, Maharashtra

Pan-India presence

Controlled through 50 zonal offices.

In the forefront, introducing various innovative services and systems

First among the nationalised banks to establish a fully computerised

branch and ATM facility at the Mahalaxmi Branch at Mumbai in 1989.

Founder member of SWIFT (Society For Worldwide Inter Bank

Financial Telecommunications)

One of the top five banks in India

Real World Examples

WHY Reengineering

For faster work

To face competition

For secure data transfer

For making banking very easy for a retail as well as

corporate customer

Core banking system and centralized data system

Automate all its branches across the country

Real World Examples

After Reengineering

Operations are carried out fast and customers are happy with the

quick service of the bank

The technological advancement has the changed the working of bank

of India totally

Account opening is done on the same day

Implementation of internet banking (more secure), (wireless

application protocol) banking, SMS banking with no extra cost to the

customer

Forms can be downloaded from the website itself and a virtual

keyboard is present on the login site (in case of internet banking)

to avoid hijacking of passwords

Real World Examples

M&M was started off by two brothers J.C and K.C Mahindra

The company started off as manufacturer of general purpose utility

vehicles and carried a production capacity of 75 jeeps In 1948

Over the period they diversified into hotels financial services auto

components IT Infrastructure and trading.

In 1994 the co established Mahindra USA to promote tractor sales

worldwide.

Top management philosophy was strengthen the competitive

position in the domestic market before launching an ambitious

globalization program

Real World Examples In 1994 a BPR exercise started - a change in functional to SBU

structure

As a result 6 autonomous SBU’s were formed with empowered

presidents for each sbu

The intention was to provide direction for the future growth of various

business lines

In 2002 M&M reached a low point in its history- depressed revenues

and high costs reduced profits margins

Share price fell from 322 in 2000 to 114 in 2002, ROCE fell from 17.09 to

8.92

M&M set up a Corporate turnaround Program Office and articulated

need for a sharper focus on financial returns

Due to this a restructuring exercise called blue chip was initiated to

raise the bar on performance

Real World Examples

After Reengineering

Tractor division undertook a major cost cutting exercise and bought

down Bep from 54000 to 35000 units

Net sales for first half of 2004 increased by 28% , operating profit was

up by 34%

M&M stock touched a high of Rs 390 from a Rs112 a year ago

Summary

Reengineering is the fundamental

rethinking and radical redesign of the

business process to achieve dramatic

improvements in critical, contemporary

measures of performance, such as cost,

quality, service and speed.”

A person’s resistance to change needs to

be addressed and overcome

Why does communication fail?

Bibliography

Andrews, Dorine. “Choose the Right Recipe for Success.”

Http://www.reengineering.com/aricles/apr96/Consjour.html. 04 May

2002.

"Business Process Reengineering." Http://www.business

majors.about.../weekly/aa060898.htm?terms=reengineering02 May

2002.

"Business Process Reengineering and Organizational Change."

Http://www.c3i.osd.mil/bpr/bprdc/7223c7.htm. 02 May 2002.

Russell, S. Roberta, Taylor, W. Bernard. Operation Management. Upper

Saddle River: Prentice Hall, 2000.

Shandler, Donald. “It's Time to Reengineer Training.”

Http://www.reengineering.com/aricles/apr96/Consjour.html. 04 May

2002.

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