session 1 business processes
TRANSCRIPT
Business Processes
Session 1
A business process refers to a wide range of
structured, often interlinked, activities or tasks
conducted by people or equipment to produce a
specific service or product for a user or consumer.
What is a business process?
Key characteristics of a business process
Value creating, Value
enabling and Supporting
processesD
Created at all levels in an
organisation
Series of logically
related activities to
produce specific resultA
B
Implemented to
accomplish
predetermined goalsC
Examples of Business Processes
Order-to-
Cash
Quote-to-
Order
Procure-to-
Pay
Issue-to-
Resolution
Application
-to-
ApprovalFrom receipt of
order to payment
added to account
books
From business
proposal to
successful
receipt of order
From buying a
good/service to
paying for it
From detecting
issues to
feedback on the
resolution
From request
for a
good/services
to approval of
the same
Business Functions
“
Business functions are a defined set of
activities that are performed in a
department which may be synonymous
to the department itself.
For example, Research and
Development (R&D), Manufacturing,
Marketing or Sales.
“
Customer
R&D Production Sales Other
BUSINESS FUNCTION VS. PROCESS
Process: Customer order to fulfillment process
Process: New product development process
Functions
IT
LET’S TAKE AN EXAMPLE OF A PROCESS OF DEVELOPMENT OF A NEW SOFTWARE
Customer
needs
Product
research
Market
test
Component
design
Product
test
Product
release
Process
design
Hardware
testingPilot launch
Process steps (sub process)
Marketing R&D Tech
Function
IT
ENTERPRISE-WIDE FUNCTIONS AND PROCESSES
Functions
Processe
s
Finance and
AccountsProcurement Stores
Marketing and
SalesManufacturing
Procure
to Pay
Order to
Cash
FUNCTIONAL FOCUS
Functions
Processe
s
Finance and
AccountsProcurement Stores
Marketing and
SalesManufacturing
Procure
to Pay
Order to
Cash
PROCESS FOCUS
Functions
Processe
s
Finance and
AccountsProcurement Stores
Marketing and
SalesManufacturing
Procure
to Pay
Order to
Cash
AN EXAMPLE OF A BUSINESS PROCESSProcure-to-Pay (simplified)
Request from
within company
to procure
certain item
Make
enquiries
on
suppliers
Review
offers
Place orders
on the
best offer
On receipt
of goods
from the
supplier –
Check
quality
Accept
/Reject
Supplier
sends
invoice
Make
payment
for
accepted
goods
Procure
to Pay
Quality
Assurance
Procurement Function Accounts Function
WHAT IS A BUSINESS PROCESS?
Your video here
(Please cover the
entire box)
A business process refers to a wide range of
structured, often interlinked, activities or tasks
conducted by people or equipment to produce a
specific service or product for a user or
consumer.
KEY CHARACTERISTICS OF A BUSINESS PROCESS
Your video here
(Please cover the
entire box)
Created at all levels in an
organisation
Series of logically
related activities to
produce a specific resultA
B
Implemented to
accomplish pre-
determined goalsC
DValue creating, Value
enabling and Supporting
processes
Order-to-
Cash—
From receipt of order
to addition of payment
to the account books
Quote-to-
Order—
From business
proposal to successful
receipt of order
Procure-to-
Pay—
From buying a
good/service to the
payment
Issue-to-
Resolution—
From detecting issues
to feedback on the
resolution
Application-to-
Approval—
From request for a
good/services to
approval of the same
EXAMPLES OF BUSINESS PROCESSES
BUSINESS PROCESS REENGINEERING (BPR)
The fundamental rethinking and radical
redesign of business processes to
achieve dramatic improvement in
critical and contemporary measures of
performance such as cost, quality,
service and speed.
WHAT THE PIONEERS SAY ABOUT BPR
.
It is an all-or-nothing proposition that produces
dramatically impressive results. Most companies
have no choice but to muster the courage to do it.
For many, reengineering is the only hope for
breaking away from the ineffective, antiquated
ways of conducting business that will otherwise
destroy them. .“Founders of the Management Theory
for Business Process Reengineering
ATM MACHINE vs BANK TELLER
KEY CHARACTERISTICS OF BUSINESS PROCESS REENGINEERING
Organised around
outcomes
Deliberate and
fundamental changeA
B
Enabled by ITC
DRadical improvement
Resolution Cycle Time: 3-8 weeks
Company A: Claims Resolution
Process
Steps:
1. Customer walks into the company office
2. Clerk fetches claim data
3. Manager verifies claim
4. Clerk processes the approved amount
5. Customer gets the amount
Resolution Cycle Time 30 min-3 hours
Progressive Insurance:
Claims Resolution
Process
Steps:
1. Customer calls the office
2. Claims Officer processes the claim
application
3. Representative meets the customer with
claim amount and necessary
documentation
UNDERSTANDING BPR THROUGH AN EXAMPLE
AN ORGANISATION MAY ACHIEVE ONE OR MORE OBJECTIVES BY UNDERTAKING A BPR
Objectives of BPR
Reinvent Business
HigherCustomer Satisfaction
Improve Quality of Life
Reduce Time
Reduce Cost
PromoteOrganisational
Learning
BUSINESS PROCESS REENGINEERINGPrinciples proposed by Hammer and Champy
04 Treat resources as centralised
03 Integrate information processing
02 Identify all processes and prioritise
01 Organise around outcomes, not tasks
07 Capture information at a single point
06 Create a decision point and control
05 Link parallel activities
03 Integrate information processing
02 Identify all processes and prioritise
01 Organise around outcomes, not tasks
BUSINESS PROCESS REENGINEERINGPrinciples proposed by Hammer and Champy
REAL WORLD TRANSLATION OF BUSINESS PROCESS REENGINEERING PRINCIPLES
Indian Oil Corporation had a huge inventory to be managed. Management
wanted to streamline the process of inventory management, hence reducing
the stock.
1. Management was clear on the outcome of the process, that is, to reduce
inventory.
2. Procurement was selected as the process to be revamped, followed by
warehousing and surplus disposal.
3. SAP R/3 software was selected which integrated Finance, Sales,
Material management, and Plant maintenance.
4. All resources were managed centrally by the SAP software.
5. Dynamic monitoring and updating in real-time kept all stakeholders
informed of the current status.
6. The Centralised Indent Processing Unit (CIPU) retrieves specification for
each material, which is updated by respective user departments and has
updated vendor information.
7. DSS was implemented for vendor evaluation and selection.
CAN ALL CHANGES BE IDENTIFIED AS BPR?
Process Change Spectrum
Automate
Streamline
Business
Process
Reengineering
Strategic
Reengineering
Ben
efi
t
Magnitude of Change
Redefine Industry
Define Best Practice
Match Best Practice
Improve Efficiency
No Benefit
Transformational01
IT enabled02
Efficiency03
Effectiveness04
BUSINESS PROCESS REENGINEERING
Attributes of the Reengineering Process
BUSINESS PROCESS REENGINEERING
Example – Ford Motors
Ford Motors led one of the most successful BPR
campaigns.
The Procure-to-Pay process was revamped using IT as
the driver.
1
This brought a major change in the organisational
structure of the Accounting department.2
BUSINESS PROCESS REENGINEERING
Example – Ford Motors
Old Process:
Purchasing
Materials
Accounting
Vendor
Copy of PO
Purchase
Order (PO)
Goods received
acknowledgement
Goods
Payment
Invoice
BUSINESS PROCESS REENGINEERING
Example – Ford Motors
New Process:
Purchasing
Materials
Accounting
Vendor
Goods
Database
Purchase
Order (PO)
Payment
BUSINESS PROCESS REENGINEERING
Example – Ford Motors
Attributes of the campaign:
Transformation: Improved accuracy, reduced costs and
brought Ford at the forefront of technology adoption1
Role of IT : Computers introduced, in person verification of
purchase orders eliminated through online portal2
Efficiency : Same number of invoices processed by 25% of
the pre-BPR workforce3
Effectiveness : Human errors minimised4Your video here
(Please cover the
entire box)
THERE ARE TWO WAYS TO REENGINEER A BUSINESS PROCESS
Clean slate: Reengineer everything
from scratch. Analogous to building
a new house from scratch.
Technology enabled: Constrained
reengineering and concurrent
transformation. Analogous to moving
in pre-designed and remodelling it
as per your requirement.
⚫ Select vendor
⚫ Reengineer
REAL LIFE EXAMPLES FOR BPR APPROACHES
Clean slate: SBI’s YONO platform
Technology enabled: Jio reengineered their
customer experience by introducing Big Data
analysis with the help of an external vendor,
Guavus and their portal Reflexis
LET’S LOOK AT THE ADVANTAGES OF BOTH THE APPROACHES
• Not constrained by tool
• Not limited by best
practices
• Retain competitive
advantage
• Not subject to vendor
changes
• May be the only way to
implement advanced
technology
• May have unique features
• Software created
• Focuses on best practices
• Tools help structure
reengineering
• Process bounded, thus
easier
• Known design is feasible
• Greater likelihood that cost
and time objectives
are met
• Software available
Clean Slate Technology
Enabled
BUSINESS PROCESS REENGINEERINGRisks
Employee resistance to change
Inadequate attention to employee concerns
Inappropriate staffing
Inadequate tools
Mismatch of strategies and goals
Lack of oversight
Failure of leadership commitment
RAVI STARTED BY UNDERSTANDING THE VARIOUSPROCESSES THAT HAPPEN IN A PASSPORT OFFICE
1 Passport Issue01
1 Passport Renewal02
1 Addition of New Pages03
AND HE COLLECTED FEEDBACK ON THE VARIOUS ISSUES THAT RESULT FROM THOSE PROCESSES
1 Error In Details01
1 Delay In Passport Issue02
1 Multiple Enclosures03
HE THEN LOOKED AT THE PROBLEM FROM A 360° VIEW TO ENVISION THE END OUTCOME
Reduce passport frauds
Reduce addition of physical
infrastructure using IT backbone
Reduce manpower
requirements
Reduce human error
Reduce malpractices
Create citizen database linking
details to passport creation
Centrally connected passport offices
Reduce passport issuance
cycle time
Improve efficiency
Reduce costs by
elimination of errors
Strategy
People
Technology
Business
Processes
WITH IT INTERVENTION, RAVI IDENTIFIED POSSIBLE BPR ACTIVITIES TO SOLVE THE ISSUES
Expected Improvements Applicable Current Benchmark Action
Reduction of time taken to issue
a passportYes 60 days 15 days
IT Implementation at
every step
Removal of erroneous details
from passport and formYes 30% error 1% error
Online application form
and processing
Creation and submission of the
form along with other required
documents by people living in
remote locations
Yes Not possible Possible Online application form
Drastic reduction of paperwork YesAlmost everything
is manual
99% reduction in
paperwork
IT Implementation at
every step
01
IBM’s field
salesperson calls in
with a request for
financing
02
Person taking the
call logs the request
for a deal on a piece
of paper
03
Piece of paper sent
to the credit
department
04
Specialist enters
information in
computer system
and check
borrower’s
creditworthiness
Specialist writes
result on piece of
paper and
dispatches to
Business Practices
department (BPD)
05
06
BPD is in-charge of
modifying standard
loan covenants in
response to
customer request
07
BPD attaches
special terms to
request form
08
Request sent to a
pricer who enters
data into personal
computer
spreadsheet to
determine
appropriate interest
rate to charge the
customer
09
Interest rate written
on a piece of paper
and delivered to
clerical group
Quote letter
prepared and
delivered to the field
representative
10
Process takes 2 weeks01
Multiple follow-ups required02
Request status unclear03
Multiple entry of data04
Paper usage05
HE IDENTIFIED MULTIPLE ISSUES IN THE CURRENT PROCESS AND STARTED WORKING ON BPR
RAVI MADE AND IMPLEMENTED MULTIPLE SUGGESTIONS FOR THE TURN AROUND
Reengineered Processes
Specialists were replaced by Generalists
Easy to use computer system that provided
access to all the data and tools
Sophisticated computer systems were provided to
deal structurers
An online application form was introduced:
● A deal structurer processed the entire
application form from beginning to end
IMPROVEMENTS TO THE CREDIT ISSUANCE PROCESS
BPR improved speed, optimised customer service
and reduced cost
Turnaround time slashed from 14 days to 4 hours
Number of deals handled increased hundredfold
Re-engineering brought in ~90% reduction in cycle
time