Week 2

1
Week 2

• Key Issues around BPR and Evolution of
  BPR
• for E-Business

2
Learning objectives

• Functional structure, the silo effect and BPR
  efforts
• BPR waves and outcomes
• BPR triggers and targeted processes
• BPR project success and failure
• More on BPR methodologies
• Back up slides
• Key business processes and IS
• Role of IT and IS function in BPR projects
• Illustration The Cigna experience
• Key functions and related activities
• Application exercise The shaping and supporting
  IT

3
Functional Structure The Silo Effect

• The functional structure (see back up slide)
• Typical organizational structure where functions
  operate independently of each other
• Each function is responsible for a set of closely
  related activities
• Business processes (BPs) are cross-functional /
  cross-organizational
• The silo effect (consequence of functional
  structure)
• Effective execution of BPs requires careful
  coordination between functions
• Coordination is achieved through exchange of
  relevant information among different functions
• Poor coordination causes delays Communication
  between functions takes time
• Poor coordination causes lack of visibility
  across BPs No information readily available on
  status of the process and on how well it is
  performing over time
• Importance of Information Systems
• IS Computer-based systems that capture, store
  and retrieve data related to process activities
• Functional IS Support individual departments
  (built independently of each other)
• Enterprise Systems Support an entire BP (execute
  BP capture and store process data monitor
  process performance
• ? Current BPR efforts Restructure BP activities
  Manage flow of data around the process Manage
  knowledge around the process

4
Evolution of BPRWaves of business process
improvement

• Degree of IT enablement

Knowledge Management
Web-enabled e-business
Time-based competition
2nd-wave BPR
1st-wave BPR
TQM
Richness of business transformation
5
Evolution of BPR and outcomes

• TQM (Early 80s)
• Continuous incremental BP improvement with no
  role for IT
• Outcome More consistency in BP outputs
• 1st wave BPR (Early 90s)
• IT-based BP improvement
• Outcome IT-enabled processes ?bad timing
  unrealistic expectations
• Time-based competition (Since the 90's)
• IT-based improvement of BP directly linked to
  corporate strategy
• Outcome Faster and leaner critical BP
• Web-enabled e-business (Since late 90's)
• IT-based improvement of cross organizational
  processes
• Outcome Increased collaboration / income using
  e-commerce
• Knowledge management (Since 2000)
• IT-based capture of information needed to improve
  BP and decision making
• Outcome Knowledge creation (such as best
  practices)

2nd wave BPR
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BPR projecttriggers and targeted processes

• Triggers
• Unsatisfied customers / competitive pressure
• High costs / reduced profits
• Long cycle time
• Awareness of broken processes / better-known way
  to do business
• Targeted processes
• Highly structured
• Easily supported by IT
• Direct impact on customers
• Improvement opportunity
• Processes most often targeted in the last few
  years
• Order fulfillment and customer service processes
• Supply chain management processes
• Other Insurance claims, expense reports, etc.

see next slide
7
Setting process priority (Harrington, 91)
Customer impact
high
medium
low
low medium
high
Improvement opportunity
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Success and Failure of BPR projects

• 67 of projects produce marginal or failed
  results (CSC Index)
• Failure
• Organizational / behavioral issues
• Project management failure
• Redesigned process not performing as expected or
  produces marginal effects
• Wrong process
• Improving chances of success
• Clear objectives in sync with business strategy
  (Low cost, differentiation, new market, new
  income)
• Methodology (see next slide) and tools
• Manageable scope
• Process management
• Continuous monitoring and reengineering of
  business processes
• Process owner responsible for the management of
  business process

9
BPR Methodologies

• Generic commonalities 5 phases
• Vision
• Project mobilization
• Process redesign main sub-phases include
• Process scoping
• Process modeling, analysis and redesign
• Process integration planning
• Implementation
• Maintenance
• Good BPR methodology
• Comprehensive to address each of the phases of
  BPR
• Includes disciplined method for coordination of
  the phases
• ? Survey of BPR methodologies Kettinger et al.
  (1997)

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• Extra Slides

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Role of IT in BPR Projects

• BPR software/tools supports the development phase
  of BPR projects
• Used for business process modeling, analysis and
  redesign
• Capture IT requirements (CASE tools capture user
  requirements)
• Some generate the code for workflow systems that
• Automate the execution of business processes
• Digitize documents and forms and route them to
  people
• IT shapes and supports business processes during
  the deployment phase
• Automates and speeds up processes
• Breaks assumptions of physical world
• Enables coordination
• Enables a more effective creation and sharing of
  information / knowledge
• Critical IT Any IT solution that enhances
• The execution of BPs from start to end, passing
  work from one participant to the next (BPMS)
• The monitoring and management of BPs (BPMS, BAM,
  Business Integration)
• The execution of tasks and the management of data
  hence generated (TPS)
• The creation and management of information and
  knowledge (DST, BAM, Dashboards)
• ? Any IT that support an improvement in BPs
  directly linked to corporate strategy

12
IS Function and BPR Projects

• Role
• Partner Gives situation on IT infrastructure and
  possibilities
• Catalyst Initiates the project
• Needed skills
• Business process thinking BP orientation and
  role of IT
• IT infrastructure awareness
• Systems analysis and design skills / RAD skills

13
The Cigna Experience 1/2Caron et al. (1994)

• Objectives
• Until 91 Streamlining of operations
• Lower costs
• Reduced cycle time
• After 91 Growth in business
• Satisfied customers
• New markets
• New customers

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The Cigna Experience 2/2
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Basic Functional Activities

• Purchasing Identify vendors Select vendors
  Create and send purchase order Evaluate vendor
  performance
• Warehousing (or inventory management) Receive
  goods from vendor Perform quality control on
  received goods Prepare goods to be returned to
  vendors Prepare goods for shipment to customers
  ship good to customers received goods
  returned by customers
• Operations Plan capacity Schedule production
  Execute production Perform quality controls
• Marketing Sales Identify customers Manage
  relationships with customers Promote products
  and services Receive customer orders Initiate
  processing of orders received Provide
  after-sale services
• Finance Accounting Process incoming payments
  Process outgoing payments Manage cash flow
  Manage capital needs Prepare financial
  statements
• Other functions HR, IT, RD

16
Application exercise 2nd wave BPR

• How does a methodology help in BPR projects?
• How do software tools help in BPR project?
• How can computer-based applications help
• Expedite a business process?
• Orchestrate a cross-functional business process?
• Monitor in real-time the execution of a business
  processes?

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Thank you