Introduction to Business Process Engineering

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Introduction to Business Process Engineering
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• BUSINESS PROCESS (RE-)ENGINEERING
• STATUS OF BUSINESS (1750-198?)
• Many Businesses currently based on the task (or
  function) model
• Tasks match industrial societies
• The Post Industrial Age
• Business moving towards process basis
• A process is a group of tasks directed towards
  achieving a goal or result.
• To move from a task based model to a process base
  requires radical change to business structures

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• Problems (with task based model)
• Bureaucracy (Chaos)
• Customers needs not met
• Automation of existing bureaucracy (file to file)
• Maintenance is too hard
• Question What existed before the task model?

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• Business Changes(1)
• Customers are in charge
• They know the cost of goods
• They can get good service
• Goods are not in short supply
• Competition
• All companies face outside competition
• The best at any one enterprise becomes the
  standard

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• Business Changes(2)
• Change becomes constant
• New products arrive regularly in the marketplace
• Cycle times are shorter

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• Business Changes(3)
• Customer orientation - everyone is someones
  customer
• Adding value - the value chain
• TQM continuous Improvement
• Employment Empowerment
• Flattened structures
• Quality Circles
• Multi Skilling

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• Reenginnering
• The fundamental rethinking and radical redesign
  of business process to bring about dramatic
  improvements in performance (Hammer et al)
• Performance may be costs, quality, service and/or
  speed
• To rip the guts out of an organisation and
  reassemble them in the context of today's
  changing business world.
• BUT Has modified view to a more limited scope or
  evolutionary model

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• BPR features (1)
• Forces examination of givens
• (ie Why check a customers credit rating to open a
  savings account?)
• Radical redesign which disregards existing
  structures
• Used only when dramatic change can succeed

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• BPR features (2)
• Several jobs frequently combined into one
• Operational staff make decisions
• Steps in the process are performed in natural
  order
• Multiple versions of a process can be combined
• Checks and controls are reduced

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• Processes and Tasks(1)
• Definition
• A process is a set of activities that, taken
  together, produce a result of value to the
  customer.
• eg Developing a new product
• Processes have inputs and outputs

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• Processes and Tasks(2)
• All processes relate to customers and their needs
  contribute to such processes
• Task orientation of business leads to a task
  being done to meet internal demands (and nothing
  at all with meeting customer needs.)

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• Reengineering Focus
• Based on end to end processes and creation of
  value for the customer
• Not based on tasks or activities
• Usually cuts across hierarchical management and
  empires
• Focus is on goals and ends vs actions

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• Role of IT
• The misuse of technology can block reengineering
  altogether by enforcing old ways of thinking and
  old behaviour patterns. (Hammer Champy)
• IT is the essential enabler (Information is
  integrated)
• IT reduces the need for sequential design
• IT cuts across organisational boundaries
• Difficulties arise with old thought patterns

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• Conceptual Shifts (1)
• GM gave access to its production schedule to
  various suppliers and pay when goods are used.
• Conceptual Shifts (2)
• Old Rule - Information occurs at one place at
  one time
• But with - Shared databases
• New rule - Information can appear simultaneously
  in as many places as needed

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• Conceptual Shifts (3)
• Old Rule - Business must choose between
  centralised decentralised
• But with - Telecommunications advances
• New rule - Business can reap the benefits of both

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• Conceptual Shifts (4)
• Old Rule - Managers make decisions
• But with - DSS tools
• (database access modelling software)
• New rule - Decision making is part of everyones
  job (Employee Empowerment)

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• Conceptual Shifts (5)
• Old Rule - Field personnel need offices to
  receive, store, transmit and retrieve information
• But with - Wireless datacomms laptop/palm top
  computers
• New rule - Field personnel can send and receive
  information wherever they are

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• BPR Lifecycle
• Vision - Someone must recognise that it must be
  done
• Design
• Implementation
• Continuous process Improvement

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• BPR Principles
• Organise work around outcomes
• Provide direct access to customers
• (eg customer -gt analyst -gt programmer,
• why not customer -gt programmer
• Harness technology
• Control through policies, practice and feedback
• Enable independent and simultaneous work
• Give decision making power to workers
• Build in feedback channels KPI - key performance
  indicators

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• How to do it
• Strong leadership
• Avoid analysis paralysis
• Reward creative thinking
• Leadership
• Passion
• Communication (relentless)
• May be a consultant

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• The Process Engineering Team
• Best Personnel
• Process orientation Optimism
• Able to see Big Picture Persistence
• Creativity Tact
• Restlessness Team Player
• Communication Skills Enthusiasm
• (no one wants to release them)

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• Making it Work
• Find what made the old way work
• Question its underpinning
• Identify
• Problem Associated with process (eg too slow,
  too expensive)
• Rule Assumption which causes the problem (eg
  specialists must check each stage then hand off)

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• Critical Success Factors
• Business focus
• Methodology and project approach
• Time
• Partnership Participation
• Visible Active Leadership

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• Ten ways to fail
• 1. Dont do it, but say that you are.
• 2. Dont focus on processes.
• 3. Analyse current situation in depth.
• 4. Proceed without strong executive leadership.
• 5. Be timid in redesign.
• 6. Go directly from concept to implementation.
• 7. Reengineer slowly.
• 8. Place some aspects of the business off
  limits.
• 9. Adopt a conventional implementation style.
• 10. Ignore employee concerns.

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• Resistance
• Is natural. Expect it.
• Doesnt always show. Find it.
• Has many motivators. Understand it.
• Deal with peoples concerns rather than their
  arguments. Confront it.
• No one way to deal with it. Manage it.

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• Mission driven organisations (Government,
  Non-Profit Orgs).
• Carefully identify and understand customers.
• Clearly specify performance measures.
• Be sensitive to higher purpose
• Watch for resistance (eg safety)

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• Further reading
• Hammer, M. Champy, J., 1993. Reengineering the
  corporation a manifesto for business revolution.
• Andrews, D., Stalick, S., 1994 Business
  Reengineering-The Survival Guide.
• Hammer, M., Stanton, S., 1995. The
  Reengineering Revolution.

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Organisational Structures
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Organisational Structures
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Organisational Structures
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• Business Function Orientation
• Task Orientation
• Rigid demarcation of function blocks
• Extreme work sharing
• Numerous hierarchical levels
• Separation of admin or decision support from
  operational processes

• (adapted from Kirchmer)

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• Task Orientation
• Advantages
• Simple definition of processes
• Systematic utilization of tools persons
• Precise definition of responsibility
• A lower degree of investment
• Scales up easily
• Increased economies of scale
• Educational institutes supply entry level
  workforce

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• Task Orientation
• Disadvantages
• Complex coordination of processes
• Poor flexibility
• Little experience from admin feeding back to
  operations
• Too many interfaces within the information flow.
• Focus on local efficiency not overall outcome
• Customisation is difficult
• Boring jobs
• Loss of customer visibility

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• Business Process Orientation
• A process is a set of interrelated functions
  initiated by an event to achieve a specific
  result for a customer.
• This ensures that the overriding task (related to
  a certain object) is completely carried out.
• A clearly defined beginning
• A clearly defined ending

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• Examples of Processes
• Develop New Product
• Resolve Service Problem
• Fulfill Order
• Examples of Function Orientation
• Research Development
• Help Desk
• Sales Department

How are these different?
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• Business Process Orientation avoids the
  disadvantages of function orientation.
• Hierarchies are flatter
• Processes can respond to market changes more
  quickly
• Coordination issues are simplified
• Interfaces are reduced

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• Process Orientation
• Advantages
• Focus on customer outcomes
• Repeatability of defined processes can be
  measured
• Efficiency seen in overall context
• Greater individual ownership (and accountability)
  of output
• Richer more fulfilling jobs

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• Process Orientation
• Disadvantages
• Individual jobs are more demanding
• Entry level employees unavailable
• Multiskilled employees in high demand
• Large investment required to replace functionally
  oriented systems
• Difficult to implement scale up.
• Harder to manage diverse personnel who comprise
  the process
• Constant change can cause lower efficiency, high
  levels of stress burnout

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