Business Process Innovation

1
Business Process Innovation Management

• Sri Sharma
• School of Business Administration
• Oakland University
• Winter 2003

2
What is BPR?

• The fundamental rethinking and radical redesign
  of business process to achieve dramatic
  improvements in performance
• Fundamental
• Radical
• Dramatic
• Processes
• Hammer and Champy, 1993

3
What is BPR?

• a cross-functional initiative
• business process focused
• simultaneous change to organizational design,
  culture, and information technology
• to enable radical performance improvements
• Stoddard, et al. (1996)

4
What is a Process?

• A collection of activities that takes one or more
  kinds of input and creates an output that is of
  value to customer. (HC, 1993)
• One or more tasks that add value by transforming
  a set of inputs into a specified outputs (goods
  or services) for another person (customer) by a
  combination of people, procedures, and tools.
  (Melan, 1993)

5
What is a Process?(Davenport, 1992)

• A process is simply a structured, measured set
  of activities designed to produce a specified
  output for a particular customer or market. It
  implies a strong emphasis on how work is done
  within an organization, in contrast to a product
  focuss emphasis on what.

6
What is a process?(Texas Instruments)

• A sequence of activities that achieve a business
  result that (is)
• on-going, continuous
• not based on existing organizational structures
• often unnamed and unrecognized
• starts and ends with the customer

7
Process Characteristics

• Dynamic vs. Slice in time
• Customer viewpoint Customer facing
• De-emphasis of functional silos
  Cross-functional, cross-departmental, and
  cross-enterprise
• Hand-offs 
• Information flow around the process
• Knowledge created around the process
• Multiple versions rather one-size-fits all
• Value-adding mix of the process
• Degree of structure of a process

8
Enablers of Process Innovation

• Information technology
• Organization structure
• Reward systems
• Job design

9
Example Ford Motor
10
Old Process
Vendor
Purchasing
Purchase Order
Goods
Receiving
Payment
Accounts Payable
Copy of PO
Receiving Documents
Invoice
11
Reengineered Process
Vendor
Purchasing
Purchase Order
Goods
Receiving
Payment
Accounts Payable
Database
12
Reengineering Themes

• Process Orientation
• Focus on end-to-end process
• Radical
• Outcomes
• Time-frame
• Ambition
• Top-down directed
• Rule-Breaking
• Creative use of IT

13
Improvement vs. Reengineering

• incremental change
• existing process
• one time/continuous
• short duration
• bottom up participation
• narrow scope
• moderate risk
• SQC as enabler
• cultural change

• radical change
• start with clean slate
• one-time change
• long time required
• top-down participation
• broad scope
• high risk
• IT as primary enabler
• cultural/structural change

14
Characteristics of Reengineered Process

• Several jobs are combined into one
• Workers make decisions
• The steps in the process are performed in a
  natural order
• Process have multiple versions
• Work is performed where it makes the most sense
• Checks and controls are reduced

15
Characteristics of Reengineered Process

• Reconciliation is minimized
• A case manager provides a single point of contact
  
• Hybrid centralized/decentralized operations are
  prevalent

16
Changes Necessary for Reengineered Processes
Business Processes
Jobs and Structures
Values and Beliefs
Management and Measurement Systems
17
Changes Necessary for Reengineered Processes

• Structural
• Organizational structures
• Work units
• Jobs
• Jobs change
• Job preparation

18
Changes Necessary for Reengineered Processes

• Management and Measurement Systems
• Focus of performance measures and compensation
• Advancement Criteria from performance to ability

19
Changes Necessary for Reengineered Processes

• Values and Beliefs
• People change
• Managers change
• Executives change
• Values change