Business Process

Reengineering
By:- Neel Kamal

Introduction
In todays ever-changing world, the only thing that doesnt
change is change itself. In a world increasingly driven by
the three Cs: Customer, Competition and Change,
companies are on the lookout for new solutions for their
business problems[4]. Recently, some of the more
successful business corporations in the world seem to
have hit upon an incredible solution: Business Process
Reengineering (BPR).
Some of the recent headlines in the popular press read,
Wal-Mart reduces restocking time from six weeks
to thirty-six hours. Hewlett Packards assembly time for
server computers touches new low- four minutes.
The reason behind these success stories: Business
Process Reengineering!

What is reengineering?
Reengineering is the fundamental
rethinking and radical redesign of
business processes to achieve
dramatic improvements in critical,
contemporary measures of performance
such as cost, quality, service and speed.
BPR advocates that enterprises go back
to the basics and reexamine their very
roots. It doesnt believe in small
improvements. Rather it aims at total
reinvention.
BPR focuses on processes and not on
tasks, jobs or people.

What to reengineer? :

A business process is a series of

steps designed to produce a product
or a service. It includes all the
activities that deliver particular
results for a given Customer(external
or internal).
Talking about the importance of
processes just as companies have
organization charts, they should also
have what are called process maps
to give a picture of how work flows
through the company.

Why Reengineer?
Historical reality for organizations:
High level of demand: organizations are
order takers
Management (and IT!) focus efficiency and
control of operations

Modern reality since 1990s:

Hyper-competiveness
Globalization
Very demanding customers
Management and IT focus: Innovation,
responsiveness/speed, quality and service.

Ford Motor Company

Accounts Payable function
500 people
Most work on mistakes between

Purchase
Orders
Receiving
Documents

Invoices

Ford (cont)

Ford (cont)

BPR Principles
Organize around outcomes, not tasks.
Have those who use the output of the process perform
the process.
Subsume information-processing work into the real
work that produces the information.
Treat geographically dispersed resources as though
they were centralized.
Link parallel activities instead of integrating their
results.
Put decision points where the work is performed and
build controls into the process.
Capture information once and at the source.

Process of BPR

 Activity #1: Prepare for Reengineering:

If you fail to plan, you plan to fail. Planning and
Preparation are vital factors for any activity or
event to be successful, and reengineering is no
exception. Before attempting reengineering, the
question Is BPR necessary? should be asked?
There should be a significant need for the process to
be reengineered.
A cross-functional team is established with a game
plan for the process of reengineering.
Another important factor to be considered is to
understand the expectations of your customers and
where your existing process falls short of meeting
those requirements.
Having identified the customer driven objectives,
the mission or vision statement is formulated.

Activity #2: Map and Analyze As-Is

Process

Before the reengineering team can proceed to

redesign the process, they should understand
the existing process.
The important aspect of BPR (what makes BPR,
BPR) is that the improvement should provide
dramatic results.
A large manufacturer spent six million dollars
over a period of one year in a bid to develop a
parts-tracking system and was all set to go
online. Only then did he realize that he had
totally overlooked a small piece of information
the mode of transmission of information
between the scheduling staff and the shop floor
was through a phone call.

Activity #2: Map and Analyze As-Is

Process

The main objective of this phase is to

identify disconnects (anything that prevents
the process from achieving desired results
and in particular information transfer
between organizations or people) and value
adding processes.
This is initiated by first creation and
documentation of Activity and Process
models.
Then, the amount of time that each activity
takes and the cost that each activity requires
in terms of resources is calculated through
simulation and activity based costing(ABC).

Activity #3: Design To-Be process

The objective of this phase is to produce one
or more alternatives to the current situation,
which satisfy the strategic goals of the
enterprise.
The first step in this phase is benchmarking.
Benchmarking is the comparing of both the
performance of the organizations processes
and the way those processes are conducted
with those relevant peer organizations to
obtain ideas for improvement
Having identified the potential improvements
we perform simulation and ABC to analyze
factors like the time and cost involved.

Activity #3: Design To-Be process

The several To-Be models that are finally
arrived at are validated. By performing
Trade off Analysis the best possible To-Be
scenarios are selected for implementation.

Activity #4:Implement Reengineered

Process:
The implementation stage is where
reengineering efforts meet the most resistance
and hence it is by far the most difficult one.
The question that confronts us would be, If
BPR promises such breath taking results then
why wasnt it adopted much earlier?

Activity #4:Implement Reengineered

Process:
requirements for the construction of the ToBe components can be added and the result
organized into a Work Breakdown Structure
(WBS).
The benefit here is that we can now define
the causal and time sequential relationships
between the activities planned.
Using prototyping and simulation techniques,
the transition plan is validated and its pilot
versions are designed and demonstrated.
Training programs for the workers are
initiated and the plan is executed in full scale.

Activity #5: Improve Process Continuously:

A process cannot be reengineered overnight.
very vital part in the success of every
reengineering effort lies in improving the
reengineered process continuously.
Two things have to be monitored the progress of
action and the results.
The progress of action is measured by seeing how
much more informed the people feel, how much
more commitment the management shows and how
well the change teams are accepted in the broader
perspective of the organization.
As for monitoring the results, the monitoring should
include such measures as employee attitudes,
customer perceptions, supplier responsiveness etc

New Life Insurance Policy Application Process at

Mutual Benefits Life Before Reengineering*

Department A
Step 1

Issuance
Application

Department
A
Step 2

...
.

Mutual Benefits Life Before Reengineering*

Issuance
Policy

Department E
Step 19

30 steps, 5 departments, 19 persons

Issuance application processing cycle time:
24 hours
minimum; average 22 days
only 17 minutes in actually processing the application

*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at

Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.

The New Life Insurance Policy Application Process

Handled by Case Managers

Mainframe

Physician

Underwriter

LAN
Server

Case Manager
PC
Workstation

application processing cycle time:

4 hours
minimum; 2-5 days average
Application handling capacity double
Cut 100 field office positions

Enabling IT to Consider
Client/server technology
Groupware and collaboration technologies
Mobile computing (wireless LAN, pen-based computing,
GPS, iPhone)
Data capturing technology (scanner/barcode
reader/RFID)
Telephony: Integration of computer and telephone
systems; VoIP; Unified communications
Web services and Service-Oriented Architecture (SOA)
Imaging technology, work flow management systems,
Business Process Management (BPM)
Decision support systems, Data warehouse, Business
intelligence, Data mining, Digital dashboard
ERP, CRM, SCM
Electronic Data Interchange (EDI), Electronic Commerce,
WWW, and Internet

IT Enabling Effects
Dimensions & Type
Organization Entity
Interorganization
al

Interfunctional
Interpersonal

Objects
Physical

Examples
Order from a supplier

Lower transaction costs

Eliminate intermediaries

Develop a new product

Work across geography

Greater concurrency

Approve a bank loan

Integrate role and task

Manufacture a product

Prepare a proposal

IT Enabling Effects

Informational

Increase outcome flexibility

Control process
Routinize complex decision

Fill a customer order

Activities
Operational

Develop a budget

Managerial

Reduce time and costs

Increase output quality

Improve analysis
Increase
participation
Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information
Technology
and Business Process
Redesign," Sloan Management Review, Summer 1990, p. 17.

The Reengineering Diamond

Customers &
Suppliers

Foster

Enlighten

Business
Business
Processes
Processes
&&Functions
Functions

Customers
&
Info. Tech.

Entail

Culture

Competitors

Values
Valuesand
and
Beliefs
Beliefs

Management
Management
&&
Measurement
Measurement
Systems
Systems

Demand
Jobs
Jobs, ,Skills,
Skills,&&
Organizational
Organizational
Structures
Structures

Markets

Conclusion:
An intense customer focus, superior
process design and a strong and
motivated leadership are vital
ingredients to the recipe for the
success of any business corporation.
Reengineering is the key that every
organization should possess to attain
these prerequisites to success.