BUSINESS PROCESS RE-ENGINEERING

BUSINESS PROCESS RE-ENGINEERING

Continuous Improvement Methods vs Business Process Re-engineering Continuous Improvement Methods 1. Focuses on incremental change in the organization processes 2. Suitable for slow change in the environment 3. Leads to moderate gains in terms of cost, service or time 4. Gradual adaptation of the organization to the changing technology 5. Working in an organizational environment of specialized jobs, tasks and structures continues 6. Shift to new information technology partial and gradual 7. Continuous improvement programme may not result in reduced workforce or reduced layers of management Business Process Re-engineering 1. Focuses on radical and quantum change in the organizational processes 2. Suitable for rapid, dynamic change in the environment 3. Leads to major gains in terms of cost, service or time 4. Prepares the organization to meet the challenges posed by fast changes in technology 5. Result in a shift from specialized jobs, tasks and structures to integrated processes that deliver value to customers 6. Massive use of new information technology such as teleconferencing, shared databases, wireless communication etc. 7. Re-engineering almost always results in production and delivery processes that require fewer people and fewer layers of management 2

Results of Business Process Re-engineering BPR typically results in new jobs and teams that emphasize: Multifunctional tasks Result oriented feedback Employee empowerment However, BPR has to keep in consideration the research findings that not all people are motivated by these new jobs and teamwork 3

Application Stages of BPR BPR not only associated with Re-engineering of business process But also with Issue of managing change such as managing resistance to change and transition to new work processes 4

Application Steps (I) A. Prepare the organization Begins with clarification and assessment of the organization s context: Its competitive environment Strategy Objectives 5

Application Steps (II) B. Specify organization strategy and objectives Business strategy determines focus of re-engineering so that improvement is made only in areas where required Example: an organization recognizes that keys to the firm s success in a competitive environment may be low costs and customer satisfaction Goals will be to double the revenues while reducing costs and reducing product development time by 75 per cent It is important to communicate clearly throughout the organization about the necessity and direction of reengineering-to overcome resistance to change 6

Application Steps (III) C. Fundamentally rethink the way work gets done. This step involves the following activities: Identifying and analyzing core business processes. Core process include activities that transform inputs into valued outputs different activities required to deliver an organization s products and services Defining their key performance objectives goals related to speed, quality, cost or other measures of performance Designing new processes 7

Application Steps (III) - Cont Designing new processes:- Begin and end the process with needs and wants of the customer Simplify the current process by combining or eliminating steps Use the best of what is in the current process Identify the critical information required at each step in the process Try that the work gets done right the first time Listen to people who do the work 8

Application Steps (IV) D. Restructure the organization around new business processes Changing the organization s structure to support the new business processes Important element of restructuring: Implementing new information and measurement systems that reinforces shift from measuring behaviours, such as absenteeism and grievances, to assessing outcomes, such as productivity, customer satisfaction, and cost savings 9

Characteristics of Re-engineered Organizations (I) 1. Work units change functional departments to process teams, e.g. an insurance company structured according to product lines such as life, health and auto insurance may now (after reengineering) be organized around: Cross functional pre-sale teams aimed at developing customer relationships and crossfunctional post-sale teams to maintain customer relationships 10

Characteristics of Re-engineered Organizations (II) 2. Job change from simple tasks to multi-dimensional work - so that fewer people (expert in multi-tasking) and fewer steps will be required to do the job People s roles change from controlled to empowered hiring decisions, purchase decisions, budgeting work-scheduling etc. done by employees The focus of performance measures and compensation shifts from activities to results rewards based on measures of customer satisfaction, operating costs and productivity Organization structures change from hierarchical to flat in place of layers of management the organization has empowered, cross-functional, and well educated process teams that: - Collect information - Make decisions about task execution - Monitor their performance Managers change from supervisors to coaches; executives change from scorekeepers to leaders new set of skills required including facilitation, resource acquisition, information sharing, supporting and problem solving 11

BPR Evaluated (I) Results from re-engineering vary widely: One study polled 497 companies in US 1245 companies in Europe 85% of the firms reported little or no gain from re-engineering cost reduction varied from 5 percent to 18 percent Re-engineering of few processes in organization less improvement Re-engineering of total business more improvement 12

BPR Evaluated (II) A survey of twenty-three successful re-engineering cases these cases were found to be characterized by: A clear vision of the future Specific goals for change Use of information technology Top management s involvement and commitment Clear milestones and measurements Training of participants in process, analysis and teamwork. 13