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Unit 4 Business Process Re Engineering: Structure
Unit 4 Business Process Re Engineering: Structure
Unit4 Business Process Reengineering
Structure
4.1 Introduction
4.2 Business Process Re – Engineering
4.2.1 Basics of BPR
4.2.2 Importance of BPR
4.3 Improving a process in BPR
4.4 Object Oriented methodology
4.5 BPR – Current Focus
4.5.1 Concept of Database
4.5.2 Data mining
4.5.3 Data warehousing
4.6 Summary
TQs
Answer to SAQs and TQs
4.1 Introduction
As more and more business functions gets added to the existing process, it becomes inevitable to
think of alternative better processes . It may not be possible to always replace an existing system,
but may be possible to enhance the existing system or redesign the system. A change of process is
possible. For changing the process it is necessary to know all the conditions which affect the process
and accordingly incorporate a change mechanism. The methodologies which are adopted to bring
about changes are called reengineering.
Learning Objectives
In this unit, student will learn about
i ) the fundamentals of business process reengineering (BPR)
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ii) importance of BPR
iii) various stages in BPR
iv) how to improve a process
v) Business object model
vi) Current focus of BPR
4.2 Business process reengineering
4.2.2 Importance of BPR
Business process reengineering is a major innovation changing the way organizations conduct their
business. Such changes are often necessary for profitability or even survival. BPR is employed when
major IT projects such as ERP are undertaken. Reengineering involves changes in structure,
organizational culture and processes. Many concepts of BPR changes organizational structure.
Team based organization, mass customization, empowerment and telecommuting are some of the
examples. The support system in any organization plays a important role in BPR. ES, DSS, AI
(discussed later) allows business to be conducted in different locations, provides flexibility in
manufacturing permits quicker delivery to customers and supports rapid paperless transactions
among suppliers, manufacturers and retailers. Expert systems can enable organizational changes by
providing expertise to non experts. It is difficult to carry out BPR calculations using ordinary
programs like spreadsheets etc. Experts make use of applications with simulations tools for BPR.
Reengineering is basically done to achieve cost reduction, increase in quality, improvement in speed
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and service. BPR enable a company to become more competitive in the market. Employees work in
team comprising of managers and engineers to develop a product. This leads to the formation of
interdisciplinary teams which can work better than mere functional teams. The coordination becomes
easier and faster results can be achieved. The entire business process of developing a product gets
a new dimension. This has led to reengineering of many old functional process in organizations.
Self Assessment Questions1 : True or False
1. This process of change for the betterment of the organization is called as Business process re
engineering.
2. Experts make use of applications with animation tools for BPR.
4.3 Improving a process in BPR
Any organization will have number of processes aligned with their business activities. Over years the
processes may have to be improved. For any improvement it is necessary to first observe the
existing process. Understand the processes, analyze the processes, and set up suitable
performance parameter of the processes in order to measure the processes.
Organizations will have to work on increasing the efficiency of the system in terms of information
generated and how much of the information is utilized, what is the percentage of redundant
information if any, speed of the process, service and quality.
Business process reengineering helps in reorganization of the entire work force along with various
flows, minimizing the wastages, and giving the system a new dimension.
Organization can obtain very large payoff from their investments in information technology for their
MIS. The process reengineering brings about a radical change in the flow of the information and
related documents from one business function to another very efficiently. This process of
management is called ‘work flow management’.
Most of the companies want to improve the quality in every field, like in products, services and
operations. Various methods to improve a process could be –
a) A concept called as total quality management (TQM) is used, to make everybody and all the
process in organization contribute towards better quality. The latest in quality management is Six
sigma. It is a specific measure of quality, representing 3.4 defects per million opportunities.
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b) Another method to improve is to benchmark. Benchmarking is setting standards for products,
service and other activities and then measuring performances against the standards.
c) Customer focus – a process may be redesigned to meet the customer demands in terms of
service, product features and quality.
d) Shorter cycle time – it eliminates many hidden costs arising out of errors in the process. Such
errors may be trapped in the early stage of the process if the cycle time is reduced.
Self Assessment Questions2 : Fill in the blanks
1. Any organization will have number of ______ aligned with their business activities.
2. Business process reengineering helps in ________ of the entire work force along with various
flows, ______ the wastages, and giving the system a new dimension.
3. A concept called as ________ is used, to make everybody and all the process in organization
contribute towards better quality.
4.4 Object Oriented Methodology
An object contains values scored in instance variables within the object. An object contains deep
level of nesting within itself governed by the parameters of the business process modeling. An object
has mainly a procedure defined within and a set of values called attributes. The procedure are
called methods which operate on the attributes. A process may be broken down into a set of
procedures and attributes. This can then be represented as a business process object model. Object
that contain the same types of values and the same methods are grouped into what are known as
‘classes’. A class is nothing but a definition of the object. An object is an instance of the class. It has
the following advantages in management information systems over other conventional methods –
a) new processes can be easily added in future whenever required.
b) Processes may contain features called object which may be used as communication entities in a
system.
c) Object once designed for a particular usage may be reused for other purposes in a process.
d) Attributes of the object are well secured.
e) The object can be modified and expanded very easily without affecting the existing process.
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4.5 BPR – the current focus
Apart from the usual ways of managing a process in any business information system, it is necessary
to enhance the value of the process and also the methods used in improving the process. Some of
the concepts of information management for effective information systems are the traditional concept
of database, the emerging concepts of data mining and data warehousing.
4.5.2 Data Mining Data mining is primarily used as a part of information system today, by
companies with a strong consumer focus retail, financial, communication, and marketing
organizations. It enables these companies to determine relationships among "internal" factors such
as price, product positioning, or staff skills, and "external" factors such as economic indicators,
competition, and customer demographics. And, it enables them to determine the impact on sales,
customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary
information to view detail transactional data. With data mining, a retailer could use pointofsale
records of customer purchases to send targeted promotions based on an individual's purchase
history. By mining demographic data from comment or warranty cards, the retailer could develop
products and promotions to appeal to specific customer segments.
4.5.3 Data Warehousing A data warehouse is a copy of transaction data specifically structured
for querying and reporting. The main output from data warehouse systems are either tabular listings
(queries) with minimal formatting or highly formatted "formal" reports on business activities. This
becomes a convenient way to handle the information being generated by various processes. Data
warehouse is an archive of information collected from wide multiple sources, stored under a unified
scheme, at a single site. This data is stored for a long time permitting the user an access to archived
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data for years. The data stored and the subsequent report generated out of a querying process
enables decision making quickly. This concept is useful for big companies having plenty of data on
on their business processes. Big companies have bigger problems and complex problems. Decision
makers require access to information from all sources. Setting up queries on individual processes
may be tedious and inefficient. Data warehouse may be considered under such situations.
4.6 Summary
After going through this unit, student would have learnt the the fundamentals of business process re
engineering (BPR), its importance of BPR and the various steps in BPR. Also explanation is
provided to understand how to improve a process. Business object model is introduced and the
significance of business object models to MIS is explained.
Terminal Questions
1. Explain what is meant by BPR? What is its significance ?
2. Explain the object oriented methodology ?
3. How is Data mining and warehousing useful?
Answer to Self Assessment Questions(SAQ)
SAQ1 : 1True, 2False
SAQ2 : 1processes, 2 reorganization , minimizing, 3) TQM.
Answer to Terminal Questions
1. Refer 4.2
2. Refer 4.4
3. Refer 4.5
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