Business Process Reengineering

Dr Nirzar Kulkarni
What is BPR?

• Hammer and Champy definition…

– “…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.”
What is BPR?

Hammer/Champy methodology – 6 steps

1. Envisioning
2. Initiate
3. Process Diagnosis
4. Process Redesign
5. Reconstruction
6. Process Monitoring
* BPR process loops back to step 3
Detailed view of 6 steps…
Relationship to IS

• Use of information systems is often key

contributing factors to BPR success
• Information technology is considered a
major enabler in providing new ways of
working and collaborating
Relationship to IS

• Studies indicate that over 50% of all

reengineering efforts are initiated “because
of a perceived information technology
opportunity…the actual technological
solution is far less important than
educating employees to use IT as both a
strategic initiative and as a tool in the
reengineering process.” (Weicher 5)
Alternative approaches to BPR

• Davenport Methodology
– Emphasizes IT as driver
• Manganelli/Klein Methodology
– focuses on business processes that directly
support the strategic goals of the company
and customer requirements
• Kodak Methodology
– Stresses change management as key
Alternative approaches to BPR

• Alternatives are very similar…

Step 1: Step 2: Step 3:
Project Preparation Redesign of Implementation
Processes
Hammer/Champy 1. Introduction 4. Understanding 6. Implementation
2. Identification 5. Redesign
3. Selection
Davenport 1. Visioning and 3. Understand and 5. Prototyping
Goalsetting measure 6. Implementation
2. Identification 4. Information
Technology
Manganelli/Klein 1. Preparation 3. Process Vision 5. Transformation
2. Identification 4a. Technical Design
4b. Social Design
Kodak 1. Project Initiation 2. Understanding 4. Business Transition
5. Change 3. New Process Design 5. Change Management
Management 5. Change Management
Key Factors to Success

• Most business analysts tend to agree that

successful implementation of BPR requires
the ability to effectively lead change.
• John P. Kotter has written several books
for the Harvard Business Review on how to
lead effective change in an organization.
• In his book, Leading Change, Kotter has
outlined 8 steps that must be followed in
order to successfully bring about change.
Key Factors to Success

Step 1 – Establish a Sense of Urgency

• Set a Burning Platform Atmosphere
1. Expose Weaknesses compared to competitors
2. Eliminate signs of excess
3. Set high unachievable targets
4. Stop measure subunit performance
5. Send more data about customer satisfaction compared to competitors.
6. Insist people talk to unsatisfied customers, unhappy suppliers, and
disgruntled shareholders.
7. Use consultants to force relevant data and honest discussion into
management meetings.
8. Eliminate senior management “happy talk”
9. Bombard people with information on future opportunities and the
organization’s current inability to pursue those opportunities.
Key Factors to Success

Step 2 – Create a Guiding Coalition

• Team must be comprised of the right
individuals.
• These individuals must posses 4 key
qualities.
 Position Power
 Expertise
 Credibility
 Leadership
Key Factors to Success

Step 3 – Develop a Vision & Strategy

• “Vision refers to a picture of the future with some
implicit or explicit commentary on why people
should strive to create that future”
• Six Key Characteristics with a good vision.
 Imaginable
 Desirable
 Feasible
 Focused
 Flexible
 Easy to Communicate
Key Factors to Success

Step 4 – Communicate the Vision

• Vision must be communicated effectively in order
for individuals to act.
• Several key elements in effective
communication.
 Simplicity
 Use of Metaphors / Analogies
 Use of Multiple Forums
 Constant Repetition
 Leadership by example
 Explanation of Inconsistencies
 Two-way communication
Key Factors to Success

Step 5 – Empower Employees

Key Factors to Success

Step 6 – Generate Short-Term Wins

• Set up project milestones
• Celebrate wins frequently
• Acknowledge failures
• Make adjustments to BP
Key Factors to Success

Step 7 – Consolidate Gains & Produce More

Change
• Never declare final victory
• “Keep change alive!”
• This eliminates
complacent attitudes
• D’Aveni Hyper-
competition Model
Key Factors to Success

Step 8 – Anchor New Approaches in Culture

• Transform BP to align with vision
• Promote Individuals in Upper Management
that live and breathe the vision
• Hire Individuals that
believe in the new culture
• Remove the bad apples
Management Responsibilities

• Start with a vision

• Course of action
• Current condition analysis
• Readiness for change
• Build credibility with the rest of the
organization
The Changes of BPR

• Work flow process

• Creation of a new process
• The objective
Management Responsibilities Cont

• Identify metrics
• Choosing metrics
• Measure the effectiveness of any new
processes
Management’s Final steps to BPR

• Transition Plan
• Implementation Plan
Company Background
• Started in 1595 in Amsterdam, Netherlands
• Major product Heineken beer
• Second largest brewer in the world
• Operates in 170 countries worldwide
• Started in the United States in 1931
• 1 of over 300 imported beer in the US
Business Environment

• Heineken’s market share was 2%

• Over 300 imported beers in the US
• Local breweries gaining popularity
• Lead-time for Heineken beer was 12wks
• Order processing labor intensive
• Customs clearance
BPR Strategy

• A new business model

• Market the business model to employees
• Overhaul of business operations
• New technology should be easy to use and
require minimal support
• Distributors should not have to pay to use
the technology
The Technology

Heineken Operational Planning System

• Web based system built around supply-chain
software
• Form of collaborative planning ,forecasting and
replenishment software
• Provides customized forecasting data
• Does not require proprietary software, equipment
or support
• Uses Oracle database,SSL2,runs on Windows or
Unix and supports all Windows applications
The BPR Implementation

• One company developed the entire system

• Required no work by distributors
• Distributors need only internet access
• Full implementation completed in 12
months and all distributors had access in
another 12 months.
• Reduced lead-time by 50%
• Increased sales by 10%
Success factors

• Senior management commitment

• Employee Involvement
• Distributors involvement
• Choice of technology mix
• Cost of technology to distributors
Conclusion
References

• http://www.siemon.com/us/company/case_studies/heineken.asp
• www.wikipedia.com
• Smith, M., & Wintermyer, P. (2000). Distribution supply chain
management. Connector specifier, May 24, available form
http://www.csmag.com.
• Stalk, G. (1988, July/August). Time — The next source of
competitive advantage. Harvard Business Review, 41–51.
• Venkatraman, N. (1994, Winter). IT-enabled business transformation:
From automation to business scope redefinition. Sloan Management
Review, 73–87.
• Weston, R. (1997). Heineken taps online ordering. Computerworld,
31(9), 69
• Kotter, John P., Leading Change, Harvard Business School Press
1st edition, 1996.
• Schumacher, Wolf D. (2004, February). Managing Barriers to
Business Reengineering Success. March 17, 2007.
http://www.prosci.com/w_2.htm.