OSM652

Office Business Process

BUSINESS PROCESS
REENGINEERING
CONCEPTS
1
 Objectives

At the end of the course, you will be able to:

a. Define business process redesign.
b. Describe the nine dimensions of BR.
c. Discuss the benefits of BPR.
d. Identify and describe the situations in which BPR becomes
necessary.
e. Describe the warning signs of trouble that indicate the need
for reengineering.
f. Identify and describe the critical success factors for BR
projects. 2
 What is Business Process
Reengineering or Redesign?

Reengineering business processes means tossing aside existing

processes and starting over.

Business Process Reengineering is defined as

“the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in
critical contemporary measures of performance such as
costs, quality and speed”.
(Hammer and Champy, 1993)
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 This definition contains four key
words:

• FUNDAMENTAL
Fundamental implies that everything – every assumption,
every reason, every activity – is challenged by asking
why it should be continued.
The implication is that nothing should be accepted as
sacred. Over time, practices that were once required
become obsolete and need to be removed.

• RADICAL
Do not try to improve the existing situation, invent
completely new ways of accomplishing work. 4
 This definition contains four key
words:

• DRAMATIC
Do not use business process redesign to obtain
marginal improvements, aim at order-of-magnitude
improvements (ten times). If the marginal gains – 5 to 10
percent – are the goal, then continuous improvement is a
more appropriate path than reengineering.

• PROCESS
Focus on the business processes instead of
organizational structures.

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BUSINESS REENGINEERING
DIMENSIONS
1. The Physical/Technical
Dimensions
a) Process Structure
b) Technical Structure
c) Organization Structure

2. The Infrastructure
Dimensions
a) Reward Structure
b) Measurement Systems
c) Management Methods

3. The Value Dimensions

a) Organizational Culture
b) Political Power
c) Individual Belief Systems

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 Dimensions of Business
Reengineering

Process Technology Organizational

Physical
Technical Layer Structure Structure Structure

Reward Measurement Management

Infrastructure Structure Systems Methods
Layer

Organizational Political Individual

Value Layer Culture Power Belief Systems

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 1. PHYSICAL/TECHNICAL
DIMENSIONS
• Most visible, most
concrete

• Process, technology
and organization
structures
– Provides organization’s
operational foundation

• Mistakenly focused
because can easily see
and do.
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a) Process Structure (cont)
• Consist of business process, their
outcomes (products/services) and
the policies, practices and
procedures (considerable
control/rigidity or flexible and
grouped or decomposed into smaller
parts)

• Defines what, when and how work is

performed
• Triggered by internal events, timing
cycles, or external stimuli

• To produce a “quality” outcome in a

timely, predictable manner

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 a) Process Structure
• If processes originate by design,
reengineering would be unnecessary
– Maintained to meet evolving business needs

• However, most are informal and

spontaneous processes
– They are not changed as business needs
change
– Negative impact – work duplication, whole
process unorganized, undocumented,
inconsistently applied and personality
dependent
– These processes would need reengineering
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 b) Technology Structure
• Consists of the automated communication,
networking and computer systems, data,
applications, and related technologies
– support process structure

• Fast and cheap, eliminate time-consuming

and error-producing data entry

• Application of technology depends on the

competent integration of technology

• People depend on technology to solve

business problems
– People then blame the technology - abandoned
and not use effectively

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 c) Organization Structure
• Defines who performs,
manages, and is accountable
for each business process

• Includes job structure,

reporting and work-group
relationships, accountabilities,
job content, and
skill/knowledge requirements

• If process and organization’ structure are out of

alignment – gaps in accountability

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 2. INFRASTRUCTURE
DIMENSIONS
• Reward, measurement and management

• Support the physical/technical operational

dimensions
– If physical/technical change, infrastructure
must change

• Use reinforcement, provide new skills,

managerial support, adequate incentives
and feedback

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 a) Reward Structure
• Regulate behavior

• Formal, informal, and financial or

recognition based

• Often disconnection of the desired

behaviors and behaviors that are
actually rewarded, changing reward
structures, policies and practices
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b) Measurement Systems
• The feedback processes that provide
information on process performance

• However, there are too much of information and

incomplete information

• Should uncover the need for change, reduce the

randomness and unpredictability of process
performance

• Should be made available directly and

simultaneously to process performers and
managers 15
 c) Management Methods
• Consists of the practices and techniques
used to supervise, develop, and support the
people who perform the business process

• Strongly affect business process

performance (management support,
empowerment, employee involvement)

• Most neglected because outside of the

project scope
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 3. VALUE DIMENSIONS
• Least visible, most difficult to change

• Organizational culture, political power and

individual belief systems

• Leadership and improvement philosophies

must emerge
– Initial implementation fails if these dimensions
left out

• Hard to reduce the natural resistance and

reaction to change
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 a) Organizational Culture
• Consists of the unspoken,
collective rules and beliefs
of the organization

• Organization’s language,
symbols, myths and rituals

• The older the culture, the

more embedded the beliefs
and values and the more
difficult change becomes
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 b) Political Power
• Individual can manipulate
and shape the actions and
behaviors of others

• Originate from formal

authority (position held in
the organization) or
personal power (expertise,
knowledge or connections)

• Reengineering threats loss

of power
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 c) Individual Belief
Systems
• Attitudes and mental models that individual
apply to themselves, those they work with,
and the work itself

• Shape their attitudes toward others and

their behavior on the job

• Cultural characteristics – impatience,

skepticism, openness, control, rigidity or
flexibility

• Organization executives must demonstrate

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leadership
 WHEN IS THE REENGINEERING
THE ANSWER?
• Focus on changing customer relationship
and repositioning the organization in the
marketplace

• Situations in which reengineering

benefit the organization:
1. Increase the organization’s ability to
customize products and services
2. Increase customer satisfaction with products
and services
3. Make it easy and pleasant for customers to
do business with your organization
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Situations in which reengineering benefit the
organization:
4. Bring customers into the information channels
5. Decrease response time to customers,
eliminate errors and complaints, reduce time
cycle
6. Process more customer requests and higher
volume from each customer, and deliver
“value-driven” prices to customers
7. Improve the quality of work life and individual
capabilities
8. Improve sharing and utilization of
organization knowledge
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 WARNING SIGNS OF TROUBLE
FOR REENGINEERING.
1. The explosion of chaos and bureaucracy

2. Thinking of customers

3. Automation of existing bureaucracy

4. Bottlenecks and disconnects in critical

cross-functional processes

5. Elusiveness of accountability

6. Chaos of downsizing
7. The turmoil of integration and merger 23
 WARNING SIGNS
1.The explosion of chaos and
bureaucracy
 work processes were not designed – they
evolved out of the chaos of doing business
 informal work patterns break under stress
 develop a process and rule set to fix mistake
 procedures habitualized
 new untrained employees and veterans make
mistakes unknowingly

2.Thinking of customers
 based on assumptions that they know what is
best for customers, inflexible, customer
frustrated, only the “rules” count
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 WARNING SIGNS
3. Automation of existing bureaucracy
 Computerization reinforced bureaucracy rather than
breaking through it
 automation of existing manual procedures
 inexperience to computers
 more paper printouts

4. Bottlenecks and disconnects in critical

cross-organizational work process
 no relationship to other units,
 must time spent,
 duplication of work,
 systems in each department do not correspond with the
other units

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 WARNING SIGNS
5. Elusiveness of accountability
 Most organizations are structured by function (eg. Sales,
manufacturing, etc) but essential business processes (eg.
customer service and support) cut across the functions.
This makes it difficult
 no accountability
 lost of responsiveness and timeliness
 incomplete, inaccurate, late

6. Chaos of downsizing
 It leaves survivors demoralized
 the work environment inadequately staffed, and people
with inadequate skills performing the work
 tasks can no longer be processed within their current
configuration

7. The turmoil of integration and merger

 work processes that often conflict and duplicate 26
 DIAGNOSIS OF PROCESSES OF
SUSPECT PRODUCTS AND
SERVICES

Possible findings
1.0 Lack of a “big picture” concept and poor
communication.
2.0 Inattention to detail.
3.0 Designer arrogance and customer exclusion.
4.0 Focus on correction, not error prevention.
5.0 Measurement problems.
6.0 Focus only on external customers.
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 The necessity for change

CREATING THE BUSINESS CASE

The alternative to change

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 1. The Necessary for Change
• Translate “what everyone already knows”
into facts and numbers (quantitative data)

– revenues, customer complaints, direct and

indirect processing costs, rates of absenteeism,
volume of back orders, costs to correct errors
and delays in deliveries.

– evaluate strategic industry trends, the

economy, customer preferences and buying
patterns and other market research.

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 2. Alternative to Change
• If not change, what will
happen

– show change effect using

hard and soft data of the
future, if the organization
doesn’t change.

– use current data to project

today’s bottom line into
tomorrow

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Commitments:
• Once the facts are on the
table:

1. Frame the project

2. Create vision, values and
goals
3. Build detailed process
redesign of the business
operations
4. Plan the implementation
5. Conduct a proof of concept (if
needed)

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CRITICAL SUCCESS FACTORS
FOR BR PROJECTS.
1. business focus – a focus on all dimensions
• Success depends on integrating all three – process,
technology and organization
• plus supporting that integration with new infrastructure and
values

2. A methodology and project approach

• requires discipline and structure
• methodology must be systematic and fact focused
• must articulate how to secure funding, manage power
struggles, and sell the new ideas

3. Time
• BR takes time. Executives must be able to stick with the
program
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CRITICAL SUCCESS FACTORS FOR BR
PROJECTS
4. Partnership participation
• BR is accomplished only as a result of efforts by
people from all over the organization
• Requires flexible and trained teams

5. Visible, active leadership

• This is the most important of all the critical
success factors
• Requires long-term commitment to BR – in
terms of dollars, people and executive visibility

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CRITICAL SUCCESS FACTORS

• BR begins the process of

transforming a dysfunctional
organization into a learning,
productive, quality-focused,
customer driven.

• BR must be customer driven.

• Quality is defined in terms of

added value, cost sensitivity,
responsiveness, and functionality.

• BR must enable people to handle

more change successfully. 34