BPR Implementation

Methodology
• The majority of BPR methodologies share common features and steps. In the following sections we
describe a representative sample of these methodologies. In the end we describe the differences of
these methodologies and the value and the importance of each special step in a BPR effort. Moreover,
the main reasons behind the failure of BPR projects are discussed and a list of factors that should be
considered in order a reengineering effort to be successful is provided. Finally, we discuss how BPR
seems to be applied in future.
 The Hammer / Champy methodology

• Hammer and Champy define BPR as 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”. In fact a BPR effort changes practically everything in the organisation: people,
jobs, managers and values, because these aspects are linked together. Hammer and Champy call these
aspects the four points of the business system diamond,

Figure 1. The business system diamond

• According to them:

• IT plays a crucial role in BPR, especially when it is used to challenge the assumptions inherent in the work processes that
have existed since long before the advent of modern computer and communication technology.

• Inductive thinking is needed in order to recognize the power inherent in modern IT and to visualize its application.

• This means that instead of first defining a problem and then seeking and evaluating different solutions to it, it is more
efficient to first recognize a powerful solution and then seek the problems it might solve.

• Since, reengineering is about innovation and not automation, one of its most difficult parts is recognising the “new”
capabilities of technologies.

• Hammer and Champy consider poor management and unclear objectives as the main problems to BPR success, but
initially they failed to give adequate consideration to the human factor.

• Only recently they acknowledge people’s resistance as a major obstacle to a successful BPR undertaking.
 six phases of the methodology by Hammer and Champy

1. Introduction into Business Reengineering

• The first step in reengineering is to prepare and communicate the “case for action” and the “vision
statement”.

• The “case for action” is a description of the organisation’s business problem and current situation; it
presents justification for the need for change.

• The “vision statement” describes how the organisation is going to operate and outlines the kind of results it
must achieve.

• This qualitative and quantitative statement can be used during a BPR effort, as a reminder of reengineering
objectives, as a metric for measuring the progress of the project, and as a prod to keep reengineering
action going.
2.Identification of Business Processes
• During this phase, the most important business processes are identified and are described from a global
perspective using a set of process maps.
• Process maps give a picture of the work flows through the company. They show high-level processes, which
can be decomposed into sub-processes on separate sub-process maps.
• Process maps are also used as a means of communication to help people discuss reengineering.
• The output of this phase is a number of process maps reflecting how these high-level processes interact
within the company and in relation to the outside world.
3.Selection of Business Processes
• It is unrealistic to reengineer all the high level processes of an organization at the same time.
• Therefore, it has to be decided which are the processes to be redesigned.
• According to an organization's strategic objectives more criteria could be defined for selecting processes for
redesign, such as whether a process contributes to the organization's strategic direction, has an impact on
customer’s satisfaction etc.
4.Understanding of Selected Business Processes

• Before proceeding to redesign, the reengineering team needs to gain a better understanding of the existing
selected processes, concerning what they do, how well or how poorly they perform, and the critical issues that
govern their performance.

• Detailed analysis and documentation of current processes is not within the scope of this phase. The objective is
the provision of a high level view of the process under consideration, in order the team members to have the
intuition and insight required to create a totally new and superior design.
5.Redesign of the Selected Business Processes

• This is the most creative phase of the methodology, because new rules and new ways of work should be
invented.

• Iimagination and inductive thinking should characterize this phase. Redesigning a process is not algorithmic or
routine and therefore Hammer and Champy suggest three kinds of techniques that can help reengineering teams
to generate new ideas:

•
6.Implementation of Redesigned Business Processes

• The last phase covers the implementation phase of the BPR project.

• Hammer/Champy do not talk about implementation as much about project planning.

• They believe that the success of the implementation depends on whether the five preliminary
phases have been properly performed.
 Davenport’s and Short’s methodology
• Davenport and Short position IT at the heart of BPR.
• They recognize the existence of a recursive relationship between IT capabilities and BPR, meaning that IT
should be considered in terms of how it supports new or redesigned business processes, and recursively
business processes and process improvement should be considered in terms of the capabilities IT can
provide.
• Despite their emphasis on innovation and technology, they recognize the importance of organization and
human resource issues as to change management, and suggest the use of traditional management
approaches like planning, directing decision making and communicating.
• Believing that BPR should be integrated with approaches like Continuous Process Improvement (CPI)
Davenport and Short suggest that the redesign effort of an organisation involve five major steps.
• The first three steps are very similar to Hammer’s methodology. Things differentiate after the fourth step.
1. Develop Business Vision and Process Objectives

• During this step the objectives and the business vision of an organisation are defined. A business vision implies specific
objectives for process redesign, such as: Cost Reduction, Time reduction, Output Quality, the Quality of Worklife and the
Quality of Learning.

• The objectives are prioritised and stretch targets are set. A redesign effort does not aim at improving processes’
performance, so that they contribute to the fulfilment of the vision and the objectives of the organization.
2. Identify Processes to Be Redesigned

• The most important processes are identified and prioritised according to their redesign potential.

• Key business processes are identified either by identification and prioritzation of all processes (exhaustive approach) or by
identification of important processes or processes in conflict with conflict with the business vision and process objectives.
3. Understand and Measure Existing Processes
• The functionality of selected process is understood here and their performance is measured against the specific
reengineering objectives.
• It is important that designers think in an innovative way and are not restricted or influenced by the analysis of current
situation.
4. Identify IT levers
• IT is a powerful tool not only for supporting processes but also for creating new process design options; therefore, it has
its own step in process redesign.
• The authors suggest eight ways to think about IT capabilities and their organizational impacts, which are summarized in
Table 1. Capability Organisational Impact/Benefit
Transactional IT can transform unstructured processes into routinized transactions
Geographical IT can transfer information with rapidity and ease across large distances, making
processes independent of geography

Automational IT can replace or reduce human labour in a process

Analytical IT can bring complex analytical methods to bear on a process
Informational IT can bring vast amounts or detailed information into a process
Sequential IT can enable changes in the sequence of tasks in a process, often allowing
multiple tasks to be worked on simultaneously
Knowledge management IT allows the capture and dissemination of knowledge and expertise to improve
the process
Tracking IT allows the detailed tracking of task status, inputs, and outputs
Disintermediation IT can be used to connect two parties within a process that would otherwise
communicate through an intermediary (internal or external)
5. Design and Build a Prototype of the Process
• The final step in a redesign effort is the design of the new process. The actual design of the new process should be
viewed as a prototype and successive iterations should be expected. Three key factors and tactics are considered in
process design and prototype:
• using IT as a Design Tool
• understanding generic design criteria
• creating organizational prototypes
 What is business process modeling?

• Business process modeling is a technique that involves creating a visual depiction of a business process. This is typically
achieved by using business process modeling tools like flowcharts and universal business modeling process notation (also
known as BPMN).

• Next, business process modeling is used to identify improvements in an organization’s business processes or workflows.
It does this by mapping two different iterations of a given process. The first is the process as it currently exists without
implementing any changes. The second is what the process will be once improvements have been made.
 The benefits of business process modeling

• Identifies areas for improvement. The primary use of business process modeling is to provide stakeholders with a
better understanding of the way that a process works with an eye towards implementing improvements.

• Transparency. A business process model shows how tasks are expected to be performed, who is accountable for them,
and how a process contributes to the achievement of a business objective. This serves an important role in increasing
trust and accountability throughout an organization.

• Agility and flexibility. Business objectives and strategies can change in an instant (think COVID-19). With business
process modeling stakeholders can immediately identify and implement improvements consistent with new objectives.

• Standardization across departments. Many processes in an organization, particularly in larger ones, involve similar
steps and tasks. For example, purchase order requests are often submitted at the unit level rather than the enterprise
level. Using process models, stakeholders can identify best practices across units to implement efficient procedures
throughout the organization.
 Tools used in Modelling the Business
• flow-chart:-A process flowchart is a diagram that shows the sequential steps of a process and the decisions needed to
make the process work. Within the chart/visual representation, every step is indicated by a shape. These shapes are
connected by lines and arrows to show the movement and direction of the process.

• A flowchart is a picture of the separate steps of a process in sequential order. It is a generic tool that can be adapted for a
wide variety of purposes, and can be used to describe various processes, such as a manufacturing process, an
administrative or service process, or a project plan

• Process flowcharts are standardized such that anyone who has an understanding of flowcharts can look at one and know
what is happening. They follow the logical flow of information so that business stakeholders have a guide as to how to
fulfil processes properly.
 Why are Process Flowcharts Beneficial?
• A process flowchart can help your business in many ways. The purpose of creating one will aid you in:

• Standardization: Stakeholders will know how to achieve intended business goals by following the process
• Process improvement: When you depict a process, you can pinpoint missing steps, bottlenecks or unnecessary steps
to apply process improvement. Data automation tools are a great way to improve processes in this way. It can find and
remove weaknesses in processes, by mapping out the process on the system, making tasks clearly defined removing
critical staff dependency and improving compliance.‍
• Defined operating procedures: Flowcharts help achieve better quality control, training and employee understanding.

• WHEN TO USE A FLOWCHART

• To develop understanding of how a process is done
• To study a process for improvement
• To communicate to others how a process is done
• When better communication is needed between people involved with the same process
• To document a process
• When planning a project
Flowchart Example – Medical Service

END
 How to Create and Use a Flowchart
• Once you’ve determined that a flowchart is a right tool for the job, continue with these steps:
• 1. Identify tasks: The process may seem straightforward from a broad perspective. But, if you’re not the one in the weeds,
then rely on the team that is to help you outline the steps and tasks with you.

• 2. Compile the necessary information: You should know the exact steps, the variables and events that may cause the process
to deviate, and also who is responsible for each step along the way.

• 3. Double-check the process: Gather critical stakeholders to review this outline of events to ensure the information is
accurate.

• 4. Create the flowchart: Now, it’s time to get to drawing! You can use the basic symbols mentioned

1. Define the process to be diagrammed. Write its title at the top of the work surface.
2. Discuss and decide on the boundaries of your process: Where or when does the process start? Where or when does it end?
Discuss and decide on the level of detail to be included in the diagram.
3. Brainstorm the activities that take place. Write each on a card or sticky note.
4. Arrange the activities in proper sequence.
5. When all activities are included and everyone agrees that the sequence is correct, draw arrows to show the flow of the
process.
6. Review the flowchart with others involved in the process (workers, supervisors, suppliers, customers) to see if they agree
that the process is drawn accurately.
 FLOWCHART EXAMPLES

2. Detailed Flowchart

1. High-Level Flowchart for an Order-Filling Process

 Relationship Diagram

• ERD stands for Entity Relationship Diagram. An ER diagram illustrates the logic within a database and how
individual components relate to one another (Visual Paradigm). Similar to a story board for film, an ER
diagram lays out the wireframe of internal database structures to aid in understanding, improving efficiency,
and debugging logical errors. The key pieces of an ER diagram are the entities, attributes, and the
relationships between them.

• For example, within the complex systems of Amazon, they would have an entity for customer listing
attributes such as name, address, payment, and email. Once an order is placed and ready for shipment,
the shipping database would access the customer database to retrieve information to complete the
order and ship out the package. An ER diagram would show how the shipping department can access
many customers within the database, and the information it would require to complete shipment.
Entity Relationship Diagram-Internet Sales Model
 Cost-Benefit Analysis
• a cost-benefit analysis will also factor the opportunity cost into the decision-making process. Opportunity costs are
alternative benefits that could have been realized when choosing one alternative over another. In other words, the
opportunity cost is the forgone or missed opportunity as a result of a choice or decision. Factoring in opportunity costs
allows project managers to weigh the benefits from alternative courses of action and not merely the current path or
choice being considered in the cost-benefit analysis.
• A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities)
associated with a project decision to determine whether it makes sense from a business perspective.
 The Cost-Benefit Analysis Process
• A cost-benefit analysis should begin with compiling a comprehensive list of all the costs and benefits associated with the
project or decision.
• The costs involved in a CBA might include the following:
• Direct costs would be direct labor involved in manufacturing, inventory, raw materials, manufacturing expenses.
• Indirect costs might include electricity, overhead costs from management, rent, utilities.
• Intangible costs of a decision, such as the impact on customers, employees, or delivery times.
• Opportunity costs such as alternative investments, or buying a plant versus building one.
• Cost of potential risks such as regulatory risks, competition, and environmental impacts.
• Benefits might include the following:
• Higher revenue and sales from increased production or new product.
• Intangible benefits, such as improved employee safety and morale, as well as customer satisfaction due to enhanced
product offerings or faster delivery.
• Competitive advantage or market share gained as a result of the decision.
 PROS AND CONS OF COST-BENEFIT ANALYSIS
• Advantages of Cost-Benefit Analysis
• A Data-Driven Approach
• Cost-benefit analysis allows an individual or organization to evaluate a decision or potential project free of biases. As such, it offers an
agnostic and evidence-based evaluation of your options, which can help your business become more data-driven and logical.
• Makes Decisions Simpler
• Business decisions are often complex by nature. By reducing a decision to costs versus benefits, the cost-benefit analysis can make this
dilemma less complex.
• Uncovers Hidden Costs and Benefits
• Cost-benefit analysis forces you to outline every potential cost and benefit associated with a project, which can uncover less-than-
obvious factors like indirect or intangible costs.
• Limitations of Cost-Benefit Analysis
• Difficult to Predict All Variables
• While cost-benefit analysis can help you outline the projected costs and benefits associated with a business decision, it’s challenging to predict all the
factors that may impact the outcome. Changes in market demand, material costs, and the global business environment are unpredictable—especially in the
long term.
• Incorrect Data Can Skew Results
• If you’re relying on incomplete or inaccurate data to finish your cost-benefit analysis, the results of the analysis will follow suit.
• Better Suited to Short- and Mid-Length Projects
• For projects or business decisions that involve longer timeframes, cost-benefit analysis has a greater potential of missing the mark for several reasons. For
one, it’s typically more difficult to make accurate predictions the further into the future you go. It’s also possible that long-term forecasts won’t accurately
account for variables such as inflation, which can impact the overall accuracy of the analysis.
• Removes the Human Element
• While a desire to make a profit drives most companies, there are other, non-monetary reasons an organization might decide to pursue a project or
decision. In these cases, it can be difficult to reconcile moral or “human” perspectives with the business case
 BPR KPIs
• A key performance indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key
business objectives. Organizations use KPIs to evaluate success at reaching targets. High-level KPIs may focus on the
overall performance of the business, while low-level KPIs may focus on processes.
• A quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objecttives for
performance.
• A set of quantifiable measurements used to gauge a company's overall long-term performance.
• A way of measuring the effectiveness of an organization and its progress towards achieving its goals.
 Create actionable KPIs
• Review business objectives: Remember, KPIs aren't static! Your KPIs should evolve as your business
objectives evolve.
• Analyze your current performance: Are you setting achievable targets? Analyzing your performance is
essential to understand your areas of success and areas of improvement. Look at your historical performance
data, too, to set a baseline for what you've accomplished in the past using a platform like PowerMetrics.
• Set short and long term KPI targets: Set your long-term goals (whether it's quarterly or yearly) and then
work backwards to identify the milestones (or short-term targets) that you need to reach along the way. This
way you can continually reassess and change course as you work towards your bigger targets.
• Review targets with your team: Teamwork makes the dream work! It's an old adage, but it still remains true.
It's important that everyone remains in-the-know so you're all working towards the same end goal.
• Review progress and readjust: Make it a habit to check in on your status. KPIs aren't set-it-and-forget-it.
Regularly check-in against your performance and relevance of your KPIs. And once you make it habit, it'll get
easier every time.
 Balanced Scorecard (BSC)

• The term balanced scorecard (BSC) refers to a strategic management performance metric used to identify
and improve various internal business functions and their resulting external outcomes. Used to measure
and provide feedback to organizations.
• A balanced scorecard is a performance metric used to identify, improve, and control a business's various
functions and resulting outcomes.
• The balanced scorecard involves measuring four main aspects of a business: Learning and growth, business
processes, customers, and finance.
• BSCs allow companies to pool information in a single report, to provide information into service and quality
in addition to financial performance, and to help improve efficiencies.
 Characteristics of the Balanced Scorecard Model (BSC)
• Information is collected and analyzed from four aspects of a business:
• Learning and growth are analyzed through the investigation of training and knowledge resources. This first
leg handles how well information is captured and how effectively employees use that information to
convert it to a competitive advantage within the industry.
• Business processes are evaluated by investigating how well products are manufactured. Operational
management is analyzed to track any gaps, delays, bottlenecks, shortages, or waste.
• Customer perspectives are collected to gauge customer satisfaction with the quality, price, and availability
of products or services. Customers provide feedback about their satisfaction with current products.
• Financial data, such as sales, expenditures, and income are used to understand financial performance.
These financial metrics may include dollar amounts, financial ratios, budget variances, or income targets.
Balanced Scorecard