Business Process Redesign/Reengineering: Introduction

Business ProcessRedesign/Reengineering:IntroductionBased on: Malhotra, Business Process Redesign: AnOverview, http://www.brint.com/papers/bpr.htm.CA441 BPM: Introduction to BPRSeptember 20131

What this Topic Focuses On What is a Business Process? Similarities and differences between BPR and TQMWhat is Business Process Redesign?How does it differ from Business Process Reengineering?Power of IT/ICTRelationship between BPR and ITA BPR MethodologyOther Organizational Devpt Approaches: Total QualityManagement (TQM)SummaryCA441 BPM: Introduction to BPRSeptember 20132

What is a Business Process?Various Definitions: "a set of logically related tasks performed to achieve a defined business “a structured, measured set of activities designed to produce a specified “Implies a strong emphasis on how work is done within an organisation" Processes have two important characteristics:outcome.”output for a particular customer or market.”(Davenport).1They have customers (internal or external),2They cross organisational boundaries, i.e., they occur across or betweenorganisational subunits.CA441 BPM: Introduction to BPRSeptember 20133

What is a Business Process? (cont'd)Identified in terms of: beginning and end points,interfaces,organisation units involved, particularly the customer unit.High Impact processes should have process owners.Examples of processes include: developing a new product;ordering goods from a supplier;creating a marketing plan;processing and paying an insurance claim;etc.CA441 BPM: Introduction to BPRSeptember 20134

What is a Business Process? (cont'd)Defined based on three dimensions: Entities: Processes take place between organisational entities. They could be Interorganisational, Interfunctional or Interpersonal.Objects: Processes result in manipulation of objects. These objects could be Physical or Informational.Activities: Processes could involve two types of activities: Managerial (e.g. develop a budget) and Operational (e.g. fill a customer order).(Davenport & Short 1990)CA441 BPM: Introduction to BPRSeptember 20135

What is Business Process Redesign? "the analysis and design of workflows and processes within "the critical analysis and radical redesign of existing businessand between organisations" (Davenport & Short 1990).processes to achieve breakthrough improvements inperformance measures." Teng et al. (1994)CA441 BPM: Introduction to BPRSeptember 20136

How Do BP Redesign & Reengineering Differ? Often by very little; both entail improving BPs in hope of gaining Main difference is in improvement project scope/scale:radical improvements. Reengineering:– complete elimination of existing process & ab initio design of new oneRedesign:–may leave existing BP intact–look at boosting measures such as customer satisfaction, cycle time etc Reengineering usually involves core BPs (e.g. recruitment) and Redesign may involve a more local process/subprocessmay involve corporate continentsOften the terms are used interchangeably.CA441 BPM: Introduction to BPRSeptember 20137

Hammer's Principles of Reengineeringa Organise around outcomes, not tasks;b Have those who use the output of the process perform the process;c Subsume info processing work into real work that produces the info;d Treat geographically dispersed resources as tho they were centralised;e Link parallel activities instead of integrating their results;fPut decision point where work is performed, & build control into process;g Capture information once and at the sourceCA441 BPM: Introduction to BPRSeptember 20138

Power of Information Technology (aka ICT)IT creates a “public good” i.e. a resource that can beaccessed by many functions. Shared info resource is not “used up” by usage, and retains its Provides comprehensive info that facilitates accomplishment of Caveat: have to be very careful of data (not the same as info!):value for other users.process objectives on a more global basis. Nowadays data can be huge (TB), multi-dimensional and noisy So information from this is a huge challenge to draw conclusions fromeven for modern computing resources (cloud, HPC) Also lots of messy ethical, proprietorial issues around data use, storageCA441 BPM: Introduction to BPRSeptember 20139

Relationship between BPR &Information Technology? IT is the key enabler of BPR (Hammer). Use IT to challenge the inherent assumptions from beforethe advent of modern ICT developments. Core of reengineering is "discontinuous thinking -- orrecognising and breaking away from the outdated rules andfundamental assumptions underlying operations. Theserules of work design are based on assumptions abouttechnology, people, and organisational goals that no longerhold."CA441 BPM: Introduction to BPRSeptember 201310

BPR and IT: A Recursive relationship BPR requires broader view of both IT and business activity,and relationships between them. IT — more than automation/mechanisation: used to fundamentallyreshape the way business is done: (“don't pave the cow path”) Business activities — more than a collection of individual or evenfunctional tasks. IT and BPR have a recursive relationship IT capabilities should support business processes, and business processes should be in terms of thecapabilities IT can provide.CA441 BPM: Introduction to BPRSeptember 201311

Recursive relationship between BPR and IT (cont'd)How can IT support business processes?IT CapabilitiesBusiness ProcessRedesignHow can business processes be transformed using IT?IT impact is as a tool for reducing the costs of coordinationCA441 BPM: Introduction to BPRSeptember 201312

BPR and ITAwareness of IT capabilities can – and should – influenceprocess design.How IT capabilities affect the organisation – 1Transactional— can transform unstructured processes into routinisedtransactionsGeographical— can transform information with rapidity and ease acrosslarge distancesAutomational— can replace or reduce human labour in a processAnalytical— can bring complex analytical methods to bear on a processCA441 BPM: Introduction to BPRSeptember 201313

BPR and IT (cont'd)How IT capabilities affect the organisation – 2Informational— can bring vast amounts of detailed info into aprocessSequential— can enable changes in the sequence of tasksKnowledge Management— allows capture and dissemination of knowledgeTracking— allows detailed tracking of task statusDisintermediation— can be used to connect two parties within aprocess that would otherwise communicate throughan intermediaryCA441 BPM: Introduction to BPRSeptember 201314

BPR & IT (cont'd)The way related functions participate in a process(functional coupling of a process) can be differentiated alongtwo dimensions: degree of mediation - the extent of sequential flow of input and outputamong participating functions degree of collaboration - the extent of information exchange and mutualadjustment among functions when participating in the same process.CA441 BPM: Introduction to BPRSeptember 201315

Degree of XX654321CA441 BPM: Introduction to BPRDegree of MediationSeptember 2013LOW(Direct)16

Degree of Collaboration Frequency and intensity of information exchangebetween two functions ranges from none(completely insulated) to extensive (highlycollaborative). Many process can be improved by increasing thedegree of collaboration.CA441 BPM: Introduction to BPRSeptember 201317

Functional Coupling Framework of Business ProcessesDegree of ee of MediationIndirectCCCoupling Pattern: Functions participate in the processsequentially with no mutual information exchange.Environment: Participating functions are sequentiallydependent and face low level of uncertainty in I/Orequirements.Example: Sales function (A) sends customer order toinventory function (B) for shipping.ACoupling Pattern: Functions participate in the processsequentially with mutual information exchange.Environment: Participating functions are sequentiallydependent and face high level of uncertainty in I/Orequirements.Example: Engineering (A) provides manufacturing designspecifications to production (B) with frequent consultationbetween A and B.ABBLowDirectCCCoupling Pattern: Functions participate directly in producingthe process outcome with no mutual information exchange.Environment: Participating functions are sequentiallyindependent and face low level of uncertainty in I/Orequirements.Example: Recruiting workers (A) and equipment requisition(B) participate directly in establishing a new plant with noconsultation between A and B.CA441 BPM: Introduction to BPRHighSeptember 2013Coupling Pattern: Functions participate directly in producingthe process outcome with mutual information exchange.Environment: Participating functions are sequentiallyindependent and face high level of uncertainty in I/Orequirements.Example: Advertising (A) and production (B) directlyparticipate in launching a new product with frequentconsultation between A and B.18

Degree ofCollaborationLowAPrimarily through application of Communication TechnologiesPrimarily through application of SharedInformation ResourcesPath YDegree of MediationAPath dInformationResourcesAPath X*SharedResourceCCA441 BPM: Introduction to BPRCthZologiesandBPath Y*HighApplication if IT in Alternative Paths for ProcessReengineeringBSharedResourceCSeptember 201319

BPR & IT(Teng) IT reduces the Degree of Mediation and enhances the Degree Innovative uses of IT leads many firms to develop new,of Collaboration.coordination-intensive structures, enabling the coordination oftheir activities in ways not hitherto possible before. Such coordination-intensive structures may raise theorganization's capabilities and responsiveness, leading topotential strategic advantages. In a later lecture will look at how this has happen in thecontext of BPM with Service Oriented Architectures.CA441 BPM: Introduction to BPRSeptember 201320

A Methodology for BPR.(Davenport and Short)Five-step approach to BPR: Develop the Business Vision and Process Objectives: Identify the Processes to be Redesigned: Understand and Measure the Existing Processes: Identify IT Levers: Design and Build a Prototype of the New Process: prioritise objectives and set stretch targetsIdentify critical or bottleneck processesIdentify current problems and set baseline for future effortsBrainstorm new process approachesImplement organisational and technical aspectsIdeally after that should come: Process ImplementationContinuing (re)evaluationCA441 BPM: Introduction to BPRSeptember 201321

Other Organizational Devpt Approaches:Total Quality Management (TQM)TQM: Historically preceded & inspired BPRAn integrative philosophy of managementfor continuously improving products andprocess quality. Assumes that product and process qualityis responsibility of all involved inbuilding/consuming the products orservices offered by an organization. requires participation of management,workforce, suppliers, and customersCA441 BPM: Introduction to BPRSeptember 201322

How Does BPR Differ from TQM? In recent years, increased attention to business processes islargely due to the TQM. TQM and BPR share a crossfunctional orientation. (Teng) Quality specialists tend to focus on incremental change andgradual improvement of processes, while BPR advocates oftenseek radical redesign and drastic improvement of processes.(Davenport)CA441 BPM: Introduction to BPRSeptember 201323

BPR vs. TQM Quality management (TQM or continuous improvement), refersto programs & initiatives that emphasise incrementalimprovement in work processes & outputs over an open-endedperiod of time. Reengineering, also known as business process redesign orprocess innovation, refers to discrete initiatives that areintended to achieve radically redesigned and improved workprocesses in a bounded time frame. (Davenport)CA441 BPM: Introduction to BPRSeptember 201324