Download Business Process Reengineering May 4, 1995 Schedule

MIS524
Business Processes
What is a process?
• A sequence of activities that achieves a
business result that (is):
– produces a specified output for a customer
or market
– has a beginning and end
– not based on existing organizational
structures
– may be unnamed and unrecognized
Process Characteristics
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Dynamic vs. Slice in time
Customer viewpoint
De-emphasis of functional silos
Implications of process improvement
Reengineering Projects
• Reengineering projects were very frequent
throughout 1990s
• Processes reengineered: customer service
(25%), order fulfillment (16%), manufacturing
(15%), customer acquisition (11%)
• Few cited research or product development, none
cited management processes
• Today reengineering may be carried via software
package implementation, e.g. SAP
Example Reengineering Benefits
Company
Siemens Rolm
Amoco
Xerox
Rank Xerox
Process
Order Fulfillment
Capital Allocation
Supply chain
Billing
Reported Benefit
Order to installation time improved by 60%
33% staff reduction
30% inventory reduction
cycle reduction 120 days to 3 days
Formula for Process Effectiveness
Value Time
Elapsed Time
The objective is to get this close to 1
BPR Life Cycles
• Mirror software development life cycles
• Phases
– Process identification
– Process analysis
– Process redesign
– New process implementation
Identifying Processes for
Innovation
• First step in BPR Life Cycles
• Selection from major organizational
processes
• Trade off between project magnitude
and political feasibility
Process Types
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Core
Network
Support
Management
Process Selection Criteria
• Strategic Importance
• Dysfunction
• Feasibility
Process Types: a different view
(Keen 1997)
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Identity
Priority
Background
Mandated
Folklore
Relationship of Process to
Competitive Advantage
• Salience
• Worth
– Asset
– Liability
Process Selection (Keen)
Yes
Does process X define your firm for customers, employees, or investors?
Identity
No
Is excelling at process X critically important to
business performance?
No
Priority
Yes
Background
Does X provide necessary support to other processes?
No
Yes
Is X carried out because it is legally required?
No
Folklore
Mandated
Yes
Determining Process Worth
Does Process X tie up substantial capital?
No
Yes
Value Neutral
Does it generate more value than the cost of the
capital it uses?
Yes
No
Asset
Liability
Role of IT
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Databases
Telecommunication networks
Workflow software
Imaging
Impact of IT on Process
Innovation - Examples
• Automation – eliminating human labor from
process
• Sequence – changing process sequence or
enabling parallelism
• Information and analysis – capturing
improved process information for analysis and
decision making
• Tracking – monitoring process status and
objects for improved control
Profiling Successful Reengineering
Projects (Teng, Jeong, Grover 1998)
• Study to understand BPR success
– 100 participating firms - manufacturing 29%,
banking/finance 13%, insurance 10%
– Main processes, customer service, product
development, order management
• Research questions
– Do reengineering projects aimed at more radical
change result in higher implementation success?
– How are the allocation of resources and energy to
stages of a project related to implementation
success?
Measures of Success
• Perceived success of the project
• Goal fulfillment
– Goals - cost reduction, cycle-time
reduction, customer satisfaction, worker
productivity, defects reduction
– Measure of the ratio actual/goal
Reengineering Projects Change
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Work flow patterns
Roles and responsibilities
Performance measures and incentives
Organizational structure
IT applications
Shared values and culture
Skill requirements
Results
• Significant correlation between extent
of change to work flow, roles and
responsibilities, performance measures,
and IT applications with perceived
success
• Insufficient effort paid to later stages
• Additional effort on later stages will
have greater impact on project success