Business Process

Reengineering
A concept by Michael hammer
What is a Business Process?

A business process is a collection of activities

which together produce something of value to a
customer
 Defining Reengineering

Reengineering is 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.
Wal-Mart reduces restocking time
from six weeks to thirty-six hours.
 Hewlett Packards assembly time
for server computers touches new
low- four minutes.
 BPR

BPR advocates that enterprises go back to the

basics and reexamine their very roots. It
doesnt believe in small improvements. Rather
it aims at total reinvention.
BPR focuses on processes and not on tasks,
jobs or people.
 Rule 1:
Look at processes as a whole not as parts and
that way we can find out the best way of doing
the whole process and redesigning it and use it
along with Information technology
Rule 2:
Dont automate , obliterate
Dont use IT to just make the existing process
faster but be prepared to design a completely
new process
 BPR Principles

Organize around outcomes, not tasks.

Have those who use the output of the process
perform the process.
Subsume information-processing work into the
real work that produces the information.
 Treat geographically dispersed resources as
though they were centralized.
Link parallel activities instead of integrating
their results.
Put decision points where the work is
performed and build controls into the process.
Capture information once and at the source.
Process of BPR
Dimensions

More concrete Physical Technical Layer

easiest to Organizatio
Process Technology
change n
Structure Structure
Structure

Infrastructure Layer
Measureme Manageme
Reward
nt nt
Structure
Systems Methods

Value Layer
More difficult Organizatio Individual
Political
to change less nal Belief
Power
concrete Culture Systems
The Physical /Technical Dimensions are what
people can easily see and do. This include:
Process structure consists of the business
processes, outcomes, policies, practices and
procedures that support the processes.
 Technology structure which consists of the
automated communications, networking, and
computer systems used to support the process
structure.
The sensible (rational/reasonable) application of
technology depends on the competent integration
of technology with work processes.
 Organization structure defines who performs,
manages, and is accountable for each business
process.
When process and organization structures are out
of alignments, there are gaps in accountability.
The Infrastructure Dimensions refers to
interpretation of policies and procedures
which heavily influences how the
physical/technical dimensions on a day-to-
day basis.

If the physical/technical dimensions

change, the infrastructure must also
change because they reinforce desired
performance operational behavior.
 Reward structure regulates behavior. Rewards
may be formal or informal, financial or
recognition based. Ideally, well-designed jobs
provide a work environment that is rewarding in
and of itself.
Measurement systems define the feedback that
provide information on process performance.
- enables people to improve process
performance;
- must deliver appropriate information;
- should uncover the need for change;
- should be made available directly and
simultaneously (at once) to process
performers and managers
 Management methods consist of the
practices and techniques used to supervise,
develop, and support the people who
perform the business processes.
It is one of the most neglected (ignored) in
reengineering because it is seen as outside
the project scope.
Managers and supervisors must understand
and learn how to support the new
environment so as to gain benefits from the
reengineering process.
 The Value Dimensions define the
organizations culture and drive behavior.
Leadership and improvement philosophies
must emerge from these dimensions.
 Organizational culture consists of the
unspoken, collective rules and beliefs of
the organization.
It can be discerned (perceive/see)
through the organizations
language, symbols, myths (legends) and
rituals (ceremony).
It defines what is important to the
organization more forcefully than any
memo from the CEO.
Changing embedded corporate value
is perhaps the most powerful form of
change.
 Political power refers to individual who
manipulate and shape the actions and
behaviors of others.
Both formal and informal leaders use power
to promulgate (broadcast) and reinforce
power.
Formal authority acquired through the
position held in the organization.
Personal power acquired through expertise,
knowledge, or connections.
 Individual belief systems are the attitudes and
mental models that individuals apply to
themselves, those they work with, and the work
itself.
Examples of mental models: Impatience,
skepticisms, openness, control, rigidity, and
flexibility
Aligning the value dimensions to support the
reengineered organization requires organization
executives to demonstrate leadership.
 benefits

Increase the organizations ability to

customize products and services while
retaining mass-production economics.

Increase customer satisfaction with

products and services so they prefer your
products and services over those of your
competitors.
 Make it easy and pleasant (enjoyable) for
customers to do business with your
organizations.

Break organizational boundaries, bringing

customers into the information channels
through communication, networking, and
computer technologies.
 Decrease response time to customers,
eliminate errors and complaints, and reduce
product and service development and
manufacturing cycle time.

. Process more customer requests and

higher volume from each customer, and deliver
value-driven prices to customers without reducing
profitability.
. Improve the quality of work life and
individual capabilities for contribution so that
people experience ownership of their work and of
customers and see their contributions to the
organizations.

. Improve the sharing and utilization of

organization knowledge so the organization
does not become/remain dependent on the
expertise of a few people.
 Ford Motor Company

Accounts Payable function

500 people
Most work on mistakes between
Purchase
Orders

Receiving
Invoices
Documents
Thank you