MBA 731: Business Systems Analysis and Design
Minder Chen, Ph.D.
School of Management
George Mason University
(O) 703-993-1788 (F) 703-993-1809
E-Mail: [email protected]
Web Site: http://gunston.doit.gmu.edu/ecommerce/MIS731/
Process
© Minder Chen, 1997-2004
Outline
• Business Process Reengineering: Introduction and Examples
–
–
–
Business Reengineering Definition and Principles
Business Reengineering Examples
Business Reengineering Framework
• Managing Business Process Reengineering Life Cycle
–
–
Business Reengineering Project Life Cycle
Business Reengineering Teams and Infrastructures
• IT Enables for Business Process Reengineering
–
–
IT Enablers
New Thinking for Taking Advantages of IT Enablers
• Business Process Reengineering Tools: Process Modeling with IDEF0
–
–
–
IDEF0 Notation and Diagramming Technique
IDEF0 Model Analysis
IDEF0 Tools: Demonstration of Design/IDEF
• Implementation of Business Process Reengineering
–
–
–
Total Quality Management vs. Business Reengineering
Culture Changes in a Reengineering Workplace
Critical Successful Factors of Implementing Business Reengineering
© Minder Chen, 1993-2007
-2-
Books on BPR
• Hammer, Michael and Champy, James, Reengineering the Corporation: A
Manifesto for Business Revolution, New York: HarperCollins Publishers,
Inc., 2001
• Davenport, Thomas H., Process Innovation: Reengineering Work through
Information Technology, Harvard Business School Press, 1992.
• Hammer, Michael, “Reengineering Work: Don’t Automate, Obliterate,”
Harvard Business Review, July-August, 1990.
• Davenport, Thomas H. and Short, James E., “The New Industrial
Engineering: Information Technology and Business Process Redesign,”
Sloan Management Review, Summer 1990, pp. 11-27.
• IBM System Journal, a special issue on Business Transformation through
Information Technology, Vol 32, No. 1, 1993. Order Number: G321-011000, (1-800-426-5687)
• Hall, G., Rosenthal, J., and Wade, J., “How to Make Reengineering Really
Work,” Harvard Business Review, November-December 1993, pp. 119-131.
Reprint No. 93604.
© Minder Chen, 1993-2007
-3-
BPR Introduction, Examples, & Principles
• Introduction to BPR
–
–
–
–
Problems
BPR Definition
Process Definition, Dimensions, and Examples
BPR Status Reports
• Examples of BPR
–
–
–
–
–
Ford
Mutual Benefit Life Insurance
Capital Holding Co.
Taco Bell
Others
• BPR Principles and Frameworks
–
–
–
Principles
A BPR Framework
Approaches
© Minder Chen, 1993-2007
-4-
Industrial Revolution’s Model of Organization and Production
• Complex work is broken down into simple and
repetitive tasks that are performed in sequence by
specialists.
– Specialization of labor: Individual jobs become simple
– Sequential processes: Coordinating people becomes
more complex (The role of the hierarchy)
– Narrow and repetitive jobs: De-skilling the work forces
• Managers’ job is to control the quantity, cost, and
quality of the work performed.
– Control as a dominant style
– Financial-oriented scoreboard
• Employees are organized by business function.
– Hierarchical structure
© Minder Chen, 1993-2007
-5-
Problems
• Functional departments become barriers to
change.
• Too much time and money are spent in
ineffective coordination and communication.
• Too little time for doing work that really benefits
customers.
• Overheads are soaring.
• Business processes are evolved over a period
of time and are not designed to handle
changing business environments or to take
advantages of emerging technologies.
© Minder Chen, 1993-2007
-6-
Process Evolution
• "We are structured today by historical
accident. As we added products, we
added functional stovepipes."
• "Processes in organizations have never
been designed in the first place."
© Minder Chen, 1993-2007
-7-
Definition of Reengineering
The fundamental rethinking
and radical redesign of
core business processes to
achieve dramatic improvements in
critical performance measures such
as quality, cost, and cycle time.
Source: Adapted from Hammer and Champy, Reengineering the Corporation, 1993
© Minder Chen, 1993-2007
-8-
What Business Reengineering Is Not?
• Automating: Paving the cow paths.
(Automate poor processes.)
• Downsizing: Doing less with less. Cut
costs or reduce payrolls. (Creating new
products and services, as well as positive
thinking are critical to the success of
BPR.)
© Minder Chen, 1993-2007
-9-
A Cow Path?
© Minder Chen, 1993-2007
- 10 -
Reengineering Is ...
Extremist's View
• Obliterate what you have now and
start from scratch.
• Transform every aspect of your
organization.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,”
Harvard Business Review, July-August, 1990, pp. 104-112.
© Minder Chen, 1993-2007
- 11 -
Gordian Knot
• In a Greek legend, nobody could untie a knot
tied by King Gordius of Phrygia. Many people
tried to untie the knot, but nobody succeeded.
• ... until Alexander the Great found a smart and
direct solution.
© Minder Chen, 1993-2007
- 12 -
Definition of Process
• A process is simply a structured, measured set
of activities designed to produce a specific
output for a particular customers or market.
-- Thomas Davenport
• Characteristics:
– A specific sequencing of work activities across time
and place
– A beginning and an end
– Clearly defined inputs and outputs
– Customer-focus
– How the work is done
– Process ownership
– Measurable and meaningful performance
© Minder Chen, 1993-2007
- 13 -
Types of Processes
Dimensions & Type
Examples
Organization Entity
• Inter-organizational
Order from a supplier
• Inter-functional
Develop a new product
• Inter-personal
Approve a bank loan
Objects
• Physical
Manufacture a product
• Informational
Prepare a proposal
Activities
• Operational
Fill a customer order
• Managerial
Develop a budget
Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process
Redesign," Sloan Management Review, Summer 1990, p. 17.
© Minder Chen, 1993-2007
- 14 -
Processes Are Often Cross Functional Areas
"Manage the white space on the organization chart!"
Customer/
Markets
Needs
CEO
Supplier
Marketing
Purchase
Production
Distribution
Accounting
& Sales
"We cannot improve or measure the performance of a
hierarchical structure. But, we can increase output quality
and customer satisfaction, as well as reduce the cost and
cycle time of a process to improve it."
© Minder Chen, 1993-2007
Value-added
Products/
Services to
Customers
- 15 -
Process-Orientation
•
•
•
•
Process-orientation is the key to the BPR success
Remove stovepipe functions
Focus on cross-functional core process redesign
“Link activities, functions, and information in new
ways to achieve breakthrough improvements in
cost, quality, and timeliness.” *
* Source: Dichter, Gagnon, and Alexander, “Leading Organizational Transformation,”
The McKinsey, Quarterly, 1993, Number 1.
© Minder Chen, 1993-2007
- 16 -
BPR Achieves Dramatic Improvement
• Ford reduced its account payable department
by 75%
• Bell Atlantic cut the cycle time for installing
carrier services for customer from 15 days to 3
days.
• IBM Credit Company reduce loan application
turn around time from 6 days to 4 hours while
loan applications increased by 100 times. No
personnel was added.
© Minder Chen, 1993-2007
- 17 -
Satisfaction with the Results of BPR
Jury still out
5%
Dissatisfied
27%
Source: Deloitte & Touche, Leading
Trends in Information Services, 1994.
Satisfied
68%
“50% to 70% of reengineering efforts
fail to achieve the goals set for them.”
Source: Thomas A. Stewart, “Reengineering: The Hot New Managing Tool,”
Fortune, August 23, 1993, pp.. 41-48.
© Minder Chen, 1993-2007
- 18 -
BPR and Other Organizational Initiatives
• Alias:
– Process Innovation
– Core Process Redesign (CPR)
• Relevant Initiatives in Organizations
– TQM
– Continuous Process Improvement
– Information Strategy Planning and Information
Engineering
– IT for Competitive Advantages
• Related Initiatives in Public Sectors
– Reinventing the Government
– Functional Process Improvement (DOD)
© Minder Chen, 1993-2007
- 19 -
Benefits of Reengineering
Customer Service
Process Timeliness
Quality
Reduce Cost
Competitiveness
New/Improved Technology
Actual Benefits
Expected Benefits
Sales/Revenues
0
1
2
3
4
5
6
7
Source: Delotte & Touche, 1993
© Minder Chen, 1993-2007
- 20 -
Reengineering for Achieving Strategic Goals
Senior executives' choice for achieving strategic goals
Outsourcing
40
Downsizing
67
Restructuring
77
Automation
78
88
0
50
Reengineering
100
Source: Gateway Information Services, Inc. New York,
Figures are based on responses from 121 executives at US firms in the manufacturing, insurance,
and utilities industries.
* Joanne Cummings, "Reengineering is high on list but little understood," Network World, July 27,
1992, p. 27.
© Minder Chen, 1993-2007
- 21 -
BPR Examples
• Ford: Accounts Payable
• Mutual Benefit Life: New Life Insurance Policy
Application
• Capital Holding Co.: Customer Service Process
• Taco Bell: Company-wide BPR
• Others
© Minder Chen, 1993-2007
- 22 -
Ford Accounts Payable Process*
Purchasing
Vendor
Purchase order
Receiving
Goods
Copy of
purchase
order
Accounts
Payable
Receiving
document
Invoice
?
?
PO = Receiving Doc. = Invoice
© Minder Chen, 1993-2007
Payment
*Source: Adapted from Hammer and
Champy, 1993
- 23 -
Trigger for Ford’s AP Reengineering
• Mazda only uses 1/5 personnel to do the same AP.
(Ford: 500; Mazda: 5)
• When goods arrive at the loading dock at Mazda:
– Use bar-code reader is used to read delivery data.
– Inventory data are updated.
– Production schedules may be rescheduled if
necessary.
– Send electronic payment to the supplier.
© Minder Chen, 1993-2007
- 24 -
Ford
Procurement Process
Purchasing
Vendor
Purchase order
Receiving
Goods
Purchase
order
Goods
received
Data base
Accounts
Payable
Payment
© Minder Chen, 1993-2007
- 25 -
Ford Accounts Payable
Before
• More than 500 accounts payable clerks matched
purchase order, receiving documents, and invoices and
then issued payment.
• It was slow and cumbersome.
• Mismatches were common.
After
•
•
•
•
•
Reengineer “procurement” instead of AP process.
The new process cuts head count in AP by 75%.
Invoices are eliminated.
Matching is computerized.
Accuracy is improved.
© Minder Chen, 1993-2007
- 26 -
New Life Insurance Policy Application Process at
Mutual Benefits Life Before Reengineering*
Department A
Step 1
Department A
Step 2
....
Issuance
Application
Issuance
Policy
Department E
Step 19
• 30 steps, 5 departments, 19 persons
• Issuance application processing cycle time:
24 hours minimum; average 22 days
• only 17 minutes in actually processing the application
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at
Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.
© Minder Chen, 1993-2007
- 27 -
The New Life Insurance Policy Application Process
Handled by Case Managers
Mainframe
Physician
Underwriter
Case Manager
PC
Workstation
•
•
•
© Minder Chen, 1993-2007
LAN
Server
application processing cycle time:
4 hours minimum; 2-5 days average
Application handling capacity double
Cut 100 field office positions
- 28 -
Customer Credit Application Analysis
Approve customer credit application
Event
Subprocesses
Credit
application
is submitted
Complete
application
Evaluate
application
Decide on
application
Result
Inform
customer
Set up
customer
Customer is
notified, recorded, and
enabled to place orders
Case for action
Vision
·We’re losing market share to competitors offering fast or instant
credit, and our image is declining.
·Our paper-based workflow involves many starts and stops, and
involves several departments and job functions.
·goWebackdon’t’t
capture the right information on the application, so we need to
to the Customer repeatedly.
·We can’t answer Customer queries about in-process applications
·minimal
The effort and delay aren't’t justified for small Customers who pose
risk as a group.
·large
Credit Representatives spend most of their time on small accounts, not on
ones where their expertise is needed.
·closure
Unless we fix the process, our market share will continue to erode and
of the operation is likely.
·We will offer instant, secured credit to small Customers.
·Applications from large Customers will be handled in two days or less.
·Reps
All staff will perform higher-value work, and have more authority-Credit
will focus on large clients, and Credit Admin Clerks will handle
Actors
·Applicant
·Sales Representative
·Credit Representative
·Credit Administration Clerk
·Credit Bureau
·Word Processing Clerk
·Marketing Administration Clerk
·Customer Data Maintenance Clerk
© Minder Chen, 1993-2007
Mechanisms
·Credit Application
·Credit Report
·Notification Letter
·Sales System
small applications completely.
·Customer
Independent surveys will show that Customers perceive us as the
Service leader in our industry.
·and
Once the new process is implemented, our market share decline will slow,
within one year we will again be growing at 12% per year.
Metrics
·1 to 4 work hours and up to 7 elapsed days per application
·6 Credit Representatives
·150 applications per month, growing 10% per year
·75% approved, 25% declined
·85% of applications come from small Customers
·90% of our sales volume comes from 10% of Customers
·from
10% of applications come from previously denied Applicants, and 10%
former Customers
·they
Small Customer bad debt write-offs are less than 2% of sales, and overall
are approximately 1% of sales
- 29 -
Capital Holding Co. - Direct Response Group*
• A direct marketer of insurance-life, health, property,
and casualty-via television, telephone, and direct mail.
• In 1988, DRG president Norm Phelps and other senior
executives decided that for our company, the days of
mass marketing were over.
• Need to strengthen DRG's relationships with existing
customers and target our marketing to those potential
customers whose profiles matched specific company
strategies.
• A new vision for DRG: The company needed to be
exactly what most people didn't expect it to be an
insurance company that cares about its customers and
wants to give them the best possible value for their
premium dollar. *Source: Adapted from Capital Holding Corporation-Reengineering the
Direct Response Group, Harvard Business School case 192-001, 1992.
© Minder Chen, 1993-2007
- 30 -
Capital Holding Co.: Vision
Caring, Listening, Satisfying... one by one
Each of us is devoted to satisfying the financial concerns
of every member of our customer family by:
• Deeply caring about and understanding each member’s
unique financial concerns.
• Providing value through products and services that
meet each member’s financial concerns.
• Responding with the clear information, personal
attention and respect to which each member is entitled.
• Nurturing an enduring relationship that earns each
member’s loyalty and recommendation.
© Minder Chen, 1993-2007
- 31 -
Capital Holding Co.: Vision
To carry out our vision we must:
• Find and serve people who have a strong sense of
affiliation, reaching them through new or existing
membership groups.
• Provide our members with a broad range of insurance
and savings products.
• Communicate personally with each member through
direct response, emphasizing telephone and technology
to build close relationships.
© Minder Chen, 1993-2007
- 32 -
DRG Cultural Audit Findings
• Cultural Audit: First initiative under reengineering
umbrella.
• It would be impossible to reengineer our systems and
processes without an understand of the culture barriers the people issue.
• Trigger major changes in human resource management redesigning of promotion and reward systems.
• Assumption: You can only trust your friends.
 Implications
–
–
–
Lack of trust may indicate a lack of confidence in the organization and
may impede the organization’s ability to implement change
If ideas aren’t shared, there is likely to be less innovation.
Withholding “bad news” gives an incomplete picture which can result in
poor decisions.
© Minder Chen, 1993-2007
- 33 -
The Underwritten Rules of the Game
The most noble organization
initiatives are doomed to failure if they
require employees to behave in ways
that conflict with water-cooler wisdom
on how to get on in the company.
Source: Adapted from Peter Scott-Morgan, The Underwritten Rules of the Game: mater
Them, Shatter Them, and Break Through the Barriers to Organizational Change, McGrawHill Inc., 1994.
© Minder Chen, 1993-2007
- 34 -
New Business Model: A Conceptual Breakthrough
Market Management
Target & Segment
of Aggregate Market
Use Group
Information
“I Think I Know.”
Use Individual
Information
Prospects
&
Customers
Capture Individual
Information
“I Know for Sure.”
Sell &
Renew
Personalized
Service
© Minder Chen, 1993-2007
Customer Management
- 35 -
A High-Level Service Process Model Today
•
•
Increase my A&H coverage
Give me information about my Life Policy beneficiaries
CSR
Customer
Life
Corres.
A&H
MicroPolicy film
Change
Action
Request
What’s your
policy #’s?
Data
Entry
System
Customer
receives
two separate
responses
Input
Requested
Change
Day 2
Day 5
Action
Challis 3 Request
Lettershop
Day 8
A&H change
confirmation letter
mailed to customer
Day 6
Day 1
Life 70
Micro-film
Response
© Minder Chen, 1993-2007
Micro-film
Request
Day 5
System
Update
Day 6
(Batch)
Life Policy
beneficiaries letter
mailed to customer
- 36 -
Customer Management Team (CMT):
A Flavor of How DRG Service Process Will Change
• Increase my A&H coverage
• Give me information about my
Life Policy beneficiaries
CMT:
System:
Teleservice
Representative
Client-server
architecture
Customer
Day 1
Day 1
Answers
Immediate
Response to
Customer
Day 1-2
Day 3-4
Send written
acknowledgment
© Minder Chen, 1993-2007
Outbound
Paper
- 37 -
Taco Bell*
• “We were going backwards - fast ... If
something was simple, we made it complex. If
it was hard, we figured out a way to make it
impossible.” - Taco Bell CEO, John E. Martin
• Customer buy for $1 are worth about 25 cents.
75 cents goes into marketing, advertising, and
overhead.
• Reengineering from the customer’s point of
view. “Are customer willing to pay for these
‘value-added’ activities?”
*Source: Adapted from Hammer and Champy, 1993
© Minder Chen, 1993-2007
- 38 -
Taco Bell
• Corporate Vision: “We want to be number one in
share of stomach.”
• Slashed kitchen:
Kitchens : Seating capacity
70% : 30%

30% : 70%
• Eliminate district managers. Restaurant managers are
given profit-and-loss responsibility.
• Moving cooking of meat and bean outside.
• Boost peak serving capacity at average restaurant from
$400 an hour to $1,500 a hour.
• $500 millions regional company in 1982 to $3 billion
national company in 1992.
© Minder Chen, 1993-2007
- 39 -
Reengineering Example
Cash Lane
No more than
10 items
Which line is
shorter and
faster?
© Minder Chen, 1993-2007
- 40 -
Reengineered Process
Key Concept:
• One queue for multiple
service points
• Multiple services
workstation
© Minder Chen, 1993-2007
- 41 -
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.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,”
Harvard Business Review, July-August, 1990, pp. 104-112.
© Minder Chen, 1993-2007
- 42 -
BPR Principles - Derived
• Redesign process steps such that they are perform
in a correct order. Combine several process steps
into one.
• Design for parallel subprocesses whenever possible
to reduce waiting time between tasks. Integrate
subprocesses.
• Processes may have multiple versions. Remove
complex, exceptions, and special cases.
• Empower human potentials. Give front-line workers
the responsibility to make decisions.
• Provide mechanism in the process to encourage
individual, team, and organizational learning
Source: Derived from Michael Hammer and James Champy, Reengineering the Corporation: A Manifesto for
Business Revolution, HarperCollins Publishers, Inc., 1993
© Minder Chen, 1993-2007
- 43 -
Informating, Not Automation
An individual without information
cannot take responsibility;
an individual who is given
information cannot help but take
responsibility.
Jan Calzon
CEO, Scandinavian Airlines
© Minder Chen, 1993-2007
- 44 -
BPR Principles - Derived (Continued)
• Perform the work where it makes sense.
• Reduce controls and checks. ==> Build in feedback
mechanisms at each steps to minimize the need for the
checkpoints and control.
• Minimize reconciliation.
• Eliminate multiple external contact points. ==> Use case
managers to provide a single point of contact for
customers. One-stop customer service or customer
service center.
• Design processes with centralized and decentralized
operations.
• Coordinate inventory, buffers, and other assets by sharing
data cross organization boundaries. JIT, continuous
replenishment, supplier shelf management.
• Strive for “doing things right the first time”. Eliminate
rework and iteration.
© Minder Chen, 1993-2007
- 45 -
A BPR Framework
Technology
Organization
–
–
–
–
–
–
–
–
Job skills
Structures
Reward
Values
Enabling technologies
IS architectures
Methods and tools
IS organizations
Process
© Minder Chen, 1993-2007
–
–
–
–
Core business processes
Value-added
Customer-focus
Innovation
- 46 -
Approaches to BPR
• Focus on core business processes.
• Use information technology to enable new
business processes, not just to automate
existing ones.
• Start with a clean sheet of paper and think out-ofthe-box.
• Consider all aspects of the process.
• Adopt a BPR methodology.
• Use proven methods and tools in analyzing and
redesigning the process.
• Manage the implementation and change process
from the beginning.
© Minder Chen, 1993-2007
- 47 -
Managing BPR Projects
• BPR Life Cycle Management
• BPR Team Structures
© Minder Chen, 1993-2007
- 48 -
Business Process Reengineering Life Cycle
The BPR life cycle approach decomposes
business reengineering projects into interrelated phases in which a set of integrated
structured methods and tools is applied to
specific tasks in each BPR phases. Each
phase and its detailed tasks contain clearly
defined goals and deliverables.
© Minder Chen, 1993-2007
- 49 -
Three Life Cycle Models of BPR
Wang
Define business
goal
Analyze the
business process
Hammer
Mobilization
(Get serious)
Diagnosis
(Get started)
Davenport and Short
Develop business vision
& process objectives
Identify processes to be
redesigned
Understand and measure
existing processes
Redesign the
process
Implement the
new process
Redesign
(Get crazy)
Realization
(Get real)
Identify information
technology levers
Design & build a
prototype of the process
Measure the new
process
© Minder Chen, 1993-2007
- 50 -
Methodology Components
Work Breakdowns
Phase
Task
Deliverable
Step
Are Involved
in
Apply to
BPR Team Structures
Role
Participant
© Minder Chen, 1993-2007
Methods and Tools
Use
Concept
Method
Tool
- 51 -
Business Process Reengineering Life Cycle
Define corporate
visions and business
goals
BPR-LC 
Visioning
Identify business
processes to be
reengineered
Enterprise-wide engineering
Identifying
Analyze and
measure an
existing process
Analyzing
Identify enabling IT &
generate alternative
process redesigns
Redesigning
Evaluate and
select a process
redesign
Process-specific
engineering
Evaluating
Implement the
reengineered
process
Continuous
improvement of
the process
Implementing
Improving
Manage change and stakeholder interests
© Minder Chen, 1993-2007
- 52 -
Phase 1: Visioning
Define corporate vision and business goals
• Apply to enterprise-wide reengineering effort.
• Develop overview of current and future business
strategies, organizational structure, and business
processes.
• Develop organizational commitment to
reengineering.
• Develop and communicate a business case for
action.
• Create a new corporate vision.
• Set stretched goals.
• Prioritize objectives.
• Assess implementation capabilities and barriers.
© Minder Chen, 1993-2007
- 53 -
Case for Action
• Business context: What is happening, what is
changing, and what is newly important in the
environment in which the company operates.
• Business problem: The major concern of the
company.
• Marketplace demands: New performance
requirements that cannot be met by the
company.
• Diagnostics: Why the company cannot meet
the new performance requirements? Why the
incremental improvement is not enough?
• Cost of inaction: Consequences of not
reengineering.
Source: Hammer and Champy, 1993.
© Minder Chen, 1993-2007
- 54 -
Objectives for Business Reengineering
•
•
•
•
•
•
Improve customer satisfaction
Shorten cycle time
Improve output quality
Cut down costs
Increase competitiveness
Maintain the leadership position
© Minder Chen, 1993-2007
- 55 -
Business Vision, Strategy, and Processes
Enterprise-Wide Vision
Business Strategy
Process Visualization
Determine who we
are and what we are
doing about
Define the right
things to do
Do the right things
right
source: John L. Barrett, “Process Visualization: Getting the Vision Right Is Key,”
Information Systems Management, Spring 1994, pp. 14-23.
© Minder Chen, 1993-2007
- 56 -
Phase 2: Identifying
Identify business processes to be reengineered
•
•
•
•
•
•
Construct high-level process map
Develop a process hierarchy
Build enterprise-wide data models (optional)
Evaluate the processes
Select processes to be reengineered
Prioritize and schedule processes to be
reengineered
© Minder Chen, 1993-2007
- 57 -
TI Semiconductor Business Process Map
Customer Communication
Market
Customers
Concept
Development
Manufacturing
Strategy
Development
Product
Development
Customer
Design &
Support
Order
Fulfillment
Manufacturing Capability Development
Source: Adapted from Hammer and Champy, 1993, p. 119.
© Minder Chen, 1993-2007
- 58 -
A Generic High-Level Process Map
Market
Customer
Develop
strategy
Organization
Learning
Understand customer needs
& develop solutions
Attract and retain
customer
Deliver products
and services
Deliver supporting services
Source: Adapted from Mark Youngblood, eating the Chocolate Elephant: Take Charge of
Change Through Total Process Management, Micrografx Inc., 1994, p. 146.
© Minder Chen, 1993-2007
- 59 -
Using Value Chain to Identify High-Level Processes
Corporate Infrastructure
Human Resource Management
Supporting
Activity
Technology Deployment
Procurement
Added
Value
Primary
Activity
Inbound
Outbound
Logistic Operation Logistic
© Minder Chen, 1993-2007
Sales
and
Marketing
Service
- 60 -
High-Level Process Diagram of Firm X
paym ent
C ustom er
Fund Business
O perations
product /
m arket
prom otions
c ustom er
w ants /
needs,
s atisfaction
s urveys
Patent O ffice
M arket
R esearch
C ustom er
product/m arket,
pricing inform ation,
m arket analysis
product
im prov em ent
requirem ents
pilot product
Plan and M onitor
Business
Supplier
m aterial
s election
patent applic ation
D evelop
Product
plans and
budgets
supplier
credentials
supplier inv oice
production order,
general order
Pay Accounts
Procure M aterials
forecasts (m aterial /
parts and tim ing)
equipm ent needed
for production
production des ign
docum ents, m ethod of
produc tion, B O M ,
inv entory, software
M aintain Financial
R ecords
m arket analysis
M arket Product
pricing
product
im prov em ents, future
product needs
produc t
im provem ents
Plan Production
production m aterial
requirem ents
m aintenanc e
plan
m arketing forecast
production
plan
product
pricing
problem sum m ary and
product feature requests
m onthly sales forecasts for production / c ustom er order
production
statistics
custom er order details
Provide Personnel
Support
Sell Product
custom is ed product
M anufacture
Product
production
m aterials
invoice details
parts for repair/refurbishing
finished product,
repaired /
refurbished parts
m aintenance
m aterial
requirem ents
Provide Post Sale
C ustom er Support
sales invoice
m aintenance
D eliver / Install
Product
R eceive Accounts
Provide
Technology
Support
finished produc ts for
dis tribution
W arehouse
M aterials and
Product
M aintain
Production
Equipm ent
custom er
enquiries,
problem
notification,
com plaints
defective
parts
m aintenance /
s upport
order
delivered
goods
c ustom er
paym ent
problem s
w ith order
product
installation
C ustom er
m aintenance
m aterials
custom er
training
product & production
supplies
Supplier
C ustom er
High Level Segmentations of Enterprise Processes
© Minder Chen, 1993-2007
- 62 -
Logical Functional Process Model
© Minder Chen, 1993-2007
- 63 -
© Minder Chen, 1993-2007
- 64 -
Methods & Guidelines in Selecting Processes
• Identify processes to be redesign:
– Systemic & exhaustive approach: Information
engineering can be used to identify critical business
processes using activity-data matrix.
– High-impact & intuitive approach: Use facilitated
workshops or extensive interviews involving senior
management.
• Guidelines:
– 2~5 business processes at a time
– Identify owners of business processes.
– Expand the scope of a process been analyzed
© Minder Chen, 1993-2007
- 65 -
Criteria for Selecting Processes
•
•
•
•
•
Broken
Bottleneck
Cross-functional or cross-organizational units
Core processes that have high impacts
Front-line and customer serving - the moment
of the truth
• Value-adding
• New processes and services
• Feasible
© Minder Chen, 1993-2007
- 66 -
Woof!
Pick low
hanging fruits
Pick low
hanging fruits
Medium
Bark up the
wrong tree
Good for a
serious pilot
project
Pick low
hanging fruits
Bark up the
wrong tree
Fruitless
Effort
Fruitless
Effort
High
Risky
business
Low
Process Impacts
The 9-Grid Model for Selecting Processes to Reengineer
High
Medium
Low
Implementation Difficulty
© Minder Chen, 1993-2007
- 67 -
Phase 3: Analyzing
Analyze and Measure an Existing Process
• Conduct preliminary scoping.
• Develop a high-level AS-IS baseline process model (work
flow model). Avoid analysis paralysis by conducting
preliminary analysis at fairly high level.
• Surface purpose and assumptions of the process (Ask
WHY?).
• Perform activity-based costing: costs can be assigned
based on actual activities and productivity.
• Reveal hidden time and nonvalue-added activities.
• Measure cycle-time and quality.
• Measure profitability in terms of task, product, and
customer type.
© Minder Chen, 1993-2007
- 68 -
Interview Questions
• What makes it go?
• Is anyone else involved?
• Does the name of the step accurately convey
the result?
• Are all outcomes shown?
• If there is a handoff,how does it get there?
© Minder Chen, 1993-2007
- 69 -
PROCESS of Gathering Requirements
• P: Plan to interview
• R: Rehearse interview
• O: Open interview
• C: Collect data
• E: End interview
• S: Summarize interview
• S: Synthesize interview
© Minder Chen, 1993-2007
- 70 -
Establish a Common Base of Knowledge
• The process and business strategies
• Customer requirements
• World-class benchmarks
© Minder Chen, 1993-2007
- 71 -
EXECUTING
TIME
Cycle time
WAITING
TIME
Idle
INVOLVEMENT
PeopleScrap
EFFICIENCY
COST
Cost per
execution
Work time
Transit
Departments
Rework
Time worked
Queue
Setup
Handoffs
Job
classifications
Labor unions
Locations
Defect by type
Errors
Languages
Countries/
cultures
Whatever else
is relevant
© Minder Chen, 1993-2007
Cost of defects
Fixed versus
variable costs
Iterations
Customer
contacts
Complaints
Compliments
- 72 -
Process Model
• Process decomposition
• Process dependency or work flow
• ICOM of a process as defined in IDEF
–
–
–
–
Inputs: information and materials
Outputs: Products and services
Controls: Policy, specification, and timing
Mechanism: Resources including people, tools, and
facility.
© Minder Chen, 1993-2007
- 73 -
Process Data
• Basic Overall process data:
–
–
–
–
Customers and customer requirements
Suppliers and suppliers qualifications
Breakthrough goals
Performance characteristics: Cost, cycle time,
reliability, and defect rate.
– Systems constraints: Budgetary, business, legal,
social, environmental, and safety issues and
constraints.
• Measure critical process metrics
–
–
–
–
–
Cycle time
Cost
Input quality
Output quality
Frequency and distribution of inputs
© Minder Chen, 1993-2007
- 74 -
Identified Broken Processes*
• Terminal Disease
–
–
Symptom: Extensive data exchange , redundancy, rekeying
Disease: Arbitrary fragmentation of a natural process
• Just In Case
–
–
Symptom: Excess buffers of assets, e.g., inventory
Disease: System slack to cope with uncertainty
• Over-inspection
–
–
Symptom: High ratio of checking and control to value adding
Disease: Incompetence and mistrust because of fragmentation
• Rework
–
–
Symptom: Frequent rework and iteration
Disease: Inadequate feedback along process chain
• Special Cases
–
–
Symptom: Too many exceptions and special cases
Disease: Graduate accretion onto a simple process
Source: Adapted from Hammer and Champy, 1993.
© Minder Chen, 1993-2007
- 75 -
Analyzing a Process
• Why? What are the underlying assumptions?
– How do the assumptions affect process structure?
– Are the assumptions still valid? Can you make them invalid?
– How would changing the assumptions affect the work and its
value?
• Who does the work?
– Are you assuming that a specialist must do the work?
• When? What is the flow of the work?
– Are you assuming that one group must finish (collecting all
data) before another group can begin?
• Where is the work performed?
– Are you assuming that decision must be made at the
headquarters?
• What resources are required?
– Are you assuming that local inventory is required for good
service?
© Minder Chen, 1993-2007
- 76 -
Phase 4: Redesigning
Identify enabling IT & generate
alternative process redesigns
How can business
processes be
transformed using IT?
Business
Reengineerin
g
Business-pulled
Technology-driven
Information
Technology
How can IT support
business processes?
Source: Thomas H. Davenport and James E. Short, “The New Industrial Engineering: Information technology and
Business Process Redesign,” Sloan Management Review, Summer 1990, pp. 11-26.
© Minder Chen, 1993-2007
- 77 -
Phase 4: Redesigning
Business Vision
& Strategy
Business-pulled
How can business
strategies be changed
business processes be
transformed using IT?
How can IT support
business strategies and
business processes?
Business
Reengineering
Technology-driven
Information
Technology
© Minder Chen, 1993-2007
- 78 -
Three Steps in Redesigning Processes
• Simplification:
–
–
Task: Change business rules or procedures of a specific task
Workflow: A process chain is simplified by elimination of
nonvalue-adding activities
• Integration:
–
–
–
Redesign tasks into a logical and effective process.
A reengineered process often crosses functional boundaries.
It offers opportunity for eradicating interdepartmental
redundancies and restructuring the organization.
• Automation:
–
–
–
Usually accompanies nontechnical redesign of organization
structures and procedures.
All reengineering costs and benefits can be projected into a
model.
Reengineering often pays for itself - sources of funding for
technology investments are frequently cost savings generated by
organizational change.
© Minder Chen, 1993-2007
- 79 -
Steps in Redesigning
•
•
•
•
•
•
Generate new visions for the process
Create ideas for dramatic changes
Identify core sub-processes
Identify enabling technologies
Design alternative new processes
Estimate cost/benefit/risk involved in alternative
process redesigns
© Minder Chen, 1993-2007
- 80 -
Phase 5: Evaluating
Evaluate and select a process redesign
• Develop criteria of evaluating alternatives of
redesigned processes
• Evaluate design alternatives
• Select and recommend a reengineered process
© Minder Chen, 1993-2007
- 81 -
Evaluation Criteria
• Costs
–
–
–
–
Design and implementing the business process
Hire and train employee
Develop supporting IS
Purchase of other equipment and facilities
• Benefits
–
–
–
–
Customer requirements
Breakthrough goals
Performance criteria
Constraints
• Risk
–
–
–
–
Technology availability and maturity
Time required for design and implementation
Learning curve
Cost and schedule overrun
© Minder Chen, 1993-2007
- 82 -
Phase 6: Implementing
Implement the reengineered process
•
•
•
•
Plan IT implementation
Plan organization implementation
Conduct a pilot project
Develop a prototype system
– Technical Design
– Social Design
• Evaluate results from the pilot project and
the prototype
• Prepare large-scale roll out
© Minder Chen, 1993-2007
- 83 -
Phase 7: Improving
Improve the process continuously
• Develop performance measurement and
reward systems in the reengineered process
• Monitor process performance constantly
• Improve the process on a continuous basis
© Minder Chen, 1993-2007
- 84 -
Elements of Integrated Process Management
Integrated Process Management
Process
Reengineering
Process
Monitoring
Process
Improvement
© Minder Chen, 1993-2007
- 85 -
Target Design Visioning: Price Waterhouse
Vision
High-Level Goals
• Desired end state
• Scope of vision
Business Analysis
Level
• Strategic
• Tactical
• Operational
Information
• Facts
• Problems
• Opportunities
•
•
•
•
•
People & culture
Processes
Systems & IT
Organization & Structure
Performance measures &
targets
Visioning Workshop
Process Design
• Facilitation
• Participation
• Consensus
• Segment processes
• Select high-return process
redesign opportunities
• Perform detailed redesign of
business processes
External View
•
•
•
•
© Minder Chen, 1993-2007
Best practices
BPR principles
Technologies
Industry &
functional
Target Environment Design
• People & culture
• Processes
• Systems & IT
• Organization & structure
- 86 -
Rapid Re Approach
Solution: Technical Design
Preparation
Recognize need
Develop executive
consensus
Train team
Plan change
Identification
Model customer
Define & measure
performance
Define entities
Model processes
Map organization
Map resources
Prioritize
processes
Vision
Understand process
structure
Understand process
flow
Identify value-adding
activities
Benchmark
performance
Determine benchmark
drivers
Estimate
opportunities
Envision and
integrate the
internal & external
ideal
Source: Adapted form Manganelli & Klein, The
Reengineering Handbook, AMACOM, 1994.
© Minder Chen, 1993-2007
Model data & reexamine
process linkages
Instrument and informate
Consolidate interfaces &
information
Redefine alternatives
Relocate & retime controls
Modularize & specify
deployment
Apply technology
Plan implementation
Solution: Social Design
Empower customer contact
personnel
Define jobs, teams, skills,
Specify management
structure, org.
boundaries, & transitional
org.
Specify job changes &
career paths
Deign change mgmt prog.
Design incentives
Plan implementation
Transformation
Build & test the
system
Train staff
Pilot new process
Define transition
Continuous
improvement
- 87 -
Enterprise Engineering - A Framework for Change
Organization and
Culture
Development
Continuous
Process
Improvement
Business
Process
Redesign
Learning
Organization
Business
Strategic
Re-engineering
Visioning
Information
Infrastructure
Development
Source: Adapted from James Martin & Co.,
Business Re-engineering Quick Reference Guide,
1993.
© Minder Chen, 1993-2007
- 88 -
BPR Team Structures
B PR Leader (Cham pion)
B PR C z ar
M eth o d o lo g ist
T o o ls Exp erts
B PR T eam
B PR Steerin g Com m itee
C h an g e M aster
B PR T eam
B PR T eam
Pro cess O w n er
“The LEADER appoints the
PROCESS OWNER, who
convenes a REENGINEERING
TEAM, with assistance from the
BPR CZAR and under the
auspices of the BPR STEERING
COMMITTEE.” (Hammer and
Champy, 1993)
© Minder Chen, 1993-2007
T eam L ead er
B PR Exp erts
D om ain Exp erts
IS Exp erts
- 89 -
Stakeholders of the Reengineering Project
•
•
•
•
•
•
End users, operators, managers of the process
Gainers and losers of benefits
Employees who may be affected
Decision makers
Controllers of resources
Suppliers and customers of the process
© Minder Chen, 1993-2007
- 90 -
BPR Team
• Size: up to 8 members in the core team
augmented by subject-matter experts when
needed.
• Commitment: half- to full-time.
• Skills: team skills, process engineering, quality,
information systems, benchmarking,
organizational and job design, and change
management.
• Composition: Employees, customers,
suppliers, and external consultants.
© Minder Chen, 1993-2007
- 91 -
Facilitated BPR Meetings
• Centered around a workshop: It is an organized,
controlled, and structured process
• Participated by users, managers, and IS personnel (if
necessary)
–
–
–
User orientation
Management direction
IS technical assistance
• Facilitated by a BPR facilitator to ensure thorough
analysis
• Employ a BPR analysis and design methodology to
ensure usable requirements or specifications
• Focused on a consensus-based decision making process
• Use multi-media audio-visual equipment or BPR tools to
bridge knowledge gap among participants
© Minder Chen, 1993-2007
- 92 -
Qualifications of a BPR Facilitator
•
•
•
•
•
•
•
•
Is skillful in team building and leading
Manages group process and dynamics
Has energetic and outgoing personality
Summarizes discussion
Is a good communicator (listening and speaking)
Has project management ability
Has mastered facilitation skills
Understands BPR methods
© Minder Chen, 1993-2007
- 93 -
BPR Team Experiences at Charles Schwab
• The real battle of reengineering is to learn how to
translate the best intentions into the best of
plans and, ultimately, into the best of products,
processes and systems.
• Current systems can not provide a single view of
any one customer’s business with the firm.
• Reengineer to survive, to sustain growth, to
maintain leadership position, to transform
businesses.
• BPR should be driven by customer satisfaction.
• You may need to reengineer the reengineering
process.
Source: Jeff Moad, “Reengineering: Report from the Trenches,” Datamation, March 15, 1994, pp. 36-40.
© Minder Chen, 1993-2007
- 94 -
Lessons Learned
• People tend to focus on the shortcoming of existing
systems, rather than entirely new way to deliver
services to customers.
• Task-oriented people in BPR teams may not be able to
see and change the big picture.
• You need data about your customers, their needs, and
your competitors before you start.
• Work hard at building a consensus of purpose and an
identity for the BPR team. Members should not see
themselves as representatives of various functional
units brought together to protect their interests. They
should work as a team to benefit the business.
• Insist on direct and active upper management
participation such that the team will have the political
cloud to actually reengineer and will know the changes
in business strategies.
© Minder Chen, 1993-2007
- 95 -
Vision
• A statement of the future business environment
and how the company will operate in that
environment.
• Vision is the result of dreams in action . It is a
positive image of the future that is the strongest
motivator for change.
• Characteristics
–
–
–
–
–
–
Common purpose: worth the effort
Positive feeling and diffuse fear
Clarity and values
Capture the imagination
Inspires and empowers
Should have "reach" and "range"
© Minder Chen, 1993-2007
- 96 -
Mission
• A statement of the basic purpose or reason for
the company to exit.
• Lines of questioning
–
–
–
–
–
What business are we in?
What is the geographic scope?
What markets do we serve?
What products and services do we provide?
What are the critical successful factors of the
organization?
– How can we achieve our competitive advantage?
© Minder Chen, 1993-2007
- 97 -
Mission: Examples
• AT&T: Our business is service
• Gerber: Babies are our business
• Du Pont: Better things for better living through
chemistry
© Minder Chen, 1993-2007
- 98 -
Strategic Visioning Process
Visions
Stories
Context
Past
© Minder Chen, 1993-2007
Insight
Present
Foresight
Future
- 99 -
Five Bold Steps Vision
Vision
Mission
1. step
2.
3.
4.
5.
Value
Source: The Grove Consultants International, 1996.
© Minder Chen, 1993-2007
- 100 -
Descargar

Business Process Reengineering: Principles, Methods, …