Reengineering: 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 (Hammer & Champy, 1993)

Reengineering is implemented when a company deems the current system is no longer efficient or failing to compete with other companies.

Reengineering can be disastrous without proper analysis of business’ needs.

What is Reengineering?

Selecting the Processes for Reengineering

Identify Change Enabler

Developing a Business Vision and Process Objectives

Understanding and Improving Existing Processes

Designing the New Processes and Organization

Implementing the New Process-Based Organization

How to Reengineer a Business Process?

1. Selecting the Process for Reengineering

Enumerate major

process

Determine process

boundaries

Prioritize process for reengineeri

ng

Key to identify the number of processes : the level of process

Most of the companies that have identified their processes in the context of reengineering have enumerated between 10 & 20

Enumerate Major Processes

Incremental improvement

• Narrowly-defined• Low rewards and

risk of failure

Radical process change

• Broadly-defined• Improving handoffs

between functions• Great possibility of

innovation• Should be broken

down into its subprocesses

The process that becomes the focus for a reengineering must have clearer boundaries and relative importance

Most companies that have worked on their processes for a number of years have revised their original lists.

Determine Process Boundaries

When might the process owner

begin&stop worrying about the process?

When should process customers’

involvement begin and end?

Where do subprocesses begin&end?

Is the process fully embedded within another process?

Are performance benefits likely to result from combining the process with other

processes or subprocesses?

Prioritize Processes for Reengineering

Five criteria to guide process selection• The process’s centrality to the

execution of the firm’s business strategy

• The state of the process’s health• The process’s culture and leadership• The current cost of the process• Manageable project scope

Assess IT enablers of

reengineering

Assess organizational & HR enablers

of reengineering

Determine which

constraints will be

accepted

2. Identifying Enablers of Change

Assess IT Enablers of Reengineering

Opportunities

Constraints

Modeling Tools

System&Information Engineering

IT as enabler

New Process Design

IT as implementer

Organizational

•Involve in change in structure & culture•Structural changes can facilitate new, process-oriented behaviors•Cultural changes can facilitate new process design and empower process participants to make decisions about process operations•Companies adopt Cross-functional skills team in single work units•Companies must pay careful attention to cultural compability issues in selection of team members

Human Resource

•Involve in the way individual workers are skilled, motivated, compensated, evaluated, and so forth•Firms can begin to train workers for skills that are likely to be necessary in a reengineered environment•Motivation levels of employees are another key determinant of process performance

Assess Organizational & HR Enablers of Reengineering

The analysis of constraints tailors the process to a systems environment from the beginning.

Many “change management” methodologies focus on identifying and removing organizational and HR constraints.

Determine Which Constraints Will Be Accepted

Organizational constraints• Organizational structure

and culture that support management along individual functions rather than cross-functional processes

HR constraints• Lack of required skills• HR management systems

that are highly functional rather than process oriented

• Career path and rewards that do not favor acquisition of broad skills

Aspects of the system that should be analyzed:

Determine Which Constraints Will Be Accepted (Cont’d)

Who are the system’s

intended users?

What are its inputs and outputs?

What process tasks is the

system designed to support?

How difficult is it to add task

functionality to the system?

What interfaces to other systems

are possible?

What processes do other firms use with the

system?

Assess Existing Business

Strategy for Process

Directions

Consult with Process

Customers to Determine

Performance ObjectivesBenchmarking

for Performance Targets and Examples of Innovation

Formulate Process

Performance Objectives

Develop Specific Process

Attributes

Developing a Process Vision (1)Key Activities:

Assess Existing Business Strategy for Process DirectionsConsider:Address nonfinancial goals in addition to financial

ones?Measurable?Focus attention on specific processes of the

business? Inspire efforts to change?

Developing a Process Vision (2)

Consult with Process Customers to Determine Performance ObjectivesConsider customer’s perspective on the process on finding:What they require of our processes serves

multiple purposes?What customer’s desire for a close relationship?What specific areas in which improvement should

take place?

Developing a Process Vision (3)

Benchmarking for Performance Targets and Examples of Innovation (1)Benchmarking could help to: Determine process objectives Identify innovative process attributesLook outside for alternative ways of designing

processBreak a company’s inwardly focused mindset

Developing a Process Vision (4)

Benchmarking for Performance Targets and Examples of Innovation (2)Consider:Traditional competitive benchmarkingBest practice or innovation benchmarking, by:

Selecting companies on the basis of the performance of a particular process

Address specific innovations and uses of change enablers

Sources of benchmarks (contact benchmarked organizations directly)

Developing a Process Vision (5)

Formulate Process Performance Objectives (1)Process objectives key component of the visionConsider:Overall process goalSpecific type of improvement desiredNumeric target for innovationTime frame in which the objectives are

accomplishedAnalysis on the functions and value of the process

is expected to bring customers

Developing a Process Vision (6)

Formulate Process Performance Objectives (2)

Developing a Process Vision (6)

What business objective is this process supposed to accomplish?

Reduce new drug

development cycle time by 50% in three

years

Reduce processing costs for

customer orders by 60% over three years

Reduce processing costs for customer orders by 60% over

three years

Double customer service satisfaction level in two

years

Develop Specific Process AttributesProcess attributes the descriptive, non-quantitative adjunct to process objectivesUse: Categorization of attributes as technology, people, process

outputs, and so on. Multiple sources, such as:

Analysis of corporate strategy and vision High-level overviews of the roles of technology and

people Customer interviews Benchmarking of the best processes in other companies Firm’s performance objectives

Developing a Process Vision (6)

The reason:1. Facilitates communication among participants in

the reengineering initiative2. As essential input to migration and

implementation planning3. Useful for understanding the magnitude of

anticipated change and the tasks required4. Can help to ensure that existing processes are

not repeated in the new process5. Can provide a measure of the value of the

proposed innovation

Understanding and Improving Existing Processes (1)

Assess the Current

Process Flow

Measure the Process in

Relation to the New Process

Objectives and Attributes

Identify Problems with

or Shortcomings of the Process

Asses Current Information Technology

and Information

Identify Short-Term

Improvements in the Process

Understanding and Improving Existing Processes (1)

Key Activities:

Assess the Current Process FlowConsider: Consultation with the performer Documents of captured process Scope

Measure the Process in Relation to the New Process Objectives and AttributesConsider: Same criteria employed for the new design Reducing the time and effort required for the current

process analysis

Understanding and Improving Existing Processes (2)

Identify Problems with or Shortcomings of the ProcessConsider: Long-standing problems that have gone unrecognized Avoidance of them in the new design Customers as a key source

Asses Current Information Technology and InformationConsider: IT architecture (applications, databases, technologies, and

standards) Job descriptions, skills inventory, and any recent

organizational changes

Understanding and Improving Existing Processes (3)

Identify Short-Term Improvements in the Process

Useful for: Document problems known for years (by analysis

activity) Short-term benefit A way to begin to deliver results Funding reengineering

Understanding and Improving Existing Processes (4)

The Output:1. Detailed process and information flows2. Detailed technology architectures and human

resource plans3. Prototypes of the process and its key enablers

Designing and Prototyping the New Processes and Organization (1)

Brainstorm Design

Alternatives

Assess Feasibility,

Risk & Benefits of

Design Alternatives,

and Select the Preferred

Process DesignPrototype of New Process

Design

Develop the Migration Strategy

Implement New

Organization Structure and

Systems

Designing and Prototyping the New Processes and Organization (2)

Key Activities:

Brainstorm Design Alternatives

Consider: Generating several different process designs (meet

the process vision) Design innovation through a series of workshop or

brainstorming Emphasis on creativity and idea generation Non-judgmental atmosphere

Designing and Prototyping the New Processes and Organization (3)

Assess Feasibility, Risk & Benefits of Design Alternatives, and Select the Preferred Process Design

Consider: Graphic representation (for communication and recording)

Large whiteboards and large pieces of colored paper and string affixed to walls

Computer-based tools Feasibility analysis (benefits, costs, risks, and time frames) Comparison in terms of structure, technology, and

organization Optimum design

Designing and Prototyping the New Processes and Organization (4)

Prototype of New Process DesignOutput: organizational prototype

Goal gradually shape the organizational environment or revise the technology

Consider: Simulation and Testing Refinement the fit between new process structure,

information technology, and organization (iterative) Many iterations (must not be viewed as failure)

Designing and Prototyping the New Processes and Organization (5)

Develop the Migration StrategyConsider: The firm may not want to risk a full and abrupt transition

if: the new process involves customers, revenues, or

valued employees the process change will be highly visible internally of

externally A pilot (implementation in a unit that most capable of

achieving successful change) as the beginning A phased introduction (implementation of new systems

capabilities and skills as they become available) Employee’s ability to handle the change

Designing and Prototyping the New Processes and Organization (6)

Implement New Organization Structures and Systems

1. Create an entirely new organization if constraints within the existing environment are too great

2. Run the organization parallel to the existing one

3. Make the organization as locus of specific products, channels, or customers

Example: Midland Bank

a. establish First Direct to service retail customers without the usual branches

b. CS processes rely on telephone and ATM

c. extensive use of IT

d. offer 24-hour service and higher interest rates

Designing and Prototyping the New Processes and Organization (7)

Challenges: Structured organizations that mitigates against the success

of the new process designs Most organizational structures based on either function or

product, with little or no process orientation Functionally organized firm have difficulty in meeting

customer needs seamlessly across different functions A firm organized around product structure have difficulty in:

ascertaining total business done with individual customers cross-selling different products to the same customer

Very few firms that have adopted a fully horizontal organization

Well-known problems in an organization with matrix structures

Implement New Organization Structure and Systems (1)

Complete innovation cycle:

Caution:

a. Use highly iterative fashion in execution

b. Do not use rigid partitioning of the activities

c. Must manage the benefit of reengineering over time

d. Carefully monitor key behaviors, process operational performance, and key financial indicators

Implement New Organization Structure and Systems (2)

Process Visioning

Detailed Process Design

System Constructio

nDeployment

1. Reengineering business processes has six steps. They are selecting the processes for reengineering, identify change enabler, developing a business vision and process objectives, understanding and improving existing processes, designing the new processes and organization, implementing the new process-based organization.

2. After reengineering business process, we should execute complete innovation cycle which shown below.

CONCLUSION

Process Visioning

Detailed Process Design

System Constructio

nDeployment

THE END