Reengineering: some basic concepts

Reengineering: some basic Reengineering: some basic conceptsconcepts

Assoc. Prof. Dr. Jegak UliAssoc. Prof. Dr. Jegak Uli

The Official DefinitionThe Official Definition

Unlike continuous improvement or Unlike continuous improvement or benchmarking, reengineering is intended to benchmarking, reengineering is intended to totally change the processtotally change the process. .

The fundamental rethinking and The fundamental rethinking and radical radical redesignredesign of business of business processesprocesses to bring to bring about about dramaticdramatic improvements in improvements in critical, contemporary measures of performance, , such as cost, quality, service and speed.such as cost, quality, service and speed.

The Official DefinitionThe Official Definition

The Key WordsThe Key Words

dramaticdramatic -- improvements not -- improvements not marginal/incremental, not 5 or 10 % but quantum marginal/incremental, not 5 or 10 % but quantum leapsleaps

radicalradical -- going to the roots of things. Starting -- going to the roots of things. Starting over, reinventingover, reinventing

processprocess -- a group of related tasks that together -- a group of related tasks that together create value for customers e.g.. order fulfillmentcreate value for customers e.g.. order fulfillment

redesignredesign -- the design of processes, how work is -- the design of processes, how work is donedone

The Key WordsThe Key Words

It is used to capture a steep change in speed, It is used to capture a steep change in speed, efficiency, or qualityefficiency, or quality

However, changes of this magnitude are not However, changes of this magnitude are not easily obtainedeasily obtained

Embarking on reengineering requires both Embarking on reengineering requires both justification and determinationjustification and determination

Common themes found among organizations that Common themes found among organizations that have successfully engaged in reengineering are have successfully engaged in reengineering are process orientation, ambition, rule breaking, and process orientation, ambition, rule breaking, and creative use of information technology.creative use of information technology.

What Reengineering is NotWhat Reengineering is Not

it is not downsizingit is not downsizing

it is not restructuringit is not restructuring

it is not a fad -- it works, brings about huge it is not a fad -- it works, brings about huge improvementsimprovements

it is not more of the same -- it is it is not more of the same -- it is revolutionary. Focus on end to end revolutionary. Focus on end to end processes and not specialization of laborprocesses and not specialization of labor

What Reengineering is NotWhat Reengineering is NotWhat Reengineering is NotWhat Reengineering is Not

The Three Cs The Three Cs CUSTOMERSCUSTOMERS -- more sophisticated, -- more sophisticated, demanding, more alternatives, more demanding, more alternatives, more knowledgeableknowledgeable

COMPETITIONCOMPETITION -- no longer local and gentle, -- no longer local and gentle, but more global and cutthroatbut more global and cutthroat

CHANGECHANGE -- change from traditional focus on -- change from traditional focus on planning, control, and managed growth to planning, control, and managed growth to emphasis on speed, innovation, flexibility, emphasis on speed, innovation, flexibility, quality, service, and costquality, service, and cost

The Three CsThe Three Cs

Top Ten Ways to FailTop Ten Ways to Fail

1)1) Giving only lip service to reengineerGiving only lip service to reengineer

2) Don’t focus on processes2) Don’t focus on processes

3) Spend a lot of time analyzing the current situation3) Spend a lot of time analyzing the current situation

4) Proceed without strong executive leadership4) Proceed without strong executive leadership

5) Be timid in redesign5) Be timid in redesign

6)6) Go directly from conceptual design to Go directly from conceptual design to implementationimplementation

7)7) Reengineer slowlyReengineer slowly

8)8) Place some aspects of the business off- Place some aspects of the business off- limitslimits

9)9) Adopt a conventional implementation styleAdopt a conventional implementation style

10) Ignore concerns of your people10) Ignore concerns of your people

The Primary IngredientsThe Primary Ingredients

LeadershipLeadership

The Reengineering TeamThe Reengineering Team

The Tools of Reengineering The Tools of Reengineering LeadershipLeadership

SIGNALS -- Explicit CommunicationsSIGNALS -- Explicit Communications

SYMBOLS -- Personal BehaviorSYMBOLS -- Personal Behavior

SYSTEMS -- Measurements and Rewards SYSTEMS -- Measurements and Rewards

The Profile of a ReengineerThe Profile of a Reengineer

Process orientedProcess oriented

Holistic perspectiveHolistic perspective

CreativityCreativity

RestlessnessRestlessness

EnthusiasmEnthusiasm

OptimismOptimism

PersistencePersistence

TactTact

Team playerTeam player

Communication skillsCommunication skills

The Content of Reengineering WorkThe Content of Reengineering Work

UnderstandingUnderstanding the old processes and the old processes and customer requirementscustomer requirements

InventingInventing a new process design that a new process design that shatters old assumptionsshatters old assumptions

ConstructingConstructing the new process-- details of the new process-- details of operations, taking care of implications, operations, taking care of implications, trainingtraining

SellingSelling the new way the new way

The Context of Re-e EffortsThe Context of Re-e Efforts

UncertaintyUncertainty -- uncertainty eliminated -- uncertainty eliminated gradually gradually

ExperimentationExperimentation -- iterative. Designing on -- iterative. Designing on paper must be followed by trying in realitypaper must be followed by trying in reality

PressurePressure -- must proceed at fast pace. -- must proceed at fast pace. Always operate under conditions of great Always operate under conditions of great urgency and intensityurgency and intensity

Focus of Team MembersFocus of Team Members

Must share dedication to three things:Must share dedication to three things:

i.i. The process being reengineeredThe process being reengineered

ii.ii. The needs of the customer of that processThe needs of the customer of that process

iii.iii. The team itselfThe team itself

Example of team characteristicsExample of team characteristics

CARINGCARING

DARINGDARING

SHARINGSHARING

Problem, Rule, and AssumptionProblem, Rule, and Assumption

PROBLEMPROBLEM -- a specific performance -- a specific performance shortcoming of the process e.g.. slow cycle timeshortcoming of the process e.g.. slow cycle time

RULERULE -- a specific aspect of the process design -- a specific aspect of the process design that causes the problem e.g.. must have that causes the problem e.g.. must have specialist for each taskspecialist for each task

ASSUMPTIONASSUMPTION -- a belief that gives rise to the -- a belief that gives rise to the rule e.g.. the work is complexrule e.g.. the work is complex

Problem, Rule, and AssumptionProblem, Rule, and AssumptionProblem, Rule, and AssumptionProblem, Rule, and Assumption

Principles for Overcoming Resistance to Principles for Overcoming Resistance to ChangeChange

Resistance is natural and inevitable --Resistance is natural and inevitable --Expect itExpect it

Resistance is not always apparent -- Resistance is not always apparent -- Find itFind it

Resistance has many motivations -- Resistance has many motivations -- Understand itUnderstand it

Deal with people’s concerns not their arguments Deal with people’s concerns not their arguments -- -- Confront itConfront it

There’s no one way to deal with resistance -There’s no one way to deal with resistance -- - Manage itManage it

Principles for Overcoming Resistance to ChangePrinciples for Overcoming Resistance to Change

INCENTIVESINCENTIVES -- positive and negative-- positive and negative

INFORMATIONINFORMATION -- dispel uncertainty and fear -- dispel uncertainty and fear

INTERVENTIONINTERVENTION -- one-on-one connection -- one-on-one connection

INDOCTRINATIONINDOCTRINATION -- make change seem -- make change seem inevitableinevitable

INVOLVEMENTINVOLVEMENT -- make people part of the effort -- make people part of the effort

The Key Mechanisms for Overcoming ResistanceThe Key Mechanisms for Overcoming Resistance

Selling the ChangeSelling the Change

Impediments to communicationsImpediments to communications

Ten Principles of Reengineering Ten Principles of Reengineering communicationscommunications

Impediments to CommunicationsImpediments to Communications

DisbeliefDisbelief

False familiarityFalse familiarity

Fear of layoffsFear of layoffs

The rumor millThe rumor mill

Sloppy execution -- incomprehensibility, Sloppy execution -- incomprehensibility, abstractions, complexity, and clichésabstractions, complexity, and clichés

Impediments to CommunicationsImpediments to Communications

Ten Principles of Re-eng Ten Principles of Re-eng CommunicationsCommunications

1) Segment the audience1) Segment the audience

2) Use multiple channels2) Use multiple channels

3) Use multiple sources3) Use multiple sources

4) Be clear4) Be clear

5) Communicate, communicate, 5) Communicate, communicate,

communicatecommunicate

Ten Principles of Re-engTen Principles of Re-eng CommunicationsCommunications

6) Honesty is the only policy6) Honesty is the only policy

7) Use emotions, not just logic7) Use emotions, not just logic

8) Heal, console, encourage8) Heal, console, encourage

9) Make the message tangible9) Make the message tangible

10) Listen, listen, listen10) Listen, listen, listen

Major components of the rapid re-e Major components of the rapid re-e methodologymethodology

Preparation: How do we do the project?Preparation: How do we do the project?

Identification: Where do we focus our attention?Identification: Where do we focus our attention?

Vision: What result do we want to produce?Vision: What result do we want to produce?

Solution: How do we produce those results?Solution: How do we produce those results?

Transformation: How do we implement the Transformation: How do we implement the solution?solution?

STAGES OF REENGINEERINGSTAGES OF REENGINEERING

STAGE 1 – PREPARATIONSTAGE 1 – PREPARATION

The purpose of this stage is to mobilize, organized, The purpose of this stage is to mobilize, organized, and energized the people who will perform the and energized the people who will perform the reengineeringreengineering

1.1. Goal seeking – goals and objectives must be aligned Goal seeking – goals and objectives must be aligned with the various business processeswith the various business processes

2.2. Facilitation – is use continuously during the life time Facilitation – is use continuously during the life time reengineering projectreengineering project

3.3. Team building – Organizing the members of Team building – Organizing the members of reengineering team into a working group and training reengineering team into a working group and training them the methodologythem the methodology


4.4. Motivation – to develop interest and enthusiasm so the Motivation – to develop interest and enthusiasm so the team members will be encouraged to seek and team members will be encouraged to seek and understand the opportunity for breakthrough changesunderstand the opportunity for breakthrough changes

5.5. Change management – the change plan will evolve in Change management – the change plan will evolve in substance in detail as the project progresses substance in detail as the project progresses

6.6. Self-assessment – analyzes the organization strength Self-assessment – analyzes the organization strength and weaknesses, ie. Org life cycle, org structure, task, and weaknesses, ie. Org life cycle, org structure, task, culture, peopleculture, people

7.7. Environmental assessment – identifying the external Environmental assessment – identifying the external forces which may offer threats or opportunities to the forces which may offer threats or opportunities to the business business

8.8. Project mgmt – requiring project leadership, planning, Project mgmt – requiring project leadership, planning, reporting, team guidance and issue resolutionreporting, team guidance and issue resolution

SPONSOR CEO

TEAM LEADERMANAGER

INDUSTRIAL ENGINEERING

FACILITATORREENGINEERING

EXPERT

SUPERVISORPRODUCTION

PLANNING

MATERIALSMGMT

DIRECTOR

SALES MANAGER

INDUSTRIALRELATIONSSPECIALIST

COST ACCOUNTANT

INFORMATIONSERVICESEXPERT

Example of re-e team

Stage 2 – IDENTIFICATIONStage 2 – IDENTIFICATION

Produces definition of customers, processes, and Produces definition of customers, processes, and performance measures and identifies value adding performance measures and identifies value adding processes processes

1.1. Customer modeling – to gain a complete Customer modeling – to gain a complete understanding of the customerunderstanding of the customer

2.2. Performance measurement and cycle time analysis – Performance measurement and cycle time analysis – to define the customers performance expectation and to define the customers performance expectation and to quantify the measures of how work is being performto quantify the measures of how work is being perform

3.3. Process modeling – rapid representation of individual Process modeling – rapid representation of individual processes and sub processes showing the sequence processes and sub processes showing the sequence of activities of activities


4.4. Supplier integration and partnership program Supplier integration and partnership program

5.5. Workflow analysis – to identify critical analysis necessary Workflow analysis – to identify critical analysis necessary to make the process work and those which add valueto make the process work and those which add value

6.6. Organizational mapping – take the specific task and Organizational mapping – take the specific task and activities associated with the processes and document activities associated with the processes and document the action takenthe action taken

7.7. Activity based cost analysis – quantifies the label cost Activity based cost analysis – quantifies the label cost associated with specific process task, based on current associated with specific process task, based on current work value and staffingwork value and staffing

8.8. Process value analysis – prioritize the processes Process value analysis – prioritize the processes based on the assumed potential of the process to meet based on the assumed potential of the process to meet the goals and objectivesthe goals and objectives

9.9. Change mgmt, project mgmt and facilitation are Change mgmt, project mgmt and facilitation are continued in this stagecontinued in this stage

STAGE 3 – VISIONSTAGE 3 – VISION

To develop a process vision capable of achieving To develop a process vision capable of achieving breakthrough performance for the processes selected breakthrough performance for the processes selected to be reengineered to be reengineered

1.1. Workflow analysis – to further analyze the process in Workflow analysis – to further analyze the process in terms of the individuals performing descript tasks and terms of the individuals performing descript tasks and the technology being usedthe technology being used

2.2. Process value analysis – inspect the activities of each Process value analysis – inspect the activities of each process to determine which have an impact on the process to determine which have an impact on the value added worth of the process itselfvalue added worth of the process itself


3.3. Benchmarking – to quantify existing performance Benchmarking – to quantify existing performance factors and compared them against competitors, factors and compared them against competitors, practicespractices

4.4. Visioning - the ideal process that put result if all Visioning - the ideal process that put result if all performance measures were optimizeperformance measures were optimize

5.5. Change mgmt, project mgmt, facilitation are continued Change mgmt, project mgmt, facilitation are continued

STAGE 4 (a) – SOLUTION : TECHNICAL DESIGNSTAGE 4 (a) – SOLUTION : TECHNICAL DESIGN To specifies the technical dimension of the new To specifies the technical dimension of the new processprocess

1.1. Work flow analysis – analyzes the linkages among Work flow analysis – analyzes the linkages among processes to identify opportunities for movement of processes to identify opportunities for movement of steps, responsibilities, etcsteps, responsibilities, etc

2.2. Information engineering – to define the technical Information engineering – to define the technical solution where and how to apply technology to solution where and how to apply technology to implement the activities and steps of the reengineer implement the activities and steps of the reengineer processprocess

3.3. Performance measurement – helps identify appropriate Performance measurement – helps identify appropriate places for process controls and performance data places for process controls and performance data capturecapture


4.4. Strategic automation – addressing technology Strategic automation – addressing technology deployment and implementation options (use or adapt deployment and implementation options (use or adapt existing systems, replacements, outsourcing)existing systems, replacements, outsourcing)

5.5. Change mgmt, project mgmt, facilitation are continuedChange mgmt, project mgmt, facilitation are continued

STAGE 4 (b) – SOLUTION : SOCIAL DESIGNSTAGE 4 (b) – SOLUTION : SOCIAL DESIGNTo specify the social dimensions of the new processesTo specify the social dimensions of the new processes

1.1. Employee empowerment – to define the responsibility, Employee empowerment – to define the responsibility, decision making that can be deployed to the level of the decision making that can be deployed to the level of the employee employee

2.2. Skill matrices – to make required skill for each new Skill matrices – to make required skill for each new position and define the job characteristicposition and define the job characteristic

3.3. Team building – structures the needed process teamsTeam building – structures the needed process teams

4.4. Self managed work team – determine the way in which Self managed work team – determine the way in which each process team will manage the work produced by each process team will manage the work produced by the team and the working of the team itselfthe team and the working of the team itself


5.5. Organizational restructuring and organizational Organizational restructuring and organizational mapping – to “redraw” the org that is appropriate to the mapping – to “redraw” the org that is appropriate to the mgmt and operation of the new processmgmt and operation of the new process

6.6. Job production – to determine the skill and knowledge Job production – to determine the skill and knowledge needed of each of the newly define positionneeded of each of the newly define position

7.7. Broad banding – to designed compensation systemBroad banding – to designed compensation system

8.8. Change mgmt, project mgmt and facilitation are Change mgmt, project mgmt and facilitation are continuedcontinued

9.9. Employee reward and incentive – to break down some Employee reward and incentive – to break down some barriers to change and retain certain current barriers to change and retain certain current cooperating operative during the transformation stage cooperating operative during the transformation stage

STAGE 5 – TRANSFORMATIONSTAGE 5 – TRANSFORMATION

Produces pilot and full production versions of Produces pilot and full production versions of reengineered process and continual change mechanism reengineered process and continual change mechanism

1.1. Process modeling – to complete the design of the Process modeling – to complete the design of the business systembusiness system

2.2. Information engineering – implement the technical Information engineering – implement the technical design from stage 4(a)design from stage 4(a)

3.3. Skill matrices – address specific personnel and the Skill matrices – address specific personnel and the strategies necessary to train or retrain them strategies necessary to train or retrain them


4.4. Team building – use to organize and train the new Team building – use to organize and train the new process teamprocess team

5.5. Continues improvement – is initiated as a program to Continues improvement – is initiated as a program to identifies and capitalizes on opportunities for identifies and capitalizes on opportunities for incremental improvement incremental improvement

6.6. Performance measurement – is done on and on going Performance measurement – is done on and on going basis, since some key benefits will depend on the basis, since some key benefits will depend on the customer reaction to the changes madecustomer reaction to the changes made

7.7. Change mgmt, project mgmt, facilitation are continuedChange mgmt, project mgmt, facilitation are continued

The differences between proc reengineering, redesign, The differences between proc reengineering, redesign, and benchmarking (Harington, 1998)and benchmarking (Harington, 1998)

BPRBPR- Use when cost and cycle time need to be reduced - Use when cost and cycle time need to be reduced between 60-90%between 60-90%

Proc redesignProc redesignUse when cost and cycle time need to be reduced Use when cost and cycle time need to be reduced between 30-60% with 100% improvement in qualitybetween 30-60% with 100% improvement in quality

Proc benchmarkingProc benchmarkingUse when cost and cycle time need to be reduced Use when cost and cycle time need to be reduced between 30-60% with 80% improvement in qualitybetween 30-60% with 80% improvement in quality

Example of BPR in MalaysiaExample of BPR in Malaysia

Banks and finance companiesBanks and finance companies

Before: Malaysia has 67 banking inst.Before: Malaysia has 67 banking inst.

Now: 10 anchor banks;Now: 10 anchor banks;

1.1. Arab Malaysian BankArab Malaysian Bank

2.2. Bumiputra Commerce BankBumiputra Commerce Bank

3.3. EON BankEON Bank

4.4. Hong Leong BankHong Leong Bank

5.5. MaybankMaybank

6.6. Multi-purpose BankMulti-purpose Bank

7.7. Perwira BankPerwira Bank

8.8. Public BankPublic Bank

9.9. RHB BankRHB Bank

10.10. Southern BankSouthern Bank

ReferencesReferences

Hammer, M. and Champy, J. Hammer, M. and Champy, J. Reengineering the Corporation: A Reengineering the Corporation: A Manifesto for Business Manifesto for Business Revloution.HarperCollins, New York, 1993Revloution.HarperCollins, New York, 1993

Hammer, M. and Stanton, S.A. Hammer, M. and Stanton, S.A. The The Reengineering Revolution: A Reengineering Revolution: A HandbookHandbook. HarperCollins, New York, . HarperCollins, New York, 1995.1995.

Documents

Reengineering: some basic concepts