Week 6 – Basic of Business Process Reengineering 2

Lesson Learnt in Lecture of Week 6

In last lecture, there are few important concepts discussed in class, which are organization adoption by using Leavitt Diamond and the wave of improvement in the business process. Also the lecture distinguished Business Process Reengineering and Total Quality Management, and how it can implement in an organization.

For the Leavitt Diamond, it states the important of balancing IT-enabled organization transformation. There are 4 main components in the Leavitt Diamond – Business Process, Information Technology Use, Organizational Form and Requisite People Skills. If the organization wants to change any one of the component, the other three components must also need to change. For example, we will redesign a new business process, we need to train our staffs again in order to acquire the new knowledge, and also we may need to integrate or add some new IT systems to realize our change. As the new business process may require less people to handle those activities, as most of them are automated by the system. Therefore the organizational structure may be flattening as one manager can in charge more subordinates.

For the concept of Total Quality Management (TQM) and Business Process Reengineering (BPR), it stated that TQM refer to continuous incremental business process improvement with little role of IT, the execution approach is bottom-up, and the output is focusing on the product quality. But for BPR, it refers to radical and quantum change in an organization, the execution approach is top-down. The most important element of BPR which are different from TQM is the length of the project, BPR is a one-shot project. In order to improve the business process of an organization, we need to use both the techniques of TQM and BPR simultaneously. Normally, after each BPR project, we will perform TQM, so that it can further improve the business process created by that BPR project. But as time goes on, we need to do another BPR project again to cater the need of the external environment. And the cycle will continue in an organization.

References:

Materiale til faget Salg og service: http://www.emu.dk/erhverv/merkantil_caseeksamen/tdc/salg_service/faget.html

External Journal: The Xerox Non-Production Procurement BPR Project

This journal is talking about how the company – Xerox do a radical and quantum redesign its non-production procurement business process. Non-production procurement process refer to all the activities for purchasing the all the major equipment or some minor things such as stationary. The company found that the original business processes are quite complex and most of them are duplicated, and it cost a lot to the company. So they decided to have a radical redesign in the business process of that area. The BPR project involves all the teams that were working on the procurement process and they also seek help from the consulting firm to plan the BPR project. During the planning of the new business process, they found that most of the activities are outdated and duplicate with others, so they suggested removing those activities. They also found that they have many contracts with different small vendors, it increase the handling cost of the company. They decided that to purchase the equipment from few main vendors, so it can save much administrative cost. Also they decided to grant credit card for the managers to purchase some emergency equipment, so that it can save the time to complete an application form for approval. Also the credit card company will provide the statements to the company in a regular period. After I studied this journal, I think that if the organization do not change its old business process, it will much increase the resources of the company, and it will lead to difficult to compete with other competitors in the market. So BPR can provide competitive advantage to the company. Even though there is no competitive advantage, at least it will not lead to competitive disadvantage.

References:

The Xerox Non-Production Procurement BPR Project by Paul Harmon, Executive Director, BP Trends, November 2002

http://search.proquest.com/docview/26252741/134A6C8B53F19A4F606/1?accountid=16210

Week 5 – Is BPR still a useful tool for business today?

As there are many failure cases when executing BPR, you may doubt the effectiveness of BPR whether it is still a useful tool in today's world.

I think BPR is still a useful tool for business to change. The Reasons in failure when executing BPR are because of the people misunderstanding the concept behind and the resistance from people for BPR. The concepts of BPR are to eliminate handoffs, rework and redundancy, with changing business environment and emerging competition and customer preferences. But as successful companies have proved reengineering the process should be aligned with the requirements to deliver mission and strategies of the company and it requires a good planning and execution with full confidence of the people. IT cannot drive the change; it can only enable the changed process to deliver the desired results.

In order to have a better understanding on the BRP, I have made some minor research on this term.

B stands for Business. It focuses on the whole processes which provide value to the customers. It monitors the hand-off activities that are moved across the organization or functional boundaries. It concerns about the effectiveness of the process and to think about the process by using outside-in perspective from the customers.

P stands for Process, which focus on the tasks and activities that can bring value to the customers. For example if we need to fulfill an order, the first step is to take the order as an input, then need to follow on a sequence of activities, approvals and hand-off, until the goods delivered to the target location. The above example is the sequence of process in the business system.

R stands for Reengineering. It involves the dramatic change and quantum improvements by the use of IT to increase the value of the process. Also it requires the business environment is fit to the BRP. Therefore if we need to change in the BPR, it will impact the whole organization include the business activities and employees.

To conclude, BPR is to improve the current out-dated business processes, by grouping, deleting and adding some new process, so that the new business process should be more effective than before. When we are designing the new business process, we should focus on adding value to the customers. We also need to change the working environment such as to change the organization structure that can fit the new business process. And the most important thing is to redesign the business process from the eye of the customers.

But in reality, many project of BPR was failed because of the following reasons.

1.          Misunderstand the concept. As many business managers thought that for any change in the organization as reengineering. Then it will lead to failure to appreciate the promise of reengineering.

2.          Some business managers thought that BPR is not a continuous improvement process, and this is a wrong way to develop a BPR project.

3.          The strategy of BPR is not match with the business strategy.

4.          BPR always take more resources than expected, which involved more people and time. If the business manager set a limit budget for the whole project, it will easily lead to over-budget.

5.          Lack of proper direction from the high level manager which lead to high failure rate of BPR.

6.          Many business managers focus on the process design and underestimate the importance of people.

In conclusion, I think the failure of executing BPR is because people lost focus of some of the most important elements of reengineering. They forgot to have a vision and strategies around which processes could be redesigned. They had no priorities for processes to be redesigned. They went for reengineering the processes without any thinking of how the process stakeholders would be affected by such a drastic change. And most importantly they ignore the resistance of people like the employees who are not willing to accept the changes as it changes their usual practice on work. However, BPR can reduce costs and cycle time by eliminating unproductive activities and the employees who perform them. So that we can prevent the errors caused by multiple handoffs and accelerates each process in each department. Moreover, BPR can improve the quality of the final products. It is because BPR is customer-oriented so that the final products are the most suitable goods for customers.

References:

1.      "Business process reengineering: A tutorial on the concept, evolution, method, technology and application” by Varun Grover and Manoj K.Malhotra 1996 - http://www.sciencedirect.com/science/article/pii/S0272696396001040

2.    Business Process Reengineering: Wikipedia - http://en.wikipedia.org/wiki/Business_process_reengineering

Week 4 - Which Alignment Perspective of SAM Analysis is the best?

Strategic Alignment Model (SAM) is focus on the four domains in the business organization which has classified into 2 sectors of “Business” and “IT”. In the business side, it had “Business Strategy” and “Business Infrastructure”. In the IT side, it had “IT Strategy” and “IT Infrastructure”. These four domains are inter-related with each other, so that a business organization can smoothly operate. The following graph shows their relationship with each other.

In my opinion, I think that “Technology Transformation” is the best alignment perspective. The path of this strategy is the following:

Business Strategy -> IT Strategy -> IT Infrastructure

The driver of this perspective is Business Strategy. The role of the top management is Technology Visionary and the role of IT Management is Technology Architect. The performance criteria are Technology Leadership.

This perspective is not limited by the current organization structure, and the strategy is to find out the best possible IT competencies. For using this strategy, business strategy is the important driver, but it also needs the support of IT strategy. IT strategy is the requirement to operate the business, and it is also the requirement of the operation in related IT infrastructure and procedure. The top level management must have the sense of IT and understand the importance of IT support in the business operation, so that they can develop some IT strategy that are helpful to the business organization. The job of the IT manager is to develop a powerful IT infrastructure that can fully adopt the business and the external environment, and responsible for the efficiency of the IT strategy.

In order to use this perspective for Business Re-engineering, we need to develop the business strategy according to the company mission and vision, and to re-engineering some or all of the business process. After that different departments in the organization will make the requirements for the IS, and they will discuss with the IT department and realize the change.

I think this alignment perspective is the best one because the people from IT department may not have a boarder view of the organization and the global business environment, so they may not have the ability to dominate the whole organization. On the other side, the people in the business side had more experience and understanding in the global market environment, so it is better to establish the strategy and IT strategy to support their direction.

For example in the bank of Standard Chartered, as their operation approach is the business manager will develop the business strategy that support the mission of their bank that is to increase the market share of personal banking. So they suggest to improve their service by provide more convenient way to the customers. Then this direction will pass to the IT department to develop a more concrete IT strategy. In order to support the business strategy, IT department proposed to develop the iPhone application for the customers to handle their transactions not only queue up in the bank or in front of the computer. They can complete their transaction at anywhere and anytime when they have the iPhone on hand. After the IT Strategy was developed, IT infrastructure will consider the hardware, software, database and the network to analysis if they can support the IT strategy.

But there are no best universal alignment perspectives that are fit to all the organization. One perspective may suitable for one organization, but may not suitable for other organizations. Because different organizations are facing different situations, and they have different mission, so the top manager of the companies need to choose their own perspectives base on their organization culture, current environment and the mission in the future.

SAM analysis bring us an important topic is that we need to alignment with the business strategy and IT strategy in order to successfully operate an organization. And we will fail in our business if we miss any one of them.

References:

J.C. Henderson and N. Ventakraman, Strategic Alignment: Leveraging Information Technology of Transforming Organizations, Vol. 32, No. 1 (1993)