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Useful document for students pursuing MBA in HR.
Business Process Reengineering (BPR) Business Process Re-Engineering…Improves Communications And Fosters Teamwork What is business process re-engineering? Business must constantly improve, and improvement requires change. How the change is to be brought in is the question, and not whether to change. Again there is very little choice. Cutting costs by cutting budgets and trying to reduce work force has been attempted. Introducing quality programmes to existing business processes has also been tried. These methods have failed to provide more than very short-term solutions. The new approach is RE-ENGINEERING. You look at the current business as if the business is being started afresh. REVIEW the past AND RELOOK into the present REPOSITION for the future. Everything is RE. This entire new approach is now known as Business Process Reengineering (BPR) What does BPR do? REASSESSES – your business purpose REPOSITION -- for greater market penetration RECONFIGURE – for smoother workflow RESTRUCTURE – so that jobs match reality REVITALISE – for ongoing competitiveness Like all new activities, it has been given wide variety of names, including streamlining, transformation, and restructuring. However, regardless of the name, the goal is almost, always the same: increased ability to compete through cost reduction. The recent surge of BPR efforts is not based on invention of new management techniques. Industrial engineering, time and motion studies, managerial economics, operations research and systems analysis have all been concerned with business process for several decades. The new emphasis is due almost entirely to the recent recognition of an increasing need to compete in order for a business to succeed or even survive. The most visible result of these changes is the decline of long established businesses. Some actually have failed completely, and it is probable that more will do so. Examples come to mind are General Motors and IBM. The pressure to change is real. It is recognised, and it is taken seriously. The term ?re-engineering? may be a misnomer. It implies that the business processes were engineered in the first place. However most business processes are products of complex series of deliberate decisions and informal evolution. They are not engineered in the sense of a design being created by professionals and the process being built to the designers specifications.
Need of BPR
The business dynamics today is governed by factors like new technologies, new competitors and again, new rules of competition. In such an ever-changing business environment, BPR is needed
for the following reasons. One, the rapid change in everything itself warrants product development in lesser time, faster product life cycles and hands-on environmental scanning. Secondly, the customer is well informed today and further; the organisations need to delight the customer rather than just satisfying. Lastly, today‘s intense competition demands the business processes at par with the ?best practices‘ prevalent in the industry.Also, the business models have to be focused on individual market segment the organisation is targeting. The need for BPR thus can be assigned to three C‘s viz.; Change, Customer and Competition. BPR in USA, Europe and India USA & some countries in Europe are termed as ?developed economy‘ today while India is a ?developing economy‘ along with other emerging economies like China, Brazil, Russia, Mexico, Turkey and Indonesia. Historically, as we have seen earlier, Michael Hammer from USA promoted the cause of BPR, being one of the earliest advocates of this theory. American companies were enjoying monopoly in the days of mass production factories with their huge assembly lines. Japanese threatened this monopoly with their superior quality products offered at
cheaper prices. This led to a re-thinking process in US which ultimately resulted in the
development of BPR methodology. The European industry on the other hand is supposed to quality conscious from the beginning. The stringent norms in Europe made it possible for their manufacturing industry to be ahead of their counterparts in US. This has been apparent with Automobile Industry in Europe following stringent Euro-II Norms. Off late, the Indian Automobile Industry also caught-up with them by adopting the Euro-II Compliance. India‘s quality movement is dominated by adoption of ISO 9000 and TQM by large number of business houses. The open competition with other global companies has brought in a lot of innovation in the business model of Indian companies. Lately, we have seen the acquisition of British companies like Land Rover and Jaguar along with Anglo-Dutch Corus by TATA from India. Other Indian stories include Tata Tea taking over Tetley, Infosys acquiring Axon, Mittal Steel merging with Arcelor etc. What all this suggests is there has been always a change dynamics; unpredictable to follow. The businesses today are more competitive, face stiffer global competition, then again face a very thoroughly informed customer; justifying the need of BPR. Reverse Innovation (Business Model Re-engineering) It has been introduced in the Harvard business review article by Mr. Vijay Govindrajan along with Jeff Immelt of General Electric and Chris Trimble. Therein the traditional Glocalisation Model is given as innovating high-end products in developed countries and bringing in their stripped-down version into the developing countries. This has been the practice so far with the western world. Glocalisation thus being coined as: the localisation of globally successful technologies.
This model now needs to be changed to a new one, coined as reverse innovation (RI). Reverse Innovation has been stated as ?Developing value products in Developing Markets (Indian / Chinese) and sell them or their modified versions to Developed Markets (US / Europe)?. Now, the whole discussion about Reverse Innovation seems futile if we look at the BPR Model. Tata Motors and Mahindra & Mahindra are following a ?Reverse Innovation‘ Model so to say, rather, their ?quest for excellence‘ and desire to give the Indian customer a ?quality product‘ might have resulted in their surge against their counterparts in US and Europe. This satisfaction of producing world-class product at competitive price was apparent on the faces of Tata Motors Engineers when they were called on stage by Ratan Tata on the launching of ?NANO‘. So, is it not radical thinking and redesign on the part of Tata‘s and Mahindra‘s applied to their respective Business Models rather than to say, processes? To conclude, the so called ?Reverse Innovation‘ can be coined as ?Business Model Reengineering‘ (BMR).
Business Process Reengineering (BPR) BPR relies on a different school of thought than continuous process improvement. In the extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself into the future and asking yourself: what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology? Such an approach is pictured below. It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.
If you have ever waited in line at the grocery store, you can appreciate the need for process improvement. In this case, the "process" is called the check-out process, and the purpose of the process is to pay for and bag your groceries. The process begins with you stepping into line, and ends with you receiving your receipt and leaving the store. You are the customer (you have the money and you have come to buy food), and the store is the supplier. The process steps are the activities that you and the store personnel do to complete the transaction. In this simple example, we have described a business process. Imagine other business processes: ordering clothes from mail order companies, requesting new telephone
service from your telephone company, developing new products, administering the social security process, building a new home, etc. Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools. We all do them, and at one time or another play the role of customer or supplier. You may see business processes pictured as a set of triangles as shown below. The purpose of this model is to define the supplier and process inputs, your process, and the customer and associated outputs. Also shown is the feedback loop from customers.
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SO WHY BUSINESS PROCESS IMPROVEMENT?
Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services. And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly. The figure below illustrates the basic steps. You begin by documenting what you do today, establish some way to measure the process based on what your customers want, do the process, measure the results, and then identify improvement opportunities based on the data you collected. You then implement process improvements, and measure the performance of the new process. This loop repeats over and over again, and is called continuous process improvement. You might also hear it called business process improvement, functional process improvement, etc.
This method for improving business processes is effective to obtain gradual, incremental improvement. However, over the last 10 years several factors have accelerated the need to improve business processes. The most obvious is technology. New technologies (like the Internet) are rapidly bringing new capabilities to businesses, thereby raising the competitive bar and the need to improve business processes dramatically. Another apparent trend is the opening of world markets and increased free trade. Such changes bring more companies into the marketplace, and competing becomes harder and harder. In today's marketplace, major changes are required to just stay even. It has become a matter of survival for most companies. As a result, companies have sought out methods for faster business process improvement. Moreover, companies want breakthrough performance changes, not just incremental changes, and they want it now. Because the rate of change has increased for everyone, few businesses can afford a slow change process. One approach for rapid change and dramatic improvement that has emerged is Business Process Reengineering (BPR).
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BUSINESS PROCESS REENGINEERING (BPR)
BPR relies on a different school of thought than continuous process improvement. In the extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself into the future and asking yourself: what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology? Such an approach is pictured below. It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.
In summary, the extreme contrast between continuous process improvement and business process reengineering lies in where you start (with today's process, or with a clean slate), and with the magnitude and rate of resulting changes. Over time many derivatives of radical, breakthrough improvement and continuous improvement have emerged that attempt to address the difficulties of implementing major change in corporations. It is difficult to find a single approach exactly matched to a particular company's needs, and the challenge is to know what method to use when, and how to pull it off successfully such that bottom-line business results are achieved.
Good reengineering projects design and implement solutions that:
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are customer focused capitalize on best practices and learning from others are designed for the future
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produce significant bottom-line improvements for the business
The methodology selected for your project impacts the size of the improvement and how fast the improvement will be realized. These guidelines present an approach shown to be effective in other companies. Research results from 248 projects are included. Ultimately, the best framework is one you select based on this information, knowledge of your project, and any internal practices at your company. If you are trying to decide whether to use a continuous- improvement methodology or a business process reengineering approach for your project, review the decision matrix at the end of this tutorial.
Recommended Approach The recommended approach for a business process reengineering project includes the following phases: 1. Project Planning and Launch(team selection, objective setting, scope definition, methodology selection, schedule development, consultant selection, sponsor negotiations, change management planning, team preparation) 2. Current State Assessment and Learning from Others (high-level process definition, benchmarking, customer focus groups, employee focus groups, technology assessment) 3. Solution Design(process design, organizational design, job design) enabling technology architecture,
4. Business Case Development (cost and benefit analysis, business case preparation, presentation to key business leaders) 5. Solution Development (detailed process definition, system requirements writing and system development, training development, implementation planning, operational transition plan, pilots and trials) 6. Implementation (larger-scale pilots and phased implementation, measurement systems, full implementation) 7. Continuous Improvement(on-going improvement and measurement of new processes and systems)
Top Management Sponsorship Major business process change typically affects processes, technology, job roles and culture in the workplace. Significant changes to even one of these areas requires resources, money, and leadership. Changing them simultaneously is an extraordinary task. If top management does not provide strong and consistent support, most likely one of these three elements (money, resources, or leadership) will not be present over the life of the project, severely crippling your chances for success. It may be true that consultants and reengineering managers give this topic a lot of attention. Mostly because current models of re-designing business processes use staff functions and consultants as change agents, and often the targeted organizations are not inviting the change. Without top management sponsorship, implementation efforts can be strongly resisted and ineffective. Top management support for large companies with corporate staff organizations has another dimension. If the top management in the "line" organization and "staff" organization do not partner and become equal stakeholders in the change, AND you only have staff management support, you most likely are ill-prepared for a successful reengineering project (line management in this context are the top managers of the operation ultimately accountable for business performance -- P&L, customer service, etc.). Projects that result in major change in an organization rarely succeed without top management support in the line organization. Strategic Alignment You should be able to tie your reengineering project goals back to key business objectives and the overall strategic direction for the organization. This linkage should show the thread from the top down, so each person can easily connect the overall business direction with your reengineering effort. You should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value, and the vision for the organization. Reengineering projects not in alignment with the company's strategic direction can be counterproductive. It is not unthinkable that an organization may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such reengineering initiatives are wasteful and steal resources from other strategic projects. Moreover, without strategic alignment your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction. Business Case for Change
In one page or less you must be able to communicate the business case for change. Less is preferred. If it requires more than this, you either don't understand the problem or you don't understand your customers. You may find your first attempt at the business case is 100 pages of text, with an associated presentation of another 50 view graphs (overhead slides). After giving the business case 20 times you find out that you can articulate the need for change in 2 minutes and 3 or 4 paragraphs. Stick with the shorter version. Why is this important? First, your project is not the center of the universe. People have other important things to do, too. Second, you must make this case over and over again throughout the project and during implementation - the simpler and shorter it is, the more understandable and compelling your case will be. Cover the few critical points. Talk to the current state, and what impact this condition has on customers, associates and business results. State the drivers that are causing this condition to occur. State what your going to do about it (vision and plan), and make specific commitments. Keep focusing on the customer. Connect this plan to specific, measurable objectives related to customers, associates, business results, and strategic direction. Show how much time and money you need and when you expect to get it back. Don't sell past the close. No matter how long you talk, you will get resistance from some, and support from others, so you might as well keep it short. The business case for change will remain the center piece that defines your project, and should be a living document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact from major change initiatives are
Role of HR in Business Process Re-Engineering
As re-engineering requires inputs from every field HR plays a very important role in the entire process of Re-Engineering. Human resource plays major role in the success and failure of BPR because HR is a key factor of any organization. While reviewing the available literature on BPR it has been reviled that very few studies are conducted on the role of HRM in BPR success .The key roles played by Hr during the entire process are asfollows Involvement of HR during the discussions on BPR-The higher management communicates the required changes to the Hr team. Inputs are taken from the HR Team. BPR projects usually concentrate on the theoretical process of work and give little attention to the human dimension of the business process. And it happened that several BPR projects encountered major difficulties uring implementation which led to their failure. One of the main reasons difficult to measure and more difficult to obtain; without a rigorous business case both are unlikely. Proven Methodology
The previous module presented several BPR methodologies, and it is important to note that your methodology does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these projects have on processes and people. Not only should your team members understand reengineering, they should know how to go about it. In short, you need an approach that will meet the needs of your project and one that the team understands and supports. Change Management One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort. Change is not an event, despite our many attempts to call folks together and have a meeting to make change happen. Change management is the discipline of managing change as a process, with due consideration that we are people, not programmable machines. It is about leadership with open, honest and frequent communication. It must be OK to show resistance, to surface issues, and to be afraid of change. Organizations do not change. People change, one at a time. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized. Line Ownership Many re-design teams are the SWAT type -- senior management responding to crisis in line operations with external consultants or their own staff. It's a rescue operation. Unfortunately the ability of external consultants to implement significant change in an organization is small. The chances are only slightly better for staff groups. Ultimately the solution and results come back to those accountable for day-to-day execution. That does not mean that consultants or staff are not valuable. What it does mean, though, is that the terms of engagement and accountability must be clear. The ownership must ultimately rest with the line operation, whether it be manufacturing, customer service, logistics, sales, etc. This is where it gets messy. Often those closest to the problem can't even see it. They seem hardly in a position to implement radical change. They are, in a matter of speaking, the reason you're in this fix to begin with. They lack objectivity, external focus, technical re-design knowledge, and money. On the other hand, they know today's processes, they know the gaps and issues, they have frontline, in-your-face experience. They are real. The customers work with them, not your consultants and staff personnel.
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presented for this unsuccessful implementation is the failure of managers to anticipate and address the human aspecgs of BPR. Training of existing staff for new skills-When new technology is to be implemented ,the existing staff need to be trained.It is the job of HR to identify the proper training to be given to the employees. While training and development can be expensive it is still considered worthwhile in terms of achieving the long-term benefits of the company and the individual. Training expenses accrue not only from the actual cost of providing on- or off-the-job training, but also from loss of productivity while employees are away being trained. Nonetheless, it is still necessary to provide this training; otherwise, companies discover how easy it is to fall behind both in terms of competence and meeting customers‘ needs. So HR has to identify key training required for the employees. Recruitment of skilled staff for the BPR- BPR involves the fundamental re-thinking and radical re-design of business processes along with radical operational changes through the application of enabling technology to achieve significant improvements in the critical measures of performance like cost, quality, service, productivity and speed. Hence there is requirement for skilled staff in order to implement BPR and achieve success. Acting as a catalyst to promote smooth acceptance of change-“Employees are always resistant to change.?It is the responsibility of HR to see that the changes implemented are properly reflected.One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized. Making old & new teams work together. Developing competitive compensation packages
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RE-ENGINEERING CHALLENGES Extracting Existing System Knowledge ? Business knowledge in terms of business logic and business\validation rules is most of the times hidden in application. Also original application developers might not be available to explain the program logic. Hence extracting existing system logic for complex applications is always a challenge for reengineering team.
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Co-Existence and Cut-Over to New System ? The original system needs to be operative till the time new reengineered system takes it‘s place. Also there could be some critical enhancements happening in original system in parallel with reengineering project. An elaborative cut over plan needs to be prepared to identify all risks and ensure smooth cutover to new system
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Efficient Use Of Existing Assets ? Lot of times business logic, documents or even some typical components can be reused in new application too. A systematic and detailed approach needs to be planned and in place for maximizing reuse of existing assets
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Minimize Risk to Business ? Reengineering strategy planning is an important aspect of reengineering. Lot of factors including criticality of original system, complexity and state of original application plays a key role in defining this strategy. Unlike development projects, reengineering pose higher risk to business if not handled systematically and correctly as we are dealing with existing operative application and changing it.
Re-engineering methodology helps projects in successfully dealing with above challenges.
HR Model The HR department has a critical role to play for a successful implementation of change. And this is made possible when the HR function is strategically oriented, i.e. when it implementsinnovative HRM practices, work in partnership with line managers, act as a change agent and finally is considered as a strategic partner. This model showed that the ?criticality? of the HR department‘s role during implementation of BPR is deemed equivalent to giving HR a ?strategic dimension?. And this dimension takes either the aspect of strategic HRM or the form of HR considered as a strategic partner.
Innovative HR functions From the theoretic arguments presented in the conceptual framework, an innovative HR function may have two impacts. First, it may promote the ability of a company to innovate and secondly it may give HR a ?boundary spanning? role across the organization as it increases the effectiveness of the interactions it is having either with managers at all levels or with employees. This, in turn, results in a better implementation of innovation as the HR function will be the vehicle of change. The resulting proposition to be explored was the following: An innovative HR function increases the capacity of the organization to adoptchange.
HR as a change agent In addition to being innovative as a function, and as it was derived from the literature review, the HR department should change its focus and its role in order to become a value-adding unit. This changing of focus entails that HR becomes less focused on operational, day-to-day tasks and give greater importance to strategic business tasks. In other words, the HR should devote less time in administrative, employee related activities and more time in activities related to strategic HRM such as being an active change agent or a strategic partner. From the literature review ,it appeared that this evolution of HR focus and role is critical for a successful implementation of innovation. This section is intended to analyze the second proposition which stipulates that for a successful implementation of change, the HR should act as a change agent. However, it is useful to start by
presenting broadly the roles of the HR functions in both banks before analyzing the aforementioned critical HR as a Strategic Partner Theory suggests that the strategic partner should play an active role in the company whether in decision making or in implementing major changes. When a company opts for outside experts for implementing major changes or when the HR department has limited or no direct control on steering the implementation process forward, then this reduces the influence of the HR function as a strategic partner to that of a simple business partner or just a ?part? of the company. HR-Line Management Relationships This section aims at discussing the last proposition stating that: When HR and line managers operate in joint task teams this will result in more effective implementation of change. Finally, concerning the interactions between the HR and other managers,recould also be put into perspective. In fact, forming strategic alliances on specific change programs, even though limited and specific to the bank A, could be considered as an important and necessary condition for granting the HR a strategic and critical role.
What are the components of Business Process Reengineering Life Cycle? The major components of a Business Process Reengineering Life Cycle include the following: Identification of current business processes Review, update and analysis of ?As-Is? processes Design of ?To-Be? processes Test and implementation of ?To-Be? processes
The BPR Life Cycle represents a closed-loop learning system for the organization to promote continuous improvement and organizational learning. What goes into Business Process Reengineering? There are several different methodologies associated with business process reengineering engagements and the Center approaches this effort with the focus more on results than methodology. However, the same basic principles and elements exist in our methodology. The methodology normally includes the following steps: 1. 2. 3. 4. 5. Envisioning new processes Process discovery and diagnosis Process redesign Process reconstruction Process monitoring Process monitoring creates a closed-loop environment where performance measurement of the new processes provides the linkage to continuous improvement. Consolidated Methodology : A consolidated methodology has been developed from the five methodologies previously presented and an IDEF0 model was developed to provide a structured approach and to facilitate understanding. But for the sake of brevity, we have shown only the major activities in the IDEF0 model in Figure 1. In the ensuing section, we deal with the details of our methodology. 4.1.1 Activity #1: Prepare for Reengineering : ?If you fail to plan, you plan to fail ?. Planning and Preparation are vital factors for any activity or event to be successful, and reengineering is no exception. Before attempting reengineering, the question ?Is BPR necessary?‘ should be asked? There should be a significant need for the process to be reengineered. The justification of this need marks the beginning of the Preparation activity[9]
This activity begins with the development of executive consensus on the importance of reengineering and the link between breakthrough business goals and reengineering projects. A mandate for change is produced and a cross-functional team is established with a game plan for the process of reengineering. While forming the crossfunctional team, steps should be taken to ensure that the organization continues to function in the absence of several key players[5]. As typical BPR projects involve cross-functional cooperation and significant changes to the status quo, the planning for organizational changes is difficult to conduct without strategic direction from the top. The impact of the environmental changes that serve as the impetus for the reengineering effort must also be considered in establishing guidelines for the reengineering project. Another important factor to be considered while establishing the strategic goals for the reengineering effort, is to make it your first priority to understand the expectations of your customers and where your existing process falls short of meeting those requirements. Having identified the customer driven objectives, the mission or vision statement is formulated. The vision is what a company believes it wants to achieve when it is done, and a welldefined vision will sustain a company‘s resolve through the stress of the reengineering process. It can act as the flag around which to rally the troops when the morale begins to sag and it
provides the yard stick for measuring the company‘s progress[4, 9]. 4.1.2 Activity #2: Map and Analyze As-Is Process: Before the reengineering team can proceed to redesign the process, they should understand the existing process. Although some BPR pr oponents (in particular Hammer and Champy) argue against analyzing the current enterprise, saying that it inhibits the creative process, that might not always hold true[1]. It varies from case to case. While some organizations which are in dire straits might go the Hammer and Champy way (attempt a new process design while totally ignoring the existing processes) most organizations need to map the existing processes first, analyze and improve on it to design new processes. The important aspect of BPR (what makes BPR, BPR) is that the improvement should provide dramatic results. Many people do not understand the value of an As-Is analysis and rather prefer to spend a larger chunk of their valuable time on designing the To-Be model directly. What follows is an illustration that illustrates this fallacy. A large manufacturer spent six million dollars over a period of one year in a bid to develop a parts-tracking system and was all set to go online. Only then did he realize that he had totally overlooked a small piece of information – ?the mode of transmission of information between the scheduling staff and the shop floor was through a phone call.‘ But just because this small yet vital information had not been documented all his efforts added up to naught and the whole system that he had so painstakingly developed had to be scrapped. Alas! He had recognized the need for an As-Is analysis, way too late[1]. The main objective of this phase is to identify disconnects (anything that prevents the process from achieving desired results and in particular information transfer between organizations or people) and value adding processes[9]. This is initiated by first creation and documentation of Activity and Process models making use of the variousmodeling methods available. Then, the amount of time that each activity takes and the cost that each activity requires in terms of resources is calculated through simulation and activity based costing(ABC). All the groundwork required having been completed, the processes that need to be reengineered are identified. 4.1.3 Activity #3: Design To-Be process: The objective of this phase is to produce one or more alternatives to the current situation, which satisfy the strategic goals of the enterprise. The first step in this phase is benchmarking. ?Benchmarking is the comparing of
both the performance of the organization‘s processes and the way those processes are conducted with those relevant peer organizations to obtain ideas for improvement[7].? The peer organizations need not be competitors or even from the same industry. Innovative practices can be adopted from anywhere, no matter what their source. Having identified the potential improvements to the existing processes, the development of the To-Be models is done using the various modeling methods available, bearing in mind the principles of process design. Then, similar to the As-Is model, we perform simulation and ABC to analyze factors like the time and cost involved. It should be noted that this activity is an iterative process and cannot be done overnight. The several To-Be models that are finally arrived at are validated. By performing Trade off Analysis the best possible ToBe scenarios are selected for implementation. 4.1.4 Activity #4:Implement Reengineered Process: The implementation stage is where reengineering efforts meet the most resistance and hence it is by far the most difficult one[2]. If we expect that the environment would be conducive to the reengineering effort we are sadly mistaken. The question that confronts us would be,‘ If BPR promises such breath taking results then why wasn‘t it adopted much earlier?‘ We could expect to face all kinds of opposition - from blatantly hostile antagonists to passive adversaries: all of them determined to kill the effort. When so much time and effort is spent on analyzing the current processes, redesigning them and planning the migration, it would indeed be prudent to run a culture change program simultaneously with all the planning and preparation. This would enable the organization to undergo a much more facile transition. But whatever may be the juncture in time that the culture change program may be initiated, it should be rooted in our minds that ?winning the hearts and minds of everyone involved in the BPR effort is most vital for the success of the effort[10]. Once this has been done, the next step is to develop a transition plan from the As-Is to the redesigned process. This plan must align the organizational structure, information systems, and the business policies and procedures with the redesigned processes. ?Rapid implementation of the information system that is required to support a reengineered business process is critical to the success of the BPR project. The IDEF models that were created in the As-Is can be mapped to those created during the To-Be and an initial list of change
requirements generated. Additional requirements for the construction of the To-Be components can be added and the result organized into a Work Breakdown Structure (WBS). Recent developments in BPR software technologies enable automatic migration of these WBS activity/relationships into a process modeling environment. The benefit here is that we can now define the causal and time sequential relationships between the activities planned[9].? Using prototyping and simulation techniques, the transition plan is validated and it‘s pilot versions are designed and demonstrated. Training programs for the workers are initiated and the plan is executed in full scale. 4.1.5 Activity #5: Improve Process Continuously: A process cannot be reengineered overnight. A very vital part in the success of every reengineering effort lies in improving the reengineered process continuously. The first step in this activity is monitoring. Two things have to be monitored – the progress of action and the results. The progress of action is measured by seeing how much more informed the people feel, how much more commitment the management shows and how well the change teams are accepted in the broader perspective of the organization. This can be achieved by conducting attitude surveys and discrete ?fireside chats‘ with those initially not directly involved with the change. As for monitoring the results, the monitoring should include such measures as employee attitudes, customer perceptions, supplier responsivenessetc[12]. Communication is strengthened throughout the organization, ongoing measurement is initiated, team reviewing of performance against clearly defined targets is done and a feedback loop is set up 5 wherein the process is remapped, reanalyzed and redesigned. Thereby continuous improvement of performance is ensured through a performance tracking system and application of problem solving skills. Continuous improvement (TQM) and BPR have always been considered mutually exclusive to each other. But on the contrary, if performed simultaneously they would complement each other wonderfully well. In fact TQM can be used as a tool to handle the various problems encountered during the BPR effort and to continuously improve the process. In corporations that have not adopted the TQM culture as yet, application of TQM to the newly designed processes should be undertaken as a part of the reengineering effort[8].
‘Business Outcomes’ Model iGATE's industry-first, 'Business Outcomes' model ensures that you 'Pay for Results Only' and not for the effort, time and manpower that go into achieving the outcomes. We are missioned to change the rules of the game, to deliver high-impact outcomes for a new technology-enabled world. Our Business Outcomes based approach focuses on the realization of tangible and measurable results, unlike traditional models which are driven by work, effort, time and manpower. By pricing our services on results, we exchange fixed costs for a variable cost structure in an attempt to get clients to 'market minus' versus 'cost plus', while helping clients adjust to the peaks and valleys of their demand. Through a blended strategy of 'offerings tailored to customers' and market needs' — referred to as our 'outside-in approach' for problem-solving, experimenting and innovating business and technology platforms; we achieve results efficiently through rapid improvement and automation, resulting in reduced cycle times and costs over a period of time. Accountability for results towards aligned goals, requires us to continuously measure our progress against the goals, thus enabling us to deliver significant benefits to our customers along with a lower risk profile. This model is driven by iTOPS (Integrated Technology and Operations Platforms) that enables us to share risk with customers on technology, investments and demand variation in their business. Focused on sharing results with customers, while absorbing their risks, we are able to drive significant bottom-line improvement for them. In this way we forge true partnerships with our clients. No longer making money ?off‘ our clients but ?with‘ them. iTOPS — Our Integrated Technology and Operations Solution Framework iGATE's iTOPS solution framework is a strategic approach towards delivering standardized IT and BPO services to customers. Often, companies find it difficult to invest in new technology and process improvement either due to high costs or lack of scale. These customers realize limited benefits from business process outsourcing. This is where iTOPS solutions deliver dramatically improved results. While iGATE makes upfront investment in building the technology and process platforms, the Client pays only for using the infrastructure, much like paying for electricity or cooking gas that we use in our homes. For example, a client sourcing mortgage services typically pays us for only for the ?number of loans funded‘, which is the desired outcome.
The iTOPS solution framework consists of best-in-class people, process and technology. Two key activities drive the success of the iTOPS Framework:
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Defining the right parameters for the service Developing the right combination of ?end-to-end technology, process and talent‘ to consistently meet the quality and cost specifications.
Click here to view enlarged image. Benefits of 'iTOPS for Business Outcomes'
The unique combination of our iTOPS solution framework and our Business Outcomes strategy ('Pay-For-Results-Only‘ pricing model) delivers significant benefits to our customers. Reduces risk from demand variation: All enterprises carry a certain degree of risk inherent in the business due to demand variation. This variability can lead to too much or too little capacity to match demand. While excess capacity leads to higher costs, a lack of capacity can result in a loss of business. The iTOPS solution can be ramped up or down in tune with the market demand. This flexibility ensures that while our clients do not lose an order due to lack of capacity, they do not overspend for excess capacity. Reduces technology risk: In a typical outsourcing arrangement, the client carries significant risks associated with the investment in selecting, implementing and managing the right technology. Our iTOPS based solutions insulate our clients from this risk. We have made substantial investments to ensure best-in-class technology and processes for our clients. Delivers predictable results and cost with 'Pay-for-Results-Only model': Our customers pay us only when we deliver results or business outcomes. This ensures that our incentives are aligned with our customers' incentives. Delivers a truly variable cost structure to better manage our client’s business: Every business manager worries about how much capacity and what skills are needed to meet the market demand. This includes the number of employees, technology resources and infrastructure. This
capacity, while meeting the demand, also results in a fixed cost for the company. For example, a mortgage company may plan to fund 100 new loans in a month. However, it may end up funding fewer loans depending upon the actual demand. In a typical in-house or outsourced model, the company will have to incur a fixed cost for 100 loans, even if the actual number of loans funded is lower than planned. With iTOPS, the customer pays only for the actual number of loans funded, not a fixed carrying cost needed for 100 loans thus delivering a truly variable cost structure for our customers. Eliminates management overheads and headaches in managing the outsourced relationship: Our clients do not have to spend time and energy to ensure that they get value for money, since they no longer need to worry about the effort and resources required to run the process. That responsibility is now shifted to iGATE with the customer executives only tracking the business outcomes they want from the process. With our outcome-based pricing approach enabled by iTOPS solutions, we deliver truly transformational solutions with significantly higher value, to our customers.
Benefits of BPR Business Process reengineering (BPR) is a more radical approach to improvement than total quality management (TQM). Instead of tweaking the existing system in a series of incremental improvements, in process reengineering a business process is diagramed in detail, questioned, and then completely redesigned to eliminate unnecessary steps, to reduce opportunities for errors, and to reduce costs. A business process is any series of steps that are followed to carry out some task in a business. For example, the steps followed by your bank when you deposit a check are a business process. While process reengineering is similar in some respect to TQM, its proponents view it as a more sweeping approach to change. One difference is that while TQM emphasizes a team approach involving people who work directly in the process, process reengineering is more likely to be imposed from above and to use outside consultants. Process reengineering focuses on simplification and elimination of wasted efforts. A central idea of process reengineering is that all activities that do not add value to a product or service should be eliminated. Activities that do not add value to a product or service that customers are willing
to pay for are known as non value added activities. For example moving large batches of work in process from one work station to another is a non value added activity. To some degree just in time (JIT) involve process reengineering as does total quality management (TQM). These management approaches often overlap. Process reengineering have been used by many companies to deal with a wide variety of problem. For example, the EMI Records Group was having difficulty filling orders for its most popular CDs. Retailers and recording stars were rebelling--it took the company as much as 20 days to deliver a big order for a hit CD, and then nearly 20% of the order would be missing. Small, incremental improvements would not have been adequate, so the company reengineered its entire distribution process with dramatic effects on on-time delivery and order fill rates. Reynolds & Reynolds Co. of Dayton, Ohio, produces business forms. Filling an order of a customer used to take 90 separate steps. By reengineering, the number of steps was slashed to 20 and time required to fill an order was cut from three weeks to one week. Massachusetts General Hospital is even using process reengineering to standardize and improve surgical procedure. Real Business Examples: Design by Computer: One of the most time consuming and expensive business process is the design stage in product development, which had traditionally relied on paper and drafting tools. Dassault systems has met the challenge of reengineering this process and has created Catia, the top selling CAD/CAM allows engineers to design and develop products on a computer. This eliminates huge amounts of paper work and slashes the time required to design and develop a new product. Catia is used by nearly every air craft manufacturer and was used by Boeing to design the777. DaimlerChrysler used Catia to design the new jeep Grand Cherokee. By debugging the production line on screen, the company saved months and eliminated $800 million of costs. Business process reengineering (BPR) is a program that systemically breaks down the process a business uses and starts over with new, more efficient methods -- basically a redesign or a reboot. A business process is a collection of procedures, steps or activities the business uses to get the product from development to the customer. Businesses use BPR for various reasons, including to cut costs and improve overall production. Nevertheless, BPR also has its drawbacks.
Business Process Reengineering (BPR) can be defined as the elemental rethinking and radical redesigning of the business processes in order to achieve remarkable improvements in critical measures of performance like cost, service, quality, and speed. An organization where application of BPR is being done, is process -oriented, where all processes are identified and given specific names. Each individual is aware of the particular process in which he or she is involved and complete process measurement such as monitoring and control is performed. Business Process Reengineering or BPR is also known by other names like Business Process Redesign, Business Process Change Management or Business Transformation. BPR brings numerous benefits to organizations and companies in which it is implemented. Some of the common benefits of BPR are:
Increase Effectiveness. As all employees are aware of the processes to which they belong , they have a greater sense of responsibility. All processes are completely monitored under the strict control of the management. The net result of this is that employees deliver high quality products to their customers. Helps to improve efficiency. Proper management and control of all business processes reduces the time lag between different processes, which otherwise is quite high causing delays. This in turn reduces the time to market the product to the target customers and givesquicker response to buyers. Reduces cost. With the proper management of processes, improved efficiency and quick delivery of products to the buyers ,the overall product costs are reduced resulting in cost saving for the organization in the long run. Meaningful job for employees. As the time lag of product processing between different departments gets reduced due to the application of business process reengineering, there are more meaningful tasks to be performed by employees. This leads to increase their levels of motivation and the desire to perform well. Solidarity to the Company "Moreover, since workers in a reengineered process spend more time on valueadding work and less time on work that addsno value, their contributions to the company increase, and, consequently, jobs in a reengineered environment will on the whole be more highly compensated."
Improvement in organizational approach. According to the traditional approach of managing an organization there is no flexibility or adaptability to change. The management formulated strict rules for employees of the organization. Whereas now, when most organizations have implemented business process reengineering there is an increase in flexibility and adaptability for change. This has created better environment for people to work, thus leading to employee satisfaction. Growth of business Implementation of BPR results in the growth of the present business thus enabling the emergence of new businesses within the same organization. Although BPR is very effective in controlling cost and improving efficiency, its implementation is a hard nut to crack. Employees are very resistant to this kind of change thus, it is important to have extensive support from the top management. Growth of Knowledge Furthermore, the personal development within a process team environment does not play such an important role which means climbing up the hierachy is a minor goal. In
this case it is much more important to get a widespread knowledge of the whole process and there are no such things as "mastering" a job; as a worker's expertise and experience grow, his or her job grows with it Identifies Waste and Encourages Ideas The aim of BPR is to help businesses pinpoint obsolete steps, items or workers in a business process. For example, if four workers perform a task, the business may discover only two workers can get the job done during reengineering. BPR encourages employee input and participation. The workers who have familiarity with the processes under study can point out flaws and voice ideas for improvement. Cuts Costs and Improves Functionality Removing unnecessary steps cuts down on time and confusion among workers. Assigning tasks that multiple workers would typically handle to one worker gives customers a clear point of contact for help or service. Even by investing more money in technology at the start, companies typically save money over time with the redesigned methods. For example, improving or updating electronic components incurs an up-front cost, but saves money over time by eliminating errors due to outdated components. Disadvantages The Dark Side of Process Reengineering Possible Disadvantage: Process reengineering that is imposed from above and that results in disruptions and layoffs can lead to cynicism. Eileen Shapiro, a management consultant, says that " reengineering as often implemented can erode the bonds of trust that employees have toward their employers. Nevertheless, many companies reengineer at the same time that they issue mission statements proclaiming, 'Our employees are most important assets, 'or launch new initiatives to increase 'employee involvement.' As one superior executive, a veteran of reengineering, muttered recently while listening to his boss give a glowing speech about working conditions at their organization, 'I sure wish I worked for the company he is describing.' Lowers Worker Morale Some workers may not adapt to the BPR changes, and those assigned new responsibilities can become overwhelmed. Other workers become obsolete if their primary function is eliminated as part of a process overhaul. Management must provide support and guidance during BPR. Failure of the management team to assist workers and set an example during the BPR process may lead to failure, disorganization and staff problems. Requires Investment and the Right Business Types BPR typically requires an investment, particularly in technology. Outdated methods, such as doing a task by hand, face replacement by computer programs. The programs improve efficiency and reduce errors, but the company must invest in the software and training, a costly option for
companies looking to cut expenses immediately. Not all business types benefit from BPR. For example, a manufacturing company may not have the option of redesigning processes without sacrificing safety or product quality. Resistance to change Employees resistance is a recurrent problem in Process Reengineering. The cause of much of this resistance is the fear that people may lose their jobs. Workers reason that if process reengineering succeeds in eliminating non value added activities, there will be less work to do and management may be tempted to reduce the pay roll. Process Reengineering, if carried out insensitively and without regard to such fears, can undermine morale and will ultimately fail to improve the bottom line (i.e., profit). As with other improvement projects, employees must be convinced that the end result of the improvement will be more secure, rather than less secure, jobs. Real improvement can have this effect if management uses the improvement to generate more business rather than to cut the work force. If by improving process the company is able to produce a better product at lower cost, the company will have competitive strength to prosper. And a prosperous company is much more secure employer than a company that is in trouble. "There will certainly be some resistance to the change necessary for reengineering, but the key is to expect this resistance and develop ways to confront it. Employees will be most concerned about their job status after a reengineering; they will often show this by promoting opposition to the plan. Employers must confront this and deal with the employees‘ concerns and not their arguments." Drawbacks to business process reengineering "People are not inherently opposed to change... but they don t like surprises. It is a leader's responsibility to let people know what the issues are.? ?Just understanding how to reengineer does not ensure success. When clearly thought out and implemented properly, BPR can be a very good way to improve the success of a company. Unfortunately, many companies implement BPR as a fad, forgetting completely about the people involved. Companies that wish to use Business Process Reengineering must determine the best strategy and follow through with the objectives. BPR will not be successful if the company flagellates. It will also not be successful if the company uses BPR over and over again. The reengineering process must come from the top down – the executives must be committed and ready to promote the changes as an example for the rest of the company."
Higher demands to the workers Empowering the workers is an inevitable step in a reengineered process. Therefore the companies which hire new workers have to consider additional criteria in their hiring. "It is not longer enough merely to look at prospective employees' education,
training, and skills; their character becomes an issue as well. Are they self-starting? Do they have self-discipline? Are they motivated to do what it takes to please the customer?" [27] [Hammer, Champy, 2001]Thismight be more complicated to find the right people for one specific job. The worker has to be a kind of "All-rounder" which can perform several jobs. As it was enough to convince a possible employer in a job Organization & Markets Business Process Reengineering interview with practical skills, now it is also very important to have the more and more demanded soft skills. "For multidimensional and changing jobs companies don t need people to fill a slot, because the slot will be only roughly defined. Companies need people who can figure out what the job takes and do it, who can create the slot that fits them. Moreover, the slot will keep changing. In an environment of flexibility and change, it is clearly impossible to hire people who already know everything they're ever going to need to know, so continuing education over lifetime of a job becomes the norm in a reengineered company." Some other Disadvantages BPR assumes that a company‘s existing processes are the main drag on its performance and the main barrier to the company reaching its full growth potential. But this may not be the case. BPR has come under fire for its clinical focus on efficiency and technology and for ignoring the human element of an organization that is subjected to a reengineering initiative. BPR has been accused of underestimating the resistance to change that is likely to exist in an organization
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Business Process Reengineering (BPR) Business Process Re-Engineering…Improves Communications And Fosters Teamwork What is business process re-engineering? Business must constantly improve, and improvement requires change. How the change is to be brought in is the question, and not whether to change. Again there is very little choice. Cutting costs by cutting budgets and trying to reduce work force has been attempted. Introducing quality programmes to existing business processes has also been tried. These methods have failed to provide more than very short-term solutions. The new approach is RE-ENGINEERING. You look at the current business as if the business is being started afresh. REVIEW the past AND RELOOK into the present REPOSITION for the future. Everything is RE. This entire new approach is now known as Business Process Reengineering (BPR) What does BPR do? REASSESSES – your business purpose REPOSITION -- for greater market penetration RECONFIGURE – for smoother workflow RESTRUCTURE – so that jobs match reality REVITALISE – for ongoing competitiveness Like all new activities, it has been given wide variety of names, including streamlining, transformation, and restructuring. However, regardless of the name, the goal is almost, always the same: increased ability to compete through cost reduction. The recent surge of BPR efforts is not based on invention of new management techniques. Industrial engineering, time and motion studies, managerial economics, operations research and systems analysis have all been concerned with business process for several decades. The new emphasis is due almost entirely to the recent recognition of an increasing need to compete in order for a business to succeed or even survive. The most visible result of these changes is the decline of long established businesses. Some actually have failed completely, and it is probable that more will do so. Examples come to mind are General Motors and IBM. The pressure to change is real. It is recognised, and it is taken seriously. The term ?re-engineering? may be a misnomer. It implies that the business processes were engineered in the first place. However most business processes are products of complex series of deliberate decisions and informal evolution. They are not engineered in the sense of a design being created by professionals and the process being built to the designers specifications.
Need of BPR
The business dynamics today is governed by factors like new technologies, new competitors and again, new rules of competition. In such an ever-changing business environment, BPR is needed
for the following reasons. One, the rapid change in everything itself warrants product development in lesser time, faster product life cycles and hands-on environmental scanning. Secondly, the customer is well informed today and further; the organisations need to delight the customer rather than just satisfying. Lastly, today‘s intense competition demands the business processes at par with the ?best practices‘ prevalent in the industry.Also, the business models have to be focused on individual market segment the organisation is targeting. The need for BPR thus can be assigned to three C‘s viz.; Change, Customer and Competition. BPR in USA, Europe and India USA & some countries in Europe are termed as ?developed economy‘ today while India is a ?developing economy‘ along with other emerging economies like China, Brazil, Russia, Mexico, Turkey and Indonesia. Historically, as we have seen earlier, Michael Hammer from USA promoted the cause of BPR, being one of the earliest advocates of this theory. American companies were enjoying monopoly in the days of mass production factories with their huge assembly lines. Japanese threatened this monopoly with their superior quality products offered at
cheaper prices. This led to a re-thinking process in US which ultimately resulted in the
development of BPR methodology. The European industry on the other hand is supposed to quality conscious from the beginning. The stringent norms in Europe made it possible for their manufacturing industry to be ahead of their counterparts in US. This has been apparent with Automobile Industry in Europe following stringent Euro-II Norms. Off late, the Indian Automobile Industry also caught-up with them by adopting the Euro-II Compliance. India‘s quality movement is dominated by adoption of ISO 9000 and TQM by large number of business houses. The open competition with other global companies has brought in a lot of innovation in the business model of Indian companies. Lately, we have seen the acquisition of British companies like Land Rover and Jaguar along with Anglo-Dutch Corus by TATA from India. Other Indian stories include Tata Tea taking over Tetley, Infosys acquiring Axon, Mittal Steel merging with Arcelor etc. What all this suggests is there has been always a change dynamics; unpredictable to follow. The businesses today are more competitive, face stiffer global competition, then again face a very thoroughly informed customer; justifying the need of BPR. Reverse Innovation (Business Model Re-engineering) It has been introduced in the Harvard business review article by Mr. Vijay Govindrajan along with Jeff Immelt of General Electric and Chris Trimble. Therein the traditional Glocalisation Model is given as innovating high-end products in developed countries and bringing in their stripped-down version into the developing countries. This has been the practice so far with the western world. Glocalisation thus being coined as: the localisation of globally successful technologies.
This model now needs to be changed to a new one, coined as reverse innovation (RI). Reverse Innovation has been stated as ?Developing value products in Developing Markets (Indian / Chinese) and sell them or their modified versions to Developed Markets (US / Europe)?. Now, the whole discussion about Reverse Innovation seems futile if we look at the BPR Model. Tata Motors and Mahindra & Mahindra are following a ?Reverse Innovation‘ Model so to say, rather, their ?quest for excellence‘ and desire to give the Indian customer a ?quality product‘ might have resulted in their surge against their counterparts in US and Europe. This satisfaction of producing world-class product at competitive price was apparent on the faces of Tata Motors Engineers when they were called on stage by Ratan Tata on the launching of ?NANO‘. So, is it not radical thinking and redesign on the part of Tata‘s and Mahindra‘s applied to their respective Business Models rather than to say, processes? To conclude, the so called ?Reverse Innovation‘ can be coined as ?Business Model Reengineering‘ (BMR).
Business Process Reengineering (BPR) BPR relies on a different school of thought than continuous process improvement. In the extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself into the future and asking yourself: what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology? Such an approach is pictured below. It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.
If you have ever waited in line at the grocery store, you can appreciate the need for process improvement. In this case, the "process" is called the check-out process, and the purpose of the process is to pay for and bag your groceries. The process begins with you stepping into line, and ends with you receiving your receipt and leaving the store. You are the customer (you have the money and you have come to buy food), and the store is the supplier. The process steps are the activities that you and the store personnel do to complete the transaction. In this simple example, we have described a business process. Imagine other business processes: ordering clothes from mail order companies, requesting new telephone
service from your telephone company, developing new products, administering the social security process, building a new home, etc. Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools. We all do them, and at one time or another play the role of customer or supplier. You may see business processes pictured as a set of triangles as shown below. The purpose of this model is to define the supplier and process inputs, your process, and the customer and associated outputs. Also shown is the feedback loop from customers.
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SO WHY BUSINESS PROCESS IMPROVEMENT?
Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services. And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly. The figure below illustrates the basic steps. You begin by documenting what you do today, establish some way to measure the process based on what your customers want, do the process, measure the results, and then identify improvement opportunities based on the data you collected. You then implement process improvements, and measure the performance of the new process. This loop repeats over and over again, and is called continuous process improvement. You might also hear it called business process improvement, functional process improvement, etc.
This method for improving business processes is effective to obtain gradual, incremental improvement. However, over the last 10 years several factors have accelerated the need to improve business processes. The most obvious is technology. New technologies (like the Internet) are rapidly bringing new capabilities to businesses, thereby raising the competitive bar and the need to improve business processes dramatically. Another apparent trend is the opening of world markets and increased free trade. Such changes bring more companies into the marketplace, and competing becomes harder and harder. In today's marketplace, major changes are required to just stay even. It has become a matter of survival for most companies. As a result, companies have sought out methods for faster business process improvement. Moreover, companies want breakthrough performance changes, not just incremental changes, and they want it now. Because the rate of change has increased for everyone, few businesses can afford a slow change process. One approach for rapid change and dramatic improvement that has emerged is Business Process Reengineering (BPR).
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BUSINESS PROCESS REENGINEERING (BPR)
BPR relies on a different school of thought than continuous process improvement. In the extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself into the future and asking yourself: what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology? Such an approach is pictured below. It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.
In summary, the extreme contrast between continuous process improvement and business process reengineering lies in where you start (with today's process, or with a clean slate), and with the magnitude and rate of resulting changes. Over time many derivatives of radical, breakthrough improvement and continuous improvement have emerged that attempt to address the difficulties of implementing major change in corporations. It is difficult to find a single approach exactly matched to a particular company's needs, and the challenge is to know what method to use when, and how to pull it off successfully such that bottom-line business results are achieved.
Good reengineering projects design and implement solutions that:
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are customer focused capitalize on best practices and learning from others are designed for the future
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produce significant bottom-line improvements for the business
The methodology selected for your project impacts the size of the improvement and how fast the improvement will be realized. These guidelines present an approach shown to be effective in other companies. Research results from 248 projects are included. Ultimately, the best framework is one you select based on this information, knowledge of your project, and any internal practices at your company. If you are trying to decide whether to use a continuous- improvement methodology or a business process reengineering approach for your project, review the decision matrix at the end of this tutorial.
Recommended Approach The recommended approach for a business process reengineering project includes the following phases: 1. Project Planning and Launch(team selection, objective setting, scope definition, methodology selection, schedule development, consultant selection, sponsor negotiations, change management planning, team preparation) 2. Current State Assessment and Learning from Others (high-level process definition, benchmarking, customer focus groups, employee focus groups, technology assessment) 3. Solution Design(process design, organizational design, job design) enabling technology architecture,
4. Business Case Development (cost and benefit analysis, business case preparation, presentation to key business leaders) 5. Solution Development (detailed process definition, system requirements writing and system development, training development, implementation planning, operational transition plan, pilots and trials) 6. Implementation (larger-scale pilots and phased implementation, measurement systems, full implementation) 7. Continuous Improvement(on-going improvement and measurement of new processes and systems)
Top Management Sponsorship Major business process change typically affects processes, technology, job roles and culture in the workplace. Significant changes to even one of these areas requires resources, money, and leadership. Changing them simultaneously is an extraordinary task. If top management does not provide strong and consistent support, most likely one of these three elements (money, resources, or leadership) will not be present over the life of the project, severely crippling your chances for success. It may be true that consultants and reengineering managers give this topic a lot of attention. Mostly because current models of re-designing business processes use staff functions and consultants as change agents, and often the targeted organizations are not inviting the change. Without top management sponsorship, implementation efforts can be strongly resisted and ineffective. Top management support for large companies with corporate staff organizations has another dimension. If the top management in the "line" organization and "staff" organization do not partner and become equal stakeholders in the change, AND you only have staff management support, you most likely are ill-prepared for a successful reengineering project (line management in this context are the top managers of the operation ultimately accountable for business performance -- P&L, customer service, etc.). Projects that result in major change in an organization rarely succeed without top management support in the line organization. Strategic Alignment You should be able to tie your reengineering project goals back to key business objectives and the overall strategic direction for the organization. This linkage should show the thread from the top down, so each person can easily connect the overall business direction with your reengineering effort. You should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value, and the vision for the organization. Reengineering projects not in alignment with the company's strategic direction can be counterproductive. It is not unthinkable that an organization may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such reengineering initiatives are wasteful and steal resources from other strategic projects. Moreover, without strategic alignment your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction. Business Case for Change
In one page or less you must be able to communicate the business case for change. Less is preferred. If it requires more than this, you either don't understand the problem or you don't understand your customers. You may find your first attempt at the business case is 100 pages of text, with an associated presentation of another 50 view graphs (overhead slides). After giving the business case 20 times you find out that you can articulate the need for change in 2 minutes and 3 or 4 paragraphs. Stick with the shorter version. Why is this important? First, your project is not the center of the universe. People have other important things to do, too. Second, you must make this case over and over again throughout the project and during implementation - the simpler and shorter it is, the more understandable and compelling your case will be. Cover the few critical points. Talk to the current state, and what impact this condition has on customers, associates and business results. State the drivers that are causing this condition to occur. State what your going to do about it (vision and plan), and make specific commitments. Keep focusing on the customer. Connect this plan to specific, measurable objectives related to customers, associates, business results, and strategic direction. Show how much time and money you need and when you expect to get it back. Don't sell past the close. No matter how long you talk, you will get resistance from some, and support from others, so you might as well keep it short. The business case for change will remain the center piece that defines your project, and should be a living document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact from major change initiatives are
Role of HR in Business Process Re-Engineering
As re-engineering requires inputs from every field HR plays a very important role in the entire process of Re-Engineering. Human resource plays major role in the success and failure of BPR because HR is a key factor of any organization. While reviewing the available literature on BPR it has been reviled that very few studies are conducted on the role of HRM in BPR success .The key roles played by Hr during the entire process are asfollows Involvement of HR during the discussions on BPR-The higher management communicates the required changes to the Hr team. Inputs are taken from the HR Team. BPR projects usually concentrate on the theoretical process of work and give little attention to the human dimension of the business process. And it happened that several BPR projects encountered major difficulties uring implementation which led to their failure. One of the main reasons difficult to measure and more difficult to obtain; without a rigorous business case both are unlikely. Proven Methodology
The previous module presented several BPR methodologies, and it is important to note that your methodology does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these projects have on processes and people. Not only should your team members understand reengineering, they should know how to go about it. In short, you need an approach that will meet the needs of your project and one that the team understands and supports. Change Management One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort. Change is not an event, despite our many attempts to call folks together and have a meeting to make change happen. Change management is the discipline of managing change as a process, with due consideration that we are people, not programmable machines. It is about leadership with open, honest and frequent communication. It must be OK to show resistance, to surface issues, and to be afraid of change. Organizations do not change. People change, one at a time. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized. Line Ownership Many re-design teams are the SWAT type -- senior management responding to crisis in line operations with external consultants or their own staff. It's a rescue operation. Unfortunately the ability of external consultants to implement significant change in an organization is small. The chances are only slightly better for staff groups. Ultimately the solution and results come back to those accountable for day-to-day execution. That does not mean that consultants or staff are not valuable. What it does mean, though, is that the terms of engagement and accountability must be clear. The ownership must ultimately rest with the line operation, whether it be manufacturing, customer service, logistics, sales, etc. This is where it gets messy. Often those closest to the problem can't even see it. They seem hardly in a position to implement radical change. They are, in a matter of speaking, the reason you're in this fix to begin with. They lack objectivity, external focus, technical re-design knowledge, and money. On the other hand, they know today's processes, they know the gaps and issues, they have frontline, in-your-face experience. They are real. The customers work with them, not your consultants and staff personnel.
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presented for this unsuccessful implementation is the failure of managers to anticipate and address the human aspecgs of BPR. Training of existing staff for new skills-When new technology is to be implemented ,the existing staff need to be trained.It is the job of HR to identify the proper training to be given to the employees. While training and development can be expensive it is still considered worthwhile in terms of achieving the long-term benefits of the company and the individual. Training expenses accrue not only from the actual cost of providing on- or off-the-job training, but also from loss of productivity while employees are away being trained. Nonetheless, it is still necessary to provide this training; otherwise, companies discover how easy it is to fall behind both in terms of competence and meeting customers‘ needs. So HR has to identify key training required for the employees. Recruitment of skilled staff for the BPR- BPR involves the fundamental re-thinking and radical re-design of business processes along with radical operational changes through the application of enabling technology to achieve significant improvements in the critical measures of performance like cost, quality, service, productivity and speed. Hence there is requirement for skilled staff in order to implement BPR and achieve success. Acting as a catalyst to promote smooth acceptance of change-“Employees are always resistant to change.?It is the responsibility of HR to see that the changes implemented are properly reflected.One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized. Making old & new teams work together. Developing competitive compensation packages
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RE-ENGINEERING CHALLENGES Extracting Existing System Knowledge ? Business knowledge in terms of business logic and business\validation rules is most of the times hidden in application. Also original application developers might not be available to explain the program logic. Hence extracting existing system logic for complex applications is always a challenge for reengineering team.
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Co-Existence and Cut-Over to New System ? The original system needs to be operative till the time new reengineered system takes it‘s place. Also there could be some critical enhancements happening in original system in parallel with reengineering project. An elaborative cut over plan needs to be prepared to identify all risks and ensure smooth cutover to new system
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Efficient Use Of Existing Assets ? Lot of times business logic, documents or even some typical components can be reused in new application too. A systematic and detailed approach needs to be planned and in place for maximizing reuse of existing assets
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Minimize Risk to Business ? Reengineering strategy planning is an important aspect of reengineering. Lot of factors including criticality of original system, complexity and state of original application plays a key role in defining this strategy. Unlike development projects, reengineering pose higher risk to business if not handled systematically and correctly as we are dealing with existing operative application and changing it.
Re-engineering methodology helps projects in successfully dealing with above challenges.
HR Model The HR department has a critical role to play for a successful implementation of change. And this is made possible when the HR function is strategically oriented, i.e. when it implementsinnovative HRM practices, work in partnership with line managers, act as a change agent and finally is considered as a strategic partner. This model showed that the ?criticality? of the HR department‘s role during implementation of BPR is deemed equivalent to giving HR a ?strategic dimension?. And this dimension takes either the aspect of strategic HRM or the form of HR considered as a strategic partner.
Innovative HR functions From the theoretic arguments presented in the conceptual framework, an innovative HR function may have two impacts. First, it may promote the ability of a company to innovate and secondly it may give HR a ?boundary spanning? role across the organization as it increases the effectiveness of the interactions it is having either with managers at all levels or with employees. This, in turn, results in a better implementation of innovation as the HR function will be the vehicle of change. The resulting proposition to be explored was the following: An innovative HR function increases the capacity of the organization to adoptchange.
HR as a change agent In addition to being innovative as a function, and as it was derived from the literature review, the HR department should change its focus and its role in order to become a value-adding unit. This changing of focus entails that HR becomes less focused on operational, day-to-day tasks and give greater importance to strategic business tasks. In other words, the HR should devote less time in administrative, employee related activities and more time in activities related to strategic HRM such as being an active change agent or a strategic partner. From the literature review ,it appeared that this evolution of HR focus and role is critical for a successful implementation of innovation. This section is intended to analyze the second proposition which stipulates that for a successful implementation of change, the HR should act as a change agent. However, it is useful to start by
presenting broadly the roles of the HR functions in both banks before analyzing the aforementioned critical HR as a Strategic Partner Theory suggests that the strategic partner should play an active role in the company whether in decision making or in implementing major changes. When a company opts for outside experts for implementing major changes or when the HR department has limited or no direct control on steering the implementation process forward, then this reduces the influence of the HR function as a strategic partner to that of a simple business partner or just a ?part? of the company. HR-Line Management Relationships This section aims at discussing the last proposition stating that: When HR and line managers operate in joint task teams this will result in more effective implementation of change. Finally, concerning the interactions between the HR and other managers,recould also be put into perspective. In fact, forming strategic alliances on specific change programs, even though limited and specific to the bank A, could be considered as an important and necessary condition for granting the HR a strategic and critical role.
What are the components of Business Process Reengineering Life Cycle? The major components of a Business Process Reengineering Life Cycle include the following: Identification of current business processes Review, update and analysis of ?As-Is? processes Design of ?To-Be? processes Test and implementation of ?To-Be? processes
The BPR Life Cycle represents a closed-loop learning system for the organization to promote continuous improvement and organizational learning. What goes into Business Process Reengineering? There are several different methodologies associated with business process reengineering engagements and the Center approaches this effort with the focus more on results than methodology. However, the same basic principles and elements exist in our methodology. The methodology normally includes the following steps: 1. 2. 3. 4. 5. Envisioning new processes Process discovery and diagnosis Process redesign Process reconstruction Process monitoring Process monitoring creates a closed-loop environment where performance measurement of the new processes provides the linkage to continuous improvement. Consolidated Methodology : A consolidated methodology has been developed from the five methodologies previously presented and an IDEF0 model was developed to provide a structured approach and to facilitate understanding. But for the sake of brevity, we have shown only the major activities in the IDEF0 model in Figure 1. In the ensuing section, we deal with the details of our methodology. 4.1.1 Activity #1: Prepare for Reengineering : ?If you fail to plan, you plan to fail ?. Planning and Preparation are vital factors for any activity or event to be successful, and reengineering is no exception. Before attempting reengineering, the question ?Is BPR necessary?‘ should be asked? There should be a significant need for the process to be reengineered. The justification of this need marks the beginning of the Preparation activity[9]
This activity begins with the development of executive consensus on the importance of reengineering and the link between breakthrough business goals and reengineering projects. A mandate for change is produced and a cross-functional team is established with a game plan for the process of reengineering. While forming the crossfunctional team, steps should be taken to ensure that the organization continues to function in the absence of several key players[5]. As typical BPR projects involve cross-functional cooperation and significant changes to the status quo, the planning for organizational changes is difficult to conduct without strategic direction from the top. The impact of the environmental changes that serve as the impetus for the reengineering effort must also be considered in establishing guidelines for the reengineering project. Another important factor to be considered while establishing the strategic goals for the reengineering effort, is to make it your first priority to understand the expectations of your customers and where your existing process falls short of meeting those requirements. Having identified the customer driven objectives, the mission or vision statement is formulated. The vision is what a company believes it wants to achieve when it is done, and a welldefined vision will sustain a company‘s resolve through the stress of the reengineering process. It can act as the flag around which to rally the troops when the morale begins to sag and it
provides the yard stick for measuring the company‘s progress[4, 9]. 4.1.2 Activity #2: Map and Analyze As-Is Process: Before the reengineering team can proceed to redesign the process, they should understand the existing process. Although some BPR pr oponents (in particular Hammer and Champy) argue against analyzing the current enterprise, saying that it inhibits the creative process, that might not always hold true[1]. It varies from case to case. While some organizations which are in dire straits might go the Hammer and Champy way (attempt a new process design while totally ignoring the existing processes) most organizations need to map the existing processes first, analyze and improve on it to design new processes. The important aspect of BPR (what makes BPR, BPR) is that the improvement should provide dramatic results. Many people do not understand the value of an As-Is analysis and rather prefer to spend a larger chunk of their valuable time on designing the To-Be model directly. What follows is an illustration that illustrates this fallacy. A large manufacturer spent six million dollars over a period of one year in a bid to develop a parts-tracking system and was all set to go online. Only then did he realize that he had totally overlooked a small piece of information – ?the mode of transmission of information between the scheduling staff and the shop floor was through a phone call.‘ But just because this small yet vital information had not been documented all his efforts added up to naught and the whole system that he had so painstakingly developed had to be scrapped. Alas! He had recognized the need for an As-Is analysis, way too late[1]. The main objective of this phase is to identify disconnects (anything that prevents the process from achieving desired results and in particular information transfer between organizations or people) and value adding processes[9]. This is initiated by first creation and documentation of Activity and Process models making use of the variousmodeling methods available. Then, the amount of time that each activity takes and the cost that each activity requires in terms of resources is calculated through simulation and activity based costing(ABC). All the groundwork required having been completed, the processes that need to be reengineered are identified. 4.1.3 Activity #3: Design To-Be process: The objective of this phase is to produce one or more alternatives to the current situation, which satisfy the strategic goals of the enterprise. The first step in this phase is benchmarking. ?Benchmarking is the comparing of
both the performance of the organization‘s processes and the way those processes are conducted with those relevant peer organizations to obtain ideas for improvement[7].? The peer organizations need not be competitors or even from the same industry. Innovative practices can be adopted from anywhere, no matter what their source. Having identified the potential improvements to the existing processes, the development of the To-Be models is done using the various modeling methods available, bearing in mind the principles of process design. Then, similar to the As-Is model, we perform simulation and ABC to analyze factors like the time and cost involved. It should be noted that this activity is an iterative process and cannot be done overnight. The several To-Be models that are finally arrived at are validated. By performing Trade off Analysis the best possible ToBe scenarios are selected for implementation. 4.1.4 Activity #4:Implement Reengineered Process: The implementation stage is where reengineering efforts meet the most resistance and hence it is by far the most difficult one[2]. If we expect that the environment would be conducive to the reengineering effort we are sadly mistaken. The question that confronts us would be,‘ If BPR promises such breath taking results then why wasn‘t it adopted much earlier?‘ We could expect to face all kinds of opposition - from blatantly hostile antagonists to passive adversaries: all of them determined to kill the effort. When so much time and effort is spent on analyzing the current processes, redesigning them and planning the migration, it would indeed be prudent to run a culture change program simultaneously with all the planning and preparation. This would enable the organization to undergo a much more facile transition. But whatever may be the juncture in time that the culture change program may be initiated, it should be rooted in our minds that ?winning the hearts and minds of everyone involved in the BPR effort is most vital for the success of the effort[10]. Once this has been done, the next step is to develop a transition plan from the As-Is to the redesigned process. This plan must align the organizational structure, information systems, and the business policies and procedures with the redesigned processes. ?Rapid implementation of the information system that is required to support a reengineered business process is critical to the success of the BPR project. The IDEF models that were created in the As-Is can be mapped to those created during the To-Be and an initial list of change
requirements generated. Additional requirements for the construction of the To-Be components can be added and the result organized into a Work Breakdown Structure (WBS). Recent developments in BPR software technologies enable automatic migration of these WBS activity/relationships into a process modeling environment. The benefit here is that we can now define the causal and time sequential relationships between the activities planned[9].? Using prototyping and simulation techniques, the transition plan is validated and it‘s pilot versions are designed and demonstrated. Training programs for the workers are initiated and the plan is executed in full scale. 4.1.5 Activity #5: Improve Process Continuously: A process cannot be reengineered overnight. A very vital part in the success of every reengineering effort lies in improving the reengineered process continuously. The first step in this activity is monitoring. Two things have to be monitored – the progress of action and the results. The progress of action is measured by seeing how much more informed the people feel, how much more commitment the management shows and how well the change teams are accepted in the broader perspective of the organization. This can be achieved by conducting attitude surveys and discrete ?fireside chats‘ with those initially not directly involved with the change. As for monitoring the results, the monitoring should include such measures as employee attitudes, customer perceptions, supplier responsivenessetc[12]. Communication is strengthened throughout the organization, ongoing measurement is initiated, team reviewing of performance against clearly defined targets is done and a feedback loop is set up 5 wherein the process is remapped, reanalyzed and redesigned. Thereby continuous improvement of performance is ensured through a performance tracking system and application of problem solving skills. Continuous improvement (TQM) and BPR have always been considered mutually exclusive to each other. But on the contrary, if performed simultaneously they would complement each other wonderfully well. In fact TQM can be used as a tool to handle the various problems encountered during the BPR effort and to continuously improve the process. In corporations that have not adopted the TQM culture as yet, application of TQM to the newly designed processes should be undertaken as a part of the reengineering effort[8].
‘Business Outcomes’ Model iGATE's industry-first, 'Business Outcomes' model ensures that you 'Pay for Results Only' and not for the effort, time and manpower that go into achieving the outcomes. We are missioned to change the rules of the game, to deliver high-impact outcomes for a new technology-enabled world. Our Business Outcomes based approach focuses on the realization of tangible and measurable results, unlike traditional models which are driven by work, effort, time and manpower. By pricing our services on results, we exchange fixed costs for a variable cost structure in an attempt to get clients to 'market minus' versus 'cost plus', while helping clients adjust to the peaks and valleys of their demand. Through a blended strategy of 'offerings tailored to customers' and market needs' — referred to as our 'outside-in approach' for problem-solving, experimenting and innovating business and technology platforms; we achieve results efficiently through rapid improvement and automation, resulting in reduced cycle times and costs over a period of time. Accountability for results towards aligned goals, requires us to continuously measure our progress against the goals, thus enabling us to deliver significant benefits to our customers along with a lower risk profile. This model is driven by iTOPS (Integrated Technology and Operations Platforms) that enables us to share risk with customers on technology, investments and demand variation in their business. Focused on sharing results with customers, while absorbing their risks, we are able to drive significant bottom-line improvement for them. In this way we forge true partnerships with our clients. No longer making money ?off‘ our clients but ?with‘ them. iTOPS — Our Integrated Technology and Operations Solution Framework iGATE's iTOPS solution framework is a strategic approach towards delivering standardized IT and BPO services to customers. Often, companies find it difficult to invest in new technology and process improvement either due to high costs or lack of scale. These customers realize limited benefits from business process outsourcing. This is where iTOPS solutions deliver dramatically improved results. While iGATE makes upfront investment in building the technology and process platforms, the Client pays only for using the infrastructure, much like paying for electricity or cooking gas that we use in our homes. For example, a client sourcing mortgage services typically pays us for only for the ?number of loans funded‘, which is the desired outcome.
The iTOPS solution framework consists of best-in-class people, process and technology. Two key activities drive the success of the iTOPS Framework:
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Defining the right parameters for the service Developing the right combination of ?end-to-end technology, process and talent‘ to consistently meet the quality and cost specifications.
Click here to view enlarged image. Benefits of 'iTOPS for Business Outcomes'
The unique combination of our iTOPS solution framework and our Business Outcomes strategy ('Pay-For-Results-Only‘ pricing model) delivers significant benefits to our customers. Reduces risk from demand variation: All enterprises carry a certain degree of risk inherent in the business due to demand variation. This variability can lead to too much or too little capacity to match demand. While excess capacity leads to higher costs, a lack of capacity can result in a loss of business. The iTOPS solution can be ramped up or down in tune with the market demand. This flexibility ensures that while our clients do not lose an order due to lack of capacity, they do not overspend for excess capacity. Reduces technology risk: In a typical outsourcing arrangement, the client carries significant risks associated with the investment in selecting, implementing and managing the right technology. Our iTOPS based solutions insulate our clients from this risk. We have made substantial investments to ensure best-in-class technology and processes for our clients. Delivers predictable results and cost with 'Pay-for-Results-Only model': Our customers pay us only when we deliver results or business outcomes. This ensures that our incentives are aligned with our customers' incentives. Delivers a truly variable cost structure to better manage our client’s business: Every business manager worries about how much capacity and what skills are needed to meet the market demand. This includes the number of employees, technology resources and infrastructure. This
capacity, while meeting the demand, also results in a fixed cost for the company. For example, a mortgage company may plan to fund 100 new loans in a month. However, it may end up funding fewer loans depending upon the actual demand. In a typical in-house or outsourced model, the company will have to incur a fixed cost for 100 loans, even if the actual number of loans funded is lower than planned. With iTOPS, the customer pays only for the actual number of loans funded, not a fixed carrying cost needed for 100 loans thus delivering a truly variable cost structure for our customers. Eliminates management overheads and headaches in managing the outsourced relationship: Our clients do not have to spend time and energy to ensure that they get value for money, since they no longer need to worry about the effort and resources required to run the process. That responsibility is now shifted to iGATE with the customer executives only tracking the business outcomes they want from the process. With our outcome-based pricing approach enabled by iTOPS solutions, we deliver truly transformational solutions with significantly higher value, to our customers.
Benefits of BPR Business Process reengineering (BPR) is a more radical approach to improvement than total quality management (TQM). Instead of tweaking the existing system in a series of incremental improvements, in process reengineering a business process is diagramed in detail, questioned, and then completely redesigned to eliminate unnecessary steps, to reduce opportunities for errors, and to reduce costs. A business process is any series of steps that are followed to carry out some task in a business. For example, the steps followed by your bank when you deposit a check are a business process. While process reengineering is similar in some respect to TQM, its proponents view it as a more sweeping approach to change. One difference is that while TQM emphasizes a team approach involving people who work directly in the process, process reengineering is more likely to be imposed from above and to use outside consultants. Process reengineering focuses on simplification and elimination of wasted efforts. A central idea of process reengineering is that all activities that do not add value to a product or service should be eliminated. Activities that do not add value to a product or service that customers are willing
to pay for are known as non value added activities. For example moving large batches of work in process from one work station to another is a non value added activity. To some degree just in time (JIT) involve process reengineering as does total quality management (TQM). These management approaches often overlap. Process reengineering have been used by many companies to deal with a wide variety of problem. For example, the EMI Records Group was having difficulty filling orders for its most popular CDs. Retailers and recording stars were rebelling--it took the company as much as 20 days to deliver a big order for a hit CD, and then nearly 20% of the order would be missing. Small, incremental improvements would not have been adequate, so the company reengineered its entire distribution process with dramatic effects on on-time delivery and order fill rates. Reynolds & Reynolds Co. of Dayton, Ohio, produces business forms. Filling an order of a customer used to take 90 separate steps. By reengineering, the number of steps was slashed to 20 and time required to fill an order was cut from three weeks to one week. Massachusetts General Hospital is even using process reengineering to standardize and improve surgical procedure. Real Business Examples: Design by Computer: One of the most time consuming and expensive business process is the design stage in product development, which had traditionally relied on paper and drafting tools. Dassault systems has met the challenge of reengineering this process and has created Catia, the top selling CAD/CAM allows engineers to design and develop products on a computer. This eliminates huge amounts of paper work and slashes the time required to design and develop a new product. Catia is used by nearly every air craft manufacturer and was used by Boeing to design the777. DaimlerChrysler used Catia to design the new jeep Grand Cherokee. By debugging the production line on screen, the company saved months and eliminated $800 million of costs. Business process reengineering (BPR) is a program that systemically breaks down the process a business uses and starts over with new, more efficient methods -- basically a redesign or a reboot. A business process is a collection of procedures, steps or activities the business uses to get the product from development to the customer. Businesses use BPR for various reasons, including to cut costs and improve overall production. Nevertheless, BPR also has its drawbacks.
Business Process Reengineering (BPR) can be defined as the elemental rethinking and radical redesigning of the business processes in order to achieve remarkable improvements in critical measures of performance like cost, service, quality, and speed. An organization where application of BPR is being done, is process -oriented, where all processes are identified and given specific names. Each individual is aware of the particular process in which he or she is involved and complete process measurement such as monitoring and control is performed. Business Process Reengineering or BPR is also known by other names like Business Process Redesign, Business Process Change Management or Business Transformation. BPR brings numerous benefits to organizations and companies in which it is implemented. Some of the common benefits of BPR are:
Increase Effectiveness. As all employees are aware of the processes to which they belong , they have a greater sense of responsibility. All processes are completely monitored under the strict control of the management. The net result of this is that employees deliver high quality products to their customers. Helps to improve efficiency. Proper management and control of all business processes reduces the time lag between different processes, which otherwise is quite high causing delays. This in turn reduces the time to market the product to the target customers and givesquicker response to buyers. Reduces cost. With the proper management of processes, improved efficiency and quick delivery of products to the buyers ,the overall product costs are reduced resulting in cost saving for the organization in the long run. Meaningful job for employees. As the time lag of product processing between different departments gets reduced due to the application of business process reengineering, there are more meaningful tasks to be performed by employees. This leads to increase their levels of motivation and the desire to perform well. Solidarity to the Company "Moreover, since workers in a reengineered process spend more time on valueadding work and less time on work that addsno value, their contributions to the company increase, and, consequently, jobs in a reengineered environment will on the whole be more highly compensated."
Improvement in organizational approach. According to the traditional approach of managing an organization there is no flexibility or adaptability to change. The management formulated strict rules for employees of the organization. Whereas now, when most organizations have implemented business process reengineering there is an increase in flexibility and adaptability for change. This has created better environment for people to work, thus leading to employee satisfaction. Growth of business Implementation of BPR results in the growth of the present business thus enabling the emergence of new businesses within the same organization. Although BPR is very effective in controlling cost and improving efficiency, its implementation is a hard nut to crack. Employees are very resistant to this kind of change thus, it is important to have extensive support from the top management. Growth of Knowledge Furthermore, the personal development within a process team environment does not play such an important role which means climbing up the hierachy is a minor goal. In
this case it is much more important to get a widespread knowledge of the whole process and there are no such things as "mastering" a job; as a worker's expertise and experience grow, his or her job grows with it Identifies Waste and Encourages Ideas The aim of BPR is to help businesses pinpoint obsolete steps, items or workers in a business process. For example, if four workers perform a task, the business may discover only two workers can get the job done during reengineering. BPR encourages employee input and participation. The workers who have familiarity with the processes under study can point out flaws and voice ideas for improvement. Cuts Costs and Improves Functionality Removing unnecessary steps cuts down on time and confusion among workers. Assigning tasks that multiple workers would typically handle to one worker gives customers a clear point of contact for help or service. Even by investing more money in technology at the start, companies typically save money over time with the redesigned methods. For example, improving or updating electronic components incurs an up-front cost, but saves money over time by eliminating errors due to outdated components. Disadvantages The Dark Side of Process Reengineering Possible Disadvantage: Process reengineering that is imposed from above and that results in disruptions and layoffs can lead to cynicism. Eileen Shapiro, a management consultant, says that " reengineering as often implemented can erode the bonds of trust that employees have toward their employers. Nevertheless, many companies reengineer at the same time that they issue mission statements proclaiming, 'Our employees are most important assets, 'or launch new initiatives to increase 'employee involvement.' As one superior executive, a veteran of reengineering, muttered recently while listening to his boss give a glowing speech about working conditions at their organization, 'I sure wish I worked for the company he is describing.' Lowers Worker Morale Some workers may not adapt to the BPR changes, and those assigned new responsibilities can become overwhelmed. Other workers become obsolete if their primary function is eliminated as part of a process overhaul. Management must provide support and guidance during BPR. Failure of the management team to assist workers and set an example during the BPR process may lead to failure, disorganization and staff problems. Requires Investment and the Right Business Types BPR typically requires an investment, particularly in technology. Outdated methods, such as doing a task by hand, face replacement by computer programs. The programs improve efficiency and reduce errors, but the company must invest in the software and training, a costly option for
companies looking to cut expenses immediately. Not all business types benefit from BPR. For example, a manufacturing company may not have the option of redesigning processes without sacrificing safety or product quality. Resistance to change Employees resistance is a recurrent problem in Process Reengineering. The cause of much of this resistance is the fear that people may lose their jobs. Workers reason that if process reengineering succeeds in eliminating non value added activities, there will be less work to do and management may be tempted to reduce the pay roll. Process Reengineering, if carried out insensitively and without regard to such fears, can undermine morale and will ultimately fail to improve the bottom line (i.e., profit). As with other improvement projects, employees must be convinced that the end result of the improvement will be more secure, rather than less secure, jobs. Real improvement can have this effect if management uses the improvement to generate more business rather than to cut the work force. If by improving process the company is able to produce a better product at lower cost, the company will have competitive strength to prosper. And a prosperous company is much more secure employer than a company that is in trouble. "There will certainly be some resistance to the change necessary for reengineering, but the key is to expect this resistance and develop ways to confront it. Employees will be most concerned about their job status after a reengineering; they will often show this by promoting opposition to the plan. Employers must confront this and deal with the employees‘ concerns and not their arguments." Drawbacks to business process reengineering "People are not inherently opposed to change... but they don t like surprises. It is a leader's responsibility to let people know what the issues are.? ?Just understanding how to reengineer does not ensure success. When clearly thought out and implemented properly, BPR can be a very good way to improve the success of a company. Unfortunately, many companies implement BPR as a fad, forgetting completely about the people involved. Companies that wish to use Business Process Reengineering must determine the best strategy and follow through with the objectives. BPR will not be successful if the company flagellates. It will also not be successful if the company uses BPR over and over again. The reengineering process must come from the top down – the executives must be committed and ready to promote the changes as an example for the rest of the company."
Higher demands to the workers Empowering the workers is an inevitable step in a reengineered process. Therefore the companies which hire new workers have to consider additional criteria in their hiring. "It is not longer enough merely to look at prospective employees' education,
training, and skills; their character becomes an issue as well. Are they self-starting? Do they have self-discipline? Are they motivated to do what it takes to please the customer?" [27] [Hammer, Champy, 2001]Thismight be more complicated to find the right people for one specific job. The worker has to be a kind of "All-rounder" which can perform several jobs. As it was enough to convince a possible employer in a job Organization & Markets Business Process Reengineering interview with practical skills, now it is also very important to have the more and more demanded soft skills. "For multidimensional and changing jobs companies don t need people to fill a slot, because the slot will be only roughly defined. Companies need people who can figure out what the job takes and do it, who can create the slot that fits them. Moreover, the slot will keep changing. In an environment of flexibility and change, it is clearly impossible to hire people who already know everything they're ever going to need to know, so continuing education over lifetime of a job becomes the norm in a reengineered company." Some other Disadvantages BPR assumes that a company‘s existing processes are the main drag on its performance and the main barrier to the company reaching its full growth potential. But this may not be the case. BPR has come under fire for its clinical focus on efficiency and technology and for ignoring the human element of an organization that is subjected to a reengineering initiative. BPR has been accused of underestimating the resistance to change that is likely to exist in an organization
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