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| By N2H | ||||||||||||||||||||||
Business Process reengineering BPR
August 5, 2008
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BPR is a form of organizational improvement. It aims to improve a business through restructuring of processes. BPR is given force by the thinking that old ways of organizing work are no longer appropriate for a competitive business environment. The ultimate aim of re-engineering processes to achieve better quality, service and innovativeness. The radical restructuring entailed in BPR is risky and uncertain.
Theoretical Foundations of BPR:
For hundreds of years, commercial activity has been based on the Adam Smith principle of Division of Labor. Division of labor encourages specialization and thereby leads to improved productivity.
The classical enterprise also exhibits the concepts of:
- Hierarchical control:- the classical layers of management
- Mass production of largely uniform goods/services
An organization based on these principles is successful in a stable market environment, characterized by growing demand for uniform goods/services. In a changed market environment characterized by sever competition, globalization, more demanding customers, smaller profit margins etc, the classical organizational models are less and less appropriate. BPR provides one alternative to the old methods of organizing business processes. The goals of BPR can be started in expanded form as either cost objectives or service objectives.
Cost Objectives:
- Reducing stocks: New materials or Intermediate goods
- Economies of scale in procurement
- Reduced staff costs (administrative costs)
- Competitive pricing of goods/services
Service Objectives:
- More reliable delivery system
- Stock availability
- Good after sales service
- Quick Response/adaptation to market changes
- Reduced product development lifecycle
Qualities of Re-engineered Processes:
- Several jobs are combined into one. This implies a reversal of the Adam Smith principle of division of labor and function. Workers make decisions, actual work and decision making are integrated.
- Processes are reorganized so that tasks are done in the most sensible/logical order.
- Checks and controls are reduced. The checks and controls are reduced to the minimum acceptable level. The checks and controls are also deferred.
- Reconciliation is minimized.
- A case manager is appointed to oversee the re-engineering process.
- Hybrid processes that combine centralization and decentralization by use of communication technology are often adopted.
- Processes have multiple versions (polymorphic) – the process is re-designed to include capabilities to deal with custom orders.
Contribution/Role of IT in BPR:
- IT is all essential enable of BPR; it enables processes to be re-engineered.
- It supports the re-engineered process
- Leading edge technology products can be particularly useful in process innovation. They can even lead the innovation process.
- IT also facilitates process integration.
- It has been argued that the most effective contribution of IT in business redesign is to enable an enterprise to do things that it was not doing before – extending the capabilities of the enterprise.
Candidates for BPR:
In theory, any business process can be subject to BPR; but in practice, certain processes can benefit more from BPR than others. Such processes have the following qualities
Dysfunction: The process is visibly out of order, it is problematic. Dysfunction in a process occurs when the process is slow (frustratingly slow), occasional complaints, generates errors etc.
Importance: Important processes that have a prominent place in the value chain. They contribute directly to the delivery of goods and services to the end consumer.
Feasible: From the managers stand point the BPR project is technically, economically and socially feasible/viable. Processes that require high capital input, or enjoy limited management support are less feasible for BPR.
What causes BPR projects to fail? (Pitfalls in BPR):
- Inadequate funding
- Insufficient management commitment/support
- Poor project leaders
- Inadequate feasibility evaluation
- Resistance to process change
- Failure to focus on most process re-design and dwelling on improving the existing process.
- Quitting too early or declaring victory too soon.
Re-engineering computer system:
At a minimum a computer system comprises of an ordered collection of hardware, software, and data resources. Computer systems are the basis for automated information system.
- Re-engineering computer systems means examining, rethinking and re-implementing such systems in a new form.
- The process is usually carried out on legacy options, re-implementing them in a more modern form.
- Re-engineering computer systems can be seen as a management response to the challenge of keeping old systems alive within a changing environment.
Merits
- The useful life of a system is increased
- The business value of such a system also increases
- Future maintenance costs are reduced
- The morale of maintenance staff may improve; because they know they are working in a modern system i.e. the systems become more maintainable.
Steps for BPR
- Identify process for innovations
- Manage business
- Manage people and work
- Identify change levels ( technology etc)
- Develop process vision – what you want to process must fit with the strategic direction of the organization (IS)
- Understand existing processes – study current process and understand necessary changes
- Design and prototype new process/create design of new process.
Approaches to re-engineering computer systems:
When a system is re-engineered any of the following changes may occur:
- It may be placed in a distributed platform.
- It will usually be re-documented
- The data may be migrated to a new database platform
- The code may be restricted
- The code may be written in a different language
Automatic Source Code Conversion:
This entails the use of software tools to convert source code in a given language.
- to code in a newer version e.g Cobol 74’ to Cobol 90’
- to code in a different language e.g Cobol 74’ to Oracle
The software tools cannot achieve 100% conversion and hence has to be supplemented with manual conversion.
Automated Program Restructuring
When code is maintained over an extended period, its structure and hence its efficiency, deteriorate. Indeed, the more a software product has been maintained, the more it costs to maintain it in future. When the program is re-structured:
- irreconcilable code is detected and removed
- complex control structures are simplified
- program modularity is enhanced
Use of software tools may not be fully effective. Manual rewriting of code may still be applied.
Automated program and Data Restructuring:
When the existing data structures are re-structured then even the programs that process the data have to be reviewed. When data is restructured:
- The overall model may be re-organized into one database.
- Data in a relational model may be modified to suit the needs of a different relational DBMS.
Re-engineering or Re-developing?
Systems targeted for re-engineering have 2 qualities
- They are heavily/regularly used
- They are currently being maintained a lot
Re-engineering usually has two main merits over re-developing. These are:
- Lower costs: re-engineering costs about ¼ of redeveloping
- Reduced risk: lower likelihood of making mistakes.
When deciding whether to re-engineer or to redevelop you may consider such issues as:
- budget provisions or costs constraints
- current state of the old system; the old system may be so old and messy that it may not be susceptible to re-engineering
- Time limitations: re-engineering is likely to be quicker than to redevelop
- Scope i.e. system scope; if the scope of the existing system is to be excluded substantially then it may be more practical to redesign and re-implement the system instead of re-engineering it.
- Perceived risk level; Risk arises from the combined effect of many factors. If the perceived project risk is high then it might be safer to re-engineer the system than to redevelop it.
Link between reengineering of computer systems and BPR:
Computer systems are usually embodied within business processes/systems such as accounts receivable, production planning, marketing and distribution, human resources etc. When such process/systems are re-engineered, then the supporting technology infrastructure also needs to be reviewed.
The overall aim of reengineering a computer system should be to re-align it with the existing business goals. The goals of a BPR project require an altered IT infrastructure then the existing infrastructure should be reengineered or re-developed.
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