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Jim Owens: What is Business Process Reengineering?

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BPR (Business Process Reengineering, also know as Business Process Redesign) is “the analysis and design of workflows and processes within and between organizations” (Davenport & Short 1990).

OK, so what does that mean? We’ll have to go back about a century to see how it all began.

Scientific Management

The basis for BPR was first suggested by Frederick Taylor’s article “The Principles of Scientific Management” in the 1900’s, and it involved decomposing complex operations into groups of simpler, even trivial tasks, so that little intelligence or skill was required.

To see Scientific Management in action, Imagine building computer motherboards, a very complex task indeed. But now imagine building them on a human-only production line (i.e. no robots or intelligent machinery). On this production line motherboards pass several thousand people and each person drills a single hole, in the same place on each motherboard.

So person 1 always drills hole 1, person 2 always drills hole 2, and so on, in exactly the same place in successive motherboards – mind-numbingly boring (no pun intended) but it couldn’t be easier.

As the boards leave the last driller, they pass another long line of people working in groups. The first person in each group inserts “their” component in the holes, and then each successive person in the group solders, “their” pin, and so on, until the motherboards are complete. So the most complex task can be accomplished by braking it down into simple steps and the arranging them in the correct order.

That was the principle behind Henry Ford’s original production lines; they were dehumanising and treated people like robots. But the big advantage (for Ford) was that they needed almost no training in order to be replaced.

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Were the customers happy?

Yes, they could finally buy a car at an affordable price. It was a basic, black, uncustomisable automobile, but this was infinitely preferable to a automobile that you can’t afford to buy.

The low price alone gave Ford a big advantage over his competitors.

Where production lines effective?

Yes, they repeatedly produced the same product, so the quality was high.

Where production lines efficient?

Yes, production output was very high.

And it is upon these three pillars, customer satisfaction, effectiveness and efficiency, that BPR was eventually founded.

But times have moved on since Ford’s production line (thankfully).

The production lines are still there, but now the use real robots. So until robots become self-aware, they should be quite “happy”.

Theoretically this leaves people to perform more meaningful and rewarding tasks.

Customers have changed too. They are no longer satisfied with basic, black, uncustomisable automobiles. Nowadays considerable customisation is considered essential in the business world, and if something is not customisable then it has to be cheap.

The second pillar, quality, is still right up there with the main reasons that people buy products. In fact consumers are often prepared to pay a higher price for a product that it likely to function reliability, such as found in Japanese automobiles.

Back in the 1920’s the efficiency of the production line guaranteed the success of the company. But nowadays the efficiencies have to flow right through the business, including the management layer, project teams, marketing, warehousing, shipping and so on.

For example Dell computers organised their assembly plant to operate on a JIT (just in time) inventory system; part are ordered only when they are needed, and they rely on the efficiency of their suppliers to keep in step. This keeps the cost of inventory tracking, and warehousing very low.

Successful implementations of BPR include American Airlines, General Motors, Procter and Gamble and Hewlett-Packard.

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What can go wrong?

BPR came about in the early 1990’s, initially as a way to improve Information Services systems.

It is related to TQM (Total Quality Management) but one of the major differences between them is that TQM is evolution, whereas BPR is revolution.

TQM is a gradually changing system based on Deming’s “Quality Wheel” of “Plan, Do, Check, Act. So the gradual changes are implemented and monitored, and can be reversed if detrimental

BPR, on the other hand is a “big bang” approach.

So you send your senior executives to a slick, evangelistic presentation on BPR, and they come back as zealots for the “new way” of doing things. And so the baby gets thrown out with the bath water.

What the slick presentors seldom highlight is the 65% to 75% failure rate of BPR.

And even if they do mention it, they will call it a “25% to 35% success rate” which doesn’t sound too bad after a couple of quarts of wine and a suitcase-full of merchandise.

In fact some organizations, such as Metropolitan Life blamed their bankruptcy on the implementation of BPR.

Oh yes, and the presenters might also forget to mention that the returns on investment will be slow and gradual, and your new zealots might forget to mention to the staff the big staff cuts that usually result from a BPR implementation.

The human cost of reengineering has been known to lead to staff cuts of over 10,000 in large organizations, and a reduction of job satisfaction.

In 1996 Dr Michael Hammer, who along with James Champy, authored several leading publications on BPR, was quoted in the Wall Street Journal,

“Dr. Hammer points out a flaw: He and the other leaders of the $4.7 billion re-engineering industry forgot about people. ‘I wasn’t smart enough about that,’ he says. ‘I was reflecting my engineering background and was insufficient appreciative of the human dimension. I’ve learned that’s critical.”

How Does BPR Differ from TQM?

TQM

BPR

Improvement

Innovation

Level of Change

Incremental

Radical

Starting Point

Existing Process

Clean Slate

Frequency of Change

One-time/Continuous

One-time

Time Required

Short

Long

Participation

Bottom-Up

Top-down

Typical Scope

Narrow

Broad

Within functions

Cross-functional

Risk

moderate

High

Primary Enabler

Statistical Control

Information Technology

Type of Change

Cultural

Cultural/Structural

(Diagram: Davenport, T.H. & Short, J.E. (1990 Summer). “The New Industrial Engineering: Information Technology and Business Process Redesign”)

Davenport & Short (1990) define business process as “a set of logically related tasks performed to achieve a defined business outcome.”

In their view processes have two important characteristics: (i) They have customers (internal or external), (ii) They cross organizational boundaries, i.e., they occur across or between organizational subunits.

One technique for identifying business processes in an organization is the value chain method proposed by Porter and Millar (1985).

Processes are generally identified in terms of beginning and end points, interfaces, and organization units involved, particularly the customer unit.

Why do BPR Projects Fail?

Bashein, B.J., Markus, M.L., & Riley, P. (1994 Spring). “Preconditions for BPR Success: And How to Prevent Failures,” Information Systems Management,suggest seven positive preconditions for BPR success as:

1. Senior management commitment and sponsorship;

2. Realistic expectations;

3. Empowered and collaborative workers;

4. Strategic context of growth and expansion;

5. Shared vision; sound management practices;

6. Appropriate people participating full-time; and

7. Sufficient budget.

They also identify negative preconditions related to BPR:

1. The wrong sponsor;

2. A “do it to me” attitude;

3. Cost-cutting focus; and

4. Narrow technical focus.

And they suggest the negative preconditions relating to the Organization include:

1. Unsound financial condition;

2. Too many projects under way;

3. Fear and lack of optimism; and

4. Animosity toward and by is and human resource (hr) specialists.

What is The future of BPR?

From the preceding then, I would suggest that a way forward for BPR would be:

- Perform a benefit/cost analysis; make sure the expected returns are worth it.

- Perform an alternatives analysis, is this the best way;

- Perform a SWOT (Strengths, Weaknesses, Opportunities, Threats analysis), make sure you don’t compromise your strengths;

- Scope the project fully in advance;

- Draw up a time-phased budget for the changes;

- Perform a full risk analysis. Make sure the risks are worth it;

- Implement a comprehensive quality plan;

- Determine and monitor meaningful KPI’s (key performance indicators);

- Dispense with the “big bang” approach, and aim for more gradual change;

- Try implementing BPR in project phases. Use a phase as a pilot, e.g. one department or branch. Or major process group;

- Get the workers involved and (as with TQM) give them timely feedback on progress and empower them to make changes to the system, at their level;

- Focus on strategy, rather than on tactics; and

- Manage the whole transformation as a project

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