Business process re engineering
A management approach concerned at making the improvements and developments to the business by raising the efficiency and effectiveness of the processes that exist within and across the organisations. The key for an organisation to success the business process reengineering is to look at their business processes from a clean slate prospect in order to determine how they can improve and better build these processes to lead their businesses.
THE IMPACT OF BPR ON AN ORGANIZATIONAL PERFORMANCE
The people and the processes are the foundation of any organizations and business process reengineering renovates an organization in ways that directly affect performance. If the individuals are motivated and working hard, than the processes of the businesses are manageable and the nonessential activities remain, the execution of organization will be poor. The key to transforming how people work is business process reengineering, which becomes visible to be minor changes in processes and can have dramatic effects on cash flow, the delivery of the service and the satisfaction of the customer.
The best technique to map and improve the organization’s procedures is to take a top down approach, and not undertake a project in isolation.
Beginning with mission statements, which define and describe the purpose of the organization, what it apart from others in its sector or an industry.
Producing vision statements which define where the organization is going, to provide a clear picture of the desired future position.
Establish these into a comprehensible business strategy, which derives thereby the objectives of the project.
Defining behaviours, which makes possible for the organization to obtain its goals.
Produce the key power measurements to seek out progress.
In relationship of the efficiency improvements to the culture of the organization.
Identifying initiatives that will improve performance.
CONCEPT OF BPR
The concept of BPR generally includes the use of computers, information system and Information technology to organize data, project trends, etc. Many large companies are giving high importance to software integration, they want to build strong links between business systems and make information flow better and avoid to access data stored in multiple systems.
Let us take an example, suppose a person wants to place an order over the internet. An integrated software solution take that order, shift it and allocate them to the manufacturing plant on one hand and place order for the raw materials on the basis of the stock, update the financial position of the company with respect to suppliers and the inventory on the other hand and so on. Different names have been given by the people to the integration of ERP, SCM, BPR and CRM. These names include e-business, c-business, m-business and KM etc. There are many softwares that do these integration activities. To name a few software these are known as Baan, Fourth Shift, Frida, JD Edwards One World, Manage 2000, Masterpiece – MP/Net, Micro strategy, Oracle e-Business Suite, People Soft and SAP R/3.
ADVANTAGES OF BPR
It locates the customer at the midpoint of the organisation.
It helps to reorganize business functions, identify the core activities and processes as well as inefficient or obsolete ones.
It helps them to focus on overall corporate objectives and promotes greater staff involvement.
It reduces the new product development and process activity times and can condense the response of the customer as well.
It can lead to `quantum leap’ improvements and developments in business results–if planned and implemented carefully.
It can improve the current industry position, an inefficient and reorganize business processes and can make them the industrial leader.
DISADVANTAGES OF BPR
It is more suited to products and services that involve logical sequences in production.
It may be less suitable for highly variable processes.
It may require a high level of investment in IT and requires good teamwork and a high degree of planning and implementation expertise.
It can be seen as a real threat to jobs.
Success is not automatically guaranteed.
ROLE OF IS/IT FUNCTION IN BPR
Top management must have the full support to BPR to succeed. The leader must be willing to “drive” change, even to the point of ruthlessness, if resistance is encountered.
“Although, BPR has its roots in IT management, it is primarily a Business Initiative that has broad consequences in terms of satisfying the needs of customers and the firm’s other constituents”. (Davenport & Stoddard 1994)
The IS/IT group may need to play a behind-the-scenes advocacy role; convincing senior management of the power offered by IT and process redesign. It would also need to incorporate the skills of process measurement, analysis, and redesign.
It is essential to differentiate between information technology (IT) and information systems (IS) to understand the role that information systems play in today’s business environment. IT is the term employed to describe the hardware of computer, the software, and the tools of infrastructure of network – in other words, technology itself. IS describes the broader prospect in which IT is employed by the management to create and the systems of support which make it possible for the organization to chase and achieve its strategic goals. When discussing IS, it is important to consider all three of its dimensions: IT, management, and organizations. As a practical matter, it should be noted that the terms IT and IS are often used interchangeably, particularly by those who are not directly involved in the IS or IT field.
Information technology is persistent in all the organizations and society as a whole. Businesses are based on IT and telecommunications to achieve their day-to-day goals. In fact, the collection, storage, and retrieval of data and information are both more sophisticated and more ordinary than they have ever been. The information which a company gathers about its procedures of management is a valuable tool of resource for planning.The organizations are able to create and implement new strategies by the innovative use of existing information technologies and systems of information.
For example, FedEx upgraded its parcel tracking system to provide the direct access through the website of the shipment information to its customers. This upgrade reduced the cost to provide the service to the customers and simultaneously increased the quality and the availability of the service. This example shows the possibilities of IS while adopting new strategies.
IT PROCESSES AND DEVELOPMENT
Today, we find a great number of advances in the IT’s has being employed in the companies. In one way, the remarkable advances in personal computers and the communications make it possible to employees to work outside the office while still being always connected to the office. The employees can work of the house or other places. The communication systems of multi-media, which send and receive audio and video signals, help us by making decisions by employing the email, the transfer of file, or the videoconference. The techniques of computer-aided design/manufacture/technology (CAD/CAM/CAE) take account of the design of products, manufacture, and the coordinating activities of technology.
By gaining new IT tools, it enables companies to gain important advantages such as:
1) Cost savings, improvement and recovering the accuracy of exchanging information.
2) Avoiding inherent human errors so complex and repetitive tasks are used.
3) Saving money because it reduces errors and the time it takes to accomplish tasks.
4) Integrating and coordinating several functions immediately.
5) Improving the effectiveness and the effectiveness of organization by elimination delay, the administrative intermediaries, and the unessential stages of transformation and by providing a better access to information.
The environment of today quickly requires companies to develop and offer the products which will satisfy the needs for customers. The companies cannot be able to do this if they apply processes with many stages and rare collaboration. Consequently, this environment forces a change of the processes of businesses to the mediation reduced by device and increased collaboration.
To diminish the degree of mediation and increase the degree of collaboration, Firstly companies must reduce the degree of mediation in processes. That is, they must convert processes with a great number of stages of intermediary of processes which take part directly in the final results.
The IT’s that make this modification easy might be:
1) Shared databases: Different functions are allowed to take part directly by employing information stored in the data bases. Each function can approach, write, or recover the information of this data base the moment when it is necessary.
2) Imaging technology: Several people may work at the same time on a digitalized image of documents or graphics.
3) Electronic data exchange and electronic funds transference.
Furthermore, shared computing resources make it possible for different functions to have access to information at any time.
Second, the companies must increase the degree of collaboration in the processes so that the implied functions share information. IT that makes the collaboration easy among the different people can be technologies of communication. These allow the transfer of information by using tools such as the email, the videoconference, and the File Transfer Protocol.
IMPORTANCE OF IS/IT IN BPR
All organizations would like to grow and extend. In order to reach this growth and prosperity, organizations place long-term goals. Their roles as a financial manager are to be helped to develop the organizational strategies which facilitate and obtain those goals. The future growth and prosperity of any organization is essential in an effective management and use of information technology (IT) and information systems (IS).
In today’s organizations, the vast majority of the data to support organizational activities and decisions comes from IS, which incorporates IT, data and information, and business procedures. Organizations with poorly designed information systems face numerous problems.
Consider the case of the Hershey Foods Corporation, which found it unable to effectively ship candy for the Halloween season following the implementation of a new computer system. The company faced a 19% drop in profitability because of this problem. Yet at the same time, organizations that effectively design and manage their information systems can gain tremendous benefits. A recent study by Jeanne Ross and Peter Weill found that organizations that effectively manage their IT decision making experience financial performance levels about 20% higher than those with less effective IT management.
IS/IT should not be used as a cure-all for organizational problems because technology can create as many problems as it solves if it is not understood properly and its applications are not actively managed. The key to developing a good strategy to achieve an organization’s goals is to build well-designed and well-managed systems.
CONTRIBUTIONS OF INFORMATION SYSTEM
IS contributes to organizational goals when people use data, information, and information technology through a set of procedures.
IMPACT OF IS/IT IN AN ORGANIZATION
All medium to large organisations depend on information technology (IT) for their continuous survival. Consider organisations like British Gas, British Telecom, the Power and Water companies having to manually calculate, millions of customer bills every month or quarter. Similar opinion applies to many other organisations such as the high street banks, central and local government. A recent article in the Daily Telegraph IT supplement suggested that many large organisations could last no longer than 24 hours without IT support! There should be a little wonder that attitudes to the development of information systems have changed over the years from an ad hoc almost cavalier approach to a professionally managed, disciplined, planned, and engineering approach.
IT can prove to be useful during the process of redesign and reengineering analysis. The graphics software and the tools of CASE can produce the charts of process maps, the spreadsheets and the costing software take account of the analysis of the cost activity-based, the data base can track the satisfaction and the complaints of the customers and display boards of E-mail of “lamp-shade” can be introduced to capture suggestions of the employees. Moreover the E-mail and the groupware can facilitate the communication and coordination through the geographical and organizational barriers.
It is recommended that during the process of implementation stage, companies follow these basis rules:
Recognize that IT is only part of the solution: it allows managers to collect, store, analyze, and communicate and distribute information better.
Cut and paste the IT tools needed.
Bring in an internal or external IT expert: their knowledge, skills, intelligence, and experience are invaluable.
After implementation, continually monitor IT performance and keep up with new IT developments.
Mentioned below are some examples of the companies experience that show the role and implementation of IS/IT in business process redesigning
To exhibit the advantages of BPR, Ford Motor was chosen by Hammer . By applying the data bases shared in the process of accounts payable, which includes the purchase, receiving, and the accounts payable, Ford reduced its labour of the employees by 75 percent.
Hewlett-Packard changed the functioning model of its salesmen. Using the portable computers, they were connected to the data base of the inventory of the company. They obtain the information of period on time, activate and apply directly for promotions, changes of the prices, or discounts. Pointless to say, their time devoted to the customers has increased by 27 percent and sales, of 10 percent.
When Citibank transformed its system of analysis of credit by reducing paper dispensation, it obtained an increase of 43 percent at time devoted to gather new customers. The credit of IBM took two weeks to finish a claim of financing because there were five stages to the process. By redesigning the process and while making take part the general practitioners who work with data bases and telecommunications networks, it takes now only four hours.
LIMITATAIONS TO TECHNOLOGY
There are limits to what a technology may accomplish. For example, when the video conferencing technology of communication became the first time available, much were excited about the prospect to employ the visual communication to finish the need for business trip, or reduce-the least substantially it. While there is no question which the visual communication can be employed for some aspects of communication of businesses, it did not finish the need for travel, partly because of the nature slightly limited of the medium and the human desire for the contact head to head.
Still another, and really undefeatable, the question which limits the use of the video conferencing communication is physical distance and the notion of the time zones. Consider a situation where a senior executive in Vancouver tries to arrange a video conference with sales offices in Eastern Canada, Europe, and in Asia. Taking account of the time zones, there is no overlapping time of covering during the normal working hours which will allow parts in these four geographical regions to meet.
To be successful, business process reengineering projects need to be top down, taking in the complete organization, and the full end to end processes. It needs to be supported by tools that make processes easy to track and analyze.
BPR is a methodology by which important improvements are obtained, although it requires big changes in organization and work style. This involves the need to change or even increase working styles, job functions, needed knowledge, and organization values.
Reengineering requires long-time dedication, resources, and effort. These are made easier by using elements called enablers. Its role is crucial because it allows a company to alter processes in two ways: collaboration grade increase and mediation grade decrease through the implementation of shared databases and communication technologies.
So, IT may help companies to obtain important improvements on variables such as costs, quality, and delivery time. Although these are not the only important elements, also bear in mind structural changes, company culture, and human resources.
BPR must be accompanied by strategic planning, which addresses leveraging IT as a competitive tool.
Place the customer at the centre of the reengineering effort — concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.
BPR must be “owned” throughout the organization, not driven by a group of outside consultants.
Case teams must be comprised of both managers as well as those will actually do the work.
The IT group should be an integral part of the reengineering team from the start.
BPR must be sponsored by top executives, who are not about to leave or retire.
BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of “limbo”.
BPR must not ignore corporate culture and must emphasize constant communication and feedback.
Berman, Saul, Strategic Direction: Don’t Reengineer Without It; Scanning the Horizon for Turbulence, Planning Review, November 1994; Pg. 18.
Brown, Tom, De-engineering the Corporation, Industry Week, April 18, 1994; Pg. 18.
Cafasso, Rosemary, Rethinking Reengineering, Computerworld, March 15, 1993; Pg. 102.
Caldwell, Bruce, Missteps, Miscues — Business Reengineering Failures, InformationWeek, June 20, 1994; Pg. 50.
Chew, Angie, How Insurance Firms Can Reengineer for Success, Business Times, June 20, 1994; Pg. 11.
Cone, Edward, Technology Chief of the Year; All the Right Moves — Tom Trainer of Reebok International Successfully Teamed Business Reengineering with Information Technology, InformationWeek, December 26, 1994; Pg. 35.
Davenport, Thomas H., Will Participative Makeovers of Business Processes Succeed Where Reengineering FailedPlanning Review, January 1995; Pg. 24.
Economist Newspaper Group, Reengineering Reviewed The Economist, June 1994, Pg 24.
Ettorre, Barbara, Reengineering Tales from the Front, Management Review, January 1995; Pg. 13.