CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 13 Triggering and executive visioning project mobilization Focus of this Big"Phase I book is here! Process redesign Big"Phase Implementation and organizational transformation Monitoring and maintaining FIGURE 1-5 The 5 typical phases of BPR in-the-BIG Phase 2: BPR mobilization occurs by selecting a project leader and forming a core BPR team. The processes to be redesigned are selected and a preliminary assessment of IT infrastructure around those processes is made. A BPR plan and budget is proposed Phase 3: In this phase the business process is redesigned and performance compar isons arc made, sometimes through benchmarking with other companies. The process design is also readied for implementation. Part B of the book( Chapters 4 through 8) will explain this phase in detail Phase 4: The implementation and organizational transformation stage is the tough est phase to execute. It includes designing the information systems and modifying the IT infrastructure. It also involves introducing and instituting the new process with its accompanying organizational design changes, training people(sometimes firing them) and possibly reskilling them, and dealing with the political and human problems that occur whenever a large organizational change is made Phase 5: Ideally BPR is not a one-shot effort and the process needs to be monitored on a continuous basis so that the process can be maintained and modified when condi tions require 1-3-2: The Participants in a BPR Project There are a variety of participants in a BPR project as shown in Figure 1-6. At the heart of a BPr project is the core BPR team that must manage the project and coordinate the different participants. The team includes a project leader A BPR project will only be successful if it has top management(and a budget) be- hind it. Any BPR project needs executive sponsors who are often champions for the project. Another important set of participants is the process owners. a process owner is
CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 13 "Big" Phase I Triggering and executive visioning "Big" Phase II BPR project mobilization "Big" Phase III Process redesign "Big" Phase IV Implementation and organizational transformation "Big" Phase V Monitoring and maintaining FIGURE 1-5 The 5 typical phases of BPR in-the-BIG Phase 2: BPR mobilization occurs by selecting a project leader and forming a core BPR team. The processes to be redesigned are selected and a preliminary assessment of IT infrastructure around those processes is made. A BPR plan and budget is proposed. Phase 3: In this phase the business process is redesigned and performance comparisons arc made, sometimes through benchmarking with other companies. The process design is also readied for implementation. Part B of the book (Chapters 4 through 8) will explain this phase in detail. Phase 4: The implementation and organizational transformation stage is the toughest phase to execute. It includes designing the information systems and modifying the IT infrastructure. It also involves introducing and instituting the new process with its accompanying organizational design changes, training people (sometimes firing them) and possibly reskilling them, and dealing with the political and human problems that occur whenever a large organizational change is made. Phase 5: Ideally BPR is not a one-shot effort and the process needs to be monitored on a continuous basis so that the process can be maintained and modified when conditions require. 1-3-2: The Participants in a BPR Project There are a variety of participants in a BPR project as shown in Figure 1-6. At the heart of a BPR project is the core BPR team that must manage the project and coordinate the different participants. The team includes a project leader. A BPR project will only be successful if it has top management (and a budget) behind it. Any BPR project needs executive sponsors who are often champions for the project. Another important set of participants is the process owners. A process owner is
14 PART A UNDERSTANDING BPR FOR e-BUSINESS Process BPR project sponsors Core BPR project BPR faci and consultants IT and e-Commerce Human resources FIGURE 1-6 Typical participants in a BPR project someone who has responsibility and accountability for a business process. It is point- less to reengineer a business process if the process owners are not involved and engaged in the project Many BPR projects bring in BPR facilitators and consultants from outside the anization who bring BPR expertise, whether in the design or implementation or insti- tutionalization aspects of BPR. Then there are participants needed in order to change the work environment around the process. These include human resource specialists who are needed to redesign jobs and reward systems and information systems special ists and electronic commerce specialists who are needed to change the IT infrastructure around the process and to design the information systems Cross-Enterprise BPR for e-Business An e-business BPR project for a business process that is carried out across a supply chain in more than one enterprise is trickier and more complex than if it were inside the same enterprise. First, there has to be agreement on how the interface between the parts of the process in each of the enterprises is designed and what information is passed be tween the enterprises. Some industries, such as the IT industry, are forming industry consortia in order to have standardized common electronic business interfaces that allow them to carry out e-business seamlessly across the supply chain. In the absence of business standards, however, the partnering enterprises have to agree on what the technical and process characteristics of the interface are and adapt their enterprise processes to the interface. Second, the political and organizational challenges of getting more than one enterprise to collaborate on a joint BPR project are much more de manding and difficultto manage. Third, the underlying IT infrastructures and enterprise information systems are often incompatible, further complicating the BPR effort. How- ever, it is the cross-enterprise BPR projects that have the highest potential impacts on businesseffectiveness
14 PART A: UNDERSTANDING BPR FOR e-BUSINESS BPR facilitators and consultants IT and e-Commerce specialists Human resources specialists FIGURE 1-6 Typical participants in a BPR project someone who has responsibility and accountability for a business process. It is pointless to reengineer a business process if the process owners are not involved and engaged in the project. Many BPR projects bring in BPR facilitators and consultants from outside the organization who bring BPR expertise, whether in the design or implementation or institutionalization aspects of BPR. Then there are participants needed in order to change the work environment around the process. These include human resource specialists who are needed to redesign jobs and reward systems and information systems specialists and electronic commerce specialists who are needed to change the IT infrastructure around the process and to design the information systems. 1-3-3: Cross-Enterprise BPR for e-Business An e-business BPR project for a business process that is carried out across a supply chain in more than one enterprise is trickier and more complex than if it were inside the same enterprise. First, there has to be agreement on how the interface between the parts of the process in each of the enterprises is designed and what information is passed between the enterprises. Some industries, such as the IT industry, are forming industry consortia in order to have standardized common electronic business interfaces that allow them to carry out e-business seamlessly across the supply chain. In the absence of business standards, however, the partnering enterprises have to agree on what the technical and process characteristics of the interface are and adapt their enterprise processes to the interface. Second, the political and organizational challenges of getting more than one enterprise to collaborate on a joint BPR project are much more demanding and difficult to manage. Third, the underlying IT infrastructures and enterprise information systems are often incompatible, further complicating the BPR effort. However, it is the cross-enterprise BPR projects that have the highest potential impacts on business effectiveness
CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 15 Scoping Mode“as-is aseline process Analysis Redesign"to-be i process altematives FIGURE 1-7 Phases of business process redesign when BPR software is used 1-4: THE PROCESS REDESIGN PHASE OF BPR: A DESIGN FOCUS The Process Redesign phase, Phase 3 of BPR in-the-BIG, is the focus of this book. The phases and steps in the process redesign phase are shown in Figure 1-7 and Table 1-2 They are explained in detail in the rest of the book and no attempt will be made here to describe each of the three phases beyond identifying them and outlining the steps. The process redesign phase requires a mindset from participants that is both probing and di- agnosing while making visioning leaps and discovery. Participants need to select tools and technologies to help them through this phase of the process as well as form pro- ductive teams Note that unlike other process reengineering methodologies, we have devised a set of steps that take advantage of BPR software. Thus the process redesign phase has itself been reengineered in this book in order to take advantage of BPR software. BPR software allows us to do more analysis and consider more redesign alternatives than we can without it. It also enables us to easily prepare the design for integration into infor- mation systems or workflow software 1-5: REDESIGNING BUSINESS PROCESSES Business processes are redesigned by changing the topology of flows associated with them, whether these flows be physical products, information, or knowledge. Three generic ways for redesigning a business process are: restructuring and reconfiguring the process (restructuring the process), changing the information flows around the process(informat ing the process); and changing knowledge management around the process(minding the process). These redesign methods and their associated principles and tactics are examined in detail in Chapter 3. Although the three generic ways are not mutually exclusive and
CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 15 Modeling, analysis and redesign ping J)— , — -~-^ \ i \ \ \ \ i \ \ i \ i \ \ \ \ i \ i r — >• Model "as-is" baseline process [^>x ••-ia^i^i x 1 — ^x N — ^j^ Analysis — +~ Select "to-be" tf^~K laajk design ^.^ j^« ^*^^ s-^s N"^^ Redesign "to-be" process alternatives p i Share process knowledge /-~ ~- (Integration ^X~7 ' / i / i / i V 1i i i i i i i i i i i i i i ! FIGURE 1-7 Phases of business process redesign when BPR software is used 1-4: THE PROCESS REDESIGN PHASE OF BPR: A DESIGN FOCUS The Process Redesign phase, Phase 3 of BPR in-the-BIG, is the focus of this book. The phases and steps in the process redesign phase are shown in Figure 1-7 and Table 1-2. They are explained in detail in the rest of the book and no attempt will be made here to describe each of the three phases beyond identifying them and outlining the steps. The process redesign phase requires a mindset from participants that is both probing and diagnosing while making visioning leaps and discovery. Participants need to select tools and technologies to help them through this phase of the process as well as form productive teams. Note that, unlike some other process reengineering methodologies, we have devised a set of steps that take advantage of BPR software. Thus the process redesign phase has itself been reengineered in this book in order to take advantage of BPR software. BPR software allows us to do more analysis and consider more redesign alternatives than we can without it. It also enables us to easily prepare the design for integration into information systems or workflow software. 1-5: REDESIGNING BUSINESS PROCESSES Business processes are redesigned by changing the topology of flows associated with them, whether these flows be physical products, information, or knowledge. Three generic ways for redesigning a business process are: restructuring and reconfiguring the process (restructuring the process); changing the information flows around the process (informating the process); and changing knowledge management around the process (minding the process). These redesign methods and their associated principles and tactics are examined in detail in Chapter 3. Although the three generic ways are not mutually exclusive and
16 PART A UNDERSTANDING BPR FOR e-BUSINESS TABLE 1-2 KEY PHASES &ACTIVITIES IN BUSINESS PROCESS REDESIGN WITH BPR SOF TWARE Phase 3 Modeling, Analys Planning Process Scoping the Process rocess Operationalize process a Continue data collection Examine altenative t e Model"As-s" baseline integration options o Define process boundaries Adjust process design o Identify key process issues Analyze and diagnose As- Plan for process Understand best practices process implementation and define initial visions o Familiarize participants with BPR software e Analyze To-Be process e Outline data collection plan alternatives and select best and collect baseline data Plan process integration Process Scoping Report a Software-Based Process Process Integration Plan Process Reengineering Key Participants Key Participants Key Participants a Process Owners and a Process Participants a IS Design Team · BPR Tean there is overlap among them, it is useful to separate them for purposes of illustration. This section provides some simple examples to give readers a general sense ofhow processes can be redesigned and the role information technologies can play. Some key properties of business processes are firstoutlined 1-5-1: The Properties of Business Processes a business process is a coordinated and logically sequenced set of work activities andassociatedresources thatproduce something ofvalue to a customer. a business process typically has the following properties Customer-facing: A business process must provide some value to recipient (per son, organization, process )that is viewed as thecustomer of that process. The outputs of
16 PART A: UNDERSTANDING BPR FOR e-BUSINESS TABLE 1-2 KEY PHASES & ACTIVITIES IN BUSINESS PROCESS REDESIGN WITH BPR SOFTWARE Phase 1 Scoping the Process Activities Phase 2 Modeling, Analysis, & Redesign of Process Activities Phase 3 Planning Process Integration Activities > Operationalize process performance targets 1 Define process boundaries > Identify key process issues • Understand best practices and define initial visions > Familiarize participants with BPR software • Outline data collection plan and collect baseline data > Plan for modeling phase Deliverables «Continue data collection 1 Model "As-ls" baseline process 1 Analyze and diagnose "Asls" process • Design and model "To-Be" process alternatives 1 Analyze "To-Be" process alternatives and select best alternative > Plan process integration phase Deliverables > Examine alternative IT integration options > Adjust process design • Plan for process implementation Deliverables 1 Process Scoping Report Key Participants • Software-Based Process Model • Process Reengineering Report Key Participants • Process Integration Plan Key Participants 1 Process Owners and Partners 1 Customers of Process • BPR Team 1 Process Participants ' BPR Team 1 IS Design Team ' BPR Team there is overlap among them, it is useful to separate them for purposes of illustration. This section provides some simple examples to give readers a general sense of how processes can be redesigned and the role information technologies can play. Some key properties of business processes are first outlined. 1 -5-1: The Properties of Business Processes A business process is a coordinated and logically sequenced set of work activities and associated resources that produce something of value to a customer. A business process typically has the following properties: • Customer-facing: A business process must provide some value to a recipient (person, organization, process) that is viewed as the customer of that process. The outputs of
CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 17 a process can be used by either external customers or internal customers. External cus- tomers are the people or entities outside the organization that purchase products or re ceive services from the organization. Internal customers are employees inside the organ ization who add more value to the product or service on its way to a final customer Customers can also do some of the work in a business process when self-service tech- niques are used Cross-functional, cross-departmental, and cross-enterprise: a business process is typically cross-functional and cuts across many different departments. For example,a ales process can constitute several subprocesses such as customer contact, order fulfill ment, shipping, invoicing, and collection, each of which could be performed by one or more organizational units. a business process also is not confined to one part of the func tional hierarchy of an organization(sales, R&D, engineering, manufacturing) but cuts horizontally across them. It is often carried out by more than one enterprise and includes much interenterprise communications Hand-offs: Hand-offs occur when a completed task is handed off to another per- son to carry out the next task in a sequence. Hand-offs are a key element of a business process and are the vehicles of coordination between different tasks. They are also the cause of errors and delays and difficult to manage. The effective management of hand- offs is critical for effective redesign of a process. Management of coordination rather than improved efficiency of tasks makes for much improved process performance Information flow around the process: This is the information flow needed to pro- duce the outputs of the process and also the information necessary to monitor the process Altering the dynamics of information flows is one way of redesigning business processes Knowledge created around the process: This includes the collective requisite knowledge about the process that the participants have that enables them to execute the process effectively under various conditions. This also includes knowledge about the process(trends, new exceptions, frequently asked questions, improvement ideas) that can be synthesized over time by gathering information from those who interact with the process(employees, customers, suppliers). Expanding the knowledge-creating capacity of a process is another way of redesigning a process through enabling the process to learn and become a source of "smarts" for its participants Multiple versions rather than one-size-fits all: a business process has multiple versions(also called cases), each of which is performed based on particular conditions ( triggers, type of customers). Furthermore, each of these versions is executed many times. For readers who are familiar with set theory this means that a business process is a class rather than an instance Value-adding mix of a process: a business process is made up of value-adding work(directly adds value for the customer ), non-value-adding work(enables value- adding but does not add it directly, such as management processes, accounting, for ex- ample), and waste(which neither adds nor enables value). While it is clear that waste is undesirable, the balance between the other two elements of the mix(value-adding and non-value-adding)is trickier. It is a design parameter to be consciously considered that trades off the cost and value of management control Degree of structure of a process: Some types of business processes are highly structured in that the process follows a series of well-defined predetermined steps every
CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 17 a process can be used by either external customers or internal customers. External customers are the people or entities outside the organization that purchase products or receive services from the organization. Internal customers are employees inside the organization who add more value to the product or service on its way to a final customer. Customers can also do some of the work in a business process when self-service techniques are used. • Cross-functional, cross-departmental, and cross-enterprise: A business process is typically cross-functional and cuts across many different departments. For example, a sales process can constitute several subprocesses such as customer contact, order fulfillment, shipping, invoicing, and collection, each of which could be performed by one or more organizational units. A business process also is not confined to one part of the functional hierarchy of an organization (sales, R&D, engineering, manufacturing) but cuts horizontally across them. It is often carried out by more than one enterprise and includes much interenterprise communications. • Hand-offs: Hand-offs occur when a completed task is handed off to another person to carry out the next task in a sequence. Hand-offs are a key element of a business process and are the vehicles of coordination between different tasks. They are also the cause of errors and delays and difficult to manage. The effective management of handoffs is critical for effective redesign of a process. Management of coordination rather than improved efficiency of tasks makes for much improved process performance. • Information flow around the process: This is the information flow needed to produce the outputs of the process and also the information necessary to monitor the process. Altering the dynamics of information flows is one way of redesigning business processes. • Knowledge created around the process: This includes the collective requisite knowledge about the process that the participants have that enables them to execute the process effectively under various conditions. This also includes knowledge about the process (trends, new exceptions, frequently asked questions, improvement ideas) that can be synthesized over time by gathering information from those who interact with the process (employees, customers, suppliers). Expanding the knowledge-creating capacity of a process is another way of redesigning a process through enabling the process to learn and become a source of "smarts" for its participants. • Multiple versions rather than one-size-flts all: A business process has multiple versions (also called cases), each of which is performed based on particular conditions (triggers, type of customers). Furthermore, each of these versions is executed many times. For readers who are familiar with set theory, this means that a business process is a class rather than an instance. • Value-adding mix of a process: A business process is made up of value-adding work (directly adds value for the customer), non-value-adding work (enables valueadding but does not add it directly, such as management processes, accounting, for example), and waste (which neither adds nor enables value). While it is clear that waste is undesirable, the balance between the other two elements of the mix (value-adding and non-value-adding) is trickier. It is a design parameter to be consciously considered that trades off the cost and value of management control. • Degree of structure of a process: Some types of business processes are highly structured in that the process follows a series of" well-defined predetermined steps every