CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 23 knowledge management around a process. A more detailed examination of principles and tactics is the topic of Chapter 3 1-6: THE LEARNING BLOCKS OF BPR FOR e-BUSINESS Whether you are a practicing business professional or in an MBa program anywhere in the world, BPR for e-business is a core skill you will need to master. Sooner or later, you will be asked to improve, transform, and redesign the business processes that you are part of in your enterprise. Whether you are in a traditional enterprise or a new start-up, there is a big push toward transforming business processes for e-business that will require BPR skills. First, you will need to understand the " why"of bPr for e-business--its drivers and motives. Second, you will need to understand the"what" of BPR for e-business- its concepts, approaches, components, and dynamics. Third, you will need to understand the"how"of BPR-the steps, methodologies, and tools necessary for carrying out BPR effort. You will not only need to understand these aspects at the enterprise level but also at the cross-enterprise supply chain level What will this book help you learn and understand? This book is designed to help you understand concepts and approaches and learn methodological skills through current case examples and the hands-on use of software. Specifically, this book will provide you with the following General understanding of the underlying concepts, perspectives, and evolution of BPR for e-business from both a design and implementation perspective In-depth understanding of the design perspective of BPr for e-business and ac- companying methodology A skill for process modeling, analysis, and redesign using BPR software and a hands-on familiarity with how BPR software works Key principles and tactics of redesigning business processes for e-business. These include principles and tactics for changing the configuration and structure of processes IGURE 1-8 The scope of the book usiness process modeling analysis and redesign using business process redesign BPR software for e-business Methodology and Redesigning collaborative design perspective of supply chain processes BPR for e-business BPR for e-business for e-business concepts and How IT enables IT platforms for executing processes in e-business
CHAPTER 1: INTRODUCTION TO BPR FOR e-BUSINESS 23 knowledge management around a process. A more detailed examination of principles and tactics is the topic of Chapter 3. 1-6: THE LEARNING BLOCKS OF BPR FOR e-BUSINESS Whether you are a practicing business professional or in an MBA program anywhere in the world, BPR for e-business is a core skill you will need to master. Sooner or later, you will be asked to improve, transform, and redesign the business processes that you are part of in your enterprise. Whether you are in a traditional enterprise or a new start-up, there is a big push toward transforming business processes for e-business that will require BPR skills. First, you will need to understand the "why" of BPR for e-business—its drivers and motives. Second, you will need to understand the "what" of BPR for e-business— its concepts, approaches, components, and dynamics. Third, you will need to understand the "how" of BPR—the steps, methodologies, and tools necessary for carrying out a BPR effort. You will not only need to understand these aspects at the enterprise level but also at the cross-enterprise supply chain level. What will this book help you learn and understand? This book is designed to help you understand concepts and approaches and learn methodological skills through current case examples and the hands-on use of software. Specifically, this book will provide you with the following: • General understanding of the underlying concepts, perspectives, and evolution of BPR for e-business from both a design and implementation perspective. • In-depth understanding of the design perspective of BPR for e-business and accompanying methodology. • A skill for process modeling, analysis, and redesign using BPR software and a hands-on familiarity with how BPR software works. • Key principles and tactics of redesigning business processes for e-business. These include principles and tactics for changing the configuration and structure of processes, FIGURE 1-8 The scope of the book Business process modeling, analysis and redesign using BPR software Methodology and design perspective of BPR for e-business How IT enables new ways of executing processes BPR for e-business concepts and perspectives Principles and tactics of business process redesign for e-business Redesigning collaborative supply chain processes for e-business IT platforms for process integration in e-business
24 PART A UNDERSTANDING BPR FOR e-BUSINESS hanging information flows around processes, and effective knowledge management around processes An understanding of how It can be used to enable new ways of executing busi ness processes An understanding of leading-edge methods to redesign collaborative supply chain processes for e-business eciation of options for It platforms for process ration in e-business
24 PART A: UNDERSTANDING BPR FOR e-BUSINESS changing information flows around processes, and effective knowledge management around processes • An understanding of how IT can be used to enable new ways of executing business processes. • An understanding of leading-edge methods to redesign collaborative supply chain processes for e-business. • An appreciation of options for IT platforms for process integration in e-business
2 KEY ISSUES AROUND BPR AND THE EVOLUTION OF BPR FOR e-BUSINESS 2-0: FIRST AND SECOND WAVES OF BPR 2-I: KEY ISSUES AROUND BPR. WHAT WE LEARNED FROM THE FIRSTWAVE 2-1-1: The Scope, Success, and State of BPR 2-1-2: BPR Methodologies and Information Technologies 2-1-3: People Issues in BPR 2-2: BPR FOR e-BUSINESS: WHERE THE SECOND WAVE IS TAKING US 2-2-1: BPR and Supply Chain Management 2-2-2: BPR and Knowledge Management 2-2-3: BPR and Web-Enabled e-Business WHAT CHAPTER 2 IS ABOUT This chapter provides a general survey of the concepts and perspectives around the evolution of BPR for e-business. The first part of the chapter pres ssues around BPr by examining what we learned from the first wave of BPR in the early to mid-1990s. The second part of the chapter presents the issues around the evolution of bpr in its second wave in the late 1990s in order to better un- derstand the direction of evolution of BPR for e-business beyond 2000 The structure of the chapter is a question-and-answer mode to allow the reader to flexibly navigate through it and refer back later for reference. Issues dealt with in later chapters in the context of process analysis and redesign are excluded from this hapter. After each set of questions, related references are suggested for readers who would like to find out more about each particular topic area. These sources are meant
2 KEY ISSUES AROUND BPR AND THE EVOLUTION OF BPR FOR e-BUSINESS 2-0: FIRST AND SECOND WAVES OF BPR 2-1: KEY ISSUES AROUND BPR: WHAT WE LEARNED FROM THE FIRST WAVE 2-1-1: The Scope, Success, and State of BPR 2-1-2: BPR Methodologies and Information Technologies 2-1-3: People Issues in BPR 2-2: BPR FOR e-BUSINESS: WHERE THE SECOND WAVE IS TAKING US 2-2-1: BPR and Supply Chain Management 2-2-2: BPR and Knowledge Management 2-2-3: BPR and Web-Enabled e-Business WHAT CHAPTER 2 IS ABOUT This chapter provides a general survey of the concepts and perspectives around the evolution of BPR for e-business. The first part of the chapter presents the key issues around BPR by examining what we learned from the first wave of BPR in the early to mid-1990s. The second part of the chapter presents the issues around the evolution of BPR in its second wave in the late 1990s in order to better understand the direction of evolution of BPR for e-business beyond 2000. The structure of the chapter is a question-and-answer mode to allow the reader to flexibly navigate through it and refer back later for reference. Issues dealt with in later chapters in the context of process analysis and redesign are excluded from this chapter. After each set of questions, related references are suggested for readers who would like to find out more about each particular topic area. These sources are meant 25
26 PART A: UNDERSTANDING BPR FOR e-BUSINESS to be illustrative and good starting points for the business professional, rather than an exhaustive list of sources. Suggestions are always welcome at the books Web site 2-0: FIRST AND SECOND WAVES OF BPR In Chapter 1(Section 1-2-2)we outlined the waves of process improvement and the evolution of BPR. We identified the first wave of BPR during the early to mid-1990s that focused on cost cutting and making enterprise processes lean and mean. We also TABLE 2-1 WAVES OF BUSINESS PROCESS IMPROVEMENT Second-wave Total quality First-wave BPr Time-based nowledge management competition e-business management Reduction of Obliteration of Transformation rocess change variability and old task-oriented of process flows int defects in processes and and organization processes with creation capacity process outputs replacement with to be fast, suppliers, of business apically focused. and customers, and processes flexible partners processes Nature and Continuous Espoused radical Cycle time used Collaborative Knowledge magnitude of incremental diagnostic business change creates organizational although often for strategic process redesign competencies change with incremental organizational around cross for both electronic new processes interfaces Associated era 1980s Early 1990s 1990s and Late 1990s and 2000 and Role of Minor role in Critical enabler Enabler of fast Web-based IT Triggers the data collection of new ways of response infrastructure shaping and and analysis executing enables new synthesis of new processes supply chain cution Bottom-up grass Top down ar Top down and Cross-enterprise Middle-up-down mostly one- Dysfunctional Not necessarily Slash and burn Not linking cycle Few Confusing aspects or bad time reduction to standardized knowledge with practices strategy partner interface information and Time frame of Continuing Short-term Long-term Short-term and performance performance long-term potential focus performa
26 PART A: UNDERSTANDING BPR FOR e-BUSINESS to be illustrative and good starting points for the business professional, rather than an exhaustive list of sources. Suggestions are always welcome at the book's Web site. 2-0: FIRST AND SECOND WAVES OF BPR In Chapter 1 (Section 1-2-2) we outlined the waves of process improvement and the evolution of BPR. We identified the first wave of BPR during the early to mid-1990s that focused on cost cutting and making enterprise processes lean and mean. We also TABLE 2-1 WAVES OF BUSINESS PROCESS IMPROVEMENT Second-wave BPR Signature of process change Nature and magnitude of organizational change Associated era Role of IT Execution approach Dysfunctional aspects or bad practices Time frame of target focus Total quality management Reduction of variability and defects in process outputs Continuous incremental improvement 1980s Minor role in data collection and analysis Bottom-up grass roots Not necessarily strategic Continuing First-wave BPR Obliteration of old task-oriented processes and replacement with radically innovated business processes Espoused radical change — although often with incremental implementation Early 1990s Critical enabler of new ways of executing processes Top down and mostly one-shot Slash and burn downsizing Short-term performance focus Time-based competition Transformation of process flows and organization to be fast, focused, and flexible Cycle time used as a diagnostic for strategic organizational change 1 990s and beyond Enabler of fast response Top down and comprehensive Not linking cycle time reduction to strategy Long-term performance focus Web-enabled e-business Cross-enterprise internet processes with suppliers, customers, and partners Collaborative business process redesign around crossenterprise electronic interfaces Late 1 990s and beyond Web-based IT infrastructure enables new supply chain processes Cross-enterprise partnering Few standardized partner interface processes Short-term and long-term performance focus Knowledge management Expanding the knowledge creation capacity of business processes Knowledge change creates competencies for both improved and new processes 2000 and beyond Triggers the shaping and synthesis of new knowledge Middle-up-down Confusing knowledge with information and data Long-term potential focus
CHAPTER 2: KEY ISSUES AROUND BPR AND THE EVOLUTION OF BPR FOR e-BUSINESS 27 ified a composite, more strategic second wave of BPR that focused on redesign- supply chain processes for collaborative advantage and creating value as quickly as possible. The second wave of BPR began in the late 1990s. It was Internet-centered taking increasing advantage of knowledge management around business processes, and driven by the scramble of enterprises to move to e-business as quickly as possible. table I-I in Chapter 1(repeated as Table 2-1)compares the characteristics of these two waves Section 2-1 exposits the key issues around BPR by examining what we learned from first wave. Section 2-2 presents the issues around the evolution of BPR in its sec- ond wave in order to better understand the direction of evolution of bpr for e-business beyond 2000 2-1 KEY ISSUES AROUND BPR: WHAT WE LEARNED FROM THE FIRST WAVE 2-1-1: The Scope, Success, and state of BPR What Is the Typical Scope of a BPR Project? The vary from small to very large Reengineering a narrow process in a single area of a company(purchasing office supplies for a motorcycle factory) Reengineering an enterprise-wide core business process(such as new product de velopment across all product lines) Reengineering a strategic supply chain management process that extends across several companies(such as co-sourcing of raw materials with fluctuating availability) Reengineering a common business process that affects the way business is done in an entire country(such as reengineering the shipping and customs clearance process for international trade in Singapore) Furthermore, while the philosophy of BPR(see definition in Chapter 1)aims to achieve quantum improvements of large magnitude--thus implying radical changes--this aim often does not carry over when translated from design to implementation. Radical changes proposed at the design stage are often watered down when difficulties and chal lenges start to appear at the implementation stage. Thus projects ranging from stream lining processes for efficiency(how travel expenses are reimbursed) to reinventing new processes that transform entire industries(buying a car through the Internet)are labeled as BPR. In 1994, at the peak of its hyped popularity, there was a joke going around that any project that needed to be funded by top management was called a BPR project Smaller and simpler BPR project out-of-pocket costs are typically in the tens of thou- sands of dollars, while larger efforts typically range in the tens of millions of dollars When huge infrastructure and information technology investments are needed, the costs tend to go up very quickly. The Internal Revenue Service in the U.S.A. has a long-term BPR project that is reportedly in the $20 billion range For large-scale enterprisewide BPR projects it is not uncommon for the process re- design phase to take about six months-perhaps preceded by another six months of vi- ioning and project mobilization. Implementation and organizational transformation is
CHAPTER 2: KEY ISSUES AROUND BPR AND THE EVOLUTION OF BPR FOR e-BUSINESS 27 identified a composite, more strategic second wave of BPR that focused on redesigning supply chain processes for collaborative advantage and creating value as quickly as possible. The second wave of BPR began in the late 1990s. It was Internet-centered, taking increasing advantage of knowledge management around business processes, and driven by the scramble of enterprises to move to e-business as quickly as possible. Table 1-1 in Chapter 1 (repeated as Table 2-1) compares the characteristics of these two waves. Section 2-1 exposits the key issues around BPR by examining what we learned from the first wave. Section 2-2 presents the issues around the evolution of BPR in its second wave in order to better understand the direction of evolution of BPR for e-business beyond 2000. 2-1 KEY ISSUES AROUND BPR: WHAT WE LEARNED FROM THE FIRST WAVE 2-1-1: The Scope, Success, and State of BPR 1. What Is the Typical Scope of a BPR Project? The scope of a BPR project can vary from small to very large: • Reengineering a narrow process in a single area of a company (purchasing office supplies for a motorcycle factory). • Reengineering an enterprise-wide core business process (such as new product development across all product lines). • Reengineering a strategic supply chain management process that extends across several companies (such as co-sourcing of raw materials with fluctuating availability). • Reengineering a common business process that affects the way business is done in an entire country (such as reengineering the shipping and customs clearance process for international trade in Singapore). Furthermore, while the philosophy of BPR (see definition in Chapter 1) aims to achieve quantum improvements of large magnitude—thus implying radical changes—this aim often does not carry over when translated from design to implementation. Radical changes proposed at the design stage are often watered down when difficulties and challenges start to appear at the implementation stage. Thus projects ranging from streamlining processes for efficiency (how travel expenses are reimbursed) to reinventing new processes that transform entire industries (buying a car through the Internet) are labeled as BPR. In 1994, at the peak of its hyped popularity, there was a joke going around that any project that needed to be funded by top management was called a BPR project. Smaller and simpler BPR project out-of-pocket costs are typically in the tens of thousands of dollars, while larger efforts typically range in the tens of millions of dollars. When huge infrastructure and information technology investments are needed, the costs tend to go up very quickly. The Internal Revenue Service in the U.S.A. has a long-term BPR project that is reportedly in the $20 billion range. For large-scale enterprisewide BPR projects it is not uncommon for the process redesign phase to take about six months—perhaps preceded by another six months of visioning and project mobilization. Implementation and organizational transformation is