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Traditional Business ConceptsTraditional Business Concepts
Adam Smith (1776, The Wealth of Nations)
Use separating work areas to increase productivity
American Railway (1820)
Create modern business bureaucracy (control-command
procedures )
Frederick Taylor (1880)
Managers could discover the best processes for performing work
and reengineer them to optimize productivity
In Taylor's time, technology did not allow large companies to
design processes in a cross- functional or cross-departmental
manner
Specialization was the state-of-the-art method to improve efficiency
given the technology of the time
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Today’s RealityToday’s Reality
Organizations in Crisis
No company is safe
There is no such things as a ‘solid’ or even substantial, lead
over one’s competitors
Traditional business relationships and operational models are
evolving or collapsing
New opportunities exist for businesses that can use information
technology to create and capitalize on emerging markets
Market expectations and pressures are changing
Global business opportunity are expanding
Information technology is crucial to realizing and managing
these opportunities
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Business PressuresBusiness Pressures
Market Pressures
Global economy - strong competition
Changing nature of the workforce
Powerful customers
Technological Pressures
Technological innovation and obsolescence
Information overload
Societal Pressures
Social responsibility
Government regulations
Government deregulation
Shrinking budgets and subsidies
Ethical issues
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The Power of 3CThe Power of 3C
Customers (Pelanggan memainkan peran)
– Demanding
– Sophistication
– Changing Needs
Competition (Persaingan semakin ketat)
– Local
– Global
Change (Perubahan menjadi konstan)
– Technology
– Customer Preferences
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BPR OverviewBPR Overview
Business Process Reengineering (BPR),
a fundamental rethinking and a radical redesign of a
business process to achieve dramatic improvements
Michael Hammer and James Champy, Reengineering the Corporation: A Manifesto for Business Revolution
(New York: Harper Business, 1993)
BPR is a systematic approach or methodology for analyzing business
activities or processes with a view to
Improving the organization's alignment with strategic goals
Its effectiveness, efficiency, competitiveness and so on
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BPR Overview (cont.)BPR Overview (cont.)
The idea is to start from “ground zero”
Then determine what things the company must do
Then seek the best way to do those things
It ignores what is and concentrates on what should be
It’s intended to overcome the shortcoming of seeking incremental
improvements
Solving problems at one part of a process instead of replacing the
entire process with something better
In reengineering, instead of “patching up” parts of a faulty process,
the entire process itself is radically improved
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BPR Four key wordsBPR Four key words
1. Fundamental
means business people have to ask themselves with a fundamental
question, such as why, what and how we do the business.
2. Radical
means, ‘if it did not exist today, how would we create it’ and then destroying
the old system to create the new one
3. Dramatic
means improvement in business result, not of 5%, not of 15% nor 20%, but
in term of quantum leaps of 100%, 300%, 500% better result
4. Process
means a group of distinct tasks that together create a product or service
desired by one or more stakeholders
Business Process Reengineering (BPR),
a fundamental rethinking and a radical redesign of a business process to
achieve dramatic improvements
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Why Company need to implementWhy Company need to implement
BPRBPR
BPR has been implemented in various industry
1. Increase skill and knowledge every specialist
2. Reduce time
3. The discovery of new machines makes one job running
easily and efficiently
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Why Company do not ReengineerWhy Company do not Reengineer
Satisfaction
Political Resistance
New Developments
Fear of Unknown and Failure
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Effective Reengineering StepsEffective Reengineering Steps
1. Develop business vision, process objectives
The BPR method is driven by a business vision which implies specific business
objectives such as cost reduction, time reduction, output quality improvement.
2. Identify process to be redesigned
most firms use the 'High-Impact' approach which focuses on the most important
processes or those that conflict most with the business vision
3. Understand, measure performance of existing processes
avoiding the repeating of old mistakes and for providing a baseline for future
improvements
4. Identify opportunities for applying information technology
awareness of IT capabilities can and should influence BPR
5. Build prototype of new process
the actual design should not be viewed as the end of the BPR process
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BPR ExpectationBPR Expectation
Identify and quantify process improvement opportunities aligned
with the organization's strategic plan
Establish objectives that "stretch" the existing activities
Identify the associated benefits to the organization
Identify the changes necessary, including any changes in
associated activities
Formulate projects for their accomplishment
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BPR ObjectivesBPR Objectives
Improve Efficiency e.g reduce time to market, provide
quicker response to customers
Increase Effectiveness e.g deliver higher quality
Achieve Cost Saving in the longer run
Provide more Meaningful work for employees
Increase Flexibility and Adaptability to change
Enable new business Growth
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Scope of BPRScope of BPR
Intra-functional
Small scope within department, least impact
Inter-functional
Horizontal view across departments, more impact
Inter-organizational
Broad view including entire supply & delivery chain,
most impact
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BPR ImpactsBPR Impacts
Resulting changes may include
Organizational structure
Roles and responsibilities
Supplier relations
Customer interfaces, and
Other stakeholder relationships
Often, it means a cultural change within the
organization
Change management should be invoked to deal with
the people aspects
The fear among employees that their jobs are
endangered and that years of experience will account
for nothing
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Reengineering vs. Other MethodsReengineering vs. Other Methods
Dimension Reengineering Rightsizing Restructuring TQM Automation
Assumptions
Questioned
Fundamental Staffing Reporting
relationship
Cust. wants
and needs
Technology
applications
Scope of
Change
Radical Staffing, job
responsibilities
Organization Bottom-up Top-down
Orientation Process Functional Functional Process Procedure
Improvement
Goals
Dramatic Incremental Incremental Incremental Incremental
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Reengineering - ‘NOT’Reengineering - ‘NOT’
not
abdicating leadership and management responsibility to your consultant
not
a fancy name for eliminating the redundant positions that should never have
created anyway
not
radically redesign functional department or radically redesign people
not
expecting your people to coorporate wholeheartedly while you obviously put
their jobs and lifestyles in jeopardy
not
thinking that you will have your new process implemented without problems
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Some Success FactorsSome Success Factors
Senior Management, Commitment and Sponsorship
Realistic Expectations
Empowered and Collaborative Workers
Strategic Context of Growth and Expansion
Shared Vision
Sound Management Practices
Appropriate People Participating Full-Time
Sufficient Budget
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Some Failure FactorsSome Failure Factors
The wrong sponsor
Cost-cutting focus
Narrow technical focus
Lack of sustained management commitment and leadership
Unrealistic scope and expectations
Resistance to change
The negative preconditions relating to the organization, include:
Unsound Financial Condition
Too Many Projects Under Way
Fear and Lack of Optimism
Animosity Toward and By IS and HR Specialists
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Core Business : Financing the computers, software and service
that the IBM Corporation sells
Length to Process : 5 steps
1
2
3
4
5
Customer Service
Credit Department
Business Practices Department
Appraisal
Administration
Example Case: IBM CreditExample Case: IBM Credit
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Example Case: IBM CreditExample Case: IBM Credit
1
Request for financing from IBM Corp sales representative, IBM Credit staff
log on a piece of paper (14 Staff)
2
Someone carted that paper to the credit department, where the specialist
entered the information into a computer system and checked the potential
borrower’s creditworthiness
The specialist write the result of the credit check on the piece of paper and
dispatch it to the business practices department
3
The business practices department modify the standard loan agreement in
response to customer request
When done, a person in that department would attach the special terms to
the request form
4 Appraiser write the rate on a piece of paper, enter the data into a PC
spreadsheet and give the paper to a clerical group
5 An administrator turn all this information into a quote letter that could be
delivered to the IBM sales representative by Federal Express
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Result:
1. The entire process consumed six days on average
2. From the sales reps’ point of view, this turnaround too
long
Customer could find another source of financing
Customer simply to call the whole deal off
1. Difficult to control
Example Case: IBM CreditExample Case: IBM Credit
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False Assumption:
Every bid request was unique and difficult to process, thereby requiring
the intervention of four highly trained specialist
Fact:
Most requests were simple and straightforward
Solution: BPR
- IBM Credit senior manager found that most of their job was little more
than clerical
- IBM Credit develop a new computer system to support the deal
structurer
- In really tough situations, he/she can get help from a specialist expert
in credit checking, pricing and so on
Example Case: IBM CreditExample Case: IBM Credit
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Result:
- The performance improvement achieved dramatically
- IBM Credit slashed its six days turnaround to four hours
- The number of deals has increased a hundredfold
- 90 percent reduction in cycle time and hundredfold
improvement productivity
- The company achieved a dramatic performance by
making a radical change to the process as a whole
Example Case: IBM CreditExample Case: IBM Credit
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A five-step approval process
Duration — from six days to two weeks
Actual processing time — 90 minutes
Why so many steps? Engineered for the most difficult
cases
Five experts replaced with one “deal structurer”
Support of I/T essential
Results
- Six days to four hours
- Slight work force reduction
- 100% work load increase
Example Case: IBM CreditExample Case: IBM Credit
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In 1987
Kodak’s arch-rival, Fuji came up with a new 35mm
single-use camera
Kodak has no competitive offering
Kodak’s Traditional Product Development Process
Slow: would take 70 weeks to produce a rival to
Fuji’s camera!
Product development process was partly sequential
and partly parallel
Example Case: KodakExample Case: Kodak
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Reaction to competition from Fuji
Kodak reengineered its product development process
through the innovative use of CAD/CAM-Computer
Aided Design/Computer Aided Manufacturing
The technology that has enabled Kodak to reengineer
its process is an integrated product design database
Result: the new process, “Concurrent Engineering”
Reduce turnaround time to 38 weeks
Priority to release product on time
Example Case: KodakExample Case: Kodak
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Key Redesign Strategy
Apply innovative use of CAD/CAM + integrated
product design database
Allow engineer to design at computer workstations
Database collect each engineer’s work and
combines into overall design
Each morning, problems are resolved immediately
Manufacturing can begin tooling design just 10
weeks into product design instead of 28 weeks in
the past
Example Case: KodakExample Case: Kodak
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Example Case: Ford MotorExample Case: Ford Motor
FORD MOTOR COMPANY’S ACCOUNTS PAYABLE DEPARTMENT
500 employees
20% saving anticipated — a reduction of 100 people
But… Mazda’s Payables Department has five people!
Old process: matching purchase orders, invoices, and receiving
documents to issue payment authorizations
New Process: purchase orders go to suppliers and on-line database.
Upon receipt, receiving clerk verifies shipment. If okay, payment is
made; if not, it is returned
Results
- No invoices
- No receiving reports
- 75% staff reduction — 375 people reassigned
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Beberapa pekerjaan digabungkan menjadi satu
Para Pekerja membuat keputusan
Tahap-tahap di dalam proses dilakukan menurut
kebiasaan
Proses-proses mempunyai banyak versi
Pekerjaan dilakukan pada tempat yang paling berarti
Pemeriksaan dan kontrol berkurang
Rujukan minimum
Manajer kasus membuat satu titik kontak
Operasi-operasi gabungan sentralisasi/desentralisasi
merata
BPR CharacteristicBPR Characteristic
