ASSIGNMENT

ON
BUSINESS PROCESSS
RE-ENGINEERING

BHARTI VIDYAPEETH INSTITUTE OF

MANAGEMENT STUDIES AND RESEARCH

1
 ACKNOWLEDGEMENT

Carrying out the project is all about the team work

which directly translates to co-coordinated efforts for
achieving the objectives. This is the only way through
which we can express our deep sense of gratitude to all
those who have given their valuable guidance and helped
us during our first year project. We offer our profound
gratitude to our professors & consultant for giving us this
opportunity of amalgamating our theoretical knowledge
with practical experience. We would like to thank
Mrs.Mona Sinha. She has been helping us with our
technical & logical difficulties right from day one.

2
 INDEX

SR No. TOPIC PAGE No.

1) INTRODUCTION 4

2) HISTORY 6

3) DEFINITIONS 7

4) MAJOR STEPS IN BPR 9

5) BPR CYCLE 10

6) PROCESS OF BPR EXERCISE 11

7) RELEVANCE OF I.T. 12

8) NEED FOR RE-ENGINEERING 13

9) METHODOLOGY 14

10) 15
HOW TO IMPLEMENT A BPR PROJECT
11) CASE STUDY(M & G, M & M) 17

12) CONCLUSION 22

13) BIBLIOGRAPHY 23

3
INTRODUCTION

Business processes are simply a set of activities that transform a set of inputs into a set of outputs
(goods or services) for another person or process using people and tools. We all do them, and at
one time or another play the role of customer or supplier.

You may see business processes pictured as a set of triangles as shown below. The purpose of
this model is to define the supplier and process inputs, your process, and the customer and
associated outputs. Also shown is the feedback loop from customers.

Business process reengineering (BPR) is a management approach aiming at improvements by

means of elevating efficiency and effectiveness of the processes that exist within and across
organizations. The key to BPR is for organizations to look at their business processes from a
"clean slate" perspective and determine how they can best construct these processes to improve
how they conduct business.

Business process reengineering is also known as BPR, Business Process Redesign, Business
Transformation, or Business Process Change Management.

BPR relies on a different school of thought than continuous process improvement. In the
extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke,
forget it. Start over. Such a clean slate perspective enables the designers of business processes to
disassociate themselves from today's process, and focus on a new process. In a manner of
speaking, it is like projecting yourself into the future and asking yourself: what should the
process look like? What do my customers want it to look like? What do other employees want it

4
to look like? How do best-in-class companies do it? What might we be able to do with new
technology?

Such an approach is pictured below. It begins with defining the scope and objectives of your
reengineering project, then going through a learning process (with your customers, your
employees, your competitors and non-competitors, and with new technology). Given this
knowledge base, you can create a vision for the future and design new business processes. Given
the definition of the "to be" state, you can then create a plan of action based on the gap between
your current processes, technologies and structures, and where you want to go. It is then a matter
of implementing your solution.

In summary, the extreme contrast between continuous process improvement and business
process reengineering lies in where we start (with today's process, or with a clean slate), and with
the magnitude and rate of resulting changes.

5
HISTORY

In 1990, Michael Hammer , a former professor of computer science at the Massachusetts

Institute of Technology (MIT), published an article in the Harvard Business Review, in which he
claimed that the major challenge for managers is to obliterate non-value adding work, rather than
using technology for automating it (Hammer 1990). This statement implicitly accused managers
of having focused on the wrong issues, namely that technology in general, and more specifically
information technology, has been used primarily for automating existing work rather than using
it as an enabler for making non-value adding work obsolete.

Hammer's claim was simple: Most of the work being done does not add any value for customers,
and this work should be removed, not accelerated through automation. Instead, companies
should reconsider their processes in order to maximize customer value, while minimizing the
consumption of resources required for delivering their product or service. A similar idea was
advocated by Thomas H. Davenport and J. Short (1990), at that time a member of the Ernst &
Young research center, in a paper published in the Sloan Management Review the same year as
Hammer published his paper.

This idea, to unbiasedly review a company’s business processes, was rapidly adopted by a huge
number of firms, which were striving for renewed competitiveness, which they had lost due to
the market entrance of foreign competitors, their inability to satisfy customer needs, and their
insufficient cost structure. Even well established management thinkers, such as Peter Drucker
and Tom Peters, were accepting and advocating BPR as a new tool for (re-)achieving success in
a dynamic world. During the following years, a fast growing number of publications, books as
well as journal articles, was dedicated to BPR, and many consulting firms embarked on this trend
and developed BPR methods. However, the critics were fast to claim that BPR was a way to
dehumanize the work place, increase managerial control, and to justify downsizing, i.e. major
reductions of the work force (Greenbaum 1995, Industry Week 1994), and a rebirth of Taylorism
under a different label.

Despite this critique, reengineering was adopted at an accelerating pace and by 1993, as many as
65% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to

6
have plans to do so. This trend was fueled by the fast adoption of BPR by the consulting
industry, but also by the study Made in America, conducted by MIT, that showed how companies
in many US industries had lagged behind their foreign counterparts in terms of competitiveness,
time-to-market and productivity.

DEFINITIONS:

Different definitions can be found. This section contains the definition provided in notable
publications in the field.

Hammer and Champy (1993) define BPR as

"... The fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical contemporary measures of performance, such as cost, quality, service,
and speed."

Thomas H. Davenport (1993), another well-known BPR theorist, uses the term process
innovation, which he says

”encompasses the envisioning of new work strategies, the actual process design activity, and the
implementation of the change in all its complex technological, human, and organizational
dimensions”.

Finally, Johansson et al. (1993) provide a description of BPR relative to other process-oriented
views, such as Total Quality Management (TQM) and Just-in-time (JIT), and state:

"Business Process Reengineering, although a close relative, seeks radical rather than merely
continuous improvement. It escalates the efforts of JIT and TQM to make process orientation a
strategic tool and a core competence of the organization. BPR concentrates on core business

7
processes, and uses the specific techniques within the JIT and TQM ”toolboxes” as enablers,
while broadening the process vision."

In order to achieve the major improvements BPR is seeking for, the change of structural
organizational variables, and other ways of managing and performing work is often considered
as being insufficient. For being able to reap the achievable benefits fully, the use of information
technology (IT) is conceived as a major contributing factor. While IT traditionally has been used
for supporting the existing business functions, i.e. it was used for increasing organizational
efficiency, it now plays a role as enabler of new organizational forms, and patterns of
collaboration within and between organizations.

BPR derives its existence from different disciplines, and four major areas can be identified as
being subjected to change in BPR - organization, technology, strategy, and people - where a
process view is used as common framework for considering these dimensions. The approach can
be graphically depicted by a modification of "Leavitt’s diamond" (Leavitt 1965).

Business strategy is the primary driver of BPR initiatives and the other dimensions are governed
by strategy's encompassing role. The organization dimension reflects the structural elements of
the company, such as hierarchical levels, the composition of organizational units, and the
distribution of work between them. Technology is concerned with the use of computer systems
and other forms of communication technology in the business. In BPR, information technology
is generally considered as playing a role as enabler of new forms of organizing and collaborating,
rather than supporting existing business functions. The people / human resources dimension
deals with aspects such as education, training, motivation and reward systems. The concept of
business processes - interrelated activities aiming at creating a value added output to a customer -
is the basic underlying idea of BPR. These processes are characterized by a number of attributes:
Process ownership, customer focus, value-adding, and cross-functionality.

8
Major steps in BPR:

Senior managers may begin the task of process alignment by a series of

BPR steps. These steps develop a self-reinforcing cycle of commitment, communication &
culture change. The steps may include gaining commitment to change through the formulation of
the top team, developing a shared vision & mission of the business & of what change is required,
defining the measureable objectives, which must be agreed by the team, as being the quantifiable
indicators of success in terms of the mission, identify the CSFs based on the mission of the
organization.

Following steps should be followed to implement BPR.

1. Break down the CSFs into the key or critical business processes & gain process
ownership.

2. Break down the critical processes into sub processes, activities & tasks & form the teams
around these.

3. Redesign, monitor & adjust the process alignment in response to difficulties in the change
process.

9
Business Process Reengineering Cycle:

Transformation, or Business Process Change Management. Reengineering is a fundamental

rethinking and radical redesign of business processes to achieve dramatic improvements in cost,
quality, Business process reengineering is also known as BPR, Business Process Redesign,
Business speed, and service. BPR combines a strategy of promoting business innovation with a
strategy of making major improvements to business processes so that a company can become a
much stronger and more successful competitor in the marketplace.

The main proponents of reengineering were Michael Hammer and James A. Champy. In a series
of books including Reengineering the Corporation, Reengineering Management, and The
Agenda, they argue that far too much time is wasted passing-on tasks from one department to
another. They claim that it is far more efficient to appoint a team who are responsible for all the
tasks in the process. In The Agenda they extend the argument to include suppliers, distributors,
and other business partners.

Re-engineering is the basis for many recent developments in management. The cross-functional
team, for example, has become popular because of the desire to re-engineer separate functional
tasks into complete cross-functional processes. Also, many recent management information
systems developments aim to integrate a wide number of business functions. Enterprise resource
planning, supply chain management, knowledge management systems, groupware and
collaborative systems, Human Resource Management Systems and customer relationship
management systems all owe a debt to re-engineering theory.

Basic elements of business process:

• Motivation to perform

• Data gathering, processing and storing

• Information processing

• Checking, validating and control

• Decision making

10
Process of BPR Exercise:

 Recast people organization into process organization

 Segregate process by customer type-internal and external
 Identify process by:
1. Impact on customer
2. High decision incidence
3. High information exchange
4. High incidence of checks, control and validations
5. High knowledge base
 Determine the value to the customer in terms of:
1. Price/Cost
2. Quality
3. Service
4. Delivery
 Identify the enablers of redesigning
 Set a benchmark for achievement
 Rank the process by:
1. Feasibility
2. Cost
3. Impact on value to the customer
 Appoint the team for each process
 Monitor the process of re-engineering

Through this process, a typical business transaction is settled for acceptance, fulfilling various
other needs outside the process in the organization. For example, the receipt of goods, a
transaction when processed with the information technology application, settles a number of
aspects of this one transaction. The aspects are whether:

The receipt is against the valid purchase order

Goods received are as per specifications both in terms of quality and quantity

The terms and conditions of supplies are fully met

The value declarations are correct and complete

Amount payable is computed and kept ready for confirmation the bill of the supplier.

Since all such aspects with the variations are settled at one place in one stroke, the dependent
steps in rest of the business functions are expedited reducing the total process cycle time.

11
Relevance of Information Technology:

The capability of IT is phenomenally higher and assures dramatic results in the cost, time,
service and delivery. It increases the people productivity and process effectiveness. The
relevance of IT is appropriate due to its merit as catalyst and the process partner for
improvement. .....

The role of information technology

Information technology (IT) has historically played an important role in the reengineering
concept. It is considered by some as a major enabler for new forms of working and collaborating
within an organization and across organizational borders.

Early BPR literature identified several so called disruptive technologies that were supposed to
challenge traditional wisdom about how work should be performed.

 Shared databases, making information available at many places

 Expert systems, allowing generalists to perform specialist tasks
 Telecommunication networks, allowing organizations to be centralized and decentralized
at the same time
 Decision-support tools, allowing decision-making to be a part of everybody's job
 Wireless data communication and portable computers, allowing field personnel to work
office independent
 Interactive videodisk, to get in immediate contact with potential buyers
 Automatic identification and tracking, allowing things to tell where they are, instead of
requiring to be found
 High performance computing, allowing on-the-fly planning and revisioning

In the mid 1990s, especially workflow management systems were considered as a significant
contributor to improved process efficiency. Also ERP (Enterprise Resource Planning) vendors,
such as SAP, JD Edwards, Oracle, PeopleSoft, positioned their solutions as vehicles for business
process redesign and improvement.

12
NEED FOR RE-ENGINEERING – WHEN AND WHY:

Each organisation must determine itself when it is appropriate for them to reengineer.
Reengineering should be done only if it can help in achieving an enhanced strategic position.
Some strategic indicators that require reengineering include

1. Realisation that competitors will have advantage in cost, speed, flexibility, quality or service

2. New vision or strategy: a need to build operational capabilities.

3. Need to re-evaluate strategic options, enter new market or redefine products/services.

4. Core operating processes are based on outdated assumptions/technologies.

5. Strategic business objectives seem unreasonable.

6. Change in market place in the form of

 Loss of market share

 New basis of competition/new competitors

 New regulations
 Shorter product life cycles
 New technologies in play.

So, if the company is at the cutting edge of an industry that has just undergone major changes
reengineering might not be appropriate.

However, if the organisation operates with old models instead of new technologies and
approaches used by others, reengineering may be urgently needed. Even if technical performance
is adequate, other improvements may be needed – such as training, organisational change,
leadership development etc. In such circumstances also reengineering is required.

13
METHODOLOGY:

Although the names and steps being used differ slightly between the different methodologies,
they share the same basic principles and elements.

1. Envision new processes

1. Secure management support
2. Identify reengineering opportunities
3. Identify enabling technologies
4. Align with corporate strategy
2. Initiating change
1. Set up reengineering team
2. Outline performance goals
3. Process diagnosis
1. Describe existing processes
2. Uncover pathologies in existing processes
4. Process redesign
1. Develop alternative process scenarios
2. Develop new process design
3. Design HR architecture
4. Select IT platform
5. Develop overall blue print and gather feedback
5. Reconstruction
1. Develop/install IT solution
2. Establish process changes
6. Process monitoring
1. Performance measurement, including time, quality, cost, IT performance
2. Link to continuous improvement

14
HOW TO IMPLEMENT A BPR PROJECT

The best way to map and improve the organization's procedures is to take a top down approach,
and not undertake a project in isolation. That means:

Starting with mission statements that define the purpose of the organization and describe what
sets it apart from others in its sector or industry.

 Producing vision statements which define where the organization is going, to provide a
clear picture of the desired future position.

 Build these into a clear business strategy thereby deriving the project objectives.

 Defining behaviours that will enable the organization to achieve its' aims.

 Producing key performance measures to track progress.

 Relating efficiency improvements to the culture of the organization

 Identifying initiatives that will improve performance

Problems that effect BPR:

The most frequent and harsh critique against BPR concerns the strict
focus on efficiency and technology and the disregard of people in the organization that is
subjected to a reengineering initiative. Very often, the label BPR was used for major workforce
reductions. Thomas Davenport, an early BPR proponent, stated that

"When I wrote about "business process redesign" in 1990, I explicitly said that using it for cost
reduction alone was not a sensible goal. And consultants Michael Hammer and James Champy,
the two names most closely associated with reengineering, have insisted all along that layoffs
shouldn't be the point. But the fact is, once out of the bottle, the reengineering genie quickly
turned ugly."

15
Michael Hammer similarly admitted that

"I wasn't smart enough about that. I was reflecting my engineering background and was
insufficient appreciative of the human dimension. I've learned that's critical."

Other criticism brought forward against the BPR concept include,

1. Lack of management support for the initiative and thus poor acceptance in the
organization.

2. Exaggerated expectations regarding the potential benefits from a BPR initiative and
consequently failure to achieve the expected results.

3. Underestimation of the resistance to change within the organization.

4. Implementation of generic so-called best-practice processes that do not fit specific

company needs.

5. Over trust in technology solutions.

6. Performing BPR as a one-off project with limited strategy alignment and long-term
perspective.

7. Poor project management.

16
CASE STUDY- M & G PENSIONS:

 Client Overview

Since M&G was established in 1931 they have provided investment products for clients in the
Bonds and Equities markets. Always at the forefront of investment thinking they strive to
provide the best Investment opportunities for their clients.

 Requirement

Business process reengineering for the production of product fact sheets

 Client Issue

M & G utilised both in house and outsourced reprographic collateral production facilities.
However, the outsource supplier had steadily been increasing prices at the same time as having
product quality issues and delivery problems. Due to the supplier exceeding agreed SLAs such as
delays on deliveries and a number of quality issues M & G staff were spending a large
proportion of their time dealing with customer complaints.

 Analysis

To implement the strategic sourcing required a restructure of roles and the development of a
strategic sourcing process.

 Approach

Investigate and shortlist suppliers who could guarantee adherence to agreed SLAs and confirm
production costs for an agreed period to meet M & G budget restrictions. In addition, they
needed to be utilising the latest technology to ensure the production of high quality results
helping to reduce lead times and, in turn, reduce the volume of customer complaints.

17
 Deliverables

As an outcome the team identified and subsequently outsourced the reproduction of collateral to
a single factory in London who could produce client case studies where they were producing
similar products. They operated 24/7 so could handle any emergencies should they arise even if
this was outside the agreed SLAs. The equipment they utilised was state of the art and therefore
they could guarantee the highest quality product, which met with M & G requirements.

 Improvements

• Cost reduction

• _Lead time of 2 days compared to previous time of 2 weeks

• Interaction and account management from the new supplier

• Greater flexibility of service

• Full track and trace on every order or item

• Reduction in customer complaints with subsequent improvement in customer satisfaction

 Processes

• Implementation of their strategic outsourcing process and organisational design

• Procurement in line with required service level agreements

• Fully detailed project implementation plan

 Business Scope:

18
To source an alternative supplier for M & G’s existing requirements who could guarantee:

• Reduced turnaround times and maintain high quality products

• Reduced costs for emergency one-off print runs

• Account management to listen and understand M & G requirements

Mahindra & Mahindra

M&M's Problem Plants

In the mid-1990s, India's largest multi utility vehicle (MUV) and tractor manufacturer M&M
was facing serious problems at its Igatpuri and Kandivili plants in Maharashtra. The plants were
suffering from manufacturing inefficiencies, poor productivity, long production cycle, and sub-
optimal output.

The reason: highly under-productive, militantly unionized, and bloated workforces. The
company had over the years been rather lenient towards running the plants and had frequently
crumbled under the pressure of union demands. The work culture was also reportedly very
unhealthy and corruption was widespread in various departments.

Alarmed at the plant's dismal condition, Chairman Keshub Mahindra tried to address the
problem by sacking people who allegedly indulged in corrupt practices. M&M also tried to
implement various voluntary retirement schemes (VRS), but the unions refused to cooperate and
the company was unable to reduce the labor force.

During this period, M&M was in the process of considering the implementation of a Business
Process Reengineering (BPR) program throughout the organization including the manufacturing
units. Because of the problems at the Igatpuri and Kandivili plants, M&M decided to implement
the program speedily at its manufacturing units.

19
The program, developed with the help of the UK-based Lucas Engineering Systems, was first
implemented on an experimental basis at the engine plant in Igatpuri. Simultaneously, an
exercise was initiated to assess the potential benefits of implementing BPR and its effect on the
unions.

M&M's management was not surprised to learn that the unions expressed extreme displeasure at
the decision to implement BPR and soon went on a strike. However, this time around, the
management made it clear that it would not succumb to union demands. Soon, the workers were
surprised to see the company's senior staff come down to the plant and work in their place. With
both the parties refusing to work out an agreement, observers began casting doubts on the future
of the company's grand plans of reaping the benefits of BPR.

Mahindra & Mahindra Ltd. (M&M) was the flagship company of the Mahindra group, one of the
top ten industrial houses in India. The company's history dates back to 1945, when two brothers,
J.C.Mahindra and K.C.Mahindra, decided to start a business of general-purpose utility vehicles.
The brothers formed a company, Mahindra & Mohammed Ltd., in association with their friend
Ghulam Mohammed. In October 1947, the first batch of 75 jeeps was released for the Indian
market. In 1948, the company was renamed Mahindra & Mahindra Ltd. Over the next few
decades, the group promoted many companies in areas as diverse as hotels, financial services,
auto components, information technology, infrastructure development and trading to name a few.

Though M&M had established itself in the markets and was among the leading players in many
of the segments it operated in, it realized that some of its businesses were not closely related to
its core business. This realization marked the beginning of the biggest change exercise since the
company's inception.

In 1994, a major restructuring exercise was initiated as part of a BPR program. M&M introduced
a new organizational model, in which various divisions and companies were regrouped into six
distinct clusters of related businesses, each headed by a president. M&M's core activities,
automotive and tractors were made autonomous business units. The other activities of the group

20
were organized into infrastructure, trade and financial services, telecommunication and
automotive components. According to company sources, the whole exercise was intended to
develop a conceptual map to provide direction for the future growth of various business lines. It
was decided that, in future, the group would confine its expansion to the identified thrust sectors.

The two main operating divisions of the company were the automotive division, which
manufactured UVs and LCVs, and the farm equipment division, which made tractors and farm
implements. The company employed over 17,000 people and had six state-of-the-art
manufacturing facilities spread over 500,000 square meters.

The plants were situated at Kandivili (MUVs and Tractors), Nasik (MUVs), Zaheerabad (LCVs,
Voyager, three-wheelers), Igatpuri (Engines) and Nagpur (Implements and tractors)...

M&M's Experience with BPR

By the mid 1990s, BPR had become a popular tool globally, with many leading organizations
implementing it. However, when M&M undertook the exercise, it was still a new concept in
India.

M&M's workforce, as mentioned earlier, resisted this attempt to reengineer the organization.
Soon after the senior staff began working on the shop floors, the first signs of the benefits of
BPR became evident. Around a 100 officers produced 35 engines a day as compared to the 1200
employees producing 70 engines in the pre-BPR days.

After five months, the workers ended the strike and began work in exchange for a 30% wage
hike. As the situation returned to normalcy, BPR implementation gained momentum. M&M
realized that it would have to focus on two issues when implementing the BPR program:
reengineering the layout and method of working, and productivity.

The Future

21
Summing up the company's BPR experience, Anand Mahindra said, "Let me put it in a simple
way. If we have facilities in Kandivili today, which are not just surviving but thriving, it is all
due to BPR...

CONCLUSION:

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. If you would like help with your BPR project the most
direct benefit that companies derive from reengineering is significant in the process improvement
(50 to 100%). Costs are lowered while speed, quality and service are dramatically improved.
Unfortunately, reengineering seldom makes a significant impact on the organisation’s bottom
line (only 20% of the time.) Reengineering has a greater chance of success if it is viewed as
leading to growth and value creation. In addition, there are costs to reengineering that must be
considered before deciding for such a right strategy for an organisation. Wayne Code, President
of Vallen Inc. explains, “These changes may be traumatic, but the pain is outweighed by the
gains made in the move towards the significant goals set. Change occurs when the pain of
change is less than the pain of staying the same.

22
BIBLIOGRAPHY

Article on Business Process Reengineering from www.csqa.info

Article published by Peter Carter on BPR on www.teamtechnology.co.uk

WWW.WIKIPEDIA.COM

WWW.GOOGLE.COM

23