Matakuliah
Tahun
: M0734-Business Process Reenginering
: 2010
The Development of Business Process
Reengineering (BPR)
Pertemuan 4
What is BPR?
• The fundamental rethinking and radical redesign of
business process to achieve dramatic improvements in
critical, contemporary measures of performance, such as
cost, quality, service, and speed
• One approach for redesigning the way work is done to
better support the organization’s mission and reduce
cost
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• Reengineering starts with a high-level assessment of the
organization’s mission, strategic goals, and customer needs
• BPR began as a private sectortechnique to help organizations
fundamentally rethink how they do their work in order to dramatically
improve customer service, cut operational costs, and become worldclass competitors
• A key stimulus for reengineering has been the continuing
development and deployment of sophisticated information systems
and networks
• Leading organizations are becoming bolder in using this technology
to support innovative business processes, rather than refining
current ways of doing work
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Reengineering Guidance & Relationship of Mission to Information Technology
Mission
Defines
Accomplish
Work
Processes
Execute
Guide
Decisions
Consider
Supports
Information
Employs
Processes
Technology
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To understand reengineering, it is important to understand the concept of
the value chain
The value chain consists of the primary and secondary activities of the firm
Reengineering strives for the efficient redesign of the company’s value
chain
The primary activities of the firm include inbound logistics, operations,
outbound logistics, marketing, and service
These activities are essential to creating, producing, marketing, selling, and
supporting a product or service
An information system supports each of these primary activities
This information system can cut the cost of performing a value activity, or it
can be used to provide a “value-added” feature to the product or service
For example, the value activity, called outbound logistics, deals with
processing orders to customers. An online order entry system which
enables customers to order electronically can cut the time and cost of this
value activity. The value activity, called service, can be supported by remote
machine diagnostics, which “adds value” by providing online diagnostic
support
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The Value Chain Primary Activities
Primary
Inbound
Operations
Outbound
Logistics
Marketing
Sales
Service
Functions
Materials
delivery
Manufacturing;
assembly
Order
shipping
Advertising;
promotion
Service;
Information
supporting
activities
Automated
warehousing
Manufacturing
systems
Online order
systems
Marketing
systems
Remote
diagnostics
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The Value Chain Secondary Activities
Support Activities
Information Systems
Organization
Electronic mail (facilitates communications throughout the
Human resources
Skill databases
Technology
Computer-aided design and manufacturing
Purchasing
Online links to suppliers’ databases
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Motivation for Business Reengineering
Driving Forces
External Responses
Internal Changes
Deregulation
Customer focus
Reengineering work
Consolidation
Quality emphasis
Corporate cultural change
Changing values
Responsiveness
Teams
Customer sophistication
Strategic relationships
Empower workers
Technological advances
Downsizing
Quality management
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• In today’s economy, some of the major motivations for
streamlining and reenginering business processes are
customer sophistication, deregulation, and increasing
competition on a global level
• These driving forces provide a rationale for re-thinking
existing business practices and using technology to
create new forms of work
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Work Environment with Fragmented Business Processes
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Reengineering Example :
Ford Motor Accounts Payable
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Elements for Business Reengineering
Elements
Activities
Business Processes
Do not automate existing business processes; break away from
Integration
Integrate business processes
Technology
Use technology to redesign business processes
Cross-functional coordination
Redesign business processes from a cross-functional view
Timing
Improve processes continuously
Objective
Implement market-driven strategies designed to provide a
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Reengineering Case Studies
Before Reengineering
After Reengineering
Business Impact
Ford Motor Company
Accounts Payable
Independent databases maintained
receiving, and accounts payable
An integrated database supporting
(e.g., purchasing, receiving, accounts
Fewer inconsistencies; reduction in
better responsiveness to customers
IBM
Credit Authorization
Multi-step credit authorization
multiple departments and multiple
a pricer, checker)
A “deal structurer” makes the credit
decision, using multiple databases
Timely decision making; more
service; elimination of redundant
bottlenecks
Xerox
Product Development
Sequential product development
meant that workers had to wait until
were completed
Concurrent engineering, using a
database and a computer-assisted
Elimination of bottlenecks and
development; responsiveness to
Wal-Mart
Inventory Management
Wal-Mart ordered its own stock of
from vendors; deal with excess
insufficient inventory
Wal-Mart let its vendor, Proctor and
replenish its inventory according to
Better inventory management; more
inventory replenishment
Hewlett-Packard’s
Purchasing Process
Decentralized purchasing led to a
wide discounts
Central negotiation of corporate
and use a shared database of
Cost savings through the use of
discounts
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Reengineering Example : Xerox
Befor
e
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Reengineering Example : Xerox
After
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Restructuring Business Process Means Restructuring Jobs
Organization
Traditional
Reengineered
Narrow
Broad
Hierarchical
Flat
Vertical
Horizontal
Work rules
Procedures
Judgment
Management
Supervision
Leadership
People skills needed
Structured
Adaptive
Job design
Structure
Career moves
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Process Modeling
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In order to depict the changes in data and processes associated with
business reengineering, a commonly used tool in systems analysis is the
process model
The process model consists of five objects :
– The business process : the process depicts the business activities which are
accomplished (e.g., check credit, mail invoice)
– The data store : the store depicts data that are needed by the business
processes
– The data flow : the flow depicts data being transferred from a process to another
process or between a process and a data store
– The organizational unit : the organizational unit depicts the units of the
organization in which these processes take place (e.g., Accounts Receivable,
Sales)
– The event, including triggers and outcomes : a trigger is an event which “triggers”
a process, and an outcome is an event which results from a process
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Making Reengineering Work
Company
Redesigned
Before
After
BAI (Banca di America
Branch customer
64 activities, 9 forms, 14
25 activities, 2 forms, 2
AT&T
PBX sales
12 project handoffs
3 handoffs
Siemen Nixdorf
Field service
30 support centers;
headcount
5 support centers; 800
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