Business Process Reengineering
& Innovation
Chou-Hong Chen, Ph.D
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99223
chen@gonzaga.edu
Innovation as a Response to Change in
Market and Technology
Technological
Advances in
Technology
Opportunities
EFFICINCY
EFFECTIVENESS
INNOVATION
INNOVATION
New Products
and Services
Market Needs
Socio-political
Changes
Time
Market
What is Business Process and
Business Reengineering?
Business process: A set of logically related
tasks performed to achieved a defined
business outcome
 Business reengineering means radically
changing how people work - changing
business policies and controls, systems
and technology, organizational
relationships and business practices,
and reward programs.

Dr. Chen, The Trends of the Information Systems Technology
TM -3
Principles of Re-engineering
(by Michael Hammer)






Organize around outcomes, not tasks
Have those who use the output of the process
perform the process
Include information processing work into the real
work that produces the information
Treat geographically dispersed resources as though
they were centralized
Link parallel activities instead of integrating their
results
Put the decision point where the work is performed.
BPR
Radical Change = New organization + IT
Types of
Industry
Organizational = Structure + Competitive Cooperative
Strategies + Strategies
Strategies
BUSINESS REENGINEERING STEPS:
1. Develop business vision, process objectives
2. Identify process to be redesigned
3. Understand, measure performance of
existing processes
4. Identify opportunities for applying
information technology
5. Build PROTOTYPE of new process
Dr. Chen, The Trends of the Information Systems Technology
TM -6
Figure 3-6 Reengineered Accounts
Payable Process (from Hammer[1])
Before
Copy of
Purchase Order
Accounts
Payable
Purchasing
Payment

Purchase
Order
Vendor
Invoice
Receiving
Document
Receiving
Goods
Figure 3-6 Reengineered Accounts
Payable Process (from Hammer[1])
After
Purchasing

Payment
Accounts
Payable
Database

Purchase
Order
Vendor
Goods
Receiving
Implementing Re-engineering

The key activities of re-engineering can be
organized into three phases referred to as
the 3R’s Re-engineering
– Redesign
– Retool
– Reorchestrate
Tools for BPR
Simulation
 Flow diagrams
 Work analysis
 Application development
 Workflow software

Reorchestrate:
Organizational Change





Leadership
Corporate values
Cultural change
Incentives
Accountability





Zeal/commitment
Communication
Comfortable with ambiguity
Obstacles to change
Celebrate success
The C’s related to
Organization Re-engineering Projects
The 3C’s of
organization Reengineering:
The 4C’s of effective
teams:
- Customers
- Commitment
- Competition
- Cooperation
- Communication
- Change
- Contribution
Information Engineering
PLANNING
ANALYSIS
DESIGN
CONSTRUCTION
What is
Information Engineering
The application of an interlocking set of
formal techniques for the planning, analysis,
design and construction of IS, applied ton
an enterprise-wide basis or across a major
sector of an enterprise.
 An enterprise-wide set of automated
disciplines for getting the right information
to the right people with the right form at the
right time.

Figure: Relationship and linkage of proposed system
projects with strategic factors and the business plan
Objective
Proposal
Business Plan
Decrease direct
labor and overhead
by 20%
Increase our
customer order-filing
rate to 95%
Produce timely
tracking and sales
information for
inventory managers
Strategic Factors
System Project
Increase labor
productivity
Supports
Improve service
differentiation
Provide managers
with better
information
Supports
A standard cost
accounting system that
provides online labor
rate and efficiency
variances
An inventory
management system
that provides reorder
points, EOQ’s, quantity
on hand, and sales by
item and salesperson.
The Emergence of a Strategic Role for IT in
Organizations
Technology
Push
Costperformance
trends
 Connectivity
capabilities
Competitive
Pull
IT as a strategic
resource
Innovative ITenabled
applications to
obtain differential
benefits in the
marketplace to
stay competitive
BUSINESS REENGINEERING STEPS:
1. Develop business vision, process objectives
2. Identify process to be redesigned
3. Understand, measure performance of
existing processes
4. Identify opportunities for applying
information technology
5. Build PROTOTYPE of new process
Dr. Chen, The Trends of the Information Systems Technology
TM -17
Figure 3-6 Reengineered Accounts
Payable Process (from Hammer[1])
Before
Copy of
Purchase Order
Accounts
Payable
Purchasing
Payment

Purchase
Order
Vendor
Invoice
Receiving
Document
Receiving
Goods
Figure 3-6 Reengineered Accounts
Payable Process (from Hammer[1])
After
Purchasing

Payment
Accounts
Payable
Database

Purchase
Order
Vendor
Goods
Receiving