Reengineering: some basic concepts

1. Reengineering: some basic concepts Assoc. Prof. Dr. Jegak Uli

2. The Official Definition The Official Definition • Unlike continuous improvement or benchmarking, reengineering is intended to totally change the process. • The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.

3. The Key Words The Key Words • dramatic -- improvements not marginal/incremental, not 5 or 10 % but quantum leaps • radical -- going to the roots of things. Starting over, reinventing • process -- a group of related tasks that together create value for customers e.g.. order fulfillment • redesign -- the design of processes, how work is done

4. It is used to capture a steep change in speed, efficiency, or quality • However, changes of this magnitude are not easily obtained • Embarking on reengineering requires both justification and determination • Common themes found among organizations that have successfully engaged in reengineering are process orientation, ambition, rule breaking, and creative use of information technology.

5. What Reengineering is Not What Reengineering is Not • it is not downsizing • it is not restructuring • it is not a fad -- it works, brings about huge improvements • it is not more of the same -- it is revolutionary. Focus on end to end processes and not specialization of labor

6. The Three Cs The Three Cs • CUSTOMERS -- more sophisticated, demanding, more alternatives, more knowledgeable • COMPETITION -- no longer local and gentle, but more global and cutthroat • CHANGE -- change from traditional focus on planning, control, and managed growth to emphasis on speed, innovation, flexibility, quality, service, and cost

7. Top Ten Ways to Fail • Giving only lip service to reengineer 2) Don’t focus on processes 3) Spend a lot of time analyzing the current situation 4) Proceed without strong executive leadership 5) Be timid in redesign

8. Go directly from conceptual design to implementation • Reengineer slowly • Place some aspects of the business off- limits • Adopt a conventional implementation style 10) Ignore concerns of your people

9. The Primary Ingredients • Leadership • The Reengineering Team

10. The Tools of Reengineering Leadership • SIGNALS -- Explicit Communications • SYMBOLS -- Personal Behavior • SYSTEMS -- Measurements and Rewards

11. Process oriented Holistic perspective Creativity Restlessness Enthusiasm Optimism Persistence Tact Team player Communication skills The Profile of a Reengineer

12. The Content of Reengineering Work • Understanding the old processes and customer requirements • Inventing a new process design that shatters old assumptions • Constructing the new process-- details of operations, taking care of implications, training • Selling the new way

13. The Context of Re-e Efforts • Uncertainty -- uncertainty eliminated gradually • Experimentation -- iterative. Designing on paper must be followed by trying in reality • Pressure -- must proceed at fast pace. Always operate under conditions of great urgency and intensity

14. Focus of Team Members • Must share dedication to three things: • The process being reengineered • The needs of the customer of that process • The team itself

15. Example of team characteristics • CARING • DARING • SHARING

16. Problem, Rule, and Assumption Problem, Rule, and Assumption • PROBLEM -- a specific performance shortcoming of the process e.g.. slow cycle time • RULE -- a specific aspect of the process design that causes the problem e.g.. must have specialist for each task • ASSUMPTION -- a belief that gives rise to the rule e.g.. the work is complex

17. Principles for Overcoming Resistance to Change Principles for Overcoming Resistance to Change • Resistance is natural and inevitable --Expect it • Resistance is not always apparent -- Find it • Resistance has many motivations -- Understand it • Deal with people’s concerns not their arguments -- Confront it • There’s no one way to deal with resistance -- Manage it

18. The Key Mechanisms for Overcoming Resistance • INCENTIVES-- positive and negative • INFORMATION -- dispel uncertainty and fear • INTERVENTION -- one-on-one connection • INDOCTRINATION -- make change seem inevitable • INVOLVEMENT -- make people part of the effort

19. Selling the Change • Impediments to communications • Ten Principles of Reengineering communications

20. Impediments to Communications Impediments to Communications • Disbelief • False familiarity • Fear of layoffs • The rumor mill • Sloppy execution -- incomprehensibility, abstractions, complexity, and clichés

21. Ten Principles of Re-eng Communications Ten Principles of Re-eng Communications 1) Segment the audience 2) Use multiple channels 3) Use multiple sources 4) Be clear 5) Communicate, communicate, communicate

22. 6) Honesty is the only policy 7) Use emotions, not just logic 8) Heal, console, encourage 9) Make the message tangible 10) Listen, listen, listen

23. Major components of the rapid re-e methodology • Preparation: How do we do the project? • Identification: Where do we focus our attention? • Vision: What result do we want to produce? • Solution: How do we produce those results? • Transformation: How do we implement the solution?

24. STAGES OF REENGINEERING STAGES OF REENGINEERING • STAGE 1 – PREPARATION The purpose of this stage is to mobilize, organized, and energized the people who will perform the reengineering • Goal seeking – goals and objectives must be aligned with the various business processes • Facilitation – is use continuously during the life time reengineering project • Team building – Organizing the members of reengineering team into a working group and training them the methodology

25. Motivation – to develop interest and enthusiasm so the team members will be encouraged to seek and understand the opportunity for breakthrough changes • Change management – the change plan will evolve in substance in detail as the project progresses • Self-assessment – analyzes the organization strength and weaknesses, ie. Org life cycle, org structure, task, culture, people • Environmental assessment – identifying the external forces which may offer threats or opportunities to the business • Project mgmt – requiring project leadership, planning, reporting, team guidance and issue resolution

26. Example of re-e team SPONSOR CEO TEAM LEADER MANAGER INDUSTRIAL ENGINEERING FACILITATOR REENGINEERING EXPERT SUPERVISOR PRODUCTION PLANNING MATERIALS MGMT DIRECTOR SALES MANAGER INDUSTRIAL RELATIONS SPECIALIST COST ACCOUNTANT INFORMATION SERVICES EXPERT

27. STAGES OF REENGINEERING • Stage 2 – IDENTIFICATION Produces definition of customers, processes, and performance measures and identifies value adding processes • Customer modeling – to gain a complete understanding of the customer • Performance measurement and cycle time analysis – to define the customers performance expectation and to quantify the measures of how work is being perform • Process modeling – rapid representation of individual processes and sub processes showing the sequence of activities

28. Supplier integration and partnership program • Workflow analysis – to identify critical analysis necessary to make the process work and those which add value • Organizational mapping – take the specific task and activities associated with the processes and document the action taken • Activity based cost analysis – quantifies the label cost associated with specific process task, based on current work value and staffing

29. Process value analysis – prioritize the processes based on the assumed potential of the process to meet the goals and objectives • Change mgmt, project mgmt and facilitation are continued in this stage

30. STAGES OF REENGINEERING • STAGE 3 – VISION To develop a process vision capable of achieving breakthrough performance for the processes selected to be reengineered • Workflow analysis – to further analyze the process in terms of the individuals performing descript tasks and the technology being used • Process value analysis – inspect the activities of each process to determine which have an impact on the value added worth of the process itself

31. Benchmarking – to quantify existing performance factors and compared them against competitors, practices • Visioning - the ideal process that put result if all performance measures were optimize • Change mgmt, project mgmt, facilitation are continued

32. STAGES OF REENGINEERING • STAGE 4 (a) – SOLUTION : TECHNICAL DESIGN To specifies the technical dimension of the new process • Work flow analysis – analyzes the linkages among processes to identify opportunities for movement of steps, responsibilities, etc • Information engineering – to define the technical solution where and how to apply technology to implement the activities and steps of the reengineer process • Performance measurement – helps identify appropriate places for process controls and performance data capture

33. Strategic automation – addressing technology deployment and implementation options (use or adapt existing systems, replacements, outsourcing) • Change mgmt, project mgmt, facilitation are continued

34. STAGES OF REENGINEERING STAGE 4 (b) – SOLUTION : SOCIAL DESIGN To specify the social dimensions of the new processes • Employee empowerment – to define the responsibility, decision making that can be deployed to the level of the employee • Skill matrices – to make required skill for each new position and define the job characteristic • Team building – structures the needed process teams • Self managed work team – determine the way in which each process team will manage the work produced by the team and the working of the team itself

35. Organizational restructuring and organizational mapping – to “redraw” the org that is appropriate to the mgmt and operation of the new process • Job production – to determine the skill and knowledge needed of each of the newly define position • Broad banding – to designed compensation system • Change mgmt, project mgmt and facilitation are continued • Employee reward and incentive – to break down some barriers to change and retain certain current cooperating operative during the transformation stage

36. STAGES OF REENGINEERING • STAGE 5 – TRANSFORMATION Produces pilot and full production versions of reengineered process and continual change mechanism • Process modeling – to complete the design of the business system • Information engineering – implement the technical design from stage 4(a) • Skill matrices – address specific personnel and the strategies necessary to train or retrain them

37. Team building – use to organize and train the new process team • Continues improvement – is initiated as a program to identifies and capitalizes on opportunities for incremental improvement • Performance measurement – is done on and on going basis, since some key benefits will depend on the customer reaction to the changes made • Change mgmt, project mgmt, facilitation are continued

38. The differences between proc reengineering, redesign, and benchmarking (Harington, 1998) BPR - Use when cost and cycle time need to be reduced between 60-90% Proc redesign Use when cost and cycle time need to be reduced between 30-60% with 100% improvement in quality Proc benchmarking Use when cost and cycle time need to be reduced between 30-60% with 80% improvement in quality

39. Example of BPR in Malaysia • Banks and finance companies • Before: Malaysia has 67 banking inst. • Now: 10 anchor banks; • Arab Malaysian Bank • Bumiputra Commerce Bank • EON Bank • Hong Leong Bank • Maybank • Multi-purpose Bank • Perwira Bank • Public Bank • RHB Bank • Southern Bank

40. References • Hammer, M. and Champy, J. Reengineering the Corporation: A Manifesto for Business Revloution.HarperCollins, New York, 1993 • Hammer, M. and Stanton, S.A. The Reengineering Revolution: A Handbook. HarperCollins, New York, 1995.