Let’s get horizontal!

1. Let’s get horizontal! Toward a process view of organizations

2. objectives • present the process view of organization • describe business processes • discuss business process reengineering

3. reinventing organizations old view… new view

4. definition of business process a specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs Davenport, 1993

5. Function So, what’s the difference? Process

6. typical business processes • product development • customer acquisition • manufacturing • order management • human resource management • planning & resource allocation

7. product development competitor analysis market research new product prototype needs analysis research market test component design product test product release process design equipment design production start cross-functional processes: product development MARKETING R & D PRODUCTION

8. order management sales order payment proposal commitment configuration delivery credit checking billing collection cross-functional processes: order management SALES LOGISTICS FINANCE

9. example:sales logistics sales order delivery payment

10. processing Arrival of order Arrival of order Arrival of order Arrival of order Quotation Quotation w/o reference to with reference with reference w/o reference to is valid is valid quotation to quotation to quotation quotation V xor Standard order Standard order processing Order Sales Rejection is processing Order Sales Rejection is Order is Order is confirmation requirements are sent to confirmation requirements are sent to released released is sent determined customer xor is sent determined customer V Material Delivery Delivery requirements processing processing planning Material is Create Material is Create issued billing document issued billing document Billing document proceessing SAP event process model:sales logistics

11. profit margin value chain support: • stream of activities • part of larger “value system” • applies to both products and services infrastructure, hr, r&d, procurement primary: inbound logistics operations outbound logistics marketing & sales service

12. inter-organizational processes The 2000’s will be about breaking down external walls: integrating and redesigning inter-enterprise processes using the Internet -Michael Hammer

14. real triviality quiz Who is Michael Hammer?

15. ...OBLITERATE!” business process reengineering • fundamental redesign of processes • “clean sheet of paper” • leveraging technology • upgrading skill levels (aka fewer jobs) Michael Hammer “Father of Reengineering” “Don’t automate…

16. Hammer’s principles • outcomes over tasks • users of output: do it yourself! • process information at the source • geography doesn’t matter • coordinate activities • empower workers

17. loan processingdesk-to-desk approach credit reporting origination of loan pre- qualification document generation application processing credit analysis & underwriting approval & closing servicing of loan payment processing escrow management customer service collections & foreclosures follow-up processing valuation & risk analysis transfer to secondary mkt

18. loan processingteam approach loan origination team regional production center field rep laptop loan servicing team

19. BPR success stories • Ford A/P • eliminated invoices • reduced headcount: from 500 to 125 • Mutual Benefit Life • revised application processing (from 30 steps, five departments, 19 people, 5 to 25 days to one person + expert system, 4 hours) • eliminated 100 positions

20. summary • presented the process view of organization • described business processes • discussed business process reengineering