Design Business Processes

Afternoon June 16th 2016Trainers

Bev Gilder and Diane Eaton

Objectives for this session….• To develop your knowledge and skills to design business

processes• Understand the tools and techniques that support the

design of business processes• Understand how modelling and testing is important• Consider factors to take into account when evaluating

the effectiveness of business processes• Understand cost /benefit analysis

What is business process engineering ?.. Or re-engineering ?• It is a discipline – its something you do• Its about improving processes overall • Its holistic – interrelated activities which work

together to achieve a business objective• It can have effects on the whole business.• It involves modelling, controls, measurement,

trials, reworks, implementation and evaluation

Reengineering

• Reengineering is 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”.

• Focusses on systems in the broadest terms not on tasks or people

• Is about large changes in how things are doneHammer and Champy 1993

What types of processes have changed dramatically in the last couple of years ??• What were they ?• What drove the changes ?• Who did they affect?• What consultation was there ?• What testing took place ?• Did the changes work straight away?• Are the changes embedded now ?

BPR Principles

• Organise around outcomes, not tasks. • Prepare for BPR• Map and analyse as-if Process• Design to-be process• Implement reengineered process• Improve continuously.

What is a process

• A business process is a series of steps designed to produce a product or a service. It includes all the activities that deliver particular results for a given Customer(external or internal).

• Companies often have process maps to give a picture of how work flows through the company.

Why Reengineer?• Modern ‘reality’ since 1990s:

– Hyper-competiveness – Globalization– Very demanding customers– Management and IT focus: Innovation,

responsiveness/speed, quality and service.

Stage gate model for business improvement

Process mapping… why do it ?• Employees can participate in constructing a

process map- gives a shared views • Some of the best solutions to business

problems come from within the organization.• Reveals the issues and gaps that cause • Increases participation in change and

probability of success • Visually illustrates and convey the essential

details of a process in a way that written procedures cannot do.

PDSA model ( Plan, Do, Study, Act)

Hammer and Champy-Reengineering the Corporation (2001)• Organisations should be process not function

driven• Processes must be built around the consumer• Staff need to be involved• Share responsibilities and empower

employees.• Should be collaborative partnerships e.g. with

suppliers

The three dimensions..

• Process efficiency ( cost, cycle time )• Product quality ( e.g customer satisfaction,

scope and quality of product)• Reduced product development time

Action checklist

• Develop the vision• Map existing processes • Redesign processes• IT support systems• Establish performance indicators • Plan the implementation• Review and maintenance

Prepare for BPR• Before attempting reengineering, the question ‘Is

BPR necessary?’ • There should be a significant need for the process to

be reengineered.• A cross-functional team is established with a plan for

the process of reengineering.• Understand the expectations of your customers and

where your existing process falls short of meeting those requirements.

• Having identified the customer driven objectives, the mission or vision statement is formulated.

Map and analyse As-If process• Must understand fully the existing process• BPR should produce dramatic and fundamental

results• Identify any disconnects • A disconnect is anything that prevents the process

from achieving desired results and in particular information transfer between organisations or people) and value adding processes.

• Create an activity and process model• Work out ABC = Activity based costing

Activity based costing

‘the amount of time that each activity takes and the cost that each activity requires in terms of resources is calculated through simulation and activity based costing (ABC).

Design To-be processes• Produce one or more alternatives to the

current situation, which satisfy the strategic goals of the enterprise

• Benchmarking = “ is the comparing of both the performance of the organisation’s processes and the way those processes are conducted with those relevant peer organisations to obtain ideas for improvement”

• Simulation and activity based costing

Design To-be processes• The several To-Be models that are finally

arrived at are validated. • By performing Trade off Analysis the best

possible To-Be scenarios are selected for implementation.

• Initiate communication and training programs• Devise a transition plan• Implement transition plan

Improve continuously

• Initiate on going measurement• Review performance against target• Monitor progress and results• KPIs, staff surveys, customer surveys, supplier

response, staff turnover • Improve process continuously

Common Problems with BPR

• Process simplification is common - True BPR is not

• Desire to change not strong enough• Start point is the existing process not a blank

slate• Commitment to existing processes too strong

– REMEMBER - “If it isn’t broke …”

Common Problems with BPR• Process under review too big or too small• Reliance on existing process too strong• The costs of the change seem too great• BPR Isolated Activity not aligned to the business

objectives• Allocation of resources• Poor timing and planning• Keeping the team and organisation on target

How to Avoid BPR Failure• BPR must be accompanied by strategic planning• Place the customer at the centre of the

reengineering effort• BPR must be "owned" throughout the organisation,

not driven by a group of outside consultants. • Case teams must be comprised of both managers as

well as those who will actually do the work.

Why does re engineering fail?

• Trying to fix a process instead of changing it• Ignoring everything except the process design• Quitting too early• Reengineering from the bottom up• Neglecting people’s values and beliefs• Being willing to settle for minor results• Assigning someone who does not understand

reengineering to lead the effort

Remember the human response to change too.• Shock• Denial• Anger • Acceptance• Experimentation• Integration

Exercise

• Consider an area of your work which you believe would benefit from process re engineering