Business Process Reengineering

PERSPECTIVES OF BPR

1. Deterministic Machines2. Complex Dynamic Systems3. Interacting Feedback Loops4. Social Constructs

Deterministic Machines

• Traced to the Taylor’s Scientific Management.• Regards Business process as a fixed sequence of well

defined activities or tasks performed by “Human Machines” that convert inputs into outputs in order to accomplish clear objectives. BP is unquestioned and its design is analogous to a technical engineering activity.

• Emphasizes structure (tasks, activities and areas of responsibility), procedures (constraints and rules of the work to be performed), and goals (nature of the OP to be obtained)of the business process being designed. Criterion of good process design is efficiency in the use of money, resources and time subject to the constraint of satisfying customers needs.

Business Process as Deterministic Machines

Deterministic Machines

• IT plays an important role in this perspective- automating, coordinating and supporting the re-engineered process.– Ex: Stable Manufacturing-type environments( order fulfillment

and fast-food processes)– Bureaucratic, paper-based processes found in some service

environments (credit application and back office processes).• Davenport and Short support Mechanistic View.• Hammer and Champy, Armistead and Rowland and Kock and

McQueen highlighted customer orientation and cross-functional activity.

STATIC BPM:

• Stress is on Mapping and documenting the flow of items , the activities, their logical dependency and the resources needed.

IDEF HISTORY• During the 1970s, the U.S. Air Force Program for Integrated

Computer Aided Manufacturing (ICAM) sought to increase manufacturing productivity through systematic application of computer technology. The ICAM program identified the need for better analysis and communication techniques for people involved in improving manufacturing productivity. As a result, in 1981 the ICAM program developed a series of techniques known as the IDEF (ICAM Definition) techniques which included the following:

• IDEF1, used to produce an "information model". An information model represents the structure and semantics of information within the modeled system or subject area.

• IDEF2, used to produce a "dynamics model". A dynamics model represents the time-varying behavioral characteristics of the modeled system or subject area.

Difficulties with the Deterministic Machines

1. Assumptions that the business processes can only be designed in rational and technical terms. Neglects the human and organizational issues.

2. Assumption that business processes are assumed static. Ignores the dynamic behavior due to resource competition, interactions or other sources of uncertainty.

Complex Dynamic Systems• A system comprised of a (usually large) number of (usually

strongly) interacting entities, processes, or agents, the understanding of which requires the development, or the use of, new scientific tools, nonlinear models, out-of equilibrium descriptions and computer simulations. -Advances in Complex Systems Journal

• "A system that can be analyzed into many components having relatively many relations among them, so that the behavior of each component depends on the behavior of others. -Herbert Simon

• "A system that involves numerous interacting agents whose aggregate behaviors are to be understood. Such aggregate activity is nonlinear, hence it cannot simply be derived from summation of individual components behavior. -Jerome Singer

• Rather than viewing a business process as an assembly of interchangeable components, this second viewpoint focuses on the complex, dynamic and interactive features of business processes. Basic idea is close to metaphors of organism and flux and transformation in which open system adapts to a changing environment in order to survive.

• Emphasizes interaction and dynamic behavior.• In this view of open system, business process can have inputs,

transformation, outputs and boundaries. • A BP can be defined as a set of subsystems – people, tasks, structure,

technology and so on - that interact with each other (internal relationships) and with their environment (external relationships) in order to fulfill some objectives.

• Each subsystem is seen as a system which can be hierarchically decomposed into further levels of detail. Effectiveness (quality and service level) is likely to be a major criterion rather than solely efficiency.

Complex Dynamic Systems

Business Process as Complex Dynamic Systems

• Discrete Event Business Process Simulation• Petri Nets• More emerging approaches, such as Agent

Based Simulation.

Complex Dynamic Systems Models

Classification of Simulation Models

• Classification of simulation models– Static vs. dynamic– Deterministic vs. stochastic– Continuous vs. discrete

• Most operational models are dynamic, stochastic (random), and discrete – will be called discrete-event simulation models

Complex Dynamic Systems Models• DISCRETE EVENT BUSINESS PROCESS SIMULATION is a way to model

the dynamic behavior in terms of entities (items and resources) and discrete events( begin task and end task). This simulation model can then be sued to conduct “what-if” experiments avoiding the need for building or disrupting the real-world business process.

• A discrete event simulation model mimics the real world but in compressed time– Focus only on events when the state of the system changes and

skips the time between these events• Discrete event simulation is a powerful and realistic tool to

complement the more simplistic methods– Allows exploration of the redesign effects without costly

interruptions of current operations– Helps reduce the risks inherent in any design/change project

Advantages with Discrete Event Simulation

• Promotes creativity by enabling easy testing of ideas• Captures system dynamics but avoids disturbances of

current process• Can capture interactions between sub-processes

– Mitigates the risk of sub-optimization• Graphical reporting features promotes better process

understanding and facilitates communication• The quantitative nature brings a sense of objectivity

into the picture.

STEPS IN A SIMULATION STUDY

ProblemFormulation

Setting ofobjectives

and overallproject plan

Modelconceptualization

Datacollection

ModelTranslation

Verified?

No

Validated?

No

No ExperimentalDesign

Production runs and analysis

More runs?

Documentationand reporting

No

Implementation

Yes

YesYes

Yes

PETRI NETS• Petri net is primarily used for studying the dynamic concurrent

behavior of network-based systems where there is a discrete flow.• Petri Net: An algebraic structure with two sets, one called places and

the other called transitions, together with their associated relations and functions, and named after their inventor, Carl Adam Petri.

• Petri net consist two types of nodes: places and transitions. And arc exists only from a place to a transition or from a transition to a place. A place may have zero or more tokens.

• Graphically, places, transitions, arcs, and tokens are represented respectively by: circles, bars, arrows, and dots.

• Place/Transition Net: A Petri net comprising a net graph with positive integers associated with arcs and an initial marking function which associates a natural number of simple tokens (‘black dots’) with places.

Basics of Petri Nets -continued• Below is an example Petri net with two places

and one transaction.

• Transition node is ready to fire if and only if there is at least one token at each of its input places. State transition of form (1, 0) (0, 1)

p1 : input place p2: output place

p2 p1

t1

Example: In a Restaurant (A Petri Net)

WaiterfreeCustomer 1 Customer 2

Takeorder

Takeorder

Ordertaken

Tellkitchen

wait wait

Serve food Serve food

eating eating

Complex Dynamic Systems Models• Discrete Event Systems Specification (DEVS Scheme, a generic

simulation environment based on LISP. BP is decomposed into a set of relatively independent subsystems. Two generic Modeling abstractions: Atomic and Coupled Models– BEST SUITED FOR COMPLEX AND HIGHLY TUNED SIMULATIONS

• Vreede Custom Arena template of process modeling abstractions supported by problem solving approach known as dynamic model ling which combines groupware, participative design and simulation modeling to analyze and improve business processes. BP is seen as a network of interacting objects that display dynamic behavior and this proposed the following modeling abstractions- message, product, person, actor, repository, link, tasks and decisions. – BEST SUITED FOR HIGH-LEVEL AND POSSIBLY FAST, MODELING

EXERCISE BECAUSE IT IS BASED ON A VISUAL INTERACTIVE MODELING SYSTEM.

Complex Dynamic Systems

• Melao and Pidd proposed BPSim++ simulation approach. • It is an extendable library of modeling components which is

easy to use by business users and flexible so as to address new application areas or complex human behavior. It is a two layered component based architecture.

• The top layer provides a visual, user-friendly environment in which the user can build models by composition from a comparison of business and manufacturing processes. For model building purposes, a business process is a programming framework from which the skilled user can modify the behavior of existing components and develop new components from other existing components or entirely from the scratch.

Complex Dynamic Systems ModelsAGENT BASED MODEL

• An agent-based model (ABM) (also sometimes related to the term multi-agent system or multi-agent simulation) is a class of computational models for simulating the actions and interactions of autonomous agents (both individual or collective entities such as organizations or groups) with a view to assessing their effects on the system as a whole.

• It combines elements of game theory, complex systems, emergence, computational sociology, multi-agent systems, and evolutionary programming.

• Monte Carlo Methods are used to introduce randomness. ABMs are also called individual-based models.

Difficulties• Lead to neglect of social-political dimensions of a business process

since there is an implied belief that a business process can only be approached in logical and rational terms. Human aspect is only regarded as relevant as a resource for executing tasks.

• The time and skills required to build dynamic computer models of simple systems may not add any value over simple flowcharts or spreadsheets. It involves huge costs.

• Ignores the feedback loops that may determine the behavior of many real-world-business processes.

• Nevertheless, this viewpoint reminds us that different subsystems of a business process interact to produce complex dynamic behavior.

Interacting Feedback Loops

• Extends the complex dynamic system viewpoint by highlighting the information feedback structure of business processes

• The difference is the complex dynamic system viewpoint focuses on business processes with no intrinsic control (Open loop systems) where as the IFL perspective claims that business processes are closed loops with intrinsic control. An attempt is to understand the dynamic behavior of a business process not in terms of individual components but rather in terms of interactions between internal structure and policies.

Business Processes asInteracting Feedback Loops

System dynamics• System dynamics is a computer-aided approach to policy analysis and design. It

applies to dynamic problems arising in complex social, managerial, economic, or ecological systems -- literally any dynamic systems characterized by interdependence, mutual interaction, information feedback, and circular causality. The field developed initially from the work of Jay W. Forrester. His seminal book Industrial Dynamics (Forrester 1961) is still a significant statement of philosophy and methodology in the field.

• Within ten years of its publication, the span of applications grew from corporate and industrial problems to include the management of research and development, urban stagnation and decay, commodity cycles, and the dynamics of growth in a finite world.

• It is now applied in economics, public policy, environmental studies, defense, theory-building in social science, and other areas, as well as its home field, management. The name industrial dynamics no longer does justice to the breadth of the field, so it has become generalized to system dynamics. The modern name suggests links to other systems methodologies, but the links are weak and misleading. System dynamics emerges out of servomechanisms engineering, not general systems theory or cybernetics (Richardson 1991).

System DynamicsThe system dynamics approach involves:

• Defining problems dynamically, in terms of graphs over time.

• Striving for an endogenous, behavioral view of the significant dynamics of a system, a focus inward on the characteristics of a system that themselves generate or exacerbate the perceived problem.

• Thinking of all concepts in the real system as continuous quantities interconnected in loops of information feedback and circular causality.

• Identifying independent stocks or accumulations (levels) in the system and their inflows and outflows (rates).

• Formulating a behavioral model capable of reproducing, by itself, the dynamic problem of concern. The model is usually a computer simulation model expressed in nonlinear equations, but is occasionally left unquantified as a diagram capturing the stock-and-flow/causal feedback structure of the system.

• Deriving understandings and applicable policy insights from the resulting model.

• Implementing changes resulting from model-based understandings and insights.

System dynamics

System dynamics

Difficulties

• Lead risk of considering the human actor as only an instrument to be controlled or as an instrument exercising control.

• Easy to know but impossible to apply.

System dynamics

http://upload.wikimedia.org/wikipedia/commons/8/8e/Adoption_SFD_ANI.gif

Business Processes as Social Constructs

•The focus here is on subjective and human aspects of the business process.

•Emphasizes business processes as made and enacted by people with different values, expectations and possibly hidden agendas.

•Implies they are abstractions, meanings and judgments that people put on the real world which resulted from a process of subjective construction of the human minds.

•A business process can be defined in terms of different perceptions constructed by various individuals and groups as a result of different frames of interpretation.

•These frames, shaped by beliefs, values, expectations and previous experience, act as filters enabling people to perceive some things but ignore others.

Business Processes as Social Constructs

•For example, a production manager may regard an order fulfillment process as a way to ensure that the orders are manufactured on time, while a marketing manager may regard it as a way to satisfy a customer’s needs.

•The existence of multiple (and often conflicting) views about what is going on and about how the process is being and should be carried out means that a different view of change is required.

•The view of a business process as a social construct fits well with strategic, less tangible processes, in which human activity is the major driver, such as health, social and educational services.

Business Processes as Social Constructs

Social Constructs - Difficulties

•First, the stress on ‘cultural feasibility’ may impede the attainment of more efficient and radical designs.

•Secondly, this perspective alone is unable to provide an objective, quantitative assessment of business process changes.

•Finally, although it recognizes the political environment, it offers no way of dealing with it other than the need to conduct several analyses.

Advantages and Disadvantages of BPR

Advantages• Satisfaction• Growth of Knowledge• Solidarity to the Company• Demanding Jobs• Authority– Reduce Organizational Complexity– Offers an Alternative Perspective– Link Functional Areas

1. Re-Engineering Too Many Processes at Initial Stages2. Inadequate Training of Process Owners and Team Members3. Unclear Knowledge of RE-engineering4. Improper Monitoring of a Re-5. Engineered Process6. Wastage of Time in Detail Process Analysis7. Fear of Failure8. Unfavourable Organizational Environment9. Delay in Showing Results10. Improper Appraisal system11. Inability to Quantify Improvement12. Complacency of Management13. Non-availability of Adequate Resources14. Limited Awareness amongst Employees15. Discontinuance of Re-Engineering after Achieving Benchmark.16. Resistance to the change

Disadvantages