session 1 business processes

Business Processes

Session 1

A business process refers to a wide range of

structured, often interlinked, activities or tasks

conducted by people or equipment to produce a

specific service or product for a user or consumer.

What is a business process?

Key characteristics of a business process

Value creating, Value

enabling and Supporting

processesD

Created at all levels in an

organisation

Series of logically

related activities to

produce specific resultA

B

Implemented to

accomplish

predetermined goalsC

Examples of Business Processes

Order-to-

Cash

Quote-to-

Order

Procure-to-

Pay

Issue-to-

Resolution

Application

-to-

ApprovalFrom receipt of

order to payment

added to account

books

From business

proposal to

successful

receipt of order

From buying a

good/service to

paying for it

From detecting

issues to

feedback on the

resolution

From request

for a

good/services

to approval of

the same

Business Functions

“

Business functions are a defined set of

activities that are performed in a

department which may be synonymous

to the department itself.

For example, Research and

Development (R&D), Manufacturing,

Marketing or Sales.

“

Customer

R&D Production Sales Other

BUSINESS FUNCTION VS. PROCESS

Process: Customer order to fulfillment process

Process: New product development process

Functions

IT

LET’S TAKE AN EXAMPLE OF A PROCESS OF DEVELOPMENT OF A NEW SOFTWARE

Customer

needs

Product

research

Market

test

Component

design

Product

test

Product

release

Process

design

Hardware

testingPilot launch

Process steps (sub process)

Marketing R&D Tech

Function

IT

ENTERPRISE-WIDE FUNCTIONS AND PROCESSES

Functions

Processe

s

Finance and

AccountsProcurement Stores

Marketing and

SalesManufacturing

Procure

to Pay

Order to

Cash

FUNCTIONAL FOCUS

Functions

Processe

s

Finance and


Marketing and

SalesManufacturing

Procure

to Pay

Order to

Cash

PROCESS FOCUS

Functions

Processe

s

Finance and


Marketing and

SalesManufacturing

Procure

to Pay

Order to

Cash

AN EXAMPLE OF A BUSINESS PROCESSProcure-to-Pay (simplified)

Request from

within company

to procure

certain item

Make

enquiries

on

suppliers

Review

offers

Place orders

on the

best offer

On receipt

of goods

from the

supplier –

Check

quality

Accept

/Reject

Supplier

sends

invoice

Make

payment

for

accepted

goods

Procure

to Pay

Quality

Assurance

Procurement Function Accounts Function

WHAT IS A BUSINESS PROCESS?

Your video here

(Please cover the

entire box)

A business process refers to a wide range of

structured, often interlinked, activities or tasks

conducted by people or equipment to produce a

specific service or product for a user or

consumer.

KEY CHARACTERISTICS OF A BUSINESS PROCESS

Your video here

(Please cover the

entire box)

Created at all levels in an

organisation

Series of logically

related activities to

produce a specific resultA

B

Implemented to

accomplish pre-

determined goalsC

DValue creating, Value

enabling and Supporting

processes

Order-to-

Cash—

From receipt of order

to addition of payment

to the account books

Quote-to-

Order—

From business

proposal to successful

receipt of order

Procure-to-

Pay—

From buying a

good/service to the

payment

Issue-to-

Resolution—

From detecting issues

to feedback on the

resolution

Application-to-

Approval—

From request for a

good/services to

approval of the same

EXAMPLES OF BUSINESS PROCESSES

BUSINESS PROCESS REENGINEERING (BPR)

The fundamental rethinking and radical

redesign of business processes to

achieve dramatic improvement in

critical and contemporary measures of

performance such as cost, quality,

service and speed.

WHAT THE PIONEERS SAY ABOUT BPR

.

It is an all-or-nothing proposition that produces

dramatically impressive results. Most companies

have no choice but to muster the courage to do it.

For many, reengineering is the only hope for

breaking away from the ineffective, antiquated

ways of conducting business that will otherwise

destroy them. .“Founders of the Management Theory

for Business Process Reengineering

ATM MACHINE vs BANK TELLER

KEY CHARACTERISTICS OF BUSINESS PROCESS REENGINEERING

Organised around

outcomes

Deliberate and

fundamental changeA

B

Enabled by ITC

DRadical improvement

Resolution Cycle Time: 3-8 weeks

Company A: Claims Resolution

Process

Steps:

1. Customer walks into the company office

2. Clerk fetches claim data

3. Manager verifies claim

4. Clerk processes the approved amount

5. Customer gets the amount

Resolution Cycle Time 30 min-3 hours

Progressive Insurance:

Claims Resolution

Process

Steps:

1. Customer calls the office

2. Claims Officer processes the claim

application

3. Representative meets the customer with

claim amount and necessary

documentation

UNDERSTANDING BPR THROUGH AN EXAMPLE

AN ORGANISATION MAY ACHIEVE ONE OR MORE OBJECTIVES BY UNDERTAKING A BPR

Objectives of BPR

Reinvent Business

HigherCustomer Satisfaction

Improve Quality of Life

Reduce Time

Reduce Cost

PromoteOrganisational

Learning

BUSINESS PROCESS REENGINEERINGPrinciples proposed by Hammer and Champy

04 Treat resources as centralised

03 Integrate information processing

02 Identify all processes and prioritise

01 Organise around outcomes, not tasks

07 Capture information at a single point

06 Create a decision point and control

05 Link parallel activities

03 Integrate information processing

02 Identify all processes and prioritise

01 Organise around outcomes, not tasks

BUSINESS PROCESS REENGINEERINGPrinciples proposed by Hammer and Champy

REAL WORLD TRANSLATION OF BUSINESS PROCESS REENGINEERING PRINCIPLES

Indian Oil Corporation had a huge inventory to be managed. Management

wanted to streamline the process of inventory management, hence reducing

the stock.

1. Management was clear on the outcome of the process, that is, to reduce

inventory.

2. Procurement was selected as the process to be revamped, followed by

warehousing and surplus disposal.

3. SAP R/3 software was selected which integrated Finance, Sales,

Material management, and Plant maintenance.

4. All resources were managed centrally by the SAP software.

5. Dynamic monitoring and updating in real-time kept all stakeholders

informed of the current status.

6. The Centralised Indent Processing Unit (CIPU) retrieves specification for

each material, which is updated by respective user departments and has

updated vendor information.

7. DSS was implemented for vendor evaluation and selection.

CAN ALL CHANGES BE IDENTIFIED AS BPR?

Process Change Spectrum

Automate

Streamline

Business

Process

Reengineering

Strategic

Reengineering

Ben

efi

t

Magnitude of Change

Redefine Industry

Define Best Practice

Match Best Practice

Improve Efficiency

No Benefit

Transformational01

IT enabled02

Efficiency03

Effectiveness04

BUSINESS PROCESS REENGINEERING

Attributes of the Reengineering Process


Example – Ford Motors

Ford Motors led one of the most successful BPR

campaigns.

The Procure-to-Pay process was revamped using IT as

the driver.

1

This brought a major change in the organisational

structure of the Accounting department.2



Old Process:

Purchasing

Materials

Accounting

Vendor

Copy of PO

Purchase

Order (PO)

Goods received

acknowledgement

Goods

Payment

Invoice



New Process:

Purchasing

Materials

Accounting

Vendor

Goods

Database

Purchase

Order (PO)

Payment



Attributes of the campaign:

Transformation: Improved accuracy, reduced costs and

brought Ford at the forefront of technology adoption1

Role of IT : Computers introduced, in person verification of

purchase orders eliminated through online portal2

Efficiency : Same number of invoices processed by 25% of

the pre-BPR workforce3

Effectiveness : Human errors minimised4Your video here

(Please cover the

entire box)

THERE ARE TWO WAYS TO REENGINEER A BUSINESS PROCESS

Clean slate: Reengineer everything

from scratch. Analogous to building

a new house from scratch.

Technology enabled: Constrained

reengineering and concurrent

transformation. Analogous to moving

in pre-designed and remodelling it

as per your requirement.

⚫ Select vendor

⚫ Reengineer

REAL LIFE EXAMPLES FOR BPR APPROACHES

Clean slate: SBI’s YONO platform

Technology enabled: Jio reengineered their

customer experience by introducing Big Data

analysis with the help of an external vendor,

Guavus and their portal Reflexis

LET’S LOOK AT THE ADVANTAGES OF BOTH THE APPROACHES

• Not constrained by tool

• Not limited by best

practices

• Retain competitive

advantage

• Not subject to vendor

changes

• May be the only way to

implement advanced

technology

• May have unique features

• Software created

• Focuses on best practices

• Tools help structure

reengineering

• Process bounded, thus

easier

• Known design is feasible

• Greater likelihood that cost

and time objectives

are met

• Software available

Clean Slate Technology

Enabled

BUSINESS PROCESS REENGINEERINGRisks

Employee resistance to change

Inadequate attention to employee concerns

Inappropriate staffing

Inadequate tools

Mismatch of strategies and goals

Lack of oversight

Failure of leadership commitment

RAVI STARTED BY UNDERSTANDING THE VARIOUSPROCESSES THAT HAPPEN IN A PASSPORT OFFICE

1 Passport Issue01

1 Passport Renewal02

1 Addition of New Pages03

AND HE COLLECTED FEEDBACK ON THE VARIOUS ISSUES THAT RESULT FROM THOSE PROCESSES

1 Error In Details01

1 Delay In Passport Issue02

1 Multiple Enclosures03

HE THEN LOOKED AT THE PROBLEM FROM A 360° VIEW TO ENVISION THE END OUTCOME

Reduce passport frauds

Reduce addition of physical

infrastructure using IT backbone

Reduce manpower

requirements

Reduce human error

Reduce malpractices

Create citizen database linking

details to passport creation

Centrally connected passport offices

Reduce passport issuance

cycle time

Improve efficiency

Reduce costs by

elimination of errors

Strategy

People

Technology

Business

Processes

WITH IT INTERVENTION, RAVI IDENTIFIED POSSIBLE BPR ACTIVITIES TO SOLVE THE ISSUES

Expected Improvements Applicable Current Benchmark Action

Reduction of time taken to issue

a passportYes 60 days 15 days

IT Implementation at

every step

Removal of erroneous details

from passport and formYes 30% error 1% error

Online application form

and processing

Creation and submission of the

form along with other required

documents by people living in

remote locations

Yes Not possible Possible Online application form

Drastic reduction of paperwork YesAlmost everything

is manual

99% reduction in

paperwork

IT Implementation at

every step

01

IBM’s field

salesperson calls in

with a request for

financing

02

Person taking the

call logs the request

for a deal on a piece

of paper

03

Piece of paper sent

to the credit

department

04

Specialist enters

information in

computer system

and check

borrower’s

creditworthiness

Specialist writes

result on piece of

paper and

dispatches to

Business Practices

department (BPD)

05

06

BPD is in-charge of

modifying standard

loan covenants in

response to

customer request

07

BPD attaches

special terms to

request form

08

Request sent to a

pricer who enters

data into personal

computer

spreadsheet to

determine

appropriate interest

rate to charge the

customer

09

Interest rate written

on a piece of paper

and delivered to

clerical group

Quote letter

prepared and

delivered to the field

representative

10

Process takes 2 weeks01

Multiple follow-ups required02

Request status unclear03

Multiple entry of data04

Paper usage05

HE IDENTIFIED MULTIPLE ISSUES IN THE CURRENT PROCESS AND STARTED WORKING ON BPR

RAVI MADE AND IMPLEMENTED MULTIPLE SUGGESTIONS FOR THE TURN AROUND

Reengineered Processes

Specialists were replaced by Generalists

Easy to use computer system that provided

access to all the data and tools

Sophisticated computer systems were provided to

deal structurers

An online application form was introduced:

● A deal structurer processed the entire

application form from beginning to end

IMPROVEMENTS TO THE CREDIT ISSUANCE PROCESS

BPR improved speed, optimised customer service

and reduced cost

Turnaround time slashed from 14 days to 4 hours

Number of deals handled increased hundredfold

Re-engineering brought in ~90% reduction in cycle

time

session 1 business processes

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