INFS3604 Business Process Management

A historical and organisation perspective

Week 1 Semester 1 2013

Overview of course Why business process? History of BPM How did we arrive at this point? BPM is about business effective and efficient not just IT. BPM is for everyone not just IT specialists.

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Our learning
Program goals Course learning outcomes
Knowledge Synthesise the principles of organisational strategy and process design. Explain the role of IT in BPM. Propose business solutions in written and verbal forms for process innovation and process redesign projects. Document processes using a process mapping tool using the BPMN. Analyse the performance of existing processes and identify process improvement. Create a BPM implementation strategy and implementation plan for an organization. Propose business solutions in written and verbal forms for process innovation and process redesign projects. Create a BPM implementation strategy and implementation plan for an organization. Propose business solutions in written and verbal forms for process innovation and process redesign projects. Propose business solutions in written and verbal forms for process innovation and process redesign projects. Analyse the performance of existing processes and identify process improvement. Create a BPM implementation strategy and implementation plan for an organization.

Assessment
Assignment 1; team assignment; examination

Critical thinking and problem solving

Lab exercises; assignment 1; team assignment; examination

Written communication

Assignment 1; team assignment; examination

Oral communication Teamwork

Presentations team assignment; final exam

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Prescribed readings:

Sharp and McDermott chapters 1 and 2. Hammer 1990 Davenport and Short 1990. (pages 1 9)

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House keeping

Assignment 1due in week 4.

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What is a business process?

A complete end-to-end set of activities that provide value, through the delivery of a product or service, to the customer of the service. Sharp and McDermott How an organisation does its work the set of activities it pursues to accomplish a particular objective for a particular customer. Thomas Davenport Process: an organised group of related activities that together create a result of value to the customer. Michael Hammer

UNSW INFS3604 S1 2013

What is a business process?

A complete end-to-end set of activities that provide value, through the delivery of a product or service, to the customer of the service. Sharp and McDermott How an organisation does its work the set of activities it pursues to accomplish a particular objective for a particular customer. Thomas Davenport Process: an organised group of related activities that together create a result of value to the customer. Michael Hammer

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A process is

A guide Clarity as to who does what and why How to understand contribution About collaboration, not pass the parcel Sharing in a customer outcome Focused on the customer About adding value.

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What a process is not

A process is not:

A low level task definition A functional internal way of doing things What you do to fulfil job responsibilities.

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Why bother with process?

Enables operationalisation of business strategy. Improves customer perception of value Improves/capacity/throughput/revenues Ensure consistency of outputs Ensures requisite output of quality Reduces cycle time May reduce cost Reduces risk Facilitates continuous improvement.

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A BPM timeline

Craft workers/Artisans pre-industrial revolution 1776 Adam Smith heralded the industrial revolution James Watt invented the steam engine power that only new industrial organisations could harness new organisation called for the division of labor into specialised tasks. Legacy of the industrial revolution was the division of complex work into simpler tasks Rise of the white collar worker to plan, organise and control Rise of specialisation Organisations as a means of harnessing the benefits of functions.

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Evolving drivers of process

Pre-industrial era Trades Skills knowledge Task work Family pass-down Individual Self management Clerical Verbal Memory Simple structure Industrial Era Jobs Technical knowledge Production lines Apprenticeships Functional Supervision Management Paper Manuals Pyramid Information Era Roles Role knowledge Teams, networks Education Process, project Leadership Team support Electronic Database Matrix/network/cell

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Benefits of specialisation include:

Increased output and economies of scales with consistent quality Easier management of personnel Development of high level skills Ability to scale up or down Educational preparation for specialisations.

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Function and organisation

View of organisations: working towards a common purpose or a collection of functions?

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However over time problems with specialisation emerged:

Loss of the big picture view, focus on process and function rather than the whole Lack of customer focus; if the function was effective that was sufficient Competition between functions Lack of co-ordination between functions

Enter Reengineering
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Drivers of re-engineering

Customer sophistication Deregulation Increasing competition on a global level Therefore: a need to improve effectiveness and efficiency.

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Principles of re-engineering

Organise around outcomes Have those who use the output of the process perform the process Link parallel activities during the process, rather than at the end of the process Treat geographically dispersed resources as if centralised Capture information at the source Subsume information processing work into the real work that produces the information Flatten organisation layers.

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Themes of re-engineering

Decentralise decision making to the decision maker to be responsive to the customers needs: flatten organisations; less need for middle managers. Use of IS/IT Re-design jobs

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Re-engineering: a focus on organisations and processes

Organisations must be effective and efficient:

Effective: do the right things Efficient: do things in the right way.

As the environment of organisations and businesses is continuously changing organisations must engage in the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical, contemporary measures of performance, such as cost, quality, service and speed (Hammer & Champy 1993).

This was termed re-engineering.

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Levels of concern:

Enterprise level Business process model Implementation level

Alignment both vertically and horizontally: activity goals must be related to the process goals, which must in turn be derived from the strategic goals of the organisation. An end to silo thinking. The role of BPR An integrated view of business processes - a holistic view The role of IT in BPR IT enables BPR

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Re-engineering: Re-structuring business processes means restructuring jobs

Organisation Job design Structure Career moves Work rules Management Traditional Narrow Hierarchical Vertical Procedures Supervision Re-engineered Broad Flat Horizontal Judgement Leadership

People skills needed

Structured

Adaptive

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Demise of Re-engineering: misuse and negativity

I reengineered my department by putting our forms on an imaging-based work flow system. We reengineered our customer service operation by laying off 30% of our staff. Our logistics process was reengineered by outsourcing to a low cost provider. Ignoring:

Motivation Human resources, human perspective Focus on functional work units rather than on process Continuous improvement.
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Value chain: a means of modelling modern organisations

Porter 1985. Competitive Advantage: Creating and sustaining superior performance. A comprehensive collection of all the activities that are performed to design, produce, market, deliver and support to a product line Business as a system. Applying the value chain to the business processes. Fig 1.3 Harmon.

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Re-engineering in context: the Value Chain Model

Organisation infrastructure HR management Technology development Procurement
M A R G I N

Inbound logistics

Operations

Outbound logistics

Marketing and sales

Service

Transportation Material handling Material storage Communications Testing Information systems

Process Materials Machine tools Material handling Packaging Maintenance Testing Building design and operations Information systems

Transportation Material handling Packaging Communications Information Systems

Media Audio/video Communications Information systems

Testing Communications Information systems

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Whats important to Porters concept is that every function involved in the production of the product, and all of the support services from information technology to accounting, should be included in a single value chain. Its only by including all of the activities involved in producing the product that a company is in position to determine exactly what the product is costing and what margin the firm achieves when it sells the product.
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Recap: fig. 2.2 Sharp and McDermott

1990-1993: BPR hysteria, Largely misapplied. 1980s: Quality becomes a major Driver and business as a system view promoted

1993-1995: BPR backlash

2000: Tech meltdown

1985: First references to cross functional work; little or no mention of business process

1990: Hammer unleashes Business Process Reengineering (BPR)

1995-2000: The wonder years: Intense focus on expensive technology investments; business process issues largely ignored

Post-2000: BPx returns! - Do more with less - Disappointment with wonder years ROI

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Hammer 1990 Davenport and Short 1990

Both papers focus on redesigning work in organisations so that business processes are effective and efficient. Hammer uses the term reengineering work while Davenport and Short use Business Process Redesign. Davenport and Short offer a more methodological approach while Hammer offers guidelines for reengineering.

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