Modeling
Business Processes
for
Performance
Enhancement
By Priti Sikdar
F.C.A., C.I.S.A.,
C.I.S.M, COBIT
(F.C.), ISO
27001 (L.A.)
Reengineering
is a new way
to do old things!
Analysis and
design of workflows
and processes
within and between
organizations
is a scientific
process which
brings around
economies of
varied kinds
by virtue of
improvisation
in the way of
working. The
business aims
at achieving
a significant
breakthrough
in performance
measures. The
management always
strives to make
all processes
best in class,
so as to optimize
productivity.
A business process
is defined as
"a set
of logically
related tasks
performed to
achieve a defined
business objective."
A process is
"a structured,
measured set
of activities
designed to
produce a specified
output for a
particular customer
or market. It
strongly reflects
how work is
done within
an organization".
Processes can
be internal
or external,
they can be
intra country
or cross country.
Processes are
generally identified
in terms of
beginning and
end points,
interfaces,
and organization
units involved,
and high impact
processes generally
have process
owners assigned
to them for
accountability.
Typical examples
in an insurance
business can
be commission
process, premium
process, etc.
Today's business
is complex,
spread over
cross-functional
and cross-departmental
boundaries.
The business
model evolves
around specialization;
whether it is
an internal
process or an
outsourced function,
the only thing
that matters
is to optimize
performance
in the most
cost-effective
way. There can
be processes
which run through
various organizational
entities, processes
which are based
on functional
bifurcations
such as managerial
processes, operational
processes and
the like. Organizations
gain in this
process of reinventing
the wheel to
make it run
more efficiently.
Business process
reengineering
is construed
by management
as a quick way
to cut costs
and bring back
a decent profitability.
But in so doing,
the basic quality
of performance
or a critical
control is lost
permanently.
A handful of
consultants
brought in by
the top heads
cannot do a
magic trick
in increasing
the bottom line,
but can do irreversible
damage to its
functional ability.
The line managers
directly on
the shop floor
are the best
diagnostic agents
to identify
weaknesses and
suggest useful
reengineering
methodologies
to optimize
the production
processes. A
control self-assessment
routine can
be built in
with the work
schedule and
periodic workshops
held to do self
evaluation of
achievement
and deficiencies
in the processes
performed.
To have a better
effect, companies
must blend strategy
and reengineering
so as to complement
each other --
by learning
to quantify
strategy (in
terms of cost,
milestones,
timetables);
by accepting
ownership of
the strategy
throughout the
organization;
by assessing
the organizations
current capabilities
and processes
realistically;
and by linking
strategy to
the budgeting
process. Failing
which, BPR is
only a short
term fiasco
and will leave
more blisters
after the first
flush fades.
In a highly
competitive
business environment,
companies have
to keep pace
with the rate
at which competitors
are providing
new products
or services.
One has to clear
the old cobwebs
in order to
take in fresh
business and
hence internally
the house has
to be in order.
If we consider
a live case,
one of our leading
foreign banks
had embarked
upon a reengineering
exercise. While
it was busy
in these efforts,
MasterCard and
Visa introduced
a new product
-- the corporate
procurement
card. The said
bank lagged
a full year
behind before
offering its
customers the
same service.
So in order
to reengineer
for better results,
a lot of commitment
must come; first
from the management
and then from
the team who
has been entrusted
the task of
rolling out
the BPR.
Reengineering
the Human Resource-
Data turns into
information
when it is placed
in a human,
behavioral context.
The disruptive
power of IT
allows information
to be at many
places at the
same time --
which allows
companies to
reap the benefits
of both centralization
and decentralization
- and is at
the heart of
BPR. The implementation
and execution
of the redesigned
processes depends
upon those who
do the work.
Hence, the participation,
and more importantly,
acceptance and
ownership at
the grass root
level is essential
for successful
BPR.
There is a human
tendency of
resistance to
change and sometimes,
the leaders
of change implementation
have to exercise
some ruthlessness
in enforcing
that change.
Managers in
a company undergoing
reorganization
must work to
eliminate resistance
and satisfy
the queries
of employees,
to make them
feel comfortable
and to impress
upon them how
they are going
to benefit from
the change exercise.
In X Corporation,
the cultural
audit revealed
that efforts
on the part
of senior managers
to provide a
constant flow
of information
throughout the
company regarding
reengineering
expectations
and successes,
and in revising
the performance
appraisal system
to emphasize
the new values
of team work
and cooperation
went a long
way in ensuring
success in the
reengineering
project. Research
has identified
that there is
a fear among
employees that
their jobs are
endangered and
that years of
experience will
account for
nothing. Effective
communication
by managers
can help mitigate
this problem.
Keep a Customer-centric
focus-All business
models revolve
on customer
base. The customer
is God in today's
customer-centric
market. Service
organizations
can put their
professed commitment
to customer
satisfaction
into action
by placing the
customer at
the center of
the reengineering
process. Service
workers are
often unable
to satisfy the
customer because
they must follow
strictly defined
rules, and they
lack the authority
to make exceptions
or the resources
to complete
a transaction.
In these circumstances,
it would be
best to begin
improvisation
by identifying
customer wants
and creating
the infrastructure
to support these
expectations.
Setting of strategy
and goals would
preclude the
designing of
work processes;
this will give
direction and
standardization
to processes
across the enterprise.
IBM started
its reengineering
exercise with
the main objective
of becoming
more customer-centric.
They identified
twelve customer
relationship
processes and
used them as
a basis for
initiating their
BPR project.
Is Information
Technology an
Enabler or a
Bottleneck?
IT can prove
useful during
the reengineering
analysis and
design process.
Graphics software
and CASE tools
can produce
process maps;
spreadsheets
and costing
software allow
for activity-based
cost analysis;
databases can
track customer
satisfaction
and complaints;
"blind"
e- mail bulletin
boards can be
used to capture
employee suggestions.
In addition
e-mail and groupware
can facilitate
communication
and coordination
across geographical
and organizational
barriers.
On the other
hand, some companies
have found it
useful to design
a technology
strategy before
reengineering.
In one case
an entertainment
and advertising
company experienced
a downturn,
the CIO of the
company convinced
senior management
to make addressing
the role of
IT the first
item on the
agenda. They
designed a plan
to use technology
to place the
company in the
forefront of
the industry,
with services
such as electronic
product catalogues,
customer interface
standards, sophisticated
electronic data
links, customer
and market databases,
and digital
video. The new
technology needed
to drive growth
was then paid
for by the cost
savings from
BPR.
Futuristic
Approach to
BPR:
Reengineering
focuses on changing
existing business
practices. This
"impairs
the entire reengineering
process, as
it stifles innovation
in finding new
ways to compete."
BPR falls short
when dealing
with new products
or services,
since "any
strategic objectives
achieved are
simply the by-
product of improved
productivity."
Strategic reengineering
addresses this
shortcoming
by focusing
on designing
the organization
to compete.
This is accomplished
by undertaking
strategic initiatives
at the start
of the reengineering
process. These
initiatives
seek to provide
understanding
of the markets,
competitors,
and the position
of the organization
within the industry.
Critical success
factors required
to compete are
identified and
prioritized.
Only then can
individual business
processes be
addressed.
A better approach
is a participative
approach where
BPR team is
divided into
two parts, one
of senior mangers,
and an execution
team composed
of people who
will actually
do the work.
The designer
studies and
participates
in the process
to be redesigned;
it provides
a deeper understanding
of the process
and demonstrates
the team's commitment
to the workers.
The team must
be willing to
sell a new process
as though it
were a process,
expect and tolerate
modifications
to the process,
and change the
reward system
to motivate
change.
The
process of reengineering
can be divided
into the following
steps:-
• Set
business vision
and objectives:
BPR is always
driven by a
business vision
and its effectiveness
lies in the
presetting of
business objectives
such as cost
reduction, time
reduction, improvisation
of quality,
etc.
• Identify
Processes to
be redesigned:
The critical
processes which
directly impact
business and
hit the bottom
line are best
targets to be
taken for a
redesigning
exercise.
• Obtain
Clear Understanding
of selected
processes: In
order to improvise
on the processes,
it is imperative
to identify
defects in existing
processes and
work towards
its redesigning.
Adopting a work
breakdown structure
and going into
sub-processes
creates better
understanding
of the processes.
• Identify
the ITInvolvement
needed for the
job: IT Participation
in the process
to act as enabler:
Awareness of
IT capabilities
and levers in
process designing
goes into time
and cost economy
and create better
processes. It
would be better
to find the
required technical
resources and
technologies
needed in the
reengineered
process.
• Build
Prototypes:
Since improvement
and reengineering
are continuous
processes, it
would do good
to build prototypes
and successive
iterations can
follow to perfect
the design of
these processes
to serve objectives
in a better
manner.
• Setting
Timeframes for
effecting changes:
The timeframes
for fine-tuning
processes for
further effectiveness
should be set
in order to
review the reengineered
processes periodically
and monitor
sustained efficiency
and effectiveness.
The key setbacks
that organizations
face in a reengineering
exercise are-
1) Big Budget:
It is not always
necessary that
having mega
budgets is going
to solve issues.
It is the efficacy
of the team
and the selection
of appropriate
technology as
well as good
coordination
amongst team
members that
signify success
in the project.
Sometimes lessons
learnt from
initial blunders
also set a platform
for better performance
in the next
instance and
many organizations
have completed
their redesigning
efforts in this
way.
2) Delegating
the task to
an outside agency
does not sometimes
help as people
do not give
much cooperation
and view it
as an additional
burden on their
completion of
daily routine
tasks. Selection
of right consultant
who can include
the people in
their entire
planning and
execution will
help overcome
this hurdle.
3) Inability
to identify
key breakpoints
in core business
processes. Breakpoints
are defined
as the achievement
of excellence
in one or more
value metrics
where the marketplace
clearly recognizes
the advantage,
and where the
ensuing result
is a disproportionate
and sustained
increase in
the supplier's
market share.
4) Absence of
a time-table:
BPR must follow
project monitoring
and ideal time
for completion
is between three
to six months.
In this timeframe
one looks at
dramatic, radical
change, affecting
core business
processes that
cuts across
functional lines
and sometimes
geographical
boundaries.
In order to
make a success
out of it, human
empowerment
element is critical
and has to be
handled delicately
as it is also
a sensitive
element. Most
of these projects
lack time adherence
and have overruns.
Success or failure
in a reengineering
exercise lies
in how the process
of maintaining
management commitment,
involvement
of people from
line and staff
positions, time
monitoring the
project and
proactive participation
and interaction
over all cross
sections within
and outside
the organization
is handled.
Information
technology has
its own contributions
in recent years
in terms of
CASE and other
computer aided
design tools
which are being
used to create
structure/process
diagrams and
do organization
wide data modeling.
This helps monitoring,
speeding up
the redesigning
process and
giving backup
and support
to the team
to use technology
as a driver
to successfully
man the business
process reengineering
to suit organizational
targets and
achieve objectives!
(Author is Manager
in Grant Thornton,
in the Business
Risk Services;
she has expertise
in the field
of business
modeling for
optimization
of performance
and providing
valuable solutions
to IT and business
related problems
She can be contacted
at pts@wc-gt.com
Cell 9322261132)
