Business Process Reengineering

Session Objectives
 What is BPR?
 Why do companies do it?
 How is it done?
 How does BPR relate to SAP Implementation?

CSU Chico
4/12/04 BPR Lecture 1
 SAP AG
THE REENGINEERING MOVEMENT

 1993 - Hammer and James Champy, publish

Reengineering the Corporation

 1995 - Hammer and Steven Stanton publish a

handbook, The Reengineering Revolution

CSU Chico
4/12/04 BPR Lecture 2
 SAP AG
WHAT IS “REENGINEERING”?

 “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.” ---Hammer &
Champy 1993

CSU Chico
4/12/04 BPR Lecture 3
 SAP AG
Radical Redesign

Improvement

Radical
Improvement

Incremental Improvement

Time

CSU Chico
4/12/04 BPR Lecture 4
 SAP AG
Processes
 Group of related tasks
 Create value for a customer
 Fragmented across many organizational units
 Fragmentation costs time and money

CSU Chico
4/12/04 BPR Lecture 5
 SAP AG
Dramatic Improvements

 Make quantum leaps in performance

 Achieve breakthroughs
 Hallmark of Reengineering
 A dramatic breakthrough in performance

CSU Chico
4/12/04 BPR Lecture 6
 SAP AG
REENGINEERING. . .
IS IS NOT
 How work is done  Restructuring
 Better ways of doing  Downsizing
necessary work
 A fad
 Huge improvements
 Hierarchical management
 End-to-end processes that and specialized labor
add value

CSU Chico
4/12/04 BPR Lecture 7
 SAP AG
Why do companies do it?

Looking ahead:
 Customers
 Competition
 Change

CSU Chico
4/12/04 BPR Lecture 8
 SAP AG
Customers
 What they want
 What you are giving them
 What the gap is

CSU Chico
4/12/04 BPR Lecture 9
 SAP AG
Competition
 Speed
 Flexibility
 Quality
 Cost

CSU Chico
4/12/04 BPR Lecture 10
 SAP AG
Change
 Global Economy
 Virtual Organizations
 E-Business

CSU Chico
4/12/04 BPR Lecture 11
 SAP AG
Success Factors
 Top Management Sponsorship (strong and consistent involvement)

 Strategic Alignment (with company strategic direction)

 Compelling Business Case for Change (with measurable objectives)

 Proven Methodology (that includes a vision process)

 Effective Change Management (address cultural transformation)

 Line Ownership (pair ownership with accountability)

 Reengineering Team Composition (in both breadth and knowledge)

CSU Chico
4/12/04 BPR Lecture 12
 SAP AG
Reengineering Process
 Scope project
 Analyze the process
 What should the process look like?
 What do my customers want it to look like?
 What do my employees want it to look like?
 Learn from others
 How do the best-in-class companies do it?
 Benchmarking

CSU Chico
4/12/04 BPR Lecture 13
 SAP AG
Reengineering Process
 Create the “To be” state
 Create an action plan for current gaps
 Where you want to go
 Plan transition
 Process Owner
 Training
 Implement
 Cultural Change

CSU Chico
4/12/04 BPR Lecture 14
 SAP AG
5 Elements of BPR Projects:
 Focus on the whole process characterized by specific
inputs and that add value for the customer
 Question the status quo
 Determine the objective of a BPR effort
 Usually there is a breakthrough in achievement
 Usually involves significant cultural change

CSU Chico
4/12/04 BPR Lecture 15
 SAP AG
Levels of BPR
(or what people call BPR)
 Functional Refinement: Limited scale within a narrow
focus (process improvements or quality circles)
 Functional Integration: Extensive change within a
narrow scope -- usually major change within a
functional area like Order Entry, Accounts Payable
 Process Redesign: Limited scale across a broad area --
automating a function that was manual affects lots of
functional areas but are confined to a specific process
 Business Redefinition (also known as re-engineering
where we change the direction of the business)

CSU Chico
4/12/04 BPR Lecture 16
 SAP AG
SAP & BPR
 Assumptions:
 Automation supports adding value to customer - business
chain
 Processes need continuous improvement
 Management needs to be lean
 SAP knows what “best practices are” (for using their software)

CSU Chico
4/12/04 BPR Lecture 17
 SAP AG
SAP & BPR
 Configuration of SAP
 Doesn’t just mean installing the software
 Configuration means selecting the business processes that
can support the business
 May include re-design of processes to best fit company
requirements
 Each installation of SAP can be (IS) different
 Known as “Configure to Order”

CSU Chico
4/12/04 BPR Lecture 18
 SAP AG
SAP & BPR
 Tools that support BPR within organizations using SAP
 Business Engineer: model for navigating SAP system
 Reference model (Data & Business Objects)
 Process Model (EPC - showing scenarios)
 Organization Model (showing hierarchy of organization)
 Business Process Repository (by role – SolMan)
 ABAP Workbench allowing for customization

CSU Chico
4/12/04 BPR Lecture 19
 SAP AG
SAP & BPR
 Modified BPR using SAP (exploiting process/IT link)
 Organizational overview & customer input
 Current process definition
 Review SAP Processes & Choose Best Practice for the
Organization
 Current process analysis: Identify & analyze targets to
redesign to take advantage of SAP functionality
 Implement
 Evaluate results

CSU Chico
4/12/04 BPR Lecture 20
 SAP AG
Getting Started
 Document the “As Is” Process
 What are the needed inputs, outputs, sub-processes?
 Who is the customer and what is the output of each sub-
process?
 Identify the “Should Be” Process
 Eliminate duplicate activities
 Link parallel activities
 Simplify the people and sub-processes involved
 Define the objectives (what do we want to achieve?)
 Share the vision of “Should Be” with those involved

CSU Chico
4/12/04 BPR Lecture 21
 SAP AG
Getting Started Continued
 Define how to get from “As Is” to “Should Be”
 What are the targets to change -- steps and order?
 What are positive driving factors?
 What are the barriers to success?
 What technology can be used or is needed to support new
process?

CSU Chico
4/12/04 BPR Lecture 22
 SAP AG
Diagramming Business Processes
Request Question
Customer Service Bill

Meter Reader Read Meter

Billing Clerk Set up

Research
Account
Question
Data Entry Add new Enter
Account Meter Reads
Manager
CSU Chico
4/12/04 BPR Lecture 23
 SAP AG
Review Questions

 What is BRP within the context of an ERP

implementation?
 How is a BPR project similar to an ERP implementation
project? How is it different?
 What are the major steps in doing a BPR?

CSU Chico
4/12/04 BPR Lecture 24
 SAP AG