Business Process Innovation through IT

1. Business Process Innovation through IT • The Concept of Business Process Innovation • What is Reengineering? • Principles of Reengineering • Examples of Reengineering • Stages of Reengineering • Factors Leading to a Failure in Reengineering

2. What is Business Process Innovation? • Business process innovation refers to a means or process through which a firm can increase competitiveness by making big changes in the way the firm conducts its business. • Examples: reengineering, benchmarking, TQM(total quality management) • Process innovation is different from process improvement. AttributeProcess ImprovementProcess Innovation Level of ChangeIncrementalRadical Starting PointExisting processClean slate Frequency of ChangeOne-time/continuousOne-time Time RequiredShortLong ParticipationBottom-upTop-down Typical ScopeNarrow, within functionsBroad, cross-functional RiskModerateHigh Primary EnablerStatistical controlInformation technology Type of ChangeCulturalCultural/structural [Source: Davenport, Thomas H. Process Innovation: Reengineering Work through Information Technology, Boston, MA: Harvard Business School, 1993]

3. What is Reengineering? • Often referred to as BPR(Business Process Reengineering) • a business process innovation technique that seeks cost reduction, increase in market responsiveness, and improvement in product/service quality for the purpose of increasing customer satisfaction and of creating a competitive edge. • Michael Hammer’s definition of BPR: ”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.” • Key words: fundamental, radical, zero-base, dramatic, processes

4. [출처: Davenport, Thomas H. Process Innovation: Reengineering Work through Information Technology, Boston, MA: Harvard Business School, 1993] Sample Business Processes

5. Principles of Reengineering • Integrate related parts of work • Tasks are integrated rather than divided, specialized, or fragmented • Work integration makes it possible to respond to external changes more rapidly • Centralize resource management • Centralized resource management can increase efficient utilization of resources and reduce the costs of resource management • Focus on concurrent processing of tasks • Strengthen the ties among sequential functions, and process functions concurrently if necessary (‘concurrent processing’) • Concurrent processing of work can significantly reduce the cycle time of a work process

6. Examples of Reengineering

7. Old Process 고객 영업사원 전화응답 직원 신용담당 부서 운영 부서 이윤책정 담당자 사무 직원 New Process 고객 영업사원 종합업무 수행자 Process Innovation at IBM Credit

8. Old Process 카메라 설계 카메라 제조설비 설계 New Process 카메라 설계 동시 진행 카메라 제조설비 설계 Process Innovation at Kodak

9. Stages of Reengineering Select a target process Understand the existing process Set the objectives of the process Design the new process Develop a change model Implement the process Operate the process

10. Factors Leading to a BPR Failure