Business Process Reengineering & Innovation

1. Business Process Reengineering & Innovation Chou-Hong Chen, Ph.D Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99223 chen@gonzaga.edu

2. Innovation as a Response to Change in Market and Technology Technological Opportunities Advances in Technology EFFICINCY EFFECTIVENESS INNOVATION INNOVATION New Products and Services Market Needs Socio-political Changes Market Time

3. What is Business Process and Business Reengineering? • Business process: A set of logically related tasks performed to achieved a defined business outcome • Business reengineering means radically changing how people work - changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs. TM -3 Dr. Chen, The Trends of the Information Systems Technology

4. Principles of Re-engineering(by Michael Hammer) • Organize around outcomes, not tasks • Have those who use the output of the process perform the process • Include information processing work into the real work that produces the information • Treat geographically dispersed resources as though they were centralized • Link parallel activities instead of integrating their results • Put the decision point where the work is performed.

5. BPR Radical Change = New organization + IT Types of Organizational = Strategies Industry Structure + Competitive Strategies + Cooperative Strategies

6. BUSINESS REENGINEERING STEPS: 1. Develop business vision, process objectives 2. Identify process to be redesigned 3. Understand, measure performance of existing processes 4. Identify opportunities for applying information technology 5. Build PROTOTYPE of new process TM -6 Dr. Chen, The Trends of the Information Systems Technology

7. Figure 3-6 Reengineered Accounts Payable Process (from Hammer[1]) Before Copy of Purchase Order Purchasing Purchase Order  Payment Accounts Payable Vendor Invoice Goods Receiving Document Receiving

8. Figure 3-6 Reengineered Accounts Payable Process (from Hammer[1]) After Purchasing  Purchase Order Payment  Accounts Payable Database Vendor Goods Receiving

9. Implementing Re-engineering • The key activities of re-engineering can be organized into three phases referred to as the 3R’s Re-engineering • Redesign • Retool • Reorchestrate

10. Tools for BPR • Simulation • Flow diagrams • Work analysis • Application development • Workflow software

11. Leadership Corporate values Cultural change Incentives Accountability Zeal/commitment Communication Comfortable with ambiguity Obstacles to change Celebrate success Reorchestrate:Organizational Change

12. The C’s related toOrganization Re-engineering Projects The 3C’s of organization Re-engineering: The 4C’s of effective teams: - Commitment - Customers - Cooperation - Competition - Communication - Change - Contribution

13. Information Engineering PLANNING ANALYSIS DESIGN CONSTRUCTION

14. What is Information Engineering • The application of an interlocking set of formal techniques for the planning, analysis, design and construction of IS, applied ton an enterprise-wide basis or across a major sector of an enterprise. • An enterprise-wide set of automated disciplines for getting the right information to the right people with the right form at the right time.

15. Figure: Relationship and linkage of proposed system projects with strategic factors and the business plan Objective Proposal Business Plan Strategic Factors SystemProject • Decrease direct labor and overhead by 20% • Increase our customer order-filing rate to 95% • Produce timely tracking and sales information for inventory managers • Increase labor productivity • Improve service differentiation • Provide managers with better information • A standard cost accounting system that provides online labor rate and efficiency variances • An inventory management system that provides reorder points, EOQ’s, quantity on hand, and sales by item and salesperson. Supports Supports

16. The Emergence of a Strategic Role for IT in Organizations Technology Push Competitive Pull • Innovative IT-enabled applications to obtain differential benefits in the marketplace to stay competitive IT as a strategic resource • Cost-performance trends • Connectivity capabilities

17. BUSINESS REENGINEERING STEPS: 1. Develop business vision, process objectives 2. Identify process to be redesigned 3. Understand, measure performance of existing processes 4. Identify opportunities for applying information technology 5. Build PROTOTYPE of new process TM -17 Dr. Chen, The Trends of the Information Systems Technology

18. Figure 3-6 Reengineered Accounts Payable Process (from Hammer[1]) Before Copy of Purchase Order Purchasing Purchase Order  Payment Accounts Payable Vendor Invoice Goods Receiving Document Receiving

19. Figure 3-6 Reengineered Accounts Payable Process (from Hammer[1]) After Purchasing  Purchase Order Payment  Accounts Payable Database Vendor Goods Receiving