white paper

BPR - pragmatic approach to breakthrough process selection

white paper | BPR - pragmatic approach to breakthrough process selection

Contents Abstract

01

Research

01

Background

01



Pragmatic business process reengineering

03



Process selection

03



Dimension Data domain prioritisation frameworks

04



Definition of breakthrough processes

08

Recommendation

WP_BPR_Approach_to_process_selection_1.0 9/12

09

white paper | BPR - pragmatic approach to breakthrough process selection

Abstract To compete effectively in the 21st century, organisations need to rethink the way they do business. This requires an approach to delivering their products and services that enables them to achieve aggressive performance improvement targets whilst also mitigating complicating factors such as intense competition, changing public opinions, and market expectations to ‘deliver more with less’. Organisations that have implemented traditional business process reengineering have been left disappointed as they have not been able to significantly improve their bottom line within an acceptable timeframe. There are many reasons for this, including: • Little focus on process integration; • Too much time spent in modelling the ‘as is’ processes; • Duplicated input process, and input is not validated at source; • Assumption that all the control steps are required, resulting in cost inefficiency and slow processes; • Little attempt to reduce wait-time in activities;

This problem may be overcome by employing a pragmatic approach to business process reengineering (BPR). As the goal of any BPR project is about increasing efficiency (internal) and improving customer service (external), pragmatic BPR can be an effective tool if used properly. Pragmatic BPR examines and changes the organisation’s business processes, people and technology by capitalising on best practices, learning from others and designing for the future in an accelerated fashion. This white paper is focused on selecting the ‘right’ breakthrough processes to reengineer with a view to achieving quick wins in the areas of business performance improvement and/or cost reduction undertakings. Additionally: • It provides a set of characteristics that the ‘right’ candidate processes should possess to be selected for reengineering. • It provides a step-by-step approach to select a process cluster that will create the desired efficiency gains in a timely and cost-effective manner, if reengineered. The approach described in this white paper can be applied to both business and IT process selection.

• Reports produced cannot be acted upon in a timely manner because of inabilty to easily arrive at conclusions to support proactive actions;

Research Background Organisations have always had specific objectives and goals for their products and services. Traditionally, organisations piece together activities that run between logical functional units (e.g. sales, logistics and finance) to deliver these products and services. These activities are pulled together in a haphazard manner, with some input at the one end that would trigger a series of activities and when the activities are completed, an output that is valued by customers1 at the other end. However, due to the manner the activities are put together, these ‘processes’ are often found to be orphaned, fragmented, invisible and unmanaged. Nevertheless, they have met the organisations’ short-term needs. Today’s world, though, is more complex. Organisations are finding it more challenging to achieve their objectives and goals due to complicating factors arising from: •

Intense threat from competition;

•

Dependencies on suppliers to deliver the right parts at the right time;

•

Aging workforce with ineffective plans to transfer knowledge to the younger generation;

•

More stringent regulatory requirements;

•

Changing economic conditions;

•

Erratic public opinion;

•

Increasing environmental concerns; and

•

The expectation to ‘deliver more with less’.

The old way of doing business is simply no longer effective in the 21st century.

• Inability to effectively balance workload and improve the workflow queues; and • Not focused on reengineering the right processes.

1. ‘Customers’ as defined here can be either internal or external customers.

01

white paper | BPR - pragmatic approach to breakthrough process selection

Organisations that have sought to implement traditional business process reengineering have been left disappointed as they have been unable to obtain the ‘promised’ outcome in a timely manner. Leading reasons that traditional BPR has not met expectations include: •

•

•

There is little focus on process integration. Organisations are designing their processes one at a time, in silo, without thinking of dependencies and complete endto-end activities to achieve the final outcome. Organisations are spending too much time modelling the ‘as is’ processes instead of focussing on what needs to be changed to make the processes more effective and efficient. Pragmatic BPR proposes that the ‘as is’ processes should only be defined to the extent that the flows are appropriately understood by all parties involved in the processes so that improvements can be made. Otherwise, the design activity will take too long and stakeholders will lose interest. The input process is duplicated, and input is not validated at source. Processing time increases when the same data is entered by multiple, different parties throughout the process lifecycle. Some data has to be re-entered way down the process flow due to input not being validated at the start of the process, and data errors occurring from multiple data handling. Pragmatic BPR proposes that data is validated and input correctly only once, at the source.

•

•

•

Organisations assume that all the control steps are required, resulting in high cost and slow processes. Dimension Data research has noted that some of these steps may not be critical to the end-to-end workflow (i.e. they are desirable, historical steps only and do not add value to the business) and can be disregarded to enable the activity to process faster. There has been little attempt to reduce wait time in activities. Long wait time only serves to increase the activity processing time. The processes have not been effectively tracked to enable improvement. The reports that are produced cannot be acted upon in a timely manner – the content produced is too massive, making it difficult for organisations to draw the right conclusions. Pragmatic BPR proposes that only exception reports are produced.

•

There is an inability to balance workload and improve the workflow activities. Organisations are unable to resolve and effectively manage their work queues – some queues are overloaded and have long wait time, while other work queues remain idle.

•

Organisations are unable to achieve the ‘promised’ outcome as they have not focused on reengineering the right processes. Pragmatic BPR proposes that organisations seek to reengineer breakthrough processes, meaning that organisations need to determine the critical processes (e.g. product development, marketing, selling, customer care) that need to be radically

changed in order to realise quick wins in the areas of business performance improvement and/or cost reduction undertakings. This is the focus of this white paper. Organisations need to start rethinking the way they do business. They need to rethink how to deliver their products and services in a manner that will enable them to achieve advanced improvement targets (i.e. stretch goals), typically in terms of: •

Improved customer experience (increased customer satisfaction and increased responsiveness to customer requests);

•

Improved quality of execution (improved internal processes);

•

Higher return on investment;

•

Bigger market share;

•

Reduced business cost; and

•

Measurable and communicated service value.

To realise any of these goals, Dimension Data research has identified that the first step for the organisation to undertake is a radical process change. This approach requires the organisation to fundamentally start over; that is, the approach is to recreate the organisation using the current knowledge of the organisation and given the current technology.

02

white paper | BPR - pragmatic approach to breakthrough process selection

Pragmatic business process reengineering

•

Before we embark on a discussion of what business process reengineering is, we should first seek to understand what BPR is not. •

BPR is not a process improvement initiative whereby improvements are made in small, incremental steps (i.e. marginal, incremental improvement).

•

BPR does not focus on a particular problem and the outcome is not to optimise a task or functional unit.

•

BPR does not assume attitudes and behaviours or that the organisation will commit only a little investment to improve existing workflows: improving existing workflows may require low investment initially, but the cost to maintain is high.

•

And, BPR is not about downsizing, restructuring, reorganising, automating or using new technology.

What is BPR then? •

BPR is about the radical process redesign that changes the way an organisation does work.

•

BPR is all about business transformation while still fulfilling the current performance obligations.

•

BPR is a vision-led transformation of the organisation that changes attitudes and behaviours so that the organisation has an ‘edge’ to jump ahead of its competitors.

•

BPR is a focus on process interdependencies and system dependencies that are established through the integration of various business processes.

•

BPR is about committing to the investment of rebuilding processes: the investment cost may be high initially, but it will reduce with time.

And, BPR is about examining and changing the basic business components of strategy, people, process, technology and organisation as a whole.

Fundamentally, the goal of BPR is about increasing efficiency (internal) and improving customer service (external). It is about capitalising on best practices and learning from others, including other industries. It is designing for the future to produce significant bottom-line improvements for the organisation and to exceed the expectations of the customer-ofthe-future.

Guidelines to process selection Critical process domains2 that are good candidates for BPR must have most of the following characteristics: •

The process domains must be major contributors to the organisation’s core competencies.

•

The process domains must be dysfunctional; i.e. they are the most problematic (e.g. fragmented, inefficient).

•

The process domains must have the greatest impact on customers.

•

The process domains must be ready and feasible for dramatic change (e.g. due to high cost, loss of market share).

•

The process domains must contribute to the organisation’s vision and objectives.

•

The level of risks for the process domains must be acceptable.

•

The process domain change must impact one or more of the following: cycle time, cost, process value, key issue, supplier performance, beats competition.

•

The process domains must have interrelationship with other functions/ departments (i.e. they must be real process domains, not functional units) and the redesign will produce quick wins.

Process selection Now that we know what BPR is, how does an organisation go about selecting the ‘right’ processes to redesign and deploy? Dimension Data research defines the ‘right’ processes as the critical processes that will enable the organisation to achieve dramatic improvements in performance measures such as: •

Improved customer satisfaction (improved user experience);

•

Reduced business and IT costs;

•

Increased responsiveness;

•

Improved quality of execution (improved internal processes); and

•

Reduced cycle time.

Lessons learnt from organisations that have implemented BPR suggest that it is not necessary to use an exhaustive approach to attempt to identify all the processes within the organisation and prioritise them in the order of redesign urgency. Most of these organisations find that using a highimpact approach that focuses on the most important processes or the processes that conflict most with the organisation’s vision is a good way to start.

2. For the purpose of this publication, ‘process domain’ is defined as a collective set (or cluster) of workflows that are inter-dependent and must work together to enable business integration to achieve excellence in customer service and/or reduce business cost (e.g. product development and go-to-market processes).

03

white paper | BPR - pragmatic approach to breakthrough process selection

Dimension Data domain prioritisation frameworks Dimension Data has successfully employed sector-specific ‘domain prioritisation’ frameworks to help the private and public sectors to quickly determine the ‘right’ process domain for reengineering. These frameworks have enabled organisations to methodically determine the space they want to occupy in their chosen market so that they can decide the process domain they want to reengineer.

Private sector domain prioritisation framework In the private sector, domain priority (see figure 1) is elevated if it improves the organisation’s: Performance in the market: Performance in the market is improved when the organisation is functioning efficiently and is ‘doing things right’ (see x-axis in figure 1); i.e. the organisation is starting to do business quicker, better and cheaper. Presence in the market: Presence in the market is improved when the organisation is functioning effectively and is ‘doing the right things’ (see y-axis in figure 1); i.e. the organisation is starting to do what it has not been doing currently.

Figure 1: Dimension Data private sector domain prioritisation framework

The private sector domain priority is classified in table 1.

Position

Performance

Presence

Priority

Market leader

80% - 100%

80% - 100%

High

Market challenger

45% - 79%

60% - 79%

Medium

Market follower

0% - 44%

0% - 59%

Low

Table 1: Classification of private sector domain priority

04

white paper | BPR - pragmatic approach to breakthrough process selection

If the private sector domain priority is high, reengineering the processes will enable the organisation to be a market leader. This is a strong basis for reengineering. If the private sector domain priority is medium, reengineering the processes will enable the organisation to challenge the market leaders.

Criteria Improve service quality

If the private sector domain priority is low, the organisation is a follower; i.e. an inactive player in the market. To determine presence and performance in the market, organisations can use a set of criteria and pre-determined weighting factors to narrow down the list of candidate processes to reengineer.

Weighting (%)

Approach to improve performance in market (total weight must equal 100%). The organisation is doing ‘things right’; i.e. it is doing what it is doing currently quicker, better and cheaper such as (see table 2):

Score

30

Increase automation

5

Improve pricing

5

Meet service level agreement targets

20

Reduce business cost

15

Improve personnel performance

5

Improve financials

20

Total

100

Table 2: Example criteria and weighting factor to improve performance in the market for organisations in the private sector Approach to improve market presence (total weight must equal 100%). The organisation is doing ‘the right things’; i.e. it is starting to do what it does not do currently such as (see table 3):

Criteria

Weighting (%)

Increase service breadth

10

Increase channel partners

15

Improve reputation

20

Increase geographic coverage

25

Improve business imperatives

5

Improve industry focus

10

Improve business development

5

Increase market share

10

Total

100

Score

Table 3: Example criteria and weighting factor to improve market presence for organisations in the private sector

05

white paper | BPR - pragmatic approach to breakthrough process selection

Public sector domain prioritisation framework Similarly, Government organisations can use a domain prioritisation approach to determine how to meet whole of government requirements and service the community (see figure 2) so that they can decide the process domain to reengineer. In the public sector, domain priority is elevated if it improves the Government organisation’s: Efficiency in delivery: Delivery efficiency is improved when the Government organisation is ‘doing things right’ (see x-axis in figure 2); i.e. the Government organisation is starting to work quicker, better and cheaper. Effectiveness in delivery: Delivery effectiveness is improved when the Government organisation is ‘doing the right things’ (see y-axis in figure 2); i.e. the Government organisation is starting to do what it has not been doing currently. The public sector domain priority is classified as follows (see table 4):

Figure 2: Dimension Data public sector domain prioritisation framework

Position

Efficiency

Effectiveness

Priority

To improve business performance and reduce cost

80% - 100%

80% - 100%

High

To improve business performance or reduce business risk

45% - 79%

60% - 79%

Medium

To invest in desirable improvement opportunities

0% - 44%

0% - 59%

Low

Table 4: Classification of public sector domain priority

06

white paper | BPR - pragmatic approach to breakthrough process selection

If the public sector domain priority is high, reengineering the processes will enable the Government organisation to improve its business performance and reduce the cost of doing business. This is a strong basis for reengineering. If the public sector domain priority is medium, reengineering the processes will enable the Government organisation to improve its business performance or reduce its business risks.

If the public sector domain priority is low, reengineering the processes will enable the Government organisation to invest its funds in desirable improvement opportunities. To determine efficiency and effectiveness in the public sector, Government organisations can use a set of criteria and pre-determined weighting factors to narrow down the list of candidate processes to reengineer.

Criteria Improve service quality

Approach to improve efficiency (total weight must equal 100%). The Government organisation is doing ‘things right’; i.e. it is doing what it is doing currently quicker, better and cheaper such as (see table 5):

Weighting (%)

Score

30

Increase automation

5

Meet service level targets

20

Reduce business cost

15

Improve personnel performance

5

Improve financials

25

Total

100

Table 5: Example criteria and weighting factor to improve efficiency for organisations in the public sector Approach to improve effectiveness (total weight must equal 100%). The Government organisation is doing ‘the right things’; i.e. it is starting to do what it does not do currently such as (see table 6):

Criteria

Weighting (%)

Increase service breadth

10

Improve business partner relationships

15

Improve reputation

20

Increase geographic coverage

25

Improve business imperatives

5

Improve compliance to legislative requirements and risk mitigation

25

Total

100

Score

Table 6: Example criteria and weighting factor to improve effectiveness in organisations in the public sector

07

white paper | BPR - pragmatic approach to breakthrough process selection

Definition of breakthrough processes Breakthrough processes are processes that make a difference to the organisation. Standard breakthrough processes in an organisation are usually the core processes in the organisation’s value chain.

For the private sector, the standard value chain can be summarised as follows (see figure 3). It must be noted that breakthrough processes are different for different organisations. Breakthrough processes are critically dependent on the organisation’s vision, business model and area of

focus that will make the organisation a market leader in the industry in which it is competing. For example, improving customer service may be critical for one organisation, but for its competitor that has excellent customer service, the focus may be on improving the sales of products and services.

Figure 3: Standard summarised value chain for the private sector

In a similar manner, the standard value chain for the public sector can be summarised as follows (see figure 4).

The focus for Government organisations is generally servicing the communities, and meeting the communities’ needs and expectations.

Figure 4: Standard summarised value chain for the public sector

08

white paper | BPR - pragmatic approach to breakthrough process selection

Recommendation

Key resource skills required include:

Approach to pragmatic BPR recommends that organisations use: (1) the process characteristics discussed in this white paper to shortlist the process domains, and (2) the Dimension Data methodology to select the ‘right’ candidate breakthrough process domain to reengineer so that organisations are able to significantly improve their bottom line and obtain the ‘promised’ outcome in a timely manner.

•

Ability to engage and draw out critical knowledge from the stakeholder participants;

•

Ability to see the big picture and quickly grasp critical issues from stakeholder perspective to build rapport and gain stakeholder trust;

•

Ability to obtain consensus during workshops and stakeholder discussions to ensure there is an agreed outcome; and

•

Ability to adapt to stakeholder behavioural style.

Sample approach to process selection The key steps in table 7 provide a sample approach to select breakthrough processes for reengineering.

Phase

Key steps

Phase 1 - Scoping

•

Schedule Week 1

•

Prepare scoping document, including determining key drivers for the BPR Determine key stakeholders and schedule workshops Output: BPR scoping document

Phase 2 - Workshops

• •

Facilitate process selection workshops Output: List of breakthrough processes

Weeks 2-3

Phase 3 - Analysis and recommendations

• • •

Analyse results from workshops Recommend BPR design roadmap Output: BPR design roadmap

Weeks 4-5

Phase 4 - Agreement and approval

• •

Obtain consensus and approval for the roadmap Output: Approval to proceed with the BPR design roadmap

•

Week 6

Table 7: Sample approach to process selection

About the Author Shirleen Heah is a member of the Dimension Data National Consulting team in Australia, providing business and technology advisory services to clients.

Shirleen’s current focus is in the areas of business process reengineering, business and process architecture, and IT strategy.

Shirleen’s rich project experience in both the private and public sectors has allowed her to thoroughly examine clients’ business delivery processes and IT environments by identifying their strengths, weaknesses and threats to provide pragmatic solution options. As a result, clients have benefitted from Shirleen’s experience and knowledge to run, grow and transform their business environments in accordance with their business imperatives. Shirleen’s sound experience can be leveraged equally in the business and IT domains.

09

MIDDLE EAST & AFRICA

·

ALGERIA ANGOLA BOTSWANA GHANA KENYA MOROCCO NAMIBIA NIGERIA SAUDI ARABIA SOUTH AFRICA TANZANIA UGANDA UNITED ARAB EMIRATES

·

·

· ·

· ·

ASIA

·

CHINA HONG KONG INDIA INDONESIA JAPAN KOREA MALAYSIA NEW ZEALAND PHILIPPINES SINGAPORE TAIWAN THAILAND VIETNAM

·

·

·

·

· ·

AUSTRALIA

EUROPE

AUSTRALIAN CAPITAL TERRITORY NEW SOUTH WALES QUEENSLAND SOUTH AUSTRALIA VICTORIA WESTERN AUSTRALIA

BELGIUM CZECH REPUBLIC FRANCE GERMANY HUNGARY ITALY LUXEMBOURG NETHERLANDS SPAIN SWITZERLAND UNITED KINGDOM

·

·

For contact details in your region please visit www.dimensiondata.com/globalpresence

·

·

·

·

·

·

AMERICAS

·

·

BRAZIL CANADA CHILE MEXICO UNITED STATES

·