Business Process Reengineering and Role of Information Technology

Business Process Reengineering and Role of Information Technology

DOCUMENTING BUSINESS PROCESS AND REENGINEERING

Today's environment is characterized by increasing levels of competition. Enterprises wanting to increase their market share or obtain profits must adapt to changes in the environment. Consequently, many changes in business methods are beginning to appear. One of them is BUSINESS PROCESS REENGINEERING (BPR), defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary/modern measures of performance. Among the potential/possible enablers of BPR is information technology (IT). IT makes it possible to obtain improvements in BPR. Enterprises can make their tasks easier, redesign their organization, change the way they work, and achieve spectacular improvement using, among other enablers, IT.

Market competition is forcing firms to reconsider how they are organized to compete. As a basis for change, they are exploring a variety of concepts, including Time-based Competition, Quality Function Deployment, Activity-Based Costing, Quality Circles, Continuous Improvement, Process Innovation, and Business Process Re-Engineering. Business process re-engineering is very much in the "guild" mold of application; management consultants are the "masters" and they impart their knowledge through "apprenticeship" to other consultants. The knowledge of business process re-engineering has yet to be formalized and reduced to engineering practice.

Information technology (IT) has historically played an important role in the reengineering concept. It is considered by some as a major enabler for new forms of working and collaborating within an organization and across organizational borders. Early BPR literature identified several so called disruptive technologies that were supposed to challenge traditional wisdom about how work should be performed.

·         Shared databases, making information available at many places

·         Expert systems, allowing generalists/simple users to perform specialist/complex  tasks

·         Telecommunication networks, allowing organizations to be centralized and decentralized at the same time

·         Decision-support tools, allowing decision-making to be a part of everybody's job

·         Wireless data communication and portable computers, allowing field personnel to work office independent and perform the entire task from any where. Data will be available.

·         Interactive videodisk/video conferencing, to get in immediate contact with potential/possible buyers

·         Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found our selves.

·         High performance computing, allowing on-the-fly planning and envisioning/be skilled/ be prepared imaginary.

Business Process Reengineering (BPR) calls for a radical/fundamental redesign and systematic overhauling of strategic/planned systems and processes in an organization. In the technology-centric business environment of today, more and more organizations are using Information Technology (IT) tools in their mainstream/conventional organizational processes.

RELATIONSHIP BETWEEN IT & BPR

The term ‘‘reengineering’’ first appeared in the Information technology (IT) field and has evolved/developed into a broader change process. The aim of this radical/basic improvement approach is quick and substantial/considerable gains/progress in organizational performance by redesigning the core business process. The motivation was usually the realization that there was a need to speed up the process, reduce needed resources, improve productivity and efficiency, and improve competitiveness

IT applications that have stimulated increasingly complex organizational change. Information technology has been used to break down communication barriers between corporate functions, to empower line workers and to fuel process reengineering. In most cases, IT has been used to expedite/speedup/accelerate office work rather than to transform it. Top executives consider IT an effective source of competitive advantage.

Working together, BPR and IT have the potential to create more flexible, team-oriented, coordinative, and communication-based work capability. IT is more than a collection of tools for automating or mechanizing processes. It can fundamentally reshape the way business is done and enable the process design.

Managers and employees from various departments are designing and controlling complex business information systems. IT capabilities involve improving information access and coordination across organizational units. It is so powerful that it can actually create new process design options, rather than simply support it. It is the need of the time that to be successful in the digital age, companies need to develop a new digital infrastructure similar to the human nervous system. This new digital system enables companies to run smoothly and efficiently, makes them respond quickly to emergencies and opportunities, provides a mean for quickly getting valuable information to the people in the company who need it.

What is the relation between BPR & Information Technology? It has been argued that innovative uses of IT would inevitably/certainly lead many firms to develop new, coordination- intensive structures, enabling them to coordinate their activities in ways that were not possible before. Such coordination-intensive structures may lead to strategic advantages.

IT roles can be categorized into three phases: before the process is designed, while the process design is underway, and after the design is complete.

BPR is a strategic action and requires a clear understanding of customers, market, industry and competitive directions. Furthermore, like any other strategic action, it requires consistency between the company’s business strategy and vision. Defining business strategy and developing a strategic vision requires understanding the company’s strengths and weaknesses, and the market structure and opportunities.

Ø  Developing a strategic vision.

Ø  Identifying the customer’s objectives.

Ø  Establishing goals/targets related to market share, costs, revenue enhancement, or profit margins.

Ø  Assessing the potential for reengineering.

Ø  Defining boundaries and scope of the appropriate process.

Ø  Keeping management committed.

BPR The Current focus in IT

Apart from the usual ways of managing a process in any Business Information System, it is necessary to enhance the value of the process and also the methods used in improving the process. Some of the concepts of information management for effective information systems are the traditional concept of database, the emerging concepts of data mining and data warehousing.

Concept of Database

Database is a data structure used to store organized information. A database is typically made up of many linked tables of rows and columns. For example, a company might use a database to store information about their products, their employees, and financial information. Databases are now also used in nearly all ecommerce sites to store product inventory and customer information. Database software, such as Microsoft Access, FileMaker Pro, and MySQL is designed to help companies and individuals organize large amounts of information in a way where the data can be easily searched, sorted, and updated.

Data Mining:

Data mining is primarily used as a part of information system today, by companies with strong consumer focus retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among “internal” factors such as price, product positioning, or staff skills, and “external” factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to “drill down” into summary information to view detail transactional data. With data mining, a retailer could use point of sale records of customer purchases to send targeted promotions based on an individual’s purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments.

Data Warehousing

A data warehouse is a copy of transaction data specifically structured for querying and reporting. The main output from data warehouse systems are either tabular listings (queries) with minimal formatting or highly formatted “formal” reports on business activities. This becomes a convenient way to handle the information being generated by various processes. Data warehouse is an archive of information collected from wide multiple sources, stored under a unified scheme, at a single site. This data is stored for a long time permitting the user an access to archived data for years. The data stored and the subsequent report generated out of a querying process enables decision making quickly. This concept is useful for big companies having plenty of data on their business processes. Big companies have bigger problems and complex problems. Decision makers require access to information from all sources. Setting up queries on individual processes may be tedious and inefficient. Data warehouse may be considered under such situations.

STRATEGIC USES OF IT AND CRITICALITY OF IT

Companies may use information systems strategically, or may use them in defensive or controlled ways. More and more businesses are beginning to use information systems strategically for competitive advantage.  The speed, information processing capabilities, and connectivity of computers and Internet technologies can substantially increase the efficiency of business processes, as well as communications and collaboration among the people responsible for their operation and management.

IT can also be used in one of the most important area of knowledge management. Knowledge management has become one of the major strategic uses of information technology. Many companies are building knowledge management systems (KMS) to manage organizational learning and business know-how. The goal of KMS is to help knowledge workers create, organize, and make available important business knowledge, wherever and whenever it’s needed in an organization. This includes processes, procedures, patterns, reference works, formulas, “best practices,” forecasts, and fixes. Internet and Intranet web sites, groupware, data mining, knowledge bases, discussion forums, and videoconferencing are some of the key information technologies for gathering, storing, and distributing this knowledge.

For any business process the criticality of Information Technology has to be analysed. Information systems can be used in business process reengineering when large software systems grow old, when there are limitations in construction tools, when there are millions of lines of code are to be maintained etc.

IT ENABLERS OF BPR

Over the decades it has become evident that one of the most important ways to facilitate effective organization redesign through process engineering in organizations is through the use of information technology (IT) as an enabler of change. In fact, some have been willing to go beyond that by saying that IT is not only a key enabler of change, but also an initiator and a facilitator.

However, while IT played a significant role in changes in the nature of work responsibilities in organizations, the results achieved over the years appear to be more often than not to be slightly incremental and linear in nature. In other words the momentum of traditional business practices developed over the years overshadowed any ability of technology to shift work methods in a different direction or onto another plane. While information technology did indeed change work methods in terms of its nature, quality, speed and location that led to a reduced need for human labour, multi decade lags between adoption and significant redesign existed.

FUTURE ROLE OF IT IN BPR

It is not possible to reengineer without IT support. IT is not only an enabler for reengineering it has also become an essential and integral part of all reengineering efforts. In the implementation of reengineering IT is crucial and it provides the skills and tools that are needed to effectively reengineer.

1.      IT provides project management skills that are important in the successful implementation of reengineering as a project.

2.      In the design phase of implementation of reengineering the capabilities of IT can be used to simulate a model of the design and there by validate the new design.

3.      The disruptive power of IT helps in the design phase of implementation of reengineering. The disruptive power helps organizations to break all the rules and think inductively about the business that they are in to gain competitive advantage.

4.      If not used properly IT can become an inhibitor of reengineering if the organization’s IT Infrastructure capabilities are inadequate or inflexible.

5.      IT capabilities of the organization should not directly influence the IT solutions that are needed for the company.

6.      IT is an indispensable tool in implementation of reengineering in the way that IT supports redesigned business process and facilitates cross-functional workflow.