TECHNICAL | FLIS
The value of PI
The examiner for final level Information Strategy
A significant number of candidates in the May 2002 FLIS examination were unsure
of the difference between business process re-engineering and process innovation
usiness process re-engineering and
process innovation were the subjects
of an examination question in May
2002. Judging from the answers, there
appeared to be some confusion among the
candidates between the two terms. This
article attempts to provide a basic explanation of the terms to help future candidates if
this area is examined again.
Business process re-engineering (BPR) is,
according to Michael Hammer and James
Champy, 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.
In other words, BPR focuses on amending
existing processes, while process innovation
(PI) attempts to implement new processes
into an organisation. In many ways, PI is
more radical than BPR, because it is changing the overall structure of an organisation,
whereas BPR is streamlining processes that
are already in place. A closer look at the
stages of both BPR and PI will help to make
this distinction.
Five stages are normally recognised in any
BPR project:
l Develop the business vision and process
objectives. State which improvements
are expected from processes based on
some overall business vision of total quality management.
l Identify the processes to be redesigned.
Most firms tend to focus on the more
important processes, although significant
improvements may still be obtained by
redesigning inefficient processes in any
part of the organisation.
l Understand and measure the existing
processes so that a baseline against which
to measure improvement is set.
l Identify “IT levers” that can be used to
apply change.
l Design and build a prototype to show
which changes are possible, and involve
customers before implementing any
revised system.
The main point is that BPR is focusing on
what’s already there and changing those
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CIMA Insider June 2003
processes, perhaps making it less radical
than its name suggests.
In contrast, PI starts by looking for
business areas where change can be applied.
The five stages of PI outlined by Thomas
Davenport are:
l Identify business areas or processes that
are suitable for innovation.
l Identify tools that can be used to innovate
– that is, the “change levers”, which may
include IT.
l Develop statements of purpose for the
process – that is, state what the process
will do, but not yet how that objective will
be achieved.
l Understand existing processes and prepare for new systems and processes. If
existing processes are to be replaced, then
these must be understood to ensure that
no critical functionality is lost.
l Design and prototype new processes as in
BPR to ensure that those processes work
and to get the users involved.
PI attempts to start from a clean sheet, or
zero base in budgeting terms, to allow more
appropriate processes to be implemented if
they are required.
To illustrate the difference between the
two approaches, consider a car manufacturing process. Cars are assembled by passing
them along a conveyor belt and adding parts
to each one in a predetermined order to
arrive at the finished product. This process
can be improved in terms of efficiency by
making robots do some of the repetitive and
less skilled operations. In this way the process
is being redesigned to include an enhanced
IT element to make it more efficient and less
prone to errors. In other words, BPR is being
used to improve the existing process.
But the process itself could be redesigned
from scratch. For example, the car could be
manufactured by giving all the parts to a
team of people and asking them to work
together to make it. This will mean creating
completely new processes, which may or
may not be more efficient than those of the
old system. But the “process vision” of providing greater employee satisfaction from
the production process itself may override
the efficiency issues. In this example, PI
results in entirely new process to build the
car, even if we haven’t defined them – it’s up
to the workers to decide.
Both BPR and PI have a sequence of steps
to follow and both try to make business
processes more efficient. The difference is
that BPR works on existing processes, while
PI attempts to implement completely new
processes. This is the most important distinction to make when the two systems are
being compared. n