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 whats already there and changing those 26 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 havent defined them its 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