Effectiveness Efficiency and BPR How Do You Know If you make changes to a business process how do you know if the change actually did what you wanted it to do METRICS If you can t measure it you can t manage it 2 Measuring Success Key performance indicator KPI measures that are tied to business drivers Metrics are detailed measures that feed KPIs Performance metrics fall into the nebulous area of business intelligence that is neither technology nor business centered but requires input from both IT and business professionals 3 Efficiency and Effectiveness Efficiency metric measures the performance of the system itself including items like throughput speed and availability Doing things right optimize process Effectiveness metric measures the impact of business processes and activities including customer satisfaction conversion rates and sell through increases Doing the right things achieve organization goals 4 Benchmarking Baselining Metrics Regardless of what is measured how it is measured and whether it is for the sake of efficiency or effectiveness there must be benchmarks baseline values the system seeks to attain Benchmarking a process of continuously measuring system results comparing those results to optimal system performance benchmark values and identifying steps and procedures to improve system performance 5 It is Often Difficult to Determine What to Measure To determine how effective or efficient a business process is you need to measure it But what is it Choose the wrong metric and you will draw incorrect conclusions Ex cost of buying a computer vs cost of owning a computer TCO 6 Metric Process Whether you are doing BPR or just a simple process improvement you need to know if your change had a positive impact 1 Plan the change 2 Determine the appropriate metric 3 Take a benchmark before the change 4 Make the change 5 Measure again and compare 7 Issues Taking a benchmark can be difficult or confusing How do you measure customer satisfaction Developing an appropriate metric is also difficult The process you are measuring may be variable or have simple complex parts 8 The Value of Transactional and Analytical Information Transactional information encompasses all of the information contained within a single business process or unit of work and its primary purpose is to support the performing of daily operational tasks Typical order entry systems by far the most common Analytical information encompasses all organizational information and its primary purpose is to support the performing of managerial analysis tasks Analysis of transactional info to help make decisions 9 The Value of Timely Information Timeliness is an aspect of information that depends on the situation Real time information immediate up to date information Real time system provides real time information in response to query requests Cost Trade off real time is expensive Do you really need real time Yes banks stock market war No manufacturing retail 10 The Value of Quality Information Low quality information example 11 Understanding the Costs of Poor Information The four primary sources of low quality information include 1 Online customers intentionally enter inaccurate information to 2 protect their privacy Information from different systems have different entry standards and formats result of silo operation 3 Operators enter abbreviated or erroneous information by accident 4 Third party and external information contains inconsistencies or to save time inaccuracies and errors Dr Weiss Fifth Source of Low Quality Data Data gatherers are rarely the data users and thus have low buy in to quality 12 Fixing Bad Data It is cheaper and easier and more efficient to capture and correct bad data at the point where it is collected and entered into the system Once bad data is in a system it travels throughout the system s at the speed of light Correcting bad data at entry often requires major changes in process e g using labels and bar code scanners instead of typing in data 13 Business Process Reengineering Business process a standardized set of activities that accomplish a specific task such as processing a customer s order or shipping a package Business process reengineering BPR the analysis and redesign of workflow within and between enterprises The purpose of BPR is to make all business processes Typically diagram As IS and To Be and design how to best in class do this 14 Business Process Reengineering Reengineering the Corporation book written by Michael Hammer and James Champy that recommends seven principles for BPR 15 Finding Opportunity Using BPR A company can improve the way it travels the road by moving from foot to horse and then horse to car BPR looks at taking a different path such as an airplane which ignores the road completely think out of the box 16 Finding Opportunity Using BPR Types of change an organization can achieve along with the magnitudes of change and the potential business benefit 17 BPR Also has a Dark Side BPR is still done but usually not called BPR anymore Why In the 90 s while BPR was a hot idea all too often the BPR process involved laying off many people outcome of the revolutionary redesign process After awhile many companies would initiate a BPR process as a secret code for laying off people The concepts are still good and valid but people have come up with many different names and variations of this to avoid the stigma of BPR 18
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