Chapter 3

1. Chapter 3 Things to ponder: In today’s information age, our business processes can become dependent on the information systems that support them than they are on the people who operate them – (Harrington, 1997) Business Process Improvement (part 1)

2. Learning outcomes • Describe six phases in BPI • Describe the role of BPI team

3. Introduction • There are 6 phases in BPI administrative • Phase 1- organization: organizing for business improvement • Phase 2- Documentation: selecting a documentation approach • Phase 3- Analysis: Defining improvement opportunity • Phase 4- Design: Designing the new administrative business process • Phase 5- Implementation: Installing the future-state solution • Phase 6- Management: Managing the administrative business process organization for continuous improvement

4. Overview • Administrative business process • A series of successive activities which administrative tasks are performed • Define the enablers and techniques employed • Define the manners and sequence • Define the process • Enabler • A technical or facility that makes it possible to perform a task, activity, or process. • Example of technical enabler: PC, photocopy machine. Networking etc. • Example of organizational enabler: enhancement, self-management, communication etc.

5. Overview • The organization’s business processes is divided into 2 types: • Product Business Process Improvement (PBPI) – producing products and services ex. manufacturing • Administrative Business Process Improvement (ABPI) – all support processes such order, account, etc. • BPI- a methodology that is designed to provide step-function improvements in administrative and support processes using approaches such as FAST, process bench marking, process redesign and process reengineering.

6. Overview-FAST • FAST • Fast Analysis Solution Technique • One of common improvement tools that is commonly used in the industries • A breakthrough approach that focuses on a single process for a one-two day meeting to define how the BPI group can improve the process over 90 days. • Before end of the meeting, normally the result will be informed either to proceed with proposed improvement or to reject it. • Can be applied to any level, from major process down to activity level. • The approach is designed to identify root causes of problems and/or no-value added activities designed into a present process. • Typical improvement: reduce cost, cycle time, and error rates between 5-15% in 3 moths

7. Overview- FAST • FAST has 8 phases: • A problem or process is identified • A high level sponsor is identified • The FAST team is assigned, a set of objectives is prepared and approved by the sponsor • The FAST team meet one or two days to develop high level process flow chart and define actions to be taken to improve process performance. All recommendation must be within the span of control and able to be completed within a 3 months time period. All items are submitted to the sponsor. • A FAST team must agree to be responsible for implementing each recommendation that will be submitted to the sponsor. • At the end of the meeting, The FAST team has to present their findings to the sponsor • Gain the sponsor approval • Implement solution in three months time.

8. Phase 1- Organization • Example of BPI Team structure Contact group 2.1 Contact group 2.2 Coordinate and manage the administrative BPI activities Assign to improve specific process Review the solution, provide supports Such as documentation, analysis etc And also technical advice

9. Phase 1- Organization • PMT • Responsible for results’ quality and project completion • Normally, PMT is represented by members’ of management • Choosing the project’s objectives • Supervising the realization of the objectives • Managing cost and time of the project • Incorporate project into the organization and its consequences

10. Phase 1- Organization • Among other tasks for PMT • Organize the project • Planning • Approve final proposal • Distributing information • Installing and managing PIT and contact groups • Monitoring • Managing staff availability • Determining budgets and audits • Approving the best solution • Tuning the project

11. Phase 1- Organization • Project leader • Sometimes called process owner • Manage the PIT • The author of project proposal • Delegates responsibilities among PIT • Should contribute expertise • Among the tasks • Provide daily direction • Monitoring • Controlling the budget • Monitoring the use of resources • Coordinate with other PIT • Giving instruction, guiding and advising • Informing and advising contact group • Reporting to PMT

12. Phase 1- Organization • PIT • Depends on size of organization and time • If involve a big project, the PIT will be divided into sub-PITs • May come from administrative department • Among the tasks • Charting and document the progress and results according to standards • Performing the analysis • Drafting proposal

13. Phase 1- Organization • Contact group • Staff from department that involved with the process to be defined and analyzed • Usually manager of these departments • Organize by divisions • The head of the division normally is the contact group leader. • Tasks • Supply information to PIT • Approving documentation of processes • Discussing and commenting on the analysis • Discussing and commenting on the proposal • Regulating the modification

14. Phase 1- Organization • Project plan by PIT • Designing the project proposal • Defining the details of the project • Drawing up a project proposal • Documenting the process • Designing the project organizational change management plan • Analyzing the process • Modifying existing process • Integrating and evaluating process • The proposal should include all activities, time, and budget for each.

15. Phase 1- Organization • Other important tasks • Planning and monitoring techniques • Detailed time plan • Work plan • Financial plan • Organizational change management plan • Monitoring progress and cost

16. Phase 1- Organization • BPI’s 10 fundamental tool • BPI concept • Flowcharting • Interview technique • BPI measurement method (cost, cycle time, etc) • No value added activity elimination method • Simulation modeling • Process and paperwork simplification technique • Organizational change management • Process walk through • Cost and cycle time analysis • BPI’s 10 Sophisticated tools • Quality function deployment (QFD) • Program evaluation and review technique (PERT) charting • Business system planning (BSP) • Process analysis technique (PAT) • Structured analysis/design (SA/SD) • Value analysis control • Information engineering • Enablers identification and application • Comparative analysis • Vision documentation

17. Chapter 3 Things to ponder: In today’s information age, our business processes can become dependent on the information systems that support them than they are on the people who operate them – (Harrington, 1997) Business Process Improvement (part 2)

18. Learning outcomes • To introduce Phase 2- Documentation: selecting a documentation approach • To examine objectives for the documentation • To identify factors to be documented • To identify the level of details of each processes should be described • To introduce Phase 3- Analysis: Defining improvement opportunity

19. Introduction • Definition • A documentation technique • A method which description is given of an information system, processes, or organization • The use of management diagram, process diagram and organizational structure diagram are part of documentation • This process, normally started once you have interviewed the related business processes.

20. Documenting the process • Steps required: • Inventorying the existing documentation • Examining the current procedures • Documenting according to the selected techniques • Giving feedbacks to the involved employees and getting their approval • Recording the process descriptions • Definitively choosing the processes to be analyzed in the next phase • Choosing the final analysis objectives and the analysis techniques • Planning the analysis phase • Reporting to the PMT

21. Documenting the process • Inventorying the existing documentation • All related materials are gathered such as forms, procedures, guidelines, process flow etc. • The gathered materials are used to define the business process involved • The materials will determine all the steps of the processes are observed and programmed

22. Documenting the process • Examining the current procedures • Analysis phase- attention should be paid to the problem areas and related issues • Example- time spent, role, frequency • Examine current procedures -> interviews • Must review the entire process from beginning to end • The information gathered at this time is an enabler of the observation activity • Identify forms use • Track where the forms come from and where it goes.

23. Documenting the process • Documenting according to the selected techniques • If documentation is not done during the interview, it should take place during an observation • Make sure the documentation of all processes are done in the same manner and appropriate detail • Degree of details are differ for each process and group-> depends on objectives • Documents should be approved, to check standard, technique and quality of work

24. Documenting the process • Giving feedbacks to the involved employees and getting their approval • Should get approval from the business owners or person in charged • Then further approval is obtained from the departmental manager • The documentation may also need to be presented to the contact group • The documentation is modified if required

25. Documenting the process • Recording the process descriptions • A well-reviewed process documentation will be given a document number • Divided according to the process or department

26. Documenting the process • Definitively choosing the processes to be analyzed in the next phase • Problems are identified at this phase • The phase to design the process are further defined • Details are included in a project proposal • Among the criteria used: • The frequency with which the processes are performed • The departments that are involved in the process • The financial significance of the process • The desired effectiveness of the information management system • The required effectiveness of the administrative product • The cost of the process • Indicators • If damaged risk involved in the process • The speed with which analysis can take place • The expected possibility for improving the process

27. Documenting the process • Choosing the final analysis objectives and the analysis techniques • Depends on the nature of the problems • Will be describe further in the next phase- analysis • Planning the analysis phase • After all the previous steps done, then the analysis plan can be drafted • Reporting to the PMT • Closed with a report to the PMT • Usually the reports are done in phases • If no further analysis required, reporting will begins after step 5. • Sometimes, interim report is submitted after step 3, to cater any important changes.

28. Documenting the process • Objectives • To provide insight into administrative business processes • To obtain good understanding on how the business processes are organized, interrelationship, problems etc. • Understanding of concepts such as procedures, cycle times, deadlines, form required, frequency, and financial interest is important • To provide a basis for the analysis and evaluation • Determined the related factors that contribute problems and issues to the business process • Transfer of knowledge • Accessible for consultation and reference -

29. Basis for analysis & evaluation • Adaptability- a measurement to handle changes in customer need and expectation • Effectiveness – a degree to which an item provides the right output at the right place, time and price. • Refer as quality • Defined by customers • Efficiency – a measurement of how well a process uses its resources • People, time, space, equipment • Relate to productivity • Timeliness- measure how long an output is left unused/ how long next activity is held

30. Basis for analysis & evaluation • Goals for each categories • The effectiveness of information management • The effectiveness and efficiency of the data files • The analysis of timeliness and cycle time • The relationship of functions and tasks to the administrative organization • The effectiveness and efficiency of the routing of the administrative business process • The accuracy, thoroughness and reliability of the data processing • The productivity of the administrative business process • The use of opportunities for standardization • Duplicates and unnecessary procedures • Adaptability of the administrative business process • The effectiveness and suitability of technological enablers

31. Chapter 3 Things to ponder: In today’s information age, our business processes can become dependent on the information systems that support them than they are on the people who operate them – (Harrington, 1997) Business Process Improvement (part 3- Analysis)

32. Learning outcomes • To introduce Phase 3- Analysis: Defining Improvement Opportunities • To identify the steps required at this phase • To identify cause of flaws in administrative business processes • To identify the effectiveness of information management and data files • To understand the analysis of on-time completion and cycle time • To determine and evaluating internal control

33. Introduction • The analysis requires 3 steps • Performing the analysis • Discussing the results of the analysis with the involved members • Reporting to PMT • The role in analysis is depending on the analysis direction and the involvement of related members. • The report should be discussed among the admin staff and managers to includes comments and draw conclusion. • A definitive report will be submitted to PMT and normally a propose business process will be defined to assist decision making.

34. Introduction • An understanding of one or more factors below should be obtained during this phase: • The effectiveness of information management • The effectiveness and efficiency of the data files • The cycle time and timeliness of the business process completion • The manner of the business activities • The effectiveness and efficiency of the business process routing • The related internal control • The productivity of the business process • The opportunity for standardizing the operations • The existence of duplicates • The effectiveness and efficiency of applied enablers

35. Introduction • Analysis objectives should be determined • Every analysis should begin with the collection of basic information. • The collection of supplementary materials should also started. • Then analysis can perform.

36. The cause of flaws • Flaws in the business processes caused: • Less effective • Less efficient • Job dissatisfaction • A number of causes such as: • The requirement placed on the administrative organization change with the passage of time • New government regulation • Market demand • Internal factors ie. Cost control • Critical success factors • Caused changes in the information systems- process, data set and information flows

37. The cause of flaws • Automating office procedures and equipment or transaction processing systems • The adjustments due to new development may affect efficiency and effectiveness • Autonomous growth symptoms • The inclination to further improve the process would always be there • Trigger the development of new information system rather than maintaining existing system. • Replication of similar activities • Similar activities are completed in a number of location , cause the creation of similar data set

38. How do you have a problem? • Flaws in administrative processes can become evidence in many different way • The creation of backlog- late delivery, loss clients, frequency use of backup procedures, etc. • Production of similar overviews summarizing similar procedures in different locations. • Existence information systems produce insufficient operation information • Obsolete information is not remove from the database- cause the need for bigger storage, longer processing time, complexity. • Illogical quantitative relationships. Ex. the number of business processes with the number of staff in-charged

39. The effectiveness of information management • Administrative business processes • Processes that refined data • Critical for the results to be efficiently managed and effectively used • The produce information is the main tool for completion of other functions in an organization ex. decision making • Important questions during the analysis stage: • Are the data supplied about all the relevant units, subjects and items? • Are the supplied data complete and thoroughly sufficient? • Are the data sufficiently critical and certain standard applied? • Are enough data about the different phases of the business process (cost, time, requirements, etc.) available? • Are all the important aspects (location, source, deadlines, capacity, etc) recorded in the system? • Are the data sufficiently reliable? • Is the speed of data processing and supply adequate?

40. The effectiveness of information management • Different organization may have different situation and ways of handling flaws in their administrative business processes • Environment • Working culture • Standard operating procedures • Internal factors • Information systems • Etc.

41. The effectiveness & efficiency (E&E) of data files • Involved creating, updating and using files • To evaluate the E&E, advisable to make a distinction between • Files stored in information systems • Manual files • Document sets for storage • Evaluation can be performed in 2 ways at different angles

42. The effectiveness & efficiency (E&E) of data files a. Evaluation of the E&E of the design of individual files • 3 forms • The evaluation of lay out and print out of the documents • The evaluation of how the file is organized (ie. Name, code number, date etc.) • Problem: many files are not arranged properly that cause cost for storing items, looking up items, updating and thinning out the file- example of no value added activities. • Assessment of the physical capacity of the file • Any changes to the physical files

43. The effectiveness & efficiency (E&E) of data files • The evaluation of the efficiency of the organization of files used with one or more administrative business process • Identify unnecessary duplication in data files • Includes file storing in computer applications • To consider file locations

44. The analysis of on-time completion and cycle time • Divide into 2 groups • Techniques for quantifying the on-time completion of an administrative business process • Techniques for analyzing the cycle time • This analysis should be performed when there is an evidence of processes not being completed on time- backlog • Need to analyze the routing of the process ex. The submission of form, where it goes, to whom, how long it takes, what is estimate time for approval. • The analysis should begin with on time completion of the process- if hardly no delay, there is no need to expand to cycle time analysis.

45. The analysis of on-time completion and cycle time • Cause for delay: • Many department involved with the process • Only a few departments involved but required documents frequently transport • Only one or a few departments involved with the execution of the process • Analysis of the on-time completion of processes • The moment the process is started • The moment the process is completed • Activities involved should be determined and recorded • Methods: random survey, observation of the process • Who should involve? • The individuals involved in administrative business process • Appointed observer • Other staff who may or may not involved in the process

46. Techniques for analyzing Cycle time • Cycle time analysis involves with the quantification of the on-time completion of processes. • Focus on detailed study of the areas where delays originated • To define the routing of the workflow • Begins with drawing activity flowchart that can illustrate the routing of the process’ • Identify measurement points. Example • Data from sending and receiving external documents • Initializing data • Data from records • Receipt and mailing data

47. Determine/evaluating the accuracy and thoroughness of data processing operations • Involve internal control- determine the accuracy & thoroughness of data processing operations • To evaluate whether the business process are organized accurately, completely represents the issues with which information is concerned • To evaluate the internal control- must have good understanding of the organization of the administration business process • How to evaluate the internal control? • Formulate the internal control system • Evaluate the internal control system • Evaluate the complete internal control system for administrative business processes • Formulate the basic principles for changing the process and/or the system

48. The E&E of applied enabler • Examples of enablers • Documents and forms • Computers • Networks • Faxes • Voice mails • E-Mail • The analysis of enablers • Reorganizing the documents and forms- ie purpose, number of documents produced, time , cost, standards. • Evaluating the possibilities for automating the process- ie. Calculation, sorting, document transfer, storing etc. • Optimizing the degree use of administrative technical enablers – ie. Location, purpose, job position, possibility, etc.

49. Summary • How to perform analysis phase? • What are the consideration need to put into considerations? • The cause of flaws in business processes • How to detect the flaws? • How the business processes can be improved further?

50. Test your understanding • What are the factors that should be obtained from the analysis phase? • What are the cause and flaws that commonly happen in administrative business processes?