11 Business Process Reengineering & Reverse Engineering

Dr. Ashish Saihjpal

1.  Learning Outcome:

After completing this module the students will be able to:

• Understand the basic concept of Business Process Reengineering (BPR).
• Understand the need of Reengineering and its usefulness to organizations.
• The underlying objectives in BPR and the process involved.
• Understand the fundamentals and need of Reverse Engineering.
• Overview of successful implementation of BPR and reverse engineering cases in India

2. Introduction

In today’s dynamic business environment, price cuts, improved quality standards and the promptness in delivery of products and services by the firms has lead the competition to intensify in the industry. The firms need to work on new product developments, up-gradation of existing products, maintenance of quality standards through technological innovations and to adopt industry’s best practices to maintain a competitive edge over its rivals. All these changes necessitate the need for organizational re-structuring, where the entire processes and organizational structure requires a change.

Companies cannot just sustain their competitive position by doing business in a single product or safeguarding it supplies by manufacturing the products in advance so as to meet the future anticipated demand. Today’s aspiring customers demand products that are specifically tailored as per their needs and are delivered at the time when they actually need them. Responding to such needs of the customer requires a high level of coordination and free flow of information with the functional areas of organization and its business partners. Business Process Reengineering (BPR) suggests organizations to restructure the complete process from the very inception and re-organize the structure rather than having small improvements.

Business Process Reengineering involves bringing in the changes in the processes across various functional departments of the organizations. The changes may be incorporated in the technical, financial, operational, business, personnel and research departments of the organization.

For the first time, the re-engineering concept was defined by M. Hammer and J.A. Champy in 1990s as a “fundamental rethinking and radical redesign of business processes to generate dramatic improvements in critical performance measures – such as cost, quality, service and speed”.

In the context of information systems (IS), the main aim of aligning IS with business goals is to produce best possible results using processes that are central to the organization while eliminating those that are not central.

2.1 Business Process Re-engineering and its focus areas for implementation

While announcing their business plan at British Telecom, all competitors were looking forward to know about their new Chief Executive Officer (CEO). To add to the curiosity and surprise of all, the new CEO, was the customer. The company now decided to align its business operations the way its customers wanted it to be. The strategic goal was to implement BPR to provide customer oriented services. BPR is a technique used to implement this type of organizational structure.

While implementing BPR the organization essentially needs to look at the following action areas as highlighted in Figure 1.

 Mitigation with Information Technology – This enables employees, vendors, partners, and suppliers to easily operate as a team using internets/extranets, workflow and groupware applications despite being remotely located. It not only easy out flow of information but also the movement of goods.

• empowering personnel – This implies enabling people to do their work using the right information, tools, training and the authority they need.
• Information repository – Integration with databases and data repositories helps in analysis and report generation for business critical information.
• Facilitating with right tools – Automation of the process helps business processes to be more streamlined and focus on analysis on business plans in a better way.
• Training the staff – Information systems not only fulfill the business needs of the organizational staff but also provide unique training methods like simulations and virtual class rooms.
• Removing inessential activities – The emphasis is laid on tasks that yield timely output rather than investment of time and effort in clerical activities.
• Paperless work functions – The aim is to have paperless work functions through implementation of information systems as data when in electronic form is easier to store, maintain and share rather than doing the same manually.
• Maintenance of records – Digitalization of data helps transmission, maintenance, analysis and display of easier and reduces the hassle of record keeping.

2.2 Business Process Reengineering – Objectives & Components

The basic objectives of BPR are shown in Figure 2 and explained as under:

• Removing Redundancy – As time passes, organizations tend to add newer processes, without deleting the old ones. As a result the organizations become process oriented rather than result oriented. BPR aims at eliminating redundant processes by investigating the relevance of the process to the core activities of the organization.
• Customer Centricity – The focus is to design processes that are customer centric so as to add value for the customer and enhance their level of satisfaction.
• Reducing Cycle Time – The steps involved in an activity or a process are reduced with BPR. This has a positive effect on the process time and enhances customer value.

Customer Value = (Quality/Cost) + (Service/Time)

• Flexibility – Flexibility implies that the organization needs to be on one hand customer focused so as to enables them to spot weaknesses and simultaneously allow them to adapt to new requirements of the market.

• innovation – BPR encourages innovative leadership through creative changes which, provides a competitive advantage to the organization.
• Quality assurance – The level of quality is always controlled and monitored by the processes. BRP ensures the key performance indicators are met so that quality standards are well assured in the organization.

The important pillars that build the BPR framework are redesign, retooling and re-orchestrating as shown in Figure 3. It is necessary for an organization to look through these areas to focus on the business areas.

3. Process involved in Business Process Re-engineering

Any business process is a transition between three steps – input, processing and output (Refer Figure 4). The BPR concept lays its emphasis in the processing phase to make the activity more result oriented thereby reducing any activity which is unnecessary and time consuming.

The BPR Model can be classified into the following stages:

• The Envision stage: This stage reviews the current strategy in use and makes suggestive improvements and list areas of potential opportunities.
• The Initiation stage: In this stage each project team is assigned result oriented activities with an agreed timeframe.
• The Diagnosis stage: The diagnosis stage comprises of essential documentation needed for processing activities and roles & responsibilities.
• The Redesign stage: In the redesign stage innovative alternatives for design are formulated.
• The Reconstruction stage: This stage requires the amalgamation of all new processes and people who are associated with these processes.
• The Evaluation stage: The last stage consists of monitoring of processes to ensure the business objectives are met and resources are put to best use.

The following table summarizes the various changes that the organization undergoes when applying BPR:

We  have  understood  the  objectives,  components  and  processes  of  BPR.  However,  the  real  question  for  an organization is, “to reengineer or not to reengineer?” PricewaterhouseCoopers’ matrix is useful to select process that needs to undergo reengineering (Dunn 2007).

Referring to the Figure 5, the Strategic – Non-Strategic cells on x-axis describes how critical the proposed processes are for the firm in achieving long term competitive advantage. While the second dimension, Competitive – Non-Competitive cells as labeled on y-axis refers to the comparison as to how much the processes under consideration for reengineering are performing when compared to the industry. This gives a trade-off between the cost of a process and response time and yields four outcomes is illustrated in the figure 5.

4. Implementation of Business Process Reengineering: Success Story of SBI State Bank of India, World’s Largest Centralized Core Processing Implementation

State Bank of India is a banking behemoth, with nearly 18,354 branches in India and another 191 spread overseas across 36 countries of the world. It is not only the oldest and largest public sector bank in India, but the second largest in the world in terms of number of branches. SBI began the world’s largest core banking system implementation ever undertaken in the banking industry to compete with its private sector counterparts. Core banking solution offers a comprehensive, integrated solution catering to bank’s needs and multiple business segments.

Mitigating the process with Information Technology has changed the organizational climate in terms of operational activities and payments in the banking industry. Through the core banking system, the banks can substantially reduce operational costs and build customer relationship. It enables banks to keep pace with industry needs and offer the new product portfolio to a customer faster. It further helps manage customer profiles as well as high transaction volumes.

TCS BaNCS – the Core Banking System created by Tata Consultancy Services is one of the largest core banking deployments ever undertaken. This project is an exclusive set up for the State Bank of India. While initially SBI intended to convert only 3,300 of its branches, the successful implementation later scaled to include all of the more than 14,600 SBI and related bank branches.

The BPR implementation project at SBI was build around the four pillars as shown in Figure 6.

State Bank of India’s objectives for its project to modernize core systems included:

• Both banked and unbanked areas to receive new product capabilities.
• Process Unification to reduce operational efforts.
• Enhanced customer service.
• Single window view of necessary customer information.
• Affiliate Banks to be merged into SBI with ease.
• Product Support for all existing products.
• Improved response time for customers.
• Reduced customer churn.
• Integration and interface with other technologies (Figure 7).

5. Reverse Engineering

Engineering is the application of applied sciences for practical and industry purposes. This process involves the designing, drafting, production and maintenance of a sustainable product or service. Engineering can be classified as forward or reverse engineering. These are discussed below in detail:

• Forward engineering – It is the process which involves moving from high level abstraction to lower level logical design and physical implementation. In simplest words, it is the transformation from a concept model to the physical tangible product.
• Reverse engineering – It refers to deriving knowledge from a man-made product or service and then re-producing it based on the information retrieved. The process involves disassembly of another manufacture’s product and carrying a component analysis in detail. This can be understood from Exhibit 5.

Acquiring a Computer Aided Design (CAD) model from 3-D points by the digital transformation or analysis of a product also refers to reverse analysis. The aim to reverse engineering is to make products that are scalable, interoperable, robust and economically more viable. It leads to a more market driven product which is an improvement in every sense than what was available in the market.

5.1 When does the need for Reverse Engineering arise?

Reverse engineering can be applied to various industries ranging from software, computing, manufacturing, logistics, military equipment, academics and where even building new products seems more economically viable. It is of paramount importance to understand the need for this technique from the point of view of the industry:

• Interoperability – This technique is needed for opening up application programming interfaces (API) to further integrate to another system or design a new system.
• Greater Research & Development – Dismantling a product, studying its prototype and divulging into greater research and development leads to the introduction of this technique.
• Improve documentation shortcomings – Many situations may lead to the need for reverse engineering. For instance, when the documentation such as product manuals, operative guidelines, installation and maintenance and upgrades are not originally available.
• Obsolescence – A product that is no longer scalable and sustainable to operate on newer technology is rendered obsolete. It then requires to be reengineered for improvements and usage.
• Software updates and upgrades – Software’s need upgrades and their newer versions to be installed with ease. In the case this activity becomes cumbersome and time consuming it renders the software’s to get outdated. Reverse Engineering is then needed to estimate the effort required to convert the current “as is” state to a desired “to be” state.
• Academics knowledge– To create newer improved and sustainable designs it is required to reverse engineer products.
• Competitive Edge –Lastly we need reverse engineering, to divulge into greater details about the

5.2 The Benefits of Reverse Engineering

Reverse engineering is the study of the technical aspects concerning the structure, functions and operations. It involves the disassembly of a product followed by a careful analysis to develop a newer, improved one. Reverse engineering is the process of learning the design of an object by studying its implementation. Following are its benefits:

• Understanding – Using models is helpful in studying the product design and application This is analyzed along with the database structure. If a model is not available, reverse engineering enables to construct one, to better understand the scope and capability of a product.
• Negotiation – The selling process tends to highlight only the product capabilities and strengths. However, to be able to understand the critical lacunas and weaknesses, reverse engineering is undertaken. This helps the firm to have a stronger hand in negotiations with the vendors.
• Conversion of Data – It is important to have a complete understanding of the source and target before implementing upgrades and data migration, which is enabled and facilitated by reverse engineering.
• Communication – It helps in establishing a clearer word with the vendor to understand his aspects of product capabilities. The vendor may bring about their own assumptions and architectural features to light while the business needs of the organization may require customized abilities to serve their business needs better.

6. Success Stories of Reverse Engineering in India

Reverse-Engineering your Business: Start at the End

In the book, “Start at the End,” Dave Lavinsky (Exhibit 6) has interestingly detailed out the intelligence behind reverse engineering. The strategy is to first identify the problem as to why reverse engineering is needed. This is followed by a careful scrutiny of available resources at hand and constraints to be kept in mind to achieve the goals. Let us see how the companies like Tata motors and Harman International have adopted reverse engineering to gain a mileage in the industry.

6.1 Innovation at Tata Motors: Five Decades of Engineering and Research

The Engineering Research Centre (ERC) at the Pune campus of Tata Motors is a hub buzzing with intellectual capital of engineering experts and designers. They invest their efforts on nearly 250 variants of vehicles. It is one of the most technical facilities comprising state of the art machinery and is equipped with facilities such as a noise, vibration and harshness (NVH) lab and a crash test lab.

Tracing back to 1977, despite having to invest in all that designing and production, Tata Motors had a license to produce just 50,000 commercial vehicles a year. The cost of trucks was nearly Rs100, 000 and the margin earned on each vehicle was just Rs1,000. Ranging from conveyor belts and cranes to machine tools” has been manufactured under the most economically viable options. If the ERC aimed to produce a gearbox, drawings from the Daimler-Benz era was studied thoroughly. Making Reverse Engineering a habit, a Mercedes-Benz truck gearbox was torn apart and analyzed. Eventually, one of the senior executives had built an ‘import library’ comprising components and parts that had been picked up from various manufacturers in Europe.

Now, engineers customize and create vehicles as per the needs of the market. They interact with truck owners and drivers to find out their need and like their vehicles to be designed. This enabled Tata Motors to manufacture for the Indian market with a customer centric focus.

6.2 Rebirth of Harman

Exhibit 8: Harman Kardon

Image Source:

http://www.gadgetsnow.com/tech-news/How-Indian-engineers-have-transformed-Harman/articleshow/52790931.cms

A lesser known brand in India, Harman International is recognized by the brand- JBL; the audio systems line owning high-end audio equipment brands like Harman Kardon and Mark Levinson. To throw some light on the credibility, ranging from

Disney theme park that use Harman audio systems, to the world’s best performing arts venues like the Lincoln Centre, John F Kennedy Centre have Harman installations. From the massive indoor arenas like the Madison Square Garden to the world’s biggest broadcasting units use it. The prestigious Grammys is with Harman. Interestingly, majority i.e., 80% of the world’s most luxurious cars like the Lexus, BMW, Audi, Daimler, Mercedes, Bentley, Aston Martin, Ferrari, and Porsche have Harman Systems. Thus, reverse engineering has been proved tremendously beneficial for many organizations.

Initially, the big majority of the Indian cars found a Harman system to be quite expensive. It is then that their CEO turned the table round by changing the “cost structure” using India’s software expertise. In his words, “If you challenge Indians and say, here’s the product, take this, reverse engineer it, bring down the cost to a third of what it is, give me the same features but you can take out one or two useless features that cost too much, but give me five extra features that people would like, they will do it,”. Thus, the strategy of reverse engineering has worked wonders for Harman.

It was for the first time that Toyota agreed upon a non Japanese supplier for its inbuilt music systems. Today, the Harman platform is on numerous brands globally, including Fiat Chrysler, General Motors, Volkswagen, Hyundai, Tata Motors and even Harley Davidson.

7. Summary

To survive in a limited market with increasing competition requires incremental changes; to excel takes restructuring. Feasibility of operations is further hampered by limited resources and funds available. Hence, breaking the conventional norms of production and inculcating newer techniques is the need of the hour. In Business Process Reengineering, we start from scratch and rethink the procedure which shall deliver more value to the customer.

Reverse engineering has numerous industry wide applications like manufacturing, industrial design, and jewelry design to name a few. Reverse Engineering enables to create interoperable products as per changing industry needs. It helps to remove obsolesce and redundancy in product functions and re creates them at costs which are sustainable as efficient business case. In the intensely competitive global market, manufacturers are constantly seeking new ways to shorten lead times to market a new product.

• Chaithanya A Krishna, “Business Process Reengineering for Retail Banks, Institute for Development and Research in Banking Technology (IDRBT).
• Chong P. Pete, Chen Ye-Sho, Chen Jason Chou-Hong, IT induction in the food service industry, Louisiana State University, Baton Rouge, Louisiana, USA.
• Raja Vinesh, “Introduction to Reverse Engineering,” University of Warwick, UK, Springer, ISBN 978-1-84628-855-5.
• Zigiaris Sotiris,” Report produced for the EC funded project, INNOREGIO: dissemination of innovation and knowledge management techniques.” January 2000.

Web Resources

3. http://www.gadgetsnow.com/tech-news/How-Indian-engineers-have-transformed Harman/articleshow/52790931.cms
4. https://hbr.org/2015/11/what-engineering-a-reverse-innovation-looks-like
5. http://www.tata.com/article/inside/50-years-of-research-and-engineering