1.3 - Origins and history of BPM
- Prehistoric times
- Humans support themselves or he small groups they lived in by producing their own food, tools and items.
- Consumers and producers were mostly the same person.
- They were generalists. (Knowledge of producing many different things)
- Ancient times
- Humans were evolving towards an intermediate level of specialism.
- People started specializing in one type of goods such as pottery, or providing a particular service such as lodging for travelers.
- Middle Ages
- More specialism, often combined in a guild of the craftsmen.
- Guild = Group of merchants and artisans concerned with the same economic activity.
- Second Industrial Revolution
- Between 1850 and WW1
- Scientific Management (Fredrick W. Taylor)
- Extreme form of labor division.
- Laborers would only be involved in one of the many steps in the production process.
- Most dominant form of organizing work. (also in the government)
- Laborers/workers became super specialized in there step in the production process.
- Side effect > managers. Someone has to oversee the productivity of a section of the production process.
- Managers were responsible for pinning down the productivity goals for individual workers
- Main interest > optimize how a job is done with the resources under their supervision.
- How to differentiate between responsibilities of the managers?
- Create a functional units in which people with a similar focus on part of the production process were grouped together.
- These units were supervised by managers with different responsibilities. So were different departments created.
- 1900 - 2000
- As a result of the Second Industrial Revolution: functional organization was created.
- Major American companies came to realize that their emphasis on functional optimization was creating inefficiencies, and thus affecting heir competitiveness.
- So instead new IT projects went to Japanese competitors.
- 1980s Ford acquisition of a big financial stake in Mazda
- Mazda was accomplishing the same result with less people than Ford did in the Purchasing Department.
- Ford had a complicated process which purpose was to keep all documents consistent.
- Consistency between 3 files (Purchase order copy, shipping notice, invoice), each file consisted o f 14 data items.
- Various discrepancies were discovered every day, and occupied several 100 people within Ford.
- Mazda had only 5 people working in this department, but was not 100x smaller.
- As a result of the comparison, Ford carried out several changes in its own purchasing process.
- A central database was created (replaced one of the original paper streams).
- New terminals were installed in the warehouse department so personnel could check incoming goods immediately.
- Acceptance of the goods were registered in the purchasing database.
- Ford managed to reduce there workforce in accounts payable by 76% (from 500 to 120 people).
- 1990s BPR (Business Process Redesign/Re-engineering)
- Enthusiasm faded down around late 1990s. What went wrong?
- Concept misuse: It was not clear if BPR was driving downsizing. Companies used the name BPR for other things than process redesign.
- Over-radicalism: According to some specialists redesign had to be radical. "Don`t automate, Obliterate". While a radical approach may be justified in some situations, most situations require a more gradual approach.
- Support immaturity: Supported tools and technologies needed for improving a business process were not available or powerful enough at that time. Supporting IT applications were also to hard coded to change in order to achieve process improvement.
- What made BPR evolve into BPM
- Study shows process oriented manufacturing organizations showed better overall performance. The mood in departments were better and there were less inter-functional conflicts.
- Different types of new IT systems emerged. (such as ERP and WfMSs)
- ERP stores company data in a consistent manner so all stakeholders who needed access to the data can gain access.
- WfMSs supported work-distribution to actors, based on predefined business processes.
- WfMSs made it easier to implement changes to business processes.
- WfMSs became known as BPMSs (Business Process Management Systems)