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?
      1. Concept misuse: It was not clear if BPR was driving downsizing. Companies used the name BPR for other things than process redesign.
      2. 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.
      3. 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)