Business Improvement Services
DPRA proposes three service offerings under this SIN area: Business Process Reengineering (BPR), Quality Registration Services, Activity Based Costing (ABC). The following is a brief description of each service and an explanation of how it supports Management, Organizational, and Business Improvement Services.
Business Process Reengineering
Business Process Reengineering (BPR) refers to the systematic redesign of work processes to meet a particular business performance objective.
A business process is a set of logically related tasks that are performed to achieve a defined business outcome, such as accounts payable. Reengineering is a systematic multi-step process that seeks to organize activities around outcomes, merge business processes with information management, link parallel activities, and decentralize decision-making in order to achieve a specific business objective.
The business objective that drives a BPR effort usually includes one of the following: reduced costs, increased efficiency, or improved quality.
Organizations turn to BPR when they wish to radically redesign and improve work processes as part of an organizational transformation effort. Of the different process improvement activities, BPR projects likely place the most stress on an organization.
While these kinds of projects can be more stressful to an organization than other process improvement projects, they also present the greatest opportunities for lasting and meaningful organizational transformation, particularly when they are combined with other process improvement activities that seek to make organizations more receptive to change, such as training, organizational assessments, and change management.
The International Standards Organization (ISO) has developed families of generic management system standards for quality management (ISO 9000) and environmental management (ISO 14000). These standards are generic because they can be applied to any organization in any sector of business, including public administration.
A management system is a series of policies or procedures that guide how an organization's business processes or activities are managed. ISO developed ISO 9000 and ISO 14000 to establish model systems that incorporated the very best elements of the systems being used by successful organizations to achieve their quality and environmental objectives.
Through dissemination of these standards, ISO has made these successful practices available to all organizations.
The ISO management system standards state the requirements an organization must meet to manage processes influencing quality (ISO 9000) or processes influencing the impact of the organization's activities on the environment (ISO 14000).
Organizations that seek to systematize their operations and achieve maximum efficiency and effectiveness assess their management systems against the ISO standards in a process referred to as certification or registration. When such an assessment reveals deficiencies in the organization, managers create an action plan for organizational transformation.
A management system that conforms to the standard is built on a firm foundation of state-of-the-art practices. Once certification has been achieved, compliance with the standard is reviewed every six months to maintain performance levels and identify opportunities for continuous improvement.
Activity Based Costing (ABC) is a method that uses actual costs rather than gross allocations to simplify and clarify decisions required by business process evaluators and senior management.
Most established accounting systems capture and distribute costs based on one of three methods: the organizational element method, budgetary account method, and direct and indirect cost allocation method.
ABC applies costs directly to products and services based on the actual work activities that are performed to produce these outputs, with limited arbitrary allocations of indirect or overhead costs. It provides a more accurate picture of output costs by tracing overhead costs through the activities that are actually used to produce them, rather than straight allocation to organizational elements, budgetary accounts, or factors of production.
ABC can be used to measure process and activity performance, determine the cost of business process outputs, and identify opportunities to improve business process efficiency and effectiveness.
Cost data from a full activity-based accounting system provide management with a comprehensive view of organizational performance and an array of performance-based indicators to monitor and evaluate strategic objectives.