Business Process Re-engineering
Business Process Re-engineering
Business process re-engineering (BPR) is a strategy of the management of an organization which focuses on the analysis and design of various business processes and flow of work within the organization. It seeks to help the organization radically to restructure its operations by focusing on the ground up design of the business processes.
BPR helps the organization to rethink in fundamental way how it should do the work in order to drastically reduce operational costs, improve service to its customers, and become a world class organization. It is also sometimes known as business process redesign, business transformation, or business process change management.
BPR as an approach to radical organizational change is a relatively recent concept emerging from the two papers written by Davenport and Short (1990), and Hammer (1990). These papers gave rise to two popular books in 1993 written by (i) by Davenport , and (ii) by Hammer and Champy. The authors of these books promoted the idea that sometimes radical redesign and reorganization of the organization becomes necessary for lowering the costs and increasing the quality of service. The concept of BPR has become popular in a short period of time, promising amazing results very quickly in relation to corporate and technological change, transformation and competitive pressures.
BPR strategy presumes that the business processes are set of logically related tasks performed to achieve defined business outcomes. Re-engineering of these processes emphasize a holistic focus on business objectives, and processes related to them are recreated totally rather than carrying out the optimization of the sub processes.
The most notable definitions of BPR are given below.
- Hammer and Champy has defined BPR as ‘… the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary modern measures of performance, such as cost, quality, service, and speed’.
- Davenport has defined BPR as ‘… the analysis and design of workflows and processes within and between organizations. Business activities should be viewed as more than a collection of individual or even functional tasks; they should be broken down into processes that can be designed for maximum effectiveness, in both manufacturing and service environment.’
- Another definition of BPR states that BPR ‘encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions’.
- According to Sherwood-Smith, the aim of BPR is ‘seeking to devise new ways of organizing tasks, organizing people and redesigning IT (information technology) systems so that the processes support the organization to realize its goals’.
BPR advocates large step changes using structural process re-design, process re-engineering and a fundamental rethinking of the business. It is based on a ‘clean-slate’ approach.
BPR is the concept which enables the organization to make the necessary step changes, originality and improvement to the business which enables it to leapfrog the competition. Re-engineering focuses on processes rather than departments, functions or tasks. BPR aims at implementing the solution of an optimization problem including the whole process and not just isolated stages. It also advocates radical changes rather than small and continuous improvements.
BPR is one approach for redesigning the way work is done to better support the organization’s mission and reduce costs. Reengineering starts with a high level assessment of the organization’s mission, strategic goals, and customer needs.
BPR seeks to break from current processes and to devise new ways of organizing tasks, organizing people and making use of IT systems so that the resulting processes will better support the goals of the organization. This activity is done by identifying the critical business processes, analyzing these processes and redesigning them for efficient improvement and benefit.
The main characteristics of BPR are as follows.
- Challenge of radical change
- Process and goal orientation
- Restructuring of the organization
- Exploitation of enabling technologies, particularly information technology
Thus, by focusing on business objectives, the processes of the organization are carried out to eliminate non essential or redundant procedures, and to use IT for redesigning of the organizational operations.
For carrying out BPR in the organization there is no standard methodology. However there are stages which are normally used by the organizations. These stages are given below.
- Decision and the commitment of top management for BPR. This stage is concerned with defining the vision of where the organization wants to be and what it requires of its business processes as a consequence.
- Creation of a team
- Evaluation of the environment. This stage is the study of the environment under which the organization is operating.
- Assessment of the organization. This stage is concerned with the defining of the current business processes.
- Defining the changes which are required. This stage requires identification of the changes needed to achieve the defined vision of the organization.
- Determination of the required technical and human resources. This stage involves making of a plan to accomplish the movement of the organization from the present state to the aimed state in the future.
- Implementation of the changes. This stage is concerned with the implementation of the plan.
- Evaluation of the results. This stage comes after the plan has been implemented. It assesses the results achieved.
BPR cycle and methodology in its simplest form is at Fig 1.
Fig 1 Simple BPR cycle and methodology
BPR derives its existence from different disciplines, and four major areas can be identified as being subjected to change in BPR. These are organization, technology, strategy, and the people. In BPR implementation a process view is used as common framework for considering these dimensions.
The prime mover of the BPR initiatives is the business strategy. Other dimensions are governed by the encompassing role of the strategy.
The basic underlying idea of BPR is the concept of business processes which are the interrelated activities which aim at creating a value added output to the customer. These processes are characterized by a number of attribute such as process ownership, customer focus, value addition, and cross functionality.
Although BPR is fundamentally designed and controlled by the top management of the organization, BPR principles are to be communicated in the entire organization. Also needed are training and education programmes which are to be implemented to educate the employees regarding their tasks in the new process design.
BPR identifies, analyzes, and redesigns the core business processes of the organization. It is done with the objective of achieving drastic improvements in critical performance measures. Examples of these measures are cost, quality, service, and speed.
BPR starts with the presumption that the business processes of the organization are usually fragmented into sub processes and tasks which are normally carried out by several specialized functional areas within the organization. It recognizes that often no one in the organization is responsible for the overall performance of the entire process. BPR maintains that optimization of the performance of sub processes can result in some benefits, but it cannot yield drastic improvements in case the processes themselves are fundamentally inefficient and outmoded. Because of this reason, BPR focuses on redesigning the processes as a whole so as to achieve the largest possible benefits to the organization and its customers. This concept of BPR for realizing drastic improvements by fundamentally rethinking how the work in the organization is to be carried out, distinguishes it from other concepts where process improvement efforts focus on functional or incremental improvements. Hence BPR is a radical change, rather than incremental change
BPR is about rejecting the conventional wisdom and received assumptions of the past. It s the search for new models of organizing the work in the organization. Under BPR tradition counts for nothing. BPR believes in a new beginning. For achieving success through BPR, top management of the organization is to be a visionary, a motivator, and a leg breaker. Under BPR, objectives of achieving annual improvements of 5 % or 10 % in all the business processes is to give way to efforts for achieving very high improvement levels of the order of 80 % to 100%, or even higher levels in a few key processes. This type of radical change is necessary if the organization has an objective of achieving and sustaining its success and growth in the global market place of today. Other methods of meeting the customer needs are so functionally based that incremental change can never yield the requisite results.
One reason the change in BPR is radical rather than incremental is the avoidance of getting trapped by the way things are currently being done. Rapid IT innovation and increasingly intensive global competition are the two main reasons why organizations need to consider the introduction of radical change.
Normally, BPR does not only mean change, but rather drastic change. The constituents of this drastic change include the overhaul of organizational structures, management systems, employee responsibilities and performance measurements, incentive systems, skills development, and the use of IT. BPR can potentially impact every aspect of how the organization conducts the business today. Change at this scale can cause results ranging from enviable success to complete failure.
Some of the important success factors of BPR are the following.
- Selection of the proper BPR team and its composition
- Exhaustive analysis of the business needs
- Adequate infrastructure for IT
- Effective change management in the organization.
- Ongoing continuous improvement efforts
Successful implementation of BPR can result in enormous reductions in cost or cycle time. It can also potentially create substantial improvements in business operations, quality, customer service, or other business objectives. BPR can help an aggressive organization to stay on top, or transform a loss making organization into an effective competitor making decent profits.