BPR --Business Process Reengineering

Business process reengineering


The analysis and design of workflows and processes within an organization. A business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering is the basis for many recent developments in management. The cross-functional team, for example, has become popular because of the desire to re-engineer separate functional tasks into complete cross-functional processes. Also, many recent management information systems developments aim to integrate a wide number of business functions.
Enterprise resource planning, supply chain management, knowledge management systems, groupware and collaborative systems, Human Resource Management Systems and customer relationship management systems all owe a debt to re-engineering theory.
Business Process Reengineering is also known as Business Process Redesign, Business Transformation, or Business Process Change Management.

Overview

Business process reengineering (BPR) began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. A key stimulus for reengineering has been the continuing development and deployment of sophisticated information systems and networks. Leading organizations are becoming bolder in using this technology to support innovative business processes, rather than refining current ways of doing work.


Business process reengineering 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.

Basic questions are asked, such as "Does our mission need to be redefined? Are our strategic goals aligned with our mission? Who are our customers?" An organization may find that it is operating on questionable assumptions, particularly in terms of the wants and needs of its customers. Only after the organization rethinks what it should be doing, does it go on to decide how best to do it.

Within the framework of this basic assessment of mission and goals, reengineering focuses on the organization's business processes—the steps and procedures that govern how resources are used to create products and services that meet the needs of particular customers or markets. As a structured ordering of work steps across time and place, a business process can be decomposed into specific activities, measured, modeled, and improved. It can also be completely redesigned or eliminated altogether. Reengineering identifies, analyzes, and redesigns an organization's core business processes with the aim of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed.

Reengineering recognizes that an organization's business processes are usually fragmented into subprocesses and tasks that are carried out by several specialized functional areas within the organization. Often, no one is responsible for the overall performance of the entire process. Reengineering maintains that optimizing the performance of subprocesses can result in some benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient and outmoded. For that reason, reengineering focuses on redesigning the process as a whole in order to achieve the greatest possible benefits to the organization and their customers. This drive for realizing dramatic improvements by fundamentally rethinking how the organization's work should be done distinguishes reengineering from process improvement efforts that focus on functional or incremental improvement.

Business Process Reengineering

Definition

Different definitions can be found. This section contains the definition provided in notable publications in the field:

• "... the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed."
• "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."

• "Business Process Reengineering, although a close relative, seeks radical rather than merely continuous improvement. It escalates the efforts of JIT and TQM to make process orientation a strategic tool and a core competence of the organization. BPR concentrates on core business processes, and uses the specific techniques within the JIT and TQM ”toolboxes” as enablers, while broadening the process vision."

In order to achieve the major improvements BPR is seeking for, the change of structural organizational variables, and other ways of managing and performing work is often considered as being insufficient. For being able to reap the achievable benefits fully, the use of information technology (IT) is conceived as a major contributing factor. While IT traditionally has been used for supporting the existing business functions, i.e. it was used for increasing organizational efficiency, it now plays a role as enabler of new organizational forms, and patterns of collaboration within and between organizations.

How to implement a BPR project
The best way to map and improve the organization's procedures is to take a top down approach, and not undertake a project in isolation. That means:

• Starting with mission statements that define the purpose of the organization and describe what sets it apart from others in its sector or industry.
• Producing vision statements which define where the organization is going, to provide a clear picture of the desired future position.
• Build these into a clear business strategy thereby deriving the project objectives.

• Defining behaviors that will enable the organization to achieve its' aims.

• Producing key performance measures to track progress.
• Relating efficiency improvements to the culture of the organization
• Identifying initiatives that will improve performance



BPR derives its existence from different disciplines, and four major areas can be identified as being subjected to change in BPR –

1. Organization,
2. Technology,
3. Strategy, and
4. People

where a process view is used as common framework for considering these dimensions.

2.Technology
Technology is concerned with the use of computer systems and other forms of communication technology in the business. In BPR, information technology is generally considered as playing a role as enabler of new forms of organizing and collaborating, rather than supporting existing business functions.

3.Business strategy
Business strategy is the primary driver of BPR initiatives and the other dimensions are governed by strategy's encompassing role. The organization dimension reflects the structural elements of the company, such as hierarchical levels, the composition of organizational units, and the distribution of work between them.
4. People / Human
The people / human resources dimension deals with aspects such as education, training, motivation and reward systems. The concept of business processes - interrelated activities aiming at creating a value added output to a customer - is the basic underlying idea of BPR. These processes are characterized by a number of attributes: Process ownership, customer focus, value adding, and cross-functionality.

A five step approach to Business Process Reengineering

1. Develop the business vision and process objectives: The BPR method is driven by a business vision which implies specific business objectives such as cost reduction, time reduction, output quality improvement.

2. Identify the business processes to be redesigned: most firms use the 'high-impact' approach which focuses on the most important processes or those that conflict most with the business vision. A lesser number of firms use the 'exhaustive approach' that attempts to identify all the processes within an organization and then prioritize them in order of redesign urgency.

3. Understand and measure the existing processes: to avoid the repeating of old mistakes and to provide a baseline for future improvements.

4. Identify IT levers: awareness of IT capabilities can and should influence BPR.

5. Design and build a prototype of the new process: the actual design should not be viewed as the end of the BPR process. Rather, it should be viewed as a prototype, with successive iterations. The metaphor of prototype aligns the Business Process Reengineering approach with quick delivery of results, and the involvement and satisfaction of customers

The role of information technology

Information technology (IT) has historically played an important role in the reengineering concept. It is considered by some as a major enabler for new forms of working and collaborating within an organization and across organizational borders.

Early BPR literature identified several so called disruptive technologies that were supposed to challenge traditional wisdom about how work should be performed.

• Shared databases, making information available at many places
• Expert systems, allowing generalists to perform specialist tasks
• Telecommunication networks, allowing organizations to be centralized and decentralized at the same time
• Decision-support tools, allowing decision-making to be a part of everybody's job
• Wireless data communication and portable computers, allowing field personnel to work office independent
• Interactive videodisk, to get in immediate contact with potential buyers
• Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found
• High performance computing, allowing on-the-fly planning and revisioning

In the mid 1990s, especially workflow management systems were considered as a significant contributor to improved process efficiency. Also ERP (Enterprise Resource Planning) vendors, such as SAP, JD Edwards, Oracle, PeopleSoft, positioned their solutions as vehicles for business process redesign and improvement.

Reengineering has earned a bad reputation because such projects have often resulted in massive layoffs. This reputation is not altogether unwarranted, since companies have often downsized under the banner of reengineering. Further, reengineering has not always lived up to its expectations.

The main reasons seem to be that:

• Reengineering assumes that the factor that limits an organization's performance is the ineffectiveness of its processes (which may or may not be true) and offers no means of validating that assumption.
• Reengineering assumes the need to start the process of performance improvement with a "clean slate," i.e. totally disregard the status quo.
• Reengineering does not provide an effective way to focus improvement efforts on the organization's constraint.

Other criticism brought forward against the BPR concept include

• It never changed management thinking, actually the largest causes of failure in an organization
• Lack of management support for the initiative and thus poor acceptance in the organization.
• Exaggerated expectations regarding the potential benefits from a BPR initiative and consequently failure to achieve the expected results.
• Underestimation of the resistance to change within the organization.
• Implementation of generic so-called best-practice processes that do not fit specific company needs.
• Overtrust in technology solutions.
• Performing BPR as a one-off project with limited strategy alignment and long-term perspective.
• Poor project management.

Reengineering Recommendations

1) BPR must be accompanied by strategic planning, which addresses leveraging IT as a competitive tool.
2) Place the customer at the center of the reengineering effort -- concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.
3) BPR must be "owned" throughout the organization, not driven by a group of outside consultants.
4) Case teams must be comprised of both managers as well as those will actually do the work.
5) The IT group should be an integral part of the reengineering team from the start.
6) BPR must be sponsored by top executives, who are not about to leave or retire.
7) BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of "limbo".
8) BPR must not ignore corporate culture and must emphasize constant communication and feedback