Business Process Reengineering

Business Process Reengineering and Change Management

Business process reengineering (BPR) is a business transformation approach aimed at creating change. In today’s business world, three Cs have become very important for organizations: customer, competition, and change.

Business process reengineering (BPR) is a kind of solution based on the latter.

Hammer and Champy define reengineering as 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.

Through these business processes, organizationsOpens in new window endeavor to add value for the customers, both internal and external. But the plot is lost when individual departments think only about their own department’s efficiency and not the process efficiency as a whole.

Process mapping is an important tool which suggests a methodology for identifying the current “As-Is processes” and can be used to provide “To-Be processes” after reengineering the product and service business enterprise functions.

But the choice of processes to be reengineered is made based on the following criteria:

• Dysfunction — identifying the processes that are functioning the worst
• Importance — identifying the most critical and influential processes on the basis of customer satisfaction
• Feasibility — identifying the processes that are most likely to be reengineered successfully.

The BPR concept enables reengineers to look at their business processes afresh and determine how best to construct these processes to improve the ways of conducting business.

BPR has may synonyms such as business process redesigning, process reengineering, business transformation, business process change management, business reinventing, reengineering and business reengineer.

Key Concepts of BPR

1.    The Fundamental Questions

While undertaking reengineering, always ask the following fundamental questions:

• Why do we do what we do?
• Why do we do it the way we do?

These are the most basic questions about the company and the way it operates. These force the company to look at the tacit rules and assumptions made for conducting business. Sometimes these rules may be inappropriate and irrelevant. Reengineering first determines what a company must achieve and then offers solutions.

2.    Radical

Radical redesign refers to getting to the root of things, not just making superficial changes and throwing away the old. This also requires a disregard for all existing structures and procedures.

It is about inventing completely new ways of accomplishing work that is not business improvement/enhancement/modification but reinvention.

3.    Processes

BPR focuses on business processes. It requires a redesign of the strategic and value-added processes and requires a process-oriented approach with a focus on end results and the different tasks involved.

The functional specialization mindset should be abandoned and those who use the output of the process should perform the process.

Multi-skilled workers must be designated as process owners. Employees must be empowered and expert systems (automation) must be provided to support them. In order to cut down end-to-end business process cycle time, parallel tasks should be performed instead of sequential tasks and results should be integrated. Information technology plays an important role in business transformation.

4.    Customers

The customers are the main stakeholders in this approach. All business processes should be focused on them.

The customer alone is responsible for defining what constitutes the value of a product or service. Anything not valuable from the customer’s perspective must be eliminated. Sadly, many organizations are not customer focused. They provide products/services to customers, but not solutions to their problems.

Besides the fact that companies are not customer focused with regard to products, many companies are also not customer focused with regard to customer service. Michael Hammer describes the reason for this as being employees’ lack of knowledge with regard to processes.

Every employee is only interested in his/her part of the responsibility, which includes individual tasks. Nobody is interested in the process, which will ensure customers are satisfied at the end of the day.

The 3 R’s of Reengineering

Every reengineering effort involves three basic phases, namely, rethink, redesign, and retool.

1.    Rethink

This phase requires examining the reengineer’s current objectives and underlying assumptions to determine how well they incorporate the renewed commitment to customer satisfaction. Another valuable exercise in this phase is to examine critical competition and check whether they contribute to the new customer satisfaction goals.

2.    Redesign

This phase requires an analysis of the way the reengineer produces the products and sells its services — how jobs are structured, who accomplishes what tasks and the results of each procedure. Then the elements that should be redesigned to make jobs more satisfying and customer focused must be determined.

3.    Retool

This phase requires a thorough evaluation of the uses to which advanced technologies are put currently, especially electronic data processing systems, to identify opportunities for change that can improve the quality of service and customer satisfaction.

Historical Development of Business Process Reengineering

The beginning of business process reengineering goes back at two decades, when Western companies realized why the Japanese used the concept of processes together with just-in-time principles for manufacturing.

By applying these principles, they introduced a product-oriented factory layout. This involved partitioning of activities into separate cells organized by type of machine instead of the traditional functional departments. This had remarkable benefits for manufacturing within Japanese companies.

These benefits included improving coordination of the rate of workflow and reducing work-in-progress. As a result, lead times had been reduced dramatically and the customer received a much better service.

The concept of cells instead of departments led to multiskilled workforces, who were responsible for their own quality inspections. Due to this fact, the Japanese companies moved away from centralized control which was a feature of hierarchical organizations, and created semiautonomous cells with substantial decision-making power to direct and control their own activities.

Together with just-in-timeOpens in new window principles, Japanese companies introduced Quality CirclesOpens in new window. This was an introduction not only to total quality control but also to the principles of working in teams to streamline processes and reduce costs.

While the tendency of companies in the United States was to check product quality at the final inspection, Japanese companies performed quality control as part of the total production process. US companies used their quality control departments to identify reject products at the end of the production process. However, as these products were only identified at the end of the production process, related costs and customer dissatisfaction were unacceptably high.

Japanese companies on the other hand did not use a quality control department, but included quality controllers as part of the project teams. They identified reject products at a much earlier stage. Costs were reduced and better yields, greater efficiency, and higher productivity were some of the results.

Requirements of the Reengineering Process

Reengineering requires a massive change in the reengineer involving lay-offs and huge investments in automation and information technology. However, proper reengineering of business processes will bring big benefits to the company.

Reengineering should start with a clean state approach. It requires selection and focus on critical business processes, process analysis, cross-functional teams, support from a strong leadership and the use of information technology as enablers. These are explained below:

1.    Clean Slate Approach

This is the original philosophy of BPR that challenges the fundamentals of a process. It involves a fundamental questioning of the techniques and entails suitable benchmarking to comprehend the full details of the current processes and to assess gap areas from the customer’s perspective.

Reengineering starts from the future and work backwards unconstrained by current approaches.

2.    Critical Processes

The emphasis of reengineering should be on identifying core business processes rather than the functional and support processes, which have a greater scope for breakthrough improvements rather than incremental improvement.

Reengineering should be assured for essential processes such as new product development or customer service that provides what the customer wants at the price the customer will pay.

3.    Process Analysis

A reengineering team must have a clear understanding of the current process — what it does, how well it performs and what factors affect it. Such an understanding can reveal areas in new thinking will provide breakthrough improvement.

The team must work on every procedure involved in the process throughout the reengineer, recording each step, questioning why it is done and then eliminating it if it isn’t really necessary.

4.    Cross-Functional Teams

A team consisting of members from each functional area affected by the process is required for carrying out a reengineering project.

Reengineering works best at high involvement workplace, where self managing teams and employee empowerment are promoted and nurtured. Top-down and bottom-up initiatives can be combined — the top-down for performance targets and the bottom-u for deciding how to achieve the targets.

5.    Strong Leadership

The top management should provide the required resources and create a sense of urgency, making a case for change that is compelling. Strong leadership by senior executives is required to execute a reengineering project. The leadership should set and monitor key performance objectives for the process.

6.    Information Technology

Information technology is a key enabler of BPR. Information should be captured once, at the source and be reused often. Information should not be keyed-in more than once. Information processing work should be merged with the real work that produces information. most reengineering projects design processes around information flows such as customer order fulfillment.