Importance of business process reengineering
By Tharanga Thilakasiri
Many organisations around the globe are undergoing major changes in their structure and management in order to stay alive in today’s highly competitive environment. Hence, a number of firms are undertaking such Business Process Reengineering (BPR) in order to bring the much needed innovations to change the outdated business processes.
Therefore, it is very much necessary to study about Business Process Redesign (BPR) in order to run any organisation efficiently in today’s highly competitive business environment. Hence, the objective of this article is to analyse the Business Process Redesign (BPR) with its importance and to understand about different methods that we can use for reengineering an organisation.
Before we move forward on BPR; let us clarify the definition as to what a Business Process is, so that we can understand the importance of BPR well.
What is a Business Process?
A Business Process is a collection of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how the work is done within an organisation, in contrast to a product’s focus. A process is thus a specific ordering of work activities across time and place, with a beginning, an end, and clearly defined inputs and outputs: a structure for action.
A Business process:
1.Has a goal
2.Has specific Inputs
3.Has a specific output
5.Has a number of activities that are performed in some order
6.Many affect more than one organisational unit. Horizontal organisational impact
7.Creates value of some kind for the customer. The customer may be internal or external
PR Business Model
BPR develops all its products based on the following business model. The key components of this business model are innovation, organisation and achievement.
The Three Levels of Process Activities are:
1.Business process improvement
2.Business process reengineering
3.Business process architecture
The most basic process activity is Business Process Improvement and the most complex is Business Process Architecture. As you increase the scope of process activity the investment, the risk and the time requirement also increase.
Business process improvement
This is equivalent to re-decorating a house. The starting and finishing points of the process are usually within a single department. The effort supports the business department’s business plan and annual objectives. The results affect the performance of that department.
When the project is finished, the nature of the business, and the organisational structure and boundaries remain unchanged. The department’s employees have to modify their routine and new skills are often needed to make the new process improvements work.
Business process reengineering
Reengineering results in companies being re-modelled: Projects can be expensive in scope. The starting point and finishing point of a targeted process are usually in different departments, making it cross-functional. Areas involved are those which have an impact on, or are impacted by, the process being reengineered.
A reengineering effort supports the company’s Business Plan. The focus is to achieve benefits in support of mid-term targets which are three to four years in the future. The results of a successful project contribute to corporate performance and should be tracked to the bottom line within a year of implementation.
Business process architecture
It is comparable to getting an old building or constructing a new one. You start with a clean sheet of paper, with the objective being to achieve an overall change. Experts are needed, the investment and the risk are substantial, the project can take years to complete and there are no guarantees of achieving the desired returns. This type of effort is unlimited in scope. The focus is on the entire business.
Example: The re-architecturing of General Electric (GE) is frequently cited in the literature as one of the classic examples of a successful, complete overhaul of a large corporation. An architecture effort is a platform for innovation because there are few restrictions in determining what could be possible. Regan James’ Crunch Time, How to Reengineer your Organisation
An overview of Business Process Redesign (BPR)
“Reengineering is the radical redesign of business processes for dramatic improvement” – Hammer, M., Beyond Reengineering, NY: Harper Business, 1996, p.xii
Business Process Redesign (BPR)
A systematic, disciplined improvement approach that critically examines, rethinks, redesigns, and implements the redesigned processes of an organisation. BPR’s goal is to achieve dramatic improvements in performance in areas important to customers and other stakeholders.
BPR is also referred to by such terms as business process improvement (BPI) or business process development, and business process redesign. While the term can be applied to incremental process improvement efforts, it is more commonly and increasingly associated with dramatic or radical overhauls of existing business processes. BPR typically relies on information technology to achieve breakthrough results.
Therefore, we can understand that if any business does not run as it has been planed earlier, there should be a problem in terms of the way it runs at present. As a result, we have to modify the present process of the business along with its procedures.
At this juncture, the BPR concept helps us to identify our present situation of the business that we engaged with and it will provide the necessary solutions to overcome the identified issues/limitation with regard to the business process.
Definition for Business Process Reengineering/Redesign
According to Hummer and Champy, Business Process Reengineering (BPR) is the fundamental rethinking and radical redesign of business process to achieve dramatic improvements in critical and contemporary measures of performance, such as cost, quality, services and speed.
There are four key components:
4.Critical and contemporary measures of performance
Scope of BPR
The impact of Business Process Reengineering (BPR) generally depends upon proper coverage of business process in terms of breadth (scope of the business) and depth (linkage with other aspects) according to western experience.
Ex: European Commercial Bank’s reengineering effort as described by Hall, Rosenthal and Wade in 1993. The Bank has failed since, it had overlooked many other back office process in planning the redesign.
Successful redesign of a process with high depth involved a complete restructuring of all the key drivers of behaviour so that the actual results measures up to the plan.
There are wide range of methodology in which seek to synergise some of the idea implicit in the reengineering concept.
Developed by Talwar, this seeks to strike a balance between strategy formulation, process, redesign, exploitation and management of the reengineered business. It entails three stages as below:
- Initiation: Defining strategic scope, scale and planning the change
- Implementation: Business redesign, integration and testing
- Exploitation: Continuing the improvement process
COBRA stands for: C- Constrains, O – Opportunities, B – Business, R – Restructuring, A – Analysis
This is an approach adopted by the commission of the European communities in 1994. As outlined by Coulson-Thomas.
It’s a six stage of BPR methodology designed to be implemented by a technocratic approach with due regard to people issues.
1.Establishing an organisation’s approach to BPR
2.Identifying the opportunity
3.Analysis of an existing process
5.Implementation of the change
According to Peter Carter Business Process Reengineering (often referred to by the acronym BPR) is the main way in which organisations become more efficient and modernise. Business process reengineering transforms an organisation in ways that directly affect performance
The impact of BPR on organisational performance
The two cornerstones of any organisation are the people and the processes. If individuals are motivated and working hard, yet the business processes are cumbersome and non-essential activities remain, organisational performance will be poor.
BPR is the key to transforming how people work. What appears to be minor change in processes can have dramatic effects on cash flow, service delivery and customer satisfaction. Even the act of documenting business processes alone will typically improve organisational efficiency by 10%.
How to implement a BPR project
The best way to map and improve the organisation’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 organisation and describe what sets it apart from others in its sector or industry.
- Producing vision statements which define where the organisation is going, to provide a clear picture of the desired future position.
- Build these into a clear business strategy and thereby derive the project objectives.
- Defining behaviours that will enable the organisation to achieve its’ aims.
- Producing key performance measures to track progress.
- Relating efficiency improvements to the culture of the organisation
- Identifying initiatives that will improve performance.
Tools to support BPR
When a BPR project is undertaken across the organisation, it can require managing a massive amount of information about the processes, data and systems. If you don’t have an excellent tool to support BPR, the management of this information can become an impossible task. The use of a good BPR/documentation tool is vital in any BPR project.
The types of attributes you should look for in BPR software are:
- Graphical interface for fast documentation
- “Object oriented” technology, so that changes to data (eg: job titles) only need to be made in one place, and the change automatically appears throughout all the organisation’s procedures and documentation.
- Drag and drop facility so you can easily relate organisational and data objects to each step in the process
- Customisable meta data fields, so that you can include information relating to your industry, business sector or organisation in your documentation
- Analysis, such as swim-lanes to show visually how responsibilities in a process are transferred between different roles, or where data items or computer applications are used.
- Support for Value Stream mapping.
- CRUD or RACI reports, to provide evidence for process improvement.
- The ability to assess the processes against agreed international standards
- Simulation software to support ‘what-if’ analyses during the design phase of the project to develop LEAN processes
The production of word documents or web site versions of the procedures at the touch of a single button, so that the information can be easily maintained and updated.
To be successful, BPR projects need to be top down, taking in the complete organisation, and the full end to end processes. It needs to be supported by tools that make processes easy to track and analyse.
BPR and Information Technology
Business Process Re-engineering has rapidly developed towards a new management philosophy. The inherent business process orientation changes the perspective of international management from a structural to that of a process view.
The re-engineering of business processes is only one aspect of the management of business processes. In particular, the re-engineering of international business processes needs special attention, because the multi-faceted structure of multinational corporations increases the complexity of business processes, thereby influencing the options for redesign.
Business Process Re-engineering has rapidly developed towards a new management philosophy based upon predecessors like Total Quality Management, Overhead Value Analysis, Kanban or Just-In-Time-Management. Business processes can be re-engineered by redesigning the steps, by changing the logical and temporal sequence of the steps, or by changing any other characteristics of the process.
The role of IT is discussed in contradictory way. Advocates of information systems favour the view that the new technology is an enabler of process re-engineering. IT has to be monitored constantly to determine whether it can generate new process designs or contribute to the performance of a business process. The breakthrough of BPR is closely connected with IT, which opens new dimensions of process reorganisation.
Moreover, those who take the initiative in process improvement/redesign, influence the role of IT. If the data processing department initiates the process change, then IT will have more of a generator function for new process redesigns. If on the other hand, the top management sets off the change process, then the process will be first restructured and later optimised through IT.
Benefits of BPR
1.Can save a company which is running at a loss
2.By changing the present process through BPR a losing business can make profits
3.Can find new business dimensions
4.BPR will open up new dimension into the existing business
5.Continues improvements will enhance the business performance
6.Over all change could enhance the performance of the business
8.Improves the quality of service delivery and customer satisfaction
Drawbacks of BPR
1.Could be a costly process
2.Need to invest huge sum of money to introduce such a system
3.Time consuming process
4.It takes lot of time to design such a system and some time take years to plan properly
5.Extensive planning required
6.Need experts to implement and monitor
7.Lack of experts
8.It is bit difficult to find real experts on BPR, since; you are going to invest a huge sum of money you need to have such experts to run the show
The article emphasised the importance of Business Process Redesigning or in other wards Business Process Reengineering (BPR) in terms of benefits and competitiveness over weighing the little imbalances which might occur due to the few drawbacks as well.
The essence of the whole idea of Business Process Redesigning is to achieve dramatic improvements in critical and contemporary measures of performance, such as cost, quality, services and speed. On the other hand it allows an organisation to acquire a competitive advantage over the other firms in the industry competing with each other.
(Tharanga Thilakasiri M.B.A. International, AIMM can be reached via email@example.com)
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