Business Process Reengineering
Business Process Reengineering
Business Process Reengineering
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.[1]
• Motivation to perform
• Data gathering, processing and storing
• Information processing
• Checking, validating and control
• Decision making
• Communication
• Motivation to perform
• Free Data/Information from ownership
• Build seamless information flow
• Provide access unlimited
• Empower person(s) through support
• Recast business operations into process
• Designate process managers
• Segregate processes where customer is internal, from
external
• Take the process beyond the organization
• Think in terms of business partners/associates and not as
buyers and sellers
• Retain only the processes which contribute to the value to
the customer and sub-contract others
Re-engineering Opportunities:
Since all such aspects with the variations are settled at one place
in one stroke, the dependent steps in rest of the business
functions are expedited reducing the total process cycle time.
History
In 1990, Michael Hammer, a former professor of computer science at the
Massachusetts Institute of Technology (MIT), published an article in the
Harvard Business Review, in which he claimed that the major challenge for
managers is to obliterate non-value adding work, rather than using
technology for automating it.[2] This statement implicitly accused managers
of having focused on the wrong issues, namely that technology in general,
and more specifically information technology, has been used primarily for
automating existing processes rather than using it as an enabler for making
non-value adding work obsolete.
Hammer's claim was simple: Most of the work being done does not add any
value for customers, and this work should be removed, not accelerated
through automation. Instead, companies should reconsider their processes
in order to maximize customer value, while minimizing the consumption of
resources required for delivering their product or service. A similar idea was
advocated by Thomas H. Davenport and J. Short in 1990[3], at that time a
member of the Ernst & Young research center, in a paper published in the
Sloan Management Review the same year as Hammer published his
paper.
With the publication of critiques in 1995 and 1996 by some of the early
BPR proponents, coupled with abuses and misuses of the concept by
others, the reengineering fervor in the U.S. began to wane. Since then,
considering business processes as a starting point for business analysis
and redesign has become a widely accepted approach and is a standard
part of the change methodology portfolio, but is typically performed in a
less radical way as originally proposed.
Definition
Additionally, Davenport (ibid.) points out the major difference between BPR
and other approaches to organization development (OD), especially the
continuous improvement or TQM movement, when he states: "Today firms
must seek not fractional, but multiplicative levels of improvement – 10x
rather than 10%." Finally, Johansson[7] provide a description of BPR relative
to other process-oriented views, such as Total Quality Management (TQM)
and Just-in-time (JIT), and state:
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.
BPR derives its existence from different disciplines, and four major areas
can be identified as being subjected to change in BPR - organization,
technology, strategy, and people - where a process view is used as
common framework for considering these dimensions. The approach can
be graphically depicted by a modification of "Leavitt’s diamond".[8]
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. 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. 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.
Methodology
Although the labels and steps differ slightly, the early methodologies that
were rooted in IT-centric BPR solutions share many of the same basic
principles and elements. The following outline is one such model, based on
the PRLC (Process Reengineering Life Cycle) approach developed by
Guha.[10].
Benefiting from lessons learned from the early adopters, some BPR
practitioners advocated a change in emphasis to a customer-centric, as
opposed to an IT-centric, methodology. One such methodology, that also
incorporated a Risk and Impact Assessment to account for the impact that
BPR can have on jobs and operations, was described by Lon Roberts
(1994). Roberts also stressed the use of change management tools to
proactively address resistance to change—a factor linked to the demise of
many reengineering initiatives that looked good on the drawing board.
Successes:
BPR, if implemented properly, can give huge returns. BPR has helped
giants like Procter and Gamble Corporation and General Motors
Corporation succeed after financial drawbacks due to competition. It helped
American Airlines somewhat get back on track from the bad debt that is
currently haunting their business practice. BPR is about the proper method
of implementation.
"If you have a good strategy with sound economics, the real challenge is to
get people excited about what you're doing. A lot of businesses get off
track because they don't communicate an excitement about being part of a
winning team that can achieve big goals. If a company can't motivate its
people and it doesn't have a clear compass, it will drift." [13]
Dell's stocks have been ranked as the top stock for the decade of the
1990s, when it had a return of 57,282% (Knestout and Ramage, 1999).
Michael Dell is now concentrating more on customer service than selling
computers since the PC market price has pretty much equalized. Michael
Dell notes:
Michael Dell understands the concept of BPR and really recognizes where
and when to reengineer his business.
Critique:
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:
Further reading
External links
• BPR Articles
• Hammering Hammer (A Critical Analysis of Michael Hammer's
Process Enterprise approach.)
• BPR : Decision engineering in a strained industrial and business
environment
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