business process reengineering _ all you need to know

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by Martin on May 20, 2014

rg niz tion l

development

Making your business

more competitive with

business process

reengineering(BPR)

The concept of business process reengineering (BPR)

is to rethink and break down existing business

processes. This allows a company to reduce costs

and improve productivitythrough newer, more

efficient processes. It is important to remember

however, that though there are instances where thisis necessary, business process reengineering is not

without its disadvantages. This makes it vital to

weigh your decision carefully. One of the most

obvious adverse effects of a companys decision to

reengineer is a lowered employee morale. Most

people are vary of change and do not manage to

adapt to it easily. This aspect needs to be kept in

mind when trying to make the decision to go

through with the activity.

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In this article, we will discuss 1) the historyof

business process reengineering, 2) the steps to help

you implementbusiness process reengineering, 3)

successes and failuresof business process

reengineering, and 4) some famous examples.

HISTORY OF BUSINESS PROCESS

REENGINEERING

Business process reengineering, also called BPR, is

the redesign and analysis of workflow, in an effort

to make it more efficient.

In the early 1990s, Michael Hammer and James

Champy published a book, Reengineering the

Corporation, that stated that in some cases, radical

redesign and reorganization within a company were

the only way to reduce costs and improve service

quality. To this end, they said, information

technologywas the key element for allowing this to

happen.

Hammer and Champy said that most large

companies made (now invalid) assumptions about

their goals, people and technology that were

impacting the workflow. They suggested seven

principles that could be used to reengineer and helpstreamline workflows, thus improving quality, time

management and cost.

Hammer and Champy suggested the following seven

principlesin their book.

1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization

and prioritize them in order of redesign

urgency.3. Integrate information processing work into the

real work that produces the information.

4. Treat geographically dispersed resources as
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2. IDENTIFICATION AND

SLACKING PROCESSES

Once a clear goal is in mind, all processes need to be

studied and those seen as slacking or that can be

improved need to be identified. Among these, those

processes with direct impact on the companysoutput or those that clash with the companys

mission become part of the red list. This clear

identification makes the difference between BPR

success and failure.

3. UNDERSTAND AND

MEASURE THE RED

PROCESSES

With a list of slacking processes in hand, it is

imperative to identify how they were identified as

such. Are they taking too much time to complete? Is

the quality of the outcome being compromised?

Whatever the issue, each process must be judged

objectively either against industry standards or

ethically obtained competitor best practices.

4. INFORMATION SYSTEM

AND TECHNOLOGY

CAPABILITIES

An efficient and relevant IT system is an essential

BPR enabler. Without such a system, it is not

possible to keep a check on all factors affecting thechange. Before setting out on a radical BPR activity,

it is vital to set in place information systems that can

deal with the magnitude of the change.

5. DESIGN, BUILD AND TEST

THE NEW PROTOTYPE

Before any new product is launched, a prototype istested out. A failure at a testing stage should never

be implemented at a larger scale. BPR projects fail

more often than not for a variety of reasons but a


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basic reason is the inability to identify and accept

any limitations at the testing stage. Among other

factors, both the managements attitude towards the

new way of work and the employees outlook

towards the change should be carefully assessed.

6. ADAPTING THEORGANIZATION

Managing change brought about by BPR activities is

the final effort towards a successful project.

Providing updated documentation, organizational

structures, governance models as well as updated

charts of authority and responsibility leave little

room for confusion and allow a smooth transition

into the new way of work.

Business process reengineering is a radical change

activity that cannot be repeated if it goes wrong the

first time. It is often a high risk activity that involves

monetary investment and a risk of demotivated

employees. In is essential to have buy in all the way

from top management down and it should have a

broad functional scope.

SUCCESSES AND FAILURES OF

BUSINESS PROVESS

REENGINEERING

It is important to acknowledge and understand that

BPR is not a foolproof method of success. As with all

activities it runs the risk of failure.

A BPR program can be successful if:

Customer needs are made the priority and this

vision is used to appropriately direct business

practices.

There are cost advantages to be achieved that

help the organization become more

competitive in its industry

A strategic view of all operational processes is

taken with relevant questions being asked

about the established way of work and how itcan be developed over the long term into

more efficient business practices

There is a willingness to look beyond tasks and


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traditional functional boundaries with a focus

outcomes. Through this, entire processes can

be eliminated or amalgamated into fewer but

more relevant and powerful processes

throughout the organization.

There is a real desire to simplify the way of

work by objectively assessing all activities and

tasks and eliminating any that add less valueand more complexity.

A BPR program will fail if:

It is seen as a way to make minor adjustments

and improvements to existing processes. If

there is no clear willingness to put all existing

process onto the chopping block, there is no

chance of success

It is seen as a one-time cost cutting exercise.

In reality, cost reductions are often a handy by

product of the activity but not the primary

concern. It is also not a one-time activity but

an ongoing change in mindset

There is no success in gaining dedicated long

term commitment from management and the

employees. Bringing people onboard is a

difficult task and many BPR initiatives never

take off because enough effort is not put intosecuring support

There is less effort to redesign and more to

automate

One department is prioritized at the expense

of the process. There needs to be an openness

towards studying every single process in detail

and a willingness to change whatever is

needed to achieve overall efficiency

There is too much internal focus and notenough of an eye on the industry and what

competitor best practices can be used as

benchmarks

SOME FAMOUS EXAMPLES OF

BUSINESS PROCESS

REENGINEERING

FORD

In his suggestions to Ford, Michael Hammer

proposed something radical: Eliminate the invoice. In
http://www.ee-institute.com/practical-case-studies/ford


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the new scenario, a buyer no longer needed to send

a copy of the purchasing order form to the creditor

administration. Instead, he registers an order in the

online database. When the items appear at the store,

the storekeeper check whether these correspond to

the purchase order form in the system. In the old

system he did not have access to this form. If the

items match the order, he accepts them andregisters this in the computer system. If they do not,

the items are returned. Hammer reported that Ford

benefited drastically from this change with an almost

75% decrease in workforce in the accounts payable

department.

TACO BELL

Taco Bell reimagined their business, focusing more

on the retail service aspect and centralizing the

manufacturing area. The K-Minus program was

created and the meat, corn shells, beans, lettuce,

cheese and tomatoes for their restaurants were now

prepared in central commissaries outside the

restaurant. At the restaurants, the prepared

ingredients are assembled when ordered by a

customer. Better employee morale, increased quality

control, fewer accidents and injuries, bigger savings

and more time for focusing on customer business

processes are some of the successes of the new way

of work. Taco Bell has gone from being a $500

million company in 1982 to a $3 billion company

(Early 1990s).

HALLMARK

Hallmark used to spend 3 years in bringing new

products to the market. With more niche markets

identified Hallmark executives were convinced that

the product development process needed to be

redesigned. Using reengineering, the goal was set to

change cycle time to one year. They discovered to

their surprise that two thirds of the product cycle

was spent on planning and conceptualizing the card

rather than on printing and production rework ashad previously been thought. The concept spent

90% time waiting for a creative staffer to complete a

new iteration till it was eventually finalized, In 1991, a

new line of cards was brought to market in 8


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months, ahead of schedule, by creating a cross

functional team for product development.

Although there have been many BPR success stories,

the process became somewhat unpopular in the late

1990s. There were many organizations who went

through the attempts to redesign processes but did

not manage to reap any of the myriad benefitspromised. So it is essential to plan carefully before

undertaking this exercise. First and foremost, a

business problem needs to be identified. Are we

manufacturing at higher costs than our industry? Is

there a newer way of work that we have not brought

into our processes? Do our processes seem overly

complex? Are too many people doing too many

similar things? After setting clear objectives and

securing support from all levels of management

within the company, it is important to approach the

process as one of continuous learning and to keep an

eye on new and emerging problems as well the

existing way of work. The success of any BPR

initiative hinges on how deeply a process

improvement mindset is created and nurtured by

both management and the process owners

themselves.

For further learning you can read through thefollowing presentation.


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AARON

This was a great article, I appreciated the

examples from other companies.
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