For decades, BPR has continued to be used by businesses as an alternative to business process management (automating or reusing existing processes), which has largely superseded it in popularity.
And with the pace of technological change faster than ever before, BPR is a lot more relevant than ever before.
Business Process Reengineering (BPR) involves the radical redesign of core business processes to achieve dramatic improvements in productivity, cycle times and quality. BPR's main objective is to break away from old ways of working, and effect radical (not incremental) redesign of processes through the in-depth use of information technology.
Originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization, BPR aimed 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.
Business process reengineering became popular in the business world, by an article called Reengineering Work: Don’t Automate, Obliterate which was published in the Harvard Business review by Michael Hammer. His position was that too many businesses were using new technologies to automate fundamentally ineffective processes, as opposed to creating something different, something that is built on new technologies.
Think, using technology to “upgrade” a horse with lighter horseshoes which make them faster, as opposed to just building a car. Re-engineering emphasized a holistic focus on business objectives and how processes related to them, encouraging full-scale recreation of processes rather than iterative optimization of sub-processes.
The thing is, though, the business needs analysis, it needs to be done properly, not rushed through to get to the more exciting parts. There are always pressures in the business world, and it’s the responsibility of the senior management to resist the temptation and make sure the proper procedure is carried out.
Problem areas need to be identified, key goals need to be set and business objectives need to be defined and this takes time. Ideally, each stage requires input from groups from around the business to ensure that a full picture is being formed, with feedback and ideas being taken into consideration from a diverse range of sources.
The next step is to identify and prioritize the improvements that are needed and those areas and processes that need to be scrapped. Any business that doesn’t take this analysis seriously will be going into those next steps blind and will find that their BPR efforts might fail.
Conversely, if properly handled, it can perform miracles on a failing or stagnating company, increasing profits and driving growth. Business process re-engineering, however, is not the easiest concept to grasp. It involves enforcing change in an organization – tearing down something people are used to and creating something new and that’s not an easy task.
(nextPage)
What Are The Steps?
Step1: Identity And Communicate The Need For Change
If you’re a small startup, this can be a piece of cake. You realize that your product has a high user drop-off rate, decide with partners, and suggest a direction to pivot. For a corporation, however, it can be a lot harder. There will always be individuals who are happy with things as they are, both from the side of management and employees.
Conversely, if properly handled, it can perform miracles on a failing or stagnating company, increasing profits and driving growth. Business process re-engineering, however, is not the easiest concept to grasp. It involves enforcing change in an organization – tearing down something people are used to and creating something new and that’s not an easy task.
What Are The Steps?
Step1: Identity And Communicate The Need For Change
If you’re a small startup, this can be a piece of cake. You realize that your product has a high user drop-off rate, decide with partners, and suggest a direction to pivot. For a corporation, however, it can be a lot harder. There will always be individuals who are happy with things as they are, both from the side of management and employees.
The first might be afraid that it might be a sunk investment, the later for their job security. So, you’ll need to convince them why making the change is essential for the company. If the company is not doing well, this shouldn’t be too hard. In some cases, however, the issue is with the company not doing as well as it could be. Meaning, you should do your research.
- Which processes might not be working?
- Is your competition doing better than you in some regards?
Once you have all the information, you’ll need to come up with a very comprehensive plan, involving leaders from different departments. The management will have to play the role of salespeople: conveying the grand vision of change, showing how it’ll affect even the employees positively. Usually, it’s possible to get the employees buy-in by motivating them or showing them different views they weren’t aware of.
What Are The Other Steps?
Step 2: Put Together a Team of Experts
Step 3: Find the Inefficient Processes and Define Key Performance Indicators (KPI)
Step 4: Re-engineer the processes and Compare KPIs
Unlike business process management or improvement, both of which focus on working with existing processes, BPR means changing the said processes fundamentally. As with any other project, business process re-engineering needs a team of highly skilled, motivated people who will carry out the needed steps.
In Most Cases, The Team Consists Of:
Senior Manager - When it comes to making a major change, you need the supervision of someone who can call the shots. If a BPR team doesn’t have someone from the senior management, they’ll have to get in touch with them for every minor change.
Operational Manager - As a given, you’ll need someone who knows the ins-and-outs of the process – and that’s where the operational manager comes in. They’ve worked with the process(es) and can contribute with their vast knowledge.
Reengineering Experts - Finally, you’ll need the right engineers. Reengineering processes might need expertise from a number of different fields, anything from IT to manufacturing. While it usually varies case by case, the right change might be anything – hardware, software, workflows, etc.
(nextPage)
What Happens If One Does Not Put The Right Team Together?
If the team consists of individuals with a similar viewpoint and agenda, for example, they might not be able to properly diagnose the problems/solutions. Or, the team might involve too many or too few people. In the first case, the decision making might be slowed down due to conflicting viewpoints.
What Are The Other Steps?
Step 2: Put Together a Team of Experts
Step 3: Find the Inefficient Processes and Define Key Performance Indicators (KPI)
Step 4: Re-engineer the processes and Compare KPIs
Unlike business process management or improvement, both of which focus on working with existing processes, BPR means changing the said processes fundamentally. As with any other project, business process re-engineering needs a team of highly skilled, motivated people who will carry out the needed steps.
In Most Cases, The Team Consists Of:
Senior Manager - When it comes to making a major change, you need the supervision of someone who can call the shots. If a BPR team doesn’t have someone from the senior management, they’ll have to get in touch with them for every minor change.
Operational Manager - As a given, you’ll need someone who knows the ins-and-outs of the process – and that’s where the operational manager comes in. They’ve worked with the process(es) and can contribute with their vast knowledge.
Reengineering Experts - Finally, you’ll need the right engineers. Reengineering processes might need expertise from a number of different fields, anything from IT to manufacturing. While it usually varies case by case, the right change might be anything – hardware, software, workflows, etc.
What Happens If One Does Not Put The Right Team Together?
If the team consists of individuals with a similar viewpoint and agenda, for example, they might not be able to properly diagnose the problems/solutions. Or, the team might involve too many or too few people. In the first case, the decision making might be slowed down due to conflicting viewpoints.
In the later, there might not be enough experts in certain fields to create adequate solutions. There is one thing, however, that benefits every BPR team: having a team full of people who are enthusiastic (and yet unbiased), positive and passionate about making a difference. Once you have the team ready and about to kick-off the initiative, you’ll need to define the right KPIs.
You don’t want to adapt to a new process and THEN realize that you didn’t keep some expenses in mind – the idea of BPR is to optimize, not the other way around.While KPIs usually vary depending on what process you’re optimizing, the following can be very typical:
Manufacturing:
Cycle Time – The time spent from the beginning to the end of a process
Changeover Time – Time needed to switch the line from making one product to the next
Defect Rate – Percentage of products manufactured defective
Inventory Turnover – How long it takes for the manufacturing line to turn inventory into products
Planned VS Emergency Maintenance – The ratio of the times planned maintenance and emergency maintenance happen
IT:
Mean Time to Repair – Average time needed to repair the system / software / app after an emergency
Support Ticket Closure Rate – Number of support tickets closed by the support team divided by the number opened
Application Dev. – The time needed to fully develop a new application from scratch
Cycle Time – The time needed to get the network back up after a security breach
Once you have the exact KPIs defined, you’ll need to go after the individual processes. The easiest way to do this is to do business process mapping. While it can be hard to analyze processes as a concept, it’s a lot easier if you have everything written down step by step. This is where the operational manager comes in handy – they make it marginally easier to define and analyze the processes.
There Are 2 Ways To Map Out BPR Processes:
Process Flowcharts – the most basic way to work with processes is through flowcharts. It is important to write down the processes step by step.
Business Process Management Software – if you’re more tech-savvy, using software for process analysis can make everything a lot easier. You can use Tallyfy, for example, to digitize your processes, set deadlines, etc. Simply using such software might end up optimizing the said processes as it allows for easier collaboration.
Finally, once you’re done with all the analysis and planning, you can start implementing the solutions and changes on a small scale. Once you get to this point, what you have to do now is to put your theories into practice and seeing how the KPIs hold up. If the KPIs show that the new solution works better, you can start by scaling the solution slowly, putting it into action within more and more company processes.
Manufacturing:
Cycle Time – The time spent from the beginning to the end of a process
Changeover Time – Time needed to switch the line from making one product to the next
Defect Rate – Percentage of products manufactured defective
Inventory Turnover – How long it takes for the manufacturing line to turn inventory into products
Planned VS Emergency Maintenance – The ratio of the times planned maintenance and emergency maintenance happen
IT:
Mean Time to Repair – Average time needed to repair the system / software / app after an emergency
Support Ticket Closure Rate – Number of support tickets closed by the support team divided by the number opened
Application Dev. – The time needed to fully develop a new application from scratch
Cycle Time – The time needed to get the network back up after a security breach
Once you have the exact KPIs defined, you’ll need to go after the individual processes. The easiest way to do this is to do business process mapping. While it can be hard to analyze processes as a concept, it’s a lot easier if you have everything written down step by step. This is where the operational manager comes in handy – they make it marginally easier to define and analyze the processes.
There Are 2 Ways To Map Out BPR Processes:
Process Flowcharts – the most basic way to work with processes is through flowcharts. It is important to write down the processes step by step.
Business Process Management Software – if you’re more tech-savvy, using software for process analysis can make everything a lot easier. You can use Tallyfy, for example, to digitize your processes, set deadlines, etc. Simply using such software might end up optimizing the said processes as it allows for easier collaboration.
Finally, once you’re done with all the analysis and planning, you can start implementing the solutions and changes on a small scale. Once you get to this point, what you have to do now is to put your theories into practice and seeing how the KPIs hold up. If the KPIs show that the new solution works better, you can start by scaling the solution slowly, putting it into action within more and more company processes.
If not, you go back to the drawing board and start chalking up new potential solutions. There are a lot of both successful and catastrophic business process re-engineering examples in history. One of the most referenced business process re-engineering examples is the case of Ford, an automobile manufacturing company.
In the 1980s, the American automobile industry was in a depression, and in an attempt to cut costs, Ford decided to scrutinize some of their departments in an attempt to find inefficient processes. One of their findings was that the accounts payable department was not as efficient as it could be: their accounts payable division consisted of 500 people, as opposed to Mazda’s (their partner) .
While Mazda was a smaller company, Ford estimated that their department was still 5 times bigger than it should have been.
In the 1980s, the American automobile industry was in a depression, and in an attempt to cut costs, Ford decided to scrutinize some of their departments in an attempt to find inefficient processes. One of their findings was that the accounts payable department was not as efficient as it could be: their accounts payable division consisted of 500 people, as opposed to Mazda’s (their partner) .
While Mazda was a smaller company, Ford estimated that their department was still 5 times bigger than it should have been.
Accordingly, Ford management set themselves a quantifiable goal: to reduce the number of clerks working in accounts payable by a couple of hundred employees. Then, they launched a business process reengineering initiative to figure out why the department so overstaffed. They analyzed the current system, and found out that it worked as follows:
When the purchasing department would write a purchase order, they sent a copy to accounts payable. Then, the material control would receive the goods, and send a copy of the related document to accounts payable. At the same time, the vendor would send a receipt for the goods to accounts payable.
Then, the clerk at the accounts payable department would have to match the three orders, and if they matched, he or she would issue the payment. This, of course, took a lot of manpower in the department.
So, as is the case with BPR, Ford completely recreated the process digitally thus:
Purchasing issues an order and inputs it into an online database;
Material control receives the goods and cross-references with the database to make sure it matches an order;
If there’s a match, material control accepts the order on the computer.
In the new scenario, a buyer did not need to send a copy of the purchasing order form to the creditor administration any longer. 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 and registers this in the computer system. If they do not, the items are returned. Report say that Ford benefited drastically from this change with an almost 75% decrease in workforce in the accounts payable department.
The need for accounts payable clerks to match the orders was completely eliminated. When it comes to BPR the best way to reduce costs and improve service quality is to put the decision point where the work is performed, and build control into the process. For a successful BPR effort, it is important to look at all the tasks that are working to achieve the same goal.
The need for accounts payable clerks to match the orders was completely eliminated. When it comes to BPR the best way to reduce costs and improve service quality is to put the decision point where the work is performed, and build control into the process. For a successful BPR effort, it is important to look at all the tasks that are working to achieve the same goal.
This exercise can then allow several jobs to be combined into one. In addition, parallel processes leading to the same outcome should be connected within the process rather than just combining results at the end. Also, it is important to look at all available resources and place the actual work where it makes the most sense.
To make the process most efficient, the power to make decisions regarding it should be given to the people performing the process and any unnecessary control systems should be eliminated. Instead of having extra processes to record information relating to the process, a resource within the process should provide all necessary data to increase accuracy and reduce redundancy.
To make the process most efficient, the power to make decisions regarding it should be given to the people performing the process and any unnecessary control systems should be eliminated. Instead of having extra processes to record information relating to the process, a resource within the process should provide all necessary data to increase accuracy and reduce redundancy.
A BPR Program Will Fail If:
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. Start with a blank sheet of paper and rethink existing processes to deliver more value to the customer.
Moreover, adopt a new value system that places increased emphasis on customer needs. Reorganization by teams decreases the need for management layers, accelerates information flows and eliminates the errors and rework caused by multiple handoffs. A successful BPR project can be more identified with the following success factors:
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. Any BPR activity needs to begin with a clearly defined and measurable objectives.
- Proven methodology
- Compelling business case for change
- Effective change management
- Strategic alignment
- Line ownership
- Top management sponsorship
- Re-engineering team composition
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. Any BPR activity needs to begin with a clearly defined and measurable objectives.
Whether the goal is reducing costs, improving quality of product, or increasing efficiency, the framework for what needs to be achieved has to be decided upon at the outset, in line with the company’s vision and mission. 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 company’s output or those that clash with the company’s mission become part of the ‘red’ list. This clear identification makes the difference between BPR success and failure. Before any new product is launched, a prototype must be tested 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 basic reason is the inability to identify and accept any limitations at the testing stage. Among other factors, both the management’s attitude towards the new way of work and the employees’ outlook towards the change should be carefully assessed.
So What Is The Future Of BPR?
A recent emphasis in business on digital transformation as a way to gain competitive advantage, as well as the pervasiveness of the Internet of Things (IoT) and advances in artificial intelligence (AI) have spurred many companies to radically rethink their workflows and make technology-driven changes.
So What Is The Future Of BPR?
A recent emphasis in business on digital transformation as a way to gain competitive advantage, as well as the pervasiveness of the Internet of Things (IoT) and advances in artificial intelligence (AI) have spurred many companies to radically rethink their workflows and make technology-driven changes.
In the future, it's expected that business process reengineering will continue to be part and parcel of most business transformation and enterprise resource planning initiatives. In the current global scenario, organizations of all sizes and types are faced with intense competition. To remain competitive, increase efficiency and improve bottom line, most organizations are turning to BPR.
