Business Process Reengineering

05/06/2020 1 By indiafreenotes

Business process re-engineering (BPR) is a business management strategy, 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 improve customer service, cut operational costs, and become world-class competitors.

BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. According to early BPR proponent Thomas H. Davenport (1990), a business process is a set of logically related tasks performed to achieve a defined business outcome. 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.

Business process reengineering is also known as business process redesign, business transformation, or business process change management.

Business Process Reengineering or BPR for short, is a methodology and technique with which organizations radically change their business processes with the aim of becoming more efficient and more modern. The far-reaching measures that are taken after the decision to restructure a process not only concern formal procedures or other existing processes, but can also bring about radical changes in management style and corporate culture.

Benefits of Business Process Reengineering

Organizations that take part in Business Process Reengineering are the first to examine the organization and its environment. Objectives play a leading role in shaping new processes or changing existing processes. Business Process Reengineering, invented by IT expert Michael Hammer, is mainly applied in information technology, but is a standardised model that can be used to optimise many processes or organizations. Benefits of using BPR are:

  1. Shorten lead times

In information technology, in particular, there is a lot of potential that is not yet being used. Outdated processes, such as the manual execution of administrative matters, can be fully automated with an investment. The investments are recouped by the lower wage costs.

  1. Increase productivity

The goal of BPR is to modernise outdated processes and that often yields time-saving results. For example, after performing BPR, the organization can discover that a certain process can be carried out by two employees instead of four. It’s important that the employees themselves provide input and come up with suggestions; after all, they know better than anyone else how the business processes work.

  1. Improve quality and customer focus

By changing task orientation to process orientation, the focus is put on the customer. This has the advantage that all irrelevant processes quickly come to the foreground, after which they can easily be removed or modified.

  1. Improve competitive position

Normally, changes that an organization makes are only gradually noticed. In order to keep up with the competition, and to satisfy customer needs, however, we must act appropriately. BPR is ideally suited for this because the radical changes are implemented in a relatively short period.

  1. Implement new technology

For example, an online webshop can choose to implement an extensive help centre with an interactive Q&A. The visitor can ask his or her question with the help of keywords and use the computer to look for a standardised answer. This way, the customer service employee won’t be occupied and can keep themselves busy with something else.

A downside to adjusting business processes as quickly as possible in order to be able to work more efficiently, is that some employees need more time to adjust than others. If an employee on Monday morning hears that their entire job description has been changed, this can seem overwhelming. Which is why it’s very important that the changes that are implemented are well communicated to the employee, and that guidance is provided if necessary.

Business Process Re-engineering Steps:

  1. Create a vision

Before a process is reviewed or adjusted, there needs to be a clear picture of the reason for the change. It’s important that the customer is the focus of this vision. The objectives must then be clarified in qualitative and quantitative terms. If the objectives are clear, it’s important to convince the employees that the changes are necessary.

  1. Select a team

A skilled team needs to be formed to get started with the changes and to minimise the chance of failure. It’s valuable to set up a diverse team because creativity is essential in analysing current business processes and developing new ones. For example, the problem is looked at from different perspectives and an accurate diagnosis is formed in the following steps.

  1. Select and understand current process

The complete current process needs to be mapped out in order to optimise it. This can be done by using flowcharts and software. Key Performance Indicators (KPIs) can then be linked to the relevant process in order to be able to monitor whether the process has the desired effect. This way, all matters that add no value to the process can be identified. These KPIs are compared in the following phases with the same indicators, but then for the new process.

  1. Develop a new process

If the KPIs show that a current process is inefficient or ineffective, a new process must be drawn up. The customer-oriented vision from step 1 should be the guide here.

  1. Implement a new process

Once the development and planning of the new process is complete, a small scale test can be run. If necessary, adjustments can then be made. The results and effects must be closely monitored with the KPIs. If it turns out that the new process works better than the previous one, it can be implemented on a larger scale.

  1. Evaluate

In a highly dynamic environment, a lot changes, so sometimes the indicators can give a different picture over time. By running an evaluation, inconsistencies are noticed sooner and can be adequately anticipated.