Purpose of this module:

1. Gain an understanding of what is meant by "business process".

If you have ever waited in line at the grocery store, you can appreciate the need for process improvement.
In this case, the "process" is called the check-out process, and the purpose of the process is to pay for
and bag your groceries. The process begins with you stepping into line, and ends with you receiving your
receipt and leaving the store. You are the customer (you have the money and you have come to buy
food), and the store is the supplier.

The process steps are the activities that you and the store personnel do to complete the transaction. In
this simple example, we have described a business process. Imagine other business processes: ordering
clothes from mail order companies, requesting new telephone service from your telephone company,
developing new products, administering the social security process, building a new home, etc.

Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods
or services) for another person or process using people and tools. We all do them, and at one time or
another play the role of customer or supplier.

You may see business processes pictured as a set of triangles as shown below. The purpose of this
model is to define the supplier and process inputs, your process, and the customer and associated
outputs. Also shown is the feedback loop from customers.

So why business process improvement?

Improving business processes is paramount for businesses to stay competitive in today's marketplace.
Over the last 10 to 15 years companies have been forced to improve their business processes because
we, as customers, are demanding better and better products and services. And if we do not receive what
we want from one supplier, we have many others to choose from (hence the competitive issue for
businesses). Many companies began business process improvement with a continuous improvement
model. This model attempts to understand and measure the current process, and make performance
improvements accordingly.

The figure below illustrates the basic steps. You begin by documenting what you do today, establish
some way to measure the process based on what your customers want, do the process, measure the
results, and then identify improvement opportunities based on the data you collected. You then implement
process improvements, and measure the performance of the new process. This loop repeats over and
over again, and is called continuous process improvement. You might also hear it called business
process improvement, functional process improvement, etc.
This method for improving business processes is effective to obtain gradual, incremental improvement.
However, over the last 10 years several factors have accelerated the need to improve business
processes. The most obvious is technology. New technologies (like the Internet) are rapidly bringing new
capabilities to businesses, thereby raising the competitive bar and the need to improve business
processes dramatically.

Another apparent trend is the opening of world markets and increased free trade. Such changes bring
more companies into the marketplace, and competing becomes harder and harder. In today's
marketplace, major changes are required to just stay even. It has become a matter of survival for most
companies.

As a result, companies have sought out methods for faster business process improvement. Moreover,
companies want breakthrough performance changes, not just incremental changes, and they want it now.
Because the rate of change has increased for everyone, few businesses can afford a slow change
process. One approach for rapid change and dramatic improvement that has emerged is Business
Process Reengineering (BPR).

Business Process Reengineering (BPR)

BPR relies on a different school of thought than continuous process improvement. In the extreme,
reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over.
Such a clean slate perspective enables the designers of business processes to disassociate themselves
from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself
into the future and asking yourself: what should the process look like? What do my customers want it to
look like? What do other employees want it to look like? How do best-in-class companies do it? What
might we be able to do with new technology?

Such an approach is pictured below. It begins with defining the scope and objectives of your
reengineering project, then going through a learning process (with your customers, your employees, your
competitors and non-competitors, and with new technology). Given this knowledge base, you can create
a vision for the future and design new business processes. Given the definition of the "to be" state, you
can then create a plan of action based on the gap between your current processes, technologies and
structures, and where you want to go. It is then a matter of implementing your solution.

In summary, the extreme contrast between continuous process improvement and business process
reengineering lies in where you start (with today's process, or with a clean slate), and with the magnitude
and rate of resulting changes.
Over time many derivatives of radical, breakthrough improvement and continuous improvement have
emerged that attempt to address the difficulties of implementing major change in corporations. It is difficult
to find a single approach exactly matched to a particular company's needs, and the challenge is to know
what method to use when, and how to pull it off successfully such that bottom-line business results are
achieved. Such are the topics for this module series.

The BPR Online Learning Center offers several sources to help with reengineering and business process
design projects:

 free tutorials (provided in this series)