Lesson 2: Business Process Reengineering

What is a Process?

A specific ordering of work activities across time and space, with a beginning and end, and
clearly identified inputs and outputs a structure for action.

Processes are generally identified in terms of beginning and end points, interfaces, and
organization units involved, particularly the customer unit. High Impact processes should
have process owners. Examples of processes include: developing a new product; ordering
goods from a supplier; creating a marketing plan; processing and paying an insurance claim;
etc.

What is a Business Process?

A group of logically related tasks that use the firm's resources to provide customer-oriented
results in support of the organization's objectives

The topic of BPR involves discovering how business processes currently operate, how to
redesign these processes to eliminate the wasted or redundant effort and improve efficiency,
and how to implement the process changes in order to gain competitiveness.

The aim of BPR, according to Sherwood-Smith (1994), is “seeking to devise new ways of
organising tasks, organising people and redesigning IT systems so that the processes support
the organisation to realise its goals”

Business process reengineering (BPR) is the main way in which organizations become more
efficient and modernize. Business process reengineering transforms an organization in ways
that directly affect performance.

Business process reengineering (BPR) is the analysis and redesign of workflow within and
between enterprises. BPR reached its heyday in the early 1990's when Michael Hammer and
James Champy published their best-selling book, "Reengineering the Corporation". The
authors promoted the idea that sometimes radical redesign and reorganization of an enterprise
(wiping the slate clean) was necessary to lower costs and increase quality of service and that
information technology was the key enabler for that radical change. Hammer and Champy
felt that the design of workflow in most large corporations was based on assumptions about
technology, people, and organizational goals that were no longer valid.
They suggested seven principles of reengineering to streamline the work process and thereby
achieve significant levels of improvement in quality, time management, and cost:

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 though they were centralized.

5. Link parallel activities in the workflow instead of just integrating their results.

6. Put the decision point where the work is performed, and build control into the process.

7. Capture information once and at the source.

Role of Information Technology

Information technology (IT) has historically played an important role in the reengineering
concept. It is considered by some as a major enabler for new forms of working and
collaborating within an organization and across organizational borders. The early BPR
literature, e.g. Hammer & Champy (1993), identified several so called disruptive
technologies that were supposed to challenge traditional wisdom about how work should be
performed.

1. Shared databases, making information available at many places

2. Expert systems, allowing generalists to perform specialist tasks

3. Telecommunication networks, allowing organizations to be centralized and decentralized

4. Decision-support tools, allowing decision-making to be a part of everybody's job

5. Wireless data communication and portable computers, allowing field personnel to work
office independent

6. Interactive videodisk, to get in immediate contact with potential buyers

7. Automatic identification and tracking, allowing things to tell where they are, instead of
requiring to be found
8. High performance computing, allowing on-the-fly planning and revisioning

Impact of BPR on organizational performance

The two cornerstones of any organization are the people and the processes. If individuals are
motivated and working hard, yet the business processes are cumbersome and non-essential
activities remain, organizational performance will be poor. Business Process Reengineering is
the key to transforming how people work. What appear to be minor changes in processes can
have dramatic effects on cash flow, service delivery and customer satisfaction. Even the act
of documenting business processes alone will typically improve organizational efficiency by
10%.

Tips for Implementation of BPR project

The best way to map and improve the organization's procedures is to take a top down
approach, and not undertake a project in isolation.

That means:

• Starting with mission statements that define the purpose of the organization and describe
what sets it apart from others in its sector or industry.

• Producing vision statements which define where the organization is going, to provide a
clear picture of the desired future position.

• Build these into a clear business strategy thereby deriving the project objectives.

• Defining behaviours that will enable the organization to achieve its' aims.

• Producing key performance measures to track progress.

• Relating efficiency improvements to the culture of the organization

• Identifying initiatives that will improve performance.

Once these building blocks in place, the BPR exercise can begin

Why Reengineer?

 Customers Demanding

 Changing Needs
  Competition

 Local & Global

 Change Technology

 Customer Preferences

Why Organizations Don’t Reengineer?

 Complacency -(a feeling of self satisfaction). A feeling of contentment or self-

 Political Resistance

 New Developments

 Fear of Unknown and Failure

Task:

Discussion Topic:

1. Is Radical Business Process Reengineering (BPR) always necessary for organizations

Discussion Prompts:

 In what situations would radical BPR be more effective than incremental changes?
 How does BPR impact organizational culture, and what role does leadership play in
successful reengineering?
 Can information technology alone drive successful BPR, or is human input equally
important in transforming business processes?
 What are the risks and benefits of reengineering for organizations that already have
established workflows and satisfied customers?
2. What disruptive technologies can we apply for a successful Business Process
Reengineering (BPR) ventures