What is Business Process Re-Engineering (BPR)?
The business processes of an organisation represent a set of activities which change the inputs into outputs in the form of goods and services which are used by other people. To do this, the organisation employs manpower and tools. Re-engineering as a concept is not well understood by few managers. The managers view individual processes in isolation and are not able to view them in conjunction with other processes, which ultimately form the organisation. This integration of processes is not visible. The key factors for managers are jobs, activities, structure and manpower rather than the achieved output.
For example, order processing is viewed as a sequential process, which includes several steps like processing an order form, coordinating the pickup from the warehouse, and transferring the ownership to the final consumer. The customers are more concerned by the end outcomes and do not focus on tasks involved. They are interested in knowing the potential of the process only. The activities or actions which complete the process are of prime importance.
Re-engineering indicates the variety of changes that an organisation can bring about in its processes or systems, ranging from slight incremental changes to drastic renovations. For re-engineering to succeed managers need to discard the current procedures and doctrines that govern their functioning and adopt new ones instead. These new ideas give birth to business re-engineering.
Business Process Re-engineering or BPR is the process of evaluating and re-organizing the processes and activities between and within the organizations. In the field of management and computer science, improving the performance and efficiency of the business processes in order to improve the organizational stability is called business process re engineering. The critical aspect to BPR is that managers should examine their existing processes from a clean slate viewpoint and see how these processes can be improved for the betterment of the organisation.
Re-engineering is a very recent approach of strategy implementation, which is utilized for making operations better. It involves the thorough redesigning of the business processes of the organisation so that the organisation can gain massive improvements in terms of service, time and cost.
Re-engineering or Business Process Re-Engineering focuses to eliminate the traditional rules and regulations that govern an organisation. These rules and regulations may include ancient policies and procedures followed blindly by all the organizations. These practices have not been changed since the time of its inception. Many of these rules become outdated and affect the performance of the organisation. These rules and regulations had been framed by the organizations without understanding the relevance of organizational objectives, people, and technology. Therefore, it is very essential to re structure the policies and processes of such organizations.
Principles of Business Process Re-Engineering
Re-engineering as a concept was propounded by Michael Hammer. He laid down the following 7 principles of re-engineering :
1) Organize around Outcomes, not Tasks :
The job of a person or a department should be re designed by modifying objectives or final outcomes and not by framing their tasks.
2) Have those who Use the Output of the Process Perform the Process :
The end users of the output of the processes should perform them themselves. This can be done with the aid of computer based information systems.
3) Subsume Information-Processing Work into the Real Work that Produces the Information :
The people or department that generate the raw data should also process the same for use rather than merely sending it to other departments.
4) Treat Geographically Dispersed Resources as though they were centralized :
The organisation should use modern information systems to have elasticity in providing services while at the same time keeping the resources to a centralized place.
5) Link Parallel Activities Instead of Integrating their Results :
Activities which perform different tasks independently, and are ready to come together, will bring about better integration of the organization's activities.
6) Put the Decision Point wherein the Work Is Performer and Build Control into the Process :
The people who are the actual doers should be the actual decision-makers. They should also have sufficient control of their activities.
7) Capture Information once and at the Source :
The units should not be engaged individually in database creation. Useful information should be put on network and shared for the benefit of all.
Phases of Business Process Re-Engineering
Peter F. Drucker says, "Re-engineering is new, and it has to be done". The BPR process can be segregated into seven clear steps or phases. It begins with a process of communication in the entire organisation. This is the most important pre-requisite for re-engineering. The various stages/phases of BPR are as follows :
Phase 1: Begin Organizational Change :
In this the following things are done :
1) Assessing the Current State of the Organisation :
The first step involves taking a deep and impartial view of the existing capabilities of the organisation. The emphasis is on analyzing the operating processes and the outcomes that the organisation has got from them. This allows the organisation to understand what kind of improvements can be released by BPR. It is very much possible that only incremental change is to be made in the organization's processes to realize the goal. This can be addressed by programs like Kaizen or TQM. The business needs to be analyzed in terms of :
- What is the current way of doing things?
- What changes may happen?
- What are the new dynamics in the external environment of the organisation?
2) Explaining the Need for Change :
The next step tries to identify harmful procedures and systems which have impacted the performance. of the organisation and have prevented it from realizing its objectives. Maybe the demographics of the customer have changed or the technology being used by the company is outdated. Maybe the competition has stolen a march over the company by adopting newer and smarter company which have redefined efficiencies in the industry. It needs to be seen if the organisation is able to meet the needs of its marketplace effectively.
3) Illustrating the Desired State :
The organisation needs to take into confidence its key resource the people. The people are the change agents who can make the BPR a success or a failure.
4) Creating a Communication Campaign for Change :
The business process re-engineering process requires substantial changes to be made in the organisation. This can make significant alteration in the existing ways of doing business in the organisation, An effective communication plan is therefore essential to spread the objectives and benefits of the BPR activity throughout the organisation. The communication should be an on-going affair and constant streams of communication should flow to all corners of the organisation. This is essential as without an understanding of the objectives of the BPR activity, there will be lot of confusion in the organisation. This can also lead to resistance from different parts of the organisation. The BPR process is most effective. when all the members of the organisation are clear about its objectives and link up effectively to discard old and obsolete working rules and regulations and adopt better ones.
Phase 2: Build the Re engineered Organisation :
This involves :
- Preparing an organisation design for BPR,
- Determine the roles to be performed for the BPR,
- Earmarking the individuals who re-engineer the process
To support the BPR activity the organisation needs to develop an infrastructure. This is a very critical part of the BPR activity. Some of the questions that need to be addressed at this stage are :
- Who are the set of people who will drive the BPR activity?
- What responsibilities they have to bear?
- Who will be the reporting authority for these people?
- What will be the impact of BPR activity on daily operations of the business?
Phase 3: Identify BPR Opportunities :
This phase has the following steps :
- Recognizing the main processes,
- Identifying major change-agents,
- Collecting the performance metrics of internal environment,
- Collecting the performance metrics of external environment,
- Marking the processes to be re-designed,
- Making priority sequence of marked processes,
- Analyzing prevalent business strategies,
- Interacting with customers to find out their needs,
- Recognizing customer's real needs,
- Designing performance objectives for new processes,
- Determine the crucial features of the processes,
- Identifying factors affecting the implementation.
Phase 4: Understand the Existing Process :
The main steps in this stage are :
- Determining the relevance of present steps being performed,
- Marking the present process as model,
- Identifying the present application of technology,
- Identifying the present application of information,
- Evaluating the prevalent organizational structure,
- Comparing the relevance of new objectives present processes.
Phase 5: Re-engineer the Process :
The major components of this stage are :
- Diversifying the re-engineering team
- Checking the suitability of current assumptions
- Utilizing change levers for brainstorming,
- Utilizing BPR principles for brainstorming,
- Measuring the new technology influence,
- Considering what various stakeholders feel about the business process re-engineering activity,
- Utilizing customer value as the central power.
Phase 6: Blueprint the New Business System :
The activities involved are :
- Defining the new workflow,
- Making the new process steps as a model,
- Making the new information requirements as model,
- Preparing new organizational design,
- Enlisting the specifications of new technology,
- Observing the new manpower management system,
- Highlighting values and culture that will be required in the new environment.
Phase 7: Perform the Transformation :
The last phase has the following steps :
- Making a migration policy,
- Generating an action plan for migration,
- Formulating metrics for analyzing implementation related act,
- Coordinating with concerned staff,
- Enabling continuous implementation,
- Creating the new organizational designs,
- Measuring the present capabilities of the personnel available,
- Communicating the required level of skills and tasks to the workforce,
- Re-organizing the workforce,
- Designing training programs,
- Briefing the personnel regarding new process,
- Briefing the personnel regarding the new technology,
- Briefing the management authority for providing required facilities,
- Determining the modes of implementing new technology,
- Adopting new technologies,
- Introducing techniques of process improvement.
Advantages of Business Process Re-Engineering
The advantages of re-engineering are as follows :
1) Satisfaction :
Re-engineering the work processes of an organisation increases the satisfaction of the employees. They get a greater sense of achievement as their productivity rises and their jobs attain a greater meaning. The employees need greater appreciation for the job done. In all this, the needs of the customers are also addressed better by the organisation.
2) Growth of Knowledge :
The knowledge process becomes more important than the individual. Individual growth and aspirations become secondary in importance. Mastering the process knowledge becomes the most important aspect in BPR.
3) Solidarity to the Company :
The workers in a re-engineered environment spend more time on doing work that is value adding. This increases the profitability and efficiency of the organisation and also leads to better compensation for the workers. It therefore helps in building solidarity within the company.
4) Authority :
The chain of command in a re engineered organisation differs significantly. In a traditional organisation workers are expected to obey rules whereas in re-engineered a organisation workers are encouraged to create their own rules. The level of delegation practiced is very high and management invests the workers with the requisite authority to get things done.
i) Reduce Organizational Complexity :
The organisation focuses on only core processes and does away with unnecessary processes. This reduces complexity at an organizational level.
ii) Offers an Alternative Perspective :
Strategy formation can now be based on processes rather than on the existing products and markets.
iii) Link the Functional Areas :
Since BPR focuses on processes it is able to link various functional areas in the organisation by cutting across the value chain. This helps in increasing overall customer satisfaction.
Disadvantages of Business Process Re-Engineering
The disadvantages of re-engineering are as follows :
1) Re-Engineering Too Many Processes at Initial Stages :
Many a times, the top management in an eagerness to cash the benefits of BPR may end up re-engineering too many processes in the organisation.
2) Inadequate Training of Process Owners and Team Members :
One of the biggest reasons for failure of business process re-engineering initiatives is the inadequate training that is provided in organizations. Organizations are often in a hurry to implement and do not educate all the stakeholders on the benefits that are likely to result from the BPR activity. As a result, the implementation becomes faulty and the resistance also happens within the organisation as the goals are not clearly articulated.
3) Unclear Knowledge of Re-Engineering :
The objective of the BPR process is to bring about drastic changes in the performance of the organisation. Incremental changes should not be viewed as BPR by the organisation. These changes need to happen but the objectives of business process re-engineering are far greater.
4) Wastage of Time in Detailed Process Analysis :
An excess of analysis leads to paralysis. The re- engineering team often spends a large amount of time in analyzing the minute events of the organizational process and this often leads to a lot of wasted time and effort in unnecessary things.
5) Fear of Failure :
For an activity like BPR to succeed, the employees should not be burdened by fear. Even BPR processes have an element of risk in their implementation and it is possible that the re-engineered process may not yield any drastic results that were initially envisaged by the management. This often leads to fear of failure in the BPR team and they have a habit of refraining from risks and taking steps which are safe. These lead to incremental changes and defeat the purpose of BPR.
6) Delay in Showing Results :
The management often loses patience with the business process re-engineering activity and expect results very fast. When the results are not immediately seen, the management dumps the BPR activity as a one-time activity.
7) Non-Availability of Adequate Resources :
Many a times, the re-engineering team comes out with a break through idea but the implementation gets affected because the organisation lacks the adequate resources to make the implementation possible. This affects the morale of the BPR team and the productivity declines.
8) Limited Awareness amongst Employees :
Treating BPR as only a managerial exercise can be another cardinal mistake committed by an organisation and one which dooms the activity to failure. Without the active involvement of all employees of the organisation, the benefits of business process re-engineering are not possible to realize and it ends up being a failed activity.