Business Process Reengineering - New Insights

By

Saji Joseph
Bhargav Pandya
Lecturer
Shree Leuva Patel Trust MBA Mahila College
Amreli (Gujarat)
E-mail: bhpandya@rediffmail.com
 

BACKGROUND:

The concept of reengineering traces its origins back to management theories developed as early as the nineteenth century. The purpose of reengineering is to "make all your processes the best-in-class." Frederick Taylor suggested in the 1880's that managers could discover the best processes for performing work and reengineer them to optimize productivity. BPR echoes the classical belief that there is one best way to conduct tasks. In Taylor's time, technology did not allow large companies to design processes in a cross- functional or cross-departmental manner. Specialization was the state-of-the-art method to improve efficiency given the technology of the time.

In the early 1900's, Henri Fayol originated the concept of reengineering: "To conduct the undertaking toward its objectives by seeking to derive optimum advantage from all available resources." Although the technological resources of our era have changed, the concept still holds. About the same time, another business engineer, Lyndall Urwick stated "It is not enough to hold people accountable for certain activities, it is also essential to delegate to them the necessary authority to discharge that responsibility." This admonition foreshadows the idea of worker empowerment which is central to reengineering.

Although Hammer and Champy declare that classical organization theory is obsolete, classical ideas such as division of labor have had an enduring power and applicability that reengineering has so far failed to demonstrate. BPR does not appear to qualify as a scientific theory, because, among other things, it is not duplicable and it has limited scope. The applicability of classical management theories, such as division of labor, were widely duplicable and portable. These ideas stimulated increases in productivity, output, and income that led to the creation of the middle class.

Cyert and March, among others, point out that conflict is often a driving force in organizational behavior. BPR claims to stress teamwork, yet paradoxically, it must be "driven" by a leader who is prepared to be ruthless. One executive with BPR experience warns not to assume "you can simply issue directives from the center and expect it to happen."

MEANING:

Michael Hammer defines business process reengineering in his book Reengineering the Corporation as:

Fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance.

Hammer focuses on one of the key concepts of BPR, that it is fundamental and radical.   The alternative business improvement methodology is Continuous Process Improvement, which emphasizes small and measurable refinements to an organization's current processes and systems. Continuous process improvement has its origins in total quality management (TQM) and Six Sigma, a program that began at Motorola.

Process improvement or reengineering? 

Many project teams struggle between using a continuous-improvement methodology and business process reengineering (BPR) approach for their project. The matrix below provides guidelines to help you make this selection.

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.

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.

Reengineering Success Factors:

More than half of early reengineering projects failed to be completed or did not achieve bottom-line business results, and for this reason business process reengineering "success factors" have become an important area of study. The success factors below are derived from benchmarking studies with more than 150 companies over a 24 month period.

Success factors are a collection of lessons learned from reengineering projects. Reengineering team members and consultants that have struggled to make their projects successful often say,

"If I had it to do over again, I would…" ,

and from these lessons common themes have emerged. In this module we examine these themes or success factors that lead to successful outcomes for reengineering projects. These include:

1. Top Management Sponsorship (strong and consistent involvement)
2. Strategic Alignment (with company strategic direction)
3. Compelling Business Case for Change (with measurable objectives)
4. Proven Methodology (that includes a vision process)
5. Effective Change Management (address cultural transformation)
6. Line Ownership (pair ownership with accountability)
7. Reengineering Team Composition (in both breadth and knowledge)

Reengineering Recommendations:

• BPR must be accompanied by strategic planning, which addresses leveraging IT as a competitive tool.
• Place the customer at the center of the reengineering effort -- concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.
• BPR must be "owned" throughout the organization, not driven by a group of outside consultants.
• Case teams must be comprised of both managers as well as those will actually do the work.
• The IT group should be an integral part of the reengineering team from the start.
• BPR must be sponsored by top executives, who are not about to leave or retire.
• BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of "limbo".
• BPR must not ignore corporate culture and must emphasize constant communication and feedback.

CONCLUSION:

Business process reengineering is the redesign of business processes and the associated systems and organizational structures to achieve a dramatic improvement in business performance.  The business reasons for making such changes could include poor financial performance, external competition, erosion of market share or emerging market opportunities.  BPR is not - downsizing, restructuring, reorganization, automation, new technology, etc.  It is the examination and change of five components of the business:

1. Strategy
2. Processes
3. Technology
4. Organization
5. Culture

References:

* www.prosci.com
* www.netlib.com
* www.faa.gov/ait/bpi/handbook/
 

Saji Joseph
Bhargav Pandya
Lecturer
Shree Leuva Patel Trust MBA Mahila College
Amreli (Gujarat)
E-mail: bhpandya@rediffmail.com
 

Source: E-mail September 30, 2005

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