Topic 2
Topic 2
Topic 2
Introduction BPR
History of BPR
Basics of BPR
The Need for Reengineering
Benefits of BPR
Roles of Leader and Manager
BPR guiding principles
BPR and Performance Improvement
Myths about BPR
What BPR isn’t
Introduction
These days, every professional’s job description includes improving performance in cost,
service, and quality for their company. In response, business process reengineering (BPR) is
experiencing a modern resurgence. While applying BPR methodologies can improve processes
dramatically, you’ll still face plenty of challenges and decide on crucial elements that can
contribute to the success or failure of the transition.
Ambitious companies that implement BPR start with the intent of doing whatever it takes to
improve performance across the business. Examples of company-specific goals through BPR
include:
The term “reengineering” suggests that an item has already been developed and is now being
redeveloped. In this case, the business’s processes are undergoing redevelopment. Business
processes are the sets of activities that lead to specific goals or outcomes. Usually they are
performed regularly and systematically. In most businesses, changes to a pre-existing process
happen relatively slowly and incrementally. With BPR, however, the most modern tools are put
to use from the ground up as the business rethinks the fundamentals of existing processes, ideas,
and designs.
The term “process” focuses on how work is done, not on the specific people, their job
descriptions, or the tasks they perform. BPR is more interested in the series of steps that produce
the product or service, from conception through creation.
BPR can bring dramatic business improvements in quality and productivity. However, because
extensive employee input and engagement are required, BPR can be very expensive and time-
intensive to implement. An alternative to the traditional approach of constant meetings is group
decision support software (GDSS), which helps solve unstructured or semi-structured issues by
providing collaboration platforms for idea generation and organization, conflict resolution,
priority setting, and solution generation.
Another term for a GDSS is a computerized collaborative work system. BPR is also known
as business process redesign, business transformation, or business process change management.
Michael Hammer first introduced BPR in a 1990 issue of the Harvard Business Review. A
graduate of and professor at the Massachusetts Institute of Technology (MIT), Hammer wanted
companies to redesign their operations, and not simply by using computers to speed up
inefficient processes. His approach reflected the flatter, more customer-centric Information Age
requirements and changed everything in the company — not just the processes, but also the
people, managers, jobs, and values.
Since then, the modern company environment has become hypercompetitive and globalized,
with demanding customers and a necessary focus on management and IT innovation,
responsiveness, speed, and quality. As a result, companies have had to look for radical ways to
deliver. Hammer suggested using IT to examine the assumptions behind the processes. He
partnered with James Champy on the book Reengineering the Corporation: A Manifesto for
Business Revolution to present their overall methodology.
At about the same time, Thomas H. Davenport and James E. Short from MIT put out an article
about business process redesign. Their version of BPR placed IT at its heart. They detailed
ongoing work at MIT, Harvard, and several consulting companies, and they hatched an approach
for others to follow. Though still urging radical change, their BPR strategy was more modest,
tempered with the discipline of continuous improvement. They recommended selecting the most
critical processes, then analyzing and redesigning them iteratively.
From these efforts, big businesses clamored to start their own BPR projects. They were
interested in how to produce their goods quicker. By 1993, an estimated 65 percent of Fortune
500 companies claimed to either have initiated or planned for BPR efforts.
PADM recognizes that the relationship between IT and process is reciprocal: Changes in IT may
require changes in process, and changes in process may require changes in IT. The old way,
which advocated for an IT-centric model, was fading out. In his book Process Reengineering:
The Key to Achieving Breakthrough Success, Lon Roberts continued Hammer and Champy’s
emphasis on a customer-centric model.
BPR methodologies
Hammer/Champy,
Davenport, PADM, and Ivar Jacobson. The study compared whether the BPR
methodologies recommend detail modeling and analysis of the as-is situation, whether
they support incremental or radical change to business processes, and whether they
suggest a review of the business prior to a BPR project. From these studies, five phases
for a BPR project have been identified;
This wave of optimism for BPR did not last long. By 1995, the backlash hit. Professionals who
had strongly supported the use of BPR turned against it. Alongside poorly performed projects
and abuse of the concept, BPR use declined. Many of the earliest proponents blamed the hype of
the concept itself.
But BPR did not disappear completely. Companies never really stopped reworking the processes,
but instead labeled it differently, especially as the internet grew in prominence. In the 2000s
companies wanted to be able to offer their customers more, and BPR was a way to make it
happen. Newer BPR frameworks are different from those developed in the 1990s because
technology and the internet are now intrinsic; the infrastructures are in place. BPR was
considered the precursor to today’s BPM.
Another contemporary methodology for BPR was developed in 1999. This approach was
structured with a model gleaned from five different methodologies. This model had the following
steps:
BPR is having a resurgence now. The objectives and the execution are different; BPR is no
longer synonymous with massive downsizing efforts, and companies are once again embracing it
for their future.
Today, Agile transformation and object-oriented BPR are used widely and successfully,
especially in developing and launching software systems. Agile transformation has many
similarities to the BPR of the 1990s, although it is not as extreme. Object-oriented BPR depends
on business process modeling, which presents your processes as a comprehensive visual to
highlight efficiencies or issues. The “objects” in this type of BPR are occurrences of information
or behavior that means something to the company, such as specific customers, invoices, work
tasks, or events. The processes are modeled with these objects, clarifying the inner workings of a
company. Then the business can either be reverse- or forward-engineered. Reverse engineering is
the existing business modeled as-is. The business is studied and presented. In forward
engineering, the reverse-engineered business is redesigned with new processes.
Basics of BPR
Business Process Reengineering (BPR) is a management approach aiming at improvements by
means of elevating efficiency and effectiveness of the processes that exist within and across
organizations.
1. Introduction:
Business Process Reengineering (BPR) is a management approach aiming at improvements by
means of elevating efficiency and effectiveness of the processes that exist within and across
organizations. The key to BPR is for organizations to look at their business processes from a
“clean slate” perspective and determine how they can best construct these processes to improve
how they conduct business.
Business process reengineering is also known as BPR, Business Process Redesign, Business
Transformation, or Business Process Change Management.
In 1990, Michael Hammer, a former professor of computer science at the Massachusetts Institute
of Technology (MIT), published an article in the Harvard Business Review, in which he claimed
that the major challenge for managers is to obliterate non-value adding work, rather than using
technology for automating it (Hammer 1990).
This statement implicitly accused managers of having focused on the wrong issues, namely that
technology in general, and more specifically information technology, has been used primarily for
automating existing work rather than using it as an enabler for making non-value adding work
obsolete.
Hammer’s claim was simple: Most of the work being done does not add any value for customers,
and this work should be removed, not accelerated through automation. Instead, companies
should reconsider their processes in order to maximize customer value, while minimizing the
consumption of resources required for delivering their product or service.
A similar idea was advocated by Thomas H. Davenport and J. Short (1990), at that time a
member of the Ernst & Young research center, in a paper published in the Sloan Management
Review the same year as Hammer published his paper.
This idea, to unbiased review a company business processes, was rapidly adopted by a huge
number of firms, which were striving for renewed competitiveness, which they had lost due to
the market entrance of foreign competitors, their inability to satisfy customer needs, and their
insufficient cost structure. Even well established management thinkers, such as Peter Drucker
and Tom Peters, were accepting and advocating BPR as a new tool for (re-)achieving success in
a dynamic world.
During the following years, a fast growing number of publications, books as well as journal
articles, was dedicated to BPR, and many consulting firms embarked on this trend and developed
BPR methods. However, the critics were fast to claim that BPR was a way to dehumanize the
work place, increase managerial control, and to justify downsizing, i.e. major reductions of the
work force 1995, Industry Week 1994), and a rebirth of Taylorism under a different label.
Despite this critique, reengineering was adopted at an accelerating pace and by 1993, as many as
65% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to
have plans to do so. This trend was fueled by the fast adoption of BPR by the consulting
industry, but also by the study Made in America, conducted by MIT, that showed how
companies in many US industries had lagged behind their foreign counterparts in terms of
competitiveness, time-to-market and productivity.
Thomas H. Davenport (1993), another well-known BPR theorist, uses the term process
innovation, which he says - encompasses the envisioning of new work strategies, the
actual process design activity, and the implementation of the change in all its complex
technological, human, and organizational dimensions.
Additionally, Davenport points out the major difference between BPR and other approaches to
organization development (OD), especially the continuous improvement or TQM movement,
when he states that day firms must seek not fractional, but multiplicative levels of improvement
10x rather than 10%.”
In order to achieve the major improvements BPR is seeking for, the change of structural organizational
variables, and other ways of managing and performing work is often considered as being insufficient. For
being able to reap the achievable benefits fully, the use of information technology (IT) is conceived as a
major contributing factor. While IT traditionally has been used for supporting the existing business
functions, i.e. it was used for increasing organizational efficiency, it now plays a role as enabler of new
organizational forms, and patterns of collaboration within and between organizations.
BPR derives its existence from different disciplines and four major areas can be identified as being
subjected to change in BPR
1.Organization,
2.Technology,
3.Strategy, and
4.People.
Business strategy is the primary driver of BPR initiatives and the other dimensions are governed
by strategy’s encompassing role. The organization dimension reflects the structural elements of
the company, such as hierarchical levels, the composition of organizational units, and the
distribution of work between them. Technology is concerned with the use of computer systems
and other forms of communication technology in the business. In BPR, information technology
is generally considered as playing a role as enabler of new forms of organizing and collaborating,
rather than supporting existing business functions.
The people / human resources dimension deals with aspects such as education, training,
motivation and reward systems. The concept of business processes – interrelated activities
aiming at creating a value added output to a customer – is the basic underlying idea of BPR.
These processes are characterized by a number of attributes: Process ownership, customer focus,
value-adding, and cross-functionality.
In the mid 1990s, especially workflow management systems were considered as a significant
contributor to improved process efficiency. Also ERP (Enterprise Resource Planning) vendors,
such as SAP, positioned their solutions as vehicles for business process redesign and
improvement.
4. Methodology of BPR:
Although the names and steps being used differ slightly between the different methodologies,
they share the same basic principles and elements. The following description is based on the
PRLC (Process Reengineering Life Cycle) approach developed by Guha et.al. (1993). A more
detailed description can be found here.
Simplified schematic outline of using a business process approach involves;
1. Structural organization with functional units;
2. Introduction of new product development (as cross-functional process);
3. Re-structuring and streamlining activities, removal of non-value adding tasks. And the phases involved
include;
B. Initiating change
C. Process diagnosis
D. Process redesign
E. Reconstruction
1.Develop/install IT solution
2.Establish process changes
F. Process monitoring
Business Process Reengineering involves the radical redesign of core business processes to
achieve dramatic improvements in productivity, cycle times and quality. In Business Process
Reengineering, companies start with a blank sheet of paper and rethink existing processes to
deliver more value to the customer. They typically adopt a new value system that places
increased emphasis on customer needs. Companies reduce organizational layers and eliminate
unproductive activities in two key areas. First, they redesign functional organizations into cross-
functional teams. Second, they use technology to improve data dissemination and decision
making.
Business Process Reengineering is a dramatic change initiative that contains five major activities
that managers should take:
Increased effectiveness; identifying the core functions as well as any that are inefficient
or obsolete, hence increased customer focus, improved profitability
Reduced overall cost and cycle time; higher quality and control
Meaningful work for staff; the process promotes greater staff involvement
Improved organizational approach; realize business rules from the past, decreasing new
product and process activity time
Solidified business focus
Business growth; improving the industry position with radical improvements
Increased customer base
Downsized company structure, empowering employees
The BPR Leader has to be a person who holds one of the top management positions, to ensure
enough power and authority over the concerned departments, which strictly follow his or her
instructions required for a reengineering process. Most likely the Chief Executive Officer (CEO)
will be too preoccupied with several important activities and therefore not able to devote enough
time and effort to be the BPR Leader as well. Still the CEO has to give constant support to the
BPR Leader. Apart from holding a top position, the leader needs personal attributes such as
conviction, optimism, sternness and commitment, so that the employees are convinced that he or
she is going the same way.
The leader always has to be accessible to the Process Owners, when they face problems.
Manage meetings with BPR project teams regularly and show personal interest.
Ensure monitoring the results.
Change management
Organizing teams
Planning the work, change required
1. Strategic in concept
2. Customer focused
3. Focused on key business processes
4. Process responsibility and decisions at the point where work is performed
5. Cross functional in nature
6. Involves both internal and external customers
7. Requires senior management commitment
8. Involves integration of people and technical aspects
9. Requires clear communication
10. Requires a mindset of radical improvement
BPR and Performance Improvement
Some organizations shy away from process reengineering because they feel it is too costly and
too time-consuming. The questions asked by them are: “Why scrap a process when we can try
to fix it instead?” The answer is to investigate and appreciate the problem.
Which Approach to Choose?
Companies need to determine whether a certain process within the organization requires minor
healing (continuous process improvement) or major surgery (process, reengineering).
Generally speaking, it depends on the circumstances facing the business. While process
improvement efforts should be guided by organizational efforts, it is important to put these
approaches in context to determine which is suitable. Here are some guidelines for deciding
whether to apply BPI or BPR:
Business Process Improvement
1. As-is process is already mapped/documented
2. As-is process fundamentally works but not well enough with some areas in need of
improvement
3. Your focus is the process – not on implementing an overarching business strategy.
Through the treacherous years of manual processes, outdated legacy systems, inaccurate
performance data and internal operational breakdowns, most organizations are ready for a heavy
dose of business process reengineering. Everyone has different opinions of what business
process reengineering actually means and what its correlation is to ERP (Enterprise resources
planning) implementations.
Enterprise resource planning (ERP) is a process used by companies to manage and integrate the
important parts of their businesses. Many ERP software applications are important to companies
because they help them implement resource planning by integrating all of the processes needed
to run their companies with a single system. An ERP software system can also integrate
planning, purchasing inventory, sales, marketing, finance, human resources, and more.
Key Takeaways
ERP software can integrate all of the processes needed to run a company.
ERP solutions have evolved over the years, and many are now typically web-based
applications that users can access remotely.
An ERP system can be ineffective if a company doesn't implement it carefully.
An enterprise resource planning system can be thought of as the glue that binds together the
different computer systems for a large organization. Without an ERP application, each
department would have its system optimized for its specific tasks. With ERP software, each
department still has its system, but all of the systems can be accessed through one application
with one interface.
ERP applications also allow the different departments to communicate and share information
more easily with the rest of the company. It collects information about the activity and state of
different divisions, making this information available to other parts, where it can be used
productively.
ERP applications can help a corporation become more self-aware by linking information about
the production, finance, distribution, and human resources together. Because it connects different
technologies used by each part of a business, an ERP application can eliminate costly duplicate
and incompatible technology. The process often integrates accounts payable, stock control
systems, order-monitoring systems, and customer databases into one system.
ERP offerings have evolved over the years from traditional software models that make use of
physical client servers to cloud-based software that offers remote, web-based access. A company
could experience cost overruns if its ERP system is not implemented carefully.
Special Considerations
An ERP system doesn't always eliminate inefficiencies within the business. The company needs
to rethink the way it's organized, or else it will end up with incompatible technology.
ERP systems usually fail to achieve the objectives that influenced their installation because of a
company's reluctance to abandon old working processes that are incompatible with the software.
Some companies are also reluctant to let go of old software that worked well in the past. The key
is to prevent ERP projects from being split into many smaller projects, which can result in cost
overruns and hence the myths conceived about BPR.
Myth 1: Business process reengineering doesn’t need to happen during ERP projects. This
is perhaps the most misguided of all the myths mentioned. Every ERP system – regardless of
which you choose – will most likely wreak some sort of havoc on your business processes. Most
of these changes will be positive improvements but will still require some effort in defining your
operations in the new system environment.
Myth 2: Simply implementing a new ERP system will drive process improvements. This
may take the cake for the most pervasive myth in the industry regarding business process
reengineering. Today’s ERP systems are extremely robust and flexible, meaning even the
simplest business processes can be performed multiple ways. Organizations need to defined their
business processes so the software can be configured and customized accordingly.
Myth 3: ERP project teams should focus on “to-be” rather than “as-is” processes. Current-
state processes probably don’t affect day-to-day. But if you are the organization making the
changes or the employees doing the work every day, then the current processes absolutely do
matter. It is critical that you assess the current state of your processes to help you define the
future state as part of your business process reengineering and optimization efforts.
Myth 5: You can’t reengineer business processes before knowing which software you are
going to implement. Obviously, screen transactions and menu options are driven by specific
ERP software, but the how, what and when of what the business actually does is mostly
independent of the software. Sure, a new ERP system may provide some new and better ways of
carrying out the detailed transactions, but the general nature of the business operations probably
won’t change much. For this reason, it is typically more advantageous and efficient to both
evaluate and improve your business processes prior to selecting and implementing a new system.
Myth 6: All business processes need to be overhauled before selecting and implementing a
new ERP system. In opposition to myth #5, some executives believe that they need to evaluate,
redesign and reengineer their entire business prior to selecting and implementing a new ERP
system. However, this is not the case. Typically, the most successful organizations focus on
improving their core areas of competitive advantage or differentiation as part of their ERP
implementations, while letting non-core business processes follow the lead of the software’s out-
of-the-box functionality.(An out-of-the-box functionality (also called OOTB or off the shelf),
particularly in software, is a feature or functionality of a product that works immediately after
or even without any special installation without any configuration or modification.)
Myth 7: Business process reengineering will cause my ERP system to take more time and
money to implement. The Achilles heel of many failed ERP implementations is that they
assume that “doing things right” will cost more time and money than if they cut some corners
along the way. While it may look good on paper to strip out any extensive business process
work, the reality is that your project will most likely take longer to implement and fail at go-live
if business processes are not adequately addressed as part of your implementation. Remember it
is much less expensive to do things right the first time than to clean up after an ERP failure.
If you have hopes of a successful ERP implementation—and let’s face it, everyone does—
be sure to keep a realistic view in mind and don’t cut corners. And, as always, beware of
the seven deadly myths. "Autonomy is unidimensional: self-sufficiency …
More autonomous machines = simple human substitutes /force multipliers….
What BPR isn’t
The BPR steps include examining and analyzing the company workflows to search for sub-par or
inadequate processes, and figuring out how to modify or alter them to find a solution for optimal
performance, productivity, and quality. Most of the operations automated in the company
workflow didn’t work in favor of customer satisfaction in any way. So instead of automating
such unnecessary works, the organization must work on removing them. The organization needs
to proper resource distribution in the right direction.
Retrenchment
Process update
Process simplification