What is Business Process Re-engineering (BPR)?
Business process Re-engineering (BPR) is a method for managing change where the tasks needed to attain an outcome for a particular business are completely rethought. One of the main goals in BPR is to examine processes within and between companies to enhance end-to-end processes and eliminate those that don’t give the customer worth.
BPR was a significant management idea from the mid-1980s until the mid-1990s. The idea is usually attributed by MIT Professor Michael Hammer and Babson College professor Thomas Davenport. Hammer and Davenport began their collaboration as coworkers working on an academic program known as”PRISM” (Partnership with Research into Information System Management). Their research was funded through some of the most powerful corporations of the time and involved the creation of an architecture model that could aid large corporations in taking advantage of the most recent advancements in technology, such as PCs, personal PCs ( PCs) and the internet.
By the year 1990, Hammer and Davenport had separated professionally and had published separate research papers , which later became popular books. The reaction of the business community to the radical changes promoted by Hammer, Davenport and their co-authors, James Champy and James Short and James Short, was initially positive. An article from 1993 from Fortune Magazine, “Business process Re-engineering The Hot New Managing Tool,” describes the rapid growth of BPR, and cites BPR successful stories from large companies, ranging across Union Carbide to telecommunications giants GTE and AT&T.
Technology companies quickly joined the BPR trend and ERP ( ERP) vendors like SAP, JD Edwards, Oracle and PeopleSoft advertised the products they offered as solutions to the redesign and enhancement of business processes. These vendors helped transform BPR into a multi-billion-dollar industry in just a few days. Consultants also benefited from the boom and firms who had previously marketed their capabilities in the field of systems thought became sought after as experts in reengineering.
In the same way that BPR became popular but so did the resentment against it. Changes that were radical proved costly and risky, however the most common criticism about BPR is that it put too the focus on the technology aspect and cost reduction and did not consider how drastic changes impact people and culture. In the late 1990s, the term reengineering was becoming synonymous to describe two processes that were profoundly changing the way companies operate -outsourcing and cutting down on staff in addition to outsourcing.
Nowadays, there is an increased interest in Business process Re-engineering processes in business as a means of implementing technological transformation. It has become clear that the concept’s determination to make radical changes can be a good complement to processes improvement strategies that focus on incremental changes for continuous improvement, like Kaizen ( Kaizen) or the Total Quality Movement ( TQM).
The necessity for radical organizational changes
The idea behind BPR was outlined in an article in 1990. Harvard Business Review article, “Reengineering Work: Don’t automate, obliterate” by the late Michael Hammer, a management writer as well as a professor at the Massachusetts Institute of Technology (MIT). Hammer claimed that the standard strategies for improving performance had been unable to produce the gains businesses needed during the 90s. Development cycles for products were slow, order fulfilment errors were too high, and inventory levels not in line with demand in many businesses which left large companies unprepared to thrive in a world of rapid technological advancement with increasing customer expectations and increased competition from around the world. Hammer was of the opinion that Information Technology ( IT) did not produce better outcomes in terms of performance or customer service because it was being utilized to automatize inefficient processes. Hammer saw the need for businesses to reconsider how technology could be utilized to develop completely new procedures.
To show the effect of BPR integrated rather than a fragmented method of improvement of processes and the role of IT in that process, Hammer recounted in detail the Business process Re-engineering efforts that were undertaken through Ford Motor Company. When Ford decided to adopt the revolutionary approach of having its employees in the department of accounts payable make use of the online system, they eliminated the requirement for employees to coordinate the purchase order on paper with receipt of invoices and documents. Rethinking the entire process of purchasing in order to benefit from the new technology helped the company reduce the department’s accounts payable staff by 75%.. The core of this project of reengineering was a determination by the company to depart from the established notions of the way operations work This is a notion Hammer described as discontinuous thinking.
The fundamentals of business process Reengineering
In 1993 Hammer along with organizational researcher James Champy published a book to elaborate on the concepts Hammer suggested in his paper of research. The book, called “Reengineering the Corporation: A Manifesto for Business Revolution,” quickly became a popular national bestseller. The authors proposed seven ideas for reengineering an organization’s work processes and achieving substantial improvements in terms of quality as well as timing management, efficiency and profit.
- Plan around outcomes, not just tasks.
- Find all the processes within an organization and rank them according to their redesign importance.
- Integrate the work of processing information in the actual work that generates the data.
- Consider resources distributed geographically as if they had been centralized.
- Connect parallel tasks in the workflow, rather than simply taking their outputs and integrating them.
- Place the decision point in the place where the work will be done and integrate an element of control in the work process.
- Capture information once , and then at the point of origin.
5 steps to redesigning business processes
The enthusiasm of the business community for reengineering business processes has resulted in a variety of interpretations on the way in which radical changes should be carried out. For instance when Hammer utilized the term “reengineering” and offered business leaders broad guidelines, Thomas Davenport used the word redesign , and offered business leaders more concrete guidance, stressing the importance in prototypes testing, simulations and experiments.
Davenport’s work with James Short, entitled “The New Industrial Engineering: Information Technology and Business Process Redesign,” suggested that business leaders employ five steps to fundamentally alter workflows:
- Establish the vision of the business and process goals.
- Find out the processes that must be changed.
- Analyze and evaluate the existing processes.
- Recognize IT levers.
- Develop and construct an early prototype for the new method.
- BPR team members’ functions
The two Hammer and Davenport were both in agreement that it is crucial to have an ardent engagement from top management of the business and the need to get the support of every department affected by the process’s redesign. Many of the implementations of BPR in the latter half of the 1980s and the mid-1990s employed the team approach, which represented BPR’s top-down management approach. The team could appear like:
Team Leader – A senior executive who has planned and approved the entire reengineering process. A team leader will be accountable for the selection of the process person responsible for the process.
Process Owner – a high-level manager who is responsible for an individual business process. Process owners are accountable of putting together a team that will redesign the process that he or is responsible for.
Reengineering Team – a team made up of insiders working on the process that is being reengineered, as well as outsiders whose work are not affected by changes to the process. The team responsible for Business process Re-engineering is accountable for studying the current procedure and overseeing its redesign.
The Steering Committee is a group of senior management who have embraced the idea of reengineering in the workplace and have set goals specific to improvement in efficiency. This steering group, directed by the team leader is responsible for deciding on disputes and helping process managers to make choices about competing priorities.
Reengineering Czar A person who is accountable for the day-to-day coordination of all ongoing reengineering efforts. The role of the czar is to serve as a facilitator and to develop methods and tools that an organization can use to redesign workflow.
What was the reason why BPR was not successful?
In a 1997 Fast Company article, “The Fad That Forgot People,” Davenport pointed out BPR’s bad media coverage on the authority given to consultants from third parties who were focused on cost reductions and had no emotional stake in the business. He mentioned a pharmaceutical firm which was able to sign two major contracts for consulting before ending its BPR initiative. He also cited a huge telecoms company that treated employees as interchangeable parts has only served to discredit the brightest minds of the company. Michael Hammer and James Champy both agreed that BPR was unable to control the impact that radical changes would have on individuals and their culture.
Other factors that greatly contributed to success were the difficulties in mapping processes precisely and working across silos within business which made it difficult to change. IT is the primary factor in the reengineering of business processes. The failure of business executives to integrate IT infrastructure in line with BPR strategies and make investments in technologies that work in the manner promised also led to levels of discontent.
Future of BPR
In the beginning of the 20th century BPR could be viewed as a flimsy business term of historical significance. There is a recent focus on digital transformation in the business world as a means to increase competitive advantages, however, and the omnipresence that is technology such as the Internet of things ( IoT) and the advancements of Artificial intelligence( AI) have prompted many businesses to fundamentally reconsider their processes and to make technologically driven adjustments. In the near future it is expected that reengineering of business processes will be a regular and integral part of many business transformations as well as enterprise planning initiatives.