Business Process Reengineering

(Source:http://www.12manage.com/)

The Business Process Reengineering method (BPR) is described by Hammer and Champy as 'the fundamental reconsideration and the radical redesign of organizational processes, in order to achieve drastic improvement of current performance in cost, services and speed'.

Rather than organizing a firm into functional specialties (like production, accounting, marketing, etc.) and to look at the tasks that each function performs, Hammer and Champy recommend that we should look at complete processes. From materials acquisition, towards production, towards marketing and distribution. One should rebuild the firm into a series of processes.

Value creation for the customer is the leading factor for BPR and information technology often plays an important enabling role. Compare: Relationship Marketing

Michael Hammer and James Champy

The main proponents of re-engineering were Michael Hammer and James Champy. In a series of books including Reengineering the Corporation, Reengineering Management, and The Agenda, they argue that far too much time is wasted, passing on tasks from one department to another. They claim that it is far more efficient to appoint a team who perform all the tasks in the process.

A five step approach to Business Process Reengineering

Davenport (1992) prescribes a five-step approach to the Business Process Reengineering model:

1. Develop the business vision and process objectives: The BPR method is driven by a business vision which implies specific business objectives such as cost reduction, time reduction, output quality improvement.
2. Identify the business processes to be redesigned: most firms use the 'high-impact' approach which focuses on the most important processes or those that conflict most with the business vision. A lesser number of firms use the 'exhaustive approach' that attempts to identify all the processes within an organization and then prioritize them in order of redesign urgency.
3. Understand and measure the existing processes: to avoid the repeating of old mistakes and to provide a baseline for future improvements. Compare: Scientific Management
4. Identify IT levers: awareness of IT capabilities can and should influence BPR.
5. Design and build a prototype of the new process: the actual design should not be viewed as the end of the BPR process. Rather, it should be viewed as a prototype, with successive iterations. The metaphor of prototype aligns the Business Process Reengineering approach with quick delivery of results, and the involvement and satisfaction of customers.

As an additional 6th step of the BPR method, sometimes you find: to adapt the organizational structure, and the governance model, towards the newly designed primary process.

Generic Circumstances that influence whether BPR is advisable

Although it is difficult to give generic advice about this, some factors that can be considered are:

• Does the competition clearly outperform the company? Compare: Turnaround Management
• Are there many conflicts in the organization?
• Is there an extremely high frequency of meetings?
• Excessive use of non-structured communication? (memos, emails, etc)
• Is it possible to consider a more continuous approach of gradual, incremental improvements? 

Critics of the BPR approach

Reengineering has earned a bad reputation because such projects have often resulted in massive layoffs. In spite of the hype that surrounded the introduction of Business Process Reengineering, partially due to the fact that the authors of Reengineering the Corporation reportedly bought huge numbers of copies to reach the top of the bestseller lists, the method has not entirely lived up to its expectations. The main reasons seem to be that:

• BPR assumes that the factor that limits organization's performance is the ineffectiveness of its processes. This may or may not always be true. Also BPR offers no means to validate this assumption.
• BPR assumes the need to start the process of performance improvement with a "clean slate", i.e. totally disregard the status quo.
• BPR does not provide an effective way to focus the improvement efforts on the organization's constraints. (As done by Goldratt in the Theory of Constraints).
• Sometimes, or maybe quite often, a gradual and incremental change (such as Kaizen) may be a better approach.
• BPR is culturally biased towards the US way of thinking.

BPR compared to Kaizen

When Kaizen is compared with the BPR method is it clear the Kaizen philosophy is more people-oriented, more easy to implement, but requires long-term discipline and provides only a small pace of change. The Business Process Reengineering approach on the other hand is harder, technology-oriented, it enables radical change but it requires considerable change management skills.

(Source:http://www.12manage.com/)