What Is Business Process Reengineering?
Business process reengineering is a structured approach to improving a company’s performance in areas such as cost, service, quality, and speed through changes in (appropriately) processes. This radical change methodology starts at the highest level of a company and works down to the most minute details to overhaul the system in a short time. As a complete redesign, BPR differs from other methodologies where incremental improvements result from from regular process updates. Companies undergoing BPR must reassess their fundamentals and reform their processes with the goal of standardization and simplification.
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.
Business Process Reengineering Methodology Overview
Michael Hammer, an original promoter of BPR in the 1990s, preached “reengineering work: don’t automate, obliterate.” At the time, investments in technology were expected to return dramatic results to improve process performance. However, new technologies are often applied after a process had been in place for many years, so they are incapable of doing more than moderately speeding performance. Hammer recommended challenging the ingrained assumptions and rules, so real improvements could be made.
Early on, the field of BPR discovered numerous recommendations:
- Organize around the outcome, not the specific task. One person owns a whole process, performing or coordinating all steps.
- Those closest to the process should perform the process. Instead of farming out different types of easily managed work, the people who need the quick outcomes from simple tasks take ownership.
- Have the people who produce the information process it. This streamlines the outcome of the information gathered into usable data.
- Centralize resources. Databases and other technology systems can consolidate resources to cut down on redundancies and increase flexibility.
- Integrate corresponding activities, not merely their results. This keeps the content cohesive, without the gaps and miscommunication that could cause delays.
- Control the decision points and where the work is done. Built-in controls enable the employees who perform the work to self-manage, so managers can become supportive rather than directive.
- Information should be collected once and at the source. You can erase data redundancies when processes are connected in a central database.
Checklist
Objectives of Business Process Reengineering
When first introduced, BPR centered on customer care, speed, compression, flexibility, quality, innovation, and productivity. Don’t be afraid to experiment.
Objectives now include contact reduction, task elimination, task automation, process integration, waiting time reduction, data quality, and data completeness.
There are many options that allow for rapid prototyping of new solutions. A prototype or pilot project is a great way to test a hypothesis without making a large investment. Some of the best ideas can feel scary and risky. Use prototypes and pilots as checkpoint to mitigate your risks.
What Problems Can BPR Solve for Your Company?
To help your company thrive in a more dynamic and changing environment, you must consider its structure and how it behaves. Most organizations aim to constantly improve performance while decreasing the cost of their services and products. To add value for your customers, you must first understand their needs. BPR can help your business continually evolve and solve these problems:
- Elevated operational costs
- Customer complaints of decreased quality
- Bottlenecks
- Middle management performing poorly
- Poor distribution of resources or tasks
- Failure to keep up with the competition
- ROI is still shrinking, despite capital investments on current processes
- Incremental improvements increase the complexity and costliness of the process
- Significantly broken processes that need more than simple corrections
- Fragmented responsibility for processes that result in a lack of accountability and problem solving
How BPR Relates to Information Technology and Information Systems
Information technology (IT) is a term that describes the hardware, software, and the network infrastructure. Information systems (IS) is broader and encompasses the employment of IT and the systems; it covers the three dimensions of IT, management, and organization. BPR and IT/IS should be inseparable. Every successful BPR project owes its relative success to IT/IS.
Though BPR has its roots in IT management, it is mainly a business initiative. Still, IT has historically played an important part in BPR, linking the owners of process and those who implement it. In the earliest iteration of BPR, IT replaced some human workers in processes. In the most recent iteration of BPR, IT serves as an existing infrastructure that can be optimized.
How Long Does BPR Take and What Does It Cost?
Two main considerations are on the forefront of any CEO’s mind when talking about process improvement: How long will this take? How much will this cost?
Overall, experts say that each BPR process varies, but takes approximately six to ten months, depending on the type of business and the consulting company hired for implementation. The cost also varies, depending on the complexity of the business processes. In the year 2018, a BPR implementation cost from $9,000-$16,000.
Currently, consulting companies utilize various payment structures to which they adhere, but most are either retainer or hourly based. A small business looking to implement BPR across their organization can expect to pay $3000-$6,000 on a retainer basis, or $175-$350 per hour.
At the end of the day, the benefits of doing BPR properly, utilizing the right tools, collecting and collating the right data and ultimately better serving your clients and customers, far outweigh the cost.
Reference Smartsheet.com 2019
Everything You Need to Know about Business Processing Reengineering
