Business process reengineering is a crucial element in the agenda of many large as well as small companies in many industries, with manufacturing and banking/ finance being the leading sectors. It allows organizations to view their business processes from a fresh perspective in order to understand how to redesign them to improve the way they work.
In this guide, we aim to simplify the concept of business process reengineering by explaining what it is and the process steps. We have also provided business process templates that you can use right away to kickstart your own BPR project.
What is Business Process Reengineering
“Business Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed” – Michael Hammer and James Champy
Business process reengineering is an approach used to improve organizational performance by increasing the efficiency and effectiveness of processes that exist across the organization. In addition to the redesigning of business processes, it also involves the redesigning of associated systems and organizational structures.
Usually, reasons like new market opportunities, increasing competition, poor financial performance, and decreasing market share trigger the need for a business process transformation.
BPR involves the analysis and transformation of several major components of a business. These include,
BPR includes three phases; analysis phase, design phase, and implementation phase. It is also referred to as business process redesign, business process change management, and business transformation.
Benefits of Business Process Reengineering
BPR plays a major role in organizational performance improvement in terms of cost, quality, delivery, employee productivity, etc. It also helps
- Streamline business processes and systems
- Companies easily adapt to changing times and reduce operating expenses
- Improve company profitability and sustain competitive advantage
- Boost employee productivity
- Increase customer satisfaction by improving the quality of products and services
Principles of Business Process Reengineering
Following are the 7 principles of reengineering proposed by Michael Hammer and James Champy
- Organize around outcomes, not tasks.
- Identify all the organization’s processes and prioritize them in order of redesign urgency
- Integrate information processing work into the real work that produces the information
- Treat geographically dispersed resources as though they were centralized
- Link Parallel activities in the workflow instead of just integrating their results
- Put the decision point where the work is performed, and build control into the process
- Capture information once and at the source
To learn about these principles in more detail, refer to this resource.
BPR Implementation | Business Process Reengineering Steps
Reengineering a process focuses on redesigning a process as a whole which includes fundamentally rethinking how the organizational work should be done in order to achieve dramatic improvement. That’s what differentiates BPR from process improvement which only focuses on functional or incremental improvement.
Reengineering might not be appropriate in all situations, especially if your processes only require optimization and if your organization is not looking to undergo dramatic change. In such a case, you can opt for a process improvement technique.
Step 1: Set the vision and business goals
This is where the senior management needs to identify the business situation; customer expectations, competition, opportunities, etc.
This will make it easier to understand the need for change and create a clear vision of where the company needs to be in the future. Then clarify the objectives in both qualitative and quantitative terms.
Step 2: Establish a competent team
The team you select needs to be cross-functional because expertise and perceptions from all levels of the organization are necessary to minimize the chances of failure.
It should be the responsibility of the top management to have a clear vision of the activities that need to be carried out and provide strategic direction. You also need to have an operational manager who knows the ins and outs of the processes. It is equally important to have the right engineers with different expertise from various fields to make the team complete.
At this stage, it is important to have the goals and strategies outlined properly. You can also carry out surveys and benchmarking activities to identify customer needs and analyze the competition.
In this step, it’s also necessary to communicate the business case for change and the objectives of the project to the rest of the employees. This will encourage their feedback as well and help them get ready for what’s to come.
Step 3: Understand the current process
In this step, you need to select the process(es) that you will be redesigning. Such processes that are broken, cross-functional, value-adding, have bottlenecks or have high-impact on the organization, etc. can be prioritized.
Then define the right KPIs for the processes in order to monitor that the process has gained the desired effect once you implement them.
Step 4: Redesign the process
Keeping your vision in mind, redesign a new process that effectively overcomes the inefficiencies of the previous process. Here you will create a future-state map that highlights the solutions you have identified for the issues of the current state process.
Step 5: Implement the reengineered process
Once the process has been redesigned, you can run a small test to see how it works by monitoring with the KPIs you have defined earlier. This will allow you to make necessary adjustments to the process before implementing it company-wide. If the new process works better than the current one, you can implement it on a larger scale.
There are several business process reengineering methodologies out there, and we have listed some of them below, along with the steps. They highlight more ways of reengineering business processes in addition to what we have discussed above.
The methodology introduced by Hammer and Champy popularized business process reengineering. It involves six steps.
Step 1: The CEO who initiates the reengineering process should introduce it to the employees by explaining the current situation of the company and his/her future vision for the company.
Step 2: Identify business processes in terms of how they interact within the company and in relation to the outside world. Here process maps can be used to visualize the processes.
Step 3: Select the processes that have the potential to bring value to the company once reengineered and those that are easy to be reengineered.
Step 4: Analyze the current performance of the processes as opposed to what is expected from them in the future.
Step 5: Redesign the selected business process using creativity, lateral thinking and imagination.
Step 6: Implement the redesigned processes.
The Davenport Methodology
Davenport puts information technology at the heart of business reengineering. The Davenport model covers six steps.
Step 1: Develop business vision and process objectives.
Step 2: Identify the business processes that should be reengineered. Davenport advises selecting not more than 15 processes at a time.
Step 3: Understand the functioning and performance of the selected processes. And set up performance benchmarks for the reengineered processes.
Step 4: Study how information technology tools and applications can be applied to the newly designed business processes.
Step 5: Design a functioning prototype of the new business process. Allow the team to study the prototype and identify areas for improvement.
Step 6: Implement the tested prototype across the organization.
Manganelli/ Klein Methodology
Manganelli and Klein state only to focus on those business processes that are crucial to the strategic goals of the company and customer requirements.
Step 1: Ask everyone involved to define goals and prepare for the business reengineering project.
Step 2: Select the key business processes for redesign
Step 3: Study the current performance of the selected processes and determine the future performance that you want to achieve.
Step 4: Develop information technology design to support new processes. And design new work environments for the people.
Step 5: Implement the redesigned processes and the new work environments within the organization.
Developed by the international Kodak organization, the Kodak methodology is applied across all Kodak facilities worldwide.
Step 1: Plan the process reengineering project and define all project administration rules and procedures.
Step 2: Bring together your project team, assign project managers, and design a comprehensive process model for the organization.
Step 3: Redesign the selected processes. This step should conclude with a plan of a Pilot Implementation of the redesigned processes.
Step 4: Implement the newly designed processes across the organization. Adjust the organization’s infrastructure to the requirements of the new processes.
Step 5: The last step is performed parallel to the other steps. Here the project team should find ways to deal with the obstacles that may occur during the reengineering project.
What Are Your Ideas on BPR?
We hope that this guide has helped you get the hang of business process reengineering. Got more questions? Do share it in the comments section below.