Business Process Reengineering: Using Radical Change to Improve Organizational Performance (2022)

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Using Radical Change to Improve Organizational Performance

Business Process Reengineering: Using Radical Change to Improve Organizational Performance (1)

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Incremental change or radical rethink?

Stan runs a soft drinks company. His revenues, and his profits, have been steadily dropping over the past year.

He studies his biggest costs and decides to buy some new cutting-edge manufacturing equipment and downsize his staff. But a year later, Stan's profit margin is in an even worse shape. So he starts looking for other cost-saving opportunities.

The problem is that, although Stan has implemented more efficient processes, it's still achieving the same things. This means his solution is only addressing one side of the issue. He should have been looking into whether what he's doing is actually necessary, or being done in the right way.

For instance, perhaps he could have looked at different bottle designs, invested in a new product or looked at improving his supply chains. If he'd done this, instead of just focusing on the manufacturing process, he would have discovered better ways to meet his customers' needs. And he would have saved money.

This is known as Business Process Reengineering – a radical rethink of business processes to achieve dramatic improvements. In this article, we'll introduce the key concepts involved in BPR, as well as the pros and cons involved in using it.

(Video) Business Process Re-engineering explained - Simplest Explanation Ever

Business Process Reengineering Definition

Business Process Reengineering was first developed by Michael Hammer, a former MIT professor, in the 1990s. [1] He argued that a "radical redesign" of business processes was needed to keep up with the fast-paced changes in markets and technology occurring during that decade.

Hammer defined BPR as, "the fundamental rethinking and radical redesign of business process to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed."

BPR focuses on how key business elements are connected, and how they work with or against one another, depending on the structure of relationships. For the best results, the company's structure, people, technology, strategy, and other resources have to work together to meet organizational goals. You can learn more about the relationships between various organizational structures with models like McKinsey's 7-S Framework, Leavitt's Diamond, and the Burke-Litwin Change Model.

Other management experts of the time, such as Peter Drucker and Tom Peters, supported similar business transformation as a way to achieve enormous improvements across a variety of performance measures. Big consulting firms quickly began to sell this new management strategy to their clients.

By the mid-1990s, corporate managers everywhere were talking about BPR. Its customer focus was very appealing – many companies' profits were suffering from increased global competition. And soon, many people automatically connected BPR to efficiencies gained through downsizing, because many businesses were looking for ways to use their resources more effectively.

Note:

Thomas Davenport, of Ernst & Young, published a similar paper in the Sloan Management Review the same year as Hammer. [2] And in 1993, Davenport wrote "Process Innovation: Reengineering Work Through Information Technology." [3]

Continuous Improvement Vs. Business Process Reengineering

The key difference between business process reengineering and other business improvement strategies, like Total Quality Management and Just in Time , is this: BPR = process innovation.

BPR is not about slow and steady improvement – it's about radical, dramatic changes to the framework and culture of a business. Rather than improving what's already there, BPR starts from the beginning and builds an entirely new process.

Here are some key ways that Continuous Improvement differs from BPR:

FactorContinuous Improvement ModelBPR Innovation Model
Degree of changeIncremental, small stepsRadical, extreme
Starting pointExisting processesClean slate, starting from new
Frequency of changeContinuous (may be one-time)One-time
ParticipationBottom-upTop-down
Typical scopeNarrow, within functionsBroad, cross-functional

As you can see, BPR is radical in every way, and it often results in massive changes within many organizations. Often technological change instigates a desire for BPR because it offers significantly different and more efficient ways of doing things.

(Video) Business Process Reengineering

Note:

A business process is a set of logical, linked activities that:

  1. Can cross many functional areas.
  2. Have a clear beginning and end.
  3. End in the desired result for an internal or external customer.

Business processes can be things like manufacturing, customer service, order fulfillment, or developing a new product.

Business Process Reengineering Example

One of the most famous examples of BPR in action was Ford Motor Co.'s restructure of its accounts payable department. Keen to cut down on its overhead costs, Ford began to look at ways of making the organization more cost efficient. It found that it's accounts payable department had increased significantly over the years – at one point employing 500 people.

When it compared the department's headcount to that of other competitors the results were shocking. Mazda, a smaller competitor, had an accounts payable department that only consisted of five people. When Ford looked closer it found that, by implementing similar accounts technology to that used by Mazda, it could reduce its accounts payable department to 100 workers.

The new accounts technology effectively cancelled out the need for multiple departments to sign off on invoices and submit them manually – all of which had created bottlenecks and delays. So, Ford decided to introducenew computer software and databases to store and transfer its accounts information automatically. By automating this process, Ford was able to cut down on the time it took to process payments and downsize its accounts department to a more manageable size.

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(Video) Business Process Reengineering Tips

Business Process Reengineering: Using Radical Change to Improve Organizational Performance (2)

Business Process Reengineering Steps

The steps for complete business process reengineering are too detailed for this article. Also, BPR's exact method is significantly influenced by the specific organization and process that's being examined.

(Video) BUSINESS PROCESS REENGINEERING

However, some key common elements of any BPR plan include:

  • Defining the project (limits and scope).
  • Determining the vision for the redesign.
  • Creating a plan or model for the redesign.
  • Completing a cost-benefit analysis.
  • Developing a detailed plan for implementation.
  • Establishing performance measures for evaluation.

Because of the radical nature of BPR, it's vital that organizations think hard about whether it's the right direction for them before implementing any plans. Here are a few questions to ask yourself before embarking on BPR:

  • Is your organization willing and able to endure the pain that BPR can cause?
  • Is your top management team personally involved and committed to completing the project? The costs of stopping the process in the middle are high, so make sure you know what you're starting.
  • Are you prepared to lose staff who simply cannot handle the change?

The Pitfalls of BPR

Business process reengineering is still discussed today, but not as often as it once was. This is because the extreme nature of BPR initiatives can lead to many problems. And BPR has had negative results – massive layoffs,difficulty for staff adjusting to radical changes to corporate culture, and only mediocre success.

Many BPR projects have failed to produce the results expected because of unrealistic expectations, inadequate resources, loss of management commitment (because they took too long), and resistance to change.

Softer, gentler approaches are now more popular. Instead of dramatic changes to processes, you're more likely to see gradual innovation through continuous improvement strategies.

Many executives have avoided the BPR approach for fear of causing disruption and disorder in a company. This is unfortunate, because BPR provides a great opportunity to take strong and definitive action to turn a company around. And its fundamental message is strong: don't just look for ways to do the same things better, because you may continue to do the "wrong" thing. Consider focusing instead on doing different – and better – things, too.

Key Points

Business process reengineering refers to the implementation of radical changes to business processes, with the aim of creating efficiencies and improving the business as a whole.

The approach became particularly popular during the 1990s, when many organizations were struggling to stay competitive following rapid changes in technology, alongside the impact of globalization.

Some companies have benefited signficiantly from BPR, and have used it to introduce forward-thinking, competitive processes. However, BPR has also come under significant criticism, particularly in recent years because it doesn't always consider the unique nature of organizational culture, or the resistance and resentment that such massive change can cause.

The strategies are still used today. However, planning and implementation tend to be more gradual and less radical than the original idea.

(Video) Business Process Re-engineering for ACCA APM (P5)

FAQs

How an organization can use business process reengineering to improve its business? ›

Business Process Reengineering reduces costs and cycle times by eliminating unproductive activities and the employees who perform them. Reorganization by teams decreases the need for management layers, accelerates information flows and eliminates the errors and rework caused by multiple handoffs.

What is business process reengineering BPR and how does it help in improving organizational performance? ›

Business process reengineering (BPR) helps organizations reimagine their existing processes and take extreme redesign measures to achieve remarkable results. BPR is different from other BPM initiatives because it revamps a process entirely rather than making repeated improvements to it.

What do you mean by business process reengineering explain with the help of an example? ›

Business process reengineering examples: company selling commemorative cards. In a company that offers products such as Christmas, anniversary, commemorative cards, etc., renewing the stock and changing the design of the cards is constantly fundamental.

What are three examples of business processes reengineering? ›

3 Business Process Reengineering Examples: Airbnb, T-Mobile, Ford Motor Company Success Stories
  • Process Improvement.
  • 2021.
  • 9 min read.

Which of the following is the best explanation of Business Process Reengineering? ›

The Correct Answer forthe given question is Option D. Transformation of business processes for more effective achievement of business goals.

What do you mean by business process how does it relate with process reengineering? ›

Business process re-engineering(BPR) is the radical redesign of business processes to achieve dramatic improvements in critical aspects like quality, output, cost, service, and speed. Business process reengineering (BPR) aims at cutting down enterprise costs and process redundancies on a very huge scale.

What are the objectives of business process reengineering? ›

BPR is defined as the radical redesign of business processes to achieve dramatic improvement in business performance (Hammer and Champy, 2003). BPR is typically pursued to improve processes, increase productivity, reduce costs, improve customer service, and provide a competitive advantage.

What is the first step in the process of business process reengineering? ›

BPR Implementation | Business Process Reengineering Steps
  1. Step 1: Set the vision and business goals. ...
  2. Step 2: Establish a competent team. ...
  3. Step 3: Understand the current process. ...
  4. Step 4: Redesign the process. ...
  5. Step 5: Implement the reengineered process.

What are the five key principles of business process reengineering? ›

5 Key Factors in Making a Business Process Reengineering Initiative Successful
  • Agency/Leadership Commitment and Sponsorship. ...
  • Inclusion of the Right People. ...
  • Clear Understanding of the Business Needs. ...
  • Crucial Change Management. ...
  • Ongoing Continuous Improvement.
11 Feb 2020

What strategic role can information play in Business Process Reengineering? ›

The good information makes the better position of an organization. By using the customer strategy the IS gets the information out of the organization how the product of the company is running through the market and implement the IS to reduce the time to market.

What are the 7 phases of Business Process Reengineering? ›

Also called Business Process Redesign, it's an approach to structurally changing your process workflows. What are the 7 steps of BPR implementation? Vision, Hypothesis, Mining, Design, Simulation, Go Live, and Monitoring.

What is the role of Business Process Reengineering in enhancing competitiveness? ›

BPR enables the organizations to optimize and organize different qualifiers and order-winners by redesigning the complete processes so as to gain competitive advantage in the market.

What is business process give an example? ›

They are the processes that directly create revenue. Examples include: product manufacturing, order to cash process, and delivering products to customers.

What is meant by business process engineering? ›

Business process engineering refers to the study of business processes so that they can be improved and streamlined for optimum efficiency in terms of both performance and cost.

What do you mean by reengineering? ›

Re-engineering is the examination and alteration of a system to reconstitute it in a new form. This process encompasses a combination of sub-processes like reverse engineering, forward engineering, reconstructing etc.

What is reengineering how does it relate to total quality practices? ›

Business Process Reengineering (BPR) and Total Quality Management (TQM) share a cross-functional relationship. Quality specialists tend to focus on incremental change and gradual improvement of processes, while proponents of reengineering often seek radical redesign and drastic improvement of processes.

What is the most important factor in BPR success? ›

According to the results, having the BPR project motivated by customer demand and competitive pressure, on the average, is considered to be more important for project success than the use of industry specialists or other outsiders.

Why is it important to determine and plan a Business Process Reengineering at the early phase of ERP implementation? ›

Business process reengineering provides a realistic understanding of the existing process and helps organizations to go for a successful ERP implementation by cutting extra cost and pacing the process at the same time. Employees can also easily embrace the new ERP system after the process reengineering is done.

What is Business Process Reengineering and its characteristics? ›

Business process re-engineering, thus, can be thought of as the task of combining the business tasks jobs, functions, departments and structures into a coherent business process. The business process should contain primarily tasks, functions, jobs and departments that taken together and create value for the customer.

Why is process important in business? ›

The importance of business processes cannot be overstated. Optimizing business processes can help you avoid mistakes and delays, improving cost-effectiveness, productivity, supplier relationships, and customer satisfaction.

When should effective change management steps start? ›

Step 1: A Change Management Process Begins with Planning and Sponsorship. Your change management process starts before you purchase anything. Keep in mind the following questions as a guide for deciding on implementing new technology: How is this technology going to alter the way things are done?

What are the four basic components of process reengineering? ›

The various components of an organisation for Business Process Reengineering are discussed in the following section:
  • Leader of BPRE Team: ...
  • Process Owners: ...
  • Reengineering Teams: ...
  • Non members (other employees) involved in the reengineered process:

What are the six critical success factors for re engineering? ›

The factors are teamwork and quality culture, quality management system and satisfactory rewards, effective change management, less bureaucratic and participative, information technology/information system, effective project management and adequate financial resources.

Why do organizations perform system reengineering? ›

There are several reasons for organizations to reengineer their business processes: (1) to re-invent the way they do work to satisfy their customers; (2) to be competitive; (3) to cure systemic process and behavioral problems; (4) to enhance their capability to expand to other industries; (5) to accommodate an era of ...

How does business process redesign the complete overhauling of business process of an organization? ›

Business process redesign is a complete overhaul of a company's key business processes. A BPR improves efficiency by cutting slack and excess, reducing costs, and sharpening management. Success is often measured using profitability metrics.

Why is ERP called the most important tool for Business Process Reengineering? ›

Firstly, it allows companies to redesign their organisation into cross-functional teams and secondly, it allows companies to improve their decision making through better data dissemination.

What is Business Process Reengineering how is it different from incrementally improving a process? ›

Reengineering is the most advanced and holistic form of process improvement. Whereas most process improvement is incremental and focused on tweaking sub-processes, process reengineering is transformational. It involves completely changing the entire process to achieve an entirely different result.

Is BPR a planned organizational change? ›

BPR is in fact not a process that produces a quick repair or a quick fix but an organizational change that is characterized by the strategic transformation on inter organizational subsystems interconnected that generate impact at various levels (Kettinger et al., 1997).

What are the main business processes? ›

What Are Key Business Processes?
  • Developing vision and strategy.
  • Developing and managing products and services.
  • Marketing and selling products and services.
  • Delivering services.
  • Managing customer service.
30 Oct 2020

How a business process works? ›

A business process is an activity or set of activities that accomplish a specific organizational goal. Business processes should have purposeful goals, be as specific as possible and produce consistent outcomes.

Why business process is very important in order to have a better impact towards society? ›

Business processes are important because they are a step by step guide that describes how things are done the best possible way and makes it easier to focus on improving business processes. Business processes have a vital role to play in the efficient and effective functioning of the organisation and structure.

What is a business process review? ›

Simply put, a business process review is an exercise designed to help businesses identify areas of improvement to become more agile, efficient, and streamlined.

What is re engineering in organizational behavior? ›

Reengineering an organization, also known as Business Process Reengineering, is the process of reviewing all the different levels of an organization's way of doing business and considering how to improve things, explains Bain & Company.

What is another word for reengineering? ›

What is another word for reengineer?
redesignremake
remodelrestructure
reformreshape

What is re engineering improvement? ›

Reengineering is the "fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measure of performance, such as cost, quality, service and speed," according to Hammer and Champy in Reengineering the Corporation.

How does business process redesign the complete overhauling of business process of an organization? ›

Business process redesign is a complete overhaul of a company's key business processes. A BPR improves efficiency by cutting slack and excess, reducing costs, and sharpening management. Success is often measured using profitability metrics.

How BPR makes an organization competent? ›

BPR allows companies to redesign their processes by enabling cross-functional teams to work together to determine areas of improvement and ways to optimize them for maximum value.

Why do Organisations perform system reengineering? ›

There are several reasons for organizations to reengineer their business processes: (1) to re-invent the way they do work to satisfy their customers; (2) to be competitive; (3) to cure systemic process and behavioral problems; (4) to enhance their capability to expand to other industries; (5) to accommodate an era of ...

What is the role of business process reengineering in enhancing competitiveness? ›

BPR enables the organizations to optimize and organize different qualifiers and order-winners by redesigning the complete processes so as to gain competitive advantage in the market.

What is the first step in the process of business process reengineering? ›

BPR Implementation | Business Process Reengineering Steps
  1. Step 1: Set the vision and business goals. ...
  2. Step 2: Establish a competent team. ...
  3. Step 3: Understand the current process. ...
  4. Step 4: Redesign the process. ...
  5. Step 5: Implement the reengineered process.

What are the objectives of business process reengineering? ›

BPR is defined as the radical redesign of business processes to achieve dramatic improvement in business performance (Hammer and Champy, 2003). BPR is typically pursued to improve processes, increase productivity, reduce costs, improve customer service, and provide a competitive advantage.

How do you do business process reengineering? ›

The Six Key Steps of Business Process Reengineering
  1. Define Business Processes. ...
  2. Analyze Business Processes. ...
  3. Identify and Analyze Improvement Opportunities. ...
  4. Design Future State Processes. ...
  5. Develop Future State Changes. ...
  6. Implement Future State Changes.
11 Oct 2021

What is the most important factor in BPR success? ›

According to the results, having the BPR project motivated by customer demand and competitive pressure, on the average, is considered to be more important for project success than the use of industry specialists or other outsiders.

What are the features of Business Process Reengineering? ›

Key Themes
  • Several jobs are combined into one. ...
  • Workers make decisions. ...
  • The steps in the process are performed in a natural order. ...
  • Processes have multiple versions. ...
  • Work is performed where it makes the most sense. ...
  • Checks and controls are minimised. ...
  • Reconciliation is minimised.
3 Sept 2012

Is BPR a planned organizational change? ›

BPR is in fact not a process that produces a quick repair or a quick fix but an organizational change that is characterized by the strategic transformation on inter organizational subsystems interconnected that generate impact at various levels (Kettinger et al., 1997).

What does organizational reengineering mean? ›

Reengineering an organization, also known as Business Process Reengineering, is the process of reviewing all the different levels of an organization's way of doing business and considering how to improve things, explains Bain & Company.

Why is process important in business? ›

The importance of business processes cannot be overstated. Optimizing business processes can help you avoid mistakes and delays, improving cost-effectiveness, productivity, supplier relationships, and customer satisfaction.

What is meant by business process engineering? ›

Business process engineering refers to the study of business processes so that they can be improved and streamlined for optimum efficiency in terms of both performance and cost.

Why is it important to determine and plan a Business Process Reengineering at the early phase of ERP implementation? ›

Business process reengineering provides a realistic understanding of the existing process and helps organizations to go for a successful ERP implementation by cutting extra cost and pacing the process at the same time. Employees can also easily embrace the new ERP system after the process reengineering is done.

Why is ERP called the most important tool for Business Process Reengineering? ›

Firstly, it allows companies to redesign their organisation into cross-functional teams and secondly, it allows companies to improve their decision making through better data dissemination.

What is Business Process Reengineering how is it different from incrementally improving a process? ›

Reengineering is the most advanced and holistic form of process improvement. Whereas most process improvement is incremental and focused on tweaking sub-processes, process reengineering is transformational. It involves completely changing the entire process to achieve an entirely different result.

Videos

1. Business Process Reengineering - Improve Quality / Productivity
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2. A Business Process Re-Engineering at Honeywell
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3. Business ReEngineering Systems
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4. Business Process Reengineering new
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5. Business Process Re Engineering BPR
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