Business Process Reengineering (BPR) can be defined as a process of analyzing and redesigning the entire business process of an organization in order to improve the productivity and performance of the organization and to enhance the quality of products produced by it.
What is Business Process Reengineering?
Business Process Reengineering is a process using which the performance and productivity of an organization can be improved in order to increase its profit generation and reduce costs. The meaning of the business process reengineering is to redesign and rethink the whole concept of an organization.
It is made sure that the strategic goals of the organization should be aligned with the main organizational goal of the organization and learn more about the needs and requirements of their customers in order to serve them better.
Business Process Reengineering focus on two main business area first is the technology. It uses modern technology in order to make better data dissemination and improve decision-making, and the second is a functional team. The functional organization is changed to form a functional team.
In Business Process Reengineering, the main objectives of the organization are assessed, and also the assessment of the processes and procedures involved in the business is done.
And in addition to this, it also focuses on the resources which are used to create the products and services to fulfill their needs and requirements of customers and market. The activities of the business are divided separately and are analyzed and improved.
Some activities which don’t add to the profit-making or useful customers are removed altogether, and some activities are redesigned to improve the productivity of the organization.
The purpose of eliminating or of improving the activities is to enhance the critical improvement metrics such as service, cost, quality, and the speed of production.
Therefore, we can say that the main purpose of reengineering to improve the subpart of the process which impacts the overall performance of the processor to redesign the whole process if it is inefficient. There are various steps involved in the business process reengineering process. Let us learn about the steps involved in the BPR process in the next section.
Steps in Business Process Engineering Process:
Step 1. Determine the reason for the required change:
The first step of the Business Process Reengineering is to determine the reason for making a change in the business process. For example, the reason can be a reduced customer base or decreasing revenue generation. Once your objective is clearly mentioned in a quantitative form or qualitative form.
Discuss it with your employees because reengineering might impact everyone in the organization. There might be some employees who will be reluctant towards the idea of change as they are comfortable with the things as they have been done, or they might feel insecure for their job.
However, it is important for management to take employees on board because the employees’ coordination is necessary for the success of the reengineering process.
Step 2. Create a team of experts:
Once the vision of the reengineering is clearly established, the next step is to create a team of experts who are skilled and motivated and can carry out the process of reengineering successfully. The team should consist of
a senior manager who can control and supervise the whole team and have expertise in taking important decisions.
An operational manager, who has a deep understanding of the about the processes involved in the business process. They have worked on the process for a long time that they share a vast knowledge about it.
Reengineering expert, who has the technical knowledge to work on the field. The skills required of a reengineering experts vary from the work to work. For example, if you want to make changes in the IT department, then you need an IT or computer engineer to carry out the process.
Step 3. Establish an understanding of the current process:
Before starting the reengineering process, it is important for the reengineer experts and other people involved in the reengineering process to understand the current process of business. Having a thorough knowledge of the current process is necessary if you want to optimize it.
Learn about the process by preparing flowcharts and diagrams of the process and then connect KPI with the process to find out whether the process has desired effect or not.
Moreover, information obtained from the KPI of the current process can be used to compare with the process after reengineering.
Step 4. Determine the inefficient processes and define necessary Key Performing Indicators (KPI):
Determine right KPI before you start with the reengineering process and make changes to the process accordingly. There are different KPIs for different departments for example, for manufacturing department cycle time, defect rate, change over time, inventory turnover is the KPI, whereas, for an IT department time for application development, meantime respond, cycle time and support ticket closure rate are the KPIs.
It is important the KPI that you want to improve before you start the reengineering process otherwise once the reengineering process is done you might want to change your decision or want to make changes in different KPI which will make the whole reengineering process waste.
Step 5. Develop a new process:
After deciding the KPIs for the reengineering process, the next step is to develop a new process.
Step 6. Implement the new process:
Run a small test once you have completely developed a new process. Make changes wherever required. Monitor the results of the KPIs you desired to improve and implement the new process if the outcome of the new process is better then the older process.
Step 7. Evaluate the process and compare Key Performing Indicators (KPI):
Finally, after implementing the new process, evaluate the performance of the process in a highly dynamic environment, and measure how much improvement is there in the KPI that you have selected for the reengineering process.
Importance of Business Process Engineering
The purpose of the whole reengineering process is to improve the performance and productivity of the Business process. However, there are many other benefits that an organization gets from Business Process Reengineering. Let us learn about them one by one.
1) Introduction of new technology:
Technology changes rapidly, and with the change in technology, the way business work also changes. Therefore, it is important for organizations to adopt new technology in order to keep up their pace with the changing environment.
However, there is one downside which the expense of coping up with the changing technology.
Sometimes, organizations have to spend a lot to adopt new technology. For example, Amazon has recently introduced robots in its warehouses to move things from one place to another.
2) Reduced Respond time:
Customers these days prefer those organizations which take the least time to respond to their requests. They want to go to those restaurants which apart from selling good quality of food takes less time in serving the food.
The problem of respond time can be reduced with the efficient use of Information technology. Information technology has great potential that organization use to improve their automation work.
3) Competitive edge over your competitors:
In the present time, it is very difficult to stay ahead in the business. There is competition in every field. With the help of Business Process Reengineering, you can improve your business process and performance of your business and can give tough competition to your competitors.
4) Improved Productivity:
In the Business Process reengineering, you identify the low performing factors of your business and improve them. For example, through the BPR process, you come to know that the work which was earlier done by three workers can be handled efficiently by two workers.
Time can be saved if the packaging of products is done using a machine rather than doing it with hands. These small changes in the business process improve the productivity of the business process.
5) Improved Quality of products:
Through the reengineering process, the quality of the product sold or services rendered can be improved.
The purpose of the BPR process is to learn about the drawback of the system and to improve them. Better quality of the product while improving the sales and satisfaction of customers.
Example of Business Process Reengineering
1) Online business:
The first example of Business Process Reengineering is the example of online business. The online business was introduced to provide goods to people at the comfort of their homes. Take the example of lenskart, Lenskart sells spectacles, and eye wears online.
The main problem with buying spectacles online is that people can’t try on the frame and decide whether they suit them or not. To deal with this problem, Lenskart introduced a 3D view of your face where you can try on glasses virtually and decide whether they look good on you or not.
This feature introduced by Lenskart not only improved their sales but also gave them a competitive edge over the other companies.
The concept of the restaurant is introduced to sell cooked food to people and to provide them a place to sit and chat. However, earlier restaurants used to prepare a meal after getting an order. But then they realize that it increases there serving time and customers become impatient.
To solve this problem, they started preparing the portion of the meals beforehand. For example, they kept boiled noodles in a refrigerator and kept chopped vegetables ready for preparing the final dish.
This reduced the serving time tremendously, and both satisfied the customers and increased the productivity of the business.
History of Business Process Reengineering
The concept of Business process Reengineering was introduced by Michael Hammer, a professor of Computer Science In Massachusetts Institute of Technology (MIT) and a management author. He introduced the concept of Business Process Reengineering in his article named “Reengineering Work: Don’t automate, obliterate.”
In this article, he mentioned that the managers should eliminate the business work that doesn’t add value to the business, rather automating them.
By this statement, he meant that the managers have been focusing on the wrong issues and they have used technology especially Information Technology to convert existing processes into automated processes rather than eliminating the non-value adding work altogether.
Hammer stated that all the work that doesn’t add value for the customers should be removed altogether from the business cycle and should not be made faster using automation and rather they should focus on their incapability to satisfy the needs of their customers.
The concept of Business Process Reengineering was supported by many well-established business thinkers and was published in many business journals and books in the following years.
However, there are many critics who criticized the concept of Business Process Reengineering and even mentioned that it is a process of dehumanizing the workplace.
Despite that, the idea of Business Process Reengineering was adopted by 60% of the fortune 500 companies and have succeeded in leaving behind their counterparts in terms of business generation and productivity.