Reengineering

Business process reengineering, also known as business process redesign, business

transformation, or business process change management, 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.

Continuous improvement had been around for a long time. But in 1990, a Harvard Business
Review article exploded the idea of incremental change, with its provocative title: Reengineering
Work: Don’t Automate, Obliterate. It was written by an MIT engineer called Michael Hammer.

And three years later, James Champy wrote a book with top management consultant,
Reengineering the Corporation: A Manifesto for Business Revolution was a rallying cry for
the consulting industry. But in the few years that followed, hundreds of companies employed
thousands of consultants to reengineer their processes and, in so-doing, remove tens of
thousands from their workforces.

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. A company can get competitive advantage if it can improve
its customer service or reduce its operating costs.

“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

The business process reengineering (BPR) means a systematic, disciplined approach to reducing
organizational costs and redundant business processes involving the analysis of existing human
and automated workflows.

The need for business process reengineering surfaces in a variety of ways:

• Customer complaints and refund requests are rising.

• Staff stress, disputes, and turnover are high.
• Chaos reigns after experienced employees depart or go out on leave.
• Profitability is falling.
• Sales leads are not being followed up upon quickly.
• Corporate governance has been lacking.
• You are struggling with your cash flow.
• Your inventory levels are rising.
• You can’t fill customer orders quickly enough.
BPR involves the analysis and transformation of several major components of a business. These
include:

• Strategy
• Organization
• Process
• Technology
• Culture

Business Process Reengineering Model

The Process Reengineering Model is structured around following steps namely:

(i) Define Objectives and Framework

(ii) Identify Customer Needs

(iii) Study the Existing Process

(iv) Formulate a Redesign Business Plan

(v) Implement the Redesign

The process-reengineering mode is illustrated in the following exhibit.

1. Define Objectives and Framework: First of all, the objective of re-engineering must be defined
in the quantitative and qualitative terms. The objectives are the end results that the management
desires after the reengineering. Once the objectives are defined, the need for change should be
well communicated to the employees because, the success of BPR depends on the readiness of
the employees to accept the change.
2. Identify Customer Needs: While, redesigning the business process the needs of the
customers must be taken into prior consideration. The process shall be redesigned in such a way
that it clearly provides the added value to the customer. One must take the following parameters
into the consideration:
o Type of Customer and customer groups.
o Customer’s expected utilities in product and services
o Customer requirements, buying habits and consuming tendencies.
o Customer problems and expectations about the product or service.
3. Study the Existing Process: Before deciding on the changes to be made in the existing
business process, one must analyse it carefully. The existing process provides a base for the new
process and hence “what” and “why” of the new process can be well designed by studying the
right and wrongs of the existing business plan.
4. Formulate a Redesign Business Plan: Once the existing business process is studied
thoroughly, the required changes are written down on a piece of paper and are converted into an
ideal re-design process. Here, all the changes are chalked down, and the best among all the
alternatives is selected.
5. Implement the Redesign: Finally, the changes are implemented into the redesign plan to
achieve the dramatic improvements. It is the responsibility of both the management and the
designer to operationalize the new process and gain the support of all.
Thus, the business process reengineering is collection of interrelated tasks or activities designed
to accomplish the specified outcome.

Benefits:

BPR or business process reengineering is the central revaluating and radical update of business
procedures to accomplish various upgrades in primary, contemporary proportions of execution like
cost, quality, administration, and speed.

Improved consumer loyalty is frequently an essential point. There are various pros and cons of
business process reengineering.

Let us dig into the benefits of BPR

1. It gives an appropriate focus to business as it revolves around customer needs.

2. BPR helps in building a strategic view of operational procedures by making radical inquiries
about how processes are improved and how things could be done.

3. It eliminates unnecessary activities and thereby helps in reducing organizational complexity.

4. It coordinates and integrates several functions immediately.

5. Provides improved viability and adequacy to an organization by eliminating the delay and
unessential phases of operations and management.

6. Reduced the number of checks/controls and reconciliation processes.

7. It helps overcome short-sighted approaches that usually emerge from excessive

concentration on functional boundaries.
Limitations:

Business Process reengineering isn’t always easy. There have been some challenges revolving
around the usage of BPR since its inception, like objections, issues, and problems. Business
process reengineering disadvantages include:

1. It doesn’t suit every business need as it depends on factors like size and availability of
resources. It usually benefits large organizations.

2. In some cases, the efficiency of one department was improved at the expense of the overall
process.

3. This BPR approach does not provide an immediate resolution. It concentrates significantly
upon long haul income collaborations of a business which not only takes some effort to take
shape but are hard to gauge as well

4. It might require a substantial investment in IT along with proper planning, fantastic

teamwork, and exceptional implementation.

5. It can replace humans when it comes to getting the job done error-free hence posing as a
real threat to jobs.

Principles of Business Process Reengineering

Following are the 7 principles of reengineering proposed by Michael Hammer and James Champy

1. Organize around outcomes, not tasks.

2. Identify all the organization’s processes and prioritize them in order of redesign urgency

3. Integrate information processing work into the real work that produces the information

4. Treat geographically dispersed resources as though they were centralized

5. Link Parallel activities in the workflow instead of just integrating their results

6. Put the decision point where the work is performed, and build control into the process

7. Capture information once and at the source