Business Process Reengineering

Business Process Reengineering

Business Process Reengineering (BPR) is an approach to change that:

• Is based on a business process view of the organisation
• Radically redesigns the work flows and processes
• Often completely reengineers the process throwing out the old process
• Is heavily Information Technology (IT) centric
• Often creates cross functional teams to complete the task
• Is the basis of many Enterprise Resource Planning (ERP) systems

It is also known by other names such as:

• Business Process Redesign
• Business Transformation
• Business Process Change Management

Care should be taken with this list as not all change approaches in different organisations are the same.  They may use these same terms but the approach can be one devised and constructed in a particular way unique to the organisation concerned.

BPR focuses on radical IT driven process change to deliver:

• Cost reductions
• Service improvements
• Production improvements
• Supply Change Improvements

Business Process Reengineering approaches tend to follow six simple stages:

• Identify the vision, mission and strategic goals of the organisation
• Identify the business customers and their needs
• Identify the business' processes
• Analyse the As - Is process state
• Design the To -Be process state
• Test and Implement the change to the process

The core of the approach is always the business processes and its performance to meet the customer needs and reduce costs.

In examining the business processes there is a recognition of the existence of sub-processes and a process hierarchy.  As redesigning sub-processes would be sub-optimal BPR focuses on redesigning the whole business process under consideration regardless of the functional structure.  

In that respect BPR looks end to end along the business process across the functional structure following the manufacture workflow.  It then looks to radically redesign and automate that workflow.

Business Process Reengineering, as a recognised business change term is usually credited to the work of Michael Hammer a former professor of computer science at the Massachusetts Institute of Technology (MIT) in the early 1990's.

Hammer focused on the use of information technology in business, then being used to merely automate the methods and processes that already existed in an organisation rather than to radically change the way work was performed.

He felt that non-valued adding work needed to be removed through automation and the focus of management should be on the business processes and their major overhaul to deliver customer needs more efficiently.

His work and that of others like Davenport and Short was published at a time when many companies were struggling to satisfy changing customer needs and reduce their cost base against severe overseas competition.  The idea of radically changing business processes and cutting the costs of servicing and production was very appealing as a way of regaining competitive advantage.

Key management gurus like Tom Peters and Peter Drucker supported the concepts outlined by Hammer through reengineering business processes.

As more companies adopted Business Process Reengineering (BPR) its critics grew.  Most criticism centred around the mechanical approach to a business process that saw it as a series of steps which needed management control with little thought for the people involved.  As Business Process reengineering (BPR) was successful in significantly reducing costs it was also labelled by many as job cutting exercise and by some as the rebirth of Taylorism.

Despite these criticisms the success in refocusing efforts on customer needs, using Information Technology to enable new processes, products and services and cost reduction saw the majority of top enterprises adopting some form of Business Process reengineering in the mid nineteen nineties.

Knowledge of how to conduct a successful business process reengineering exercise that produced long term sustainable success, in a fast changing world, was in short supply.  As a result, like with many major change approaches, the popularity began to fall away towards the end of the 1990's as critics grew.

However, BPR's lasting legacy was to focus attention on customer needs, the need to reengineer business processes and the need to use technology to enable change.

These basics still support the approach of BPR today although changes proposed are often less radical than those originally envisaged at the start of the BPR movement.  For some the use of the concepts of BPR is still a major requirement but the phrase BPR is avoided because of its historical links to job losses.

Most major change approaches today include the basics of the BPR approach and the need to focus on business processes.  However, the people side of the change equation is now much more prevalent than in the early days of BPR.

To many BPR was succeeded by Business Process Management (BPM).  BPM is an approach to change heavily linked to Information Technology enablement.  Interestingly in the last few years BPM is suffering the same fate as BPR as it is accused of being driven by Information Technology in the absence of true end to end business process design based on customer needs and the engagement of the people aspects of change and change management.

Like many major change initiatives Business Process Reengineering does not have one accepted definition nor methodology.  However the following principles form the basis of most definitions:

• Business process focused
• Radical change vision and strategy and process redesign
• Significant improvements in critical success factors - costs, customer service, performance
• Complex and integrated reliance on Information Technology to deliver the change
• Attempt to integrate in implementation the organisational structural elements, people and technology

It is worth noting that BPR saw itself as a step improvement to the way Total Quality Management (TQM), another major Organisational Development approach, was implemented.  

In the US in particular, TQM implementations were often seen as slow and dealing with small continuous improvement in the way work was performed.  This was not the case everywhere but BPR appeared on the scene to make radical change and embed processes at the heart of change thinking.  

For many in the TQM movement, processes and a mix of small and large change was already part of their approach but unfortunately this inclusion of the radical alongside the incremental was not widespread.  

As a result a new approach which bore the promise of significant fast change, rather than small step TQM improvements, was appealing to many.

BPR also appeared at a time when Information Technology itself was undergoing a significant change.  This enabled new concepts to be brought into play to assist in the reengineering of a business process which had not been available before:

• New IT distributed networking capabilities
• Computing power
• Expert systems
• Shared data and databases
• Wireless
• Mobile computing
• Video communications
• Workflow management systems

These developments saw major IT companies develop new 'mega-systems' to enable significant process change in an organisation:

Enterpirse Resource Planning (ERP) systems:

SAP

JD Edwards

Oracle

Peoplesoft

The implementation of ERP systems became tied up with BPR approaches and in many cases completely threw out what previously existed whether it worked or not..

Business Process Reengineering has left a positive legacy in terms of change management focus on business processes and the use of technology.  

The lessons learned about the absence of the people element, understanding the organisation's stakeholder needs and constraints have also led to better more mature BPR approaches today.  

With the benefit of hindsight BPR has taught the need to add the following to its successful elements of change.  The need to:

• focus on the strategic needs,
• understand the voice of the customer strongly against other stakeholder needs,
• define the strategic constraints of the business operation,
• understand the performance indicators across the whole balanced scorecard
• understand what works well today
• understand and manage structural and organisational changes
• understand and manage the human people elements of change
• people engagement.

The concepts with the addition and benefit of these hindsight lessons still form the basis of key approaches to BPR and other major change approaches today.