Why is BPR so popular now discuss?

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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.

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.

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:

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.

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 introduce new 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.

Your company is making great progress. You’re meeting goals easily, but the way you meet goals is where the problem is. Business processes play an important role in driving goals, but they are not as efficient as you’d like them to be.

Making changes to the process gets more and more difficult as your business grows because of habits and investments in old methods. But in reality, you cannot improve processes without making changes. Processes have to be reengineered carefully since experiments and mistakes bring in a lot of confusion

What is business process re-engineering (BPR)?

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.

Is business process reengineering (BPR) same as business process improvement (BPI)?

On the surface, BPR sounds a lot like business process improvement (BPI). However, there are fundamental differences that distinguish the two. BPI might be about tweaking a few rules here and there. But reengineering is an unconstrained approach to look beyond the defined boundaries and bring in seismic changes.

While BPI is an incremental setup that focuses on tinkering with the existing processes to improve them, BPR looks at the broader picture. BPI doesn’t go against the grain. It identifies the process bottlenecks and recommends changes in specific functionalities. The process framework principally remains the same when BPI is in play. BPR, on the other hand, rejects the existing rules and often takes an unconventional route to redo processes from a high-level management perspective.

BPI is like upgrading the exhaust system on your project car. Business Process Reengineering, BPR is about rethinking the entire way the exhaust is handled.

Five steps of business process reengineering (BPR)

To keep business process reengineering fair, transparent, and efficient, stakeholders need to get a better understanding of the key steps involved in it. Although the process can differ from one organization to another, these steps listed below succinctly summarize the process:

Below are the 5 Business Process Re-engineering Steps:

1. Map the current state of your business processes

Gather data from all resources–both software tools and stakeholders. Understand how the process is performing currently.

2. Analyze them and find any process gaps or disconnects

Identify all the errors and delays that hold up a free flow of the process. Make sure if all details are available in the respective steps for the stakeholders to make quick decisions.

3. Look for improvement opportunities and validate them

Check if all the steps are absolutely necessary. If a step is there to solely inform the person, remove the step, and add an automated email trigger.

4. Design a cutting-edge future-state process map

Create a new process that solves all the problems you have identified. Don’t be afraid to design a totally new process that is sure to work well. Designate KPIs for every step of the process.

5. Implement future state changes and be mindful of dependencies

Inform every stakeholder of the new process. Only proceed after everyone is on board and educated about how the new process works. Constantly monitor the KPIs.

A real-life example of BPR

Many companies like Ford Motors, GTE, and Bell Atlantic tried out BPR during the 1990s to reshuffle their operations. The reengineering process they adopted made a substantial difference to them, dramatically cutting down their expenses and making them more effective against increasing competition.

The story

An American telecom company that had several departments to address customer support regarding technical snags, billing, new connection requests, service termination, etc. Every time a customer had an issue, they were required to call the respective department to get their complaints resolved. The company was doling out millions of dollars to ensure customer satisfaction, but smaller companies with minimal resources were threatening their business.

The telecom giant reviewed the situation and concluded that it needed drastic measures to simplify things–a one-stop solution for all customer queries. It decided to merge the various departments into one, let go of employees to minimize multiple handoffs and form a nerve center of customer support to handle all issues.

A few months later, they set up a customer care center in Atlanta and started training their repair clerks as ‘frontend technical experts’ to do the new, comprehensive job. The company equipped the team with new software that allowed the support team to instantly access the customer database and handle almost all kinds of requests.

Now, if a customer called for billing query, they could also have that erratic dial tone fixed or have a new service request confirmed without having to call another number. While they were still on the phone, they could also make use of the push-button phone menu to connect directly with another department to make a query or input feedback about the call quality.

The redefined customer-contact process enabled the company to achieve new goals.

• Reorganized the teams and saved cost and cycle time
• Accelerated the information flow, minimized errors, and prevented reworks
• Improved the quality of service calls and enhanced customer satisfaction
• Defined clear ownership of processes within the now-restructured team
• Allowed the team to evaluate their performance based on instant feedback

–> Here are 6 more real-world business process management examples.

When should you consider BPR

The problem with BPR is that the larger you are, the more expensive it is to implement. A startup, five months after launch, might undergo a pivot including business process reengineering that only has minimal costs to execute.

However, once an organization grows, it will have a harder and more expensive time to completely reengineer its processes. But they are also the ones who are forced to change due to competition and unexpected marketplace shifts.

But more than being industry-specific, the call for BPR is always based on what an organization is aiming for. BPR is effective when companies need to break the mold and turn the tables in order to accomplish ambitious goals. For such measures, adopting any other process management options will only be rearranging the deck chairs on the Titanic.

Core questions

Before you decide to adopt BPR for functional reshuffling, ask yourself the following questions:

• Who are our customers? What values are we offering them?
• Are the current processes delivering expected values?
• Do the processes need to be redefined or redesigned?
• Are the processes in sync with our long-term mission and goals?
• How would we handle the existing processes if we were a new company?

If a company concludes that it is, in fact, operating on complacent grounds, it has to identify the right kind of solution to address the problem or consider BPR for a total overhaul. Done well, BPR’s radical approach yields dramatic results for a company in terms of improved cycle times, product quality, productivity, and so on.

Good BPM reduces the need for BPR

The productivity of employees definitely takes a hit during process reengineering. Changes are difficult to manage and it saves a lot of costs on analysis, reengineering, and documentation. If processes are managed better during runtime, the need for reengineering is greatly reduced.

Kissflow Process is a BPM tool to manage business processes with full control. It is built as an intuitive logic-based tool that anyone can learn and understand. You get a lot more visibility into processes and their functions. Take a free trial and see how easy it is to manage your processes

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