What is Business Process Reengineering (BPR)? Definition, Steps, Characteristics

What is Business Process Reengineering (BPR)?

Business Process Reengineering (BPR) is the fundamental rethinking and redesign of business processes to achieve significant improvements in critical measures of performance, such as cost, quality, service, and speed.

To achieve consistent performance, organisations are required to make continuous improvements in their existing processes. In the modern scenario, organisations are adopting Business Process Re-engineering (BPR) to improve and enhance the efficiency of their existing processes.

Business Process Reengineering Definition

In order to understand how BPR helps an organisation, let us first understand the concept of BPR.

According to Hammer and Champy, BPR 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.

In this definition, focus is laid on three words: radical, redesign, and processes. Thus, it can be implied that:

• BPR involves radical and innovative reorientation of existing business processes.
• BPR is about redesigning existing business processes to achieve goals more effectively.

BPR can help an organisation in achieving its aims more effectively by removing redundancy. Let us understand this with the help of an example:

IBM Credit Corporation re-engineered its credit checking and approval process by replacing specialists with generalists. These generalists were solely responsible for deciding customers’ creditworthiness. As a result, the number of checks and controls reduced. Moreover, a lot of time was saved in assessing the creditworthiness of customers. Consequently, the company was able to deliver services to customers on time. As a result, customer satisfaction increased greatly.

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Business Process Re-engineering Steps

BPR works to changing the complete course of the said processes at the core. This makes it extremely risky, laborious, costly and time-consuming process. You need to be capable enough to manage and carry out each and every step carefully and successfully. You may face many failures in your attempts to make a reasonable and beneficial change in the processes.

Here are certain steps to follow for efficient Business Process Re-engineering:

Step #1: Identify the Need for Change and Communicate

For small startups, this step is probably very easy. You can go for BPR when you realize that your product is receiving a huge user drop-off rate. Then, the next thing to do is informing the co-founder, suggest a direction to spindle and you are good to go for the further steps.

For a large business, the first step is the biggest hurdle itself. You will always find individuals who are satisfied and happy with the existing ways of working. These individuals can be both, from management side and the employees. The management will most probably be afraid of getting their investments sunk, and the employees might see it as a job security threat.

Before anything else, you will have to make up their minds and convince them why the change is required for the firm. This shouldn’t be difficult if your company isn’t doing well.

Perform a thorough research and try answering these questions in case of a dilemma: Which of the processes might not be efficient? Where are you lagging behind of your competition? Are you even part of the competition or is the condition worse?

Step #2: Build a Great Team of Experts

Business process re-engineering demands a team of highly motivated, and skilled team of individuals who has the potential to carry out all the needed steps involved.

The team of experts majorly consists of:

• Senior Manager: For supervision and calling out the shots for taking major decisions. If your BPR team doesn’t have anybody onboard from the senior management, then they will have to get their approval for every little change.
  
  
• Operational Manager: He is the one who is aware of the ins and outs of the process. Their process knowledge can prove to be a great asset to build a new, effective and more efficient process.
  
  
• Reengineering Experts: They are the ones who expertise in the field from IT to manufacturing. They will discover where and how the right changes should be implemented to yield the best outcomes. The changes might be anything – software, workflows, hardware, etc.

Step #3: Define Key Performance Indicators (KPI) for the Inefficient Processes

After the team is ready and you are all set to launch the initiative, there will be the need to define the correct Key Performance Indicators (KPIs). BPR is introduced to optimize your process. Formulate BPR strategies that can bend as per your business requirements and, not the other way around.

KPIs usually differ a lot depending on the type of process you’re optimizing. And the following are the most typical ones:

Manufacturing

• Cycle Time – The total time taken from initiating to concluding a process.
• Changeover Time – Time in between required to shift the line from making one product to the next. Rate of Defect – The total percentage of defective products manufactured.
• Inventory Turnover – The time taken in the manufacturing process to convert inventory into products.
• Planned VS Emergency Maintenance – The proportion of the times when planned maintenance and emergency maintenance happened.

IT

• Mean Time to Repair – The average time spent to repair the app, software, or system after any emergency.
  
  
• Support Ticket Closure rate – The ratio of number of support tickets closed by the support team to the number opened.
  
  
• Application Development – The time spent on completely developing a new application from the scratch.
  
  
• Cycle Time – The time required to get the network back up after a security fissure.

Perform business process mapping to know exactly where the KPIs need to be defined in the individual processes. Use the step-by-step strategy to perform BPR effectively.

You can map out the processes using 2 ways:

• Process Flowcharts – It is the most basic technique. Just grab a pen and a blank paper and jot down the processes stepwise.
  
  
• Business Process Management (BPM) Software – Technology makes anything easy! Using a BPM software for process analysis makes everything clearer and easier to work with.

For example, you can use BPM software, process digitization, setting deadlines, etc. Such software will most probably lead you to optimize the said processes since it allows easier collaboration among the employees.

Step #4: Reengineer and Compare KPIs of the Processes

After the all the above steps, it is important to perform A/B testing to check the working and efficiency of the new process. Start by implementing the modifications and solutions on a significantly small scale.

Now all you are left to do is – put up your theories into practice and see how the KPIs are holding up. Once you realize that the new solution works better, and start scaling the solution gradually. Eventually put it into action within other company processes as well.

If the new solution doesn’t prove to be that fruitful, then you need to start the process all over again. The cycle of finding loopholes and solutions to them repeats until you form a desirable, effective process.

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Characteristics of BPR

BPR has become an effective tool for organisations to operate efficiently in today’s dynamic and competitive business environment. The following are some important characteristics of BPR:

Fast speed

BPR compresses time taken to perform strategic business processes. For instance, if the average cycle time of a process before BPR was 4 hours, after BPR, the same can be reduced to an hour.

Customer focus

BPR focusses on serving customers by designing customer-oriented processes. This helps an organisation in eliminating customer complaints.

Flexibility

Through BPR, organisations can transform their traditional processes into highly adaptive processes to respond quickly to changes taking place in the business environment.

Adoption of technology

BPR requires innovative use of technology to achieve the challenging goals defined by an organisation. For example, Information Communication Technology (ICT) is being used in various organisations to reform existing processes.

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ERP and BPR

As discussed in the previous chapters, Enterprise Resource Planning (ERP) is an application that supports an organisation in determining the best possible ways to manage its available resources.

On the other hand, BPR involves analysing the performance of business processes and determining the possible changes that can help in streamlining operations.

To improve their overall performance, organisations can deploy both BPR and ERP together. For instance, organisations can use BPR to redesign their existing processes and improve their efficiency. For this, they need accurate information related to processes. Such information needs can be fulfilled by ERP.

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Advantages of Implementing BPR in Business

There are many benefits of business process re-engineering to your business. Some of them are as follows:

Cost-cutting and reducing cycle times

Business Process Reengineering eliminates all the unproductive and futile activities within an organization. This drastically reduces the costs and cycle times for the employees performing them. With team reorganization the need for management layers is eradicated. This also enhances the flow of information eliminating the errors and rework efforts required due to multiple handoffs.

Improve work, product and service quality

Business Process Reengineering minimizes work fragmentation and establish clear responsibility and ownership of the processes. This impacts the overall process effectively. Performance measurement can be evaluated easily with a prompt feedback and this allows workers to gain insight on the output responsibility.

Let’s look at some of the tangible benefits of business process re- engineering:

• Integration within the organization.
• Empowered employees.
• Reduction in the process steps.
• Natural order of process steps followed.
• Process transparency increases.
• Drastic reduction in the manufacturing costs.

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Challenges That Impact the Implementation of Business Process Reengineering

Lack of knowledge

The team you are working with must be clear on where to implement the reengineering processes and apparently why. Proper prioritization of different business process for reengineering must be considered.

The employees must be trained appropriately or retouched with substantial business process reengineering programs to gain the required knowledge in the field. In case the implementation is done on wrong processes, it could result in wastage of resources. The business can see the correct process implementation only through proper training, guidance and knowledge transfer.

Irregularity throughout the implementation and opting wrong direction

Business Process Reengineering cannot be carried out with an instant competitive advantage. The entire process must be followed bit by bit for the visible growth. But this does not adhere that reengineering has to be done for every process in the organization, there might be some exception where it is not suitable.

Also, once the company achieves the desired benchmark, the business process reengineering practice should not be discontinued because an irregular reengineering process can hinder a lot of opportunities and growth that comes along. There should be predefined objectives and expectations in place.

Inappropriate Team Formulation

A constant look must be put on for latest updates, if any, by the well- defined team on various process reengineering practices. Not just the correct knowledge but the inclusion of the right set of the team is vital both for the operation and management.

The team must be properly structured in which at least a senior or operation manager be allocated who is expert in business process knowledge. You can complete the team with experienced engineers for every single field such as from manufacturing or IT. This will enable constant supervision in the right set direction.

Wrong placement of resources

Lack of essential resources can completely disrupt the bridge between the organization and the reengineering process, so getting this right is the first step. You must see to it that proper resources are readily available when there is a requirement.

The list of things you must check beforehand is skilled human resources, sufficient funds, correct set of Business process reengineering tools, vast knowledge of the processes, experienced players in the system, timely approval and you are good to go.

Faulty analysis and lack of support from team members

The process milestones should always be analyzed and established in advance. You must ensure that the data and essential information for the procedure is accessible to the entire team. Make the team abreast of the priorities so that the work is well-coordinated without wasting any time.

The work carried out must be relevant, and the team members should be more transparent on why a specific process is required instead of focussing on how the process can be undertaken. Often businesses face challenges in channelling the Business Process Reengineering steps.

The responsibility lies on the organization as a whole and not just the Business Process Reengineering team for a particular decision made.

Hence, it can be precisely said that failure may be the result of lack of organizational readiness for change, lack of purpose to move past the traditional methods and age-old comfort zone, lack of commitment, leadership and efficient planning.

When employees in the company are not skeptical about the Business Process Reengineering success only then, they can develop understanding toward working on a particular goal.