Need for Business Process Reengineering
The real meaning of process reengineering lies in changes to the 4 main business disciplines – organization, technology, strategy, and people. The need for business process reengineering arises in several ways in a business. How do you know if it is time for a business overhaul? Business processes must be reviewed regularly to determine if process reengineering is required. Why should business processes be reviewed regularly?
- Somewhere within the business process, an entrenched status quo has been set by employees. These employees may be hoarding knowledge and responsibilities that make them indispensable to the organization.
- Your competition may be eating away at your customer base due to error-prone business processes within your organization.
- Despite achieving remarkable business growth, business profits are falling.
If your business shows any of the above signs, it warrants a process overhaul. The next question is how often is a process review required? When any of the above situations are encountered, then it is the right time for process reengineering. Organizations that employ process analysts often make frequent reviews of processes. How do find out which process needs to be reengineered? Depending on the issue, the corresponding process needs overhauling. Common issues that warrant process reengineering are:
- A rise in customer complaints and refund requests
- Increase in staff stress, disputes, and turnover
- Disruptions in business operations after experienced employees quit or go on long leave
- Rapidly falling profitability
- Frequent disruptions in cash flow
- Raising inventory levels
- Inability to fill customer orders on time
- Closure of accounts books takes really long
- Sales leads are not being followed quickly
Businesses facing one or more of the above situations must consider reengineering their processes.
Phases of Business Process Reengineering
Before we get into the phases of process reengineering, let us first understand the objectives of BPR. Following are the main objectives of BPR:
- Reduce business costs and process times drastically: BPR reduces costs and cycle times by eliminating unproductive activities and freeing the employees that perform them. Reorganization by teams reduces the need for management layers, accelerates information flows, and eliminates errors or rework due to multiple handoffs.
- Improve the quality of customer services significantly: BPR improves the quality of work by reducing fragmentation of work and establishing clear ownership of individual tasks. This way employees are made aware of their output and can measure their performance based on process feedback.
- Reinvent the basic rules of the business: ill-planned and implemented business processes result in resource and time wastage. The basic rules of business upon which the processes are built need to be reinvented to keep up with the evolving market and business needs.
- Improve customer satisfaction: BPR streamlines business processes for improved productivity. Improved productivity translates to better customer satisfaction.
- Enhance the effectiveness of organizational learning: BPR creates new learning opportunities for employees.
Business process reengineering is implemented in 3 phases, analysis, design, and implementation phases. Implementation of all these phases should be followed by communication throughout the organization.
The analysis phase of BPR starts with the analysis of the process to be reengineered. The requirements for the new process are forecasted by focusing on the current and future needs of the customer, analyzing what is currently accomplished by the old process, creating a vision of what is to be achieved by the reengineered process, and zeroing in on the distinction between the two. The main aim of the analysis phase is to give the reengineering team a deep understanding of reality. If a pressing need for process change is revealed in the analysis phase, the reengineering team proceeds with the design phase.
The design phase of BPR deals with the design of the reengineered process that begins with the mapping of the new process to the development of a change management plan. Between the mapping step and change development plan step, the jobs are redefined and redesigned and the available technology and organization resources are evaluated.
The implementation phase of BPR involves reengineered process/steps execution, testing of the new steps/processes, and gathering performance feedback. The new process is tested, and the performance is evaluated through feedback. Continuous improvement of business processes promotes a better customer experience.
How to Implement BPR?
Simply put, business process reengineering means altering the way an individual performs work so that better results are accomplished. BPR redefines workflows to improve customer service, achieve higher levels of efficiency, and cut operational costs. BPR implementation needs to be planned and executed in a systematic manner.
Here are the steps to successful BPR implementation:
Step 0: This step focuses on preparation and coordination for implementing BPR. The main objective is to establish strong management support and communicate clearly to the implementation team about their project details and their roles.
Step 1: This step focuses on the business diagnosis and performance measurement of business processes. The main objective is to diagnose and identify problematic areas in the current processes. The performance of current processes is evaluated based on measurable factors like average cycle time, number of errors, average cycle times, and number of customer complaints.
Step 2: choosing the process for change and modeling is the second step in business process reengineering implementation. The strategic processes that are feasible for change are identified. Redefining and modeling the selected processes are the main objective of this step.
Step 3: technical design of the solution is the main objective of this step. Workflow automation is a tested way to improve operational efficiencies. Ways to automate modeled business processes using workflow tools and networks is the main objective here. Redesigning and modeling of the selected processes are done using workflow automation tools.
Step 4: training and allocation of personnel for implementing the changes are carried out in this step. The new ways of working with new processes and ways of using IT in the redesigned process need to be explained to the project team. This step focuses on training personnel on the usage of new processes and allocating the right person for newly defined tasks.
Step 5: change management and employee empowerment are important steps of BPR. Efficient change management helps establish a positive attitude towards change among employees. In order to minimize resistance from employees against change, they are empowered with position-based performance appraisal and bonus systems.
Step 6: the final step in the implementation of EPR is the introduction of new processes into business operations. A time and date are decided for introducing new processes into the business. Emphasis is given to making the employees understand that working under old processes is not possible anymore.
Step 7: continuous improvement of business processes is a must for sustaining in the market. The best way to capitalize on BPR implementation is to develop an internal team of experts that offers guidance on future BPR implementations.
Effective BPR implementation requires the timely execution of the above steps. The most important factor in successful BPR implementation is having a clear goal and coming up with clear strategic improvements to existing work processes. BPR is all about implementing new ideas that change the way you engage and interact with customers.
Challenges in Business Process Reengineering
Once a business has decided to implement business process reengineering, there are several factors that it must consider to ensure successful implementation. There are several reasons why a perfectly fine BPR decision can fail. For successful BPR implementation, adequate IT infrastructure and clarity in implementation procedures are a must. Despite careful planning of BPR, why is it that nearly 50% of the projects fail? Let us consider the top 5 challenges that might mess up BPR initiatives:
1. Lack of knowledge:
the why, when, where, and how of business process reengineering must be clear to the implementation team. In scenarios where there is a lack of clarity or knowledge of the BPR implementation, the scope for confusion, redundancy, and repetition is more. BPR projects that lack knowledge and awareness result in a waste of business resources. To overcome or avoid such scenarios, the team must be properly trained and guided all through the implementation.
2. Irregularities in implementation:
BPR cannot be considered as a trigger for instant competitive edges, instead, a thorough process must be followed from start to end for visible growth. In some scenarios, BPR may not be suitable for many processes. Moreover, BPR practices cannot be considered as one-off implementations, they must be made part of the business strategy for continuous improvement. Irregular BPR practices hinder the growth opportunities that come with it.
3. Improper team formulation:
must-have requirements for the formulation of the BPR team are well-defined, well-structured, knowledge of operation and management and the right set of business process knowledge and expertise. Any team that lacks these characteristics is bound to mess up the BPR implementation.
4. Shallow analysis and lack of support:
an in-depth analysis of existing business processes is the backbone for BPR implementation. The process milestones must be clearly established and analyzed before the implementation. The inadequate analysis is a recipe for disaster.
5. Insufficient and Inappropriate Resource utilization:
lack of essential resources like skilled human resources, adequate budgeting/funding, knowledge of BPR tools, availability, timely approval, and correct set of BPR tools results in failure of BPR implementation.
To achieve success through BPR implementation, businesses need to ensure that the above challenges are addressed or avoided during the analysis, design, and implementation phases.
Pros and Cons of BPR
Business Process Reengineering is a task that has a mix of positive and negative repercussions for a business. Although it seems like a straightforward process, there are several pros and cons that come with BPR implementation.
Pros of BPR
- More focus on customer needs: Provides focus to business by making core processes customer-centric. One of the main reasons businesses go for BPR is to improve customer experience by streamlining existing processes with a focus on customer and market requirements.
- BPR helps build a strategic view of operational procedures by delving into radical methods to improve business processes. BPR focuses on how business processes could be done for better outcomes.
- Elimination of repetitive and redundant steps is possible with BPR. When these steps are eliminated from the process, the complexity and length of business processes are significantly reduced.
- Improves coordination and integration between various business functions.
- Cuts out the delay and non-essential phases of operation and management to improve viability and adequacy across the organization.
- The number of reconciliation processes, checks, and controls is greatly reduced with BPR.
- Checks on short-sighted approaches that are due to excessive focus on functional boundaries.