Business Process Reengineering Movement

March 28, 2012

What is Business Process Reengineering?

The best and simple definition for Business Process Reengineering (BPR) was found in the book “Reengineering the Corporation – A Manifesto for Business Revolution” by Michael Hammer and James Champy. It said, “BPR is defined as 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 short, the heart of BPR lies in the notion of discontinuous thinking. According to the authors, BPR done right means starting from scratch.

Business Process Reengineering recognizes that an organization’s business processes are usually fragmented into sub processes and tasks that are carried out by several specialized functional areas within the organization. Often, no one is responsible for the overall performance of the entire process. Reengineering maintains that performance optimizing of sub process can result in some benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient and outmoded. For that reason, reengineering focuses on re-designing the process as a whole in order to achieve the greatest possible benefits to the organization and their customers.

Hammer and Champy in Reengineering Corporation – A manifesto for Business Revolution, suggest 7 principles.

· Organize around results and outcomes and not tasks

· Have those who use the output of the process perform the process

· Subsume information-process work into the real work that produce the information

· Treat geographically dispersed resources as though they were centralized.

· Link parallel activities instead of integrating their results

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

· Capture information once and at the source

Role of Information Technology

Major advantage of IT in reengineering lies in its disruptive power. IT has the power to break the rules and make people think inductively and give the company a competitive advantage. A great example is Amazon. Amazon turned around the customer’s view of a book store. Another example would be super markets/department stores like Wal-Mart who have used IT to drive their business. The scanners that are used to check out commodities provide huge benefit by making it possible to track sales in real time.

IT provides project management skills and experience, which is a key ingredient in successfully implementing reengineering. In Hammer and Champy’s book (1993) they state that “IT is an integral part of BPR used as an enabler since it permits companies to reengineer Business Process”. Corporations must think inductively about the solution in order to bring in innovative ideas to implement the new process.

In my research I discovered a couple of white papers that explain the role of IT in BPR:

Honey well – David J. Paper, James A. Rodger, and Parag C. Pendharkar did a case study on the successful implementation of BPR in Honeywell, Phoenix Arizona. This study shows one organization’s experiences with radical change for the purpose of uncovering how they achieved success. From their study, 2 out of 10 points stand out…

· Execution of carefully developed change plans separate the high performers from less successful BPR projects.

· Recognizing that dealing with change is difficult and complicated is not enough. This study states how World Class Manufacturing (WCM) programs achieved high performance and fewer product defects. Total Plant™ (Change Management Group) and their Factory-focused program unified business and control information to enable global customer satisfaction.

ING Bank in Nederland, A large Dutch Bank – In this is white paper written by H.A. Reijers on Product Based Design of Business Process Applied within the Financial Services. In the abstract, he defines the reengineering process suits the information intensive products such as bonds, mortgage and loans. This study shows the method of Credit Processing, which is paper intensive and by reengineering could provide substantial savings in cost and flow time.

By: Shyam P. Prabhakar

Citations / References

· Reengineering the Corporation – A manifesto for business revolution – Michael Hammer & James Champy

· http://www.anterron.com/cgi-bin/white_papers/docs/Role_of_IT_in_BPR.pdf: Business Process Reengineering: Role of Information Technology in Implementation of BPR by Nandagopal Ramachandran

· http://en.wikipedia.org/wiki/Business_process_reengineering

· A BPR case study at Honeywell: By David J. Paper, James A. Rodger and Parag C. Pendharkar. http://www.bus.iastate.edu/nilakant/MIS538/Readings/BPR%20Case%20Honeywell.pdf

· Product-Based Design of Business Processes Applied within the Financial Services by H.A. Reijers: http://is.tm.tue.nl/staff/hreijers/H.A.%20Reijers%20Bestanden/pbd%20-%20paper%20-%20reijers%20-%20final.pdf

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