A Sound and Practical Guide to Business Process Re-Engineering

Quick Summary: We’ve curated this blog on Business Process Re-engineering to help organizations supercharge their internal workflows. We'll show you how it's a catalyst for innovation and agility, giving businesses an edge in this continuously evolving marketplace.

Organizations must be flexible enough to thrive, specifically during times of crisis.

And one magic bullet to make it through a crisis is operational efficiency, i.e., increasing the agility and speed of business.

In search of a better approach, enterprises opted to deploy advanced IT solutions. They assumed that automating the existing infrastructure would help them improve business performance.

However, they needed to re-evaluate their processes and where and how to get the most out of them. The only answer to all these concerns was Business Process Reengineering (BPR) - a simple yet radical idea by Michael Hammer.

It facilitates a consistent systemic analysis and reconstruction of the existing processes, allowing organizations to enhance efficiency and significantly minimize expenses. Also, adapting to this continuous change is not just about adopting advanced technologies but also about primarily rethinking how you can do business. Hence, business process reengineering (BPR) is an imperative approach for organizations seeking to maintain a competitive edge and remain agile for the future.

This in-depth guide will help you understand everything you need about BPR and how it can help your organization.

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What is Business Process Reengineering?

Business process reengineering is a structured and well-organized approach to enhance a company's performance in various aspects, such as service, cost, speed, and quality, by making appropriate changes to the existing processes.

Unlike other methodologies that focus on gradual improvements through regular updates, BPR involves a radical transformation that starts at the top level of the company and extends to even the smallest details, completely revamping the system within a short timeframe.

The primary goal is to elevate business process management throughout the entire company and set specific objectives tailored to their business, which may include:

• Transforming a department-specific task into a cross-functional process
• Recreating organizational goals for consistent improvement plans
• Embracing a process mindset instead of a product mindset
• Making one person responsible for a decentralized process

Biggest Benefits of Business Process Re-Engineering

BPR (Business Process Reengineering) can bring various benefits to an organization, although the specific advantages will vary depending on factors like the company’s maturity level, the efficiency of the current process, desired outcomes, and the reengineering team.

However, based on a few successful reengineering use cases across the world, we can highlight some common benefits:

1. Enhanced efficiency through an extensive reevaluation and redesign of business processes. BPR helps you identify and eliminate unnecessary or redundant steps while delegating certain tasks to more cost-effective roles.

2. By redesigning business processes, the organization becomes better equipped to adapt to regulatory changes, customer needs, market trends, and other relevant factors.

3. Increased customer satisfaction, and potentially, supplier satisfaction if the implemented changes prove to be successful. This, in turn, can lead to cost reductions, ultimately impacting the competitiveness and profitability of your firm.

4. Improved process quality and consequently, the quality of associated products or services, as enterprises can review processes and cut down errors.

5. Lastly, engaging in business process redesign works as a significant motivator for the entire team. It empowers them to enhance their processes, fostering a sense of involvement, morale, satisfaction, and ultimately, productivity.

Business Process Reengineering (BPR) vs. Business Process Improvement (BPI): Is There Any Difference?

The topic of BPR vs. BPI comes with some serious confusion. Are they actually different and do they bring the same thing to the table? We're going to find out here.

First of all, Business Process Reengineering (BPR) calls for the complete overhaul of existing processes. You must break down your legacy system and recreate it from scratch.

On the other hand, Business Process Improvement BPI is an incremental approach that fine-tunes processes to make them faster and more efficient. It focuses on identifying improvement areas and implementing small, continuous adjustments to enhance quality and productivity.

In a nutshell, If you need a makeover of your outdated infrastructure, BPR is the way to go. However, if your processes are working fine but there’s still room for improvement, BPI enables you to optimize them without tearing things down.

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Key Principles of Business Process Reengineering

Now it's time to understand the process of business process reengineering from a holistic perspective by delving into the fundamental principles outlined by Hammer and Champy in their groundbreaking book Reengineering the Corporation: A Manifesto for Business Revolution.

• Rethink from the customer’s point of view to deliver better results.
• Question and challenge existing assumptions about how work should be done.
• Simplify processes and eliminate non-value activities.
• Combine data collection and processing units to reduce errors.
• Design result-oriented, not process-oriented, workflows.
• Prioritize organizational processes based on redesign urgency.
• Allow decision-making to be an integral part of the overall project.
• Enable shared databases to connect disparate systems.
• Merge corresponding activities instead of linking end results.
• Collect data once and at the source through a centralized platform.

Different Types of Business Process Reengineering Methodologies

Since Hammer came with the Business Process Reengineering strategy, we’ve seen a rise of different BPR methodologies and for obvious reasons:

Below is a list of the top BPR methods you could follow:

Hammer and Champy’s Methodology

This approach involves making significant changes to business processes by prioritizing customer needs and incorporating new technology to steer business innovation.

Manganelli and Klein’s Methodology

This method highlights the significance of employee involvement in the implementation of business process reengineering, along with clear organizational vision and strong leadership.

Kodak's Methodology

Eastman Kodak Company developed its own methodology in the 1990s as part of their successful reengineering efforts. This structured approach to process redesign includes identifying customer demands, creating cross-departmental teams, and measuring against competitors.

The Davenport Methodology

Thomas Davenport brainstormed another methodology that focuses on the importance of thoroughly understanding existing processes and using analytical tools to identify areas that can be improved.

Other Methodologies

Additional BPR methodologies include Total Quality Management (TQM), Lean methodology, and the Six Sigma approach. Each of these methodologies offers its own unique Business Process Reengineering tools and techniques to improve processes and drive organizational transformation.

What Problems Does BPR Solve in an Organization?

In order to provide value to your customers, it is essential to first understand their needs. Business Reengineering can assist your business in continuously adapting and resolving various issues, such as:

1. Bottlenecks in processes and rising operational expenses.
2. Complaints from customers regarding declining quality.
3. Inability to keep up with the competition.
4. Continued decrease in RO despite investing in current processes.
5. Inefficient allocation of resources or tasks.
6. Incremental improvements that only increase process complexity and costs.

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7 Practical Business Process Reengineering Steps

So, what does Business Process Reengineering involve?

The most straightforward way to BPR implementation is as follows. For your better understanding, we're going to use the example of one of our previous BPR experiences of working with a manufacturing company and support each step of the process with real-life experience.

Step 1: Identify the need for change

The first step is to recognize that there is a need for process improvement solutions within your organization, such as outdated systems, inefficiencies, customer complaints, or changes in the market.

In this case, the retail company notices a decline in sales and customer satisfaction due to slow and inefficient order processing.

Step 2: Define the scope

The second phase of Business Process Redesign focuses on identifying the specific processes that need reengineering so that you can properly allocate time and resources to those areas.

For example, after consulting with our software engineering team, the client decided that they needed to reengineer order processing, inventory management, and customer service.

Step 3: Analyze existing processes

Now, thoroughly examine the current processes to understand their strengths, weaknesses, bottlenecks, and inefficiencies. You can do this through data analysis, process mapping, interviews, and observations.

At this stage, we helped the retail company map the order processing workflow. As a result, they identified manual data entry as a bottleneck and discovered redundant steps in the process.

Step 4: Redesign the processes

Based on the analysis, develop a new process design that streamlines workflows, reduces costs, and improves overall performance.

Our team proposed automating data entry through barcode scanning and implementing a centralized warehouse management system to streamline the order processing workflow.

Step 5: Communicate and gain buy-in

The next step in Business Process Re-engineering is to clearly communicate the proposed changes to all stakeholders involved in the process. This will help you build support and get buy-in from employees, managers, and other relevant parties.

We encouraged our client to hold meetings and presentations to explain the benefits of the proposed changes to employees.

Step 6: Implement the new processes

After successfully engaging with your stakeholders, it’s time to put the redesigned processes into action. This phase involves legacy system modernization, training employees in new procedures, and modifying organizational structures.

Talking about the retail company, they invested in barcode scanning equipment, updated the warehouse management software, and provided training to their workforce on using the new systems.

Potential Challenges of Business Process Reengineering

Considering its scope and intensity, the implementation of Business Process Reengineering might come with a number of challenges..

Let's explore what you should be ready for:

1. Misunderstanding of the BPR concept

One of the initial obstacles is often the objections raised by stakeholders, such as:

• "The current way of doing things is fine"
• "Let's prioritize other tasks for now"
• "The plan sounds good, but it's not feasible"
• "We cannot implement it at this moment"

It is crucial to effectively communicate with your stakeholders, emphasizing that investing in a Business Process Reengineering strategy does not imply that the company has been doing things incorrectly, but due to changes in the business landscape.

2. Lack of skilled professionals or the right facilitators

The team responsible for leading the business process reengineering project plays a crucial role in determining the outcome. It is vital to assemble a team that is enthusiastic, objective, and experienced in working with business processes.

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Best Practices of Business Process Reengineering for Success

Despite the challenges and the confusion surrounding the use of BPR in various businesses, there are reasons to believe that it can still succeed when followed the Business Process Reengineering best practices.

By considering a few overarching factors and approaching BPR with care, you can increase the likelihood of a successful outcome:

• Tried-and-Tested Methodology: Utilize methods that have already been successful within your company.

• Business Case: Carefully consider and document a compelling reason for implementing change.

• Adequate IT Infrastructure: Ensure that your IT capabilities are capable of implementing the reengineered processes, as relying solely on software solutions cannot transform processes.

• Business-Needs Analysis: Analyze the company's business strategy and long-term goals during the evaluation process.

• Customer Needs Are a Priority: Maintain a customer-centric approach to shape business practices.

• Effective Change Management: Manage expectations, timelines, and the overall impact on the business.

When Should You Implement Business Process Reengineering?

Business Process Reengineering is a significant endeavor that demands considerable time, resources, and investment. While there’s no universal rule on when you should reengineer your business processes, there are definitely certain situations where BPR delivers tangible results:

1. When cost reduction is necessary. If process costs hinder competitiveness, it becomes essential to redesign processes and eliminate unnecessary expenses by using Business Process Reengineering tools
2. When responding to changes in demand, competition, or regulations. BPR can integrate with enterprise software systems to swiftly implement these changes and adapt with agility.
3. When there is a need to enhance the quality of products or services. This involves identifying and eliminating sources of errors and inefficiencies within the processes.
4. When integrating new technologies into processes and exploring innovative ways to automate workflows. This involves identifying how technology can optimize operations.

Top Business Process Reengineering Examples

As we mentioned before, big enterprises around the world have embraced the process reengineering strategy and gained exceptional benefits. This section will explore three unique case studies and highlight the organization’s performance before and after implementing the Business Process Reengineering model.

• Ford

Ford Motor previously had 500 employees working in their Accounts Payable department, whereas their Japanese competitor, Mazda, only had 5 employees handling the same function.

Taking inspiration from Mazda's practices, Ford implemented BPR, reengineered their procurement process, and reduced their headcount by 75% through a method called "invoiceless processing."

• Airbnb

In order to optimize the Airbnb mobile booking experience, the Airbnb team realized they needed to revamp not only the app's design elements but also the underlying process.

The company dedicated nine months to reengineering the Software development Process and creating a new app, which now completes what used to take days of revision in just 45 minutes.

• Taco Bell

Taco Bell's growth from a $500 million company in 1982 to a $3 billion company in the early 1990s is the result of their strategic business transformation.

Through Business Process Reengineering, they experienced significant cost savings, enhanced quality control, improved employee morale, reduced accidents and injuries, and more time available to cater to customer needs.

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Let’s Reengineer the Future of Your BusinessTweaking processes and applying band-aids isn’t always the best plan. Sometimes, it can be much more efficient to completely revamp the entire system and redesign your workflows.By implementing Business Process Reengineering, you not only have the opportunity to make significant improvements all at once but also gain a fresh perspective that can lead to more innovative solutions for addressing inefficiencies.Hence, it is important to provide your team with a flexible digital platform that can cater to their specific needs and adapt as those needs evolve. With our business process automation solutions, you can easily plan, manage, and report on work from anywhere and anytime, enabling your team to be more productive and accomplish more.The choice is up to you; reengineer on a whim or support your action with facts, data, and logic designed for modern times.