Business Process Reengineering (BPR) – When It’s Time to Obliterate
July 10th, 2017 • Business Process Reengineering
Business Process Reengineering Definition
If business process improvement is fine-tuning your car, then business process reengineering is doing a total engine overhaul.
Business process reengineering (BPR) helps organizations reimagine their existing processes and take extreme redesign measures to achieve remarkable results.
BPR is different from other BPM initiatives because it revamps a process entirely rather than making repeated improvements to it. Implementing BPR successfully will result in more drastic benefits of saving costs, speeding processes, and bettering product/service quality.
BPR Blows It Up
In 1990 an MIT professor, Michael Hammer, wrote an article titled, “Don’t Automate, Obliterate” which fuelled BPR’s popularity as a revolutionary concept. Hammer writes:
It is time to stop paving the cow paths. Instead of embedding outdated processes in silicon and software, we should obliterate them and start over. We should “reengineer” our businesses: use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvements in their performance.
Businesses love BPR for its no-nonsense, blitzkrieg approach to completely blot out waste from processes.
Respect the Old, but seek out the New
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Of Tacos and Tauruses
BPR gained more steam when Fortune 500 companies started adopting business process reengineering (BPR) as their new weapon of choice to eliminate process redundancies and shoot up workflow efficiency.
In one of the early examples of BPR’s success, Ford Motor Company examined their Accounts Payable department. In the early 1990s, they employed 500 people in accounts payable to manage a very complicated system. They also had inefficiencies throughout the system and many errors. Through some basic improvements with IT, they thought they could reduce their workforce by 20%. However, when they realized that Mazda employed only 5 people in their accounts payable, they realized something more drastic was needed.
Using BPR, Ford:
- Introduced the concept of “Invoiceless Processing”
- Reduced their workforce by 75%
- Digitized its accounting process
- Improved vendor relationships
Taco Bell’s K-Minus initiative is another example of a successful BPR initiative. The retail food service company decided to move the food preparation job from its restaurants to a centralized commissaries in 1989. The decision helped them:
- Achieve greater quality control
- Lessen employee injuries in restaurant kitchens
- Encourage employees to deliver better customer service
When to Use Business Process Reengineering (BPR)
The benefits of BPR are countless – increased revenue, improved customer service, reduced cost, higher employee retention, faster processing time. Nearly any business benefit can be gained from business process reengineering.
However, the key is when to use BPR. Here are some key times when you might want to think about obliterating your processes and starting fresh:
- When technology has significantly disrupted your industry
- When a competitor does drastically more with less (think Mazda)
- When you need to be the disruption in your industry
- When a little improvement won’t make much difference
The Pitfalls Of Business Process Reengineering
Business process reengineering (BPR) is not a silver bullet to revive tangled up, sloppy processes. It fails when companies mistake BPR for a way to automate, downsize, or outsource.
A business process reengineering (BPR) initiative flops when organizations:
- Don’t have long-term, clear goals
- Apply it to more than one process
- End up with only minor changes to the process
- Don’t dare to put their processes on the anvil
- Apply it continually, reengineering processes yearly or more often
- Focus more on automation than redesign
A Case Study of BPR Failure
In the mid-1990s, US telecommunications company TELECO adopted BPR to fight the toughening market competition. But due to factors like poor communication from leadership, prematurely letting go of employees, uncoordinated execution, and lack of awareness about BPR tools, the initiative failed to deliver results. The teams at TELECO did not follow the business process reengineering steps which ended up in a waste of money and time.
Read the full story here:
Difference Between BPM and BPR
Business process management is the methodology of how to manage and optimize existing processes. Organizations often use business process improvement as a way to manage their on going processes. However, business process management (BPR) means essentially trashing the old process and starting fresh with a blank slate.
A quick run-down of how BPI and BPR differ:
Business Process Reengineering Steps
Broadly speaking, business process reengineering steps can be put into a five-stage progressive plan:
1. Select Process for Reengineering
Specify an individual process that’s causing problems and evaluate what’s wrong with it.
2. Define Process Objectives
Specify the goals you want to realize, and communicate clearly with all stakeholders.
3. Identify Reengineering Enablers
Is your culture ready for a change? Do you have IT/technological competency to make things happen?
4. Formulate A New Redesign
Rewrite process prototypes by ignoring the existing process rules and finalize on the best fit.
5. Execute The New Process
Train team members on the new process and new tools to execute it. Once the new model is proved successful, convert to regular business process improvement.
- An Accenture study found that two-thirds of companies that adopted reengineering saw improvements in one or more of their processes by more than 500 percent. [source]
- The American health insurance giant CIGNA applied business process reengineering (BPR) to many of its projects like customer service and expense operations and was able to save as much as $100 million. [source]
- A survey by a consulting firm, Arthur D. Little, on North American businesses discovered that 85% of executives surveyed were dissatisfied with the results of BPR projects. [source]
- Three biggest obstacles to BPR implementation: Lack of commitment in leadership, expecting too much too soon, and resistance to change. [source]
Core BPR Principles
If you want your BPR initiative to succeed, remember this advice from Michael Hammer’s original article:
Think Cross-Functionally. Your process likely touches many departments. If you only try to change things within one department, your efforts may not make a difference.
Keep asking “Why” and “What if”. BPR works because it stretches the boundaries and doesn’t assume the current solution is the only one.
Organize around outcomes, not tasks. Don’t think up a better way to do the individual tasks in a process. Focus on the outcome and the simplest way to get there.
Let those closest to the work make the final decisions. There is tremendous insight in those people who have performed a function a thousand times over. Ask them how improvements can be made and give them decision-making power.
Capture information once, at the source. Much of the redundancies in processes involve the manual transfer and resubmission of data. Collect the data once, and use IT systems to parse it out to every task after that.