Changes within a business begin when companies wish to improve their business processes.
Ensuring that new processes deliver substantial business value, companies must first seek to clarify their goals and expectations.
Business process reengineering is the process of turning those expectations into reality.
What is business process reengineering (BPR)?
Business process reengineering (BPR) is the remodeling of a business’s current processes. The aim is to achieve considerable improvements in business-critical aspects like quality, service, output, cost, and speed.
The term was first coined in a Harvard Business Review by Michael Harmer.
Business process reengineering should reduce enterprise costs by eradicating unproductive business layers, improving process innovation, or restructuring sections of a business. Ultimately it should remodel a business, or specifically, reengineer.
Who is BPR for?
The problem with business process reengineering is that the larger you are, the more expensive it is to put in place. For example, a younger startup might undergo a pivot, that only has minimal costs to execute.
Once an organization grows, it becomes both harder and expensive to reengineer its processes completely. But they are also the organizations that change due to more competition or unexpected marketplace shifts.
For example, in the 1990s, telecommunication companies had to up their game. Faced with newer, more agile competitors equipped with better technologies, they had to offer more value to their customers.
Lately, this trend has spread to multinational banks, fintech, biotechs, and manufacturing. All have benefitted by embracing business process reengineering.
Rather than being industry-specific, the purpose of BPR is based on what an organization is aiming for. BPR is powerful when companies seek to accomplish newer goals by entirely changing their current patterns of conducting business.
Which core questions should companies ask before business process reengineering?
Before a company approaches business process engineering, they should ask themselves the following:
- Who are our customers?
- What values can we offer them?
- Are current processes delivering expected value?
- Do the processes need redefining or actually redesigning?
- Are the processes in tandem with company long-term goals?
- How would we change the existing processes if we were a new company?
If a company concludes that it is operating complacently, it must identify a solution to either address the issue individually, or consider BPR for a total organizational overhaul.
Done correctly, BPR produces dramatic results for a company. BPR can improve profitability, productivity, product quality, and offer more value to customers.
When identifying whether BPR fits a company’s objectives, the critical question to ask is whether the company has the resources to execute it.
You see, BPR is not an experimental discipline.
It requires a direct investment, dedicated resources, and starting afresh. Organizations should consider process reengineering to introduce new products or services that take their customer value offering to new heights.
The 7 steps of business process reengineering
- Define. Mapping the current business patterns and its processes like roles, supporting technologies, workflows, and all business activity helps us define the business process reeengineering.
- Hypothesize. Incorporate a vision of a business and create a hypothesis related to core business processes.
- Identify and Analyze. Identify, analyze, and validate opportunities to address gaps and root causes identified during the analysis. This step includes identifying and validating improvement opportunities that are forward-facing. Usually, strategic transformational opportunities that are not part of the current processes.
- Design. Select the improvement opportunities identified above that have the most impact — namely organizational effectiveness, operational efficiency, and which most achieves organizational strategic objectives. Ensure selected opportunities match the organization’s budget, time, and talent to install within the project timeframe.
- Develop and Simulate. New workflows and procedures are designed, new functionality is either created or enhanced. Process simulation quantifies and confirms the potential benefits (time perspective, cost, and decreased variations. Furthermore, simulation reveals the unintended consequences of the proposed changes. Allowing organizations to verify ‘what-if scenarios’. Either a virtual setting with real data or creating a prototype.
- Implementation. The rollout phase. Launches could be staggered to minimize the impact. Yet BPR is designed to be bold, so rollout should not be overly incremental. Thus, organizations should proceed with a healthy level of risk and optimism. Ensure that the change is measured and felt instantaneously.
- Monitoring. As with all BPR approaches, it is a never-ending cycle. Rather than a checklist of events that is ‘ticked off’ as completed. Business process reengineering is monitored continuously and influenced by new data outcomes. It should never be forgotten.
Does BPR always work?
Contrary to what many organizations believe, BPR is not always the panacea to solve failing businesses or process concerns.
Research has demonstrated that 70% of companies who attempted to reengineer their business processes suffered a failure.
BPR is an ideal fit for an organization seeking to revamp its core processes. It is not an answer to every situation.
Organizations differ in their views about the success of BPR, probably because a significant number of organizations that applied BPR failed to achieve their goals.
Due to its drastic nature, BPR is an all-or-nothing approach. It highly depends on how strategically applied it will be.
For example, a company implementing BPR to cut costs does not raise its value chain — a cost-cutting approach could severely damage a company’s potential growth.
But, BPR can remove process deficiencies when all other performance-boosting methods fail. Principally because the latter usually aims at speeding things up within traditional rules.
These process solutions rely on speed, efficiency, and control, whereas business process reeengineering purpose is developed on innovation.