Business process reengineering (BPR), also known as business process transformation, focuses on the analysis and redesign of core business practices.
It’s used by businesses to identify and eliminate inefficiencies in the workflow, resulting in improvements in productivity and quality.
Benefits of Business Process Reengineering
Increases Competitive Advantage
BPR helps an organisation to focus on its core competencies. These competencies are hard to mimic, which provides businesses with a competitive advantage.
Organisations can radically improve the effectiveness and efficiency of its operations with BPR. The redesigned processes can help boost productivity and reduce time wastage, which ultimately lowers operational costs.
BPR allows organisations to maintain flexibility. In today’s world, the most successful companies are known to be able to adapt quickly to changing trends. Therefore, the ability to stay agile is imperative.
Principles of Business Process Reengineering
Michael Hammer – the founder of the BPR concept, wrote the book “Reengineering the Corporation: A Manifesto for Business Revolution”. In his book, he suggests 7 principles that businesses should abide to when undergoing BPR.
1. Organise Around Outcomes, Not Tasks
The first principle states that new processes should focus on the outcomes of the BPR programme and the easiest way to achieve it.
2. Have Those Who Use the Output of The Process Perform the Process
This principle suggests that the work should be carried out by the person using the output. For example, employees can make purchases without having to go through the procurement department.
3. Integrate Information Processing Work into the Real Work that Produces the Information
This means that the handling of data must be done by the same person who’s collecting it. This reduces errors by limiting the number of external contact points in a process.
4. Treat Geographically Dispersed Resources as Though They were Centralised
Technology such as shared databases and cloud computing should be used to optimise the organisation’s resources.
5. Link Parallel Activities Instead of Integrating Their Results
According to Hammer, parallel activities must be coordinated. This removes inefficiencies and reduces operational costs.
6. Put the Decision Point Where the Work is Performed and Build Control into the Process
Hammer states that employees must have the rights to make decisions and should be given control over their work.
7. Capture information once – at the source
This principle recommends that information should be collected once at where it’s been created. This helps the organisation to avoid incorrect data entries and expensive re-entries.
Steps in Business Process Reengineering
Step 1: Set the Vision and Define Objectives
The vision and objectives of the BPR programme should be clearly defined and communicated to the employees. This prepares them for what’s to come and sets the tone of the project.
Step 2: Establish a Competent Team
A team of cross-functional experts needs to be assembled to help establish new processes. It should consist of employees who can reengineer outdated processes.
According to Toggl, the best BPR teams consists of
- senior managers,
- operation managers and
- reengineering experts.
Step 3: Study the Existing Processes
Current processes will be thoroughly analysed to identify inefficiencies and bottle necks.
Benchmarking can be helpful in this step. It’s the act of comparing the company’s performance and processes against similar organisations in the same industry.
This can help your organisation better determine the processes that need to be overhauled.
Step 4: Redesign the Processes
The redesigned processes should be in line with the vision and objectives established in Step 1. Additionally, it should also lead to increased efficiency and mitigate problems caused by the previous processes.
Step 5: Implement the Reengineered Processes
Once the processes have been redesigned, a test should be carried out to identify any potential issues.
This allows the organisation to make any necessary adjustments before implementing the process on a larger scale.
Business Process Reengineering Best Practices
BPR is not a failproof method. Some factors that will help ensure the success of the BPR programme include:
- Making customer needs a priority
- Gathering support from upper management
- Establishing clearly defined goals and responsibilities of the participants
- Using proven BPR methodologies that have shown real-world results
Examples of Business Process Reengineering Case Studies
Problem: Ford’s accounts payable division was not as efficient as it should be.
The company found that the department was overstaffed and approximately 5 times larger than it should have been.
Solution: Deploy a BPR strategy to change the accounts payable process.
Ford reorganised and downsized the department and came up with new processes. This helped the company become more productive.
Problem: The company’s hiring process was ineffective.
Google had found that their hiring process had little correlation with how a candidate ultimately performed in his job. This led to bad hires that left negative, long-lasting effects on the company.
Solution: Adopt a structured, process-driven approach to hiring and interviewing candidates.
Google reengineered its hiring process and developed a structured approach to interviewing candidates.
Consequently, the company spent fewer resources and capital when hiring new staff and can better weed out toxic employees.
Problem: The employees involved in Airbnb’s product development process – designers, engineers, and researchers – were working in silos.
This was counterproductive and caused them to struggle with meeting their deadlines. Furthermore, it also resulted in mediocre product ideas.
Solution: Create a digital environment where employees can work closely together.
The company came up with a system that updated files in real-time, allowing the designers, engineers, and researches to work seamlessly together. This enabled them to deliver great product ideas punctually.
Implementing Business Process Reengineering in Your Company
A BPR programme requires the right expertise and knowledge to succeed. If you’re keen on redesigning your existing business processes, contact us to find out how we can assist you.