We can define business process reengineering as a management strategy, focusing on analyzing and designing business processes within an organization. Business process engineering is also known as BPR. BPR helps organizations reimagine how they do their work to improve customer experience, reduce operational costs and gain a competitive advantage.
BPR is typically carried out to:
- Optimize cycle time and costs: BPR reduces cycle time by eliminating unproductive activities. It entails restructuring teams aimed at optimizing layers, accelerating information flow and eliminating rework. An optimal cycle time leads to cost optimization as well.
- Improve quality: Quality of output is affected due to work fragmentation and multiple handoffs. Business process reengineering enhances quality by cutting down the fragmentation of work and establishes clear ownership of each process. Employees are held responsible for their output, with constant feedback becoming a part of the process.
When Do You Need Business Process Reengineering?
Although business process reengineering is helpful to organizations, it is important to understand when the time has arrived for organizations to seriously consider business process reengineering.
- High, recurring customer complaints
- High employee stress and attrition
- Tasks that require frequent follow-ups
- Lack of ownership among teams
- Increasing turnaround time to market
These are indicative symptoms gathered from various organizations over the years. Business leaders need to be alert to other kinds of issues that indicate the growing inefficiency of their existing business processes.
How Do We Define Business Process Engineering?
Before embarking on the business process reengineering journey, organizations need to ask themselves the following questions to obtain clarity and determine the purpose of the exercise.
- Who are our customers?
- What value does our product/service offer to our customers?
- Are the existing business processes delivering expected value to customers?
- Is there a need to redesign the business processes?
- How are the existing processes contributing to the organization’s long-term growth?
The answers to these questions are the drivers for organizations to pursue business process reengineering, also known as business process redesign.
Business Process Reengineering Steps
Business process reengineering starts with a high-level assessment of an organization’s mission and strategic goals. The organization’s current state needs to be baselined, and the desired state needs to be established—one that is aligned to customer goals and expectations.
The steps involved in BPR are as follows:
1. Define And Analyze Current State
Collect necessary data to understand the as-is business process performance and baseline it. This process must include workflows, roles and reporting relationships, business rules and technology in use.
2. Identify Process Gaps
The data from the previous step can help identify the delays that affect the free flow of the identified process(es).
3. Identify And Validate Improvement Opportunities
Validate with stakeholders if all steps are necessary. For instance, if there’s a step to inform an authority, remove it and automate the communication process.
4. Define And Design Future-State Process
Create a new process to address the gaps identified earlier. This might also entail defining a completely new process, which is fine so long as it’s aligned to the goals of the BPR exercise. Define KPIs for each step.
5. Implement Changes And Measure Improvement
Inform and educate all stakeholders on the new process. It’s essential to get everyone’s buy-in before rolling out the new process. Ensure capturing and monitoring of the defined KPIs.
The business process reengineering steps discussed above are only guidelines. Each organization can customize its business process reengineering steps to suit its context and goals. It’s also common for organizations to form BPR champions from cross-functional teams, who would drive the initiative.
Business Process Reengineering Examples
There have been many successful business process reengineering examples in the past couple of decades. Let us consider the example of Airbnb and understand how business process reengineering helped them.
The major roles involved in the Airbnb product development process—designers, engineers and researchers—were working in silos, only coming together at predefined times. Such an approach didn’t help them deliver products on time.
As with many organizations, the designers at Airbnb would wait for engineers to develop a module before a mock-up was visualized. In turn, engineers would wait for researchers to validate new ideas, only to find that many project assumptions were off target at the end.
Solution #1: Treat Geographically Dispersed Teams As Centralized
The identification of the problem mentioned above meant that the product development process had to be reengineered. Airbnb created a digital environment where designers and engineers could work together. This unified digital environment enabled teams to share real-time work items with actual data.
Even though Airbnb couldn’t physically have the teams together, the visual development environment ensured that all the teams involved were looking at the same product in real-time.
Solution #2: Organize Around Outcomes
The next area they addressed was organizing the product teams around outcomes that would offer customers value, not just product features. Holding teams accountable for features only led to successive features getting built without much consideration for their usefulness to the end customer.
Solution #3: Link Parallel Activities
To address the concern of researchers’ ideas not getting in at the early stage of the development, they were made to participate at every step of the development right from the start. This helped bring valuable outside information in, and the product was developed based on these inputs.
By integrating the researchers tightly with the development team, they were treated as equal contributors to the entire project, fostering collaboration and efficiency.
The Ford’s business process reengineering example is another famous case study used by organizations looking to implement business process reengineering steps.
Successful implementation of BPR hinges on clearly understanding it and the steps to perform it. While many organizations identify that their business processes need change, they’re unsure how to change and where to start.
The best place to start is by answering these questions and documenting the findings in concurrence with key stakeholders.
The following factors decide the success of a BPR activity:
- Satisfying customers’ needs: This is the reason why organizations exist. Therefore, an organization needs to be clear on its customer needs.
- Business needs analysis: This involves understanding and educating teams on business goals and objectives.
- Change management: Any new change faces resistance. It’s crucial to get everyone concerned on board before starting an activity.
- Team composition: An ideal BPR team needs to have representation from top management and cross-functional teams responsible for the process area.
- Continuous improvement: BPR is an ongoing activity and needs constant monitoring and feedback.
- IT infrastructure: Organizations need to be willing to invest in adequate IT infrastructure.
Business process reengineering, when done right, enhances customer value and operational efficiency while positioning a business ahead of its competitors. Harappa’s Executing Solutions Course will teach you about the whole process and familiarize you with all its parts. Check it out now!
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