Reengineering the business organization, formally known as Business Process Reengineering (BPR), is the fundamental rethinking and radical redesign of core business processes to achieve dramatic improvements in critical performance measures such as cost, quality, service, and speed.
It involves starting from a clean slate to create new, highly efficient processes, often leveraging modern information technology, rather than just making incremental improvements to existing, outdated ones.
Key Principles of Business Process Reengineering
The BPR philosophy is guided by principles that shift the focus from fragmented tasks and departmental structures to integrated, outcome-oriented workflows:
- Organize around Outcomes, Not Tasks: Focus on designing processes that achieve a desired result (the outcome), rather than breaking the work down into a series of functional tasks.
- Have those who use the output perform the process: Empower workers to complete an entire process end-to-end, minimizing handoffs, delays, and complexity.
- Subsume Information Processing into the Real Work: Those who produce information should also process it. Data should be captured once and at the source.
- Treat Geographically Dispersed Resources as if they were Centralized: Use technology to manage resources collectively, even if they are physically spread out.
- Link Parallel Activities Instead of Integrating Their Results: Coordinate and synchronize interdependent processes as they occur, rather than trying to fix inconsistencies at the end.
- Put the Decision Point Where the Work is Performed: Empower the workers performing the process to make decisions, building control into the process itself and reducing the need for layers of management oversight.
- Minimize Non-Value-Adding Activities: Critically examine and eliminate any step or task that does not directly contribute value to the customer or the final outcome.
Common Steps in the Reengineering Process
While methodologies vary, the reengineering process typically follows these key stages:
1. Identify the Need and Define Objectives
- Define the Vision: Senior management establishes a clear need for radical change, driven by factors like poor performance, market changes, or customer dissatisfaction.
- Set Goals: Establish clear, measurable objectives for the reengineering effort (e.g., reduce cycle time by 50%, cut operational costs by 30%, or improve customer satisfaction scores).
2. Assess and Analyze the Current State
- Map “As-Is” Processes: Document and thoroughly analyze existing, end-to-end business processes (the “as-is” model) to understand how work is currently done.
- Identify Gaps and Bottlenecks: Pinpoint inefficiencies, redundancies, bottlenecks, non-value-added activities, and major gaps between current performance and desired objectives.
3. Design the Future State
- Radical Redesign (“To-Be” Model): Develop a completely new process design (the “to-be” model) from the ground up, ignoring the constraints of the old process. This involves challenging fundamental assumptions and leveraging modern IT for automation and integration.
- Process Modeling: Create a detailed map of the new, streamlined workflow that focuses on outcomes and cross-functional teams.
4. Implement Changes
- Develop Resources: Assess and secure necessary technology and resource requirements, including new systems, tools, and training materials.
- Pilot and Rollout: Implement the redesigned process, often starting with a pilot or phased rollout to minimize disruption. This includes updating organizational structures and job descriptions.
- Change Management: Communicate the changes to all stakeholders and provide comprehensive training to ensure employee buy-in and a smooth transition to the new way of working.
5. Evaluate and Iterate
- Monitor Performance: Continuously monitor the performance of the new processes against the initial objectives using key performance indicators (KPIs).
- Refine: Gather feedback, make necessary adjustments, and iterate to ensure the benefits are sustained. BPR is an ongoing journey of optimization, not a one-time project.
Benefits of BPR
Successful business process reengineering can lead to dramatic, transformative results for an organization:
- Cost Reduction: Eliminating redundancies, non-value-added steps, and manual tasks significantly lowers operating costs.
- Improved Efficiency & Speed: Streamlined workflows and automation lead to faster cycle times and increased productivity.
- Enhanced Customer Satisfaction: Processes redesigned with the customer in mind result in higher quality service, faster delivery, and a better overall experience.
- Increased Agility: The organization becomes more flexible and better able to respond quickly to market changes and competitive pressures.
- Focus on Core Competencies: By streamlining non-core functions, the organization can re-allocate resources to strategic priorities.