Business process reengineering is an activity larger in scope than systems development, as it addresses all of the processes in the organization, including the information systems processes. Rapid developments in the capabilities and applications of IT, such as e-business, present organizations with increasingly difficult business opportunities/ challenges.
They are being asked - sometimes being forced in order to ensure their very survival - to abandon long-held business beliefs and assumptions and to rethink what they are attempting to accomplish and how they are trying to accomplish it. Business process reengineering has been likened to presenting an organization’s management with a blank piece of paper and asking them to reinvent the organization from scratch.
Why would management ever be motivated to engage in such an undertaking? In many cases, they have no alternative. Experiencing the harsh realities of an increasingly competitive environment, they recognize that their companies must make mega-changes in how they operate, or face extinction.
Business process reengineering (BPR) is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed. The emphasis on four words in this definition focuses on those four key components of BPR.
1. Fundamental rethinking of business processes requires management to challenge the basic assumptions under which it operates and to ask such rudimentary questions as “Why do we do what we do?” and “Why do we do it the way we do it?” Without fundamental rethinking, technology often merely automates old ways of doing business. The result is that what was a lousy way of doing a job became simply a speeded-up, lousy way of doing the job.
2. Radical redesign relies on a fresh-start, clean-slate approach to examining an organization’s business processes. This approach focuses on answers to the question, “If we were a brand-new business, how would we operate our company?” The goal is to reinvent what is done and how it is done rather than to “tinker” with the present system by making marginal, incremental, superficial improvements to what’s already being done. Achieving the goal requires forward-looking, creative thinkers who are unconstrained by what now exists.
3. Achieving dramatic improvements in performance measurements is related to the preceding two elements. The fundamental rethinking and radical redesign of business processes are aimed toward making quantum leaps in performance, however measured. We are not talking about improvement in quality, speed, and the like that is on the order of 10%. Improvement of that order of magnitude often can be accomplished with marginal, incremental changes to existing processes. Reengineering, on the other hand, has much loftier objectives.
4. Reengineering focuses on end-to-end business processes rather than on the individual activities that comprise the processes. BPR takes a holistic view of a business process as comprising a string of activities that cut across traditional departmental or functional lines. BPR is concerned with the results of the process.
As an example, let’s look at the discrete activities that may be involved in completing a sale to a customer. These activities might include receiving and recording a customer’s order, checking the customer’s credit, verifying inventory availability, accepting the order, picking the goods in the warehouse, packing and shipping the goods, and preparing and sending the bill.
Reengineering would change our emphasis by breaking down the walls among the separate functions and departments that might be performing these activities. Instead of order taking, picking, shipping, and so forth, we would examine the entire process of “order fulfilment” and would concentrate on those activities that add value for the customer.
Instead of assigning responsibility for these activities to multiple individuals and organizational units, we might assign one individual to oversee them all. And, just as important, we might change measurement of performance from the number of orders processed by each individual to an assessment of customer service indicators such as delivering the right goods, in the proper quantities, in satisfactory condition, and at the agreed upon time and price.
When asked to identify the critical success factors for reengineering projects, a group of Chief Information Officers (CIOs) cited strong project management, a visible and involved executive sponsor, and a compelling case for change. Organizational resistance to change, inadequate executive sponsorship and involvement, inadequate project management, and the lack of an effective change management program were described as significant barriers to change by this same group of CIOs.