Business Process Reengineering

Business Process Reengineering – Poul Goldschadt 1998

– What is BPR?

BPR stands for reevaluation, reorganization, and repositioning – a sales redesign of an organization, utilizing the power of modern IT technology and the input of employees and customers involved in a given organization. BPR is an approach used by organizations to streamline and improve internal business processes and maximize business goals.

The concept of BPR emerged in the early 90s based on the idea that software should support business functions, leading to the reevaluation and modification of these functions in relation to external conditions and their changes.

The concept is becoming a new sub-discipline within organizational development and management consulting. It is often presented as a new vision for how businesses, organizations, and universities could operate in the 90s to survive and succeed.

It involves a reevaluation of current organizational theories (e.g., TQM) that trace back to the model of the industrial revolution (Smith).

BPR involves changing from hierarchical to flat organizational structures, training employee groups to achieve goals, transforming function-oriented employees into more multidimensional ones, shifting management from control and surveillance to coaching and collaboration, and altering overall business processes to gain competitive advantages in the global economy.

BPR originated by evaluating patterns in activities within companies, organizations, and universities undergoing continuous change. It examined which ones succeeded in restructuring business processes and compared them with those that failed (best-practice studies). Looking back at all the innovations, visions, models, and theories that have influenced our lives, work, and business over time, all these events can be called “reengineering”!

Adam Smith’s model outlined in Wealth of Nations (1776) was reengineering two hundred years ago. Henry Ford’s vision for the automobile industry was reengineering in 1903, the expansion of the US railroad network, the electrification of Russia in 1917, and so on.

BPR is the best application of available technology in changing current business processes, educational planning, and public administration to achieve and realize organizational goals. BPR usually occurs in response to dramatic changes in external environments (paradigm shifts, geopolitical changes) that hinder the organization’s ability to fulfill its mission, improve competitiveness, and survive as a unit. BPR is a radical change in the total business process or at least a significant part of these processes. Almost all functions within an organization are affected by BPR. Existing organizational and technological infrastructures are radically restructured, putting pressure on the organizational culture itself.

There are several stages in this process of change: discovery and attention, redesign and realization, and implementation, deployment. First, a strategy is laid out, then rough design, where management monitors mobilization, innovation, intention. In realization, management must plan and control processes in large organizations. This is done through training, education, consultation, intensive workgroups focusing on developing new workflows with the customer’s perspective at the center.

It involves a thorough reconstruction of core, cross-functional business processes, focusing on activities that together create results and value for the company’s customers.

The core of BPR is thus the sets of business processes (each consisting of a collection of activities) involved in creating value for the customer. Which activities should be carried out, and how should they be arranged? It delves into the essence of the company’s existence.

Unlike TQM, which involves small continuous improvement initiatives, BPR starts radically from scratch. It is a comprehensive overhaul that takes time, effort, and resources, often requiring support from systems analysis and information technology. One must break with familiar ideas about efficiency. The company is a collection of processes, not just a hierarchy of departments and functions. Information technology should be used – not to automate the existing, but as a tool to design entirely new business processes. Weave a new structure. A cross-functional process perspective, focus on the company’s customers, the customer’s perspective throughout the improvement project, starting with a clean slate, willingness to start over, interaction between analysis and innovation, creative awareness, linking business strategy and operational management, playing along with many other complementary approaches to success.

The transition from a function-oriented (traditional) organizational structure to a process-oriented – reengineered – goes through some learning processes, learning curves, which can be subject to analysis.

Moving from TQM to BPR reveals an organizational learning process, a kind of new organizational self-awareness. This learning process and educational initiatives are the starting point for the concept – organizational learning and the learning organization.

The “learning organization” is a new management discipline that follows TQM and BPR, as a new focus emerges around learning processes and knowledge transfer within and between organizations – navigation! The background is the rapid changes that the individual’s workplace undergoes. On the one hand, there is a violent and rapid development in technology and knowledge. It is said that 90% of our (scientific) knowledge has been created in the last 30 years. Our amount of knowledge will double within a few years, making many products and employees’ skills obsolete. On the other hand, the need to control and reduce costs, efficiency, and competitiveness. On one side, growing complexity and on the other the need for simplification. Thus, pressure is applied to organizational culture, the lifelong learning process in technology-oriented organizations.

Organizations that have successfully applied the BPR concept were able to:

• Improve customer service by ensuring that the focus of business processes is on their needs.
• Reduce costs by reducing lead time and eliminating non-value-added activities.
• Create an innovative workforce where innovation is rewarded, tested, and incorporated into daily business processes.
• Improve profitability through cost reduction, increased sales, and production improvements.
• Maximize the return on investment from technological investments.

BPR methodologically focuses on creating changes in various areas within an organization: employees, processes, structures, and technology.

In short, the focus is on:

• Changing employees’ work (organizational culture, attitudes and opinions, values)
• Redesigning process components, including information flow, policies, procedures, business rules, and technology usage.
• Changing internal structures such as reporting relationships, jobs and roles and responsibilities, physical work environments, organizational structures, and management benchmarks.
• Maximizing payback from technology investments.

The mindset is:

• Organizing across functions in the future, not just execution.
• Those who use the output of the process should also perform it.
• The organization that produces the work should lead it.
• Resources should be centralized, meaning geographically separate units are seen as centralized.
• Information gathering processes are incorporated into the work that produces information.
• Linking parallel processes instead of results integration.
• Decisions are made where the work is performed with built-in control processes.
• Information is collected only once and at the source.
• From and to Organization

Structure Process Leadership Management Information (often one-way) Network communication So-called rational plans Creative visions Rule-based control Framework control Qualifications Competence Stability Flexibility Maintaining current positions Willingness to change Organization as a state within a state Extroversion. Corporate Image Handling all functions internally Outsourcing Profit maximization Broad-spectrum goal fulfillment Individual work Teamwork.

The new leader

Specialist Generalist Manager Leader Functional responsibility Personnel responsibility Universal management Situational leadership External control Internal control Hierarchical leadership Project and network leadership.

The new employee

FROM – TO

Professional qualifications Broad-spectrum competence Blind loyalty Commitment Fulfilling a job Performing tasks Reward for working hours Performance-based pay Interaction on company’s terms Awareness of self-worth, demands Permanent employment Short and part-time Vertical promotion Dynamic career development Company takes primary responsibility for development Employees are responsible for their own development

• External leadership The responsibility for ensuring support for the restructuring and change of the organization lies with the management and the managers of the areas affected by the changes. These are individuals not directly involved in the change processes but who have authority, power, and responsibility for economic and directional decisions. It is necessary for them to participate in the development of the change vision and approve the initial solution and implementation measures.

They need to remove obstacles, provide financial resources, and select the team. They have a significant position and political power. They should formulate problems – not solutions – and reflect the new behavior, the new culture, the new value set.

• Process leadership These individuals are responsible for external leadership and have overall responsibility for the success of the change project. This group reports directly to the project leader, so the project leader must lead through influence and actions. There must be a balance between visions and practical implementation, responsibility, and job delegation.
• Process participants These are the individual employees of a particular unit affected by changes in business processes. These individuals make decisions in the project. Without their participation and engagement at every step of the process, it cannot succeed. They participate in envisioning, designing, and planning, ensuring support, focus, logistics, coordination, and direction.
• Pitfalls Since the beginning of the 90s, several methodological tools and other computer-aided design tools have been developed to support the BPR operations involved in creating structures and process diagrams and models of the organization’s data volume and flow. Analyses of success and failure in the processes have highlighted some pitfalls:

Preparation: How large is the organization’s commitment? What are the expectations, goals, who should be on the team, what skills are needed, how is the result communicated throughout the organization?

The mistake here is spending a lot on new technology without sufficiently analyzing the underlying business processes. There is simply a lack of a clear picture of what BPR and OL actually entail.

Identification: What is the core of the business processes? How is the interaction between customers and suppliers, what is the strategy, what is the timeframe? The mistake here is often delegating the change process to an external consulting firm with little expertise in the industry.

Vision: Which sub-processes, activities, and steps make up the business processes together? How does information, resources, and work flow through each process? Why do things the way they are done now? What are the underlying assumptions about business and technology: Are there other ways that seem impossible today? Where are the boundaries between customer and supplier and which ones can be changed? What benchmarks should be used against competitors? The mistake here is not having contact with an external consulting firm that can break down organizational barriers and provide a new perspective, help with team formation, which is critical in maintaining the change process.

Solution of technical design: What technological resources need to be included and are necessary for change? The mistake is that core processes and benchmarks that are included in the evaluation of quality and success are not correctly identified.

Solution of social design: What are the human resources? What immediate opportunities exist in the short and long term? How can acceptance be motivated? In what ways does responsibility shift? What education is necessary? What does the new organization look like? The mistake seems to be that many organizations do not allocate sufficient resources, internally and externally.

Transformation: How and when should the process be controlled? How should random obstacles be overcome? How to maintain momentum in the process? Most mistakes involve ambiguity about what BPR is, unrealistic expectations, wrong scope – either too narrow or too extensive. Excessive dependence on information technology, lack of effective method.