Business Process Re-engineering

Business Process Reengineering (BPR) is an improvement

philosophy. It can be applied at the level of the individual
process or at the level of the organization. BPR achieves
performance improvements by redesigning operational
processes, maximising the value added content, and
minimising all production related costs.

BPR has wider implications than redesigning an operating

process and implementing new technology. A firm should
rewrite its JDs, make multi-functional teams and team working
ability a priority, review reward systems that support
individuality and internal competitiveness in favour of more
cooperative working, design and test new information systems,
and instil new measures of performance. This task demands a
total cultural change within the organization.

The key principles of BPR are as follows:

AMBITION - BPR aims at large scale improvements – not only

with optimizations but also with redesigning configurations of
the current processes

PROCESS FOCUS – BPR deals with basic processes that

underlie the operations of an organization.
QUESTIONING FUNDAMENTAL ASSUMPTIONS – BPR questions
the assumptions with a fresh perspective and discards those
assumptions that are no longer required.

INFORMATION TECHNOLOGY AS AN ENABLER – IT facilitates

new and effective ways of carrying out the task and
streamlining the business process – which would not have been
possible using manual processes.

MEASUREMENT OF RESULTS NOT ACTIVITIES – Focus on new

measures of performance - emphasizing on assessment of
outcomes like customer satisfaction, process performance, and
throughput efficiency. This is a fundamental shift from the
traditional perspective of measuring individual activities.

BPR involves the radical redesign of core business processes to

achieve dramatic improvements in productivity, cycle times
and quality. Here, companies rethink existing processes to
deliver more value to the customer. They typically adopt a new
value system that places increased emphasis on customer
needs.

Companies reduce organizational layers and eliminate

unproductive activities in two key areas. First, they redesign
functional organizations into cross-functional teams. Second,
they use technology to improve data dissemination and
decision making.
Types of Processes:

STRATEGIC PROCESSES – these prepare the organization for

the future and set a long-term direction for the organization –
like: strategic planning, product/service development, new
processes, marketing strategies, etc.

OPERATIONAL PROCESSES – these relate to regular day-to-day

functions – like: winning the customer, satisfying the customer,
and supporting the customers, etc.

ENABLING PROCESSES – these enable the smooth flow of

strategic and operational processes – like management of
human resources, accounting and finances, MIS, etc.

Once an organization has identified the processes to be

redesigned, it has to decide on the new design – which should
make the process better, cheaper, and/or faster: better in the
sense it delivers better service and ensures higher level of
satisfaction to customers/stakeholders; and cheaper, in order
to perform different activities of the organization at the highest
levels of the efficiencies.

Redesigning a process involves eliminating non-value-adding

activities, and streamlining core-value-adding activities. The
rules followed can be represented by an acronym ESIA:
 E – Eliminate all non-value-adding activities;
S – Simplify aspects of work where possible;
I – Integrate elements of the process; and
A – Automate where appropriate

How Business Process Reengineering works:

Business Process Reengineering is a dramatic change initiative

that contains five major steps.

Managers should:

 Refocus company values on customer needs

 Redesign core processes, often using information technology
to enable improvements
 Reorganize a business into cross-functional teams with end-
to-end responsibility for a process
 Rethink basic organizational and people issues
 Improve business processes across the organization

Companies use Business Process Reengineering to:

Companies use Business Process Reengineering to improve

performance substantially on key processes that impact
customers. Business Process Reengineering can:
  Reduce costs and cycle time. Business Process
Reengineering reduces costs and cycle times by
eliminating unproductive activities and the employees who
perform them. Reorganization by teams decreases the
need for management layers, accelerates information
flows, and eliminates the errors and rework caused by
multiple handoffs.

 Improve quality. Business Process Reengineering

improves quality by reducing the fragmentation of work
and establishing clear ownership of processes. Workers
gain responsibility for their output and can measure their
performance based on prompt feedback.

There are two broad approaches to re-designing: the

systematic approach and the clean sheet approach. When
actually redesigning processes, most firms follow a mix of both
the approaches.

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