The classic definition of Business Process Reengineering (BPR) is given in Michael

Hammer’s and John Champy’s pioneering book, "Reengineering the Corporation-A

Manifesto for Business Revolution," published by Harper Collins, 1993. They define
BPR as, "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." From this definition it is clear that BBR is an
ongoing, iterative process itself requiring strong commitment and vision from senior
management.

John Martin, Taco Bells CEO, used BBR to transform Taco Bell from a failing 500
million dollar regional Mexican fast food chain returning negative 16% annually to a
company that since 1989 has grown at a 22%+ annual clip with 3+ billion dollars of
sales. Similar stories abound of companies radically transforming key business processes
to stave off disaster or to retain industry leadership.

What then are the BPR techniques and approaches used by companies such as Bell
Atlantic, Kodak, IBM Credit Corporation, Hallmark, Blue Cross, Grossman’s Hardware,
Capital Holding Corporation and others to revolutionize their businesses? Can these
techniques be used by companies of all sizes to remain competitive?

BPR involves the total creative rethinking of one or more of a company’s key business
processes. No business assumption or organizational structure is sacred. All too often
these structures evolved during a time when consumer markets were less competitive and
access to information was controlled by centralized, unresponsive IS departments using
technology obsolete by today’s standards. Often this rethinking is triggered by an existing
or looming crisis. In the case of Bell Atlantic, their Carrier Access Services division was
losing accounts left and right because it took them 4 times as long as MCI, Sprint and
others to provide customers connect services. In the case of Hallmark, their print/capacity
costs were escalating while market share was declining. Grossman’s Hardware, a
Massachusetts based chain of over 160 retail stores, realized that to compete with the
truly big hardware chains they needed to shift their market focus from the average
homeowner to the more specialized needs of the professional contractor or
knowledgeable do-it-your-selfer.

The classic example of a reengineered process is the way IBM Credit Corporation now
handles credit issuance. IBM Credit Corporation, if independent, would be a Fortune 100
company. Prior to reengineering, it took IBM Credit from 6 days to two weeks to issue
credit. Often they would lose customers during the lengthy approval process. Today, the
process takes only minutes or hours. Initially, to fix this process, IBM put computer
terminals on everyone’s desk to pass information electronically. Next they attempted
queuing theory and linear programming techniques. Finally they tried setting rigid factory
like performance standards for each employee involved in the credit approval process. In
each instance their changes failed to reduce the time it took to approve credit
applications.
Finally, quoting Hammer’s book, "IBM Credit had a brainstorm. Executives took a
financing request and walked through all five ladders in the approval process, asking
personnel in each of the five offices to put aside what they were doing and to process this
request as they normally would, only without delay of having it sit in a pile on someone’s
desk. They learned from their experiments that performing the actual work in total took
only 90 minutes. The remainder, now more than seven days on the average-was
consumed by handing the form off from one department to the next. In the end, IBM
Credit replaced its specialists- the credit checkers, pricers, etc. with generalists. Now
instead of sending an application from office to office, one person called a deal structurer,
processes the entire application from beginning to end."

IBM Credit developed decision support systems for the deal structurers to guide them
through the credit issuance process. They gave them rapid computer access to all the key
information required to issue credit. They developed a triage approach by allowing
routine applications to quickly go through the approval process and having the more
complex, troublesome requests addressed by a small pool of specialists.