Business Process Reengineering - Article Example

Business Process Reengineering Part – I Why should BPR be considered by an organization? Feltes and Karuppan, in an article written in 1995, had commented that reengineering actually consists of getting down to the business of doing business. (Feltes and Karuppan July 1995) Though it might sound rather rhetorical, but their definition of business process reengineering had quite aptly described a phenomenon that has become possibly the single most influential concept in the world of management. According to Hammer and Champy, leading proponents of business process reengineering; this new concept consists of “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." (Hammer and Champy 1993) The key words of this definition are "fundamental," "radical," and "dramatic." This means forgetting about existing procedures and processes, and creating a fresh, innovative organization. Business people and academics everywhere emphasize the value of redesigning business processes. But any attempt at successfully implementing BPR requires management to take a fundamentally new look at operations. For example, thinking about how established bank departments can better fulfill customer needs must give way to thinking in terms of processes that often cut horizontally across the company. Organizational barriers have to give way to customer desires. From the beginning, however, it is important to understand that reengineering is not simply a disguised cost-reduction exercise. The process, of course, can and should lead to significant reductions in expenses. As it questions the work that is done internally, efficiency and productivity should also rise. Just as important, reengineering should surely lead to a corporate transformation, making the company more customer-focused and improving service. Thus, those working on a reengineering project need to be able to consider how things should work rather than how they work today. Brainstorming and creativity must be encouraged; egos and linear thinking have to be done away completely and reengineering should begin with the area that most managers, employees, and customers agree is not working and could use a basic "rethink." This might involve marketing, product design, risk management, or payment processing in the bank we had referred to earlier. Achieving success in one area should rally key employees to expand the effort and assist in creating the high level of staff "buy in" which is required. Reengineering, therefore, demands a team approach to problem solving with the focus on customer needs, ignoring internal politics and the team should include a mix of insiders, who know how the current process works, and outsiders, either from another department or from outside the bank. These outsiders can provide a fresh perspective and challenge old procedures. What would be the objectives of implementing BPR? Reengineering is indeed a project and should be managed as one. This means clearly and firmly setting process improvement objectives and adopting a limited time frame so that the focus remains on obtaining results. As with any project, a primary concern for all organizations is the size and deployment of resources - people, time, and technology. To successfully meet the goals of the company, the reengineering project must permeate the entire organizational hierarchy. It must include the top management of the firm but not be limited to top management. Once the project is started, it needs to adhere to timing targets to both make the changes happen and to reinforce member commitment. These requirements may mislead management to believe that the actual business of the business will be neglected. But, in reality, BPR allows a business to become more competitive and hence, more profitable. However, business reengineering isnt about tinkering with existing systems. The process begins with a blank sheet of paper, and it involves what are often radical redesigns of basic business processes and altogether new methods of implementation. Unlike most traditional organizational improvement methods, the key reason for adopting business reengineering is not just to improve productivity or contain costs - although such objectives can be fulfilled. Business reengineering is externally oriented: its fundamental objective is to improve - to guarantee - customer satisfaction. (Stewart 1993) Radical recreation of basic business processes can have several important benefits: Greater effectiveness through focus on customer needs. Greater efficiency and faster cycle time as a result of elimination of low-value-added steps, increased automation, improved resource sharing and more tightly coupled applications and information. Greater clarification of issues of accountability in the organization. Improved understanding of roles and responsibilities. This first point is the key, and it doesnt refer to a customer "focus," or to a customer or service "orientation." It means fulfilling customer demands and requirements so the customer agrees that his or her "conditions of satisfaction" have been met. Thus, Business reengineering is fundamentally about two basic questions: What does the customer want? How can customer needs best be satisfied? It is very different from - although not incompatible with - Total Quality Management disciplines, such as Continuous Process Improvement, that look for ongoing, incremental improvements to existing processes. Reengineering assumes that radical change must occur. The process of business reengineering also focuses attention on identifying the skills that are required for staff to ensure customer satisfaction. In this regard, it differs from "downsizing" and "right-sizing" efforts; it does not rely on cutting jobs to save costs. Instead, skill upgrades rather than staff reductions are often required. In fact, even though there isnt a lot of empirical evidence yet, there is good reason to believe that organizations that do not reengineer fundamental processes and upgrade staff skills will eventually become candidates for outsourcing. (Weber and Kelly 1993) How could or will specific techniques, such as process mapping, be used? Reengineering projects usually use process-charting tools, such as simple flow charting, and a "process mapping" method that augments traditional flow charting. Process mapping provides a guide to implementation; documents the desired work flow for all participants and defines the tools, databases and applications required. For each process being reengineered, a process map shows the sequence of major events, key decision points, who makes the key decisions and the criteria for making decisions such as whether to close a trouble ticket or add capacity, or who to notify about pending network changes. A process map for the move process, for example, could involve 20, 30 or more steps, and several "if-then" logic steps. The process map is thus a blueprint/architecture for constructing the new reengineered process - it shows the important pieces and how they fit together, and they enable process designers to consider alternative process flow designs. Taken together, these maps define the companys approach to the entire reengineering process and they also identify the required information bases from where necessary information may be collected. (Mintzberg and Quinn 1991) This happens to be of especial relevance when business process reengineering is carried out in service industries. One must remember that any effective process mapping is entirely dependent in available data and database marketing companies tend to provide crucial information in this regard. These companies provide banks with the tools to drill down to essential customer information that yields a better understanding of the relationships between an institution, its customers and its products. Data mining provides the ability to look at a marketing database in the contexts of customer profiles, statistics, reports and promotion analysis. Such a scientific approach allows the banks to approach business process engineering in a more rational and practical manner. (Schnitt January 1993) Database marketers also need to answer these questions: Where are the most valuable customers? Where are the customers in proximity to their primary branch? Where do they conduct their banking business? Where are the product volumes from? Where are those people who responded to specific direct mail campaigns? Where are those people using alternative channels - telephone or computer banking? (White 1997) All these details will allow banks to achieve the final goal of BPR more smoothly. What problems in implementation, including resistance, might be expected and why? Foresight, planning, dedication, openness, and commitment are the critical success factors in any business reengineering program. Thus, the following guidelines need to be followed to make the entire exercise a success: Commitment of top management: Nothing can be undertaken or implemented in the absence of top managements commitment. If top executives are not sold on the idea of reengineering, then there are only two options: convince them or abandon the idea. This commitment takes many forms, including providing direction; allocating resources; forming and supporting teams; standing up for the team members throughout the duration of the project; and most importantly, implementing the results of the reengineering teams efforts. This implies that the commitment does not end at the planning phase; it should be sustained and visible throughout the project life cycle. Setting of specific outcomes: Reengineering starts with a vision of how the business should be run. Thus if one makes the mistake of first analyzing the way a process is currently run, it will automatically set limits to achievements. Setting up the reengineering team: To make reengineering a reality, some person or persons must become responsible for the process itself. That charge is generally placed on a team containing members with a variety of skills and status. As a general rule, the formation of the team should be based on the representation of three categories of skills - functional/technical, problem solving/decision making, and interpersonal. A trained team leader, quite obviously, is necessary to provide direction, coordinate all activities, and assess results. The team leader should have enough experience in the company to fully understand its culture and its strategic requirements because when dramatic change takes place in a company, it is reassuring to see this change orchestrated by a familiar and trusted figure. Creativity and group dynamics may be the essence of the reengineering program, but a certain degree of discipline is necessary to exercise control over the project and meet the target completion date. The team should set and adhere to the following rules: Limit the time of the meetings Set the agenda in advance Assign tasks Provide and enforce rules for participation and near total attendance (Hall and Wade November-December 1993) Part – II Critically discuss the argument proposition that BPR is fundamentally no different from scientific management (e.g. Grint, 1994) in its treatment of the organisation as a mechanistic system and its reliance and insistence on the need for objectivity, consensus and control at the workplace. Reengineering is one of the prevailing business themes that have been used to attempt dramatic levels of business improvement. It has been heralded as a major innovation in management and has become an essential element in many companies attempts to improve their competitive position in the marketplace. Business reengineering refers to a total revamping of a business process. But its label is being slapped on everything from requests for new chairs to across-the-board layoffs. True reengineering is the radical redesign of business processes to achieve major gains in cost, service, or time. One must appreciate that Business reengineering is a management philosophy that emphasizes managing the entire organization so that it excels in all dimensions of its operation. Implementation of reengineering requires the creation of an organization-wide structural system that allows all members of the organization to participate in redesigning and reworking business processes to maximize the attainment of business goals. There are five vital core processes of management that provide guidelines for managers who are heading into the uncharted waters of reengineering. The core process includes mobilizing employees, enabling the workforce, defining objectives, measuring performance, and communicating with employees throughout the entire process. (Byrne 1993) One of the first points to remember about reengineering is getting the strategy straight. By setting the strategy first the operations that a company needs to implement are easier to define. Reengineering without strategy leads to "market-blind" cost cutting. In addition, reengineering must be led by people with the authority to oversee a process from end to end or from top to bottom. Reengineering also emphasizes strong leadership, technology, and radical change. (Rifken 1993) Another study suggested that success in reengineering requires top managers to be visionaries, communicators, motivators, and leg breakers. According to Jane Saseen, a consultant in the field of reengineering, although a company involved in the reengineering process might need someone to "hold its hand, the impetus and most of the hard work have to come from its own senior managers." (Saseen 1993) Reengineering will simply not deliver without top managements commitment. Managers, however, must realize that reengineering is not a failsafe idea. The process takes a tremendous amount of work and the dedication of time and resources. One study points out that reengineering fails to achieve significant results about seven out of ten times. (Byrne, Reengineering Management, the Mandate for New Leadership Managing the Change to the Reengineered Corporation 1995) Hammer and Champy estimate that as many as 50 percent to 70 percent of companies fail to achieve the dramatic results that were intended. (Hammer and Champy 1993) With such a high failure rate, one could ask why reengineering receives so much interest from the business world. The reason, according to several studies, is that reengineering can increase performance far beyond 10 or even 20 percent gains. In the mid-1990s, reengineering or Business Process Reengineering (BPR) eclipsed Total Quality Management (TQM) as the most widely recognized, if not practiced, organizational improvement initiative. (Burdett 1994) Knights and McCabe distinguish between two main variants of reengineering. (Knights and McCabe 1998) On the one hand, there are the “dream-like exhortations” of Hammer and Champy and on the other hand there is the “hard-headed, pragmatic but nonetheless somewhat mechanistic incitements” of Davenport’s “process innovation”, which “encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of change in all its complex technological, human, and organizational dimensions” (Davenport 1993) Grint has identified several features that are common to all conceptions of reengineering. (Grint 1994) These include the switch from functional departments to process teams; the shift from simple to multi-tasked work; a reversal of power relations from super-ordinate to subordinate; the empowerment of employees; changes in employees’ focus away from a hierarchical concern with one’s superior toward customers; changes in management’s behaviour from that of supervising to coaching; and the flattening of hierarchies. Knights and McCabe argue that the essence of reengineering is its emphasis upon a process-based, rather than a functional, approach to the organization of work which is facilitated by the increased and intensive use of information technology. (Knights and McCabe, What Happens When the Phone Goes Wild? Staff, Stress and Spaces for Escape in a BPR Telephone Banking Work Regime 1998) While Hammer and Champy have cast it as a novel approach, several commentators have firmly identified reengineering with the traditions of Taylorism, arguing that it is merely a form of warmed-up Scientific Management. (Grint and Willcocks, Business Process Re-engineering in Theory and Practice: Business Paradise Regained? 1995) In an inquiry into the popularity of the reengineering movement, Grint rightfully concludes that few of the principles contained within the reengineering movement are actually innovations, let alone radical innovations. Instead, he suggests that we look for an “externalist account” of the movement’s popularity which addresses the ways in which “the purveyors of reengineering manage, in and through their accounts, to construct a series of sympathetic ‘resonances’ or ‘compatibilities’” (Grint, Reengineering History: Social Resonances and Business Process Reengineering 1994) Grint identifies three such resonances: cultural and symbolic; economic and spatial; and political and temporal. While Grint’s analysis does an admirable job of situating the reengineering movement in a macro-historical context, the appeal or “resonances” of the reengineering movement from the perspective of the individual manager as a consumer of management ideas is perhaps still valid especially if we examine the process from a rhetorical standpoint and not purely the inherent rationality of its ideas. When an organization decides to introduce such a wide-ranging organizational improvement initiative as reengineering, it has chosen to participate in a highly theatricalised, organizational drama in that it has been comprehensively scripted. It is this scripted quality, that is, after all, a major element in the appeal of an improvement initiative that is imported by the organization and has been tried and trusted. Hare and Blumberg have suggested that any performance starts out with an idea about a situation and the action that may unfold from it. (Hare and Blumberg 1988) The idea may be a single image or it may be as fully developed as the detailed script of a play, with parts for each member of the cast and stage directions to guide the performance. Many of the ideas that management gurus put forward to managers come in a prescriptive form. That is, they describe your problem, tell you what to do, how to do it, who should do it, when and where. In this regard the management guru acts as “playwright” to the organization that chooses to participate in his or her “play”. (Mangham 1978) Applying the theatrical analogy to a performance of reengineering, Hammer and Champy and lesser guru figures have acted as the playwrights. The “producers” of the drama (i.e. those who sponsor the reengineering process) are the organization’s senior executive group. The “director” of the process is, in Hammer and Stanton’s terminology, a “reengineering czar” whose role is “to insure that all these efforts are co-ordinated, facilitated, and supported”. (Hammer and Stanton, The Reengineering Revolution: A Handbook 1995) In the “on-stage” area, Hare and Blumberg identify a “protagonist” to whom we could equate the “process owner” and whom Hammer and Stanton define as “a senior individual designated by the leader to have end-to-end responsibility for the process and its performance”. The protagonist assembles a team or “chorus” to support him or herself. He or she may also bring in from outside the organization some “auxiliary players” or consultants. The basic problem with BPR lies elsewhere. It is the twin inconsistencies that run through the reengineering vision and they are securing commitment from employees and promoting empowerment among them. The problem of securing commitment from employees to reengineering projects has been characterized as the “Catch-22” of reengineering. (Tomasko 1996) Reengineering requires the active participation of employees who have intimate knowledge of the existing processes in order to guarantee its success. However, knowing that past experience strongly intimates that they may be out of work at the end of the reengineering project, why would anyone actively support the project, let alone resist the temptation to derail it? Another central tenet of reengineering is that employees should be empowered so that managerial decisions are made at lower levels of the organization where information is richer and the impact of the decision more immediate. However, reengineering is an approach that Hammer and Champy have stressed needs to be imposed from above so that, although hierarchical layers of management may be removed, hierarchical principles are, in practice, actually reinforced. Thus, Argyris has quite correctly observed that “although the rhetoric of reengineering is consistent with empowerment, in reality it is anything but…it has not produced the number of highly motivated employees needed to insure consistently high-performing organizations”. (Argyris 1998) References Argyris, C. "Empowerment: The Emperor’s New Clothes." Harvard Business Review, May/June 1998: 98-105. Burdett, J.O. "TQM and Re-engineering." TQM Magazine 6, 2, 1994: 7-13. Byrne, John. 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