BUSINESS PROCESS REENGINEERING

Business process re-engineering is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become worldclass competitors. In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so. BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. According to Davenport (1990) a business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering emphasized a holistic focus on business objectives and how processes related to them, encouraging full-scale recreation of processes rather than iterative optimization of sub processes. Business process re-engineering is also known as business process redesign, business transformation, or business process change management. In 1990, Michael Hammer, a former professor of computer science at the Massachusetts Institute of Technology (MIT), published an article in the Harvard Business Review, in which he claimed that the major challenge for managers is to obliterate forms of work that do not add value, rather than using technology for automating it.[3] This statement implicitly accused managers of having focused on the wrong issues, namely that technology in general, and more specifically information technology, has been used primarily for automating existing processes rather than using it as an enabler for making non-value adding work obsolete. Despite this critique, reengineering was adopted at an accelerating pace and by 1993, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so.[2] This trend was fueled by the fast adoption of BPR by the consulting industry, but also by the study Made in America[citation needed], conducted by MIT, that showed how companies in many US industries had lagged behind their foreign counterparts in terms of competitiveness, time-to-market and productivity.

BPR Success & Failure Factors

BPR does not only mean change, but rather dramatic change. The constituents of this drastic change include the overhaul of organizational structures, management systems, employee responsibilities and performance measurements, incentive systems, skills development, and the use of IT. BPR can potentially impact every aspect of how business is conducted today. Change on this scale can cause results ranging from enviable success to complete failure. In spite of the depth of change involved in undertaking BPR efforts, a recent survey showed that some 88 percent of CIOs were satisfied with the end result of BPR efforts (Motwani, et al., 1998). Successful BPR can result in enormous reductions in cost or cycle time. It can also potentially create substantial improvements in quality, customer service, or other business objectives. The promise of BPR is not empty; it can actually produce revolutionary

improvements for business operations. Reengineering can help an aggressive company to stay on top, or transform an organization on the verge of bankruptcy into an effective competitor. The successes have spawned international interest, and major reengineering efforts are now being conducted around the world (Covert, 1997). On the other hand, BPR projects can fail to meet the inherently high expectations of reengineering. In 1998, it was reported that only 30 percent of reengineering projects were regarded as successful (Galliers, 1998). The earlier promise of BPR has not been fulfilled as some organizations have put forth extensive BPR efforts only to achieve marginal, or even negligible, benefits. Other organizations have succeeded only in destroying the morale and momentum built up over their lifetime. These failures indicate that reengineering involves a great deal of risk. Even so, many companies are willing to take that risk because the rewards can be astounding (Covert, 1997). Many unsuccessful BPR attempts may have been due to the confusion surrounding BPR, and how it should be performed. Organizations were well aware that changes needed to be made, but did not know which areas to change or how to change them. As a result, process reengineering is a management concept that has been formed by trial and error or, in other words, practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent (Covert, 1997). To reap lasting benefits, companies must be willing to examine how strategy and reengineering complement each other by learning to quantify strategy in terms of cost, milestones, and timetables, by accepting ownership of the strategy throughout the organization, by assessing the organizations current capabilities and process realistically, and by linking strategy to the budgeting process. Otherwise, BPR is only a short-term efficiency exercise (Berman, 1994). Some BPR researchers have focused on key factors in the BPR process that enabled a successful outcome. Over the past years, BPR projects and efforts have revealed some interesting findings for both academics and practitioners.