Business process reengineering module 1

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Unit I: Definition of Business Processes-Process redesign- Business process reengineering-Business
Reengineering- Business Process Management-Business Process Redesign-origin of BPR-need-benefits-
golden principles-Difference between BPR and other Management techniques like TQM, JIT Six Sigma
etc
Definition of Business Processes
PROCESS
Process is a controllable set of activities which are carried out by people (or resources) to transform an
input (provided by an internal or external supplier) into an output that is of value to the customer (who
may also be internal or external)
 Hammer and Champy (1993) define a process as: a collection of activities that takes one or
more kinds of input and creates an output that is of value to the customer.
 A process is a specific ordering of work activities across time and space, with a beginning, an
end, and clearly identified inputs and outputs: a structure for action.
i.e. A process is structured change.
 A process is simply a structured, measured set of activities designed to produce a specific output
for a particular customers or market
Examples of processes include:
o Developing a new product;
o Ordering goods from a supplier;
o Creating a marketing plan;
o Processing and paying an insurance claim
o Cleaning the store
o Finding an email address
o Deploying software
o Customer profiling
o On-boarding a new employee
o Planning a wedding
Processes may be defined based on 3 dimensions

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§ Entities: Processes take place between organizational entities. They could be Inter-organizational (e.g.
EDI), Inter-functional or Interpersonal (e.g. CSCW).
§ Objects: Processes result in manipulation of objects. These objects could be Physical or Informational.
§ Activities: Processes could involve two types of activities: Managerial (e.g. develop a budget) and
Operational (e.g. fill a customer order).
Mainly 3 types of process in an organization (Industrial Processes has divided to three-way typology of
processes)
1. Management processes, which set the organizational context and style of working;
2. Business processes, which are large, cross-cutting collections of activities like product design,
order fulfillment and customer service. Operational processes concern your core business
process.
3. Work processes, which focus on how the work gets done, for example, activities such as
prototype development, finished-goods warehousing, purchasing. Supporting processes support
the management and operational processes.
Characteristics:
A specific sequencing of work activities across time and place
A beginning and an end
Clearly defined inputs and outputs
Customer-focus
How the work is done
Process ownership
Measurable and meaningful performance
BUSINESS PROCESS
“A business process is a collection of activities which together produce something of value to a
customer”
– e.g. Customer Order Entry
• A group of logically related tasks that use the firm's resources to provide customer-oriented
results in support of the organization's objectives.
• A business process is an activity or set of activities that will accomplish a specific
organizational goal.
•

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 A collection of interrelated work tasks, initiated in response to an event, achieving a specific
result for the customer and other stakeholders of the process
A Simple Business Process Example
• Customer Buying Cup of Coffee
• Different Actors involved: Customer, Cashier and Chef
• Business Process Redesign is "the critical analysis and radical redesign of existing
business processes to achieve breakthrough improvements in performance measures." Teng et al.
(1994)
• Business process management (BPM) is a systematic approach to improving those processes.
BUSINESS PROCESS MANAGEMENT
Business process management (BPM) is a discipline in operations management in which people use
various methods to discover, model, analyze, measure, improve, optimize, and automate business
processes.BPM focuses on improving corporate performance by managing business processes.
Any combination of methods used to manage a company's business processes is BPM.
Processes can be structured and repeatable or unstructured and variable. Though not required, enabling
technologies are often used with BPM.
Business Process Management is how a company creates, edits, and analyzes the predictable processes
that make up the core of its business. Each department in a company is responsible for taking some raw
material or data and transforming it into something else. There may be a dozen or more core processes
that each department handles.
With Business Process Management, a company takes a step back and looks at all of these processes
in total and individually. It analyzes the current state and identifies areas of improvement to create a
more efficient and effective organization.
 Business process management (BPM) is the discipline of improving a business process from end
to end by analyzing it, modeling how it works in different scenarios, executing improvements,
monitoring the improved process and continually optimizing it.

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Business Process Management (BPM) is a discipline involving any combination of modeling,
automation, execution, control, measurement and optimization of business activity flows, in support of
enterprise goals, spanning systems, employees, customers and partners within and beyond the enterprise
boundaries. BPM is not a one-time task, but rather an ongoing activity that involves persistent process
re-engineering.
Organizations engaged in BPM can choose to follow one of the various BPM methodologies, which
include Six Sigma and Lean.
Business Process Management (BPM) is a discipline involving any combination of modeling,
automation, execution, control, measurement and optimization of business activity flows, in support
of enterprise goals, spanning systems, employees, customers and partners within and beyond the
enterprise boundaries.
• Modeling means that they would identify, define, and make a representation of the complete
process to support communication about the process. There is no single standard way to model,
but the model must encompass the process.
• Automation refers to the work that is done in advance to assure the smooth execution of the
process instances. In many cases this means writing software, but it might include building
machinery or even creating signage to direct participants.
• Execution meaning that instances of a process are performed or enacted, which may include
automated aspects. Conceptually, the process instance executes itself, following the BPM
practitioner‟s model, but unfolding independent of the BPM practitioner.
• Control means that the there is some aspect of making sure that the process follows the designed
course. This can be strict control and enforcement, or it might be loose control in the form of
guidelines, training, and manual practices.
• Measurement means that effort is taken to quantitatively determine how well the process is
working in terms of serving the needs of customers.
• Optimization means that the discipline of BPM is an ongoing activity that builds over time to
steadily improve the measures of the process. Improvement is relative to the goals of the
organization, and ultimately in terms of meeting the needs of customers.
• BPM is about improving processes - BPM is the act of improving business processes
BPM FRAMEWORK

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BPM LIFE CYCLE/BPM activities
BPM life cycle is the set of activities which constitutes the foundation of business process management
methodology. Business process management activities can be arbitrarily grouped into categories such as
design, modeling, execution, monitoring, and optimization.
A) Design
• Encompasses both the identification of existing processes and the design of "to-be"
processes.
• Areas of focus include representation of the process flow, the factors within it, alerts and
notifications, escalations, standard operating procedures, service level agreements, and
task hand-over mechanisms.
• The aim of this step is to ensure that a correct and efficient theoretical design is prepared.
B) Modeling
• Capture the business processes at a high level.
• Gather just enough detail to understand conceptually how the process works.

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• Modeling takes the theoretical design and introduces combinations of variables which
determine how the process might operate under different circumstances.
• Updates a business process, mostly by using graphical representation
C) Execution
• Instances of the process are launched and interacted with by the end users.
Business process execution is broadly about enacting a discovered and modeled business process.
Enacting a business process is done manually or automatically or with a combination of manual and
automated business tasks. Manual business processes are human-driven. Automated business processes
are software-driven. Business process automation encompasses methods and software deployed for
automating business processes.
D) Monitoring
Monitoring encompasses the tracking of individual processes, so that information on their state can be
easily seen, and statistics on the performance of one or more processes can be provided.
• Measure key performance indicators and process performance.
• View these via graphical dashboards and textual reports to monitor how the process is
performing.
• Understand where the bottlenecks/inefficiencies in the process are.
E) Optimization
• Improve the business process and performance by reducing the bottlenecks/inefficiencies
identified during monitoring.
• Simulate these changes using “what-if” simulation.
• Determine which changes will deliver the maximum benefit.
• Fine tune the process
F) Re-engineering
When the process becomes too complex or inefficient, and optimization is not fetching the desired
output, it is usually recommended by a company steering committee chaired by the president / CEO to
re-engineer the entire process cycle. Business process reengineering (BPR) has been used by
organizations to attempt to achieve efficiency and productivity at work.

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BPM as continuous cycle comprising the following phases
• Process identification. In this phase, a business problem is posed; processes relevant to the problem
being addressed are identified, delimited and related to each other. The outcome of process identification
is a new or updated process architecture that provides an overall view of the processes in an organization
and their relationships. In some cases, process identification is done in parallel with performance
measure identification.
• Process discovery (also called as-is process modeling). Here, the current state of each of the relevant
processes is documented, typically in the form of one or several as-is process models.
• Process analysis. In this phase, issues associated to the as-is process are identified, documented and
whenever possible quantified using performance measures. The output of this phase is a structured
collection of issues. These issues are typically prioritized in terms of their impact, and sometimes also in
terms of the estimated effort required to resolve them.
• Process redesign (also called process improvement). The goal of this phase is to identify changes to the
process that would help to address the issues identified in the previous phase and allow the organization
to meet its performance objectives. To this end, multiple change options are analyzed and compared in
terms of the chosen performance measures. This entails that process redesign and process analysis go
hand-in-hand: As new change options are proposed, they are analyzed using process analysis techniques.
Eventually, the most promising change options are combined, leading to a redesigned process. The
output of this phase is typically a to-be process model, which serves as a basis for the next phase.
• Process implementation. In this phase, the changes required to move from the as-is process to the to-
be process are prepared and performed. Process implementation covers two aspects: organizational
change management and process automation. Organizational change management refers to the set of
activities required to change the way of working of all participants involved in the process. Process
automation on the other hand refers to the development and deployment of IT systems (or enhanced
versions of existing IT systems) that support the to-be process. In this book, our focus with respect to
process implementation is on process automation, as organizational change management is an altogether
separate field. More specifically, the book presents one approach to process automation wherein an
executable process model is derived from the to-be process model and this executable model is deployed
in a BPMS.
• Process monitoring and controlling. Once the redesigned process is running, relevant data are
collected and analyzed to determine how well the process is performing with respect to its performance
measures and performance objectives. Bottlenecks, recurrent errors or deviations with respect to the
intended behavior are identified and corrective actions are undertaken. New issues may then arise, in the
same or in other processes, requiring the cycle to be repeated on a continuous basis.
BENEFITS OF BPM
-BPM is used on an ongoing basis for business process improvement.

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-It is meant to improve order, insight and efficiency of the collective workflows that make up any given
business process. BPM is meant to reduce any chaos within those collective workflows that make up a
process and eliminate ad hoc workflow management.
-The goal for organizations engaged in BPM is to take control of their myriad processes and constantly
strive to optimize them to create a more efficient organization better capable of delivering its end
products and/or services.
-Thus, BPM is intended to support organizational leaders as they seek to achieve not just operational
efficiencies, but as they work to realize their overarching goals for the organization as a whole.
-It enables a company to cost-effectively and quickly model and change its business process to meet the
specific needs of the business.
-BPM products make integration with other products easy.
- An ideal approach for automating process that require information from multiple enterprise
applications.
-Helps in productivity improvements.
Gain control of chaotic and unwieldy processes
Create, map, analyze, and improve business processes
Run everyday operations more efficiently
Realize bigger organizational goals
Move toward digital transformation
Improve and optimize tangled operations
Closely track individual items as they move through a workflow
BUSINESS PROCESS REDESIGN
Business process redesign or reengineering is a matter of improving what is already there. It implies
some form of radical change.
Business process redesign (BPR) examines the efficiency and effectiveness of a company's most
critical processes. It is a key enabler to deliver the highest-quality of service, in the most productive
way, at the most competitive cost and time to output

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Oftentimes, companies will gather a project team and redesign the organization, its mission, strategic
goals, assumptions, and processes from scratch, often with the help of specialized external process
consultants. They may be seeking ways to:
Increase productivity
Reduce cycle times
Improve product quality
Achieve more efficient client service
Implement new technologies
Restructure and streamline teams
BUSINESS PROCESS REENGINEERING
Business process re-engineering (BPR) is a business management strategy,
focusing on the analysis and design of workflows and business processes within an organization. BPR
aimed to help organizations fundamentally rethink how they do their work in order to improve customer
service, cut operational costs, and become world-class competitors
BPR seeks to help companies radically restructure their organizations by focusing on the ground-up
design of their business processes. 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.
• BPR is 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.(Hammer & Champy, 1993)
• In BPR companies 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:
• They redesign functional organizations into cross-functional teams.
• They use technology to improve data dissemination and decision making.
• BPR focuses on processes and not on tasks, jobs or people.
Business Process Reengineering is also known as business process redesign, business transformation,
or business process change management.
BPR initiatives usually arise at the strategic level then promulgated to lower levels by a high-ranking
champion, the Chief Executive Officer.
Hammer considers four keywords within this definition which are most relevant. These are:
a) Fundamental
The term „fundamental‟ refers what and how. What refers the performance. It refers to the key
operations that an organization is required to perform to accomplish its objectives. How refers the

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sequence of performance. The key operations identified are to be performed in a meaningful sequence to
accomplish its objectives.
i.e: Two questions; what are we doing, and why are doing so, are considered as being
fundamental and are addressing the organizations for justification of existence. As Hammer points out,
forcing people to question the way they do business leads to rules turning out to be obsolete, incorrect
and inappropriate. Reengineering means starting from scratch, no assumptions given and no current fact
accepted and determines firstly what a company has to do, and secondly how to do it.
b) Radical
Radical redesign of business processes means getting to the root of things, not improving existing
procedures and struggling with sub optimizing. According to Hammer, radical redesign means
disregarding all existing structures and procedures and inventing completely new ways of accomplishing
work.
The term „radical‟ refers a school of thought that prescribes to throw away the
conventional methods and innovate to improve the process performance. In other words it is a „clean
slate‟ approach.
i.e. sweep the slate and draw a fresh plan. However there are certain factors to be considered for the
successful implementation of the BPR efforts. These factors include effective change management,
systems to integrate the efforts of the teams from different functional areas, systems to make these
different teams to understand each other‟s requirements etc.
c) Dramatic
Reengineering is no way for achieving marginal improvements and fine tuning. It is intended to achieve
heavy blasting.
The term „dramatic‟ in the definition of BPR refers a jumping result, not a continuous improvement or
incremental result.
There are three possible instances that an organisation undertakes reengineering:
 An organization that is in deep trouble. It needs dramatic improvement to sustain. The situations such
as the high company‟s costs than the business model will allow, the customers are repetitively complains
about the service, the product failure rate is high etc., it needs business reengineering.
An organization is not in trouble; is doing well. But the management has the foresightedness and can
see trouble coming.
 An organization is in very good position and doing quite well. But the management sees an
opportunity to do better and become the leader in the particular segment.
d) Processes
Process-orientation is considered as being the most important aspect of BPR.
Processes‟ are generally identified based on the following dimensions:
Entities: Processes can be identified based on the interaction between entities of an organization viz.
inter functional, interpersonal, inter organizational etc.
Objects: Processes can result in the manipulation of the objects. The objects may be informational or
physical.

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Activities: Processes are also identified with the kind of activities. Activities in an organization are
generally of two types-managerial and operational.
In nutshell, Reengineering can be perceived as the adjustment, alteration, or partial replacement of a
process or product in order to make it to meet a new need.
While TQM concept holds an incremental and continuous improvement in performance, BPR concept
holds a radical, dramatic and discontinuous improvement in performance.
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
KEY CHARATERISTICS
• Radical Improvement
 Sustainable
 Process improvements need to become firmly rooted within the organization
 Stepped Approach
 Process improvements will not happen over night they need to be gradually
introduced
 Also assists the acceptance by staff of the change
• Integrated Change
 Viable Solutions
 Process improvements must be viable and practical
 Balanced Improvements
 Process improvements must be realistic
• People-Centred
 Business Understanding
 Empowerment & Participation
 Organizational Culture
• Process Based
 Added Value
 BPR Initiatives must add-value over and above the existing process
 Customer-Led
 BPR Initiatives must meet the needs of the customer
• Focus On End-Customers

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 Process improvements must relate to the needs of the organization and be relevant to the
end-customers to which they are designed to serve
The Concept of Reengineering
Successful organizations are imagined to be networked across functional boundaries and business
processes rather than functional hierarchies. However, it is pointed out in literature that simply using the
latest technology on existing processes, respectively procedures, is no valid solution to the problem. The
solution is found in taking a step further and rethinks and questions the business activities being a
foundation for business processes. Effective redesign of business processes by removing unnecessary
activities and replacing outdated functional processes with cross-functional activities, in combination
with using information technology as an enabler for this type of change will, lead to significant gains in
speed, productivity, service, quality and innovation.
Business reengineering normally includes a fundamental analysis of the organization and a redesign of:
• Organizational structure
• Job definitions
• Reward structures
• Business work flows
• Control processes and, in some cases
• Reevaluation of the organizational culture and philosophy
BPR is generally conceived as consisting of four elements to be considered, as there are
strategies, processes, technology and humans (figure 2.1.), where strategies and processes are building
the ground for the enabling utilization of technologies and the redesign of the human activity system. A
brief description of these four dimensions is given below
fig:2.1
Strategies
The strategy dimension has to cover strategies within the other areas under concern, namely
organization strategy, technology strategy and human resources strategy. The determination of all
strategies has to be performed with respect to the dynamic marketplaces the organization is acting on
and is not focused on internalities, but the external presumptions for successful acting on markets.
Beyond that, strategies have to be current and relevant to the vision of organization, as well as to internal
and external constraints. It is assumed that a reconsideration and redefinition of strategies might
accelerate further changes. Finally, the strategies must be defined in a way that enables understanding
and motivation of employees in order to align the work accurately.
Processes
Processes can be defined on different levels within the organization. The issue is, to identify core
processes which are satisfying customer needs and add value for them. It is important to point out, that
processes are not determined by internal organizational requirements, but by customer requirements,

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even though organizational constraints have to be taken under consideration. The shift from functional
departments to inter-functional processes includes a redesign of the entire organizational structure and
the human activity system and implies process- instead of task optimizing.
Technology
Information technology is considered as the major enabler for spanning processes over functional and
organizational boundaries and supporting process driven organizations. However, the point is not to use
IT as an improver for existing activities, as which it often has been conceived, but as enabler for the new
organization. This includes using new technologies, as well as new methods and an acceptance of
technological changes with the fact that information technology will be shaping the future.
People
The human activity system within the organization is the most critical factor for reengineering. While
top management support for reengineering efforts is rather simple to ensure, the real change agents,
middle management are far harder to win due to the fact that they have to identify change opportunities
and perform them. This is the group facing most threats, as BPR often is used for cutting hierarchies and
reducing the work force. The other crucial factor is to align the work force with the strategies defined
and to address the variable cultural and environmental contexts within the organization. Finally,
flattening hierarchies implies decision making to be moved down in the organization and empowering
the employees. This requires training and education as well as motivation and trust from top
management that people are able and willing to take responsibility, a fact that is rather contradictory to
the "trust is good, control is better" way of thinking.
BPR FRAMEWORK
Process Management has tried to make easy guidelines for BPR. They often use proprietary based upon
the experience and philosophy, and then tailor the methodology to the specific company they are
working with. Common guiding principles for BPR are as follows:
1. Set the vision
BPR starts with the reasons why. Companies must be clear on why they want or need to reengineer their
processes; why where they are now is not where they need to be. A business needs analysis could be a
way to start the process and convince stakeholders with clearly defined and measurable objectives. The
organization must understand that their current processes must change, and be given a vision for the
future. Understanding the reasons are critical because they ensure employee buy-in to the BPR. Without
buy-in, the employees may feel that their work life is threatened. They may obstruct the change,
especially the necessary radical alterations that come with BPR. Since absolute support is critical, a clear
vision of the intended consequences can give the employees a goal to rally.
2. Assemble the Team
Next, a team (which can consist of internal employees, consultants, or mix of both) is gathered within
the company to conduct the reengineering. Depending on the project scope, the factors to consider when
choosing a team are as follows:
Should there be an initial team to consider the reengineering?
Should the team be responsible for the BPR in its entirety?
What experience and background should team members have with respect to the company or the field?
Should the team be a smaller “core” group, or a larger “contributor” group?
How autonomous with decisions should the team be?
Should there be team members that are external to the company?

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Hammer and Champy discuss five specific roles that should comprise the BPR team. These include the
Leader, the Process Owner, the Reengineering Team, the Steering Committee, and the Reengineering
Czar. They cite that the core reengineering team is ideally five to ten people.
3. Determine the Processes
This portion of BPR requires a comprehensive study of the company itself, looking at its mission, goals,
the needs of its customers, and how the company is meeting those needs. Through this lens, the
processes are reviewed and analyzed for how they are currently performed. Weaknesses and non-value
add tasks are rooted out. Companies must ask what each process is trying to accomplish. It is imperative
at this step to choose which process to initially evaluate, starting out with only a small amount of
processes so as not to overwhelm the company. Hammer and Champy discourage using benchmarking -
measuring your company‟s performance against similar but best in class companies - because it can
restrict innovative thinking.
4. Redesign
There are no specific rules that govern how a process is redesigned. This is the portion of BPR where the
team gets to flex their creative muscle and design the main principles that reengineering will be applied
though. These include figuring out what biases and assumptions that the team is under for the process at
hand, and looking for opportunities to apply technology. Team members should remember that they are
not just making the old processes better, but completely redesigning how they are performed.
5. Include the Whole Company
Companies should remember that BPR does not work well if it is done in a bubble. Not only should
companies get employee feedback, but also they should review the other portions of the company that
will necessarily evolve because of the change in processes. This may include organizational and
management structures, in keeping with the vision. Further, continued communication with employees
about the reengineering process itself, the results, and their part in it is essential. Reinforcing the
reengineering method through performance incentives keeps them positive and engaged.
Cross et.al’s Framework for BPR

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The Origin of BPR
Some researchers argue that the original concept of reengineering can be traced back to the management
theories of the nineteenth century. The purpose of reengineering is to make all your processes the best-
in-class.
Frederick Taylor suggested in the 1880‟s that managers use process reengineering
methods to discover the best processes for performing work, and that these processes be reengineered to
optimize productivity.
In the early 1900‟s, Henri Fayol originated the concept of reengineering: To conduct the
undertaking toward its objectives by seeking to derive optimum advantage from all available resources.
Similarly, Galliers (1998) observes that “BPR ... far from being a new departure is in fact a
reversion to the classical school of strategic thinking popularized in the 1960s”. That is, organizations
make such radical changes when they meet competitive pressures which challenge their current
processes.
BPR can be viewed as a response to such change and therefore fits in the classical
school of strategy where organizations adjust themselves to new forms in order to maximize their
profits. However it is commonly agreed that BPR first came and attracted academic and industrial
attention in 1990 as a result of two papers by Michael Hammer (on reengineering, see Hammer, 1990)
and Thomas Davenport (on business process redesign, see Davenport and Short, 1990).
In 1991, Michael Hammer, a former MIT professor in computer science published an article
in the Harvard Business Review, emphasizing the need for fundamental organizational change and for
the first time using the term Business Process Reengineering.
• BPR was first introduced in 1990 in a Harvard Business Review article by Michael
Hammer :”Reengineering Work: Don't Automate, Obliterate,” (1990)
• Hammer's claim was simple: Most of the work being done does not add any value for customers,
and this work should be removed, not accelerated through automation. Instead, companies
should reconsider their inability to satisfy customer needs, and their insufficient cost structure.
• The critics were fast to claim that BPR was a way to dehumanize the work place, increase
managerial control, and to justify downsizing, i.e. major reductions of the work force, and a
rebirth of Taylorism under a different label.
Despite this critique, reengineering was adopted at an accelerating pace by many of the Fortune
500 companies
FORD MOTOR COMPANY
Ford Motor Company changed from the sequential process to the pool process. First time, Ford Motor
had 500 employees for account payable department, matching purchase order, receiving report &
suppliers invoice. The reengineered system eliminates reconciliation to supplier invoices and reduces
head count by 75 %. Electronic payments were made once the receiving details match the purchase
orders.

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In 1993 they further published two key books (Hammer and Champy, 1993 and Davenport, 1993) which
brought widespread attention to the emerging field of BPR.
The concept of BPR is widely regarded as having been introduced as a perceived solution to the
economic crisis and the recession of the late 1980‟s and early 1990‟s. As Butler describes it: “the 80s
were a time for financial reengineering. The 90s are for technological reengineering”.
Hammer and Champy (1993) propose that “BPR can help organizations out of crisis situations by
becoming leaner, better able to adapt to market conditions, innovative, efficient, customer focused and
profitable in a crisis situation”.
Before BPR emerged (and even today), it was widely accepted by industries and business enterprises
that a work should be broken down into its simplest (and most basic) tasks. This leads to the structure of
enterprises becoming hierarchical – or functional – in order to manage such divided tasks.

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This leads to the structure of enterprises becoming hierarchical – or functional – in order to manage such
divided tasks.
1. Galliers points out that the four schools (approaches) to business strategy since the 1960s are
classical, processual, evolutionary and systemic.
2. Hammer and Champy gives a brief history of management problems in a chapter (“The Crisis that
will not Go Away”), in which they point out three forces (the three Cs) are driving today‟s business
environment to become more and more complex and thus „the crisis will not go away”: (1) customers
take charge; (2) competition intensifies; (3) change becomes constant.
These hierarchical or functional structures were commonly used for a period. However enterprises of
these structures later encountered some problems, especially when the competitive environment has
changed beyond what we can recognize.
Today, many enterprises face competition from the global business environment as
well as the fact that the taste of customers is becoming complex. As Hammer (1990) argues, “in order
to achieve significant benefits, it is not sufficient to computerize the old ways, but a fundamental
redesign of the core business processes is necessary”. New organizational structures, which are more
suitable to today‟s environment in which enterprises can understand their current activities and find
potential problems, are needed.
Macintosh and Francis suggest that it is becoming more important “to develop new
products effectively than to produce old products efficiently”. By introducing fast developing
information technology, enterprises try to redesign their structures and seek new ways of operation,
which results in many enterprises moving toward combination but not division of labour. Hammer and
Champy conclude that previously divided tasks are now being re-unified into coherent business
processes. Thus one reason why BPR becomes popular is that it provides a mechanism to make the
changes better to fit the competitive environment to which the enterprises must adapt themselves in this
new and post-industrial age.
The Key Concepts
BPR seeks to break from current processes and to devise new ways of organizing tasks, organizing
people and making use of IT systems so that the resulting processes will better support the goals of the
organisation. This activity is done by identifying the critical business processes, analysing these
processes and redesigning them for efficient improvement and benefit.
Vidgen etal.(1994) define the central tenets of BPR as:
1. Radical change and assumption challenges,
2. Process and goal orientation,
3. Organizational restructuring,
4. The exploration of enabling technologies, particularly information technology
BPR can help organizations out of crisis situation by becoming learner, better able to adapt to market
condition, innovative, efficient, customer focused and profitable in crisis situation.”
Need for BPR (Why Reengineer?)
World is increasingly driven by the three C‟S: Customer, Competition and Change.

18
Customers take charge.
Mass market v. a “market of one”
Backward integration
Informed consumers
Demanding
Sophistication
Changing Needs
Competition intensifies.
More and different kinds
Local
Global
Big is not better
Technology changes the nature of competition
Change becomes constant.
reduced product cycles
reduced time to develop new products
more environment scanning
Technology
Customer Preferences
“Companies created to thrive on mass production, stability, and
growth can‟t be fixed to succeed in [such] a world.
Business Process Reengineering” or “process reengineering” (or process redesign) or simply
“reengineering” is focussed on “breakthrough” improvement to dramatically improve the quality and
speed of work and to reduce its cost by fundamentally changing the processes by which work gets done.
Business process re-engineering is required in two cases:
1. The organization has discovered some breakthrough methodology which will revolutionize its
processes to give it more productivity and efficiency and therefore the entire process needs to be
changes.
Customers
• Demanding
• Sophistication
• Changing
Needs
Competition
• Local
• Global
3C’S
Change
• Technology
• Customer
Preference

19
2. The organization has failed to keep up to date with the changing technologies. Since it did not
continuously innovate, it is now faced with a “change or die” situation and business process re-
engineering which helps integrate latest best practices into the processes are the only way to save
the business.
Simple and Streamlined Operation
At the end of the business process re-engineering (BPR) process, you are left with a business that has
streamlined its functions and cut out superfluous processes that used to slow things down. The result is
that efforts become more directed towards the clear goals that you set out during BPR. Instead of
jumping through hoops to get things done, employees can now take the shortest path between the start of
a project and successful completion
Increased Efficiency
Increased efficiency comes hand-in-hand with a streamlined operation. By paring down operations and
tweaking processes, you cause things to move through your company both easier and faster, greatly
increasing overall efficiency.
Instead of struggling through organizational red tape, employees have more time to perform meaningful
work. Less time spend working through inefficient organizational structures means time better spent in
the workplace.
Better Results and Products
Efficiency and focused goals allow you and your employees to put more energy towards your products,
which will improve them. In addition, better organizational schemes and lines of communication foster
improvement and innovation as well as insulating your business by making your company more
reactive, improving results all around.
Re-engineering your processes provides improvement in all areas of your business, and those
improvements trickle down to your product.
More Profit
All of these results come together to bring more profit to your business:
 Lower operational costs as a result of streamlining and eliminating some processes
 Better organization and goals creating more productive (and maybe happier) employees
 Better products driving more sales
BENEFITS OF BPR
8 Benefits of Reengineering of a Business Process
The following are the benefits of reengineering of a Business Process:
• 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.

20
• 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.
• BPR revolves around customer needs and helps to give an appropriate focus to the business.
• BPR provides cost advantages that assist the organisation's competitive position.
• BPR encourages a long-term strategic view of operational processes by asking radical questions
about how things are done and how processes could be improved.
• BPR helps overcome the short-sighted approaches that sometimes emerge from excessive
concentration on functional boundaries. By focusing on entire processes the exercise can
streamline activities throughout the organisation.
• BPR can help to reduce organisational complexity by eliminating unnecessary activities.
• By reengineering, an organisation can achieve radical changes in performance (as measured by
cost, cycle time, service and quality).
• It boosts competitiveness in the operations network through simpler, leaner and more productive
processes.
• Reengineering encourages organizations to abandon conventional approaches to problem solving
and to “think big” (revolutionary thinking).
• The slow, cautious process of incremental improvements leaves many organizations unprepared
to compete in today‟s rapidly changing market place. Reengineering helps organizations make
noticeable changes in the pace and quality of their response to customer needs (i.e. break-through
improvements).
• Through reengineering, an organisation can be transformed from a rule driven and job centred
organisation structure to a marketing organisation structure that focuses directly on the customer.
Other benefits are:
●Lower costs
●Reduced risks
●Product safety
●Superior quality
●Enhanced process consistency
●Greater brand protection
●Simplified operation
●Improve predictability
GOLDEN PRINCIPLES OF BPR
BPR (business process re-engineering) is the study and redesign of workflow within and between
enterprises. Seven basic principles of re-engineering to reduce costs of the work procedure and thereby
accomplish substantial levels of business expansion in quality, time management, and price:
Hammer and Champy suggested the following seven principles in their book.
1. Organize around outcomes, not tasks
2. Identify all the organization's processes and prioritize them in order of redesign urgency
3. Integrate information processing work into the real work that produces the information

21
4. Treat geographically dispersed resources as though they were centralized
5. Link Parallel activities in the workflow instead of just integrating their results
6. Put the decision point where the work is performed, and build control into the process
7. Capture information once and at the source
Difference between BPR and other Management techniques like TQM, JIT Six Sigma etc
BPR & TQM
When discussing radical change in BPR, we find that BPR, DSS (decision support systems) and TQM
(total quality management) have much common with each other. Firstly they are all focusing on
business processes
BPR is different from TQM in that BPR concentrates on major discrete changes to business processes,
whereas TQM concentrates on minor continuous improvement to business processes. That is, the
improvements in TQM are smaller than the ones in BPR. Butler (1994) elucidates the difference
between BPR and TQM as:
[TQM approach] which favours steady incremental gain, may often take a number of years to complete.
For firms in highly competitive industries, this lag-time can allow competitors to forge ahead. In
contrast, results from BPR can be realized within 12-18 months, but it is a far riskier undertaking, and
should not be regarded as a “quick fix” solution.
Furthermore, whereas BPR is commonly viewed as a top-down solution from management, TQM
involves staff from all levels for problem solving and suggests bottom-up improvement. Employees‟
resistance to change has been identified as one major barrier to the success of BPR. It was reported by
Macintosh and Francis (1997) that those companies that had introduced TQM prior to taking on board
BPR, faced less resistance to change. As we believe that these two approaches are compatible, we
propose in this thesis a concept of „participative BPR‟ which combines both of them.
• Teng et al. (1994) note that in recent years, increased attention to business processes is largely
due to the TQM (Total Quality Movement). They conclude that TQM and BPR share a cross-
functional orientation. Davenport observed that quality specialists tend to focus on incremental
change and gradual improvement of processes, while proponents of reengineering often seek
radical redesign and drastic improvement of processes.
• Davenport (1993) notes that Quality management, often referred to as total quality management
(TQM) or continuous improvement, refers to programs and initiatives that emphasize
incremental improvement in work processes and outputs over an open-ended period of time. In
contrast, Reengineering, also known as business process redesign or process innovation, refers to
discrete initiatives that are intended to achieve radically redesigned and improved work
processes in a bounded time frame. Contrast between the two is provided by Davenport (1993):
Total Quality Management (TQM) describes a management approach to long-term success through
customer satisfaction. In a TQM effort, all members of an organization participate in improving
processes, products, services, and the culture in which they work.
Process Improvement (TQM) versus Process Innovation (BPR) From Davenport (1993, p. 1

22
a. TQM and BPR have a cross functional relationship.TQM is concerned about improving
productivity through quality improvements while BPR is about making process improvements
through radical redesign and use of advanced technologists.
b. TQM is focusing on continuous improvements while BPR is concerned about product
innovation.TQM emphasis on the use of statistical process control while BPR emphasis on the
use of information technology.
c. Both top down and bottom up approaches can be used in implementing TQM but BPR can be
implemented only through a top - down approach.
BPR & SIX SIGMA
• Business Process Reengineering and Six Sigma are only similar in the end result, when you are
changing processes.
• The main purpose of Six Sigma is to develop a culture within the Organization to Eliminate
Waste and Reduce Variation in Everything.
• Six Sigma not only looks at Processes it also looks at Design and creating new processes as well
as improving existing processes.
• Six Sigma is meant to involve people in the change, so they are not threatened by it, but rather
helping to lead it throughout the organization.
• Both Systems take Commitment from top Management. Six Sigma does not involve a complete
overhaul of the process like BPR. However, it requires out-of-the-box thinking and questioning
status-quo to identify and implement solutions.
• Level of Change
• Starting Point
• Frequency of Change
• Time Required
• Participation
• Typical Scope
• Risk
• Primary Enabler
• Type of Change
• Underlying philosophy
• Pace of change
TQM
• Incremental
• Existing Process
• One-time/Continuous
• Short
• Bottom-Up
• Narrow, within functions
• Moderate
• Statistical Control
• Cultural
• Maintain harmony
• Slow
BPR
• Radical
• Clean Slate
• One-time
• Long
• Top-Down
• Broad, cross-functional
• High
• Information Technology
• Cultural/Structural
• Disrupts the status quo
• Rapid

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BPR & JIT
Just-in-time manufacturing, also known as just-in-time production or the Toyota Production System, is a
methodology aimed primarily at reducing times within production system as well as response times from
suppliers and to customers.
Benefits of JIT
Reduction in inventory.
short lead time.
lower production cost.
more cash available for other uses.
Business process reengineering, although a close relative of Just In Time (JIT) Principles seeks
radical rather than merely continuous improvement.
It escalates the efforts of JIT to make process orientation a strategic tool and a core competence of
the organization.
BPR concentrates on core business processes, and uses the specific techniques within JIT as
enablers, while broadcasting the process vision.
BPR criticisms
• BPR was sometimes seen (incorrectly) as a means of making small improvements in existing
practices. In reality, it should be a more radical approach that questions whether existing
practices make any sense in their present form.
• BPR was often perceived (incorrectly) as a single, once-for-all cost-cutting exercise. In reality, it
is not primarily concerned with cost cutting (though cost reductions often result), and should be
regarded as on-going rather than once-for-all. This misconception often creates hostility in the
minds of staff who see the exercise as a threat to their security.
• BPR requires a far-reaching and long-term commitment by management and staff. Securing this
is not an easy task, and many organisations have rejected the whole idea as not worth the effort.

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• Underestimation of the resistance to change within the organization.
• In many cases business processes were not redesigned but merely automated.
• In some cases the efficiency of one department was improved at the expense of the overall
process. To make BPR work requires a focus on integrated processes (as discussed above) that
often involves obliterating existing processes and creating new ones.
• Some companies became so focused on improving internal processes that they failed to keep up
with competitors' activities in the market.
• Strict focus on efficiency and technology and the disregard of people in the organization that is
subjected to a reengineering initiative.
• Very often, the label BPR was used for major workforce reductions
• exaggerated expectations regarding the potential benefits from a BPR initiative and consequently
failure to achieve the expected results
• Implementation of generic so-called best-practice processes that do not fit specific company
needs.

Business process reengineering module 1

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