business-process-re-engineering

Business Process Re-engineering In A Nutshell

Business Process Reengineering became popular in the 1990s after the publishing of a Harvard Business School article titled Reengineering Work: Don’t Automate, Obliterate. Business Process Reengineering (BPR) describes the redesign of core business processes to improve productivity, quality, cost reduction, or cycle times.

Understanding Business Process Reengineering

The HBR article asserted that many businesses use new technology to automate ineffective processes. However, author Michael Hammer notes that a more efficient approach is to simply re-design the process itself.

This can be achieved through the systematic and disciplined nature of BPR. 

Both human and automated workflows can be analyzed to identify process improvements. Some common scenarios where BPR may be useful include:

  • Rising inventory levels.
  • A lack of corporate governance.
  • High employee conflict, stress, or turnover.
  • Cash flow problems.
  • An inability to fulfill customer orders promptly.

The six key steps of BPR

Six key steps encourage a fair, transparent, and efficient BPR process.

Here is a look at each.

  1. Define business processes. Start by mapping the current state of affairs (workflows, activities, roles and reporting, business rules, supporting technology, and so forth).
  2. Analyze business processes. Then, identify any elements that contribute to organizational inefficiency or prevent a goal or objective from being realized. This may encompass gaps, root causes, or strategic disconnects.
  3. Identify and analyze improvement opportunities. How can the elements identified in the previous step be addressed? Often these initiatives will be innovative and forward-facing. That is, they are not associated with current processes.
  4. Design future state processes. In this step, select the improvement opportunity deemed to have the greatest impact on organizational efficiency. Here, the business should ensure that it has sufficient resources. Time, capital, and talent are the most crucial. Complete this step by creating a future state map outlining the selected opportunities.
  5. Develop future state changes. It’s important to realize that a new opportunity is only as robust as the processes that underpin it. Each process needs to be designed from the ground up and communicated to relevant staff. The new functionality must also be rigorously tested before becoming operationalized. 
  6. Implement future state changes. Once implemented, the change must be evaluated for effectiveness through performance monitoring. Is the new opportunity meeting KPIs?

When should Business Process Reengineering be used?

One drawback of BPR is that the larger a business is, the more expensive it will be to implement. 

Indeed, a start-up with only a few months of operating experience will find it much more cost-effective to pivot to a new opportunity.

Nevertheless, the ability to respond to unforeseen circumstances is important in all businesses – regardless of size. BPR is also well suited to any business that wants to break free of the status quo and achieve goals once thought too ambitious.

If a business is still unsure of BPR, it should ask itself the following questions:

  • Who are our customers and what values are we offering them?
  • Are current operations delivering these values?
  • If not, do some operations need to be reconfigured?
  • Do our processes reflect our strategic objectives or long-term mission?
  • How would these operations be implemented if we were a new company?

Key takeaways:

  • Business Process Reengineering is the redesigning of business operations to facilitate improvements in quality, cost, service, or alignment.
  • Business Process Reengineering is underpinned by six key steps that are fair, transparent, and efficient.
  • Business Process Reengineering can be an expensive undertaking for large companies. To ensure that BPR is money well spent, a business should consider some guiding questions to determine if operations are in alignment with broader strategies.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"