Written by Joseph Jones
The Value Proposition for BPR Today
I’ve been accused of being a process junkie. Over the years, I’ve managed, tailored, and participated in an entire alphabet of process and quality improvement methodologies and life cycle models for organizational change management, enterprise process management, studies and analyses, data management, project management, capability maturity, system engineering and integration, information assurance, value engineering, software development, operations and support, and reuse – to list a few. I also love visual methods like diagramming, mapping, and swim lanes – to name a few. OK – guilty as charged.
Along the way, I’ve found that these various methods, models, tools, and techniques can have inherent flaws, become obsolete, or are sometimes exercised poorly. However, I’ve found that they also have positive, useful attributes and lessons that address some of the needs in our increasingly dynamic, complex, and competitive world of today.
This is the first in a series of three posts where we will examine the key facets and value of employing a comprehensive, systematic methodology that initially gained prominence a quarter century ago – Business Process Re-engineering (BPR). In three parts, we will address, respectively:
- Why BPR is useful in today’s business environment,
- What methods and tools are used to conduct BPR, and
- How to find BPR opportunities that you can use.
BPR (aka: Business Process Redesign, Business Transformation, or Business Process Change Management) is a branch of the Business Process Management (BPM) family tree that came into prominence in the 1990s. Almost every article about BPR will refer to “Reengineering the Corporation,” where Michael Hammer and James Champy defined 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.” The adoption of BPR by over 60% of the Fortune 500 companies by 1993, plus its continuing success stories over the past two decades, make it a noteworthy candidate as a tool for managing the course of change in today’s environment of dynamic, customer-centric business challenges, global competition, and complex, disruptive technologies.
BPR differs from the incremental improvements to existing processes that are addressed by other members of the BPM family (that includes Business Process Improvement, Business Process Optimization, and Total Quality Management). In contrast, BPR is more revolutionary than evolutionary, focusing on the formulation of wholesale changes in how resources are used within or across organizations to create products and services for particular markets or customers. BPR is a holistic front-end to innovation that strives for optimal performance while taking into account the entire context of business strategy, organizational structure, staff performance, enabling technologies, evolving facilities and platforms, statutory and regulatory environments, and social issues.
Why should we be interested in BPR today? What are the cornerstones of the business case for a BPR initiative? In a world characterized as “The only constant is change,” BPR can be used to address business objectives and drivers such as:
- Quality: Choosing and implementing best practices to improve the quality of core products, services, and supporting business processes
- Cost: Avoiding non-value added activities and misappropriation of resources that can cause delays, excess expenses, or deviation in tasks, processes, products, and services
- Performance Management: Establishing metrics, a feedback loop, and analytics to root out inefficiencies and improve effectiveness
- Technology: Optimizing business processes against a practical mix of legacy and/or new systems and the most promising technologies
- Organizational Posture: Aligning and preparing organizational structure and partnerships to enhance execution against business goals and objectives
- Competitiveness: Enabling the implementation of more agile, customer-centric business vision and strategies for scaling core products and services to the needs and wants of the emerging global middle class
- Statutory and Regulatory Compliance: Cutting the cost of compliance overhead and improving the quality, safety, registration, and the compliance with standards for systems in financial, medical, and pharmaceutical sectors
In researching BPR case studies from the last two decades, I’ve found that BPR has been shown to produce tangible benefits that can be applied to the challenges of today’s environment, particularly when coupled with automation, system renovation, and/or new technologies. BPR success stories dot the landscape, with a sampling of case studies from the open literature listed below.
BPR CASE STUDY
|Financial ProductsFreddie Mac||Improved corporate data quality and consistency; regulatory compliance|
|Industrial Automation and ControlHoneywell||Reductions in defect rates by 70%, customer rejects 57%, parts cycle times 72%, inventory investment 46%|
|Service Charge Refund AutomationChase||Annual savings of over $500M|
|Business-to-Business CommunicationsCISCO||$51M annual reduction in labor costs on a yearly basis; 45% inventory reduction|
|Information Systems InfrastructureFord||Savings of 10% – 25% on support costs, 3% – 5% on hardware, 40% – 60% on software licensing fees|
|Emergency Care Facility Hospital name withheld by request||Over 75% decrease in ER wait time; substantial cost reductions|
|Automated Weather Information Processing System O&MNational Weather Service||ITIL, ISO 20000 certification; 92% Customer Satisfaction (up 6 points); Service Level Agreement performance|
Another example I’m familiar with occurred when the country’s largest blood banking organization was faced with functional, regulatory, and supportability issues in one of its key laboratory operations. It chose a BPR strategy of re-locating the physical lab, re-building its infrastructure, re-defining its processes and procedures, and constructing a new laboratory reporting system. My team assisted in applying joint application development (JAD) and extreme programming to construct new software for collecting testing information and reporting results in synch with the re-vamped business processes. The result was a more capable, regulatory-compliant, less expensive operation with a supportable technology platform and software that incurred just three bugs in its first year of use.
On the flip side, I’ve found that failure to plan and manage BPR initiatives and risks properly has resulted in setbacks, as well as successes. Based on examples such as those cited above, I’ve seen the following essential ingredients for BPR success:
- Compelling Business Case – tangible business objectives including a clear delineation of the changes needed and measures for meeting expectations
- Top Management Sponsorship – strong and consistent management commitment and involvement to encourage acceptance throughout the organization
- Proven Methodology – documented approach led by personnel experienced in BPR, starting with a vision that engages organizational stakeholders early
- Reengineering Team Composition – involvement of a balanced array of stakeholders with a comprehensive understanding of the business operations and applicable technologies
- Detailed Analysis and Decision Criteria – to avoid overtrust in glitzy technology solutions and generic so-called best practices
- Line Ownership – coupling recognition for outcome(s) with the responsibility and accountability for better project management, implementation, and lasting results
- Effective Change Management – comprehensive plans for the accompanying organizational training and cultural transformations
The business objectives/drivers and ingredients for success outlined above can be used to frame the business case for your next BPR project, then to tailor and elaborate it to fit the organization, your needs and objectives, and today’s operational context.
In our next installment (Part 2 of 3), we will take the next step into examining how to implement a BPR project, with the focus on successful BPR strategies, enabling methods, tools, and techniques, metrics for planning and estimating, and the importance of organizational change management to its success.