BUSINESS PROCESS REDESIGN OVERVIEW

Hammer and Champy’s basic work of business process redesign, Reengineering the Corporation²²² states that re-engineering is not making marginal or incremental improvements but achieving quantum leaps in performance. To re-engineer properly, a company must radically redesign its processes into cross-functional ones, the focus should be on looking at complete processes from materials acquisition, to production, to marketing and distribution. This will lead to changes in organisational structure, culture, incentives and information technology.

Davenport and Short²⁸¹ have stated that business process redesign (i.e. re-engineering) is the analysis and design of workflows and processes which reorganises human work. They define a business process as a set of logically related tasks performed to achieve a defined business outcome. It has a strong emphasis on how work is done within an organisation. Davenport and Short claim that processes have two important characteristics: (1) they have internal or external customers, and (2) they cross organisational boundaries occurring across or between organisational units.

279 Hammer and Champy: Reengineering the Corporation: A Manifesto for Business Revolution (1993), 240 p.

280 El Sawy: Redesigning Enterprise Processes for E-Business (2000), 196 p.

281 Davenport and Short: The New Industrial Engineering: Information Technology and Business Process Redesign (1990) Sloan Management Review, pp. 11-27

Järvenpää and Stoddard²⁸² have represented another view to engineering. They describe re-engineering as a two-phased process, which comprises design and implementation phases. Only one of the two re-engineering stages needs to be revolutionary. Järvenpää and Stoddard suggest that re-engineering begins with radical designs, but it does not necessarily need a revolutionary approach for change. Their study presents that the radical design phase is at the heart of re-engineering. Organisations that seek to re-engineer have to start with the radical design phase.

The radical design phase creates the enthusiasm and momentum needed for the changes.

Breakthrough designs provide a long-term road map for changes and instil motivation in ways that more moderate plans cannot.

Järvenpää and Stoddard continue that the implementation of BPR is not necessarily radical. If the organisation is in the midst of a survival crisis, the changes may have to unfold in a revolutionary fashion. If the organisation has time, a more evolutionary approach allows implementing the changes in a managed and measured fashion. It could mean though compromise goals and take more time to involve the staff. Because the risk and cost of revolutionary tactics, a revolutionary implementation might not be feasible. Few companies can afford to fully implement their radical designs the first time around. Revolutions are disruptive and they are generally viewed as unduly risky and counter-cultural. For example, sudden unplanned executive changes may stop the change program altogether.

Caron, Järvenpää and Stoddard claim that BPR²⁸³ is like fighting a guerrilla war against an organisation's antibodies. The organisation's defence mechanisms see BPR as a foreign organism and try to defeat it relentlessly. The only way to win is to wear the enemy out. You have to keep repeating the message. The moment you ease up you have lost. Caron et al. state that redesigning is about trying and trying once again. They have summarised their experience of BRP projects as recommendations: (1) diffuse and leverage learning from each project, (2) learn from failures, (3) foster commitment and ownership at all levels, (4) exploit "clean slate" opportunities, (5) tailor reengineering to the characteristics of the environment, (6) ascend to higher forms of reengineering over time, (7) move fast to achieve results, (8) communicate truthfully, broadly and via multiple forums, (9) select the right people, and (10) focus - most of all - on a mindset change.

The most difficult challenge of reengineering is the cultural change that typically must accompany the process changes that are underway. It is therefore important to acknowledge up front that all employees will have to participate in a mindset change to enable the success of the initiative.

Business Process Redesign and Quality Management

Davenport²⁸⁴ notes that quality management, often referred to as total quality management (TQM), refers to programs and initiatives emphasising incremental improvement in work processes.

Improvements in work processes and outputs are achieved in an endless time period. This endless improvement period is a contrast to the BPR approach which refers to discrete initiatives that are intended to achieve radically redesigned and improved work processes in a bounded time frame.

Davenport concludes that TQM and BPR share a cross-functional orientation. He observed that quality specialists tend to focus on incremental changes and gradual improvements of processes,

282 Järvenpää and Stoddard: Business Process Redesign: Radical and Evolutionary Change (1998) Journal of Business Research, Vol. 41, No. 1, pp. 15-27

283 Caron, Järvenpää and Stoddard: Business Reengineering at CIGNA Corporation: Experiences and Lessons Learned (1995) MIS Quarterly, Vol. 18, No. 3, pp. 233-250 (SIM Paper of Year for 1994)

284 Davenport: Process Innovation: Reengineering Work Through Information Technology (1993), 352 p.

while re-engineering proponents often seek radical redesign and drastic improvement of processes.

Davenport has summarised the contrast between the two as shown in Table 17.

Table 17. Total Quality Management and Business Process Re-Engineering

Total Quality Management Business Process Re-Engineering

Level of change Incremental Radical

Starting-point Existing process Clean slate

Frequency of change One-time/continuous One-time

Time required Short Long

Participation Bottom-up Top-down

Risk Moderate High

Primary enabler Statistical control Information technology

Type of change Cultural Cultural/structural

Role of IT in Business Process Re-Engineering

Hammer²⁸⁵ considers IT as the key enabler of business process re-engineering. He states that IT challenges the assumptions of work processes. The work processes have existed long before the advent of modern computer and communications technology, and they do not necessarily notice the IT possibilities. He argues that at the heart of re-engineering is the notion of discontinuous thinking. It involves recognising and breaking away from the outdated rules and fundamental assumptions underlying the operations. The work processes are based on assumptions about technology, people and organisational goals that do not necessarily hold any more. Hammer suggests seven principles for re-engineering with IT:

Principle 1: BPR should be organised around outcomes, not tasks.

Principle 2: Users of the process output perform the BPR process.

Principle 3: Information processing work is included into the real work producing the information.

Principle 4: Geographically dispersed resources are treated as if they were centralised.

Principle 5: Parallel activities are linked instead of integrating their results.

Principle 6: Decision points are located in the working place, and control is built into the process.

Principle 7: Information is captured once and at the source.

Davenport and Short²⁸⁶ argue that BPR requires taking a broader view to both business activities and IT, and the relationships between them. Business activities should be seen more broadly than as a collection of individual or functional tasks. A process view is necessary for maximising effectiveness. IT should be viewed as more than an automating or mechanising force: it is fundamental to BPR to reshape the way business is done. IT and BPR can be seen to have recursive relationship. IT capabilities support business processes, and business processes are operated within the IT capabilities. Davenport and Short state that this broadened, recursive view of IT and BPR is the new way for industrial engineering.

285 Hammer: Reengineering Work: Don't Automate, Obliterate (1990) Harvard Business Review, Vol. 68, No. 4, pp. 104-112

286 Davenport and Short: The New Industrial Engineering: Information Technology and Business Process Redesign (1990) Sloan Management Review, pp. 11-27

Davenport: Process Innovation (1993), p. 11

Business Process Re-Engineering Methodology

Davenport and Short²⁸⁷ present a five-step approach to business process re-engineering: 1) develop business vision and process objectives, 2) identify the processes to be redesigned, 3) understand and measure the existing processes, 4) identify IT levers, and 5) design and build a prototype of the process.

1) Develop business vision and process objectives

BPR is driven by a business vision, which implies specific business objectives, such as cost reduction, time reduction, product quality improvement, quality of the working environment, learning etc. The key is to prioritise objectives and stretch targets.

2) Identify the processes to be redesigned

Most companies use the high-impact approach, which focuses on the most important processes (bottleneck or critical processes) or most business vision-conflicting processes.

Some companies use the exhaustive approach that attempts to identify all the processes within an organisation and then prioritise them in order of redesign urgency.

3) Understand and measure the existing processes

Identifying and understanding the nature of the current problems is important for avoiding and repeating old mistakes. A baseline for future improvements should be established.

4) Identify IT levers

Awareness of IT possibilities should influence the process design, giving the limits of the available IT systems. Brainstorming would help in revealing new approaches.

5) Design and build a prototype of the process

The actual design should not be viewed as the end of the development process. Rather, it should be viewed as a prototype, which will be improved in successive iterations. The prototyping is seen to align the business process re-engineering with quick delivery of results, and the intention to involve and satisfy the customers.