Business Process Reengineering (BPR)

Compiled and presented by Dr. A.M.Al Husseini

Planning or reengineering of a business or business project must at some stage address a few financial details, and challenges and opportunities relating to modern technology, the internet, websites, etc. However the techniques of how to write strategic business plans (or a strategic marketing plan) remain basically straight-forward. Business planning and marketing strategy are mostly common-sense and logic, based on cause and effect. Below are the simple rules for planning and starting a business. The principles also apply to planning and starting a new business within an organization for someone else. In amongst the distractions and details of new business planning, it is important to keep sight of the basic rules of new business success: Your successful new business must offer something unique that people want. Uniqueness is vital because otherwise there is no reason for customers to buy from you. Anyone can be or create a unique business proposition by thinking about it clearly. Uniqueness comes in all shapes and sizes - it's chiefly being especially good and different in a particular area, or field or sector. Uniqueness can be in a product or service, or in a trading method, or in you yourself, or any other aspect of your business which makes what you are offering special and appealing to people. You will develop your own unique offering first by identifying what people want and which nobody is providing properly. Second you must ensure that your chosen unique offering is also an extension of your own passion or particular expertise or strength something you will love and enjoy being the best at - whatever it is. Every successful business is built on someone's passion.

If you have ever waited in line at the grocery store, you can appreciate the need for process improvement. In this case, the "process" is called the check-out process, and the purpose of the process is to pay for and bag your groceries. The process begins with you stepping into line, and ends with you receiving your receipt and leaving the store. You are the customer (you have the money and you have come to buy food), and the store is the supplier. The process steps are the activities that you and the store personnel do to complete the transaction. In this simple example, we have described a business process. Imagine other business processes: ordering clothes from mail order companies, requesting new telephone service from your telephone company, developing new products, administering the social security process, building a new home, etc. Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools. We all do them, and at one time or another play the role of customer or supplier. You may see business processes pictured as a set of triangles as shown below. The purpose of this model is to define the supplier and process inputs, your process, and the customer and associated outputs. Also shown is the feedback loop from customers.

So why business process improvement? Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services. And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly. The figure below illustrates the basic steps. You begin by documenting what you do today, establish some way to measure the process based on what your customers want, do the process, measure the results, and then identify improvement opportunities based on the data you collected. You then implement process improvements, and measure the performance of the new process. This loop repeats over and over again, and is called continuous process improvement. You might also hear it called business process improvement, functional process improvement, etc.

This method for improving business processes is effective to obtain gradual, incremental improvement. However, over the last 10 years several factors have accelerated the need to improve business processes. The most obvious is technology. New technologies (like the Internet) are rapidly bringing new capabilities to businesses, thereby raising the competitive bar and the need to improve business processes dramatically.

Another apparent trend is the opening of world markets and increased free trade. Such changes bring more companies into the marketplace, and competing becomes harder and harder. In today's marketplace, major changes are required to just stay even. It has become a matter of survival for most companies. As a result, companies have sought out methods for faster business process improvement. Moreover, companies want breakthrough performance changes, not just incremental changes, and they want it now. Because the rate of change has increased for everyone, few businesses can afford a slow change process. One approach for rapid change and dramatic improvement that has emerged is Business Process Reengineering (BPR). Business Process Reengineering (BPR) BPR relies on a different school of thought than continuous process improvement. In the extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself into the future and asking yourself: what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology? Such an approach is pictured below. It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.

In summary, the extreme contrast between continuous process improvement and business process reengineering lies

in where you start (with today's process, or with a clean slate), and with the magnitude and rate of resulting changes. Over time many derivatives of radical, breakthrough improvement and continuous improvement have emerged that attempt to address the difficulties of implementing major change in corporations. It is difficult to find a single approach exactly matched to a particular company's needs, and the challenge is to know what method to use when, and how to pull it off successfully such that bottom-line business results are achieved. Such are the topics for this module series. Good reengineering projects design and implement solutions that:

are customer focused

capitalize on best practices and learning from others are designed for the future produce significant bottom-line improvements for the business

The methodology selected for your project impacts the size of the improvement and how fast the improvement will be realized. These guidelines present an approach shown to be effective in other companies. Research results from 248 projects are included. Ultimately, the best framework is one you select based on this information, knowledge of your project, and any internal practices at your company. If you are trying to decide whether to use a continuousimprovement methodology or a business process reengineering approach for your project, review the decision matrix at the end of this tutorial.

Recommended Approach

The recommended approach for a business process reengineering project includes the following phases: 1. Project Planning and Launch (team selection, objective setting, scope definition, methodology selection, schedule development, consultant selection, sponsor negotiations, change management planning, team preparation) 2. Current State Assessment and Learning from Others (high-level process definition, benchmarking, customer focus groups, employee focus groups, technology assessment) 3. Solution Design (process design, enabling technology architecture, organizational design, job design) 4. Business Case Development (cost and benefit analysis, business case preparation, presentation to key business leaders) 5. Solution Development (detailed process definition, system requirements writing and system development, training development, implementation planning, operational transition plan, pilots and trials) 6. Implementation (larger-scale pilots and phased implementation, measurement systems, full implementation) 7. Continuous Improvement (on-going improvement and measurement of new processes and systems) Summary

The figure below summarizes this process and shows decision points and deliverables. This is a key diagram to use with executive sponsors and stakeholders. The business process design steps are easy to explain, decision points for managers are clearly shown and deliverables for the project team are identified at each phase.

Process improvement or reengineering? Many project teams struggle between using a continuousimprovement methodology and business process reengineering (BPR) approach for their project. The matrix below provides guidelines to help you make this selection.

Reengineering Success Factors More than half of early reengineering projects failed to be completed or did not achieve bottom-line business results, and for this reason business process reengineering "success factors" have become an important area of study. The success factors below are derived from benchmarking studies with more than 150 companies over a 24 month period. Success factors are a collection of lessons learned from reengineering projects. Reengineering team members and consultants that have struggled to make their projects successful often say, "If I had it to do over again, I would" , and from these lessons common themes have emerged. In this module we examine these themes or success factors that lead to successful outcomes for reengineering projects. These include: 1. Top Management Sponsorship (strong and consistent involvement) 2. Strategic Alignment (with company strategic direction)

3. Compelling Business Case for Change (with measurable objectives) 4. Proven Methodology (that includes a vision process) 5. Effective Change Management (address cultural transformation) 6. Line Ownership (pair ownership with accountability) 7. Reengineering Team Composition (in both breadth and knowledge) Top Management Sponsorship Major business process change typically affects processes, technology, job roles and culture in the workplace. Significant changes to even one of these areas requires resources, money, and leadership. Changing them simultaneously is an extraordinary task. If top management does not provide strong and consistent support, most likely one of these three elements (money, resources, or leadership) will not be present over the life of the project, severely crippling your chances for success. It may be true that consultants and reengineering managers give this topic a lot of attention. Mostly because current models of redesigning business processes use staff functions and consultants as change agents, and often the targeted organizations are not inviting the change. Without top management sponsorship, implementation efforts can be strongly resisted and ineffective. Top management support for large companies with corporate staff organizations has another dimension. If the top management in the "line" organization and "staff" organization do not partner and become equal stakeholders in the change, AND you only have staff management support, you most likely are ill-prepared for a successful reengineering project (line management in this context are the top managers of the operation ultimately accountable for business performance -- P&L, customer service, etc.). Projects that result in major change in an organization rarely succeed without top management support in the line organization. Strategic Alignment You should be able to tie your reengineering project goals back to key business objectives and the overall strategic direction for the organization. This linkage should show the thread from the top down, so each person can easily connect the overall business direction with your reengineering effort. You should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value, and the vision for the organization.

Reengineering projects not in alignment with the company's strategic direction can be counterproductive. It is not unthinkable that an organization may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such reengineering initiatives are wasteful and steal resources from other strategic projects. Moreover, without strategic alignment your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction. Business Case for Change In one page or less you must be able to communicate the business case for change. Less is preferred. If it requires more than this, you either don't understand the problem or you don't understand your customers. You may find your first attempt at the business case is 100 pages of text, with an associated presentation of another 50 view graphs (overhead slides). After giving the business case 20 times you find out that you can articulate the need for change in 2 minutes and 3 or 4 paragraphs. Stick with the shorter version. Why is this important? First, your project is not the center of the universe. People have other important things to do, too. Second, you must make this case over and over again throughout the project and during implementation - the simpler and shorter it is, the more understandable and compelling your case will be. Cover the few critical points. Talk to the current state, and what impact this condition has on customers, associates and business results. State the drivers that are causing this condition to occur. State what your going to do about it (vision and plan), and make specific commitments. Keep focusing on the customer. Connect this plan to specific, measurable objectives related to customers, associates, business results, and strategic direction. Show how much time and money you need and when you expect to get it back. Don't sell past the close. No matter how long you talk, you will get resistance from some, and support from others, so you might as well keep it short. The business case for change will remain the center piece that defines your project, and should be a living document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact from major change initiatives are difficult

to measure and more difficult to obtain; without a rigorous business case both are unlikely. Proven Methodology The previous module presented several BPR methodologies, and it is important to note that your methodology does matter. Seat-of-thepants reengineering is just too risky given the size of the investment and impact these projects have on processes and people. Not only should your team members understand reengineering, they should know how to go about it. In short, you need an approach that will meet the needs of your project and one that the team understands and supports. Change Management One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort. Change is not an event, despite our many attempts to call folks together and have a meeting to make change happen. Change management is the discipline of managing change as a process, with due consideration that we are people, not programmable machines. It is about leadership with open, honest and frequent communication. It must be OK to show resistance, to surface issues, and to be afraid of change. Organizations do not change. People change, one at a time. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized. Line Ownership Many re-design teams are the SWAT type -- senior management responding to crisis in line operations with external consultants or their own staff. It's a rescue operation. Unfortunately the ability of external consultants to implement significant change in an organization is small. The chances are only slightly better for staff groups. Ultimately the solution and results come back to those accountable for day-to-day execution. That does not mean that consultants or staff are not valuable. What it does mean, though, is that the terms of engagement and accountability must be clear. The ownership must ultimately rest with

the line operation, whether it be manufacturing, customer service, logistics, sales, etc. This is where it gets messy. Often those closest to the problem can't even see it. They seem hardly in a position to implement radical change. They are, in a matter of speaking, the reason you're in this fix to begin with. They lack objectivity, external focus, technical redesign knowledge, and money. On the other hand, they know today's processes, they know the gaps and issues, they have front-line, in-your-face experience. They are real. The customers work with them, not your consultants and staff personnel. Hence your dilemma. The line operation probably cannot heal itself when it comes to major business re-design. Staff and consultants have no lasting accountability for the solution, and never succeed at forcing solutions on line organizations. You need both. You need the line organization to have the awareness that they need help, to contribute their knowledge, and to own the solution and implementation. At the same time you need the expertise and objectivity from outside of the organization. Building this partnership is the responsibility of the line organization, stakeholders and re-design team. No group is off the hook. Reengineering Team Composition The reengineering team composition should be a mixed bag. For example, some members who don't know the process at all, some members that know the process inside-out, include customers if you can, some members representing impacted organizations, one or two technology gurus, each person your best and brightest, passionate and committed, and some members from outside of your company

Reengineering Success Factors More than half of early reengineering projects failed to be completed or did not achieve bottom-line business results, and for this reason business process reengineering "success factors" have become an

important area of study. The success factors below are derived from benchmarking studies with more than 150 companies over a 24 month period. Success factors are a collection of lessons learned from reengineering projects. Reengineering team members and consultants that have struggled to make their projects successful often say, "If I had it to do over again, I would" , and from these lessons common themes have emerged. In this module we examine these themes or success factors that lead to successful outcomes for reengineering projects. These include: 8. Top Management Sponsorship (strong and consistent involvement) 9. Strategic Alignment (with company strategic direction) 10. Compelling Business Case for Change (with measurable objectives) 11. Proven Methodology (that includes a vision process) 12. Effective Change Management (address cultural transformation) 13. Line Ownership (pair ownership with accountability) 14. Reengineering Team Composition (in both breadth and knowledge) Top Management Sponsorship Major business process change typically affects processes, technology, job roles and culture in the workplace. Significant changes to even one of these areas requires resources, money, and leadership. Changing them simultaneously is an extraordinary task. If top management does not provide strong and consistent support, most likely one of these three elements (money, resources, or leadership) will not be present over the life of the project, severely crippling your chances for success. It may be true that consultants and reengineering managers give this topic a lot of attention. Mostly because current models of redesigning business processes use staff functions and consultants as change agents, and often the targeted organizations are not inviting the change. Without top management sponsorship, implementation efforts can be strongly resisted and ineffective. Top management support for large companies with corporate staff organizations has another dimension. If the top management in the "line" organization and "staff" organization do not partner and become equal stakeholders in the change, AND you only have staff

management support, you most likely are ill-prepared for a successful reengineering project (line management in this context are the top managers of the operation ultimately accountable for business performance -- P&L, customer service, etc.). Projects that result in major change in an organization rarely succeed without top management support in the line organization. Strategic Alignment You should be able to tie your reengineering project goals back to key business objectives and the overall strategic direction for the organization. This linkage should show the thread from the top down, so each person can easily connect the overall business direction with your reengineering effort. You should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value, and the vision for the organization. Reengineering projects not in alignment with the company's strategic direction can be counterproductive. It is not unthinkable that an organization may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such reengineering initiatives are wasteful and steal resources from other strategic projects. Moreover, without strategic alignment your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction. Business Case for Change In one page or less you must be able to communicate the business case for change. Less is preferred. If it requires more than this, you either don't understand the problem or you don't understand your customers. You may find your first attempt at the business case is 100 pages of text, with an associated presentation of another 50 view graphs (overhead slides). After giving the business case 20 times you find out that you can articulate the need for change in 2 minutes and 3 or 4 paragraphs. Stick with the shorter version. Why is this important? First, your project is not the center of the universe. People have other important things to do, too. Second, you must make this case over and over again throughout the project and

during implementation - the simpler and shorter it is, the more understandable and compelling your case will be. Cover the few critical points. Talk to the current state, and what impact this condition has on customers, associates and business results. State the drivers that are causing this condition to occur. State what your going to do about it (vision and plan), and make specific commitments. Keep focusing on the customer. Connect this plan to specific, measurable objectives related to customers, associates, business results, and strategic direction. Show how much time and money you need and when you expect to get it back. Don't sell past the close. No matter how long you talk, you will get resistance from some, and support from others, so you might as well keep it short. The business case for change will remain the center piece that defines your project, and should be a living document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact from major change initiatives are difficult to measure and more difficult to obtain; without a rigorous business case both are unlikely. Proven Methodology The previous module presented several BPR methodologies, and it is important to note that your methodology does matter. Seat-of-thepants reengineering is just too risky given the size of the investment and impact these projects have on processes and people. Not only should your team members understand reengineering, they should know how to go about it. In short, you need an approach that will meet the needs of your project and one that the team understands and supports. Change Management One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort.

Change is not an event, despite our many attempts to call folks together and have a meeting to make change happen. Change

management is the discipline of managing change as a process, with due consideration that we are people, not programmable machines. It is about leadership with open, honest and frequent communication. It must be OK to show resistance, to surface issues, and to be afraid of change. Organizations do not change. People change, one at a time. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized. Line Ownership Many re-design teams are the SWAT type -- senior management responding to crisis in line operations with external consultants or their own staff. It's a rescue operation. Unfortunately the ability of external consultants to implement significant change in an organization is small. The chances are only slightly better for staff groups. Ultimately the solution and results come back to those accountable for day-to-day execution. That does not mean that consultants or staff are not valuable. What it does mean, though, is that the terms of engagement and accountability must be clear. The ownership must ultimately rest with the line operation, whether it be manufacturing, customer service, logistics, sales, etc. This is where it gets messy. Often those closest to the problem can't even see it. They seem hardly in a position to implement radical change. They are, in a matter of speaking, the reason you're in this fix to begin with. They lack objectivity, external focus, technical redesign knowledge, and money. On the other hand, they know today's processes, they know the gaps and issues, they have front-line, in-your-face experience. They are real. The customers work with them, not your consultants and staff personnel. Hence your dilemma. The line operation probably cannot heal itself when it comes to major business re-design. Staff and consultants have no lasting accountability for the solution, and never succeed at forcing solutions on line organizations. You need both. You need the line organization to have the awareness that they need help, to contribute their knowledge, and to own the solution and implementation. At the same time you need the expertise and objectivity from outside of the organization.

Building this partnership is the responsibility of the line organization, stakeholders and re-design team. No group is off the hook. Reengineering Team Composition The reengineering team composition should be a mixed bag. For example, some members who don't know the process at all, some members that know the process inside-out, include customers if you can, some members representing impacted organizations, one or two technology gurus, each person your best and brightest, passionate and committed, and some members from outside of your company

Key findings: The need to reduce cost/expense was the most frequently cited business driver for reengineering projects. The top activity that project teams would do differently on the next project is to use more effective change management. Projects that were driven or heavily supported by top management were more likely to meet expectations. The planning stage, where scope and roles were set, was the most important phase in the project. Resistance to change within the organization is the number one obstacle to successful implementation.