Business Process Reengineering in 4 Simple Steps
Business Process Reengineering, also known as BPR, has the power to transform a failing company into a successful company with vast financial growth. The trick is to execute and manage your company’s business process reengineering properly.
A lot of business owners do not understand the term “business process reengineering” or how much change to their organization it actually entails.
Business process reengineering means you are changing the entire business process of your organization by scrapping the old one and replacing it with something completely new. There is nothing easy about doing something this extreme.
When a company starts to lose customers and profits for a long period of time, it means the core business model of the company is not working so well anymore. In an effort to save the company, its leaders may decide to reengineer the entire company’s business process or model.
That way, they can hopefully lower their operating expenses and produce a better-quality product that people will want to purchase.
Business process reengineering requires a comprehensive analysis of all the workflows of the organization. If any of these workflow processes are found to be inefficient or unproductive, then they will either be eliminated or improved.
History of Business Process Reengineering
The corporate world first heard about business process reengineering back in the 1990s. Michael Hammer published an article in the Harvard Business Review called “Reengineering Work: Don’t Automate, Obliterate.”
In the article, Hammer wrote that numerous businesses were automating their unproductive processes by using new technologies, which was a mistake. Hammer thought it would be better for businesses to use new technologies to create something original and different than their previous processes. He was basically saying that new technologies can be used to upgrade business processes rather than to automate them.
From that point forward, more companies have replaced traditional business process management with business process reengineering. As technology continues to be enhanced rather quickly, business process reengineering is more important than ever.
The Four Main Steps of Business Process Reengineering
There is nothing easy about business process reengineering. It is not like business process management, where you simply improve the processes. Instead, business process reengineering requires you to change the processes entirely. This will take a lot of time, money, and effort. On top of that, there is a certain degree of risk involved too.
If you want to prevent yourself from making mistakes, then you must perform the following steps below. Then you will have a good chance of changing the processes for the better.
Step 1: Acknowledge the Needed Change
Start-up businesses already know they need to make changes because they’re still trying to figure out what works and what doesn’t work in their industry. Company leaders must communicate and share ideas with each other on what needs to change in the organization. This is easy if the company is a small business. But if it is a corporation, then change can be more difficult to implement.
Many stakeholders of corporations do not like change because they are afraid of the risks involved. Everyone from the employees to the managers would rather keep things the way they are in the organization. They believe it will ensure their job security if they don’t take on any unnecessary risks.
As a result, you must do a good job of convincing the stakeholders of why change is important for the business. The stakeholders will more likely believe what you say if the company is doing poorly at the moment. It all depends on why the company is doing poorly.
Perhaps the business processes of the company are not working well for it anymore. Maybe your competition has changed their business processes and is now gaining more sales than you. To figure out why your business is doing poorly, it will require research into these things.
After you’ve acquired all the necessary information from your research, the next step is to create an all-inclusive plan for all the leaders of your company. The managers must become the salespeople by advocating for the changes that you want to make. That way, the lower-level employees will grasp the change in a positive way.
Increase Employee Buy-In
Business process reengineering cannot work unless you get your employees to buy-in to the change. Since business process reengineering will impact all of the company’s stakeholders, people won’t be so quick to think positively of the change.
A lot of your employees may fear getting laid off after the change is implemented. If the employees are not on board with the change, then the change cannot work for the business. It doesn’t even matter if the management has accepted the change. The lower-level employees must accept it too.
In order to encourage the employees to buy-in to the change, you must present to them a different point of view that they have not heard before. If this doesn’t work, then your workplace culture might be to blame for their lack of enthusiasm toward the change. In that case, you must make some changes to the workplace culture before implementing your business process reengineering initiatives.
You can use several different change management models to assist you in helping your employees develop a commitment to these changes. The two most recommended models are Bridge’s Transition Model and the ADKAR Model.
Step 2: Organize an Experienced Team
You cannot implement business process reengineering into the organization by yourself. You must put together a team of professional people who are educated, motivated, and skilled at carrying out the necessary tasks that will be handed to them.
A typical team will include:
- Senior Manager – The senior manager is the leader of the team. They make the biggest decisions and supervise the others in the team. It will usually be a person who is from the actual senior management of the company. If there is no senior manager, the team will stay in regular contact with the senior management.
- Operational Manager – The operational manager understands everything about the processes. They will serve as a teacher and adviser to everyone else in the team as they work on the processes together.
- Engineers – You need several different types of engineers to work on the reengineering processes, such as manufacturing engineers and information technology engineers. Each company will have something different to change, such as their workflows, hardware, or software. That is where engineers come in handy.
Form the Right Team
It is easy to make mistakes when putting a business process reengineering team together. You don’t want to have a team of people who think the same and have the same viewpoints. It is better to have a variety of different people with their own viewpoints because the team will have a better chance of diagnosing problems and coming up with solutions.
You also need just the right number of people on the team, not too many and not too few. If you have too few people on your team, then you won’t have enough professional people who specialize in the right fields.
Of course, the project is another factor in forming the right team too. If you can find skilled people who are excited and enthusiastic about a particular project, then it goes a long way in ensuring a positive outcome.
Step 3: Figure Out the Key Performance Indicators
After you’ve put a good team together, you must figure out and locate the key performance indicators. It is better to identify the expenses before getting used to a new process.
Business process reengineering is all about process optimization. The specific process that is under optimization will determine your key performance indicators.
Here are some common key performance indicators to consider:
- The amount of time spent on the entire process.
- The amount of time required to switch from manufacturing one product to manufacturing another product.
- The percentage of defective manufactured products.
- The amount of time it takes for inventory to be manufactured into products on the manufacturing line.
- The amount of time spent on planned maintenance versus the time spent on emergency maintenance.
- The average amount of time required to perform emergency repair work on the system or software.
- The rate of support ticket closures. Take the total number of closed support tickets and divide it by the total number of opened support tickets.
- The amount of time required to develop an entirely new application.
- The amount of time required to restore the network following a security breach.
Figure out all these key performance indicators, and then work on the individual processes. Business process mapping is an easy and fast way to start doing this because you’ll have each step of the process written out for you to follow.
The operational manager will become useful at this point. It will be much easier to identify and evaluate the processes with their help. They’ll map out the processes with process flowcharts and business process management software.
The process flowcharts can be written down on paper. They describe each step of the processes. The business process management software makes it so much easier to analyze the processes because it is more automated. Its CheckFlow feature lets the processes become digitized. You can also set deadlines with it too. Best of all, employees will have an easier time collaborating with each other by using the software.
Analyze the Processes Properly
You don’t need business process reengineering if your company has profits and positive income projections. The time for business process reengineering comes when the company is failing or not seeing profits. This would indicate that big changes are needed in order to turn around the company and make it more profitable again.
Don’t get impatient with your analysis of the process. Even though you’re anxious to turn things around, you must complete the analysis before implementing any changes. If you don’t rush the analysis, then you can do it properly.
The stress over money may tempt you into rushing the analysis. But if you want to act like a responsible senior manager of the company, then you must fight the temptation to rush. If you can do this, then you can focus on executing the right procedures.
What you’ll want to do is identify the problems and set important goals for overcoming them in order to achieve the objectives of the company. All of this takes time and effort.
During each stage, you must receive input from various groups of the business. The more diverse ideas and feedback you receive, the better chance you’ll have of defining the necessary improvements required. You’ll also know which processes to eliminate as well.
Step 4: Implement Your Solutions
After you’ve analyzed the processes, you can begin coming up with the solutions. Keep the changes small while comparing the key performance indicators and making sure they stay strong.
If the indicators determine the new solution works great, then scale up the solution at a slow pace by implementing them into more of the business processes. But if the indicators show the solution is failing, then start over on the drawing board and come up with some new solutions.
A Good Example of Business Process Reengineering
A lot of change has taken place over the last decade because of all the new technology being developed. Because of this, more companies have executed lots of business process reengineering initiatives. Over the years, some companies have demonstrated some amazing business process reengineering examples, while others have demonstrated terrible ones.
Ford is a positive business process reengineering example. When the American auto industry was failing in the 1980s, Ford decided to reduce costs by searching for inefficient processes in its various departments. They ended up discovering inefficiencies in their accounts payable department. It had 500 people in its accounts payable division, while their competitor Mazda only had five people in its accounts payable division.
You could argue that Mazda was much smaller in comparison to Ford. However, Ford still believed their accounts payable department was five times larger than necessary.
So, to remedy the situation, the upper management of Ford created a new goal to eliminate a significant number of the people who worked in that department. They wanted to get rid of a few hundred employees, at least. After they did that, a business process reengineering initiative was created to determine how the accounts payable department became so cluttered with employees.
Once the system had been analyzed, the management found out what happened. Each time the purchasing department wrote a purchase order, the accounts payable department would receive a copy of it.
The goods would then get sent to the material control department, which would also send a copy to the accounts payable department. A clerk in the department had to match three orders together before issuing the payment. A lot of time and energy went into making this happen.
Ford’s business process reengineering initiative resulted in a new digitalized process. In other words, order purchases were now entered into an internet database. That way, material control could cross-reference the goods they received with the information in the database. This makes it much easier for them to match or eliminate orders because it is all done on the computer.