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Business Process Reengineering

Business Process Reengineering is a management concept that aims at improving the efficiency and effectiveness of the processes that are employed within as well as across organizations. It is otherwise known as Business Process Redesign, Business Process Change Management, and Business Transformation. The founder of the term, Michael Hammer defines Business Process Reengineering 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.” [HAMMER93] The four keywords in this definition are FUNDAMENTAL, RADICAL, DRAMATIC, and PROCESSES. The fundamental keyword asks such questions as, “What are we doing?” and “Why are we doing it?” These questions determine what a company must do and how it intends to do it. Radical redesign involves an understanding of the core processes and finding out new and more efficient ways of doing any work. This is dramatic because it shakes the very foundation of consistency. Consistency does not matter as long as any process is efficient and effective. And all the above steps are process oriented.

Business Process Reengineering involves the following steps:

1. Envisioning new processes

a. Securing support of management – It is crucial that the top management supports the reengineering initiatives of a firm. This is a tough call as existing conventions and protocols need to be abandoned for bringing in innovation and creativity.

b. Identifying reengineering opportunities – Identification of opportunities is the first step of the reengineering process. These opportunities form the foundations of the processes.

c. Identifying enabling technologies – Implementation of Information Technology tools to the reengineering process is helpful in removing many a barrier. But one must keep in mind that undue use of technology at inappropriate places may cause more harm than good.

d. Aligning with corporate strategy – The organizational objectives of the firm must be the primary goal of any reengineering step.

2. Initiating change

a. Setting up reengineering team – The reengineering team is comprised of people from various departments. A team leader is then assigned by the top management.

b. Outlining performance goals – Performance goals are comprised of three factors cost, time and number of defects. Some of the other dimensions of performance are customer satisfaction, financial stress, organizational learning and internal processes.

3. Process diagnosis

a. Describing existing processes – The entire existing process must be described and the process resources and elements must be identified. Process performance must be defined along with an analytic decomposition of all the processes involved.

b. Uncovering pathologies in current processes – There may be high costs incurred or inefficient flow of work. The reengineering process may not add much value to the customer satisfaction. Such pathological conditions must be recognized for what they are at the very initial stage.

4. Process redesign

a. Developing alternative process scenarios – Each process entails alternatives which must be harnessed to improve optimization.

b. Developing new process design – New processes must be designed. These processes may disregard the existing conventions and may come up with “preposterous” processes. Hierarchical structures would be dismissed.

c. Designing HR architecture – This involves redefining of titles and job positions, encouragement of organizational learning, performance evaluation metrics and implementation of reward structures that are based on performance.

d. Selecting IT platform – The IT platform must support the new protocol.

e. Developing overall blueprint and gather feedback – The systems currently in use might have to be either modified or replaced depending on the process that needs to be reengineered.

5. Reconstruction

a. Developing/installing IT solution - The IT platform that has been selected must then be custom made and installed.

b. Establishing process changes – The organizational structure must be synchronized with the changes made to the processes.

6. Process monitoring

a. Performance measurement (time, quality, cost, IT performance) – Process performance is measured by value added to the customer and quality of the process. System use and information rate is used to measure IT performance.

b. Link performance to continuous improvement – Total Quality Management is key to follow up on the processes and it is required to monitor the process for good performance.

The four dimensions of Business Process Reengineering are :-

Strategies - Technology - People - Processes                               

The dimension of strategy takes care of the strategic component in areas like technology strategy, organization strategy and human resource strategy. All processes are defined at all the levels of the organization. Customer requirements determine the processes and not internal requirements of the organization. Information Technology is the key tool involved in spanning the functional and organizational processes. People comprise the human capital of a firm and  the most critical component in Business Process Reengineering.

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