Business Process Re-engineering

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TABLE OF CONTENT

INTRODUCTION

WHAT IS BUSINESS PROCESS RE-ENGINEERING?

Definition

BACKGROUND

BPR EVOLUTION

Development after 1995

BPR Concept

BPR PROCESS / FRAMEWORK

HOW TO DEVELOP BPR?

Phase 1: Understanding

Phase 2: Initiating

Phase 3: Programming

Phase 4: Transforming

Phase 5: Implementing

Phase 6: Evaluating

BUSINESS PROCESS RE-ENGINEERING IMPACT AND CHALLENGES

a.Change in Management System and Culture

b.Human Factor’s

c.Technology

d.Environment

THROWBACK OF BUSINESS PROCESS RE-ENGINEERING

1.High Operational Cost

2.Low Quality of System Development

3.Poor Performance of Middle Level Management

4.Higher Demands to the Workers

CONCLUSION

Increase Effectiveness

Improve Efficiency

Reduces Cost

Improvement in Organizational Approach

Growth of Business

REFERENCES

INTRODUCTION

In today’s environment, most of business needs an attention to provide more effective and effectiveness service to customer. One of the solutions is Business Process Re-engineering (BPR) where it has been receiving attention from all industries as well as the academic community. It’s time to change management practice and working processes in organisations in today’s scenario and future to improve our business organization and to achieve business objective for maximize the profit.

WHAT IS BUSINESS PROCESS RE-ENGINEERING?

Many researcher and academician have defined the meaning of the Business Process Re-engineering. Business process re-engineering can be defined as a business management strategy, which focuses on the business analysis and design of business’s workflow and processes within an organization. BPR helped organizations to improve their customer service, cut operational costs, and become world-class competitors. Wikipedia (2014)

Sometimes BPR is known as ‘core process redesign’, ‘new industrial engineering’ or ‘working smarter’. Whatever the BPR called, all the terms give the same meaning and concept which is focusing on the business process redesign and deploying IT to support the reengineering work. (Chen 2001)

Definition

Hammer and Champy (1990), define Business Process Reengineering (BPR) as an analysis and redesign of workflow within and between enterprises. Crowe, Fong and Zayas-Casto, 2002 stated that BPR as a total transformation of a business, technologies and management systems, as well as organizational structure and values, to achieve quantum jumps in performance throughout the business. (Mlay, Zlotnikova et al. 2013)

BACKGROUND

In 1776, Adam Smith is the first person who uses the separating work areas to increase productivity. In year 1820, American Railway creates modern business bureaucracy (control-command procedures) to make the business more efficient. Frederick Taylor (1880) came with the observation and analysis through time study to set the optimal production rate. In other words, to develop a science for each man’s task a One Best Way.

The task have significantly selected for the best man job and it is the best procedures he is expected everyone to follow. In this task, he establishing a concept that give a rate system based on the incentive basis and not according to the position of work described. Cooperation is important between managers and workers, so that manager have responsibility for planning and preparation of work rather than the individual workers.

1954, Tawney belief that man being totally rational, and made him disregard the crucial issue of human behaviour and the fact that money is insufficient as the single source of motivation. Drucker (1972), mention that scientific management was not concerned with technology. It took tools and technology as givens. (F, S et al. 2013)

Michael Hammer (1990), have published the article "Reengineering Work: Don't Automate, Obliterate" which he claimed that the major challenge for managers is to obliterate forms of work that do not add value, rather than using technology for automating it. This statement implicitly accused organizations have been changing from time to time due to changes in technology and customers’ demands. (Sungau, Ndunguru et al. 2013)

Today’s, as a fast-growing business in the world, BPR have seen as one of the important methods and tools to the organization. However, how fast the method is growing, the critic also were fast to claim that BPR was a way to dehumanize the work place, increase managerial control, and to justify downsizing for an example in major reductions of the work force and a rebirth of Taylorism under a different label.

Regardless of this critique, BPR have shown that it have a challenge and impact to an organization. In time-to-time many researcher had protected their BPR in terms of competitiveness, time-to-market and productivity.

BPR EVOLUTION

Development after 1995

When the times change, the technologies also change. So organization has major issues in the business system development, which might have an impact on the ultimate success or failure of an organization business itself. From the critiques feedback of the early BPR proponents the business process systems began to wane. Since then, business process started improved time to time and re-engineering the process of the organization.

More recently, the concept of Business Process Management (BPM) has gained major attention in the corporate world and can be considered as a successor to the BPR wave of the 1990s, as it is evenly driven by a striving for process efficiency supported by information technology. Equivalently to the critique brought forward against BPR, BPM is now accused of focusing on technology and disregarding the people aspects of change. (Mlay, Zlotnikova et al. 2013)

BPR Concept

In develop and manage a system, organization needs to divide a task and responsibility among people, IT development system and to perform better to fulfil the organization’s objective and goals. Many factors are inherent in successful of BPR. To enhance the effectiveness of the BPR, the organization needs to know first their business activities by analysing, planning, redesigning the process for its improvement and benefit.

http://upload.wikimedia.org/wikipedia/commons/thumb/a/a2/Business_Process_Reengineering_Cycle.svg/240px-Business_Process_Reengineering_Cycle.svg.png

Figure 1

BPR concept can be determine by process of changes and challenges to improve performance. Teng et al 1994, Talwar 1993, stated that BPR as a strategy for incorporating critical inputs from both corporate and IT planning. But Craig and Yetton 1997, mention that BPR will change the firm’s competences, it is more probable to be successful if it is developing, benefiting from organizational culture. (Chang, Levy et al. 2014)

BPR PROCESS / FRAMEWORK

Different organization has adopted and develops different process / framework. The process is to help the organization to achieve their goal and objectives. Framework encourages the business to reduce lack between the processes. Below framework is an example BPR that have been design for the SME’s by Chang and Powel, 1998. The framework shows that the business should focuses on process of the organization. (Chang, Levy et al. 2014)

Figure 2: BPR Framework for SMEs

HOW TO DEVELOP BPR?

BPR is important in organization. To develop BPR, organization must have method or steps to make sure the BPR is follow successfully. BPR is driven by a business vision which implies specific business objectives such as Cost Reduction, Time Reduction, Output Quality Improvement, Quality of Work life (QWL)/Learning/Empowerment. Figure 3 illustrations the steps on developing the BPR. (Habib and Shah 2013)

Figure 3: BPR steps

Phase 1: Understanding

In this phase, the duties and responsibilities of the top management is very importance. They need to know what and why they want? The top management should show their complete commitment towards the creativity.

Phase 2: Initiating

Organization need a vision that will make all the energy to run in the right direction thus, the top management have to provide a suitable vision and objectives to the rest of the employees so that their goals can be achieve.

Phase 3: Programming

Benchmarking is the current process and activities that will evaluate in this phase to find out the zones of real concern and create the baseline for the BPR project.

Phase 4: Transforming

In this phase, a set of pilot study will be place and the work is assessed to calculate the scope of variation and the resources desired for this transformation.

Phase 5: Implementing

When the pilot study in phase 4 is successfully, then the implementation of phase 5 will do. This phase is very significant and crucial due to requirement of supporting from the top management and commitment from middle managers to educate employees, provide leadership, placement the structure, implementation of IT and modification of remuneration system so that the integration is completed as a successful BPR.

Phase 6: Evaluating

The last phase is about observing and evaluation of the whole process of BPR where the success of the project is monitored frequently as well as the areas that needs modification (continuous improvement) are recognized.

BUSINESS PROCESS RE-ENGINEERING IMPACT AND CHALLENGES

In article “Why Re-engineering Failed: The Fad that Forgot People” by Davenport, 1995, in which he identified that business people in the United States, re-engineering has become a word that stands for reform, lay-offs, and too often, failed revolution platforms ... companies that embraced [re-engineering] as the silver bullet are now watching for ways to re-build the organisation’s torn fabric. (Davenport 1995)

There is many reason and challenges that can be influence BPR as we know that BPR is depending on the country itself. Many critiques and argument is thrown by previous researcher. The challenge can be identified based on the feedback and successful of the BPR system that already develops and adopted by an organization. There is still a gap between the challenges and the capabilities of BPR. Below is an example of the challenges that might be influence BPR.

a. Change in Management System and Culture

Problem and challenges occurs in the management system and culture actually depends on country. BPR failed to perform when an organization change their work system. It also can created problems in communication when the management is arguing each other due to lack of organizational readiness for change (Mlay, Zlotnikova et al. 2013).

b. Human Factor’s

Many researchers have highlighted the human factors as a challenge in BPR. Corrigan (1996), found that the lack of responsiveness given by [BPR] to the human proportions of organising, highlighting “how employees, not just practices must be re-engineered or debugged if they are to run effectively in systems”. Davenport (1993) stresses that the achievement of re-engineering programmes is reliant on and synchronized with effective organisational and human resource change. (Dumay 2004)

c. Technology

IT infrastructure is important nowadays. Without it, can be a significant enabler of, or barrier to, the applied options available to planning and changing processes for BPR Business Process Re-engineering mostly use IT and technology-driven, with the role of IT changing from producing data to mixing new technologies and support people as independent information collectors.

d. Environment

Because of the environment is turbulent, competitors are growing faster and stronger due to globalization. In addition, consumers nowadays are more demanding based on their needs and requirements. This favours mass customization over mass production.

Business Process Re-engineering (BPR) tried to impose end-to-end processes across whole organizations. The challenges of BPR did not always support the system, and had the disadvantage of limiting agility, both at organizational level and within individual business units and functions. Due to this many of the organization have do some innovation in implement the BPR.

THROWBACK OF BUSINESS PROCESS RE-ENGINEERING

Systems that generate throughout technologies have advantages and also disadvantages. However, when the time running so fast, it appeal with the systems function that might be to be consider as a crucial not only for the systems development but increasingly for cost efficiency, it is difficult to find the way for that cost reduction in a short-term fix. Hence, for most implementations focusing is less on the customer and more on process efficiency and cost savings with a consequent lack of building in mapping customer response and over reliance on customer satisfaction measures.

Mark Wallace, CEO of Texas Children Hospital stated that "People are not fundamentally opposed to change... but they don´t like shocks. It is a lead's accountability to let people know what the issues are." (Kiefer 2004)

1. High Operational Cost

To maintain good system of BPR, organization has to make sure that their system is up-to-date in line with the system development. To have this entire requirement, organization will face with the high operational cost that might be influence their business profit. (Zigiaris 2000)

2. Low Quality of System Development

Organization has a potency to face the low quality of system development due to cut cost in developing the good system. This will rapidly affect their business appearance and performance.

3. Poor Performance of Middle Level Management

BPR is a system that has a huge of responsibility to manage it. Middle Level management without an skill and training will have a problematic in handling the system. To make BRP successful, organization must have talented top management to control the organization.

4. Higher Demands to the Workers

Hiring new workers has been to consider to an organization. It is complicated to find the right people for one specific job. The worker must have multitasked attitude that can do different types of jobs segregation. It has to convince the organization to employ them. It’s hard to fine good worker nowadays due to their skills and demanding on the pay. (Kiefer 2004)

There are many failure and throwback of BPR system. In 1997, Choi and Chan put presumptuous some of the effects of BPR failure as (1) failure of the employees and the management to recognize the advantage of BPR in their organization, (2) overreliance on Information Technology to allow BPR, (3) depending deeply on outsiders to effect BPR and ignoring the employees, (4) lack of ordinary methodology, and (5) lack of an sympathetic BPR among others. (Mlay, Zlotnikova et al. 2013)

CONCLUSION

Business Process Re-engineering, some of researcher and academics people make good and bad judgement based on their research. In my opinion, BPR brings numerous benefits to organizations in which it is applied. Some of the common benefits of BPR are:

Increase Effectiveness

Throughout BPR, all processes are completely monitored under the firm control of the management. With this employees will deliver high quality products to their customers.

Improve Efficiency

The time lag between different processes will be reducing with proper management and control of all business processes. This will make the organization to improve their organization efficiency.

Reduces Cost

For the long time business run, BPR will help the organization that have proper management of processes, better efficiency and overall will reduce the product cost saving for the organization.

Improvement in Organizational Approach

BPR formulated strict rules for employees of the organization. BPR helped to increase in flexibility and compliance for change. This has formed better situation for people to work, thus leading to employee fulfilment.

Growth of Business

The organizations will growth rapidly throughout the implementation of BPR. Although BPR is very effective in controlling cost and improving efficiency, its application is a hard buff to crack. Employees are very strong to this kind of change thus, it is important to have extensive care from the top management.

REFERENCES

Chang, L.-J., et al. (2014). "Process Re-Engineering Success In Small And Medium Sized Enterprises."

Chen, Y.-C. (2001). Empirical Modelling for Participative Business Process Reengineering. The University of Warwick.

Davenport, T. H. (1995). "The Fad That Forgot People." Fast Company magazine.

Dumay, M. (2004). "Business Processes: The Theoretical Impact of Process Thinking on Information Systems Development " Department of Information Systems & Software Engineering.

F, L., et al. (2013). "BPR Lifecycle." Decision Support Systems Laboratory, NTUA.

Habib, M. N. and D. A. Shah (2013). Business Process Reengineering: Literature Review of Approaches and Applications. Proceedings of 3rd Asia-Pacific Business Research Conference. Kuala Lumpur, Malaysia.

Kiefer, T. (2004). Advantages and Disadvantages of Business Process Reengineering.

Mlay, S. V., et al. (2013). "A Quantitative Analysis of Business Process Reengineering and Organizational Resistance: The Case of Uganda." The African Journal of Information Systems 5(1).

Sungau, J., et al. (2013). "Business Process Re-Engineering: The Technique To Improve Delivering Speed Of Service Industry In Tanzania." Independent Journal Of Management & Production (IJM&P).

Wikipedia (2014). "Business process reengineering." 2014, from http://en.wikipedia.org/wiki/Business_process_reengineering.

Zigiaris, S. (2000). INNOREGIO: dissemination of innovation and knowledge management techniques, EC funded project.

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