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Business process reengineering is an approach which aims to dramatically improve the over all business process. Since 1990s, companies are moving towards more flexible and customer centric. In todays fast pacing world, redesigning of existing processes is very significant for organizations to be competitive and customer oriented. Organizations are changing their business models to increase their profitability; they are radically re-engineering their business models to compete each other. Economic globalization has introduced unique conditions in the business environment. Change in the environment has played a big role, technological advancement, political instability, economic down turn and socio cultural changes has forced companies to aareengineer its old backward processes and make it efficient and effective one. Many researcher claims that the managers should eliminate those activities which are not adding value rather than automating them through technology (Michael Hammer; Thomas H. Davenport; and J. Short in 1990). BPR does not restrict its approach to just jobs it involves more than that like entire business process organizational structure and its culture and values, as it needs long-time commitment, resources, and company wide struggle. These are made easier by Information technology (IT) which is considered as a key contributing factor to achieve targeted business performance and efficiency relating improvements on costs, quality, and delivery time.
Many scholars tried to find out the indicators for re-engineering on their success and failure factors (Neda Abdolvand et al., 2008; Hartini Ahmed et al., 2007). Moving toward re-engineering, there are few post-BPR environments which are necessary to monitor for successful implementation of BPR (Siew Kien Sia and Booon Siog Neo, 2008). A flexible business process modeling, stimulation and re-engineering (BPMSR) was also laid down for the easy implementation, testing and feedback of BPR (Razvi Doomun and Navin Vunka Jungum, 2008). Top ten practices were also benchmarked as best practices for business process redesigning (S. Limam Mansar and H.A. Reijers, 2007). Organizations are more focused towards customer and cost-effective care through Business Process Redesign (S.G. Elkhuizen et al., 2006). Successful implementation of Enterprise Resource Planning (ERP) found to have a positive relationship with the Business Process Improvement (BPI) (Chuck C.H. Law and Eric W.T. Ngai, 2007).
No previous studies have come across to find out the impact of Business Process Reengineering (BPR) and Information Technology over financial performance of pharmaceutical companies operating in Pakistan. Through this paper is an attempt to fill that gap existed in preceding literature. Pakistan is more backward in technological advancement, people are more rigid to change, and not easily accepting the change or does not even supports the change at all. Changes related to automation are not appreciated as it is perceived that technology will move the organisation towards layoffs. There are many processes which are not adding values to a product but are carried out as an important process. There are various examples all over the world which has provided evidences that the successful implementation of information technology and radical redesigning or reengineering of the business models has drastic positive impact on company's overall performance. In Pakistan, pharmaceutical sector has gone through different phases of transformations; this paper will examine the impact of those transformations over company's performance.
The purpose of this paper is to study the impact of Business Process Reengineering (BPR) and Information Technology (IT) on financial performance of pharmaceutical industries operating in Pakistan, and to examine the factors which will directly affect the financial performance of the firm based on BPR and the usage of information technology.
This paper is structured in sections. Section 1 illustrate the introduction; section 2 entails the overview of relevant preceding literature reviews ; section 3 describes methodology: section 4 highlights data analysis and findings, section 5 draws the conclusion and policy making regarding the future research opportunities.
Q1. Does Business Process Reengineering (BPR) have a positive impact over financial performance of pharmaceutical company?
Q2. Does Information Technology play a vital role in BPR implication?
Varun Grover et al. (1998) studied the relationship between IT diffusion, productivity improvement, and process redesign of sample size of 313 US based organisation. Data were collected through mailed questionnaire and a series of regression analysis were tested on the data. It was concluded that IT and process redesign have a relationship with the productivity. Investment in IT as a medium of information diffusion results in improved productivity.
Fabio Zucchi and John S. Edwards (1999) examine the relationship between human resource management and BPR of 11 UK based organisation. Detailed interview were conducted with the senior managers of the firms and it was concluded that holistic approach to HRM should be adopted during and after the changes. All elements regarding reward system, organisation structure, decision making authorities etc. should be considered equally during the changes.
Bernhard Wieder et al. (2006) investigated the adoption of ERP system and its impact over organisational performance. Sample sizes of 102 Australian companies were selected through mailed questionnaire and telephonic survey. Non-parametric two-independent sample tests, trend analysis and standard correlation were applied and it was concluded there was no difference between the firms who are ERPS adopters and non-adopters. It was further concluded that the firms who are the aged adopters of ERPS has the higher overall performance as compared with the late adopters, there were no such evidences were extracted for the supply chain performance. Only those ERPS adopters gain higher business level performance advantage who adopted SCMS also. For the future implications it is recommended that the study should be performed with large sample size and instead of ERP system, enterprise systems should be studied.
S.G. Elkhuizen et al. (2006) study's the use of BPR in implementing transformation of organization towards customer focused and cost reduction. Literature review methodology was adopted, 86 studies were review and it was concluded that quality of studies were not up-to mark and many of the studies shows no consistencies between their objective and outcomes. The paper explores a new idea for the researchers to do the work on Medical Subject Heading and produce a quality work.
The study of Cristina Gimenez (2006) shares an idea of integration process followed by the firms during their implementation phase of supply chain management. The research was conducted with the sample size of 172 Swedish companies for the time frame of spring-summer, 2001. Survey model methodology was select and data were collect through questionnaires. Statistical test; Pearson correlation, K-means cluster analysis and discriminant analysis, were applied to extract the results, and it was concluded that there are three integration phases; phase I, companies are not integrated. Phase II, companies are high-medium level of integration; low level of integration in logistics-production, and external integration is levelled to medium. And phase III, companies are highly integrated in their internal boundaries and some their supply chain relation. The study provides support to managers in the integration process. Before going toward any external integration, firm must integrate their internal functions.
S. Limam Mansar and H.A. Reijers (2007) investigated the best BPR practices and academics with insight into the most popular investigations to originate improved process designed. An online survey was conducted for the time frame of 2003-2004 in UK and Dutch, questionnaires were emailed. Top ten best practices were selected and tested against two case studies in which ten best practices were discussed (Limam Mansar and Reijers, 2005). The paper helps to identify the best ten practices applied extensively by the practitioners in BPR. The rules have been accumulated together to provides ideas about different implementation opportunities for new process. This study can be used to gain success in BPR phase.
Hartini Ahmad et al. (2007) inspected the key success factors of BPR in Higher Education. Case study quantitative analysis was conducted, three case studies were considered for the study. The outcomes of the case studies were then compared with the best practices of BPR benchmarked by University of Wisconsin-Stout. In the end 7 factors were found critical for successful implication of BPR, which were teamwork and quality culture, effective change management, quality management and adequate reward system, democratic and participative, effective project management, information system and sufficient financial resources. The future implication of the study implies that all the factors driven through the study should be considered during BPR transformation.
Chuck C.H. Law and Eric W.T Ngai (2007) investigated the relationship between organizational factors, business process improvement, and ERP success using 96 firms operating in Hong Kong. The data were collect through emailing the questionnaires to 1000 firms, 106 companies responded out of which 96 were those whose questionnaires was full completed. On those sample size Non-parametric statistic method were used (Mann- Whitney test and correlation analysis) and it was concluded that Business Process Improvement (BPI) has a positive relationship with the success of Enterprise Resource Planning (ERP), senior management support of BPI, and senior management support of Information Technology (IT). It was also discovered that the distance between CIO (Chief Information Officer) and IT function to CEO (Chief Executive Officer); CEO-IT distance, has a negative relation with the extent of BPI. The finding suggests that the scholars and researchers of ERP must pay attention on variables of the studies for the firms belonging to different geographic origin.
Emad M.Kamhawi (2008) researched on the factor that influences intension of managers toward embracing BPR in third world country. A survey methodology was adopted to collect data, questionnaires were send to 14 companies and sample size of 106 proper filled questionnaires were collect. Statistic Regression analysis was applied to data and it was concluded that "effective project management experiences" and "the ability to build an environment supporting need for change" are important provisions to gain positive views toward BPR. The study also suggests that manager's cognitive style and educational level has an impact on their intentions to adopt BPR. The study supports the firm to identify the level of knowledge, skill, and experience required by the managers to adopt the BPR.
Neda Abdolvand et al. (2008) studied how to minimize the risk of employing Business Process Reengineering by measuring readiness of two Iranian companies; Company A and Company B with the sample size of 169 and 156 respectively. Questionnaires were prepared through critical review of past researches and through mailing service they were posted to respective companies. First Factor Analysis test, and then Correlation Analysis were applied. This research concluded with the six indicators which are the positive readiness indicators of Business Process Reengineering (BPR) âˆ’ that are democratic leadership, cooperative working environment, top management obligation, compassionate management, and the use of IT. Resistance to change is been the only negative indicator for BPR readiness. It was suggested that at each organizational level BPR need to change the culture and behaviour of human. Managers play a vital role in the success of BPR. New team works and project environment based on BPR should be engaged so to enhance the readiness indicators. Companies going through readiness to change should emphasize on ICT (information and communication technology), effective channel of communication.
Siew Kien Sia and Boon Siong Neo (2008) examined working impact of BPR through Panoptic on lens concept; specially the level of empowerment and work monitoring. An intensive case study was conducted at Internal Revenue Service, Singapore, which goes through successful BPR. Sample sizes of 99 were tested and it was concluded the high work monitoring during post-BPR environment. During redesigning phase, close work monitoring has an impact on real empowerment, leaving little scope of empowerment. The future implication of the study is that implementers can affect the discipline of visibility to arrange control creatively in a reengineered environment. Indications of post-BPR workplace can help manager to tackle the change management issues.
Razvi Doomun and Nevin Vunka Jungum (2008) examine the flexible framework through BPR can me module, stimulated and reengineered in the cost effective manner. The methodology adopted for this study is based on literate review and it was resulted that modelling starts with the definition of modelling structure and limitations. This study contributes to implement the successful BPR in call centre.
Sidikat and Mukaila Ayanda (2008) assess the impact of BPR over organizational performance of financial institutions. Data for this study were collected through primary and secondary sources. Questionnaires were distributed and interviews were conducted for that information which was not covered by the questionnaires. Annual reports, journals, etc. were the source for secondary data. Sample size of 60 was considered for the review in the region of Nigeria. It was analyse through percentage and regression analysis that success of BPR is based on direct relationship of basis of activity and its relation to the need and objective of the business. For future the paper implies that it would be worked on different sectors as well as in different region.
Qiang Wang et al. (2008) examine the financial performance of third-party logistics affected by information technology in China. Samples of 105 were considered usable and were collected through mail survey for the study. Path analysis and spline regression was applied on the data and it was concluded IT has a significant impact over financial performance of 3rd party logistics and for better performance, IT strategies and business strategies are to be in aligned. In future it is implicated that the data size should be increase and the model proposed were based on extended expectancy theory, in future it can be tested in other settings too.
E. Loukis et al. (2009) investigated the contribution of ICT (information communication technology) investment in business process change paradigms that is BPR and TQM on the business value generation of firms. Sample of 271 Greek firms randomly selected with the help of data base of ICAP and hypothesis were tested through regression model. The result shows BPR and TQM have a positive equal relationship with the ICT investment and firm value added. The uses of ICT should not be limited to systematize the existing business process but also it must be used as an innovative tool for constructing new business processes like BPR and TQM.
Rashmi Jain et al. (2009) examined the need and expectation from newly hired engineering fresh employee involving BPR. Survey research method was adopted for the study, 12 companies of different sector were selected as a sample size and were received a survey questionnaires containing 33 questions. Standard deviation and average were computed to find out the importance of each 19 BPR topics and the research clearly shows a developed role of BPR. Employer views BPR as more of operational nature rather than of strategic nature. For the future implications, this study can be used as a guide line for the entry-level applicant to prepare themselves for the industry and it also provides a guidance to firm about the level of knowledge, skill and training required for the BPR to be engaged.
Charles Tennant and Yi-Chieh Wu (2005) investigated the key success factor of UK based company in implementing BPR. Open and close ended questionnaire survey was gathered from various business sectors of 63 UK based companies who had fully implemented BPR. Main objective of this research is to examine the driver for BPR, the key barriers and through this key success factor can be identify. The result highlighted that the main drivers for applying BPR are competitive pressure, cost reduction and productivity improvement. The barrier which hinders the successful implementation of BPR is that IT is over focused and Management is under focused. It is suggested that the study should also be perform on other regional based companies.
Mohsen Attaran (2004) studied the relationship between IT and BPR. This paper investigated the real implementation of different companies who effectively applied IT in BPR. 14 firms were reviewed for this study and the investigation shows that IT is a most important tool for successful implementation of BPR as it meets the goal of reengineering in three ways through proper dissemination of information across organisation, providing proper channel of communication, and helping in modelling and optimising reengineering effort but lack of appropriate knowledge, visionary leader ship style, commitment of employees and connection of BPR goals to corporate goals the chance of benefits are limited. But in many cases IT can be a major barrier in radical redesign because it requires information sharing redesign, which is a major resistance of employees.
The data collected for this study is primary and secondary both. Financial performances of the companies were extracted from the financial report published by the firms and it is quantitative in nature. The primary source of the data is for the implication of BPR and IT used to assess its success through conducting unstructured detailed qualitative interview with the key personnel of the companies.
The relationship had been developed between the quantitative and qualitative data, and relevant statistical test was applied to conclude the result.