by Jack Vrins
Introduction
Today’s business environment is subject to continuous change as customer and competitive requirements force operational changes which in turn drive the need for correction in business processes. The source of these changes is diverse. Whether the entry into a new market or product line, the introduction of new technology, corporate acquisition or divestiture, or even turn-over in executive management – all have a direct impact on the operational business model, and all necessitate an evaluation of the adequacy of current business processes. Due to the flux of the business environment and the consistent external pressure for change - a relatively new business discipline has emerged; the discipline of Business Process Reengineering (BPR). This article is an introduction to the rationale of Business Reengineering (BPR) and provides a high level overview of some of its main elements.
In its most elementary definition Business Process Engineering is the discipline used to evaluate business operations in line with the strategic objectives of the enterprise. Business process engineering deals with the inter-relationships between the activities, and the people, procedures and tools/technology used to perform them. Likewise, Business Process Re-Engineering (BPR) is the discipline of re-thinking and redesigning of current business processes to achieve improvements in critical measures of performance such as cost, quality, service, and speed.
Business Process Engineering is not just a matter of better, faster, cheaper. Although the latter three are usually an objective or impetus for change, Business Process Reengineering is most often an issue of organizational alignment. The following paragraphs detail some of the main causes by which the business enterprise gets out of alignment and should consider initiating a BPR effort.
A new service offering or product line, a new web presence or online store, acquisition of new technology or even international expansion – all common business components which are usually added on an incremental basis. While being added a slice at a time, these changes can cause a significant misalignment between the strategic direction set by senior management, and the tactical objectives followed by field managers and staff. When strategic and tactical objectives are not aligned – the resulting disjointed operations tends to alienate customers, cause unnecessary stress on operational management and staff, and have a clear affect on the bottom-line.
This misalignment is more common than you might anticipate. It is not necessarily a result of bad management, but rather a common reaction to today’s competitive business environment which drives operational changes in business processes one slice at a time. After a period of time the slices of incremental change are starting to add up to create a misalignment where the strategic focus of the enterprise has been lost due to operational "reactive" changes. Consequently, it is recommended that senior management at regular intervals review and when necessary re-align strategic and tactical objectives, the result of which more than likely will involve BPR.
Business growth, added subsidiaries, increased reliance on web based business, and entry of new markets, are all components that can significantly change the business organizational structure. As so many business cases have demonstrated – business growth can be poisonous to its structure and processes. Too many organizations have failed due to their success and growth. In most general terms, their failure was due to the sharp divergence between business structure and processes, where business processes could not keep pace with the incredible speed of changes at the organizational/enterprise structure level.
Growth, however, is not the only structural factor that can seriously impact business processes. Internal organization and re-organization are common and tend to follow senior management’s strategic and tactical vision. However, once again, all too often business processes are left behind. A misalignment of business structure and business processes will directly impact staff performance and morale and in certain cases customer satisfaction. Periodic Business Process Reengineering by aligning business structure and processes, therefore, is not only good business sense – it might very well be the foundation for long term survival.
Image the space shuttle, where the crew does not communicate to the captain, image a surgeon not communicating with the nurses, image a quarterback not communicating with his receiver. It is clear that effective communication is one of the most recognized corner stones for success – yet business communication channels are often neglected. Similar to other alignment areas within the business enterprise, communication channels between staff and management need to be constantly monitored for efficiency and adequacy. Senior management should always be vigilant to open all channels of communication an creating an business model that incorporates an ongoing dialogue between staff and management about business policies, processes and operations.
The larger or more complex the business enterprise, the easier it is to misalign product and service offerings with customer requirements. As an obvious example, just think about Enron as energy supplier entering the broadband/internet business. Business Process Reengineering – forces a periodic evaluation and assessment of an enterprise’s product/service portfolio with its customer base and its requirements. However, don’t be fooled – many smaller enterprises or small; businesses fall prey to the same misalignment. It might be that you notice your customer base dropping off , or may be you start to realize you are spending more and more on advertising to attract new customers, or perhaps you notice a gradual disappearance of long-term customers. All of these signs might point to a gradual misalignment of your product/service portfolio and the customer requirements; a re-examination of your business practices and processes is over due!
Although there are many reasons for considering BPR – the increasing role of technology and Information Technology is most often a driving factor behind the need for organizational change. While Information Technology has greatly facilitated access to data and information, it has introduced an element of complexity that forces the enterprise to periodically re-examine it’s business model, goals and objectives, current operations, client base, and product line.
The key element here is complexity. While clearly recognizing the need for Information Technology, recent trends have raised the BPR-IT combo to the levels of rocket science. Business owners, managers, and executive are all subject to intense hype about the latest and the greatest technology. In pursuit of this goal, Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Manufacturing Resource Planning (MRP), and other such acronyms are becoming "household terms" around the office. While many of these programs assist the enterprise with satisfying customers' requirements and improving the bottom line, many of them are "over-kill". Always keep the business model in sight and only use a level of technology that support and feeds the model. Having technology for technology-sake is a costly waste of your precious capital expense dollars.
Business organizations often change it organizational/operational structure. Whether through acquisition or divestiture, organizational centralization or de-centralization – significant changes in corporate structure necessitate significant changes in business processes. Organizational changes almost always cause a sizable ripple effect – like casting a stone in the water. These effects ripple through every level of the organization. When disregarded, an unnecessary strain can be placed on day-to-day operations. Regardless of its origin – changes in organizational structure bring about great stress among staff and management. When considering BPR as a result of a change in organizational structure, it is highly recommended to direct special attention to the staff - as the bulk of the changes will be felt "in the trenches". Insufficient Transition Management and management communication will severely impact staff morale and productivity, and will thus negatively impact the successful outcome of the organizational re-structuring.
What is good for Illinois is good for California – what is good for Chili is good for the Netherlands. Of course not! Whether on a geographic level, product level, technology level, or competitive level – each market segment is unique, and each market segment deserves attention to its business processes. Hence automatic copying of business processes from one market to another can have disastrous consequences. When entering a new market – always examine the existing/available business processes and adjust as needed.
Regardless of the impetus behind the need for Business Process Reengineering, the following paragraphs are components which are commonly overlooked during the planning process:
- Top-down versus bottom-up
The traditional approach to BPR has been to enact the reengineering effort from a management or senior management perspective. Although sometimes driven by staff suggestions or complaints, initiatives are usually spearheaded by senior management responding to strategic changes in the market place, technology, competition, or customer demands. Logic, therefore, appears to dictate that any BPR efforts are directed from the senior management perspective. Although the Top-down approach is a definite component of the BPR efforts – it is strongly recommended to engage the effort also from the staff level. While the Top-down approach tends to address the strategic objectives of the enterprise, the Bottom-up approach discloses the actual operating conditions in the field – often demonstrating short comings at the strategic or enterprise business level. It is strongly recommended therefore, that staff interviews at each level and at each business functionality be included in the BPR efforts.
The end result will be a common ground where both staff and management, tactical and strategic objectives meet. The Top-down, Bottom-up approach customarily has some additional beneficial side effects. First of all, the main obstacle to successful change is employee resistance at all levels: front-line, middle managers, and senior managers. The Top-down, Bottom-up approach tends to set the stage for a collaborative effort. Actually, this approach de-facto tends to create and guide the collaborative effort and establishes a clear understanding that changing organizational processes takes time, effort, and other resources, as well as the prioritized commitment of participants to make it succeed. Another beneficial side effect will be increased staff satisfaction and morale. Staff will feel they have been given a voice in shaping the business processes, hence increasing communication and cooperation between management and staff.
- Communication at all levels
Change is never easy, radical change might even result in organized staff opposition and resistance. The most elementary, but crucial tool for a successful BPR initiative is to create a comprehensive communication model. It is highly recommended that this model is in place, before the BPR efforts take place. This model should at a minimum include written procedures covering: Project Communication Roles and Responsibilities, Project Meeting and Communication flows, Key Communication methods, Key Project Information Sharing tools, and Project Information Sharing Guidelines. The Communication Plan should cover all functional and hierarchical levels. In addition, the plan should be promoted by senior management to stress the importance of the collaborative nature of the BPR effort and the necessity for communication at all levels.
- Transition planning
Transition planning is itself a process that is often overlooked, more often resulting in negative consequences. When asked what they would do differently next time, most BPR teams would begin their Transition Planning and Change Management activities earlier in planning and execution of their BPR project, instead of viewing it as an add-on or afterthought. Rather than throwing a switch to the new processes – staff and operational management should be consulted as to develop the best methodology to transition and implement the new business model.
- Exceptions
Despite the above case for periodic Business Process Reengineering, there are certain circumstances where BPR is not advisable There are business processes that are resistant to systematic reengineering and thus should be avoided. These processes are characterized by lack of frequent repetition, ad-hoc process structure or flow, highly creative activities, infrequent but long-duration business cycle times, and processes whose formalization overwhelms their simplicity.
Business Process Reengineering sounds like an academic exercise – an exercise only intended for large corporations. This perception can not be further from the truth. BPR is a suitable and essential business practice for any enterprise – whether small or large, whether start-up or turnaround, whether single product or conglomerate. Business Process Reengineering should be part of strategic and tactical planning and should be performed on a regular basis. Once accepted as a common business practice, the enterprise will at all times find itself in alignment – a business model where organizational structure and process, strategic and tactical objectives, staff and management, technology and operations, product/service portfolio and customer requirements all work in harmony towards the bottom-line!