There isn’t a business whose management wouldn’t say that they strive to build a company that’s adaptable enough to respond to changes in market conditions swiftly, lean enough to undercut any rival’s pricing, technologically savvy enough to keep its products and services fresh and in-demand, and committed enough to deliver top-notch quality and customer service.
But if that’s the case, why are so many organizations bloated, sluggish, rigid, non-competitive, inefficient, inattentive to their customers’ needs, and constantly losing money?
The answer lies in how these companies do their work and why they do it that way — something business consultants in the UAE and worldwide have been helping companies re-examine for decades.
When founders and CEOs ask themselves, “If I were rebuilding my company today, given what I know and the technology available to me, what would it look like?”
They begin to abandon thinking in terms of incremental changes and patchwork fixes that leave already flawed structures intact and look afresh at a better way of doing business. This is what’s otherwise known as business process re-engineering (BPR).
What is BPR?
Michael Hammer, the father of BPR, defines it as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary performance measures such as cost, quality, service, and speed.”
In this definition, four powerful words encapsulate the nature of BPR:
- Fundamental
BRP starts with no givens. It challenges decision-makers to go back to the basics and evaluate what their businesses do and why they do it. This almost always highlights how certain rules and assumptions that were once considered necessary are now redundant, wrong, or all-out obstructive.
For example, asking, “How can we conduct our physical inventory counts more efficiently?” assumes the necessity of performing physical inventory counts in the first place when, in fact, the cost of doing so in terms of time, labor hours, and probable errors (especially in the age of automation) is almost certain to outweigh its supposed benefits.
- Radical
BPR is not business improvement, modification, or optimization; it’s a total reinvention. This means getting to the root of things, abandoning long-established procedures and protocols, and introducing new ways of accomplishing tasks.
- Dramatic
BPR isn’t aimed at achieving small, incremental gains; it’s about effecting monumental leaps in business performance.
- Processes
A process is a collection of activities that operates on one or more inputs to produce an output of value for the customer. An example would be a customer buying a product from a company, which triggers activities like ordering, shipping, invoicing, payment, and, eventually, delivery, which is the intended value this process offers.
However, when asked to describe the processes at work within their organizations, most executives will proffer a series of tasks, roles, people, or structures, and few will be able to give a holistic picture of how the end-to-end processes in their organization work to create value for the customer.
BPR brings about a more process-oriented approach, wherein the entire system of interdependent activities is examined and re-evaluated for effectiveness, efficiency, contribution to the overall organizational goals, and, ultimately, customer value.
5 Common Themes in Re-Engineered Processes
In applying business process re-engineering, Michael Hammer and James Champy, authors of “Reengineering the Corporation,” noted five more common characteristics shared by re-engineered processes, regardless of the companies and sectors they belong to.
Most business consultants would agree that any BPR effort would demonstrate, at least to some extent, one or more of the following:
1. Merging Several Roles Into One
Following the assembly line model, many organizations divide tasks into dozens of stages, assigning each step to a different person or department. As efficient and specialized as this approach may seem, it often results in slow and siloed operations with too many handoffs that engender errors, miscommunication, and delays.
BPR seeks to reduce the number of steps and redundancies by having fewer people, or even one person, take on a broader range of responsibilities.
This approach has been proven to be a great success for many enterprises, most notably IBM Credit, a wholly owned subsidiary of IBM responsible for financing IBM computers and service offerings purchased by its customers.
Initially, the task of processing loan applications involved five steps in which five different departments were responsible for taking in customer requests, performing credit checks, modifying loan covenants in response to risks (if any), keying in information to determine interest rates and sending final approvals to field agents — steps which took nearly seven days to complete, jeopardizing the very purpose of client financing.
However, when IBM Credit re-engineered the process, it melded all these roles into one position called “deal structurer.” This role was responsible for every aspect of the loan process, from start to finish. The result was a turnaround of four hours, a 90% reduction in cycle time, and a hundredfold boost in productivity.
2. Empowering Workers
Hierarchical management under the mass-production paradigm stemmed from the belief that workers either lack the knowledge, skills, and commitment or are simply less invested in the company’s objectives. Today, however, employees are more likely to contribute because they know how their efforts fit the larger organizational goal and have the tools and resources to make decisions guided by those objectives.
For this reason, BPR seeks to break down hierarchical barriers, giving workers more autonomy, authority, and decision-making power to execute tasks with minimal supervision. This happens by compressing roles not only horizontally but also vertically to enable employees to no longer seek permission from their superiors to act. This, in turn, accelerates the pace of work, lowers overhead costs, elicits better customer response time, and promotes employee motivation.
3. Prioritizing the Natural Order of Processes Over Pre-Established Sequences
In most organizations, processes are arranged linearly; task A follows task B, which follows task C, and so on. However, what if task B could be accomplished simultaneously as task A? Assuming there’s a linear sequence of tasks when there’s none is to stifle efficiency. In re-engineered processes, work is arranged in terms of what needs to follow what.
By de-linearizing processes, the time from the initial to the final task is reduced significantly, which minimizes the chance of changes that could render earlier work outdated or later work incompatible, all in all leading to fewer revisions and delays.
4. Instituting Multiple Versions of Processes
Today’s business environment demands innovation and agility, meaning each business should be able to rapidly adapt to changing markets, situations, policies, and opportunities. To achieve this, organizations need to institute several iterations of the same process, each tuned into different conditions but all with the same economies of scale and execution speed.
This usually begins with a triage phase in which all processes with multiple versions are assessed to decide which works best in a given scenario. This is demonstrated in IBM Credit’s three-version loan issuance procedure: the first for straightforward, routine cases, performed entirely by computer; the second for more medium complexity, overseen by a single deal structurer; the third for challenging cases, undertaken by a deal structurer and specialist advisers.
If IBM Credit had only one process, it would have had to incorporate special exceptions and procedures every time a loan application demanded them, as opposed to having three operational ones already primed for action.
5. Performing Work Where It Makes Sense
Another characteristic of re-engineered processes is shifting tasks across traditional organizational boundaries, where work is confined to specialists and specific departments.
Take, for example, the IT support structure in many companies. Typically, when an employee encounters a technical issue, however minimal, they’d need to log a ticket with the IT department, wait for it to be assigned to a specialist, prioritized and then resolved. This stretched-out process could lead to significant downtimes that impact employee productivity and business operations.
Now, imagine a scenario where the company has implemented a tiered support system that includes “super users” or IT ambassadors within each department. These individuals could receive minimal training to handle common technical problems directly in their own department. For example, if someone’s printer isn’t working or they’re having trouble with a standard software installation, the department’s super user can step in immediately to solve the problem without IT needing to intervene at all.
This is a prime example of how re-engineered processes can eliminate bottlenecks, reduce wait times, and improve overall efficiency by reallocating tasks to where they make the most sense.
The relationship between processes and enterprises may look quite different after re-engineering, but the result is a more agile, efficient, and productive organization.
BPR: A Fundamental Shift in Business Thinking
BPR is a powerful tool for any organization, whether it needs a complete process overhaul, foreseeing potential challenges ahead, or is already in peak condition but seeks a higher plane of performance.
If any of these situations sound like your organization, it may be time to embrace a BPR way of thinking or BPR itself.
AUTHOR BIO
Ratheesh C. Ravindranathan is the Managing Partner at Affility, a comprehensive advisory services firm assisting clients in the UAE and worldwide with IT, risk and management consulting solutions. Being a specialist FinTech professional with over 20 years of experience, an MBA in Information Systems Management, Oracle Certified Professional (OCP) and a Certified Information Systems Auditor (CISA), Ratheesh is an expert at guiding through your business's digital transformation journey, Independent ERP Advisory, and Transaction Advisory for various M&As in this region.
