Week 5 - Basics of BPR (1)

References:

1. Examining the Relationship between Business Process Reengineering and Information Tchnology, by Natasha La Rock(2003)

2. BPR implementation process: an analysis of key success factors and failure factors, by Al-Mashari, Majed., & Zairi, Mohamed. (1999)

3. What went wrong with the business-process reengineering fad. And will it come back? by Thomas H. Davenport and Laurence Prusak with H. James Wilson(2003)

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Week 5 - Basics of BPR (1)

Introduction to BPR

The following 4 key points summarize the characteristics of BPR.

1. Radical change and assumption challenge

BPR is in nature a radical change rather than incremental change. According to Harvard Business Review(1990), Dr. Michael Hammer states that "Reengineering Work: Don’t Automate, Obliterate“. This suggests that BPR requires rethinking of things built up before. A successful BPR should challenge its assumption made before so that their business will not be trapped by business processes and organizational structure built up before.

2. Process and goal orientation
   
   BPR is Process-based rather than structure-based. BPR aims to redesign the business processes that require improvement. Most of the time, BPR project is implemented to achieve certain business goals.

3. Organizational restructuring
   
   Organizational restructuring is often aligned with implementation of BPR project. This is to redistribute the job, job duties and departments to achieve better efficiency.

4. Exploitation of enabling technologies, particularly information technology
      

BPR often requires the exploitation of information technology. This is to launch business-IT alignment to facilitate the business processes. This can improve efficiency and also provide better allocation of resources.

Why launching BPR project?

—  To provide a sense of direction to the company

—  To eliminate the redundant resources

—  To improve efficiency and profitability

—  To gain competitiveness

—  To achieve certain business objectives

BPR – with failure rate higher than 70%?

Although I have stated a lot of pros of implementing BPR project. According to Business Process Redesign: An Overview, Malhotra(1998) said that the failing rate of BPR project is over 70%. Therefore, there is a lot to to done to have a successful BPR project.

Reasons of failure of BPR project:

1. Lack of sustained management commitment and leadership
2. Unrealistic scope and expectations
3. Resistance to change
4. Too radical changes
5. Lack of use of improvement techniques (e.g business process management and total quality control)
6. Poor handling techniques of partially successful business processes (see the video by Dr. Michael Hammer)
   

5 key factors to make BPR projects successful:

1.      Change Management

BPR requires change of management systems and culture. These management systems should be designed to be workable in the company and resist rapid change of business environment. Also, company has to let their staff support the changes to ensure smooth process of BPR project implementation.

Effective communication with internal and external stakeholders is also required. Meetings with staff of top management level and grass-root level are required to adopt opinions form workers of different levels. Surveys have to be done to strive for customers’ satisfaction. For external stakeholders, the company should communicate with supplier, logistics and transportation companies to ensure the correct direction of BPR project.

Empowerment is also launched so that decision making process will not be concentrated on top management level. Grass-root level workers can make more decisions to eliminate the time that requires them to ask for managers’ approval.

Consultations have to be done to staffs to ensure they understand the process of BPR project and knows clearly their job duty. This is also to make sure that they adapt to new changes when launching BPR. Consultations should also be done to customer so that the business process after redesign can meet customer needs. Experiments have to be done during the BPR implementation to test whether the redesign can meet the business objectives set up before.

2.      Management Competence & Support

Top management commitment and leadership are required. A good leader with a good top management team can provide a clear vision of future for the company. A good management team can keep the grass-root level workers work at a correct pace. Resources and other support should be provided for low-level staff.          

The company should also have barriers-overcoming power. It should be able to deal with political, economic and organizational risks. Continuous risk assessment is needed during the BPR process. The company should also has anticipation and Plan for risk handling. This is to ensure that the company can handle the risks due to rapid change of business environments

3.      Organizational Structure
Integration of human resources is done to ensure no waste of company resources. This can improve the efficiency. Formulation of new jobs and responsibilities has also been done carefully as this will affect the organizational structure of the company. New jobs and departments should have clear description of their job duties to make sure there is no duplication of jobs and ensure good collaboration between departments.

      The company should has effective cross-functional teams so that the company can deal with different kinds of tasks. Choosing team members with different abilities can guide the BPR project to success. Company should choose team members with competence, creditability, creativity, motivation and effective leadership to launch the BPR project.

4.    Project Planning & Management

      Company should be able to identify the performance of their existing business processes. This can ensure suitable improvements can be done to the unsatisfactory business processes. Also, the company should also monitor the business processes after redesign, this can let the company to choose the correct improvement tactics to align with.

      Adequate resources are must for launching BPR project. Effective use of consultants is needed to ensure correct direction of BPR project. Adequate time frame has to be set up to make sure that the project can be finished on time.

5.   IT Infrastructure

The company should be equipped with information technology. An effective IT infrastructure follows a top-down approach, beginning with business strategy and IS strategy and passing through designs of data, systems and computer architecture. Linkages between the IT infrastructure components are important for ensuring integrity and consistency among the IT infrastructure components. IT standards also have a major role in reconciling various infrastructure components to provide shared IT services that are of a certain degree of effectiveness to support business process applications. The IT infrastructure shared services and the human IT infrastructure components, in terms of their responsibilities and their expertise, are both vital to the process of the IT infrastructure composition.


Case study - Successful implementation of BPR - Ford Motor Company


Overview of purchase system before BPR

•        500 head count
•        accounts payable has to match 14 items between purchase order, good received note and invoice 

Overview of purchase system after BPR

•          automatic matching of 3 items (part number, unit of measure, supplier code) between purchase order and good received note
•         faster, smoother, simpler process
•         higher efficiency and accuracy
•         75% reduction in head count
•         invoice less processing

=== End of Week 5 Review ===