Tuesday, September 02, 2008

Business Process ReEngineering a Value adding tool or a dehumanizing gadget

Business process reengineering

Business process reengineering (BPR) is a management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes that exist within and across organizations.

The key to BPR is for organizations to look at their business processes from a "clean slate" perspective and determine how they can best construct these processes to improve how they conduct business.

Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management.

Contents [hide]
1 History
2 Definition of BPR
3 The role of information technology
4 Methodology
5 Successes
6 Critique
7 Development after 1995
8 See also
9 External links
10 Notes


In 1990, Michael Hammer, a former professor of computer science at the Massachusetts Institute of Technology (MIT), published an article in the Harvard Business Review, in which he claimed that the major challenge for managers is to obliterate non-value adding work, rather than using technology for automating it (Hammer 1990).

This statement implicitly accused managers of having focused on the wrong issues, namely that technology in general, and more specifically information technology, has been used primarily for automating existing work rather than using it as an enabler for making non-value adding work obsolete.

Hammer's claim was simple: Most of the work being done does not add any value for customers, and this work should be removed, not accelerated through automation. Instead, companies should reconsider their processes in order to maximize customer value, while minimizing the consumption of resources required for delivering their product or service.

A similar idea was advocated by Thomas H. Davenport and J. Short (1990), at that time a member of the Ernst & Young research center, in a paper published in the Sloan Management Review the same year as Hammer published his paper.

This idea, to unbiasedly review a company’s business processes, was rapidly adopted by a huge number of firms, which were striving for renewed competitiveness, which they had lost due to the market entrance of foreign competitors, their inability to satisfy customer needs, and their insufficient cost structure.

Even well established management thinkers, such as Peter Drucker and Tom Peters, were accepting and advocating BPR as a new tool for (re-)achieving success in a dynamic world. During the following years, a fast growing number of publications, books as well as journal articles, was dedicated to BPR, and many consulting firms embarked on this trend and developed BPR methods.

However, the critics were fast to claim that BPR was a way to dehumanize the work place, increase managerial control, and to justify downsizing, i.e. major reductions of the work force (Greenbaum 1995, Industry Week 1994), and a rebirth of Taylorism under a different label.

Despite this critique, reengineering was adopted at an accelerating pace and by 1993, as many as 65% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so. This trend was fueled by the fast adoption of BPR by the consulting industry, but also by the study Made in America, conducted by MIT, that showed how companies in many US industries had lagged behind their foreign counterparts in terms of competitiveness, time-to-market and productivity.

Definition of BPR

This article or section contains too many quotations for an encyclopedic entry.
Please improve the article or discuss proposed changes on the talk page.
You can edit the article to add more encyclopedic text or link the article to a page of quotations, possibly one of the same name, on Wikiquote. See Wikipedia's guide to writing better articles for further suggestions. (April 2008)

Different definitions can be found. This section contains the definition provided in notable publications in the field.

Hammer and Champy (1993) define BPR as

"... the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed."

Thomas H. Davenport (1993), another well-known BPR theorist, uses the term process innovation, which he says

”encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions”.

Additionally, Davenport (ibid.) points out the major difference between BPR and other approaches to organization development (OD), especially the continuous improvement or TQM movement, when he states:

"Today firms must seek not fractional, but multiplicative levels of improvement – 10x rather than 10%."

Finally, Johansson et al. (1993) provide a description of BPR relative to other process-oriented views, such as Total Quality Management (TQM) and Just-in-time (JIT), and state:

"Business Process Reengineering, although a close relative, seeks radical rather than merely continuous improvement. It escalates the efforts of JIT and TQM to make process orientation a strategic tool and a core competence of the organization. BPR concentrates on core business processes, and uses the specific techniques within the JIT and TQM ”toolboxes” as enablers, while broadening the process vision."

In order to achieve the major improvements BPR is seeking for, the change of structural organizational variables, and other ways of managing and performing work is often considered as being insufficient.

For being able to reap the achievable benefits fully, the use of information technology (IT) is conceived as a major contributing factor. While IT traditionally has been used for supporting the existing business functions, i.e. it was used for increasing organizational efficiency, it now plays a role as enabler of new organizational forms, and patterns of collaboration within and between organizations.

BPR derives its existence from different disciplines, and four major areas can be identified as being subjected to change in BPR - organization, technology, strategy, and people - where a process view is used as common framework for considering these dimensions. The approach can be graphically depicted by a modification of "Leavitt’s diamond" (Leavitt 1965).

Business strategy is the primary driver of BPR initiatives and the other dimensions are governed by strategy's encompassing role. The organization dimension reflects the structural elements of the company, such as hierarchical levels, the composition of organizational units, and the distribution of work between them. Technology is concerned with the use of computer systems and other forms of communication technology in the business.

In BPR, information technology is generally considered as playing a role as enabler of new forms of organizing and collaborating, rather than supporting existing business functions. The people / human resources dimension deals with aspects such as education, training, motivation and reward systems. The concept of business processes - interrelated activities aiming at creating a value added output to a customer - is the basic underlying idea of BPR. These processes are characterized by a number of attributes: Process ownership, customer focus, value adding, and cross-functionality.

The role of information technology

Information technology (IT) has historically played an important role in the reengineering concept. It is considered by some as a major enabler for new forms of working and collaborating within an organization and across organizational borders.

The early BPR literature, e.g. Hammer & Champy (1993), identified several so called disruptive technologies that were supposed to challenge traditional wisdom about how work should be performed.

Shared databases, making information available at many places
Expert systems, allowing generalists to perform specialist tasks
Telecommunication networks, allowing organizations to be centralized and decentralized at the same time

Decision-support tools, allowing decision-making to be a part of everybody's job
Wireless data communication and portable computers, allowing field personnel to work office independent

Interactive videodisk, to get in immediate contact with potential buyers
Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found

High performance computing, allowing on-the-fly planning and revisioning
In the mid 1990s, especially workflow management systems were considered as a significant contributor to improved process efficiency. Also ERP (Enterprise Resource Planning) vendors, such as SAP, JD Edwards, Oracle, PeopleSoft, positioned their solutions as vehicles for business process redesign and improvement.


Although the labels and steps differ slightly, the early methodologies that were rooted in IT-centric BPR solutions share many of the same basic principles and elements. The following outline is one such model, based on the PRLC (Process Reengineering Life Cycle) approach developed by Guha et.al. (1993).

Simplified schematic outline of using a business process approach, examplified for pharmceutical R&D:
1. Structural organization with functional units
2. Introduction of New Product Development as cross-functional process
3. Re-structuring and streamlining activities, removal of non-value adding tasksEnvision new processes
Secure management support
Identify reengineering opportunities
Identify enabling technologies
Align with corporate strategy
Initiating change
Set up reengineering team
Outline performance goals
Process diagnosis
Describe existing processes
Uncover pathologies in existing processes
Process redesign
Develop alternative process scenarios
Develop new process design
Design HR architecture
Select IT platform
Develop overall blueprint and gather feedback
Develop/install IT solution
Establish process changes
Process monitoring
Performance measurement, including time, quality, cost, IT performance
Link to continuous improvement
-> Loop-back to diagnosis

Benefiting from lessons learned from the early adopters, some BPR practitioners advocated a change in emphasis to a customer-centric, as opposed to an IT-centric, methodology. One such methodology, that also incorporated a Risk and Impact Assessment to account for the impact that BPR can have on jobs and operations, was described by Lon Roberts (1994).

Roberts also stressed the use of change management tools to proactively address resistance to change—a factor linked to the demise of many reengineering initiatives that looked good on the drawing board.

Also within the management consulting industry, a significant number of methodological approaches have been developed. A set of short papers, outlining and comparing some of them can be found here, followed by some guidelines for companies considering to contract a consultancy for a BPR initiative:

Andersen Consulting (now Accenture)
Bain & Co.
Boston Consulting Group
McKinsey & Co.
Guidelines for BPR consulting clients


This article or section is written like an advertisement.

Please help rewrite this article from a neutral point of view.
For blatant advertising that would require a fundamental rewrite to become encyclopedic, use {{db-spam}} to mark for speedy deletion. (April 2008)

BPR, if implemented properly, can give huge returns. BPR has helped giants like Procter and Gamble Corporation and General Motors Corporation succeed after financial drawbacks due to competition.

It helped American Airlines somewhat get back on track from the bad debt that is currently haunting their business practice. BPR is about the proper method of implementation.

General Motors Corporation implemented a 3-year plan to consolidate their multiple desktop systems into one. It is known internally as "Consistent Office Environment" (Booker, 1994). This reengineering process involved replacing the numerous brands of desktop systems, network operating systems and application development tools into a more manageable number of vendors and technology platforms.

According to Donald G. Hedeen, director of desktops and deployment at GM and manager of the upgrade program, he says that the proces
s "lays the foundation for the implementation of a common business communication strategy across General Motors." (Booker, 1994).

Lotus Development Corporation and Hewlett-Packard Development Company, formerly Compaq Computer Corporation, received the single largest non-government sales ever from General Motors Corporation. GM also planned to use Novell NetWare as a security client, Microsoft Office and Hewlett-Packard printers.

According to Donald G. Hedeen, this saved GM 10% to 25% on support costs, 3% to 5% on hardware, 40% to 60% on software licensing fees, and increased efficiency by overcoming incompatibility issues by using just one platform across the entire company.

Michael Dell is the founder and CEO of DELL Incorporated, which has been in business since 1983 and has been the world's fastest growing major PC Company. Michael Dell's idea of a successful business is to keep the smallest inventory possible by having a direct link with the manufacturer.

When a customer places an order, the custom parts requested by the customer are automatically sent to the manufacturer for shipment. This reduces the cost for inventory tracking and massive warehouse maintenance. Dell's website is noted for bringing in nearly "$10 million each day in sales."(Smith, 1999).

Michael Dell mentions: "If you have a good strategy with sound economics, the real challenge is to get people excited about what you're doing. A lot of businesses get off track because they don't communicate an excitement about being part of a winning team that can achieve big goals.

If a company can't motivate its people and it doesn't have a clear compass, it will drift." (Smith, 1999) Dell's stocks have been ranked as the top stock for the decade of the 1990s, when it had a return of 57,282% (Knestout and Ramage, 1999).

Michael Dell is now concentrating more on customer service than selling computers since the PC market price has pretty much equalized. Michael Dell notes: "The new frontier in our industry is service, which is a much greater differentiator when price has been equalized.

In our industry, there's been a pretty huge gap between what customers want in service and what they can get, so they've come to expect mediocre service. We may be the best in this area, but we can still improve quite a bit—in the quality of the product, the availability of parts, service and delivery time." (Smith, 1999) Michael Dell understands the concept of BPR and really recognizes where and when to reengineer his business.

Ford reengineered their business and manufacturing process from just manufacturing cars to manufacturing quality cars, where the number one goal is quality. This helped Ford save millions on recalls and warranty repairs.

Ford has accomplished this goal by incorporating barcodes on all their parts and scanners to scan for any missing parts in a completed car coming off of the assembly line. This helped them guarantee a safe and quality car. They have also implemented Voice-over-IP (VoIP) to reduce the cost of having meetings between the branches.

A multi-billion dollar corporation like Procter and Gamble Corporation, which carries 300 brands and growing really has a strong grasp in re-engineering. Procter and Gamble Corporation's chief technology officer, G. Gil Cloyd, explains how a company which carries multiple brands has to contend with the "classic innovator's dilemma — most innovations fail, but companies that don't innovate die.

His solution, innovating innovation..." (Teresko, 2004). Cloyd has helped a company like Procter and Gamble grow to $5.1 billion by the fiscal year of 2004. According to Cloyd's scorecard, he was able to raise the volume by 17%, the organic volume by 10%, sales are at $51.4 billion up by 19%, with organic sales up 8%, earnings are at $6.5 billion up 25% and share earnings up 25%. Procter and Gamble also has a free cash flow of $7.3 billion or 113% of earnings, dividends up 13% annually with a total shareholder return of 24%. Cloyd states: "The challenge we face is the competitive need for a very rapid pace of innovation.

In the consumer products world, we estimate that the required pace of innovation has double in the last three years. Digital technology is very important in helping us to learn faster." (Teresko, 2004) G. Gil Cloyd also predicts, in the near future, "as much as 90% of P&G's R&D will be done in a virtual world with the remainder being physical validation of results and options." (Teresko, 2004).


The most frequent and harsh critique against BPR concerns the strict focus on efficiency and technology and the disregard of people in the organization that is subjected to a reengineering initiative. Very often, the label BPR was used for major workforce reductions. Thomas Davenport, an early BPR proponent, stated that

"When I wrote about "business process redesign" in 1990, I explicitly said that using it for cost reduction alone was not a sensible goal. And consultants Michael Hammer and James Champy, the two names most closely associated with reengineering, have insisted all along that layoffs shouldn't be the point. But the fact is, once out of the bottle, the reengineering genie quickly turned ugly." (Davenport, 1995)

Michael Hammer similarly admitted that

"I wasn't smart enough about that. I was reflecting my engineering background and was insufficient appreciative of the human dimension. I've learned that's critical." (White, 1996)

Other criticism brought forward against the BPR concept include

lack of management support for the initiative and thus poor acceptance in the organization.

exaggerated expectations regarding the potential benefits from a BPR initiative and consequently failure to achieve the expected results.

underestimation of the resistance to change within the organization.
implementation of generic so-called best-practice processes that do not fit specific company needs.

overtrust in technology solutions.
performing BPR as a one-off project with limited strategy alignment and long-term perspective.

poor project management.

Development after 1995

With the publication of critiques in 1995 and 1996 by some of the early BPR proponents, coupled with abuses and misuses of the concept by others, the reengineering fervor in the U.S. began to wane. Since then, considering business processes as a starting point for business analysis and redesign has become a widely accepted approach and is a standard part of the change methodology portfolio, but is typically performed in a less radical way as originally proposed.

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.

See also
Business Process Management
process improvement
Service-Oriented Modeling Framework (SOMF)
Business Process Modeling Notation (BPMN)

External links
BPR Articles
Hammering Hammer (A Critical Analysis of Michael Hammer's Process Enterprise approach.)
BPR : Decision engineering in a strained industrial and business environment

Davenport, Thomas & Short, J. (1990), The New Industrial Engineering: Information Technology and Business Process Redesign, in: Sloan Management Review, Summer 1990, pp 11-27
Davenport, Thomas (1993), Process Innovation: Reengineering work through information technology, Harvard Business School Press, Boston
Davenport, Thomas (1995), Reengineering - The Fad That Forgot People, Fast Company, November 1995.
Drucker, Peter (1972), Work and Tools, in: W. Kranzberg and W.H. Davenport (eds), Technology and Culture, New York
Greenbaum, Joan (1995), Windows on the workplace, Cornerstone
Guha, S.; Kettinger, W.J. & Teng, T.C., Business Process Reengineering: Building a Comprehensive Methodology, Information Systems Management, Summer 1993
Hammer, Michael (1990), Reengineering Work: Don’t automate, obliterate, Harvard Business Review, Jul/Aug 1990, pp 104-112
Hammer, Michael and Champy, James (1993), Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business Chapter 1 excerpt
Industry Week (1994), De-engineering the corporation, Industry Week article, 4/18/94
Johansson, Henry J. et.al. (1993), Business Process Reengineering: BreakPoint Strategies for Market Dominance, John Wiley & Sons
Leavitt, H.J. (1965), Applied Organizational Change in Industry: Structural, Technological and Humanistic Approaches, in: James March (ed.), Handbook of Organizations, Rand McNally, Chicago
Loyd, Tom (1994), Giants with Feet of Clay, Financial Times, Dec 5 1994, p 8
Malhotra, Yogesh (1998), Business Process Redesign: An Overview, IEEE Engineering Management Review, vol. 26, no. 3, Fall 1998.
Roberts, Lon (1994), Process Reengineering: The Key To Achieving Breakthrough Success, Quality Press, Milwaukee.
Taylor (1911), Frederick, The principles of scientific management, Harper & Row, New York
Thompson, James D. (1969), Organizations in Action, MacGraw-Hill, New York
White, JB (1996), Wall Street Journal. New York, N.Y.: Nov 26, 1996. pg. A.1
Retrieved from "http://en.wikipedia.org/wiki/Business_process_reengineering"
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Reengineering Success Factors

More than half of early reengineering projects failed to be completed or did not achieve bottom-line business results, and for this reason business process reengineering "success factors" have become an important area of study. The success factors below are derived from benchmarking studies with more than 150 companies over a 24 month period.

Success factors are a collection of lessons learned from reengineering projects. Reengineering team members and consultants that have struggled to make their projects successful often say,

"If I had it to do over again, I would…" ,

and from these lessons common themes have emerged. In this module we examine these themes or success factors that lead to successful outcomes for reengineering projects. These include:

Top Management Sponsorship (strong and consistent involvement)

Strategic Alignment (with company strategic direction)

Compelling Business Case for Change (with measurable objectives)

Proven Methodology (that includes a vision process)

Effective Change Management (address cultural transformation)

Line Ownership (pair ownership with accountability)

Reengineering Team Composition (in both breadth and knowledge)

Top Management Sponsorship

Major business process change typically affects processes, technology, job roles and culture in the workplace. Significant changes to even one of these areas requires resources, money, and leadership. Changing them simultaneously is an extraordinary task. If top management does not provide strong and consistent support, most likely one of these three elements (money, resources, or leadership) will not be present over the life of the project, severely crippling your chances for success.

It may be true that consultants and reengineering managers give this topic a lot of attention. Mostly because current models of re-designing business processes use staff functions and consultants as change agents, and often the targeted organizations are not inviting the change. Without top management sponsorship, implementation efforts can be strongly resisted and ineffective.

Top management support for large companies with corporate staff organizations has another dimension. If the top management in the "line" organization and "staff" organization do not partner and become equal stakeholders in the change, AND you only have staff management support, you most likely are ill-prepared for a successful reengineering project (line management in this context are the top managers of the operation ultimately accountable for business performance -- P&L, customer service, etc.). Projects that result in major change in an organization rarely succeed without top management support in the line organization.

Strategic Alignment

You should be able to tie your reengineering project goals back to key business objectives and the overall strategic direction for the organization. This linkage should show the thread from the top down, so each person can easily connect the overall business direction with your reengineering effort. You should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value, and the vision for the organization.

Reengineering projects not in alignment with the company's strategic direction can be counterproductive. It is not unthinkable that an organization may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such reengineering initiatives are wasteful and steal resources from other strategic projects.

Moreover, without strategic alignment your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction.

Business Case for Change

In one page or less you must be able to communicate the business case for change. Less is preferred. If it requires more than this, you either don't understand the problem or you don't understand your customers.

You may find your first attempt at the business case is 100 pages of text, with an associated presentation of another 50 view graphs (overhead slides). After giving the business case 20 times you find out that you can articulate the need for change in 2 minutes and 3 or 4 paragraphs. Stick with the shorter version.

Why is this important? First, your project is not the center of the universe. People have other important things to do, too. Second, you must make this case over and over again throughout the project and during implementation - the simpler and shorter it is, the more understandable and compelling your case will be.

Cover the few critical points. Talk to the current state, and what impact this condition has on customers, associates and business results. State the drivers that are causing this condition to occur. State what your going to do about it (vision and plan), and make specific commitments. Keep focusing on the customer. Connect this plan to specific, measurable objectives related to customers, associates, business results, and strategic direction. Show how much time and money you need and when you expect to get it back. Don't sell past the close. No matter how long you talk, you will get resistance from some, and support from others, so you might as well keep it short.

The business case for change will remain the center piece that defines your project, and should be a living document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact from major change initiatives are difficult to measure and more difficult to obtain; without a rigorous business case both are unlikely.

Proven Methodology

The previous module presented several BPR methodologies, and it is important to note that your methodology does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these projects have on processes and people.

Not only should your team members understand reengineering, they should know how to go about it. In short, you need an approach that will meet the needs of your project and one that the team understands and supports.

Change Management

One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort.

Change is not an event, despite our many attempts to call folks together and have a meeting to make change happen. Change management is the discipline of managing change as a process, with due consideration that we are people, not programmable machines. It is about leadership with open, honest and frequent communication.

It must be OK to show resistance, to surface issues, and to be afraid of change. Organizations do not change. People change, one at a time. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized.

Line Ownership

Many re-design teams are the SWAT type -- senior management responding to crisis in line operations with external consultants or their own staff. It's a rescue operation. Unfortunately the ability of external consultants to implement significant change in an organization is small. The chances are only slightly better for staff groups. Ultimately the solution and results come back to those accountable for day-to-day execution.

That does not mean that consultants or staff are not valuable. What it does mean, though, is that the terms of engagement and accountability must be clear. The ownership must ultimately rest with the line operation, whether it be manufacturing, customer service, logistics, sales, etc.

This is where it gets messy. Often those closest to the problem can't even see it. They seem hardly in a position to implement radical change. They are, in a matter of speaking, the reason you're in this fix to begin with. They lack objectivity, external focus, technical re-design knowledge, and money.

On the other hand, they know today's processes, they know the gaps and issues, they have front-line, in-your-face experience. They are real. The customers work with them, not your consultants and staff personnel.

Hence your dilemma. The line operation probably cannot heal itself when it comes to major business re-design. Staff and consultants have no lasting accountability for the solution, and never succeed at forcing solutions on line organizations.

You need both. You need the line organization to have the awareness that they need help, to contribute their knowledge, and to own the solution and implementation. At the same time you need the expertise and objectivity from outside of the organization.

Building this partnership is the responsibility of the line organization, stakeholders and re-design team. No group is off the hook.

Reengineering Team Composition

The reengineering team composition should be a mixed bag. For example,

some members who don't know the process at all,
some members that know the process inside-out,
include customers if you can,
some members representing impacted organizations,
one or two technology gurus,
each person your best and brightest, passionate and committed, and
some members from outside of your company.
Moreover, keep the team under 10 players. If you are finding this difficult, give back some of the "representative" members. Not every organization should or needs to be represented on the initial core team. If you fail to keep the team a manageable size, you will find the entire process much more difficult to execute effectively.

Seven reengineering success factors have been introduced in this module. Subsequent modules in this series written by industry experts will take several of these success factors into greater depth.

Source: Prosci's 1998-1999 Reengineering Best Practices study (248 companies)


The BPR Online Learning Center offers several sources to help with reengineering and business process design projects:

free tutorials (provided in this series)
bookstore where you can purchase reengineering toolkits, templates, checklists and reference material
research results from studies with more than 400 companies involved in major change projects
article indexes of online material from other sources
yellow pages of vendors, consultants, and other resources for project teams

Welcome to the BPR Tutorial Series

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Purpose of this module:

Gain an understanding of what is meant by "business process".
Understand and contrast continuous process improvement and business process reengineering (BPR).

If you have ever waited in line at the grocery store, you can appreciate the need for process improvement. In this case, the "process" is called the check-out process, and the purpose of the process is to pay for and bag your groceries. The process begins with you stepping into line, and ends with you receiving your receipt and leaving the store. You are the customer (you have the money and you have come to buy food), and the store is the supplier.

The process steps are the activities that you and the store personnel do to complete the transaction. In this simple example, we have described a business process. Imagine other business processes: ordering clothes from mail order companies, requesting new telephone service from your telephone company, developing new products, administering the social security process, building a new home, etc.

Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools. We all do them, and at one time or another play the role of customer or supplier.

You may see business processes pictured as a set of triangles as shown below. The purpose of this model is to define the supplier and process inputs, your process, and the customer and associated outputs. Also shown is the feedback loop from customers.

So why business process improvement?
Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services. And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly.

The figure below illustrates the basic steps. You begin by documenting what you do today, establish some way to measure the process based on what your customers want, do the process, measure the results, and then identify improvement opportunities based on the data you collected. You then implement process improvements, and measure the performance of the new process. This loop repeats over and over again, and is called continuous process improvement. You might also hear it called business process improvement, functional process improvement, etc.

This method for improving business processes is effective to obtain gradual, incremental improvement. However, over the last 10 years several factors have accelerated the need to improve business processes. The most obvious is technology. New technologies (like the Internet) are rapidly bringing new capabilities to businesses, thereby raising the competitive bar and the need to improve business processes dramatically.

Another apparent trend is the opening of world markets and increased free trade. Such changes bring more companies into the marketplace, and competing becomes harder and harder. In today's marketplace, major changes are required to just stay even. It has become a matter of survival for most companies.

As a result, companies have sought out methods for faster business process improvement. Moreover, companies want breakthrough performance changes, not just incremental changes, and they want it now. Because the rate of change has increased for everyone, few businesses can afford a slow change process. One approach for rapid change and dramatic improvement that has emerged is Business Process Reengineering (BPR).

Business Process Reengineering (BPR)
BPR relies on a different school of thought than continuous process improvement. In the extreme, reengineering assumes the current process is irrelevant - it doesn't work, it's broke, forget it. Start over. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. In a manner of speaking, it is like projecting yourself into the future and asking yourself: what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology?

Such an approach is pictured below. It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.

In summary, the extreme contrast between continuous process improvement and business process reengineering lies in where you start (with today's process, or with a clean slate), and with the magnitude and rate of resulting changes.

Over time many derivatives of radical, breakthrough improvement and continuous improvement have emerged that attempt to address the difficulties of implementing major change in corporations. It is difficult to find a single approach exactly matched to a particular company's needs, and the challenge is to know what method to use when, and how to pull it off successfully such that bottom-line business results are achieved. Such are the topics for this module series.

The BPR Online Learning Center offers several sources to help with reengineering and business process design projects:

free tutorials (provided in this series)
bookstore where you can purchase reengineering toolkits, templates, checklists and reference material
research results from studies with more than 400 companies involved in major change projects
article indexes of online material from other sources
yellow pages of vendors, consultants, and other resources for project teams


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Change Management


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