According to Michael Hammer, “Business Process Re-Engineering is a management approach aiming at improvements by means of elevating efficiency, the effectiveness of the processes that exist within and across organizations.”
Business process re-engineering aims at maximizing customer value while minimizing the consumption of resources.
In the book Reengineering the corporation: A manifesto for Business Revolution, Michael Hammer & James Champy suggested the following seven principles:
The first principle states that the tasks performed by different people can be combined into one specialized task. Taking example, the redesign of a manufacturing company with separate divisions performing different functions in a sequence. One determines the customer requirement the other passes in the information, and the third convey this to various plants and warehouses. These sequential based activities led to errors, rework, and delays. When a company re-engineers, it eliminates the assembly line approach.
This principle states that the work should be done by the individual getting the output, i.e., the consumer. Today, this can be observed as the “self-service”. For example, if a customer is facing any problem, he has to fill in the data himself instead of any office doing it for him. It pushes the work to the consumer.
This principle has matured and is visible in the concept, division of labor. This means the data handling must be done by the same person who is collecting the data. This reduces the number of errors by eliminating external contact for a process.
For example, a company has a structure wherein one department collects the information while the other records it. Here, the shared database will have many errors while translating the information from one department to another.
The advances in information technology allow the company to connect separate units that are geographically dispersed by using a shared database. Centralized databases provide with economies of scale in addition to providing flexibility and quick responses to the customers as there are better agreements between the vendors.
According to Hammer, the processes of the activities must be integrated rather than the end results. The parallel functions must be coordinated using communication networks, shared databases. These parallel activities must be linked continuously and coordinated at the process execution. This will eliminate the high costs and delays in the outcome of the process.
There must be decision aiding-technology to cut unnecessary controls and to keep a check in the process. Hammer states the decision should be made by the person who is doing the work. The processes can be improved by empowering the authority of the resource with the responsibility to make the decision and improve the workflow. This is possible with an educated and knowledgeable workforce.
This approach saves cost by avoiding costly re-entries and invalid data entries. It is the principle of capturing information only once at the source where it was created. This eliminates the difficulty of transmitting the information, and it doesn’t have to be recorded at different locations at various times.
BPR began as a private sector technique to help organizations rethink how they do their work in order to improve customer service, cut operational costs, and become world-class competitors.
- Define business vision and objectives.
- Identification and improvement of the process.
- Understand and measure the feasibility of the process.
- Designing the information system & identifying technological capabilities.
- Designing & testing the new prototype.
The business process must be constantly evaluated to meet the demand and expectations of the evolving society. It designs the workflows and analyses the business processes within an organization.
A business can achieve the following with Business Process Re-Engineering:
Customer needs are a priority which gives a clear vision to the organization. The customers when provided with a better service that matches their expectations, thus building loyalty in them. The design and delivery of the business process are redone to match the performance with the expectation of the customer.
As the whole process is remodeled, unnecessary costs are eliminated through the value chain. It reduces the cost and cycle time by eliminating the unproductive activities and organizing the teams. It has radically improved the effectiveness and efficiency of the operations.
Business process re-engineering helps an organization to focus on its core competencies, which gives it a competitive advantage. These core values are difficult for the competitors to copy as it becomes the firm’s signature trait. Gaining a competitive advantage gives firm excellence in the broader business process.
In the re-engineering process, a company strategically puts relevant activities to design, produce, market, and support its product to provide customer value. The firm analyzes value-creating activity and compares it with the competitors to find ways to improve it.
Business process re-engineering gives a firm an explicit vision that aligns its goals and objectives with that of customer’s needs, wants, and interests. This way an organization acquires some brand identity and an ideal structure to target the customer.
According to Hammer’s principles of BPR, it is not all about reorganizing, restructuring, downsizing, or cost-cutting. Sure, these are part of the process, but a BPR project can be identified with various success factors like – strategic alignment, team composition, proven methodology and line ownership.
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