The classic definition of Business Process Reengineering (BPR) is given in Michael Hammers and John Champys pioneering book, "Reengineering the Corporation-A Manifesto for Business Revolution," published by Harper Collins, 1993. They 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." From this definition it is clear that BBR is an ongoing, iterative process itself requiring strong commitment and vision from senior management.
John Martin, Taco Bells CEO, used BBR to transform Taco Bell from a failing 500 million dollar regional Mexican fast food chain returning negative 16% annually to a company that since 1989 has grown at a 22%+ annual clip with 3+ billion dollars of sales. Similar stories abound of companies radically transforming key business processes to stave off disaster or to retain industry leadership.
What then are the BPR techniques and approaches used by companies such as Bell Atlantic, Kodak, IBM Credit Corporation, Hallmark, Blue Cross, Grossmans Hardware, Capital Holding Corporation and others to revolutionize their businesses? Can these techniques be used by companies of all sizes to remain competitive?
BPR involves the total creative rethinking of one or more of a companys key business processes. No business assumption or organizational structure is sacred. All to often these structures evolved during a time when consumer markets were less competitive and access to information was controlled by centralized, unresponsive IS departments using technology obsolete by todays standards. Often this rethinking is triggered by an existing or looming crisis. In the case of Bell Atlantic, their Carrier Access Services division was losing accounts left and right because it took them 4 times as long as MCI, Sprint and others to provide customers connect services. In the case of Hallmark, their print/capacity costs were escalating while market share was declining. Grossmans Hardware, a Massachusetts based chain of over 160 retail stores, realized that to compete with the truly big hardware chains they needed to shift their market focus from the average homeowner to the more specialized needs of the professional contractor or knowledgeable do-it-your-selfer.
To be successful the reengineering effort must be spearheaded by at least one senior executive with clout. The executives authority and influence needs to cut across functional departments. Business processes such as order fulfillment, sales, service and product development often span functional departments such as purchasing, shipping, and engineering. This senior executive must be a key player in developing the business case, i.e., why there is a need for change, and finally stating the ultimate goals and vision for the company. He also plays a key role in determining which processes require reengineering. The level of dysfunction, impact on the company and the feasibility of change influence which processes to tackle first. Finally, senior managements support is crucial since dramatic change often triggers changes in the reward/compensation system, shifts in the corporate mission, significant personnel changes and considerable uncertainty at all levels.
Senior executives, in turn, appoint from their "best and brightest," process owners, responsible for reengineering a specific process. A reengineering team is assembled consisting of those currently working inside the process and outsiders, who are not involved with the process, hence able to bring fresh perspectives.
The process of reengineering itself has no fixed rules. Hammer, in his landmark book, identified common themes found in reengineered processes. Some of these include:
· Several jobs are combined into one. Work normally
performed by a number of specialists in different functional departments can now be
performed by one individual or team. Through shared databases and decision support systems
this generalist has access to all the required information and expert systems to make a
Finally, quoting Hammers book, "IBM Credit had a brainstorm. Executives took a financing request and walked through all five ladders in the approval process, asking personnel in each of the five offices to put aside what they were doing and to process this request as they normally would, only without delay of having it sit in a pile on someones desk. They learned from their experiments that performing the actual work in total took only 90 minutes. The remainder, now more than seven days on the average-was consumed by handing the form off from one department to the next. In the end, IBM Credit replaced its specialists- the credit checkers, pricers, etc. with generalists. Now instead of sending an application from office to office, one person called a deal structurer, processes the entire application from beginning to end."
IBM Credit developed decision support systems for the deal structurers to guide them through the credit issuance process. They gave them rapid computer access to all the key information required to issue credit. They developed a triage approach by allowing routine applications to quickly go through the approval process and having the more complex, troublesome requests addressed by a small pool of specialists.
Again, according to Hammer, there a number of common pitfalls that companys fall
into while reengineering key business processes. These include: