Considering Business Process Reengineering?
Business Process Reengineering, according to Hammer (Hammer 1995), is “the fundamental rethinking and radical redesign of business processes to bring about dramatic improvement in performance”. The theory behind Business Process Reengineering is that there is an optimal way to complete a process or task.
Business Process Reengineering is often used by companies as an emergency measure to cut costs and return to profitability. In the short term, a company may benefit from reduced costs. However, the same company may find itself unable to deploy new products, maintain competitiveness, or provide a satisfactory level of customer service. This may place the company in a far worse financial position than it was prior to undertaking the reengineering process.
In the current financial climate, companies are once again looking at cost saving measures, and evaluating the benefits of Business Process Reengineering. Historically, Business Process Reengineering has been less than successful. Why, then, are companies still experimenting with reengineering? Perhaps, companies are motivated as “when a star is in its death stage, about to collapse on itself, it burns at its brightest, with tremendous energy and fury. Reengineering is the supernova of our old approaches to organizational change, the last gasp of efforts that have consistently failed. (1)”
In instances where reengineering is necessitated by an impending financial crisis, it is easy to see why such efforts are likely doomed to failure. Process reengineering is a major undertaking, and impacts all aspects of an organization. Without proper strategic planning, management and employees will lack clear objectives, resulting in haphazard decisions and internal conflicts. Employees who fear job loss due to the reengineering processes may impede progress. The end result will most likely be a failure to positively impact company productivity, revenue, or customer service.
Companies would do well to closely study Walmart’s reengineering success story. Walmart strategically utilized information technology to re-engineer the processes used to procure and distribute goods. The success of their radical innovation can be partly attributed to a cultural change – instituting a different way of thinking – at all levels of their organization.
Process improvements, a much less radical method of improving company performance, could also be considered. The six sigma method can yield significant improvements in quality, performance, and revenue.
Recent contributions into the areas of business management, productivity, quality and continuous improvement theory will no doubt be of tremendous value to companies looking to cut costs, maintain competitiveness and high levels of customer satisfaction. Hopefully management will have the support and resources necessary to strategically plan process innovations and improvements, rather than be forced to immediately institute radical, and likely counterproductive, measures. There are many fantastic resources available on the topic of Business Process Reengineering and Process Improvement. I have listed a few below that we found particularly useful. If you have any suggestions for other resources or materials on this topic, give us a shout!
(1) Brown, Tom, De-engineering the Corporation, Industry Week, April 18, 1994; Pg. 18.