by OverHeadWatch Team | Dec 29, 2016 | Cost Reduction, Library | 0 comments
If you own a company and are at a halt in your business life, then you need to make some changes. Therefore, instead of winging it or going for management reshaping, why not try business process reengineering? When it was introduced back in the nineties, it changed the way people used to think about running a business in general. You can try to apply it yourself as well, as it can work, provided you perform it right. Here are all the details you need to know.
The History of Business Process Reengineering
To be able to understand clearly where to begin and what to do, you must first know a few things about this business strategy. Business process reengineering was introduced in 1990 by Michael Hammer. He wrote a piece for the Harvard Business Review, which you can read in full here. Back then, he was a professor at MIT. Therefore, he based what was to become the business process reengineering theory on how information technology affects business processes.
When it came out, it promised to revolutionize corporate change. Its very authors stated that this strategy will help fundamentally rethink and radically redesign all business processes. They wanted to dramatically improve metrics of performance such as quality, cost, speed, and service.
The technique itself aims to deconstruct a company’s core processes and reassemble them in such a way as to make them a lot more efficient from all points of view. However, the strategy’s originator alongside his colleague, James Champy, always said that it is about more than just processes. They stated that it applied to all the parts of a company and that its purposes were a lot higher than that.
However, despite their allegations, many commentators saw the idea of reengineering as a mere return to Frederick Winslow Taylor and his mechanistic ideas. Going further, some saw it as just an excuse for downsizing when the need strikes.
What Is Business Process Reengineering?
As stated above in the short history, business process reengineering is a strategy through which companies seek to better their processes as well as the way they function in general. When they go about it, they typically start with a tabula rasa or a blank piece of paper. It helps them rethink all their running process and find ways to deliver more quality to their customers.
When they do that, they like to shift their views as well, so as to focus more on their clients’ needs. They also reduce organizational layers and strike off all the unproductive activities. This happens in two main areas. First of all, they turn functional organizations into so-called cross-functional teams. Second of all, they make use of technology so as to improve the way they disseminate the data and make their decisions.
How Does Business Process Reengineering Work?
As a change, this strategy initiative is very dramatic, and it contains five key elements. Here is what managers should do.
- Refocus their company’s values according to what customers actually need.
- Redesign their core processes. For this step, managers should use information technology which enables improvements.
- Reorganize their business into a cross-functional team. Every team they thusly create must have an end-to-end responsibility as far as one process is concerned.
- Rethink basic issues that have to do with people and organization.
- Improve their entire business process across the whole of the company.
What Do Companies Use Business Process Reengineering for?
As noted above, most companies take to this strategy so that they can improve their performance and sustainability. That concept regards processes which mostly impact the customers. Therefore, business process reengineering can do the following.
- Reduce the costs as well as the cycle time. The strategy will always reduce costs and cycle time because it eliminates both activities that are unproductive as well as employees who usually do them.
When you reorganize the business by teams, you will decrease the need for upper management and management layers. It will also accelerate the information flow, seeing as there are fewer people than before. The fact that there are fewer individuals in the chain will also eliminate most of the errors and reworks. These are usually generated by encountering too many handoffs. - Improve overall quality. Since it reduces the fragmentation in the work process, business process reengineering will improve the quality of work. It will also help establish a very clear ownership of all the processes.
Workers become responsible for the results of their work. Apart from that, they can also measure how well they performed seeing as they will get very fast feedback.
In the early 1990s, the duo Hammer and Champy also released a book, called Reengineering the Corporation. Evidently, it included both the article we mentioned in the beginning, as well as some of the same ideas they had put forward, seeing as they had been so successful.
However, by the mid-nineties, the idea started to attract some bad publicity. The leading naysayers argued that this strategy was nothing more than a very elaborate reason for companies to downsize without having to answer morally for their actions.
Downsizing means effectively reducing the number of employees you have on your payroll. However, there are some voices and opinions out there who do make a difference between downsizing and laying off. The first one is more of a permanent situation, while the latter is temporary, which means that the employees could, later on, get their jobs back, should the situation ask for it.
Unfortunately, this strategy went a bit under after the mid-nineties, precisely because of these reasons. Hammer himself said that there were a few factors which lead to the business process reengineering strategy to be replaced by enterprise resource planning. These factors included the want of sustained management, leadership, and commitment, as well as unrealistic scopes and expectations. There was also a serious resistance to all change, which, in the end, prompted the managers in question simply to abandon this concept.
Enterprise resource planning, as opposed to business process reengineering, aims to facilitate more the flow of information. In the end, all decisions made within a company have to come after analyzing a set of data.
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