Business process reengineering (BPR) is an approach to change management in which the related tasks required to obtain a specific business outcome are radically redesigned. An important goal of BPR is to analyze workflows within and between enterprises in order to optimize end-to-end processes and eliminate tasks that do not provide the customer with value.Content Continues Below
BPR was a very important management concept from the mid-1980s to the mid-1990s. The concept is generally credited to MIT professor Michael Hammer and Babson College professor Thomas Davenport. Hammer and Davenport started out as colleagues, working on a research program called PRISM (Partnership for Research in Information Systems Management). Their research efforts, which were sponsored by some of the biggest corporations at the time, involved developing an architectural model that would help large companies take advantage of recent advances in technology, including personal computers (PCs) and the internet.
By 1990, Hammer and Davenport had parted ways professionally and published separate research papers which were later turned into popular books. The business community's reaction to the kind of radical change advocated by Hammer, Davenport and their co-authors, James Champy and James Short, was initially extremely positive. A 1993 article in Fortune Magazine, "Reengineering The Hot New Managing Tool," gives a sense of BPR's swift uptake, citing BPR success stories at marquee companies ranging from Union Carbide to telecommunications giants GTE and AT&T.
Technology vendors quickly jumped on the BPR bandwagon and enterprise resource planning (ERP) vendors such as SAP, JD Edwards, Oracle and PeopleSoft promoted their products as solutions for the redesign and improvement of business processes and helped to turn BPR into a multi-billion dollar industry seemingly overnight. Consultants followed the money too, and suddenly firms that previously promoted their expertise in systems thinking found themselves in high demand as reengineering experts.
As quickly as BPR rose in popularity, however, so did the backlash against it. Radical change proved to be expensive and risky, but the most frequent critique of BPR was that it placed too much emphasis on technology and cost reduction and didn’t consider how dramatic change affects people and company culture. By the end of the 1990s, the word reengineering was being used as a synonym for two practices that were radically impacting corporate life -- downsizing and outsourcing.
Today, there is a renewed interest in business process reengineering as a framework for digital transformation. With hindsight, it has become apparent that the concept’s focus on radical change can complement process improvement approaches that emphasize incremental change, such as continuous improvement (Kaizen) or the Total Quality Movement (TQM).
The need for radical organizational change
The concept of BPR was laid out in a 1990 Harvard Business Review article, "Reengineering Work: Don't automate, obliterate" by the late Michael Hammer, a management author and professor of computer science at the Massachusetts Institute of Technology (MIT). Hammer contended that the usual methods for boosting performance had failed to yield the improvements enterprises needed to operate in the 1990s. Product development cycles were too slow, order fulfillment errors too high and inventory levels were out of sync with demand at many companies, making large enterprises ill-equipped to succeed in a time of rapidly changing technologies, rising customer expectations and global competition. Hammer believed that information technology (IT) failed to improve results in performance or customer service, because it was simply being used to automate existing, deficient processes. He saw the need for companies to stop and rethink how technology could be used to create entirely new processes.
To illustrate the impact of BPR's holistic, rather than piecemeal, approach to process improvement and IT's role in achieving that, Hammer recounted in detail the reengineering initiatives undertaken by Ford Motor Company. When Ford took the radical approach of having employees in the accounts payable department use an online database, it negated the need for staff to spend time matching paper purchase orders with receiving documents and invoices. Completely rethinking the purchase process to take advantage of new technology allowed the company to reduce its accounts payable department's headcount by 75%. At the heart of this reengineering project was a willingness by the company to break away from established assumptions about how operations should work, a concept Hammer referred to as discontinuous thinking.
The principles of business process reengineering
In 1993, Hammer and organizational theorist James Champy published a book to expand upon the ideas Hammer proposed in his research paper. The book, which was entitled “Reengineering the Corporation: A Manifesto for Business Revolution,” quickly became a national bestseller. The authors suggested seven principles for reengineering a work process and achieving a significant level of improvement in quality, time management, speed and profitability.
- Organize around outcomes, not tasks.
- Identify all the processes in an organization and prioritize them in order of redesign urgency.
- Integrate information processing work into the real work that produces the information.
- Treat geographically dispersed resources as though they were centralized.
- Link parallel activities in the workflow instead of just integrating their results.
- Put the decision point where the work is performed and build control into the process.
- Capture information once and at the source.
5 Steps to business process redesign
The business community's enthusiasm for business process reengineering inevitably generated many interpretations for how radical change should be implemented. For example, while Hammer used the word reengineering and provided business leaders with broad guiding principles, Thomas Davenport used the word redesign and provided business leaders with more concrete advice, emphasizing the value of prototypes, simulations and tests.
Davenport’s book with James Short, entitled “The New Industrial Engineering: Information Technology and Business Process Redesign,” suggested that business leaders use a five-step approach to radically change workflow:
- Develop the business vision and process objectives.
- Identify the processes to be redesigned.
- Understand and measure the existing processes.
- Identify IT levers.
- Design and build a prototype of the new process.
BPR team member roles
Both Hammer and Davenport agreed on the importance of having a serious commitment from the top executives of the company and the need to secure buy-in from all departments affected by the process redesign. Many implementations of BPR during the late 1980s and mid-1990s used a team approach that reflected BPR’s top-down management philosophy. Such a team might look like this:
Team Leader - a senior executive who has envisioned and authorized the overall reengineering effort. The team leader is responsible for appointing the process owner.
Process Owner - a senior-level manager in charge of a specific business process. The process owner is responsible for assembling a team to reengineer the process he or she oversees.
Reengineering Team - a group that is composed of insiders whose work involves the process being reengineered and outsiders whose jobs will not be affected by changes in process. The reengineering team is responsible for analyzing the existing process and overseeing its redesign.
Steering Committee – a group of senior managers who have championed the concept of reengineering within the organization and set specific goals for improving performance. The steering committee, which is led by the Team Leader, is responsible for arbitrating disputes and helping process owners make decisions about competing priorities.
Reengineering Czar – an individual who is responsible for the day-to-day coordination of all ongoing reengineering activities. The czar’s responsibility is to be a facilitator and develop the techniques and tools the organization will use to reengineer workflow.
Why BPR in the 1990s was a failure
In a 1996 Fast Company article, "The Fad That Forgot People," Davenport blamed BPR’s negative press on the excessive power given to third-party consultants who were primarily interested in cost savings and didn't have an emotional investment in the company. He cited a pharmaceutical company that went through two major consulting contracts before calling off its BPR initiative and a large telecommunications firm whose treatment of employees as interchangeable components only succeeded at alienating the company’s brightest minds. Michael Hammer and James Champy also agreed that BPR failed to manage the effect that radical change would have on people and culture.
Other factors that heavily influenced success included the difficulty of mapping processes accurately and working across business silos that made change difficult. IT is a major driver of most reengineering business processes and the failure of business leaders to align IT infrastructure with BPR strategies and wisely invest in technology that performed as promised also raised frustration levels.
Future of BPR
During the early part of this century, BPR was sometimes regarded as simply a business buzzword of historical interest. A recent emphasis in business on digital transformation as a way to gain competitive advantage, however, as well as the pervasiveness of the Internet of Things (IoT) and advances in artificial intelligence (AI) have spurred many companies to radically rethink their workflows and make technology-driven changes. In the future, it's expected that business process reengineering will continue to be part and parcel of most business transformation and enterprise resource planning initiatives.