REENGINEERING

The concept of reengineering traces its origins to management theories developed as early as the nineteenth century. The purpose of reengineering is to make all processes the best possible. American efficiency engineer Frederick Winslow Taylor (1856–1915) suggested in the 1880s that managers could discover the best processes for performing work and reengineer them to optimize productivity. Business process reengineering (BPR) echoes the classical belief that there is one best way to conduct tasks. In Taylor's time, technology was not sufficient to allow large companies to design processes in a cross-functional or cross-departmental manner. Reengineering became popular in the early 1990s even though the methodology and approach were not fully understood or appreciated. In the twenty-first century, reengineering is an effective tool for organizations striving to operate as effectively and efficiently as possible. Much attention is given to "best practices" that are the outcome of reengineering strategies.

DEFINITION OF REENGINEERING

Reengineering is most commonly defined as the redesign of business processes—and the associated systems and organizational structures—to achieve a dramatic improvement in business performance. BPR has been described as a radical new approach to business improvement, with the potential to achieve dramatic improvement in business performance. BPR should not be considered downsizing, restructuring, reorganization, and/or new technology. It is the examination and change of five components of the business strategy, process, technology, organization, and culture. Many companies continue to experiment with reengineering, even if they have failed in previous attempts.

MOTIVATION FOR REENGINEERING

The motivations for reengineering are many, including to:

Reduce costs/expenses (the most cited business-driven reengineering project goal)
Improve financial performance
Reduce external competition pressure
Reverse erosion of market share
Respond to emerging market opportunities
Improve customer satisfaction
Enhance quality of products and services

REENGINEERING PROJECT GUIDELINES

A common approach for a BPR project includes the following phases:

Planning and launching—Team selection, objective setting, scope definition, methodology selection, schedule development, consultant selection, sponsor negotiations, change management planning, team preparation

Current state assessing and learning from others—High-level process definition, benchmarking, customer focus groups, employee focus groups, technology assessment

Designing solution—Process design, enabling technology architecture, organizational design, job design

Developing business case justification—Cost and benefit analysis, business case preparation, presentation to key business leaders

Developing solution—Detailed process definition, system requirements writing and system development, training development, implementation planning, operational transition plan, pilots and trials

Implementing solution—Larger-scale pilots and phased implementation, measurement systems, full implementation in all relevant aspects of the company

Instituting continuous improvement strategy—Ongoing improvement and measurement of new processes and systems

FACTORS FOR SUCCESS

Several key factors affect the success of BPR. The objectives of reengineering should be specified clearly, such as improved customer service, reduced costs, and improved quality of work performed. Also required are management support and vision; a strong, committed project leader; clearly established objectives; organized change management; and an effective methodology. Team members must share a clear vision of the objectives and goals, have a common focus and understanding of what is to be done, and support the project. Activities critical for broad acceptance of what is proposed include: (1) constant and relevant communication, (2) employee training for implementation of reengineering outcomes, and (3) transition planning, including reevaluating short-term goals and targets.

FACTORS THAT LEAD TO FAILURE

Factors that contribute to unsuccessful efforts in BPR are failures in:

Change management—insufficient attention to proper design and implementation
Technological competence—inadequate identification of what is needed
Strategic planning—limited view of range of planning prerequisite for strategy
Time frame—inability to predict optimum time required
Management support—range of management involved is too narrow
Human resources—erroneous assessment of quality of in-house personnel
Process delineation—lacks sufficient specificity to be informative
Tactical planning and project management—unskillful in identification of relevant aspects

KEY OBSTACLES TO SUCCESS

Experiences in planning and executing reengineering projects have shown that key obstacles to success are:

Resistance to change—Failure to understand the extent and nature of involvement of employees throughout the process, a critical prerequisite for effective implementation of changes
Corporate culture—Traditional operating style that is top-to-bottom and not participatory often dooms a project, even if enthusiastically supported by the project team
Organizational inertia—Indifference on the part of key executives to the need for comprehensive understanding and participating of all employees

REASONS FOR OUTSOURCING

Among the key reasons companies outsource BPR projects are:

They are able to negotiate and control costs
It frees up in-house resources for other purposes
They can secure resources, especially reengineering management skills not available internally
Reengineering efforts may be accelerated through the use of such experts

DIFFERENCES BETWEEN CONTINUOUS PROCESS IMPROVEMENT AND BPR

Continuous process improvement begins by documenting what one does today, establishing some measures for process flow, measuring performance, and identifying and implementing improvement. BPR begins with defining the scope and objectives of the reengineering project, learning from customers, employees, competitors, and technology, creating a vision for the future and designing new business processes, creating a plan for action during the transition period, and implementing a solution. BPR efforts are far more comprehensive than those involved in continuous process improvement.

INFORMATION TECHNOLOGY IN REENGINEERING

Most analysts view reengineering and information technology (IT) as irrevocably linked. Wal-Mart, for example, would not have been able to reengineer the processes used to procure and distribute mass-market retail goods without IT. In another well-known example, Ford Motor Company was able to decrease its number of employees in its procurement department by 75 percent by using IT in conjunction with BPR.

Despite studies that indicated that over half of all reengineering efforts were initiated because of a perceived IT opportunity, it has been noted that the actual technological solution is far less important than educating employees to use IT as both a strategic initiative and as a tool in the reengineering process. IT can prove useful during the reengineering analysis and design process. Graphics software and computer-aided software engineering tools can produce process maps; spreadsheets and costing software allow for activity-based cost analysis; databases can track customer satisfaction and complaints; and "blind" electronic-mail bulletin boards can be used to capture employee suggestions.

During the implementation stage, it is recommended that companies follow these basic rules: recognize that IT is only part of the solution—it allows managers to collect, store, analyze, and communicate and distribute information better; bring in internal or external IT experts because their knowledge, skills, acumen, and experience are invaluable; and, after implementation, continually monitor IT performance and keep up with new IT developments.