“Change can be frightening, and the temptation is often to resist it. But change almost always provides opportunities—to learn new things, to rethink tired processes, and to improve the way we work.” – Klaus Schwab, founder and executive chairman of the World Economic Forum
Businesses begin as great ideas that seek to fulfill a demand. When starting a business, one of the first things you must think about is how to establish a system that turns your objective into a profitable output. Once a system is in place and you have customers clamoring for your product, the work lies in making sure daily operations run smoothly and without hitches.
Of course, it doesn’t end there. Say you made a million dollars from your business this year—wouldn’t it be awesome to double your profit and make two million dollars next year?
To ensure that profit margin grows and your business doesn’t fail or remain stagnant, you must take a closer look at your business processes. After all, every business needs constant innovation to evolve and stay relevant. This is where business process reengineering (BPR) comes in.
Process improvement and BPR
The concept of business process reengineering (BPR) is relatively new. It first appeared in the early ’90s and gained popularity through Michael Hammer and James Champy, authors of the best-selling book Reengineering the Corporation. In the book, they talked about how a drastic redesign of business practices can lower production costs and improve the quality of service to the consumer, and that information technology plays an integral role in executing this big change. This is the key concept behind BPR.
Unlike business process management (BPM) and business process improvement (BPI), which require minimal revisions on current operations, BPR demands commitment to implementing radical changes over a period of time, but the benefits are far greater. Through BPR, you can:
- cut costs of production by removing unproductive activities
- shorten cycle times through the introduction of simpler and more streamlined operations
- improve product quality and employee satisfaction by creating systems that allow each person to take ownership of their work.
Big companies turn to BPR when they notice that they’ve been losing money and need to stay afloat, but in reality, even small and midmarket companies can benefit from it. It’s helpful for any and all kinds of companies to identify unnecessary measures in their processes—even more so with smaller companies that can’t afford to be bogged down by needless work.
Necessary steps when improving business processes
Now that we’re familiar with BPR, let’s go into the nitty-gritty of what it takes to make this huge step. Keep in mind that there is no specific formula for this, since each company going through reengineering is faced with its own unique set of situations and challenges. Instead, what we have are basic strategies that can make reengineering efforts less daunting and more manageable:
1. Identify where you are vs. where you want to be
A company on the verge of reengineering will rely heavily on its employees to carry out the desired change. Make your team understand why a revamp is necessary to a company’s growth and survival, and how sticking to the same procedures may lead to negative outcomes. In the same breath, set a tangible goal for them to measure their efforts against. Providing a clear vision of where the company should be will help them know what they’re working toward and give them a much-needed boost during more challenging times of the transition.
2. Form a reengineering team
Since people are the main driving force behind reengineering efforts, set new roles for each member to take on during this process. You’ll need:
- A leader who commands, motivates, and ensures that each step is a step towards the right direction.
- A process owner or manager who is responsible for a certain business process and the reengineering efforts geared towards it.
- A reengineering team or group of people focused on diagnosing the existing process, coming up with ways to improve on it, and implementing the changes they suggest.
- A steering committee or group of senior managers who can make policies to help develop the reengineering strategy as a whole and keep track of its progress.
- A reengineering Czar or an individual who has the ability to develop tools and techniques to unify all reengineering efforts across different business processes.
3. Point out a specific process to improve on
Not all business processes can be reengineered at the same time. Doing so will put you at risk of biting off more than you can chew. Instead, choose a process you can start with by using Hammer and Champy’s three criteria for selection.
First is dysfunction: Which process is most problematic? Second is importance:Which of the processes affect your customer the most? Third is feasibility: Which process is most pliable and can guarantee a successful redesign?
4. Analyse the process
Before taking on the task of improving a process, it’s necessary to have a thorough understanding of it first. Looking at it from the customer’s point of view is a good place to start. Have solid knowledge of your target market and what they need, so you can align your reengineering goals with your customers’ desires and expectations.
5. Reform the process through the use of information technology
Reengineering requires thinking of a specific business process in a whole new light. It’s not enough to make minor improvements here and there. BPR that works should simplify processes, provide hefty returns, and improve the company’s performance remarkably. With the creative use of technology, all these can be achieved in less time. The integration of information technology has long been identified as a key enabler in numerous successful BPR case studies.
Business process management software to get you started
Back in the mid-1990s, BPR came to be known as a more polite way of saying downsizing. The use of information technology in BPR simply meant the automating some business processes, which consequently led to employee redundancy. This created a resistance to change and prompted companies to abandon the concept—when in reality the failure of BPR was due to lack of expertise in selecting the right tools and educating their workforce on how to use them constructively.
Today, technology has become the driving force behind much of the work we do, influencing even the simplest business processes. An honest-to-goodness BPR will tell you what your business needs, but embracing the technology to fix what needs fixing requires an integrative system that can improve operations and automate tasks at the same time. An enterprise resource planning (ERP) provides this. Having a suitable ERP can greatly help reconcile the needs of your business with those of your customers.
Making ERP work for your small or medium-sized business
Along with BPR, ERP is capable of revolutionising the way you run your business. The two work as a team to form a concrete and doable business process framework, allowing you to realise and carry out your business goals. Using the BPR methodology will help you choose an appropriate ERP and design it for your specific purposes. Some say ERP is BPR’s physical form, while others argue that they can exist independently. Organisations now have the option to reengineer business processes before applying ERP or skip reengineering and go directly to implementing ERP. The choice is yours, but each option has its own set of pros and cons.
Without BPR, your company will need to revise its business practices to follow the ERP model and adjust to what the system offers. Adopting this technique gives your company access to capable processes that offer tried-and-tested measures and controls.
Having BPR as your jump-off point, on the other hand, means you already understand your current processes and know how you can alter the formula to deliver more value to your customers. All that’s left to be done is to tweak the ERP system package to fit your organisation’s requirements. You can do this by considering what you want your ERP to achieve, how much customisation is needed and at what cost, what kind of information you have on hand and what to do with it, and how much of the workflow can be reengineered. While the former means quicker implementation, this option will allow your employees to understand the process more thoroughly and own it as well.
Successful BPR = successful ERP implementation (and vice versa)
Seeing BPR through successful and beneficial completion relies heavily on successful ERP implementation. Without dependable software, introducing changes to business processes will require a lot of manpower, which can result in inconsistencies and failure to overhaul the organisation. Conversely, to make ERP software work for you, you’ll need all the information you’ve gathered through successful BPR. From this, you can choose an ERP that can facilitate process improvement and reengineering, and at the same time provide opportunities for collaboration among different business functions under a centralised system.
Make BPR work for you by choosing a powerful and intelligent ERP like SAP Business One. Sign up for a free demo on SAP Business One Mobile App now.