Business Process Re

BUSINESS PROCESS RE-ENGINEERING
Carlo Dino M. Santos

Block 9 Lot 26, Everlasting Street, Merry Homes II, Camarin, Caloocan City
(0998) 531 6141
superman.bharubal@gmail.com
INTRODUCTION
Business Process Reengineering involves changes in structures and in processes within
the business environment. The entire technological, human, and organizational
dimensions may be changed in BPR. Information Technology plays a major role in
Business Process Reengineering as it provides office automation, it allows the business to
be conducted in different locations, provides flexibility in manufacturing, permits quicker
delivery to customers and supports rapid and paperless transactions. In general it allows
an efficient and effective change in the manner in which work is performed.
What is the Business Process Re-engineering
The globalization of the economy and the liberalization of the trade markets have
formulated new conditions in the market place which are characterized by instability and
intensive competition in the business environment. Competition is continuously
increasing with respect to price, quality and selection, service and promptness of delivery.
Removal of barriers, international cooperation, technological innovations cause
competition to intensify. All these changes impose the need for organizational
transformation, where the entire processes, organization climate and organization
structure are changed. Hammer and Champy provide the following definitions:
Reengineering is the fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements in critical contemporary measures of performance such
as cost, quality, service and speed.
Process is a structured, measured set of activities designed to produce a specified output
for a particular customer or market. It implies a strong emphasis on how work is done
within an organization. " (Davenport 1993).
Each process is composed of related steps or activities that use people, information, and
other resources to create value for customers as it is illustrated in the following example.
Business processes are characterized by three elements: the inputs, (data such customer
inquiries or materials), the processing of the data or materials (which usually go through
several stages and may necessary stops that turns out to be time and money consuming),
and the outcome (the delivery of the expected result). The problematic part of the process
is processing. Business process reengineering mainly intervenes in the processing part,
which is reengineered in order to become less time and money consuming.
CEO SALES FINANCE PRODUCTION

Customer Inquiry Delivery of Results
1. Trigger 3. results
PROCESSES ARE CHARACTERIZED BY 3 ELEMENTS
2. Processing
Figure 1. The componentsof a business process
The term "Business Process Reengineering" has, over the past couple of year, gained
Increasing circulation. As a result, many find themselves faced with the prospect of
having to learn, plan, implement and successfully conduct a real Business Process
Reengineering endeavor, whatever that might entail within their own business
organization. Hammer and Champy (1993) define business process reengineering (BPR)
as: An example of BPR application.
A typical problem with processes in vertical organizational structure is that customers
must speak with various staff members for different inquiries. For example, if a bank
Customer enters into the bank determined to apply for a loan, apply for an ATM card and
open a savings account, most probably must visit three different desks in order to be
serviced, as illustrated in
figure 2.
When BPR is applied to an organization the customer communicates with only one
person, called "case manager", for all three inquiries,
shown in figure 3.
manager completes an application for a loan in electronic form, which in turn is
submitted through the network to the next team member, the credit control director, who
examines the credit status of the customer. If the credit status is not satisfactory the
rejection of the loan is approved by the credit manager and a rejection form is filled and it
is returned to the case manager. The case manager explains to the customer the reason
that his application was rejected. On the other hand, if the credit status of the customer is
satisfactory, the application is submitted electronically to the next team member, who
calculates interest rates and payment tables. The application is then submitted to the
credit manager for approval using a digital signature. The approval of the application
along with the payment table is delivered to the customer by the case manager. the
fundamental rethinking and radical redesign of the business processes to achieve
dramatic improvements in critical, contemporary measures of performance, such as cost,
quality, service and speed".
LOANS ACCOUNTS ATM CARDS
Figure 2. Three inquiries three waiting queues
LOANS APPLICATION
PROCESS
NEW ACCOUNTS PROCESS
ATM PROCESS
R
FUNCTIONAL TEAMS
Figure 3. One Stop Service for all three inquiries The implementation of "One Stop
Shopping" as a major customer service innovation, requires the close coordination with a
team of staff assigned to a process powered by IT for exchanging information and
documents in order to service the customer's request. For instance a
customer applying for a loan "triggers" a team of staff assigned to service a loan
application.
The BUSINESS PROCESS RE-ENGINEERING - BPR
INNOREGIO project S. Zygiaris, Msc, BPR Engineer
BPR Hellas SA4
Most importantly, while the loan application team was processing the loan application,
the case manager "triggered" the account team to open a savings account and the ATM
team to supply the customer with an ATM card. The customer leaves the bank having a
response for his loan application, a new savings account and an ATM card, And all these
without having to move around the desks for signatures and documents. All the
customer's requests were satisfied at the same time in parallel motion. The difference
between the vertical organization (figure 2) and the cross functional organization (figure
3) lies in the way businesses are organized internally. The vertical organization is
organized based on functional units (e.g. the sales, the accounting department). In crossfunctional organizational units the main organizational unit is the process. Since "doing
business" is mainly running processes, it would be very logical to organize companies
based on processes. For instance, the ordering process crosses different departments. The
sales department for order taking, the accounting department for credit control and
invoicing, the logistics department for inventory control and distribution, and the
production department for producing the order.
An every day business - customer conversation...
Throughout the conversation there is an emphasis on department functions. Each
employee is satisfied with the fact that "I have done my job but I do not know what the
others did". (see bold characters in the conversation". Nobody would like to take total
responsibility. While this situation seems awkward, it is the most usual case in most
organizations. Most of the times it is up to the good will of some employees, like the
logistics manager, for the customer to receive some type of service. Using BPR the
company will be organized based on processes. The company will organize an order
processing team, braking the departmental barriers. The team would be composed of a
case manager to respond to the customers requests, and employees from Assuming a
customer calls the company to ask why his order has not yet arrived to its premises.
"Let me transfer you to the accounting department to check if the order was invoiced"
responds the telephone operator.
The customer must explain his problem to the accounting department again. "We had
invoiced your order, but I don't now if already shipped to you. You need to call the
logistics department, unfortunately I could not transfer you since they are located in
another city". The customer calls the logistics department and explains the situation
again. The logistics manager responds "that although the order should have been
distributed to you, I haven't yet received the order from them in the production
department".
"Please hold on a minute, I will try to talk to them to find out what happened". The
inventory manager tried to help out the situation, since he felt that the customer was
getting aggravated from the other side of the phone. After a while he said "Sir I am sorry,
it is the finish department's fault. Somebody had forgotten your order in the finish
storage. I will have it send out to you as soon as possible." After this odyssey the
customer was seriously considering whether he would place another order.BUSINESS
PROCESS RE-ENGINEERING - BPR
BPR Hellas SA5
the accounting department, the logistics department and the production department. The
process must be designed to trace an order step by a step electronically and provide an
answer back to the customer quickly. THE CUSTOMER MUST SPEAK WITH ONE
PERSON, the case manager. All internal controls are the responsibility of the order
processing team. BPR focuses on team building operations around processes and building
a company mentality to personnel. The objective of the technique is to build customeroriented effective organizations. The customer does not care if the accounting department
works adequately, he wants to see his order processed as it should be. If the management
of the company overheard this conversation, they would be desperately seek for a
solution to the problem. Most frequently they would change around the organizational
chart and would replace people in the company hierarchy or would modify the roles and
responsibilities of some employees. Businesses continuously are overcoming some major
or minor changes in the way they operate without having the desired outcome. Their
effort is crashed on the departmental barriers and the employee mentality to protect their
personal or functional interests. How can BPR be applied to an organization?
When British Telecom had announced their Business Plan, all competitors were eager to
find out who would be the new CEO of the organization. To the surprise of all the new
CEO it was the customer. The company had decided to transform all the operations of the
organization the way customers wanted them to operate. The most important action in
applying BPR is the company's strategic goal to provide customer oriented services. BPR
is a technique used to implement this type of organizational structure. Having the
management commitment for change, another very important factor for implementing
BPR, is the enabling role of Information Technology. The way that businesses are
organized around departments is very logical since, for instance, there were physical
barriers in the communication of the accounting department with production department.
(The warehouse could be in another location in the another part of the city). So it wasn't
possible for a cross-functional team to communicate efficiently. In the 90s when
telecommunication technologies were becoming abundant and low costing BPR was
becoming a world-wide applicable managing technique for business upgrade, enabled by
the technology. Employees can easily operate as a team using intranets/extarnets,
workflow and groupware applications, eliminating distances. We can work together even
though we are located in different places. Empowering people. Empowerement means
giving people the ability to do their work: the right information, the right tools, the right
training, the right environment, and the authority they need. Information systems help
empower people by providing information, tools and training. Providing Information.
Providing information to help people perform their work is a primary purpose of most
information systems although they provide information in many different ways. Some
systems provide information that is essential in informing a business process, such as the
prices used to create a customers bill at a restaurant. Other systems provide information
that is potentially useful but can be used in a discretionary manner, such as medical
history information that different doctors might use in different
Ways.
BUSINESS PROCESS RE-ENGINEERING - BPR
BPR Hellas SA6
Providing Tools. In addition to providing the right information, empowering people
means giving them the right tools. Consider the way planning analysts produce
consolidated corporate plans based on plans of individual divisions and departmants. If
the plans are submitted on paper, it is a major task to add up the numbers to determine the
projected corporate bottom line. When the plan is changed during a negotiation process,
the planning analyst has to recalculate the projected results. With the right tools, the
numerical parts of the plans arrive in a consistent, electronic format permitting
consolidation by a computer. This leaves the analyst free to do the more productive work
of analysing the quality of the plan. Providing Training. Since information systems are
designed to provide the information needed to support desired work practices, they are
often used for training and learning. As shown by an expert system and a decision
simulator, they sometimes provide new and unique training methods. IBM developed an
expert system for fixing computer disk drives. The expert system was an organized
collection of the best knowledge about fixing these disk drives, and it fostered rapid and
efficient training. Before the system was developed, technicians typically took between 1
and 16 months to become certified, but with the expert system, training time dropped 3 to
5 months. Eliminating Unproductive Uses of Time. Information systems can reduce the
amount of time people waste doing unproductive work. A study of how professionals and
managers at 15 leading U.S. corporations spent their time concluded that many
professionals spent less than half of their work time on activities directly related to their
functions. Although the primary function of salespeople is selling, the time breakdown
for salespeople averaged 36 percent spent on prospecting and selling, 39 percent spent on
prospectin an selling, 3 percent on servicing accouts, 19 percent on doing aministrtative
chores, and 6 percent on training. Better use of information systems could save much of
their unproductive time performing chores such as collecting product or pricing
information, determining order status for a customer, resolving invoice discrepancies, and
reporting of time and expenses. Eliminating Uneccesary Paper. One common way to
improve data processing is to eliminate unnecessary paper. Although paper is familiar and
convenient for many purposes, it has major disadvantages. It is bulky, difficult to move
from place to place, and extremely difficult to use for analysing large amounts of data.
Storing data in computerized form takes much less physical space and destroys fewer
forests, but that is only the beginning. It makes data easier to analyze, easier to copy or
transmit, and easier to display in a flexible format. Compare paper telephone bills with
computerized bills for a large company. The paper bills identify calls but are virtually
impossible to analyze for patterns of inefficient or excessive usage. Eliminating
Unnecessary Variations in the Procedures and Systems. In many companies, separate
departments use different systems and procedures to perform essentially similar repetitive
processes, such as paying employees, purchasing supplies, and keeping track of
invetories. Although these procedures may seem adequate from a totally local viewpoint,
doing the same work in different ways is often inefficient in a global sense. Whenever the
systems must change with new technology, new regulations, or new business issues, each
separate system must be analysed separately, often by someone starting from scratch.
Minimizing the Burden of Record Keeping, Data Handling, and General Office Work.
Since processing data is included in most jobs, improving the way people process data is
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an obvious place to look for information system applications. Focus on basic data
processing tasks: Reducing the burden of record keeping means being more efficient and
effective with the six components of data processing. Those components are capturing,
transmitting, storing, retrieving, manipulating, and displaying data. Capture data
automatically when generated: Capturing data automatically at the time of data
generation is especially important in minimizing the burden of record keeping. In depth,
BPR assumes that the current processes in a business are inapplicable and suggest
completely new processes to be implemented by starting over. Such a perspective enables
the designers of business processes to disassociate themselves from today's process, and
focus on a new process. The BPR characteristics - outcomes include the following:
; Several jobs are combined into one.
; Decision-making becomes part of the job of employees (employee empowerment).
; Steps in the processes are performed in natural order, and several jobs get done
simultaneously.
; Processes have multiple versions. This enables the economies of scale that result from
mass production, yet allows customization of products and services.
; Work is performed where it makes the most sense.
; Controls and checks and other non-value-added work are minimized.
; Reconciliation is minimized by cutting back the number of external contact points and
by creating business alliances.
; A single point of contact is provided to customers.
; A hybrid centralized/decentralized operation is used.
BPR is achieving dramatic performance improvements through radical change in
organizational processes, rearchitecting of business and management processes. It
involves the redrawing of organizational boundaries, the reconsideration of jobs, tasks,
and skills. This occurs with the creation and the use of models. Whether those be physical
models, mathematical, computer or structural models, engineers build and analyze
models to predict the performance of designs or to understand the behavior of devices.
More specifically, BPR is defined as the use of scientific methods, models and tools to
bring about the radical restructuring of an enterprise that result in significant
improvements in performance.
Redesign, retooling and reorchestrating form the key components of BPR that are
essential for an organization to focus on the outcome that it needs to achieve. The
outcome pursued should be an ambitious outcome (as for instance, are a 24 hour delivery
to any customer anywhere in the world, approval of mortgage loans within 60 minutes of
application, or ability to have on-line access to a patient's medical records no matter
where they are in any major city in the world). These types of visionary goals require
rethinking the way most organizations do business, careful redesign. They will
additionally need very sophisticated supporting information systems and a transformation
from a traditional organizational structure to a network type organization. In resuming,
the whole process of BPR in order to achieve the above mentioned expected results is
based on key steps-principles which include redesign, retool, and reorchestrate. Each
step-principle embodies the actions and resources as presented in the table below.
BPR Hellas SA8
REDESIGN
Simplify
Standardize
Empowering
Employeeship
Groupware
Measurements
RETOOL
Networks
intranets
extranets
WorkFlow
REORCHESTRATE
synchronize
processes
IT
human resources
The 3 Rs of re-engineering
Creating the new enterprise involves considerable change in virtually everything to do
with people's working lives. Rather than fixing the old, we set out to create the new.
There is a fundamental transformation occurring in business - in terms of its structure,
processes, people, and technology. The table following presents the changes in that occur
in the business under BPR.
Changes in the World of Work
From Conventional To BPR
Functional departments Process Teams
Simple tasks (division of labor) Empowered employees
Controlled people (by management) Multidimensional work
Training of employees Education of employees
Compensation for skill and time spent Compensation for results
Pay raises based on promotions and seniority
Low pay plus high performance-related bonuses
Advancement based on ability Advancement based on performance
Protective organizational culture Productive organizational structure
Managers supervise and control Managers coach and advise
Hierarchical organizational structure Horizontal (flat) structure

Executives as scorekeepers Executives as leaders
Separation of duties and functions Cross-functional teams
Linear and sequential processes Parallel process
Mass production Mass customization
SOURCE: Based on Hammer and Champy, 1993.
In resuming, the whole process of BPR in order to achieve the above mentioned expected
result is based on key step-principles which include redesigning, retooling and
reorchestrating. Each principle embodies the actions and resources as presented in the
table below.
1.2 Objectives of BPR
When applying the BPR management technique to a business organization the
implementation team effort is focused on the following objectives: Customer focus.
Customer service oriented processes aiming to eliminate customer complaints.
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Speed. Dramatic compression of the time it takes to complete a task for key business
processes. For instance, if process before BPR had an average cycle time 5 hours, after
BPR the average cycle time should be cut down to half an hour.
Compression. Cutting major tasks of cost and capital, throughout the value chain.
Organizing the processes a company develops transparency throughout the operational
level reducing cost. For instance the decision to buy a large amount of raw material at
50% discount is connected to eleven cross checkings in the organizational structure from
cash flow, inventory, to production planning and marketing. These checkings become
easily implemented within the cross-functional teams, optimizing the decision making
and cutting operational cost.
Flexibility. Adaptive processes and structures to changing conditions and competition.
Being closer to the customer the company can develop the awareness mechanisms to
rapidly spot the weak points and adapt to new requirements of the market.
Quality. Obsession with the superior service and value to the customers. The level of
quality is always the same controlled and monitored by the processes, and does not
depend mainly on the person, who servicing the customer.
Innovation. Leadership through imaginative change providing to organization
competitive advantage.
Productivity. Improve drastically effectiveness and efficiency. In order to achieve the
above mentioned adjectives the following BPR project methodology is proposed.
1.3 Methodology of a BPR project implementation / alternative techniques

BPR is world-wide applicable technique of business restructuring focusing on business
processes, providing vast improvements in a short period of time. The technique
implements organizational change based on the close coordination of a methodology for
rapid change, employee empowerment and training and support by information
technology. In order to implement BPR to an enterprise the followings key actions need
to take place:
Selection of the strategic (added-value) processes for redesign.
Simplify new processes - minimize steps - optimize efficiency -.(modeling).
Organize a team of employees for each process and assign a role for process
coordinator.
Organize the workflow - document transfer and control.
Assign responsibilities and roles for each process.
Automate processes using IT(Intranets, Extranets, Workflow Management)
Train the process team to efficiently manage and operate the new process
Introduce the redesigned process into the business organizational structure Most
reengineering methodologies share common elements, but simple differences can have a
significant impact on the success or failure of a project. After a project area has been
identified, the methodologies for reengineering business processes may be used. In order
for a company, aiming to apply BPR, to select the best methodology, sequence processes
and implement the appropriate BPR plan, it has to create effective and
BPR Hellas SA10
actionable visions. Referring to 'vision' we mean the complete articulation of the future
state (the values, the processes, structure, technology, job roles and environment) For
creating an effective vision, five basic steps are mentioned below.
- the right combination of individuals come together to form an optimistic and energized
team
- clear objectives exist and the scope for the project is well defined and understood
- the team can stand in the future and look back, rather than stand in the present and look
forward
- the vision is rooted in a set of guiding principles.
All methodologies could be divided in general 'model' stages:
The Envision stage: the company reviews the existing strategy and business processes
and based on that review business processes for improvement are targeted and IT
opportunities are identified.
The Initiation stage: project teams are assigned, performance goals , project planning and
employee notification are set.
The Diagnosis stage: documentation of processes and sub-processes takes place in terms
of process attributes (activities, resources, communication, roles, IT and costs).
The Redesign stage: new process design is developed by devising process design
alternatives and through brainstorming and creativity techniques.
The Reconstruction stage: management technique changes occur to ensure smooth
migration to the new process responsibilities and human resource roles.
The Evaluation stage: the new process is monitored to determine if goals are met and
examine total quality programs.
Alternative techniques to BPR
Total Quality management, often referred to as total quality management (TQM) or
continuous improvement process (CIP), refers to programs and initiatives that emphasize
incremental improvement in work processes and outputs over an open-ended period of
time. In contrast, Reengineering refers to discrete initiatives that are intended to achieve
radically redesigned and improved work processes in a bounded time frame. The major
differences between the two Comparing TQM and Reengineering
TQM BPR
Case for action Assumed to be necessary Compelling
Goals Small-scale improvements in
many places with cumulative effects
Outrageous Scope and focus Attention to tasks, steps, and
processes across the board
Select but broad business processes
Degree of change Incremental and continual Order of magnitude and periodic
Senior management involvement
Important up front Intensive throughout
Role of information technology
Incidental Cornerstone
SOURCE: Gulden and Ewers, 1997.
In opposition with the other existing approaches on business process improvement, which
suggest gradual and incremental improvements, as for instance the Total Quality
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Management approach, BPR does propose dramatic changes. The major differences
between process innovation through BPR and incremental improvement through TQM
are mentioned on the table that follows. Process Innovation vs Incremental Improvement
Process Innovation Incremental Improvement Change Abrupt, volatile Gradual, constant
Effects Immediate, dramatic Long-term, more subtle Involvement A few champions From
few to everybody Investment High initially, less later Low initially, high to sustain.
Orientation Technology People Focus Profits Processes

SOURCE: Merlyn V., Ernst and Young, private communication.
The differences between the two management techniques extend to the organizational
structure, the implementation time and results achieved and to the basis upon which the
whole procedure towards change and improvement is elaborated, as shown in the table
below.
1.4 Expected Results / Benefits
The expected results for a company that implements business process reengineering are
the following:
Reallocation of jobs and processes so as to be combined into fewer, to be executed in
natural order, simultaneously and by the least possible number of employees.
Reorganization of the company's structure (downsizing) and employee
empowerment.
Jobs and processes become flexible so as to be executed according to the needs of each
case, company's and customer's need's (hybrid centralized/decentralized operations)
The above changes will bring reductions of costs in the company, better quality (as far as
price, promptness of delivery and offerings of related services) in the products and
services provided to the customers. BPR shows that there is 'more than one way to skin a
cat' and enables a fresh view without ingrained prejudice affecting judgement. It can
produce huge initial savings where a business is struggling and often has the affect of
turning around an unprofitable operation. Also, it leaves the business with a fully
documented model of the operation, which is invaluable if embarking on a quality
programme. The expected outcome from a successful BPR process should the desired one
for the favor of the business concerned. The dramatic changes that are caused involve
people's jobs and working relationships as it is very often that jobs are eliminated and the
entire process is not as beneficial for all.
1.5 Characteristics of firms and service providers Several surveys and benchmarking
findings reveal the essential role of consultants in the BPR process. Consultants' help and
guidance may be extremely beneficial in all stages of the BPR procedure. This is due to
the fact that consultants have the following attributes:
They are objective and immune to internal politics.BUSINESS PROCESS REENGINEERING BPR INNOREGIO project S. Zygiaris, Msc, BPR Engineer
BPR Hellas SA 12
They have followed the process before.
They bring information and best practices from other companies.
They are good communication paths between front line workers and customers, and the
leaders of the company or organization.
Consultants, besides their beneficial qualities, can also unintentionally create barriers
by: having the solution being viewed as "theirs" and not "yours", and taking too strong a
lead role and disengaging the organization. The consultants may play different roles in
the BPR procedure, and this is a matter for the company to decide always taking into
account the organizations needs and the specific BPR approach chosen. The role of
consultant may be:
a strong facilitator and experienced practitioner who brings a methodology with them.
a team member; can be an objective and unbiased contributor to the solution;
a subject-matter expert with knowledge of performance levels and best practices of
similar organizations and processes; able to perform specific tasks for the team.
2 APPLICATION
2.1 Where the technique has being applied
Many public and private sector organizations and SMEs Word-wide had undergone major
reengineering efforts. The technique was applied first to multinational cooperations, such
as IBM, AT&T, SONY, GENERAL ELECTRIC, WALL MART, HEWLLET PACKARD,
DEC, KRAFT FOODS having as a result major downsizing in their organizational
structures. Later, the banking sector began to reengineer with a great degree of success
such as CITIBANK , NORTHWESTERN BANK, BANK OF AMERICA and others.
Major utility companies used reengineering as a technique to improve service like OTE,
ELTA. BPR is also being used to change the organizational structure of public services.
First the government cabinet of Egypt reengineered its processes along with many
Municipals in Europe. The public health sector is undergoing a major re-engineering in
Europe using the CORBA methodology. As the technique was becoming well known to
the business sector smaller enterprises were using the technique for organizational
upgrade. Today most SMEs are investigating the re-engineering technique and a lot of
them are applying re-engineering, since the technique is applicable and affordable to
almost all SMEs. This is proved by the increasing demand for BPR consultants in Greece
and worldwide.
Most of the times re-engineering is applied as a "must" when innovative IT tools are
introduced to SMEs. Tools such as SAP, BAAN and various ERP systems that promote
the horizontal organizational structure are the vehicles for re-engineering the
organizational structure in order to adapt to the horizontal operational subsystems of the
tools. For the first time we can say " that IT does not only support management, IT
changes the organizational structure". Today 120 businesses from small to medium size in
Greece and thousands in Europe have installed such types of IT systems reengineering
also their organizational structure.BUSINESS PROCESS RE-ENGINEERING BPR
BPR Hellas SA 13
2.2 Types of firms / organizations that BPR can be applied

BRP could by implemented to all firms (manufacturing firms, retailers, services, etc.)
and public organizations that satisfy the following criteria:
Minimum Number of employees: 20 (at least 4 in management positions).
Strong management commitment to new ways of working and innovation.
Well formed IT infrastructure (requirements are presented in paragraph 2.4).
Business Process Reengineering could be applied to companies that confront problems
such as the following:
High operational costs
Low quality offered to customers
High level of ''bottleneck" processes at pick seasons
Poor performance of middle level managers
Inappropriate distribution of resources and jobs in order to achieve maximum
performance, etc.
2.3 Duration and implementation cost of BPR Duration
The BPR technique, in general, is not a time consuming process. The duration of each
BPR project varies from 6 -to 10 months. This variation relates to the kind of business
and the extend to which BPR is going to be implemented. Moreover, it depends on the
techniques and methodology that each consulting company (that usually participates in
the procedure) is using. For instance, BPR HELLAS, using the RE-engineering
Methodology Oriented towards Rapid Adaptation (REMORA) proposes the following
time schedule:
MONTHS
BPR PROJECT STAGES 1 2 3 4 5 6
Preparation & coordination for BPR
Business modeling & measurements
Management of change & controls
Technical design of the solution
Personnel adjustment & training
Realization & transfer of changes
Implementation Cost
The implementation of a BPR project consists of two stages:
1.The process management and redesign study and consulting stage.
2.The implementation of the redesigned process using IT tools including employee
training and introduction of the new processes to the company organizational structure.
The cost of a BPR for projects applied to SMEs for selective processes varies depending
on the complexity of the business environment and the number of processes for
reengineering In general, the following cost is applicable for each stage.

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Stage Description Cost in Euro
1 The process management and redesign study and consulting. From 4000 to 7000
2 The implementation of the redesigned process using IT tools including employee
training and introduction of the new processes to the company organizational structure
From 5000 to 9000
Total From 9000 to 16000
2.4 Conditions for implementation (infrastructures required etc.)
Infrastructure requirements:
An operating transactional and accounting computerized system inclosing the
commercial part of the transactions.
A network that connects all key personnel.
Workstations with Windows NT or Windows 1995 system or latest version.
An exchange server (MS outlook, or MS back office or Lotus Notes)
2.5 European Organizations Supporting the Implementation of BPR The importance and
the need for Business Process Reengineering in the small and medium enterprises and to
bigger companies as well, is great. The European Commission has acknowledged this
situation and promotes BPR and supports the efforts of SMEs to proceed to
reengineering. Under the ESPRIT and the latest IST programmes, there is a number of
projects such as the COBRA (URL www.imsgrp,com), and ROCHADE (URL
www.gsm.ch/rochade).
BPR supporting organizations
WARIA. The Workflow And Reengineering International Association. URL
http://www.waria.com
BPRC. Business Processes Resource CentreURL:http://bprc.warwick.ac.uk/index.html
3 IMPLEMENTATION PROCEDURE OF BPR
3. 1 Steps / Phases of a BPR project
A BPR project consists of specific steps aiming to a successful outcome.. The necessary
steps in a rapid re-engineering methodology are the following as they presented in figure
4.STEP ZERO - preparation and coordination of the project.
Duration: Two days Participants: BPR team, BPR consultants..
Objectives:
To establish a strong management support
To explain to the members of the BPR implementation team the implementation
details of the project and their role in the successful outcome in the BPR effort.
Actions taken:
Explain to the top-level management the necessity to commit to the BPR project.
Allocate the most capable employees to the BPR implementation team and assign roles
for each one of them.BUSINESS PROCESS RE-ENGINEERING - BPR
BPR Hellas SA15
Run an 8-hour workshop having as participants the members of the BPR
implementation team. The consultants will present the project step by step, as well as, the
role of the implementation team in the success of the project.
STEP 1 - Business diagnosis & measurements.
Figure 4 - Steps in the implementation of a BPR project
Duration:
4 weeks Participants: BPR team, BPR consultants, personnel involved with processes
Objectives:
To diagnose & identify problematic areas in the current processes
To measure the performance characteristics of the current processes based on
measurable factors such as average cycle time, delays, number of mistakes or number of
customer complaints.
Actions taken:
Diagram each process using a process management tool such as OPTIMA, ADONIS
or BONAPART (see annex A-1).
Record physical on the site measurements for each step of a process related to time,
resources spent or efficiency (see annex A-3).
Input all measurements in the process management tool for further evaluation and
analysis.
Identify added value processes that have a major impact on customer service.
STEP 2 - Selection of processes for change and modeling.
Duration: 7 weeks Participants: BPR team, BPR consultants.
Objectives:
To identify the strategic processes that are feasible to change
To redesign and model the selected processes
Actions taken:
STEP ZERO PREPARATION &
COORDINATION OF A BPR
PROJECT
STEP 1 BUSINESS DIAGNOSIS &
MEASUREMENTS
STEP 2 -
SELECTION OF PROCESSES
FOR CHANGE & MODELLING
STEP 3 TECHNICAL DESIGN OF THE
SOLUTION USING IT
STEP 4 PERSONNEL ADJUSTMENT &
TRAINING
STEP 5 MANAGEMENT OF CHANGE
& EMPLOYEE
EMPOWERMENT
STEP 6 INTRODUCTION OF NEW
PROCESSES INTO BUSINESS
OPERATIONS
STEP 7 CONTINUOUS
IMPROVEMENTBUSINESS PROCESS RE-ENGINEERING - BPR
BPR Hellas SA
16
Set the characteristics of the processes that are more important to the organizational
goals
Based on the characteristics identify the processes that will change based on the
added value they provide and their feasibility for change. (see annex A-3).
Redesign processes based on the characteristics that serve the organizational goals
Simulate the processes in running environment using the process management tool
(see annex A-1)
Model the new process using the diagramming tool of the process management tool
STEP 3 - Technical design of the solution.
Duration: 10 weeks
Participants: BPR team, BPR consultants, IT experts.
Objectives:
To automate modeled business processes (step 2) using networks and workflow tools
Actions taken:
Establish network connections between process team members.
Prepare intranet applications to exchange forms and documents between team
members
Prepare workflow application that will implement each step in the redesigned process
automatically.(see annex A-2).
STEP 4 - Personnel adjustment & training.
Duration: 10 weeks
Participants: Process team members, process coordinator, trainers.
Objectives:
To train personnel in the new ways of working using IT in the redesigned processes.
Actions taken:
Adjust each position according to skills needed in the new process.
Provide training in the operation of new processes, so employees will feel
comfortable in the changing job environment
STEP 5 - Management of change & employee empowerment.
Duration: 1 week
Participants: BPR team, BPR consultants, process team, executive management.
Objectives:
To establish a positive attitude for the change between employees
To minimize the resistance to change between employees by empowering their
position based on performance appraisal and bonus systems.
Actions taken:
Establish executive management determination for change and determinate any
attempts of resistance to change.
Facilitate the change process outlining the positive effects of change
STEP 6 - Introduction of new processes into business operations.
Duration: Day and time are set by executive management
Participants: The whole business organization
Objectives:
To set the time and date of operating under the new processes, emphasizing the fact
that working under the old processes is not an acceptable practice.BUSINESS PROCESS
RE-ENGINEERING - BPR
BPR Hellas SA17
Actions taken:
Prepare and test all background resources (IT, documents, equipment)
Set time and date for operating under the new processes.
Do not allow any non-conformities in the operations of new processes
STEP 7 - Continuous improvement.
Duration: Runs dynamically and continuously after the end of the project
Participants: BPR implementation team
Objectives:
To capitalize from the BPR project and develop internal experts for other BPR
projects
Actions taken:
Periodically evaluate the performance of business processes
Plan the time and the resources for the next reengineering project.
3.2 Partial techniques and tools included in each step
The tools and techniques are explained in each step in paragraph 3.1 with related
references to the annex.
3.3 Related Software
The are two categories of software used in implementing a BPR project
1. Process management tools, used for the design, performance evaluation of process (see
annex A-1).
2. Workflow applications for implementing modeled processes (see annex A-2)..
BIBLIOGRAPHIC REFERENCES
1. "15 Principles for Better Business Engineering" Daniel S. Appleton, Business
Engineering Newsletter, Volume 1, Issue 2
2. "Achieving Breakthrough Improvement Through Business Process Reengineering"
Michael S. Yoemans and Janice L. Beckett, Armed Forces Comptroller, Winter,
1996
3. "After Reengineering: Taking Care of Business" Jeff Moad, Datamation, Oct
15,1994
4. "After the Reengineering Hype, An Ambiguous Legacy"Jeffrey Zack, American
Banker, April 1, 1996
5. "Applying Information Technology to Reengineering" Tim R. Furey, Jennifer L.
Garlitz and Michael L. Kelleher, Planning Review, Nov-Dec 1993
6. "Automating Business Process Reengineering:"National Productivity Review,
Winter, 1994
7. "Beating the Risks of Reengineering"Michael Hammer and Steven Stanton, Fortune,
May 15, 1995
8. "Bell Atlantic Reengineers Payment Processing"Scott Humphrey, Enterprise
Reengineering, Oct/Nov, 1995
9. Business Reengineering:Dorine C. Andrews and Susan Stalick, Prentice Hall, New
York, 1994
10. "Canada Institute Reengineers Document Delivery, The"Judy Bassett, Enterprise
Reengineering, June/July 1995
11. "Change Requires Reengineering" Industry Week, June 20, 1994BUSINESS
PROCESS RE-ENGINEERING - BPR
BPR Hellas SA
18
12. "Chasing the BPR Tool Market" Randy Barrett, Enterprise Reengineering, March,
1996
13. "Getting Past the Obstacles to Successful Reengineering"
Dr. Winford E. Holland and Sanjiv Kumar, Business Horizons, May-June, 1995
14. "Going Horizontal" Chief Executive, May 1996
15. Government Business Process Reengineering (BPR) Readiness Assessment
Guide
General Services Administration, 1996
16. "Hocus-Pocus of Reengineering, The"Paul A. Strassmann, Across The Board, June,
1994
17. "How Benchmarking Can Improve Business Reengineering"
Theodor Richman and Charles Koontz, Planning Review, Nov-Dec 1993
18. "How BPR Can Go Awry"Thomas G. Cody, Enterprise Reengineering, March,
1996
19. "How to Reshape Your Business to Fit the Future" Robert M. Randall, Planning
Review, Jan-Feb., 1995
20. "Human Resource Management Lessons From A Decade of Total Quality
Management And Reengineering"California Management Review, Summer, 1994
21. "Human Resources: First Stop for Reengineers"
Larry Willets, Enterprise Reengineering, July 1996

22. "Human Resources: Requirement for Reengineering" Management Review, June,
1994
23. "Putting the Engine into Reengineering"
Elaine M. Mandrish and Robert H. Schaffer, National Productivity Review, Spring
1996
24. "Reality of Business Reengineering, The: Pacific Bell's Centrex Provisioning
Process"
Donna B. Stoddard, Sirkka L. Jarvenpaa and Michael Littlejohn, California
Management Review, Spring 1996
25. Reengineering A. Strassmann, Information Economics Press, New Canaan, CT,
1995
26. "Reengineering Administrative Logistics"
Ellen Metaal and Bruce Gladwin, Enterprise Reengineering, September, 1995
27. "Reengineering Aetna"
Glenn Rifkin, Forbes ASAP, 6/7/93
28. "Reengineering and Information Resources Management"
Dr. Sharon L. Caudle, Public Manager: The New Bureaucrat, Winter 1994
29. "Reengineering Challenge:"
Planning Review, Nov-Dec, 1994
30. Reengineering for Results: Keys to Success from Government Experience
Dr. Sharon L. Caudle, Nat'l Academy of Public Administration, Wash.D.C., 1995
31. Reengineering Handbook, The
Dr. Raymond Manganelli and Mark M. Klein, American Management Association,
1994
What is Reengineering?
The fundamental rethinking and radical redesign of core business processes to achieve
dramatic improvements in critical performance measures such as quality, cost, and cycle
time.
What is Business Process Re-engineering?
Business process reengineering (BPR) is the analysis and redesign of workflows within
and between enterprises in order to optimize end-to-end processes and automate nonvalue-added tasks.
The concept of BPR was first introduced in the late Michael Hammer's 1990Harvard
Business Review article and received increased attention a few years later, when Hammer
and James Champy published their best-selling book, Reengineering the Corporation.
The authors promoted the idea that sometimes-radical redesign andreorganization of
an enterprise is necessary to lower costs and increase quality of service and that
information technology is the key enabler for that radical change.
Hammer and Champy suggested seven reengineering principles to streamline the work
process and thereby achieve significant levels of improvement in quality, time
management, speed and profitability:
1.
Organize
around
outcomes,
not
tasks.
2. Identify all the processes in an organization and prioritize them in order of redesign
urgency.
3. Integrate information processing work into the real work that produces the information.
4. Treat geographically dispersed resources as though they were centralized.
5. Link parallel activities in the workflow instead of just integrating their results.
6. Put the decision point where the work is performed, and build control into the process.
7. Capture information once and at the source.
By the mid-1990s, BPR became popular as a justification for downsizing. According to
Hammer, lack of sustained management, commitment and leadership; unrealistic scope
and expectations; and resistance to change prompted managers to abandon the concept of
BPR and embrace the next new methodology, enterprise resource planning.
Levels of Reengineering Business Process are as follows:
The need for process reengineering and the core elements of process-reengineering.
Before discussing the process reengineering model, we need to clear the confusion
caused by some organizations using the terms work process reengineering, business
process reengineering and business reengineering synonymously.
To avoid confusion, it is better to consider reengineering at three levels which will make
the implementation of Business Process Reengineering or Process Reengineering easier.
The three levels of reengineering are:
1. Work process reengineering which deals with any process in a firm that describes the
sequence of activities through which a major function is performed, for example, packing
a finished product, processing a customer order or processing a purchase requisition,
hiring a new employee, carrying out preventive maintenance of a machine etc.
2. Business process reengineering is concerned with the whole process of an
organization. It describes the entire sequence of activities directly or indirectly connected
with satisfying the needs of a firms customers while generating quality return on
investment for share holders. The business process is made up of all the work processes
in the firm. It includes the processes of the business partners such as suppliers of
materials or services upstream or a distributor downstream.
3. Business reengineering goes beyond Business Process Reengineering (BPRE). It deals
with all aspects of running the business. It includes the management style, the
organizational structure, the business philosophy and marketing strategies, production
and operations, human resource management, purchasing, organizational structures,
accounting concepts, information systems and global business strategy.
Business Process Reengineering Life Cycle
The BPR life cycle approach decomposes business reengineering projects into interrelated phases in which a set of integrated structured methods and tools is applied to
specific tasks in each BPR phases. Each phase and its detailed tasks contain clearly
defined goals and deliverables.
The Process Reengineering Model is structured around three phases namely: (i)
Planning, (ii) Designing and (iii) Implementing!
There is no only one right way to approach process reengineering. But we can use
guidelines to approach our process reengineering effort. The process-reengineering model
illustrated in the exhibit 6.3 gives us guidelines that will pave the way for our
reengineering effort.
Each of the three phases contains major steps which provide direction toward making the
efforts more effective. The three phases and their major steps are listed in box 6.1
Phase One: Planning Phase:

A close look is taken at the process to be reengineered. The requirements for the new
process are forecasted by focusing on the current and future needs of customers,
analysing what is currently accomplished by the old process, creating a vision of what is
to be achieved by the reengineered process and zeroing in on the differences between the
two. At the end of this phase, the reengineering team should have a good grip on reality.
If the planning results in a great desire to change, the reengineering team will process to
the next phase.
Phase Two: Design Phase:
This phase involves designing a reengineered process which starts with actual mapping of
the new process and moves to the development of a change management plan. In between
these two steps, the jobs are redefined and redesigned, taking a careful look at the
technology available and considering the organisations resources.
Phase Three: Implementation Phase:
This phase involves implementing a reengineered process. The new process is tested and
its success is gauged. An atmosphere of continuous process improvement is promoted in
which employees strive to make improvements that make a difference to the customer.
Exploring the Relationship Between Information

Technology and Business Process Reengineering1
ABSTRACT: This study examines a series of relationships between information
technology (IT) and business process reengineering (BPR). Specifically, it argues that
those aspiring to do business process reengineering must begin to apply the
capabilities of information technology. This paper provides a summary of IT roles in
initiating and sustaining BPR and examines several companies that have successfully
applied IT to reengineering. The paper also addressees barriers to successful
implementation of reengineering and identifies critical factors for its success.
KEY WORDS: Businesses Process Reengineering; Restructuring; Information
Technology;
Information Technology Performance; Organizational Change; Process
Innovation
I-Introduction
The term reengineering first appeared in the information technology (IT) field and has
evolved
into a broader change process. The aim of this radical improvement approach is quick and
substantial gains in organizational performance by redesigning the core business process.
In the
1990s, many U.S. companies embraced reengineering as an effective tool to implement
changes
to make the organization more efficient and competitive. The motivation was usually the
realization that there was a need to speed up the process, reduce needed resources,
improve
productivity and efficiency, and improve competitiveness [14, 32, 33].
The changing economic environment has led to an increasing interest in BPR by
progressive
firms around the world. One study shows that about 87% of firms surveyed were either
engaged in BPR projects, or indicating their intention to take up BPR projects in the next
few
years [25]. Hammer and Champy reinvigorate the topic in their book, Reengineering the
Corporation, published in 2001. They reintroduce the goal of making
1- The author wishes to acknowledge constructive suggestions and major editing received
from Edgar H. Sibley, editor of the Journal.4
major gains in reducing waste in the organization. They suggest that we reexamine
every single
process and rebuild businesses [12].
Another reason for BPR relates to the increasing emphasis placed on integrating business
web
sites with backend legacy and enterprise systems, as well as organizational databases.
Such
integration may require substantial reengineering [3, 20, 23]. In his new book, James
Champy
argues that BPR was 1990s remedy for sluggish corporations that lacked customer focus
and
competitive ability. Today, he sees reengineering as only a beginning. In this decade,

businesses
will need to continue by using technology to add customers, suppliers, and other partners
to the
process redesign mix. The redesign of work will be between a company and its
customers,
suppliers and partners. He calls this process X-engineering crossing organizational
boundaries. Companies such as Cisco, Dell, Intel and Solectron are examples of
successful Xengineering
implementations [4].
In the 1990s, significant reduction in the cost of IT resulted in enormous investments in
IT
applications that have stimulated increasingly complex organizational change.
Information
technology has been used to break down communication barriers between corporate
functions,
to empower line workers and to fuel process reengineering. In most cases, IT has been
used to
expedite office work rather than to transform it. Top executives consider IT a potent
source of
competitive advantage.
Working together, BPR and IT have the potential to create more flexible, team-oriented,
coordinative, and communication-based work capability [34]. IT is more than a collection
of
tools for automating or mechanizing processes. It can fundamentally reshape the way
business is
done and enable the process design. In leading edge practices, information technology
makes
BPR possible and worthwhile. BPR and IT are natural partners, yet their relationships
have not
been fully explored [9]. Given the growing dominance of services, their recursive
relationship is
in need of further analysis and redesign. 5
II- IT Capabilities and Reengineering
IT has penetrated the office and services environment since the 1978. The shift from
mainframe
to PC based technology is breaking down communication barriers between employees
and
customers. Now managers and employees from various departments are designing and
controlling complex business information systems.
IT capabilities involve improving information access and coordination across
organizational
units. It is so powerful that it can actually create new process design options, rather than
simply
support it. In his book, Business @ the Speed of Thought, Bill Gates argues that if the
1980s
were about quality and the 1990s were about reengineering, then the 2000s will be about
velocity. Gates advocates complete digitalization of all aspects of life. He argues that to
be
successful in the digital age, companies need to develop a new digital infrastructure
similar to the
human nervous system. This new digital system enables companies to run smoothly and
efficiently, makes them respond quickly to emergencies and opportunities, provides a
mean for
quickly getting valuable information to the people in the company who need it. This in
turn
empowers employees to make decisions and interact with customers [8].
What is the Relation between BPR & Information Technology? Hammer considers IT as
the
key enabler of BPR [13]. Davenport & Short argue that BPR requires taking a broader
view of
both IT and business activity, and of the relationships between them. IT capabilities
should
support business processes, and business processes should be in terms of the capabilities
IT can
provide. They believe IT's promise and its ultimate impact is to be the most powerful tool
for
reducing the costs of coordination [6].
It has been argued that innovative uses of IT would inevitably lead many firms to develop
new,
coordination-intensive structures, enabling them to coordinate their activities in ways that
6
were not possible before. Such coordination-intensive structures may lead to strategic
advantages [30].
Table 1
IT Roles in Initiating and Sustaining Reengineering
Before the Process Design During the Process Design During the Implementation
Create infrastructures and
manage information that
support evolving organization
Foster process thinking in
organizations
Identify and select process for
redesign
Participate in predicting the
nature of change and
anticipate the information
needs to support that change
Educate IT staff in nontechnical
issues such as
marketing, customer
relationships, etc.
Participate in designing
measures of success/ failures
of reengineering
Bring vast amounts of
information into the process
Bring complex analytical
methods to bear on the process
Enhance employees ability to
make more informed decisions
with less reliance on formal
vertical information flows
Identify enablers for process
design
Capture the nature of proposed
change and match IT strategy
to that change
Capture and disseminate
knowledge and expertise to
improve the process
Communicate ongoing results
of the BPR effort
Transform unstructured
processes into routinized
transactions
Reduce/replace labor in a
process
Measure performance of
current process
Define clear performance goals
and objectives to drive the
implementation
Define the boundaries and
scope of the process
Create a digital feedback
loop
Establish resources for
critical evaluation of the
reengineered process
Improve IT processes to
meet increasing needs of
those divisions that have gone
under reengineering
processes
Institute a program of
cleanup and damage
control in case of failure
Communicate ongoing results

of the BPR effort
Help to build commitment to
BPR
Evaluate the potential
investment and return of
reengineering efforts7
IT roles can be categorized into three phases: before the process is designed, while the
process
design is underway, and after the design is complete. Table 1 provides a summary of IT
roles in
initiating and sustaining BPR.
Phase 1- Before the Process is Designed (as an enabler)
BPR is a strategic action and requires a clear understanding of customers, market,
industry and
competitive directions. Furthermore, like any other strategic action, it requires
consistency
between the companys business strategy and vision. Defining business strategy and
developing
a strategic vision requires understanding the companys strengths and weaknesses, and
the
market structure and opportunities.
The activities in this phase may include:
Developing a strategic vision
Identifying the customers objectives
Establishing goals/targets related to market share, costs, revenue enhancement, or profit
margins
Assessing the potential for reengineering
Defining boundaries and scope of the appropriate process
Keeping management committed
IT capabilities can provide good insight into the existing conditions. IT is one of several
enablers, including human resources and organizational change, that all must be
considered
together to bring about change in business processes.
Many companies ignore IT capabilities until after a process is designed. An awareness of
IT
capabilities can and should influence process design. Michael Hammer recommends
companies
to redefine the process first and automate it second.
IT can play important roles in this phase of BPR efforts as follows:8
1. The opportunity IT provides is to utilize newer and better technology to develop a
strategic
vision and to help improve the business process before it is designed. For example, an
important Wal-Mart vision was to eliminate unnecessary distribution steps and cost and
to
provide value to customers. To accomplish this, Wal-Mart developed a strategy that
included linking its suppliers to its retail stores. IT, eventually enabled Wal-Mart to
implement this strategy. An Enterprise-wide information system was developed that
directly
connected all retail locations, distribution warehouses, and major supplies [7].
2. The capabilities of IT to track information and break down geographic and
organizational
barriers are useful in understanding the companys strengths and weaknesses, and market
structure and opportunities. Communication technology helps to overcome geographic
barriers and thus enable broader acceptance of the process change. At General Electric
email
systems are used to speed analysis and design sharing and to hold frequent virtual
meetings between group from different regions and overseas.
3. The focus is on finding different approaches to manage a process. These approaches
can be
found and be adapted from practices of companies outside of the industry. The
organization
should benchmark against other industries and combine it with the experience and
expertise
of the team members to adopt an entirely new process technology.
4. BPR requires a flexible organization design. The existing rigid infrastructure of the
organization must be altered to facilitate cooperation between various departments by
using
cross-functional teams instead of individuals working in isolated departments. Flexible
infrastructures adapt to changing external drivers. Therefore, the flexible infrastructure
includes processes for continuously evaluating existing tools to see what should be
removed,
and continuously seeking user input about what works or does not.
5. To achieve effective teamwork, each worker should develop several competencies. The
IT
organization is no exception. The demand for close collaboration with other functions 9
dictates the need for IT staff to broaden their portfolio of skills especially in nontechnical
issues such as marketing, customer relationships, etc. The combination of the Internet and
the Intranet services allows a collaborative team effort from around the globe.
6. Alliances and other methods of cross company coordination are becoming commonplace.
In an attempt to gain market shares, many firms are teaming and collaborating with
suppliers
and distributors.
Phase 2- While the Process is Being Designed (as a Facilitator)
This stage involves two activities: technical and social design. During the technical
phase,
information is consolidated, alternatives are redefined, process linkages are reexamined,
and
controls are relocated prior to applying technology. The social design focuses on human
aspects
and involves employees who will affect corporate changes: defining jobs and teams,
defining
skills and staffing needs, and designing incentives are considered carefully.
This stage also requires development of test and rollout plans. After the objectives are
identified,
the existing processes are mapped, measured, analyzed, and benchmarked, and then are
combined to develop a new business process. Development of people, processes, and
technology are integrated.
During the process design, accountability for development, testing and implementation
must be
clearly defined. Real benefits to the business result when IT becomes involved with more
fundamental changes to the business process itself.
The crucial roles that IT plays in this phase of BPR efforts are:
1. IT can facilitate the reengineering design process through the use of project
management
tools. These help identify, structure, and estimate BPR activities and help to control 10
contingencies that arise during the process. Project management tools along with
electronic
communication, enable ongoing communication of the reengineering process between
users
and facilitators.
2. Gathering and analyzing information about the performance and structure of a process
is
an important step in identifying and selecting process for redesign. Mapping or
flowcharting
the existing process and then measuring the results in terms of cost, quality and
time are the most successful. IT can facilitate this step with the use of tools that provide
modeling and flow simulation, document business processes, analyze survey data, and
perform structuring evaluation. Technologies such as computer-aided systems
engineering (CASE) are designed primarily to draw process models. The ability to draw
models and make changes rapidly speeds redesign and facilitates the process of
process design. At Xerox, for example, several divisions are moving directly from
process modeling to automated generation of computer code. They report high user
satisfaction and improved productivity with the resulting systems. In addition, IT is
capable of storing and retrieving unstructured, multimedia information that can be useful
for developing process prototypes. The maintenance and operating workers at Union
Carbides plant in Taft, Louisiana used flow-charting to redraw their old process and
create new ones. The results were a saving of more than $20 million [26].
3. Computing technologies have facilitated a process-oriented approach to system
development where a database is shared in different functional units participating in the
same business process. Ford Motor Corp., for example, used databases in its accounts
payable process to cut down many intermediate steps and to overhaul a sequential flow
of paper documents among involved functions. As the project progressed, the
reengineering efforts achieved a 75% reduction in the workforce. In addition to shared
databases, imaging technology has facilitated a process-oriented approach because in
processing loan applications, for example, the digitized image of an application can be
worked on by several employees directly 11

4. Telecommunication technologies such as LANs, groupware, etc. have improved
collaboration among personnel of different functional units in their efforts to accomplish
a common business process. At Texas Instruments, for example, the process for new
product development was dramatically improved when a design team in different
countries used global network to work on design directly without sequential flow of
documents. As a result, the development cycle time for various products decreased
substantially (more than 30% in some cases) [21]. At Ford, the process for new car
design was improved when computer-aided design (CAD) systems were utilized.
Members of design teams share a common design database across the Atlantic to
exchange design ideas, criticism, and opinions without meeting face to face.
5. Making data digital from the start can provide a whole range of positive results. When
figures are in electronic form, employees can look at them in any detail or in any view
they desire, can study them and pass them around for collaboration. For example,
Seven-Eleven Japan used IT to not only improve inventory control, but to provide key
information to management and improve quality of sales information to make better
operation decision on a regional basis. In 1979 the company established an on-line
network and from there introduced the Electronic Point of Sale (EpoS) system in 1982
[28]. At Hewlett-Packard Co., the sales process improved drastically as 135 sales
representative were trained to use laptop to retrieve up-to-date inventory information
from the corporate database during the customer meetings. In addition, sales persons
used these laptops to communicate with their peers and superiors. As a result, time
spent in meeting decreased by 46 percent, travel time was cut by 13 percent, time spent
with customers increased by 27 percent and sales rose by 10 percent [1].
6. Input from employees and information on customer requirements is essential in
reengineering. IT applications allow organizations to build a data base to track customer
satisfaction, analyze complaints, and obtain employees feedback for ways to improve
customer satisfaction. At Frito Lay each of the 10,000 salespersons uses a hand-held 12
computer to record sales data on 200 grocery products, reducing many clerical
procedures. The data is transmitted to a central computer, which, in turn, send
instructions (such as changes in pricing, and product promotions) to all salespersons
through their hand-held computers. This process greatly enhances collaboration
between marketing and sales and also makes weekly summaries and analysis available
to senior managers [22].
7. IT capabilities are used for information exchange and to improve inner organizational
collaboration. For example, R.J. Reynolds Tobacco Co. used EDI technology in
conjunction with varied technologies of electronic commerce such as document imaging
with electronic work queues to reengineer its accounts payable function
8. IT can also be used to help identify alternative business processes. IT can help
companies to achieve multiple objectives in redesigning processes. Expert systems and
technological databases can provide information on current and future capabilities of
technology, human resources and organization change. American Express improved
quality, cost, and time of its credit authorization process with an Authorizers Assistant
expert system. The successful redesign led to 25 percent reduction in the average time
for each authorization, a 30 percent reduction in improper credit denials and a 7 million
annual reduction in costs due to credit losses. IT makes it possible to develop much
richer processes.
Phase 3- After the design is complete (as an Implementor)
The bulk of the reengineering efforts lie in this phase. The reengineering efforts include
planing
and managing people, processes, and technology and driving the implementation toward
the
business vision. The objectives of this stage are to pilot test the new approach, to monitor
the
results, and to provide extensive retraining of employees. As reengineering efforts go
forward it
is important to define and redefine performance goals and objectives, maintain a strong
13
commitment to the vision, break the barriers between the departments, and be flexible as
the
business environment changes.
IT can facilitate the following processes in this phase:
1. Implementation of the new process through the use of project management and process
analysis tools. These help identify structure and estimate all associated activities. They
facilitate tracking and managing employees expectations against commitments.
Contingencies and problems that arise during the implementation phase can be handled
and
controlled.
2. Electronic communications enable ongoing and real time communication of the
process
between users and facilitators. IT helps to overcome geographic barriers.
3. Evaluating the potential investments and returns of the reengineering efforts is
absolutely
essential. How can the value of any specific reengineering process in the company
operation
be objectively questioned? The reengineering team or management should have enough
information to determine the value the new process contributes to the overall
performance.
Pacific Bell developed Process Value Estimation (PVE) methodology to compute the
amount of value-added by a given process before and after BPR effort. Pacific Bell
management is using the methodology to target right process for reengineering and to
evaluate the changes that have made and the returns of the reengineering efforts [17].
4. A fundamental source of difficulties is the fact that process are reengineered but
infrastructure is not. The rigid infrastructure of the organization must be altered to
facilitate
cooperation and to cross-functional barriers between departments. Cross-functional teams
must replace individuals working in isolated departments. Recently, there has been a
significant growth in collaborative computing products. These range from software for
conducting meetings online to complex programs that enable a number of users to
collaborate in real time, sharing documents, managing projects and handling different
tasks. 14
These include idea generation, brainstorming, group outlining, voting, teleconference,

meetme-service,
etc.
5. As other business divisions undergo reengineering process, IT organization should be
improved to meet their increasing needs. For example, in 1993 CIGNA implemented
reengineering of its 1000-person IT departmentCIGNA Technology Services (CTS).
The main reason was to meet the increasing needs of the business divisions. A team based
structure resulted, and the benefits included a major change in the philosophy of the unit.
Where the unit was previously technology focused, reengineering brought about a focus
on using technology to meet business strategies. Management style changed from control
based and functional, to leadership-based and team-oriented. The hierarchy was flattened,
increasing flexibility [2].
6. Digital feedback loop makes it possible to have a specific definition of success, a
specific beginning and end in terms of time and tasks, intermediate milestone and finally
a budget. IT is only useful if it helps employees do their work better and differently.
Organizations are not working with the employees in the organization to infuse
technology. Successful reengineering requires that companies first concentrate on crucial
business processes that effect competitive factors, customer service, cost reduction,
product quality and time-to-market. Obtaining greatest benefit from IT requires that
current processes not be simply automated or existing automation improved.
III-The Current State of Reengineering
Many companies considered reengineering to be the productivity breakthrough of the
1990s.
American businesses spent more than $30 billion on reengineering projects in 1994, and
as much as $50 billion in 1995 and 1996. 15
Table 2
Reported IT Enabled Reengineering Successes
Company Process Role of IT Reported Benefits
American
Express
Credit
Authorization
Expert system was used to
achieve multiple objectives in
redesigning credit authorization
$7 million annual reduction in
costs
25% reduction in the average
time for authorization
30% reduction in improper
credit denials
Cisco Systems Sales Web based automation is used for
online sales
Handles 75% of sales online
20% increase in productivity
in two years
Deere & Co. Product
Development
CAD and CAM are used for
design, production and materials
management
Reduced inventory costs
Decreased manufacturing
overhead
Dell Computer Supply Chain Internet based technology to fulfill
individually customized products
with Delivery target of 5 days or
less
Reduce inventories to a five
days worth, down from 13 in
1997, resulting in a $50 million
saving
FedEx Corp. Procurement The Internet technology is used to
automate and streamline its whole
paper-based inefficient
procurement processes
Purchasing cycle times have
been reduced from 20 % to
70 %
Number of suppliers have been
reduced by more than half
Better service for its own
employees
Ford Motor Corp Accounts
Payable
Relational database overhaul a
sequential flow of paper document
Imaging technology facilitates a
process-oriented approach
75% reduction in workforce,
from 500 to 125
14 day reduction in payment
time to suppliers
Frito Lay Purchasing Hand-held computer records data
on grocery products
Enhanced collaboration
between marketing and sales
Saved 30,000 to 50,000 work
hours per year

Lowered the sales staff by
600 people
Eliminated 10% of the
distribution centers
Hewlett-Packard
Co.
Sales
Process
Laptop Computers were used to
provide frequent exchange of
sales intelligence and corporate
directives
46% reduction in time spent in
meetings
27% increase in time spent
with customers
10% increase in sales16
Table 2- Continued
Reported IT Enabled Reengineering Successes
Company Process Role of IT Reported Benefits
Pacific Bell Billing
Department
New printing technology 30% reduction in paper
consumption
$10-12 million reduction in
postage costs
Pfizer Inc. Product
Development
Web based document
management
Sliced the old one-year drug
approval timetable nearly in
half
R.J. Reynolds Accounts
Payable
EDI, electronic receipt settlements
and imaging technology with
electronic work queues reengineer
accounts payable function.
53% reduction in invoice
processing costs
25% reduction in clerical
staffing requirements
16% annual increase in
transactions volume
Texas
Instruments
Product
Development
Global network and advanced
computing resources enable
design teams in different
geographic areas to work on predesign
development without
meeting face-to-face
30% reduction in time needed
to develop an instrument
Wal-Mart Procurement/
Distribution
Process
EDI and Bar Scanners provide
just-in-time inventory levels
Satellite systems are used for data
transmission between sites
2% cost advantage over its
nearest competitors
Seven-Eleven
Japan
Co., Ltd.
Inventory
Control
Point-of-sale (POS) and electronic
ordering enhance business
efficiency
Satellite* communications and an
integrated services digital network
(ISDN) are used for data
transmission between stores and
district office
Enhanced information-sharing
among stores, headquarters
and suppliers
Enhanced business efficiency
Improved overall ability to
meet customer needs
* See Figure 1 for a detailed view.
Reengineering efforts have produced a wide range of results. Some users achieved large
cost
reductions, higher profits and throughput, etc. In many of these firms, IT played an
important
role in process redesign (Table 2). Many innovative IT applications stem froma
combination of
breakthrough ideas and from modifying the ideas that have succeeded or failed in other
companies.17
Figure 1
Seven-Eleven Japans Information Systems
Source:
Corporate
Outline,
1999,
7-Eleven,
Online
(http://info.sej.co.jp/contents_e/sej04.html)
IV-Barriers to Effective Implementation
Despite all the energy, money, and efforts spent by companies trying to make their
organizations reengineering efforts successful, reengineering is still an unfulfilled
promise. Even
substantial reengineering payoffs appear to have fallen well short of their potential. [10,
11,19,
18, 24]. In his 1996 article, Harari suggested that BPR is dead [15]. This is true, not
because
the concept is flawed, but because of implementation problems. 18
Misunderstanding of the Concept
The concept of reengineering is widely misunderstood (see Table 3). Those who label any
organizational change as reengineering have victimized it. Lack of understanding of the
concept
and inappropriate application will all contribute to organizations failure to appreciate the
promise of reengineering [16].
Reengineering is process design, process management, and process innovation.
Reengineering
involves revising organizational processes. It means designing the core business process
instead
of analyzing the current one. It involves reconfiguration of work to serve customers
better.
Reengineering forces us to challenge the way that organizations are run and to redesign
the
organizations around the desired outcomes rather than functions or departments.
Reengineering
forces a new way of thinking. Peter Drucker states, Every organization has to prepare
for the
abandonment of everything it does. The old way of managing, the vertical organizations,
the
promotion and compensation schemes, and the whole decision making schemes no longer
work.
Table 3- What Reengineering is Not
Misapplication of the Term
Reengineering is not cheap. It is a challenging process that will require hard work by both
management and employees. Reengineering is a powerful tool for creating seamless
organizations. Business process reengineering should not replace TQM or other
organizational
Downsizing Reengineering eliminates work, not jobs or people.

Restructuring Reengineering is concerned with how work is done,
not how an organization is restructured.
Automation Reengineering enables new process design, rather than
providing new mechanisms for performing old ones.
More of the same Reengineering is a revolution.19
initiatives. In fact without a continuous improvement process, reengineering can not be
successful.
Lack of Proper Strategy
A major reason given for the high failure rates of BPR efforts was that the efforts had not
been
connected to the corporate goals [35]. Robert M. Tomasko, author of Rethinking the
Corporation states, Dont fix stuff you shouldnt be doing in the first place. [29].
Reengineering is about operations; only the strategy can show what operations matter.
Reengineering programs should concentrate on understanding the existing process. The
output
goals must be stated in clear and quantitative terms. Reengineering could provide
executives
with more accurate estimates of the required number of employees to run a particular
process
more effectively.
Unrealistic Objectives
Evidence suggests that reengineering always takes longer than expected, always involve
more
people resources than are available, and always presents problems no one anticipates.
According to a survey by Arthur D. Little, only 16 percent of senior executives were fully
satisfied with their reengineering programs. About 68 percent were experiencing
unanticipated
problems. It was concluded that much of this came from setting unrealistic targets. It was
also
pointed out that nobody knew whether reengineering programs did grow revenues and
profits.
Management Failure to Change
Lack of leadership is a frequent cause for the high failure rate of BPR projects. BPR
implementation requires a top-down, directive leadership style. Yet, it also requires the
management of motivated, skilled, independent-thinking people doing nonprogrammable tasks
for which a non-directive leadership style is most suited, [27].20
A fundamental source of difficulties is the fact that process is reengineered while
management
does not. Reengineering forces changes in management style. It forces managers to
reevaluate
not only what they do, but also who they are. Management must change the way they
think,
organize, plan, deploy, inspire and reward the performance. They must learn to organize
work
in a holistic, integrated way. They must create an environment where generalists are
replaced
with specialists, and where preoccupation with internal activities is shifted to a design
focused on
customers.
Failing to recognize the importance of People
Many companies who attempt reengineering focus on process design and ignore or
underestimate the importance of people. Without a proper approach to dealing with
employees
involved, the implementation is guaranteed to fail. Reengineering changes all aspects of a
business. When a process changes, the jobs of those who do the work in that process must
also
be changed.
Reengineering efforts changes almost everyones job causing employees at all levels to
require
new skills. Furthermore, reengineering usually involves the process of combining many
job
categories into one, which requires extensive technical crosstraining. Thorough skills
assessment of the workforce should be undertaken through job-analysis and needsanalysis.
The analysis should determine what skills are needed and what changes have to take
place.
Reengineering causes enormous change in the organization therefore it has a tendency to
cause
organizational anxiety. One of the challenges of implementing reengineering is coping
with the
reaction of employees. Employees resistance to change and their fears about job
displacement
need to be alleviated and explained. Making employees feel they own the reengineering
efforts
can improve employees moral and soothe negative feeling [31].
IS Failure to Change21
IT can be one of the greatest barriers to BPR. Many reengineering efforts have been
stopped
because radical change would require IS redesign. Resistance on the part of IS personnel
has
more often been a failure in implementation than an enabler.
IV- Summary
BPR is going through its second wave. BPR is gaining importance as organizations
develop
inter-organizational relationships, alliances, and other methods of cross company
coordination.
A lot of the value and innovation in organizations today comes from knowledge workers
and
knowledge work processes. Davenport argues that the following processes ought to be
considered [5]:
Inter-organizational processes: Web servicesSOAP and the UDDI Web services

directory, XML.
Marketing and customer-facing processes: marketing automation, workflow for
semistructured
processes, customer insight analytics.
New product development processes: collaborative product commerce applications;
intellectual property management.
Information access and analytical processes: role-based and active portals, digital
content services, and the integration of information management, knowledge
management and e-learning.
The rapid evolution of information technologies and its declining costs are creating
opportunities
to change and improve the way they conduct business.
IT is the most effective enabling technology for BPR. It helps in meeting the objectives
of
reengineering in three ways: By providing information across functional levels and
establishing
easy communication, improving the process performance and finally by helping the
reengineering
effort by modeling, optimizing and assessing its consequences.22
IT can play an important role in success of reengineering, but only when the
organizations adopt
a change in mindset regarding the role of the IT function. Without visionary leadership
and
support most IT changes will be ineffective and there is little chance that innovative
forces can
be mobilized to facilitate process redesign and organizational transformation.
In many cases, IT was the biggest barrier to rapid and radical change because radical
change
required IS redesign. IT is clearly an enabler of reengineering. In many cases redesign
process
cannot be implemented until employees can access new sources or domains of
information.
Organizations often fail to achieve reengineering objectives because they trivialize the
concept.
Reengineering require creative thinking. It requires a new perspective on the part of
management-may be even a new philosophy. 23
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BUSINESS PROCESS RE-ENGINEERING

Carlo Dino M. Santos

CEO SALES FINANCE PRODUCTION

Hierarchical organizational structure Horizontal (flat) structure

1.3 Methodology of a BPR project implementation / alternative techniques

Orientation Technology People Focus Profits Processes

2.2 Types of firms / organizations that BPR can be applied

BUSINESS PROCESS RE-ENGINEERING - BPR

Larry Willets, Enterprise Reengineering, July 1996

Phase One: Planning Phase:

Exploring the Relationship Between Information

competitive ability. Today, he sees reengineering as only a beginning. In this decade,

Communicate ongoing results

worked on by several employees directly 11

These include idea generation, brainstorming, group outlining, voting, teleconference,

hours per year

Downsizing Reengineering eliminates work, not jobs or people.

Inter-organizational processes: Web servicesSOAP and the UDDI Web services

[23]. Nissen, M., 1998, Redesigning Reengineering Through Measurement-Driven

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