Business Process Reengineering and Best Practices
Enterprise Resource Planning (ERP) and Business Process Re-engineering (BPR) evolved almost at the same time i.e. 1st half of 1990. Both relates to radical redesign of an organization at a relatively short period. Both are having the primary intend to optimize workflow and improve productivity. But, the chicken and egg question remained, whether an organization reengineer business process before implementing ERP or directly implement ERP and reengineer by adopting standard business process, included in the ERP package.
What is Business Process Re-engineering (BPR) ?
BPR means not only change but radical change within a short period. This change is achieved by complete revamp of organizational structure, business process workflow, job description, performance measurement and adoption of information technology. Some of Basic characteristics of BPR are:
- View business as a set of customer (both internal and external) oriented processes rather than a set of departmental functions.
- Processes must have clear cut ownership.
- Non value adding activities within a process should be eliminated..
- Gather information only once at the point of origin.
A successful BPR implementation brings significant improvement to productivity, customer service and bottom-line. There are pain and difficulties during implementation and instances where BPR efforts did not achieve desired result. Notwithstanding, the risk is worth taking. Otherwise, there will be grater risk of being overtaken by competitors who develop and progress rapidly through BPR.
- Project kick off: Project goal, project team and communication standards are agreed upon. A number of workshops are held where project scope, sponsors commitment, project risk, milestones and deliverables are discussed. A SWOT (strength, weakness, opportunities and threat) analysis is carried out with active participation of all.
- Process identification and data gathering: “As is” processes are assembled through flow charts. Current practice of Interfacing with business partners is gathered. Bottlenecks, delays, complexity, internal blame games, idle assets etc. are brought forward. Use of existing technologies is comprehended. Major and strategic business processes to be reengineered, are identified. Stakeholders categorize the processes to be reengineered and agreed upon on the timeline of implementation.
- Process Reengineering: In this phase, actual reengineering begins. A number of brain storming sessions are held with project team and other stakeholders, where current business processes are critically analyzed to determine non value adding activities and identify excess control and check, always with customer value as a focal point. Impact of new technologies on process improvement is also evaluated. New process ideas with reduced check and control and enabling technologies such as Workflow automation and ERP, are envisaged. Benchmarking is also done with best of breed industrial peers.
- Blueprint of new system: Blueprinting involves modeling workflow and information requirement, of new business processes. “To be” processes are modeled using various modeling tools. New organization structures, human resource need, performance monitoring and compensation, technological needs, are also outlined. Normally, a first cut redesign scheme is produced which is modified after gathering actionable feedback from the stakeholders.
- Transformation: A migration strategy and a migration plan is the first step of transformation. Migration strategy may decided as a pilot, phased or big bang implementation. The migration plan would include establishment of new organizational structure, detailed training and reallocation of workforce, and cut off dates for implementation. Change management and introduction of new technologies will form an important part and may need engagement of outside consultants for this specific purpose. There should be provision on the plan to tweak the implemented system so as to get maximum value out of it.
BPR or ERP: For successful of BPR implementation, Information Technology plays the role of a key enabler. Therefore, a question is raised whether it is logical to directly implement ERP and re-engineer business processes by adopting world class practices, contained in ERP packages. This approach would avoid embarking on BPR which is expensive, time consuming and often risky. Also reengineered process arising out of BPR exercise may not be best of class. On the other hand, there is a grave risk in this approach if a proper ERP package is not chosen. Process orientation and ownership will be lacking from employees which may lead to major implementation difficulties.
Authorship/Referencing - About the Author(s)
The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.
- ERP - Introduction
- Historical Evaluation of ERP
- ERP and e-Commerce
- ERP Vendors
- ERP Architecture
- Business Process Re-engineering
- ERP Life Cycle
- Implementation of ERP System
- Selection of ERP Packages
- Do’s & Dont’s in ERP Projects
- Environment for ERP Implementation
- Phases of ERP Implementation
- Change and Risk Management
- Return on Investment (ROI)
- Configuration Control & Base Settings
- Master Data Management
- General Ledger & Accounts
- Accounts Payable and Receivable
- Asset Management & Budgetary Control
- Cost Estimate and Accounting
- Cash Management Module in ERP
- Production Module - BOM & Routing
- Production Planning and Control
- Subcontracting and Materials Issue