REENGINEERING- A ROADMAP

Dr. Adalat Khan
REENGINEERING- A ROADMAP

RAPID, radical and constant changes are driving businesses crazy and pose threat to their very survival and existence. Increased customers expectations, intense global competition, elimination of market entry barriers, explosive technology and high demands of shareholders and employees are some of the factors which put enormous pressure on the business to change.

To cope up with these, driving forces businesses need to come up with innovative methods to improve their performance. They do need it because traditional approaches to improve efficiency are inefficient and obsolete.

Business Process Re-engineering or BPR is one such management philosophy which can arm the businesses to cope up with these changes and achieve breakthrough business results.

Background of BPR. The concept of Re-engineering gained tremendous popularity after Dr. Michael and James Champy wrote their best calling book Re-engineering the Corporation. In this book they reported how some of the US companies have achieved breakthrough business reads through redesign of their business processes, which they termed as “ Re-engineering”. Since then many companies in the world started re-engineering programmes. Presently re-engineering has gained tremendous popularity, especially due to the extra ordinary results achieved by the companies which have undergone Re-engineering programmes.

Some of the examples of benefits achieved through Re-engineering are as below:

o Monoprix of France increased market share by 20 per cent.

o Richard Alen USA reduced labour hours per unit per year by 15 per cent and increased revenue per employee by 30 per cent.

o AT & T reduced the 39 months cycle time to 19 months.

o Delta Lloyd reduced their policy processing time from three weeks to three days.

o Bell Atlantic brought down telephone installation time from 30 to three days.

These and numerous other success stories have created such euphoria among the companies all over the world that most of the companies are thinking of re-engineering.

In its September 95 issue the World Executive Digest headline “Re-engineering Hits Asia”, which suggests that currently re-engineering is the in-thing for companies in Asia. Many companies in South East Asia including Malaysia have embarked on re-engineering programmes.

What is Re-engineering anyway?

Many people today don’t even know the head and tail of re-engineering. Many managers don’t read about re-engineering and why would they because there is a common misconception among people, thinking it has some thing to do with engineering. So let us define what is “re-engineering;” any way.

1. “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” – Michael Hammer and James Champy.

2. “Re-engineering means getting breakthrough business results through the rapid and radical redesign of critical core processes and the systems, policies and organisational structures that support them” – America Management Association.

Characteristics of Re-engineering.

Fundamental Change

Re-engineering involved fundamental changes the way business work and operate. These changes will only take place if people at the organisation in general and top management in particular are willing to give up the prevailing organisational structure, practices, processes and policies. They must accept the challenge and ask themselves hard questions like, why do we do what we do? Is there a need for doing it? Who needs it? Why do we do it the way we do? Is it the only way? Why not other ways?

These are questions if truly answered will challenge the very pillars of the organisation on which it is standing and will enable it to make fundamental changes.

Changes from hierarchical to flat, from specialization to generalization, from departments to process teams are such fundamental changes which must happen when re-engineering take place.

Breakthrough business results

This attribute of re-engineering means that re-engineering aims at achieving results which are extraordinary and breakthrough why re-engineering seeks breakthrough results? The answer is that re-engineering is not an easy job. Re-engineering involves drastic, difficult and tough changes. Re-engineering also involves hard work, deployment of scarce resources, and high risk element. So businesses must aim for breakthrough business results otherwise it may not be justified.

For achieving ordinary and incremental improvements business can use other improvement programmers which are not drastic and risky. As such re-engineering projects will always aim for breakthrough results.

Here it is needed to clarify that the breakthrough results must be business results meaning results which can be quantified and measured of increased performance like revenue, profit, market share, return on investment or decrease in expenses, cycle time, response time and others.

Rapid

The third peculiarity of re-engineering is achieving breakthrough results in a relatively short period of time ranging from six months to one year. Surveys of senior executives, conducted by Gateway Management Consulting Services in 1993, disclosed that improvements projects promising results after more than one year are unlikely to receive top management’s support. Rapid business changes also justify that business must achieve rapid results and stay on top of the changes taking place outside the business.

Process focused

Re-engineering focuses on improving work processes which cross departmental boundaries. Processes in business flow in natural order starting from a point of contact with the customer and culminating in delivery of product or service. For example, an order fulfillment process involves marketing, manufacturing, purchase, shipping and other departments. Re-engineering sheds the departmental views and focus the attention of these departments on the process thus eliminating departmental rivalries, turf wars and inter departmental disconnects-all of these leading to wastage of time and resources.

Critical core processes

Re-engineering focus only on those processes which are critical to the success or failure of business.

There are hundreds of processes in a company but the critical can be few. These processes fall under the 20 of Pareto principle’s 80/20 rule.

The redesign of these business processes promises to deliver extraordinary results. A critical process can be defined as a core process that adds value to what the company offers to the customer. A process may be called value added if the customer care about it and is willing to pay money for the added value.

Re-engineering methodology

To succeed in re-engineering effort companies need to have a methodology. A methodology will provide a step by step road map guiding the project in achieving its objectives. Like any other project, re-engineering projects need clear definitions of what is to be done, how, and by whom. The following six steps methodology can guide BPR projects through the right steps and in the right order.

Realisation and vision stage

The first step in re-engineering takes place when someone in the organisation recognises that the organisation needs to change for the better with the aim of achieving breakthrough business goals. It may be a chief executive, a manager or a clerk, but someone in the organisation must realize and say, “We need to change”. The need for change, however, must be supported by the top management.

According to Michael Hammer and James Champy, there are three motivators for companies going for change and adopting re-engineering programme.

These are pain, fear and ambition. Pain refers to the situation where the company is losing market share, revenue, or profit margin, or when costs are increasing. This is a reaction to get rid of the pain. Fear means that the organisation is doing well out it foresees problems down the line. This is an anticipative approach for meeting the challenges of the future.

Finally, some companies opt for re-engineering out of ambition to maintain its market leadership. When a company successful but sees an opportunity to redefine the marketplace in their favour or to leapfrog the competition.

After reading the need for change, companies should ask these fundamental questions to determine their visions. What do we want from change? Now will the post-change organisation look like? What breakthrough business goals do we need to achieve?

These and other identical questions will force the organisation to create “to be” vision for the organisation after implementing the re-engineering programme.

It is at this stage that the business should determine clear cut breakthrough business goals. It is important to mention here that re-engineering programmes involving rapid, radical and fundamental changes are tough and taxing.


Undergoing these changes is only justified if an organisation can harvest extra ordinary benefits like 50 per cent increase in market share or revenue, 50 per cent reduction in cost, cycle-time and response time etc. If the goals are not breakthrough, the company better avoid the hassle.

Deployment stage

After realising the need to change and establishing breakthrough business goals, the next step in re-engineering road map is the deployment stage. During this stage an organisation mobilises resources to start work on the project.

It is at this stage that a steering committee and BPR teams are established. A steering committee is a high-level body consisting of top and senior management members who provide direction, broader guidelines, support and resources to the effort. Additionally a steering committee identifies core business processes, champions the “change” process, re-moves barriers, monitors results and provides vision to the BPR teams.

In re-engineering project, every process should have one team consisting of cross functional, and the best and the brightest employees of the company.

The major functions of BPR teams are to carry out the appropriate analysis and information gathering wok, develop the detailed process mapping and to actually re-engineer the processes in line with the vision provided by the steering committee.

BPR teams are needed because processes in an organisation travel through different sections and departments and to reinvent and transform them; the input of all concerned departments is needed.

To equip these teams to properly perform their duties, training in the areas of team-building, process analysis and redesign and conflict management will be required. BPR teams are change-agents and an organisation should take extra care in selecting, deploying and training these teams.

Review of the present situation

BPR teams must first review the present situation of the company and provide answers to the most crucial question-“What needs changes?”

At this stage, a detained analysis of the processes is carried out where each process is mapped. For each process, detailed data like value-added time, non-value-added time, inter-functional disconnects, error levels, cost of the process etc are collected. This information enables the BPR teams in identifying weaknesses, gaps and their impacts on processes.

To carry out detailed mapping of the processes teams can make use of various techniques like cause-and-affect diagrams, flow charts, affinity diagrams, prioritisation matrix and value-added flow analysis.

At this stage, opportunities for re-engineering are identified in terms of critical core processes, impact on breakthrough business goals and which processes to re-engineer first.

Innovation Stage

The purpose of this stage is to reinvent the business processes in a manner that will deliver breakthrough business goals. Based on the understanding of the existing situation carried out at the review stage. BPR teams challenge the “as is” situation and bring up new ideas to take them to the “to be” situation.

This requires starting from a clean sheet of paper, and letting go the existing processes and methods for a new and better ones.

Here, teams come up with new, innovative ideas as which will transform the business processes. Group brainstorming sessions and other creative techniques are used to recreate the process in such a manner so as to achieve extraordinary business results.

It is also at this phase that new vision for the “to be” processes is developed. The new vision must take into account the customer needs and values so as to create processes which meet the customers’ needs.

The vision is the ideal goal of re-engineering. It describes the process would operate with all of the external and internal performance measures optimized. Visioning enables the BPR teams to picture the “to be” situation thus getting motivation for facing the difficult and tough challenges of re-engineering.

It should be noted that at this stage a timeframe for the realisation of the vision should be established, thus, making it more meaningful. The culmination of this stage results in producing a vision document.

This vision document, outlining the broader parameters of re-engineering the processes and final outcomes, is submitted to the steering committee for approval, which upon authorises the BPR teams to proceed with the design of new processes.

Redesign and re-engineer stage

Keeping in view the vision established at the previous stage, at this point processes are redesigned and re-engineered. A critical task at this stage is to break apart the processes, take out the non-value-adding activities and put them back at natural and most optimal order.

Common features of re-engineered processes include combination of several activities into one job, elimination of unnecessary tasks, re-sequencing and synchronising activities and performing work at the place where it makes the most sense.

The redesign of the processes enables the BPR teams to develop preliminary plans for implementing the technical, social and organisational aspects of the re-engineered processes. At this juncture, the role of technology as an enabler is further clarified and its application is specified.

Business process re-engineering uses technology, primarily capture and document information, provide on-line communication, help in process controls, create human interfaces, aid manufacture and share information.

Technology facilitates the smooth implementation and its role is determined and clarified at this time.

Re-engineering changes processes and these changes must also result in people’s job. At the re-design stage, the “people” aspect of the new design must be determined in conjunction with the technical issues.

Work units should change from functional departments to process teams. Job must change from simple tasks to multi-dimensional work. People’s roles should change from controlled to empowered and managers must change from supervisors to coaches.

The organisational structure should change from hierarchical to flat. These and many other changes to enable the re-engineering effort are determined so that implementation is facilitated.

Commitment and implementation stage

Re-engineering doesn’t happen in vacuum. People must buy the idea and commit their support. Re-engineering is a tough job due to two major factors. It is tough because it involves fundamental and radical changes which people by nature will resist.

Another factor is its demanding nature, requiring people to work harder and taking on more responsibilities. To over-come these problems the BPR teams and steering committee should extensively communicate to all the stakeholders, particularly employees. Questions like what, why, how and when should be answered in detail so that the anxiety of the change is reduced.

Companies which have successfully undergone change have extensively communicated through meetings, circulars, company magazines, memos etc all the details and the reason why people should support the BPR project.

After doing all the things mentioned earlier, now it is time to realise the vision by pushing the button and implementing the technical, social and organisational designs developed earlier.

This is the most crucial and critical step in re-engineering which can make or break the whole effort. Most BPR efforts fall short in the implementation, which requires even greater effort than the earlier stages mentioned.

One of the useful strategies for implementing re-engineering is to first conduct a pilot test in limited areas so as to test its applicability.

The pilot test also helps in detection and correction of any flaws thus smoothening the road to full implementation. The successful pilot test is followed by a full-fledged implementation to achieve the desired breakthrough goals. This should be followed by continuous improvement as the famous saying goes, “Success is a journey, not a destination”.

Conclusion

Business process re-engineering is a revolutionary management idea of this decade. Companies which have successfully implemented BPR Projects have achieved enormous business results and left their competitors behind.

There are many success stories of BPR all over the world, which means good news for those who are in the process of or planning to implement BPR projects. But, like any other management system, some of the companies have also failed miserably in their efforts to re-engineer their organisations. One can learn from both these experiences by adopting what works and discarding what has not worked for others. Clearly, a proper methodology of the kind proposed in this article will be an effective way to implement BPR projects.

Dr. Adalat Khan is the president of Mina Resources Sdn Bhd a leading training organization providing engagement training programs who can be reached by e-mail dradalat@gmail.com
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Dr. Adalat Khan

DR. ADALAT KHAN

EDUCATION:
o Doctor OF Business Administration-DBA, American University
of Hawaii-USA.
o M.B.A. and BBA, Peshawar University, Pakistan.
o LLB Karachi University, Pakistan.
o Post graduate diploma in Management The Netherlands.
TEACHING AND PROFESSIONAL EXPERIENCE:
He is a visiting professor to the American Central University, USA and have taught various courses such as Intercultural communication, Train the Trainer, Conflict management and resolution, management, leadership, communication, law etc. He is the director of MINA MANAGEMENT INSTITUTE, a leading Malaysian Management consultancy and educational organisation. He is an internationally renowned trainer and consultant, registered on the roasters of ILO United Nations, The Asian Development Bank and The Commonwealth Secretariat.
As a resource consultant to ILO United Nations he is well versed with the Occupational Safety and Health Management system and have conducted live OSH audits for many companies. He is a certified trainer by the Department of Occupational Safety ( DOSH) Malaysia. Additionally he has taught safety and health management courses to various OSH diploma programs.
Dr. Adalat has also helped many companies in their improvement programmes like, BPR, OD, Business revivals and has also conducted training programmes for many organisations and trained hundreds of people both in Malaysia and overseas. He has conducted many programmes for Malaysian Institute of Accountants (MIA