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Business Process Reengineering: high-level management to reduce costs

Executive man acting with a holographic screen

Business Process Reengineering: high-level management to reduce costs

The growing technological evolution and relevant changes in the demands of the new consumer have led several companies to a plan of restructuring, transformation and adaptation to new processes. Although adopting a Business Process Reengineering model is an important change for companies, it brings great advantages in terms of cost reduction, quality and service improvement.

What is Business Process Reengineering? Business Process Reengineering (BPR) goes far beyond the belief that it is only an improvement in processes, although both go hand in hand, there are big differences between these concepts, for example: it is not the same to improve the efficiency of the engine of a vehicle (IMPROVEMENT) than to rethink its operation and modify parts in search of improving its functionality (REENGINEERING).

With this example it is clear that Business Process Reengineering is the radical improvement of business performance with the total redesign of its main processes and work dynamics, taking advantage of new technologies. A methodology that not only encourages unconventional decision making, but also proposes to restructure processes from a high-level management perspective to ensure business continuity and relevance over time.

An example of Business Process Reengineering widely applied these days and that Interfaz offers among its services is digital transformation. It is linked to the concept of BPR, since it enables the rethinking of one, two, three or all processes of a company due to low performance, high costs or because a change is coming, which would be the case of digital transformation.

How did Business Process Reengineering come about? It was in the 80s when Michael Jammer and James Champy, developers and leading exponents, presented the first phase of this methodology, giving a radical turnaround to many businesses. In a single idea, they define the methodology as “the in-depth review and radical redesign of processes to achieve dramatic improvements in critical, contemporary performance measures such as cost, quality, service and speed”. And to do so, they divide it into 4 fundamental phases:

As for today, developers around the world say Davenport’s methodology is becoming more relevant, given its emphasis on the use of IT as the main driver of change. And to some extent it makes sense, with the rising tide of technologies it makes sense when he mentions that the model should not be generalized to all companies as each one has unexpected elements and different adversities.

The implementation of a BPR model, according to Davenport, must include a process of internal mapping so that the approach actually helps organizations to identify high value and low performance activities, this implies a detailed analysis of each of the processes and/or tasks that are carried out within the company, in order to redefine and improve them looking for simplified and efficient processes. Therefore, it is important that it is done according to the defined and recommended steps:

  1. Identify the reengineering process: focus on all follow-up actions based on the company’s vision and target process. In addition to cost reduction, worker satisfaction, production time reduction and performance improvement should also be prioritized.

  2. Analyze the business situation: identify the business processes that need to be redesigned, for this the team should put focus on attention to the important core processes.

  3. Understand, evaluate and redesign the process: evaluate the precise functions and performance of the selected business process by establishing a new benchmark for the redesigned process.

  4. IT lab testing: study the suitability of the use of IT hardware and software for the newly designed work process.

  5. Implementation and prototyping: encompass the design functions in prototypes that match the newly designed business process.

  6. Management and implementation: the prototype will be tested in the organization before implementation. This is the most important step to ensure the success of the BPR model.

As Davenport rightly mentions, the role of IT is fundamental nowadays, by merging it with BPR, it allows to guide and project companies in different aspects to obtain multiple benefits. For example, at the level of costs, it can provide better knowledge of the financial environment and efficiency in decision-making; at the level of structure and personnel management, a less hierarchical, more collaborative organization can be achieved, with better HR management; and at the commercial level, a reduction in logistics costs, development of new innovations and improvement in brand reputation can be achieved by cataloging the company as an innovative company.

Although both Jammer and Champy’s and Davenport’s processes are valid, it should be clarified that there is no exact methodology, unique to make BPR, or a model that fits all companies, depending on the type of company or the type of modification you want to make, you should or can use different tools that contribute to the objectives, among them are: Process Frameworks, Simulations, Process Mapping, Design Thinking, Benchmarking, Customer Journey Map and Lean Six Sigma Methodologies (DMAIC, SIPOC, Paretos). These tools contribute to the success of the BPR model under the two key factors: agile, effective and efficient work processes, coupled with total satisfaction in the customer experience.

When to apply Business Process Reengineering? There are three situations that can set off the alarm bells within an organization to make the decision to apply the model:

  1. Companies that have setbacks in their processes or feel that they are too costly, inefficient and/or obsolete, their services do not achieve the expected results and they have not been able to adapt to new technologies.

  2. Companies that are going through a good time, but also experience problems in their processes. They are unable to adapt their products or services to changes in market consumption trends or drastic changes in the economy and therefore sales are not as expected.

  3. Companies that do not have problems, but know that to remain active in the future it is necessary to apply methodologies such as Process Reengineering, this ensures them to be ahead of the market and gain a greater competitive advantage over their competition.

In conclusion, it is clearly demonstrated that today’s business processes must be strongly influenced and supported by radical models such as BPR, an extreme solution to extreme problems. Organizations should not only focus their efforts on gaining market share, but also examine methodologies that contribute to their usefulness, that strengthen them and make them practical companies.

This choice should be guided by existing processes that are likely to need radical, continuous and incremental restructuring and that are manageable in terms of cost and implementation.

BPR is one of the best suited to achieve business reinvention, operational cost reduction, improved customer experience and last but not least, what all companies are looking for in the market: profitability. And with Interfaz you will find it.

Resources: BPR book by Michael Jammer and James Champy | Implementing Process Reengineering “International Journal of Business and Management” | Journal of ICT in Education

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