Week 5 - Basic of BPR (1)

Reference

1. http://en.wikipedia.org/

2. http://webs.twsu.edu/whitman/papers/ijii99muthu.pdf

3. http://www.accountingformanagement.com/process_reengineering.htm

4. http://benefitof.net/benefits-of-bpr/

What is BPR?

BPR stands for Business Process Re-engineering / Redesign.

"BPR is the fundamental re-thinking and radical re-design of business process ro achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and spend." (Michael Hammer & James Champy, 1993)

In this journal, we are going to talk about the advantages of using BPR, the rationale of BPR, applying BPR and the cost of applying BPR. 

The Advantages of using BPR

- Dramatic productiveity improvements

- Dramatic product and service quality imrovements

- Cost reduction / efficiency gains

- Improvement in organizational quality

- Increase of market coverage

The rationale of BPR 

In today’s market place, when customers take charge, competition intensifies and change becomes constant, company need to be more responsive and put more value on the customers.

Business Process changes from the traditional Bureaucracy towards Customer-Centric. In the old days, CEO is put at the top of a process then middle management then workers and the last is customer.

However, after re-engineered, the customers are put at the top then the company. Everyone in the company is empowered to act because everyone knows the Vision and the Plan. It also means that the middle management and the workers are stimulated to make decisions and take actions themselves. The process becomes more flexible and responsive to the customers.

The organizational forms have changed from vertical to horizontal. In tradition, organization use vertical approach which is hierarchical, a top down control. Things need to go through the top levels management and then to the middle and front line workers. It wastes a lot of resources and time, having low efficiency.

With the use of horizontal approach, each worker performs a single step and then hands work and responsibility off to the others. Works are broken down into components and only “time each of the elements of a job”. This approach involved process/customer focus and empowerment.

The advantages of horizontal approach are Reduce confusion and sub-optimization across functions, enhance customer responsiveness, increase accountability and performance of the process, reduce wasteful activities, compress lead times, improve customer service.

Applying the BPR

IT/IS is a main component for the re-engineering!!

“.. a way of transforming the business, which frees it from the restrictions of the traditional approach by cutting across functional divisions. Information system are the fundamental ingredient of redesigned business processes”

Eg. before reengineering, a number of paper documents were processed by 3 functions who participate in the process indirectly with a work force of 500 to perform intermediate steps.

After reengineering, with a work force of 125, the 3 functions participate in the process directly by accessing a shared database, eliminating many intermediate steps and flow of paper document.

I am not going into details of applying the BPR since the lecture notes and the reference reading has already provided enough.

Rather, I considered the lecturecs notes has only provided the positive side of using the BPR without mentioning the down sides.

Cons of applying BPR

Committing the BPR also will lead to several problems such as employee morale ( by having the BPR, some labours are being laid off) skills and knowledge ( BPR consisits of IS/IT, workers may not be familiar with the IT skills) cost ( BPR may invlove new technology(hardware and software), they are expensive). 

The structure of an organization, as the process of handling jobs are different, the structure of an organization may also change. Employees may not get used to it.