Business Process Reengineering: Benefits and Challenges

The Business Process Reengineering can be defined as the process of recreating a core business process with the aim of improving the product/service output, quality and reducing wastage and cost incurred.

What exactly it involves is the analysis of company workflows, finding processes that are not meeting the requirements or inefficient which you are attempting out ways to get rid of them or change them.

With pandemic hitting every business hard, organizations of all sizes and types are faced with intense competition. To stay afloat in this competitive environment, these organizations look for the way out to increase efficiency and improve their bottom line by turning to process improvement through Business Process Reengineering.

Business Process Reengineering can be as simple as shaping unclear processes and continually looking for areas of improvement and making critical changes which can be as complicated as reengineering ventures.

Let us dig into some of the benefits of Business Process Reengineering implementation:

Flexibility

The only thing that is permanent is change and even organizations fall in this criteria and are regularly faced with the need for change. Changes may become essential because of many reasons like new regulations, technological innovations, market demands or the advent of new ways of working.

One of the key features of Business Process Reengineering is that it promotes the design of processes with minimum costs. Most of the related processes can be easily customized to suit the requirements of your organization.

Enhancement of Productivity

Business Process reengineering focuses on the automation of a lot of repetitive elements within regular business workflow. The business process improvements basically include removal of process bottlenecks, initiation of parallel processing, and complete elimination of redundant steps. All these improvements can be easily achieved with Business Process Reengineering, which will thereby allow employees to spend more time on important activities. Since the support functions have been handled, it can result in increased productivity and reduced waste.

Reduced Risks

The visibility of business processes in the business process reengineering allows for concentration on inefficiencies. It gives organizations the opportunity to work more efficiently whereby they can save their resources. Business Process Reengineering is also responsible for the creation of better- designed, executed and monitored processes which tends to reduce the operational risks like fraud.

Perks and Challenges - Reduced Risks

Transparency

There are certain industry regulations which the organizations need to comply with. Business process reengineering ensures that the organizations remain transparent and implement the regulatory requirements at ease through which delays in compliance and any associated fines and penalties can be prevented. When you integrate compliance into the process life cycle, you automatically make the organizational processes transparent and visible to all your employees.

Employee Contentment

Business process reengineering removes a lot of red tape in the organizations, thereby allowing employees to focus 100% on their work. This process automation eliminates a lot of repetitive work which again makes access to information easier and results in increased productivity and a happier workforce.

Improved Customer’s Attention

With simplified processes and increased productivity, employees get enough time to focus better on the customer. The employees will be in a better position to respond to customer’s proposals instantly, build solutions faster and customize their requirements. Business process reengineering is responsible for bringing people and technology together that again in a way, increases customer satisfaction. Also, employees are able to deliver the right results for customers and related stakeholders.

Consistency

With Business Process Reengineering, every task can be executed exactly the way it was planned and designed. There will be no requirement to reinvent the wheel as similar problems can be addressed in the same way even if the roles get changed. Also, exceptional situations and responses are noted down to ensure that they are handled appropriately.

Durability

With the change in the organizational conditions, the business processes require to adapt to those changes and deliver the expected results. Business Process Reengineering helps in smooth adaptation while maintaining control and managerial oversight as well.

Evaluation

Processes, when measured and evaluated end-to-end and compared to the expected results, can help in managing people well. Business Process Reengineering provides reporting and analytical tools which can help in making executive decisions. It also helps in streamlining and quantifying processes that can help the organization to optimize its workflows.

Integration of Technology

Business Process Reengineering bridges the gap between users and IT by using various standards of business process management. The focus should always be on processes and not on applications that support them.

Steps in Business Process Reengineering:

Now that we know the perks of implementing Business Process Reengineering, lets us go through the steps involved in it.

As mentioned earlier, business process reengineering is a complex task and involves a complete change in the processes fundamentally instead of working with the existing processes. Unless and until you carry out every step carefully and successfully, there are chances your attempts might fail. It is therefore considered as one of the time-consuming, expensive and risky affairs and step by step process must be followed under the guidance of a Subject Matter Expert (SME)

Business Process Reengineering generally includes analyzing and examining the company workflows to identify the inefficient processes and find a solution as to how to alter them for enhanced productivity, performance and quality.

Business Process Reengineering comprises of few steps like:

  • Outlining the main objectives or milestones.
  • Properly analyzing the business processes to meet customer’s needs.
  • Closely examining the already implemented processes.
  • Searching for improvement/optimization.
  • Formulating an appropriate business plan.
  • Finally comparing the re-engineered processes thoroughly.

These steps can be broadly segmented into four phases or steps, which are as follows:

Step 1 – Identifying and communicating the need for change

In case you are dealing with a start-up, it can be as easy as a cakewalk. You can simply suggest a direction to pivot to your founder through text, and it’s done. While for a corporation or company, it can be challenging. There will always be a bunch of people in the organization who will be happy with the things as they are. Some might be afraid that it might cost huge investment while the other might think of their job security.

So, one has to convince them why making change is essential for the company. This should be entirely based on the research. You must know exactly which processes are not working properly, or are your competitors performing better than you or worse?

Once you get through this, you will need to come up with a very comprehensive plan that basically involves leaders from different departments. In this scenario, the role of the management will be that of the salespeople; they will be responsible for conveying the grand vision of change and portraying how well will it affect even the lowest-ranked employee positively.

Perks and Challenges - Step 1 - Identifying and communicating the need for change

Step 2 – Set up a Team of Experts

Similar to any other project, for business process reengineering also, you will need a team of highly-skilled, self-motivated people who can carry out the required steps. In most of the cases, the Business Process Reengineering team basically consists of senior manager, operational manager and reengineering experts. The senior managers can provide supervision, the operational managers can contribute to different processes with their vast knowledge, and the reengineering experts will be needed for several other fields, beginning from IT to manufacturing.

The foremost benefit that you can derive from every Business Process Reengineering Team is to have a team of unbiased people with enthusiasm and passion for making a difference.

Perks and Challenges - Step 2 - Set up a Team of Experts

Step 3 – Detect inefficient processes and outline Key Performance Indicators (KPI)

Once you have your team set, to kick-start, you will have to outline the right KPIs. The idea of business process reengineering is always to optimize rather than being utterly unaware of the expenses that might take place while adopting a new process.

KPIs mostly depend on the process you are going to optimize, among all the following can be typical like

Manufacturing Sector:

  1. Total Cycle Time – the entire time consumed from the beginning to the end of a process.
  2. Total Changeover or Switching Time – the entire time involved in switching the process line from making one product to the other
  3. Defect Percentage – the percentage of the manufacturing defect.
  4. Inventory Turnover Ratio – the time is taken for the manufacturing line to turning ventory into products.
  5. Planned and Emergency Maintenance Ratio – the no. of times planned and emergency maintenance take place.

IT Sector:

  1. Average Time to Repair – the time needed to repair a particular system, software or app after an emergency broke out.
  2. Support Ticket Closure Rate – the rate of the number of support tickets closed with the number still opened.
  3. Application Development – the time taken to develop an application from scratch.
  4. IT Cycle Time – the time taken to get the backup of the network after a security breach.

Once the KPIs are exactly outlined, you would be required to go after the individual processes. The easiest way out to this is business process mapping. This is precisely where the operational manager plays a significant role in analyzing the processes.

Step 4 – Processes reengineering and comparing of KPIs

Once you and your company are done with all the analysis and planning work, it is time for you to start implementing the solutions and changes on a smaller scale. After you reach this step, there is not much to add; you can now apply your company’s theories into practice and see how the KPIs perform. In case you find that the new solution is working better, you can begin the process of scaling the solution and implementing it in more company processes. And in case, it doesn’t; you need to start figuring out new potential solutions.

In the end, it can be said that Business Process Reengineering consists of seven frameworks, i.e., Initiate, Negotiate, Select, Plan, Investigate, Redesign, and Ensure.

Challenges Poised on the Implementation of Business Process Reengineering:

Once your business house confirms with the decision of going along with the implementation of Business Process Reengineering, there are still a lot of factors that could actually mess up with this decision.

The business process reengineering should not be taken for granted. For a Business Process Reengineering to be successful, it is important that you have an adequate IT infrastructure in place and complete understanding of the ongoing process and practices.

Not all the business process reengineering projects see the sunlight and fall much behind the promised benefit and envisioned growth.

Few of the top challenges that impact the implementation of business Process Reengineering include:

Lack of knowledge

The team you are working with must be clear on where to implement the reengineering processes and apparently why. Proper prioritization of different business process for reengineering must be considered.

The employees must be trained appropriately or retouched with substantial business process reengineering programs to gain the required knowledge in the field. In case the implementation is done on wrong processes, it could result in wastage of resources. The business can see the correct process implementation only through proper training, guidance and knowledge transfer.

Irregularity throughout the implementation and opting wrong direction

Business Process Reengineering cannot be carried out with an instant competitive advantage. The entire process must be followed bit by bit for the visible growth. But this does not adhere that reengineering has to be done for every process in the organization, there might be some exception where it is not suitable.

Also, once the company achieves the desired benchmark, the business process reengineering practice should not be discontinued because an irregular reengineering process can hinder a lot of opportunities and growth that comes along. There should be predefined objectives and expectations in place.

Inappropriate Team Formulation

A constant look must be put on for latest updates, if any, by the well-defined team on various process reengineering practices. Not just the correct knowledge but the inclusion of the right set of the team is vital both for the operation and management.

The team must be properly structured in which at least a senior or operation manager be allocated who is expert in business process knowledge. You can complete the team with experienced engineers for every single field such as from manufacturing or IT. This will enable constant supervision in the right set direction.

Wrong placement of resources

Lack of essential resources can completely disrupt the bridge between the organization and the reengineering process, so getting this right is the first step. You must see to it that proper resources are readily available when there is a requirement.

The list of things you must check beforehand is skilled human resources, sufficient funds, correct set of Business process reengineering tools, vast knowledge of the processes, experienced players in the system, timely approval and you are good to go.

Perks and Challenges - Wrong placement of resources

Faulty analysis and lack of support from team members

The process milestones should always be analyzed and established in advance. You must ensure that the data and essential information for the procedure is accessible to the entire team. Make the team abreast of the priorities so that the work is well-coordinated without wasting any time.

The work carried out must be relevant, and the team members should be more transparent on why a specific process is required instead of focussing on how the process can be undertaken. Often businesses face challenges in channelling the Business Process Reengineering steps. The responsibility lies on the organization as a whole and not just the Business Process Reengineering team for a particular decision made.

Hence, it can be precisely said that failure may be the result of lack of organizational readiness for change, lack of purpose to move past the traditional methods and age-old comfort zone, lack of commitment, leadership and efficient planning.

When employees in the company are not skeptical about the Business Process Reengineering success only then, they can develop understanding toward working on a particular goal.

Noteworthy Examples of Business Process Reengineering

The past decade witnessed significant changes in the technological front, and with the pandemic, the development of new technologies became more evident. Many companies started carrying out business process reengineering activities. While there are a few catastrophic business reengineering examples, there are successful examples too in history. Ford, an automobile manufacturing company, is one of the famous among all.

The American automobile industry was undergoing a phase of depression in the year 1980. As a cost-cutting measure, Ford decided to scrutinize some of its departments in search of inefficient processes. In the process, they found out that their accounts payable department was overly crowded, consisting of around 500 people which was not at all required.

Ford management then outlined their goal and decided on to reduce clerical staff in the account payable department. Launching of Business Process Reengineering enabled them to figure out the reason why that particular department was overstaffed.

They analyzed the workflow and completely recreated the process digitally and warded off the old manual payable process.

Similarly, you will find that large banks like HDFC vamped off the clerical staff by introducing Chatbot named EVA, which was India’s first and largest artificial intelligence-powered banking chatbot to serve customers in a better way.

Eliminating the unwanted processes and introducing new initiatives is what Business Process Reengineering is all about.

So, is your company ready to venture out on a ride with Business Process Reengineering?

Let’s get started!

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