Business process re-engineering is the process of redeveloping core business processes. It aims to generate significant improvements in critical aspects of the business. These typically include cost, output, quality, service and/or speed.
Business process re-engineering and continuous improvement
BPR is about making the sort of significant changes that can make or break a company. Business process improvement is about maximising your return on investment in those changes.
Business process re-engineering starts with a blank slate. The business decides what it wants to achieve, then works out the optimum way of achieving it. No consideration is given to existing processes. These can all be completely discarded if that is what is required to deliver the optimum process.
Business process improvement starts with what you already have. The company looks at how to make it better. This may involve some level of investment, for example upgrading existing tools. However, it stops well short of making significant changes to the company’s existing way of operating.
Business process improvement can also be an indicator of when you need to start looking at business process re-engineering. It should give you a good idea when your current processes are reaching the end of their useful life. You’ll then need to organise a significant upgrade.
Business process re-engineering steps
Business process re-engineering can be a complex process, even for start-ups. At a basic level, however, it can generally be broken down into a few, key steps. All of these steps run in tandem with a process of clear and relevant communication.
1. Identify the need for business process re-engineering
This step can actually be broken down into two parts. First, identify the need for some form of change. Then you need to identify that BPR is the right approach to deliver the needed change.
2. Form a business process re-engineering team
As a rule of thumb, this team should include representation from senior management, representation from operations and re-engineering experts. The latter may be external consultants.
3. Map your current business processes
If your business processes are already mapped, then check that the mapping is accurate. The mapping should reflect what people are actually doing rather than what management thinks they are doing. Sometimes you’ll be able to check this with software tools. At other times, you’ll need to go and talk to your workforce.
4. Analyse your process map
This exercise is often best undertaken in two parts. First look for any obvious weaknesses. Second, look for ways to improve on anything you are already doing well, but could be doing better. In either case, define key performance indicators (KPIs) to measure them.
5. Create a new process map
Now you’ve identified where you could do better, you need to identify how you are going to do better. Once you’ve updated your processes, see if you also need to update your KPIs.
6. Pilot test and assess
Implement the changes on a small scale and measure the result. Then decide whether to go ahead and roll out the changes throughout the company or go back to the drawing board.
Business process re-engineering success and failure factors
In business process re-engineering, success and failure factors are generally two sides of the same coin. Here are the common factors that can determine the success or failure of BPR.
Identification of needs
Communication with management and employees at all levels
Composition of the business process re-engineering team
Analysis of the current processes
Definition of KPIs
Examples of business process re-engineering
Although the term ‘business process re-engineering’ dates from the 1990s, the concept has existed throughout history. For example, the invention of the Gutenberg Press in the 15th century led to a massive overhaul in the printing industry. This is a clear early example of what would now be recognised as business process engineering.
Another notable example is Henry Ford’s introduction of a moveable assembly line for car production. This was implemented in 1913 and reduced production time from more than 12 hours to one hour and 33 minutes.
Now, the move to the cloud is offering companies a great opportunity to undertake business process re-engineering. Companies may start their journey to the cloud by simply replicating their existing processes. Once they are established there, however, they can undertake business process re-engineering to take full advantage of the cloud’s capabilities.
How we can help
If you’re interested in finding out more about business process re-engineering (BPR), then get in touch with the financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.