Using your knowledge of the background concepts of BPR and your expertise in IS / IT, assess the relationship between BPR and IS/IT.

Using your knowledge of the background concepts of BPR and your expertise in IS/IT, assess the relationship between BPR and IS/IT.

In particular consider what demands BPR is likely to place on the IS/IT function in a business organisation. What support is required for the kind of management approach likely to follow from it? To what extent do you believe that without effective IS/IT support, BPR is bound to fail? What evidence would you put forward for this?

At the start of the 1990’s another management craze hit the UK. Following closely on the heels of (perhaps unfairly discredited), Total Quality Management, “Business Process Re-Engineering” was proclaimed as the latest way to invigorate an under performing business, The message was received well in the UK where the private sector had been hit hard by the recession and much of the public sector was in need of a good shake-up. Here was a way to “transform” the business and to do so in a rather shorter time scale than the half-decade or so that TQM was alleged to take.

Many businesses today recognise the need to re-shape, re-design or re-engineer their core business processes in order to remain competitive.

A process can be any operational or administrative system which transforms inputs into valued outputs, typically a sequence of tasks arranged into a procedure or set of work arrangements perhaps involving various machines, departments and people. Seeing a sales order from beginning through to the end is a process.

The word process is very important because most “business people” are not “process oriented”. They are focused on tasks, on jobs, on people, on structures, but not on processes.

Improving business processes is paramount for businesses to stay competitive in today’s marketplace. Over the last 10-15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services, And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitiveness for businesses).

Davenport and Short (1990) define business processes as “a set of logically related tasks performed to achieve a defined business outcome”. A process is “a structured, measured set of activities designed to produce a specified output for a particular customer or market. This implies that a strong emphasis is put on how work within an organization is done” (Davenport 1993).

The term ‘re-engineering’ was first introduced into common business terminology in 1990 in a seminal Harvard Business Review article, “Re-Engineering: Don’t Automate, Obliterate” by Michael Hammer. Hammer offers one definition of Business Process Re-engineering (BPR) as:

“The fundamental re-thinking and radical re-design of business processes to bring about dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed”

By this he means not improving existing processes, but starting with a clean slate. “We are going to take this place apart brick by brick and put it back together again” CEO of Proctor and Gamble (1993). In re-engineering terms, radical redesign means disregarding all existing structures and procedures and inventing completely new ways of accomplishing work. Re-engineering is not about making marginal or incremental improvements but about achieving huge leaps in performance.

Hammer went on to develop the concept further in a book, “Re-Engineering the Corporation”, written jointly with James Champy. The implication of the Hammer and Champy definition is that we should be concentrating on processes rather than functions as the central focus for the operations planning, design and management. To understand it better, the rationale behind BPR is that most operations are not designed to support the actual work that they do, that is, the execution of business processes to create and deliver goods and services to their customers. In most cases, the operational structure is defined before thinking about how the work will actually be performed. As a result, the steps in the execution of a process are usually divided up across several departments or functions within the structure in operations.

Davenport and Short (1990) define BPR as “the critical analysis and radical re-design of existing business processes to achieve breakthrough achievements in performance.

Davenport refers to BPR as process innovation. He recommends viewing businesses not as functions, divisions or products, but as key processes for which root and branch re-design using today’s technology can result in resource savings and performance gains.

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Davenport and Short (1990) define BPR as “the critical analysis and radical re-design of existing business processes to achieve breakthrough achievements in performance.

The approach and tools of BPR serve the needs and aspirations of business strategy makers and implementers. If the target is to obtain better operating ability to satisfy customers then radical change may be needed. BPR programme becomes a tactic, a programme to achieve desired results. BPR in isolation from strategic plans will not work. The commitment of strategic managers is essential. Isolated re-engineering efforts will have no direction and will get lost.

BPR premises that the effectiveness of a business can only be improved and sustained by a radical and complete redesign of its business processes. It therefore concerns itself more than any of the traditional approaches not so much with systems, though these are viewed as an integral part of the re-engineering organisation, but with the redesign of the organisation itself.

When undertaking re-engineering, the most basic questions need to be asked about their companies and how they operate: Why do we do what we do? And why do we do it the way we do? Asking these fundamental questions enables management to look and analyse the way in which they conduct their business. Often when these processes have been analysed they turn out to be obsolete, erroneous or inappropriate.

Some of the immediate benefits to the organisations in undertaking the re-engineering of the business processes can be identified through:

Cutting Complexities
Introducing time reduction
Achieving Best Practice
Improving profit levels
Ensuring continuous improvement
Increasing staff morale
Enhancing customer satisfaction

What is the relationship between IS/IT and BPR?

IS/IT is fundamental to any business innovation, particularly in establishing new trans-boundary horizontal processes. However IT should be regarded as a facilitator to assist BPR.

IT capabilities should support business processes, and business processes should be in terms of the capabilities IT can provide. Davenport & Short (1990) refer to this broadened, recursive view of IT and BPR as the new industrial engineering.

Information Technology has allowed the rethinking of the way business is done. Hammer states, “IT is the most powerful tool for breaking traditional rules”.

He also states that IT is the enabler of BPR, which he considers as “radical change”.

Technology can provide the tools to co-ordinate organisational change and the mechanisms of process automation.

While business processes can be reworked without Information Technology (IT), recent technological advances have placed greater importance on IT as an enabler of BPR. Increasingly, BPR is being deployed in tandem with the use of IT to revamp or overhaul existing business processes that limit effectiveness. Technologies such as Local Area Networks (LANs), client server architecture, electronic data exchange (EDI) and executive information systems (EIS) are some examples of IT which allow firms to achieve performance gains in the communications dimensions of business processes. The emerging technologies of video/teleconferencing, imaging and workflow technologies are providing to be important enablers of BPR by reducing or replacing manual tasks and improving communications. Systems already in place must be selectively destroyed and replaced by cross-functional systems that allow many departments to share a single data warehouse (Kettinger et al, 1996).

Dr Geoffrey Robinson of IBM UK highlighted rapid IT innovation and increasingly intensive global competition as two of the main reasons why organisations have had to consider the introduction of radical changes. He said the relentless progress of microelectronics in making IT cheaper and more powerful had been combined with advances in telecommunications to transform the opportunities available to reinvent business processes, management methods and organisational cultures and structures. He likened the impact of recent advances like optical fibre technology as being equivalent to the effects on travel if the canal, railway and jumbo jet had been invented within a space of ten years.

Dr Robinson pointed to Marks & Spencer (M&S) as an example of the way in which the impact of IT had changed. In the 1970’s, he said, M&S had regarded computers essentially as a cost-cutting mechanism. Then it introduced electronic point of sales tills, initially to help with inventory management, and bought out its own store card rather than accept credit card. This gave the company a valuable electronic information base about its customers. It eventually used this to establish a totally new financial services business, which has the potential to compete with banks and other financial-service companies.

In most companies the IS organisation has the skills to identify the applicable technologies, design, implementation and management of technology-based solutions.

The IS/IT can be used to analyse existing processes and then form the basis for the development of new processes.

Davenport & Short (1990) argue that BPR requires taking a broader view of both IT and business activity and the relationship between them. IT should be viewed as more than an automating or mechanizing force: to fundamentally reshape the way business is done.

Davenport & Short (1990) outline the following capabilities that reflect the roles that IT can play in BPR: Transactional, Geographical, Automatical, Analytical, Informational, Sequential, Knowledge Management, Tracking and Disintermediation.

Grover et al (1995) state that innovative uses of IT will inevitably lead many firms to develop new, co-ordination-intensive structures, enabling them to co-ordinate their activities in ways that were not possible before. Such coordination-intensive structures may raise the organization’s capabilities and responsiveness, leading to potential strategic advantages.

In terms of the IS context, BPR demands a change of focus. Traditional view of IS development focused solely on the technology and on supporting the existing functional division of the organisation. The traditional IS development strategy also only offers incremental improvements in business performance. In BPR, Information Systems are considered as affording the opportunity to radically redesign organisational work. As a consequence, radical re-design of work can offer radical improvements in organisational improvements.

Although, BPR has its roots in IT management, it is primarily a business initiative that has broad consequences in terms of satisfying the needs of customers and the firms other constituents (Davenport & Stoddard 1994).

The IS group may therefore need to play a behind-the-scenes advocacy role, convincing senior management of the power offered by IT and process redesign.

It will also need to incorporate the skills of process measurement, analysis ad redesign.

Real benefits to the business occur when IS becomes involved with more fundamental changes to the business processes themselves. Michael Hammer notes that “IS can not play a leadership role. But there is a very important role, an active role, that IS sometimes plays, what I call the catalytic role”. The technology must support fundamental changes to the underlying process and not simply be applied to the old, inefficient processes.

Demands On IS/IT

There are a number of demands on which BPR places on the IS/IT function. IS/IT can be used to examine and analyse existing information systems.

IT can be used in the training of operational staff and integrate the re-engineered process or processes into the live operational environment. Test and refine them in operations.

Also provides ongoing support to the re-engineered operations, help managers and staff adjust to new roles, responsibilities and methods of working, monitor performance and initiate ongoing refinements.

IS/IT can ensure a continuous review of the opportunities to exploit the enhanced capabilities created through BPR.

In most companies the IS organisation has the skills to identify the applicable technologies, design, implementation and management of technology-based solutions. The IS organisation is also a source of another key ingredient to business re-engineering success; large-scale project management skills and expertise. Business re-engineering projects are broad in scope and demand the rethinking and re-creation of all parts of an organisation.

Although IS should not lead the overall business re-engineering effort; that is clearly a job for the business owners. The natural, obvious benefits of empowerment business managers to lead reengineering initiatives are that it places responsibility and accountability for future business processes on those most knowledgeable about operations and most affected by the impending changes (Jones 1994).

However, because technology and project management are so important to the success of re-engineering, it is imperative that the IS organisation also assume a leadership role, where appropriate, in those efforts.

Role of by different aspects of BPR (Martinez 1995)

Business re-engineering process leaders should strive to partner with IS staff because, as re-engineering moves toward implementation, IS professionals skills will be nessasary for success. Business managers should expect and encourage IS to provide leadership in two areas; project management discipline and experience, and technology vision and expertise (Martinez, 1995).

What Support is required For Management Approach Post BPR?

Will BPR fail without effective IS/IT support and what evidence is there For/Against this view?

Hayward (1995) estimates that about 99% of BPR initiatives are failures with only 1% that have succeeded with their re-engineering initiatives. But it should be noted that not all business initiatives can be classed as BPR.

Re-engineering fails because people resist to change (Cooper & Markus, Jones 1994). Organisations are bound to continue having trouble implementing change until they learn that people resist not only to change, but the way they are treated in the change process and the roles they play in the effort. This means that it is not enough merely to re-engineer the organisation, the management must also be re-engineered. The engine of re-engineering is not only re-engineering analysts, but managers and the people who do the work. Re-engineering requires committed, empowered people, not simply to operate processes after they have been re-engineered, but also to re-engineer them in the first place. So the success of re-engineering depends critically on the people and their knowledge, creativity and openness to radical change. Hammer and Champy specified a list of errors that lead companies to fail at re-engineering (1993).

An essential feature of all BPR success stories is that top management commitment to the change programme has to be sustained over a long period. Managers who understand how an organisation works and its people feel are effective drivers and facilitators in helping to motivate fresh thinking and willingness to innovate.

King (1994) views the primary reason of BPR failures as overemphasis on the tactical aspects and the strategic dimensions being compromised. He notes that most failures of re-engineering are attributable to the process being viewed and applied at a tactical, rather than strategic level.

Conclusion

Concluding we can say, BPR is the radical re-design of business processes to enable radical improvements in business performance. BPR is important in focusing on the necessary inter-dependence between IS and organisational work. It proposes considering new forms of organisational structure made possible by innovations in IT.

BPR and IS development require joint team approach. Risks of BPR and IS development should be shared between designers and users. Business users knowledge, skills and experience have great value. They could be helpful in IS/IT supported business re-engineering. The notion that users do not know what they want should be rejected and their co-operation with IS/IT partners should be developed.

BPR could be undertaken with the express purpose of improving the quality of thinking or working life, introducing new ways of working and learning, or widening job opportunities; while a focus upon external relationships could lead to the building of capability, market or network innovation and more profitable partnerships with customers. BPR offers us the opportunity to take an integrated view of the operations and create a platform from which to grow and shape future business success.

Time should be spent on learning and understanding the core business processes before embarking on any re-engineering.

Management should also recognise what role IS/IT plays in BPR strategies and how it can be managed most effectively. As the technology is creating many of the opportunities opening up for new business processes, it may be inevitable that IS/IT may drive BPR to some extent.

Information technology has allowed the rethinking of the way business is done. It supports both process analysis, design and change. Technology can provide the tools for organisational change.

Hammer states that as much as 70% of BPR projects fail. However, IS is not seen as the primary cause of such failure, faltering support from upper management is primarily blamed. BPR by their very nature are high risk/high payoff projects.