Business process reengineering

Business process reengineering can improve the performance of a firm.

Where we are in the strategic planning process?

Following the first three stages of planning, we have the data to create strategic options.

Process reengineering can be a part of business strategy.

Process engineering and management accountability

Not every little business process improvement is strategic in its impact. Every manager should aim to improve the business processes in their area. Small improvements within their operation may cut costs, speed delivery, reduce risks, and improve product or service quality. These may not affect the corporate bottom line enough to be strategic. Therefore, these are not a business strategy of business process reengineering.

Strategic process reengineering will affect the corporate results by say 20% or more.

Reengineering of business processes has received some negative reaction in recent years. There may be a number of reasons for this.

Issues with business process reengineering

First, it is hard to pin down the meaning of process reengineering. Many perceive it as just one more management fad that involves repackaging previous process improvement practices.

Second, Business Process Reengineering, in some hands, seems suspiciously like a reversion to early twentieth century Taylorist concepts. These include sharp division of labor and eliminating worker initiative in order to reduce error through process simplification. This is despite Business Process Reengineering advocates claiming to reject Adam Smith's ideas on division of labor and economies of scale. Some studies have suggested that process reengineering often requires workers to be more robot like.

Third, some see reengineering as a fancy name for ‘downsizing’, or ‘rationalizing’ when managers bereft of growth strategies resort to drastic cost cutting.

Fourth, the most disturbing thing about so much process reengineering is the failure to deliver intended results.

Is process reengineering worth the pain?

Best Practices, Total Quality Management, Six Sigma, ‘something’ driven management, management by ‘something else’, Core Competence, ‘something’ sourcing, as well as Process Reengineering have all become part of every managers name dropping arsenal.

All from time to time promise to make improvements big enough to justify a bit of pain along the change journey.

It is easy in hindsight to condemn the business reengineering work.

Negativity about enterprise process reengineering may come from the aggressiveness of some of its advocates. Some proponents of process change seem to delight in pushing a disruptive; some might say destructive, approach to organizational change.

The disenchantment with failed business process reengineering projects should not blind us to the strategic potential of process reform.”

The ‘re’ in ‘reengineering’ means ‘again’. Try again! The challenge process reengineering addresses is the bureaucratization of large organizations. Many fall behind in productivity.

However, the challenge of improving performance shifted. From a strategic perspective, the ‘new’ reengineering of business processes needs to look at process design in the first place, and prioritize process redesign in the second place.

A strategic look at businesses processes

An approach I have found helpful in preparing for Business Process redevelopment is that developed by Peter Keen in his book The Process Edge and further elaborated for the digital economy by Keen and coauthor Mark McDonald in the The eProcess Edge.

Not all business processes are equal

Keen and McDonald set a strategic challenge that goes beyond improving current processes. They ask should these processes exist at all. If so what is their relationship to business success in terms of wealth creation. What is their role in providing customers with value?

They use a simple interrogation sequence, and classify business processes by the answers to enable managers to prioritize processes for reengineering or other attention.

Use the following chart to narrow your focus to the small percentage of your processes that leak the largest percentage of lost value. Protect the small percentage of business processes that generate the largest share of profits. Tackle the big problems in your business if you are serious about strategic planning for improved performance.

Of course, there are strategic sourcing implications from this analysis.

Options include -

  • Integrate- Embed routine background or mandated types in software interfaces
  • Out source- Required for firm success but it may not have the capability
  • In house- Processes vital to competitive advantage (‘secret sauce’) should be under your control

For more resources on Business Process redesign, check out the suggestions below.

Return from Business Process Reengineering to Business Strategy.

Return from Business Process Reengineering to Simply Strategic Planning Home Page.

Resources for Process Reengineering

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