The Effect of Business Process Reengineering on Organizational Objectives in Union Bank Plc

Chapter One of The Effect of Business Process Reengineering on Organizational Objectives in Union Bank Plc

Concept of Business Process Re-engineering

Business process re-engineering is an integrated set of disciplines for building or changing an enterprise, its processes, and systems. It integrates the most powerful change methods and makes them succeed. Business process re-engineering provides management with a tool box of change methods. It aims to select and integrates the most powerful methods so that management can plan and succeed with complex change while continuing to run the business (Nadler, 2006).

However, Kaizen (2009) opined that business process re-engineering is about the simplification of work to achieve higher quality, better results for customers, and lower costs. It is about replacing manual processes with automation, eliminating unnecessary bureaucracy, streaming and minimizing handoffs across departments providing the right information at the right time to the right people, eliminating unnecessary work, reducing unnecessary controls, empowering every employee and getting it right the first time.

However, Klein (2007) defines business process re-engineering as the rapid and radical redesign of strategic, value added business and the system policies and organizational structures that support them to optimize work flows and productivity within an organization. Johansson and Mchugh (2008) opined in their book “Business Process Reengineering: Breakpoint strategies for market Dominance,” defines business process reengineering as the means by which an organization can achieve radical change in performance, as measured by cost, cycle time, service and quality, by the application of a variety of tools and techniques that focus on the business as a set of related customer-oriented core business processes rather than a set of organizational functions.

Furthermore, Jacob (2009) defines (BPR) as an informed, participative process resulting in new ways of doing business that position an entire organization for success, now and into the future.

The above definitions emphasize dramatic, radical change, usually occurring in a short time frame that affect a core business process that cuts across functional lines and where the people, cumin empowerment element is crucial for success. In recent years a number of formal BPR case and other computer aided design tools have been employed to support the task of creating structure / process diagrams and modeling an organization’s data. Further, as companies achieve success and failure in this process, a number of stages in the BPR process have become clearly identified. Clearby B.PR is an on-going process critical to an organization’s success in a competitive market place.

BPR has being existing since 1900 but the history of business process reengineering in modern era. According to Darein (2009) came into limelight in 1990, when Michael Hammer, a former professor of Computer Science at the Massachusetts institute of technology (MIT), published an article in the Harvard Business Review, in which he claimed that the major challenge for managers is to obliterate non-value adding work, rather than using technology for automating it. This statement implicitly accused managers of having focused on the wrong issues, namely that technology in generally, and more specifically information technology, has been used primarily for automating existing processes rather them using it as an enabler for making non-value adding work obsolete.

Hammer’s claim was simple: most of the work being done does not add any value to customers, and this work should be removed, not accelerated through automation. Instead, companies should reconsider their processes in order to maximize customer value, while minimizing the consumption of resources for delivering their product or services. A similar idea was advocated by (Daverport, 1990). The concept of re-engineering traces its origins back to management theories developed as early as the nineteenth century. The purpose of re-engineering is to “make all your processes the best-in-class.” Frederick Taylor suggested in the 1880’s that managers could discover the best processes for performing work and reengineer them to optimize productivity. BPR echoes the classical belief that there is one best way to conduct tasks. In Taylor’s time, technology did not allow large companies to design processes in a cross functional or cross-departmental manner. Specialization was the state-of-the-art method to improve efficiency given the technology of the time.

In the early 1900’s, Henri Fayol originated the concept of re-engineering: “To conduct the undertaking towards its objectives by seeking to derive optimum advantage from all available resources.”

Although, the technological resources of our era have changed, the concept still holds. About the same time, another business engineer, Cyndallurinck stated, “it is not enough to hold people accountable for certain activities, it is also essential to delegate to them the necessary authority to discharge that responsibility.” This admonition foreshadows the idea of worker empowerment which is central to re-engineering.

Although Hammer and Champy (2007) declared that classical organization theory is obsolete, classical ideas such as division of labour have had an enduring power and applicability that reengineering has so far fail to demonstrate. BPR does not appear to qualify as a scientific theory, because, among other things, it is not duplicated and it has limited scope. The applicability of classical management theories, such as division of labor, were widely duplicable and portable. These ideas stimulated increases in productivity, output and income that led to the creation of the middle class.

If BPR is not a theory, but a technique, Hammer and Champy are surprisingly vague about the details. This paper attempts to fill in the blanks. Despite their vagueness, Hammer and Champy (2009) are clear about who to blame when re-engineering attempt to fail, it is the fault of the individual company. Cyert and March, among others, point out that conflict is often a driving forces in organizational behavior. BPR claims to stress framework, yet paradoxically, it must be “driven” by leader who is prepared to be ruthless. One executive with BPR experience warns not to assume.