BPR (Business Process Reengineering) is to radically restructure and optimize business contents and flows as well as structure of an organization.
Overview of BPR
BPR is a concept to redesign an inefficient current business process from scratch in order to restructure an optimal business process. In a company, as a result of functional labor division, business processes are locally optimized on a sectional basis; thereby, global optimization cannot be achieved in some cases. In such cases, BPR conducts process-oriented analyses of business contents and flows by means of some indices, such as costs, quality, speed, and so forth, in order to radically rebuild a process including new process-oriented structure of the organization, value, evaluation system, etc.
In the 1990s, a number of consultants advocated it, but in many cases, its “continuity” was not emphasized enough; in the 2000s, it has come to be treated with a negative image.
History of BPR
- 1990: Michael Hammer, a former professor at MIT, advocated BPR in his paper published in Harvard Business Review.
- 1993: M. Hammer and James A. Champy published “Reengineering the Corporation: A Manifesto for Business Revolution,” which made BPR well-known.
- 1997: Owing to successive failures of BPR, “70% of BPR projects failed.” became a phrase mildly making fun of BPR. (MIT System Dynamics Group)
- 2000s: Continuous improvement activities of BPM attract a great deal of interest.
Steps of BPR
When we carry out BPR, a process-oriented manner is indispensable. We need to clarify the relations among individual tasks and to consider that the company’s business processes are comprised by connecting these tasks in order. Furthermore, it is required to specify necessary resources for each task, executers of tasks, execution conditions, relations among processes, and so on. In this way, we must clearly define all of the business in the company as processes. After defining processes, BPR proceeds in the following order.
- Analysis of present state
- Medium-/Long-term strategy formulation
- Establishment of optimal business processes and organization structure for the accomplishment of the strategy
- Process transformation
For analysis of present state and medium-/long-term strategy formulation, we can use
- ABC (Activity Based Costing)
- BSC (Balanced Score-Card)
In terms of ABC, cost involved in business processes is derived from cost per activity. The effects before and after BPR can be measured from the viewpoint of cost. In order to measure effects of BPR from other viewpoints, BSC is useful because it defines evaluation indicators and goals from multiple perspectives.
Relation between BPR and BPM
PDCA Cycle in which four steps above are repetitively executed, and improvement activities are continuously performed. In BPM, repetitive improvement and monitoring gradually establish optimal processes. In contrast, BPR doesn’t include continuity but does try to approach optimal processes at once by implementing drastic reforms. BPR can be considered as a part of Plan step in PDCA Cycle of BPM.
Differences between BPR and TQC
TQC (Total Quality Control) is a term similar to BPR. Both of these refer to business improvement in companies; TQC aims at company-wide business improvement by accumulating everyday business improvement in each section while BPR means fundamental reforms for the entire company activities.