Business is a constant, never-ending battle for supremacy. Your company is either gaining ground on the competition or losing it. Obviously, we hope that your organization falls into the latter category! One of the best ways to ensure that it does is to invest in business process reengineering.
You see, one of the keys to maintaining a foothold over the other brands in your industry is developing a knack for innovation. The companies that can stay agile and adjust when needed often win. So that’s what we’ll discuss in this blog post. Keep reading to learn what business process reengineering is, why it’s beneficial, and how to do it successfully.
What is Business Process Reengineering?
According to Wikipedia, business process reengineering is, “the practice of rethinking and redesigning the way work is done to better support an organization’s mission and reduce costs.”
While many other methodologies tweak processes in the hopes of securing incremental improvements, business process reengineering completely overhauls current systems, often times producing radical new results in a relatively short amount of time.
For example, a while back, Ford, an American car manufacturer, needed to cut costs. After deploying a business process reengineering strategy, company leaders realized their accounts payable division was overstaffed. They then reorganized the entire department, developed new processes to support a smaller staff, and saved a significant amount of money.
This business approach was first championed by Michael Hammer in his 1990 article, Reengineering Work: Don’t Automate, Obliterate. Michael believed that many businesses were using technology to automate lackluster processes. Instead, he reasoned, they should create new, more effective processes.
Since that time, major corporations such as Google, Taco Bell, the aforementioned Ford, and many others have used the business process reengineering methodology to improve their organizations.
The Benefits of Business Process Reengineering
The exact benefits a company will enjoy due to business process reengineering completely depend on which process is being overhauled. But a few potential benefits include:
- Reducing Costs: This methodology can help a company significantly reduce costs, as evidenced by Ford in the above example. By reengineering a bloated company system, Ford was able to dramatically minimize expenses in the accounts payable department.
- Increasing Profits: An increase in profits is another potential benefit. If a company is able to re-engineer a process so that it’s less expensive to operate and/or is more efficient, an increase in profits will be enjoyed.
- Boosting Productivity: Many processes need to be overhauled because they simply have too many steps, which leads to low productivity. A more efficient workflow will help an organization both cut costs and boost profits.
- Maintaining Flexibility: Lastly, business process engineering can help companies maintain flexibility. In today’s world, the organization that can stay agile and quickly adjusts to changing trends and customer needs often wins.
Remember, you’ll have to embark on your own business process reengineering adventure to know which of these benefits your organization will actually enjoy. But each is not only possible but probable when you follow the five-step system we’ll outline for you in the next section!
How to Reengineer Your Business Processes
You now know what business process reengineering is and why it’s beneficial. But how do you actually use this approach to better your business? Simply follow these five steps and you’ll be well on your way.
1. Know Your Goals
The first step is understanding your goals. Why do you want to reengineer company processes? Are you hoping to cut costs, become more productive, or better serve your customers? A process reengineering effort can help your organization achieve each of these goals. But you must first understand which one you want to accomplish.
You’ll also want to clearly define your goals so that you can get buy-in from important stakeholders. Without understanding the benefits of adjusting company processes, they’ll likely be hesitant to do so. But if you can give them a compelling reason — i.e. a boost in organizational revenue — they’ll be more inclined to jump on board with your plans.
2. Build a Team
Next, you need to build a team of experts to help you establish new company processes. This team could consist of top employees, experienced management consultants — whoever you believe will be able to help your company reengineer outdated systems.
Most successful business process reengineering teams consist of:
- Senior Manager: This person is charged with overseeing the entire reengineering effort. They are crucial to success because they hold a senior position within the company. Meaning they can make decisions without needing to get approval from other upper management professionals. This will save your team a lot of time,
- Operations Manager: The operations manager is someone with deep experience and knowledge on the process being overhauled. Their expertise will come in handy when deciding how to re-engineer systems and business strategies.
- Reengineering Experts: These folks are people with expertise in fields such as IT, manufacturing, finance — whatever areas of the company a reengineered process effects. For instance, a new company process may require new technology to operate. An IT expert will be able to assist in that area.
In addition to the skill sets mentioned above, each person on your business process reengineering team should also be highly motivated and well-respected within your company. These kinds of team members will give your organization the best chance at successfully changing business procedures from the ground up.
3. Study Your Current Processes
Now that your team is in place, it’s time for your group to study your current business process and determine what can be done better. Which actions bog down the entire system and cost your company time, money, or both? Now look for ways to remove them.
During this step, you may find benchmarking to be an extremely helpful practice. If you’re not familiar with the term, benchmarking is the act of measuring a company’s performance against other similar organizations in the same industry. This may give you a clearer view of which processes need to be overhauled and which should stay the same.
4. Start the Redesign
This is where business process reengineering get’s interesting. During this step, you and your team will need to flex your creative muscles and imagine your organization’s processes in a new way.
You’ll need to look at any biases or assumptions that are present and if they are true or not. You’ll need to search for fresh opportunities to use technology. And you’ll want to make sure your team is building from the ground up, not just tweaking current workflows.
A few of the main things you’ll want to look for include reducing process steps, centralizing data, limiting delays, quickening lag times, and combining similar actions.
5. Look at the Big Picture
Finally, it’s important to look at the big picture during your business process reengineering initiative. How will changing one procedure affect others in the company? How will the change affect the team your company employs?
These are important considerations. A new process, if it handicaps other company systems, won’t benefit your organization. Likewise, a new approach that isn’t willingly accepted by workers won’t be as successful as it could be.
So, remember that business process reengineering can’t be done in a vacuum. Any adjustments you make will have consequences. The trick is making sure the consequences are both understood and beneficial. And be prepared. One change can potentially lead to many more. You’ll be much better off if you plan for this from the beginning.
Criticisms of Business Process Reengineering
While business process reengineering does have a slew of valuable benefits, there are those that criticize the approach. The biggest complaint is that, for many companies, reengineering becomes an easy way to justify downsizing. While downsizing is a potential outcome of business process reengineering, it shouldn’t be the default.
Another prominent criticism is that business process reengineering automatically assumes that every business problem can be traced back to company processes. This may not always be true. For example, an organization could be experiencing difficulties because of the people managing its processes, not the processes themselves.
But despite these critiques, business process reengineering can be an effective methodology for improving an organization — when used in the right context.
Is Business Process Reengineering Right for Your Company?
Only you can answer that question. But if you’re looking to improve profitability, boost profits, and maintain an edge over your competition, you should definitely take a serious look at business process reengineering! Just remember our five-step system:
- Know Your Goals: You can’t effectively change company processes without understanding what you’re hoping to achieve by doing so.
- Build a Team: Successful business process reengineering can only be accomplished with the right team in place.
- Study Your Current Processes: Take a good, long look at the current processes your company is using and look for areas of improvement.
- Start the Redesign: Get creative and imagine your organization’s workflows in a completely new way. Don’t tweak old processes, develop completely new ones.
- Look at the Big Picture: Finally, remember that your business process reengineering efforts won’t happen in a vacuum. Make sure you evaluate how a change in one process will affect your company as a whole.
Follow these five steps and you’ll be well on your way to business process reengineering success. Good luck!