Business Process Management – A Comparison Between the Change Initiative Business Process Reengineering and the Continuous Improvement Method Six Sigma

Diploma Thesis , 2010 , 93 Pages , Grade: 2.0

Business economics - Business Management, Corporate Governance

On the one hand, it is often said that the manufacturing and service companies in the industrialised countries are well organised, the business processes are well managed, so the companies are able to work effectively and efficiently. On the other hand, a lot of companies, even big corporations, have gone bankrupt over the last years, because of their confusing and inefficient business process organisation, which also led the management to take wrong decisions. So how do these two statements match? Hence it has become more important for companies, especially for those which are globally organised, to focus on their business processes to either optimise or eliminate the one which adds no value. In this context it is an important approach to find out, in what way the most important methods of BPM, BPR, and Six Sigma can help organisations to face the challenges of today’s turbulent marketplaces.

Table of Content

Abbreviation List

List of Figures

1. Introduction
1.1 Background
1.2 Objectives
1.3 Research Problem
1.4 Research Relevance
1.5 Research Methodology
1.6 Structure of the Work

2. Business Process Organisation within Companies
2.1 What is a Business Process?
2.2 Process Hierarchies
2.3 Core Competencies and Core Business Processes
2.4 Development of Business Process Strategies

3. Change Initiative - Business Process Reengineering (BPR)
3.1 Conception
3.2 History and Development
3.3 BPR Objectives
3.4 Role of Information Technology in BPR
3.5 Implementation of BPR with Regard to BPR Implementation Phases
3.5.1 Defining BPR Implementation Objectives
3.5.2 Identification and Selection of Processes to be Reengineered
3.5.3 Understanding the Selected Processes/Process Analysis
3.5.4 Redesign of the Selected Processes
3.5.5 Implementation/Transformation of Redesigned Processes

4. Continuous Improvement - Six Sigma
4.1 Conception
4.2 History and Development
4.3 Six Sigma Objectives
4.4 Implementation of Six Sigma with Regard to DMAIC Phases/Methodology
4.4.1 Define Phase
4.4.2 Measure Phase
4.4.3 Analyse Phase
4.4.4 Improve Phase
4.4.5 Control Phase

5. Aspects of a Combined BPR and Six Sigma Implementation in Praxis
5.1 Discussion about the Improvement Methodologies
5.2 Preparation: Overcome Employee Resistance
5.3 Starting with the Implementation of BPR
5.3.1 Challenges in Implementing BPR
5.3.2 BPR Team Structure
5.3.3 Changes within the Reengineered Organisation
5.4 Proceeding with the Implementation of Six Sigma
5.4.1 Challenges in Implementing Six Sigma
5.4.2 Six Sigma Team Structure
5.4.3 Realisation of a Six Sigma Organisation

6. Critical Analysis
6.1 Arguments For and Against BPR
6.2 Arguments For and Against Six Sigma

7. Conclusion and Outlook
7.1 Results of the Work
7.2 Future Research Direction

List of Literature

Abbreviation List

illustration not visible in this excerpt

List of Figures

Figure 1: Overview of BPM Methodologies

Figure 2: Business Process

Figure 3: Process Hierarchies

Figure 4: BPR Implementation Phases

Figure 5: Examples of Core Business Processes

Figure 6: As Is Process Output

Figure 7: Relationship Between Sigma Level and DPMO

Figure 8: DMAIC Cycle

Figure 9: Six Sigma Tools

Figure 10: Components of a Project Charter

Figure 11: VoC and CtQ

Figure 12: Measurement Matrix of a Car Dealer

Figure 13: SIPOC Diagram

Figure 14: DPMO Conversion Table

Figure 15: Cause and Effect Diagram

Figure 16: Prioritisation Matrix

Figure 17: FMEA Worksheet

Figure 18: Control Chart

Figure 19: Question List for Discussion Phase

Figure 20: Continuous Improvement versus Radical Change

Figure 21: Sub-Phases of the Redesign Phase

Figure 22: BPR Team Structure

Figure 23: Six Sigma Team Structure

1. Introduction

1.1 Background

In the course of globalisation, increasing homogeneity of products, and a change from the seller’s to a buyer’s market, companies have yet to face bigger challenges than ever before. Increasing competition leads the companies to focus more on their price-quality ratio of their products and services for the sake of competitive advantage.¹ To achieve the basic goal of organisations and profit-maximising firms, namely customer satisfaction, an effective and efficient Business Process Management (BPM) has received more attention in today’s ever-changing world.²

In general, BPM is about satisfying the right customers with the right products and services by aligning the internal activities and resources with the external requirements.³ In addition, it is an important strategic approach, which leads companies to work more efficient by managing the cross-functional activities, such as production and supply, throughout the organisation that must work collaboratively to create a permanent value for customers and shareholders. From the business administration or managerial point of view, increasing customer satisfaction, reducing cost of doing business, time to market, improving quality of products and services as well as establishing new products and services at low cost are important goals of BPM.⁴

Due to the increasing focus on business processes, some special change initiatives,⁵ and continuous improvement methods in order to increase process performance have been developed and become more important during the last decade.⁶ Figure 1 on the next page provides an overview of some essential continuous improvement methods and change initiatives. In addition, the figure illustrates that several methods are a part of BPM.⁷

illustration not visible in this excerpt

Figure 1: Overview of BPM Methodologies⁸

One of the best-known change initiatives is Business Process Reengineering (BPR).⁹ Changes in the marketplaces, customer requirements, technologies etc can lead companies to reorganise their business processes to be more competitive in today’s challenging business environment. That is what BPR is about, namely an instrument of the fundamental rethinking and radical redesign of business processes. In addition, it is to create a radically new process of organisational change to renew the commitment of companies to customer service.¹⁰

To get an efficient continuous improvement, business processes offer good requirements for the applicability and integration of Six Sigma.¹¹ The basic goal of Six Sigma is to achieve a virtually error free business process performance. The implementation of Six Sigma takes place in single business processes rather than organisational functions or departments. Six Sigma focuses on critical business processes. It firstly reduces process variation and then improves the process capability for the sake of customer satisfaction.¹²

Hence BPM which is the generic term of those change initiatives and continuous improvement methods, has become an important issue over the last years. An efficient BPM is the only chance for organisations to face the current tough market conditions.¹³

1.2 Objectives

On the one hand, it is often said that the manufacturing and service companies in the industrialised countries are well organised, the business processes are well managed, so the companies are able to work effectively and efficiently. On the other hand, a lot of companies, even big corporations, have gone bankrupt over the last years, because of their confusing and inefficient business process organisation, which also led the management to take wrong decisions. So how do these two statements match? Hence it has become more important for companies, especially for those which are globally organised, to focus on their business processes to either optimise or eliminate the one which adds no value.¹⁴ In this context it is an important approach to find out, in what way the most important methods of BPM, BPR, and Six Sigma can help organisations to face the challenges of today’s turbulent marketplaces.

The goal of the thesis at hand, as the title and the background part suggest, is to discuss the aforementioned change initiative BPR as well as the continuous improvement methodology Six Sigma. Particularly, to describe the way of implementation of these two methodologies is the most essential goal of this work. In addition, a critical stand regarding the effectiveness and resulting benefits for companies should be taken, and finally the ability to compare these two methodologies with each other should be provided to readers. Furthermore challenges in implementing BPR and Six Sigma should be discussed. Within the work change initiative BPR means the approach of radical redesigning and radical improving business processes. Furthermore, the introduction of a combined application of BPR and Six Sigma for a long-term business process solution is an essential part of this work. The reasons for choosing BPR and Six Sigma are that they originate from different business disciplines, illustrate the wide impact of the process view and have a clear focus on business processes.¹⁵

Firstly it is necessary to discuss the business process organisation within companies for a better understanding of the implementation of BPR and Six Sigma. Afterwards the theoretical aspects of BPR and Six Sigma, which have the ability to define, manage, refine and execute business processes, can be well discussed to give an overall introduction of these instruments. For a better understanding the theoretical aspects are provided by practical examples.

The targeted readers are mainly members of the management of companies and in addition other employees who are usually involved in human interaction and have a basic knowledge of business processes. After having read this thesis, the readers will understand the most essential aspects of BPR and Six Sigma implementation. Additionally the level of awareness about the importance of an efficient BPM will increase. Furthermore, the work provides the readers with a clear conception of radical change and continuous improvement. Thus, the thesis identifies and defines the key business process concepts and terms, which especially help the companies’ leaders to create business process advantages for them.

1.3 Research Problem

The research problem generally focuses on the concepts, approach, goals and particularly on the implementation of today’s most dominant change initiative BPR¹⁶ and continuous improvement method Six Sigma.¹⁷ Additionally the work should enable the readers to compare these two instruments and finally to find out for their companies, whether they should implement either of them or a combination of BPR and Six Sigma is more beneficial. These are also the main research questions as per particulars given below:

-> In what way can BPR and Six Sigma be implemented within business processes?
-> How can a combined BPR and Six Sigma implementation be undertaken?

1.4 Research Relevance

Due to the higher impact of Internet, globalisation has become one of the most interesting economic developments of the twenty-first century. Organisations that attempt or already are globally organised have to consider lots of challenges, such as new marketplaces, new workforces, new competitors and a diverse cultural mix.¹⁸ In addition, organisations are constantly forced to face dynamic markets and have to provide their customers with better, cheaper and more specific products.¹⁹ Due to these tough conditions organisations are required to constantly sense changes in market conditions, and adapt their dynamic and flexible business process strategies to reflect the changes.²⁰ As a matter of fact, nowadays successful organisations are able to adopt existing products at low cost and to create a new product introducing it rapidly to the market. This ability is the main requirement for the competitive advantage in such global markets.²¹

Due to the aforementioned facts BPM,²² particularly its methods (change initiative BPR²³ and the continuous improvement methodology Six Sigma)²⁴ have received more attention in recent years. At an organisational level BPM is essential to understand how companies operate, and it provides an ideal opportunity to rapidly adapt the strategies reflecting the changes in global markets. In general, BPM is the answer of acting flexibly, efficiently, and customer oriented.²⁵

1.5 Research Methodology

The basic media are books and magazines. Also the Internet, interviews or opinions of experts, and empirical analysis are essential media of the research.

In the beginning it is necessary to read books, articles and search in the Internet to get an overview of the topic. In the following step it might be easier to find targeted literature and Internet sources. While going deeper in the topic it is necessary to analyse the literature, to take a critical point of view and finally to find out the most important parts in order to include them in the work. Furthermore, interpretation of several empirical analyses and articles will be an essential methodology, especially for the practical part of the thesis.

1.6 Structure of the Work

The introduction is followed by chapter 2, dealing with the definition and description of business processes. Furthermore, essential aspects of business processes within companies, like core competencies and the development of business process strategies, are described. After pointing out the significant milestones of business process organisation within companies, this thesis continues with the description of the change initiative BPR. Firstly an overall introduction about the BPR methodology is provided within chapter 3. Furthermore, a brief history and BPR objectives are discussed to get a deeper understanding of its methodology. Due to the importance of IT in implementing BPR the role of IT is included. An essential part of this thesis is the description of BPR implementation. This essential part is included in chapter 3. The implementation of BPR is described in due regard to its 5 implementation phases. Every phase comprises various activities and objectives, which are all deeply discussed. The second essential part of this thesis is the way of Six Sigma implementation. For the sake of a better understanding of the way of Six Sigma implementation, a conception of its methodology, its history and development and Six Sigma’s objectives are discussed within chapter 4. Afterwards the implementation of Six Sigma with regard to the DMAIC cycle that comprises 5 phases is deeply discussed. In order to implement the Six Sigma with the DMAIC cycle every phase comprises various tools and techniques that are also described in detail. The work follows with the introduction of a combined BPR and Six Sigma implementation. This essential part of the work is included in chapter 5. In general, chapter 5 describes how a combined implementation of BPR and Six Sigma can be undertaken. Therefore a discussion about the improvement methodology and the aspects of preparation, particularly to overcome employees’ resistance are included in chapter 5. Afterwards the aspects of starting with the implementation of BPR are illustrated. In practice organisations face a lot of challenges in implementing BPR, even once the implementation has begun. Those challenges are also included within chapter 5. Organising a team structure continuously is an essential approach, which is described before discussing the realised changes within the reengineered organisations. Chapter 5 proceeds with the description of Six Sigma implementation. Essential aspects that have to be considered in practice are deeply discussed. Further Six Sigma implementation aspects like challenges in implementing Six Sigma and the team structure of Six Sigma is included in chapter 5. Chapter 5 ends with the description of a Six Sigma organisation that improves its process performance continuously. In chapter 6 the aspects of BPR and Six Sigma implementation are critically examined. The advantages as well as the disadvantages of BPR and Six Sigma implementation are discussed in detail. The conclusion answers the questions that are stated in the introduction part and gives a summary of the core statements of this thesis. Furthermore a forecast of the expected future research concerning BPR and Six Sigma is included in chapter 7.

2. Business Process Organisation within Companies

2.1 What is a Business Process?

A business process is a clear defined organisational procedure, which usually involves a large number of departments of companies and human interaction.²⁶ It has a clear structure of activities and describes how something is done within an organisation. Business processes are inter-functional because they comprise multiple business functions and even the simplest process involves the application of specialist skills, which can be found in different departments such as Marketing, Manufacturing, Human Resources and Finance. In general, as the figure below shows, business processes can be well defined as a logical order of work activities across time and place starting with identified inputs and ending with the targeted outputs for customers.²⁷

illustration not visible in this excerpt

Figure 2: Business Process²⁸

As illustrated in figure 2, a regular business process comprises a beginning, a lot of activities and a targeted ending. The beginning is the trigger event which usually is wanted from a customer. In many cases a customer contacts a company asking for a specific product or service. Afterwards there have to be taken a lot of steps (activities) within the company to fulfil the customer’ contract. The ending event is the final activity that brings the output for the customer.²⁹ Hence the customer always is the focus of any business process, so a business process can be described as a process from- customer-to-customer.³⁰ A customer applying for a credit is a good example. Here the starting event of the business process begins. The input in this case is the application of the customer. Thereafter internal activities within the bank follow. At first, the bank verifies the application. Further activities may comprise valuing and trading credit risks, reviewing credit amounts, executing credit assessment etc. After the activities within the bank have successfully been accomplished and the application has been approved the bank transfers the credit amount. Transferring the credit amount is concurrently the ending event and the targeted output.³¹

2.2 Process Hierarchies

Based on their scope within an organisation, processes can be divided into three main groups or levels. The figure below shows that management processes are at the highest level, business processes are at the second level and the hierarchy structure ends with the support processes.³²

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Figure 3: Process Hierarchies³³

Management processes play the most crucial role within organisations. They target organisation’s goal in a direct way. Management processes even define and operate both business processes and support processes,³⁴ which is possible because management processes are even cross-functional processes and cut across several functional units. Furthermore, they often include a significant amount of non-manufacturing related activities and offer the greatest potential for improvement. Management processes have all the sequences and functions of activities, policies and procedures, and supporting systems required to meet the main goal of an organisation.³⁵ Strategic Planning, Financial Planning, Controlling and Internal Audit are some examples for management processes.³⁶

Business processes are characterised as value-creating activities and as the figure 3 shows they are even the closest to the output, which can be a product or a service. They play a big role for the economic survival of the company. The activities of business processes are in general based on support processes. Business processes are even useless without support processes.³⁷ Some examples for the second level processes are Customer Relationship Management, Supply Chain Management and Product Lifecycle Management.³⁸

Support processes are no real value-creating processes, but rather supporting measures needed to support the business processes. Although they do not have a direct linkage to the output, they play a big role for the success of business processes. This is mainly because business processes could not be executed without errorless support processes. Only errorless support processes can enable business processes to produce the targeted output successfully.³⁹ Some examples for support processes are Quality Management, Human Resources, Financial Management, Communication and Procurement.⁴⁰

2.3 Core Competencies and Core Business Processes

Core competencies are an important strategic aspect for organisations.⁴¹ In addition they are a key business output or process through which an organisation is able to act more efficient. Core competencies represent core functional efforts and are usually characterised by transactions that directly or indirectly influence the customer’s requirements.⁴² Further important characteristics of core competencies are that they are based on the skills and knowledge of specialists or experts; they are not a product which can be purchased in markets; core competencies help to generate new products and services. Additionally, core competencies help organisations to penetrate new markets and enable organisations to increase customer satisfaction. Hence core competencies provide organisations with the ultimate opportunity to act flexibly, fast respond to the changes in the markets.⁴³

Organisations have to develop their core competencies themselves. In this context business processes play a crucial role.⁴⁴ The core competencies must coincide with the activities of organisations.⁴⁵ The activities of organisations can be best found within core business processes. Additionally, core business processes can help to implement core competencies in a better way. Coinciding core competencies with the activities of organisations can particularly support to be rapidly developed into new markets; to recognise the changes of customers’ requirements in the earlier phases; to produce new products efficiently and to satisfy the customers better and faster than the competitors.⁴⁶ Dell, offering customised products at reasonable cost, is one example for competitive advantage by the linkage of core competencies and core business processes. Dell is able to accomplish this, because its core competence is integrated in its online sales process and through this approach Dell have a perfect order fulfilment process, which its competitors are not able to match.⁴⁷

Within the scope of strategic planning, organisations have to find out the linkages between core competencies and core business processes. There are several possibilities combining core competencies with core business processes. Such examples for those possibilities are as follows:⁴⁸

- the whole activity procedure of a business process includes all the core competencies
- a group of business processes includes all the core competencies
- a single business process includes just a few of core competencies

2.4 Development of Business Process Strategies

In response to the rapidly changing business environment, the development of perfect business process strategies has become more and more important for the corporations’ success in this turbulent world.⁴⁹ In addition, business processes are assets and core processes can generate the best value for the customers.⁵⁰ For an efficient business process strategy, the goals should be set clearly at the first step. Regularly business process strategies can be derived from the main goals of organisations. As already mentioned in the background, the organisations’ main goal is to increase customer satisfaction, which is mainly necessary for the sake of competitive advantage. In this context, the development of business process strategies even focuses on the aspects of remaining profitable in today’s turbulent marketplaces and on improving price-quality ratio.⁵¹

The main goals of business process strategies are to coordinate the business process activities efficiently⁵² and to find out the linkages between core competencies and core business processes.⁵³ This main goal can be achieved by comprising the tasks of measuring, monitoring, controlling and analysing business processes. These tasks are based on each other. Measuring and monitoring of business processes provide information about the processes which allow organisations to predict and recognise process variations. As soon as processes are found having a high variability and giving inconsistent results to the customer the next step has to be taken: controlling these processes. Analysing business processes is necessary to get a final overview of the business processes to find out, if there are any improvement steps needed to yield the highest value. Overall it can be said that only good strategy based business processes can produce consistent value to customers and have the foundation for the process to be improved.⁵⁴

3. Change Initiative - Business Process Reengineering (BPR)

3.1 Conception

BPR is a managerial practice or approach and can be well understood as a change initiative, which can improve organisations’ performance through redefining business processes within organisations⁵⁵ by ignoring the history and starting from scratch.⁵⁶ The most common and widespread definition of BPR is⁵⁷ as follows: it is a process or a methodology of “… the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measure of performance, such as cost, quality, service, and speed”⁵⁸.

The above mentioned quotation includes all the essential characteristics of BPR. The key word “fundamental rethinking” describes the beginning implementation steps of BPR. Fundamental rethinking is about analysing the existing business processes and the attempt to find out what the organisation is doing and why e.g. a specific process is performed in a certain way.⁵⁹ Hence it emphasises to focus on process inputs, activities, and outputs. This first step is primarily necessary to filter out the outdated, inefficient, less value adding, and completely unnecessary procedures, particularly business processes.⁶⁰

The second key word in the reengineering definition is “radical redesign” which emphasises that for the implementation of BPR, there have to be taken steps for revolutionary changes in business processes.⁶¹ Furthermore, it shows that BPR is not a process of modification but a process of reinvention.⁶²

The third key term is “dramatic improvement” and calls for positive dramatic results. Although there have been a lot of BPR efforts which failed to deliver the intended dramatic results there are also examples of extreme improvement. The extreme improvement of Union Carbide is a good example for a dramatic positive result. Union Carbide was able to cut its fixed costs about $400 million within three years through the implementation of BPR.⁶³

The last key term in the reengineering definition is “processes”. Carefully analysing and questioning core business processes is an important approach of BPR⁶⁴ because organisations that are based on processes and not on functions are able to perform better. Due to this fact BPR concentrates on processes such as strategy creation, production, sales, manufacturing, and customer service. Overall it can be said that BPR is an organisational breakpoint, which tends to have major implications on a company’s competitive ability, strategy, and financial performance.⁶⁵

3.2 History and Development

In most publications the credit for the foundation of BPR is given to Michael Hammer,⁶⁶ who is the founder of Hammer and Company as well as the author of Reengineering the Corporation, which received a lot of attention in the business environment of the 1990s.⁶⁷ However, the roots of this process improvement methodology can be found much earlier.⁶⁸

Scientific Management was the first step to the introduction of BPR, in the early 1900s.⁶⁹ The founder of this approach was Frederic Taylor who developed a lot of organisational theories and did a lot of work for the modern management.⁷⁰ He introduced the process reengineering methods as an instrument of discovering the best processes within organisations, which should be reengineered to achieve optimum productivity. Due to the limited technological facilities, which did not allow large companies to act cross-functional, and due to unknowledgeable workers during Taylor’s time, he was not very successful with his theories of reengineering,⁷¹ and his approaches were largely forgotten in the middle of the 20th century.⁷²

Around the late 1980s and early 1990s, the economic recession stimulated organisations to think of alternative or new ways to increase process efficiency for their economic survival. Global competition and tough market conditions led the companies to focus more on some cost cutting programs and to increase their ability to be flexible and responsive. Large consulting units such as Peat Marwick and McKinsey & Co. contributed a lot to help companies out of those tough conditions by developing reengineering ideas.⁷³ However, BPR reached its peak when Michael Hammer and James Champy introduced their book “Reengineering the Corporation” in the 1990s. The book gave even birth to the term Business Process Reengineering.⁷⁴ BPR added several new approaches to the generic set of process management ideas existing at that time. For instance, it was the first process management movement which focused primarily on cross-functional business processes and improved process performance through a radical redesign of business processes.⁷⁵

In the following years, many firms in the U.S. and Europe undertook BPR projects and caused a large growth of its methodology. Some studies in the 1990s analysed the increasing impact of BPR. A telephone survey in 1994 by Mercer Management Consulting showed that 75 percent of 180 U.S. and 100 European companies were engaged in BPR efforts in the last three years. Some other studies by CSC Index in early 1994 and Pitney Browes Management Services in late 1994 exemplified that 69 percent of 497 respondents and 83 percent of another 100 respondents were either already involved in or embarked upon one or more BPR projects. In addition, a market research has exemplified the investment in BPR projects. In 1994 the investment in BPR projects was estimated being about more than $7 billion.⁷⁶

Due to the complicated implementation procedure of BPR a lot of reengineering attempts did not achieve the expected goals. In 1995 a BPR survey found out that between 60 and 87 percent of all BPR projects ended unsuccessfully.⁷⁷

Despite the high rate of failure, BPR has been and still is the best-known and recognised business process improvement methodology. A conceivable explanation may be that the reengineering methodology came to the right place at the right time, namely when the business environment was looking for answers on the tough market conditions as for instance how to compete effectively and efficiently in the changing marketplace.⁷⁸

3.3 BPR Objectives

Every organisation is influenced by a number of different contextual factors such as economy, industry, competition, marketplace, customer demands, changes in the marketplaces etc. The objectives of BPR may also differ from company to company. For some organisations reducing costs might be the most important goal, for some other organisations increasing speed or quality improvement might be the most important objectives. Despite differences in organisational performance improvement goals, it is often proven that successful performance improvement programmes are characterised by a focus on rethinking and redesigning business processes.⁷⁹

The most important objective of BPR is to radically improve and redesign business processes by focusing on the three C’s: competition, customers and change. In addition, BPR is a multidimensional problem solving approach, which improves the performance in terms of multiple parameters such as quality, cost, delivery, time to market etc to gain competitive advantage. Hence the BPR approach includes all the aforementioned important goals of organisations.⁸⁰

The objective of BPR to radically improve companies’ core processes is focused on increasing customer service and process capacity as well as improving operational efficiency.⁸¹ Customers are the driving force behind reengineering since they have become more knowledgeable about their own needs and more and more demanding. Due to a high competition, customers have the ability to select products and services that uniquely fit their needs, so they will not be easily satisfied with less.⁸² The key objective of BPR is getting a competitive edge which can only be achieved by providing the customers with better service and better products than the competitors and being closer to the needs of customers. For instance, if a car manufacturer produces a car matching the customer’s taste, this car maker will most probably gain more than the other competitors due to the customisation option.⁸³ Due to the fact that satisfying demands for products or services is critical to competitiveness, a clear understanding of the price-quality ratio is the basic requirement to ensure a successful BPR effort.⁸⁴

The second focus of BPR objective, namely increasing process capacity, can be well understood as a more favourable cost structure by using the extra capacity to produce the same number of process outputs with fewer employees. An example is Ford who was able to reduce staff within the accounts payable department from 500 to 125 employees resulting in a reduction of costs by up to 75 percent in only one department or section.⁸⁵

The third focus of BPR objective, namely improvement in operational efficiency is the call for streamlining the operations. The results of streamlining the operations can be well connected with the savings of costs and time.⁸⁶ In this context, companies have to master their skills of being efficient and effective for the ultimate customer satisfaction.⁸⁷ To instance, a Chinese company that fabricated parts of Boeing Series Aircraft had several management sections between ordering and sending products. Due to the inefficient cooperation between the management sections they were not able to finish products in time. The company decided to undertake BPR efforts with a main focus on streamlining the operations and improving the performance of the organisation. Due to the successful implementation of BPR the company was able to deliver good-quality products in time.⁸⁸ To name some particular figures, the major outcomes of BPR objectives could be e.g. “… 70 percent decreases in cycle time, 40 percent decreases in costs, 40 percent increases in customer satisfaction, quality, and revenue, 25 percent growth in market share”⁸⁹.

3.4 Role of Information Technology in BPR

Information Technology (IT) is the “… technology of sensing, coding, transmitting, and transforming”⁹⁰. The extensive structure of IT infrastructure capabilities offers a fundamental tool in enabling or constraining the innovative reengineering implementation. The usage of IT provides the ability to find powerful solutions first, before recognising problems. One example are the Ford managers who thought that they have to create a process which provides them the ability to pay their outstanding accounts more quickly with fewer employees. By using IT they were able to abolish the process of paying outstanding accounts completely. It shows that the Ford managers first had a solution, before recognising the problem.⁹¹

Some important benefits of using IT, which have an essential impact on the BPR approach, are given below:⁹²

- important data or information can be retrieved everywhere whenever it is needed
- even generalists can undertake the work of experts
- taking decisions can become the job of every employee, instead of being only the managers’ responsibility
- wireless communication provides the ability to keep employees informed, even if they are in the field.

The primary role of IT is to redesign core processes and to provide the ability to perform them efficiently. It is important to notice that within the implementation phases of BPR, IT is not used to automate the processes but to make corrections within reengineering processes.⁹³

The usage of IT within the implementation phases of BPR enables the whole organisation to work with technology, instead of enabling only a few IT specialists. In addition, IT provides an efficient communication flow, so the employees have a better opportunity to exchange information and ideas. Due to the fact that BPR implementation is based on workforces the improvement in communication flow is an important success factor for organisations which attempt a BPR implementation.⁹⁴

Thus, IT can be a core instrument for the implementation of BPR. Modern IT equipment is quite important. Furthermore, basic background knowledge of IT resources and the correct usage of those technologies are essential requirements for a successful BPR implementation.⁹⁵

3.5 Implementation of BPR with Regard to BPR Implementation Phases

The implementation of BPR is a “… one time-event …”⁹⁶ for organisations. Once the BPR implementation is undertaken, the future performance of the organisation will be completely different.⁹⁷ Before starting with the implementation of BPR it has to be taken into account that the BPR implementation process usually causes a lot of resistance. In particular refusal comes up among the employees of organisations if they are unsure about the consequences of BPR and especially about their positions or power within the company.⁹⁸ Some other possible failure factors of BPR implementation are the financial straits of organisations, the selection of too many improvement projects, and a poor definition of the goals.⁹⁹

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¹ Cp. Laguna, M.; Marklund, J. (2005), p. 1.

² Cp. Sorg, S.O.; Bartonitz, M.; Windisch, S. (2009), p. 44p.

³ Cp. Laguna, M.; Marklund, J. (2005), p. 1.

⁴ Cp. Hagen, R.; Stucky, W. (2004), p. 5.

⁵ Cp. Cook, S.; Macaulay, S.; Coldicott, H. (2004), p. 22pp.

⁶ Cp. http://www.contentmanager.de/magazin/artikel_165_business_process_ management_grundlagen.html; 2009-10-08; 06:25 pm.

⁷Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 11.

⁸Self Creation.

⁹ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 371.

¹⁰ Cp. Dutta, S.; Manzoni, J.-F. (1999), p. 3p.

¹¹ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 391.

¹² Cp. Pyzdek, T. (2003), p. 3pp.

¹³ Cp. Sorg, S.O.; Bartonitz, M.; Windisch, S. (2009), p. 48.

¹⁴ Cp. Freidlinger, R. (2006), p. 2pp.

¹⁵ Cp. Laguna, M.; Marklund, J. (2005), p. 24.

¹⁶ Cp. Dutta, S.; Manzoni, J.-F. (1999), p. 3.

¹⁷ Cp. Bucher, P. (2007), p. 368.

¹⁸ Cp. http://www.ibm.com/developerworks/library/ar-arprac6/; 2009-10-10; 07:38 pm.

¹⁹ Cp. Weske, M. (2007), p. 4.

²⁰ Cp. http://www.ibm.com/developerworks/library/ar-arprac6/; 2009-10-10; 09:17 pm.

²¹ Cp. Weske, M. (2007), p. 4p.

²² Cp. Weske, M. (2007), p. 4.

²³ Cp. Dutta, S.; Manzoni, J.-F. (1999), p. 3.

²⁴ Cp. Kanji, G.K. (2008), p. 580p.

²⁵ Cp. Sorg, S.O.; Bartonitz, M.; Windisch, S. (2009), p. 46.

²⁶ Cp. Laguna, M.; Marklund, J. (2005), p. 2.

²⁷ Cp. Portougal, V.; Sundaram, D. (2006), p. 2pp.

²⁸ Cp. Strohhecker, J; Gerberich, C.W. (2002).

²⁹ Cp. Hagen, R.; Stucky, W. (2004), p. 23.

³⁰ Cp. Seidenschwarz, W. (2008), p. 10.

³¹ Cp. Allweyer, T. (2005), p. 45.

³² Cp. Seidenschwarz, W. (2008), p. 61.

³³ Cp. Falkner, G. (1998), p. 53.

³⁴ Cp. Seidenschwarz, W. (2008), p. 61.

³⁵ Cp. Laguna, M.; Marklund, J. (2005), p. 3p.

³⁶ Cp. Seidenschwarz, W. (2008), p. 64.

³⁷ Cp. Kruse, W. (2009), p. 54.

³⁸ Cp. Seidenschwarz, W. (2008), p. 64.

³⁹ Cp. Kruse, W. (2009), p. 54.

⁴⁰ Cp. Seidenschwarz, W. (2008), p. 64.

⁴¹ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 97.

⁴² Cp. Wireman, T. (2004), p. 30.

⁴³ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 98.

⁴⁴ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 98.

⁴⁵ Cp. Lehner, F. (2008), p. 208.

⁴⁶ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 98.

⁴⁷ Cp. Chang, J. (2006), p. 31.

⁴⁸ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 98.

⁴⁹ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 92.

⁵⁰ Cp. Chang, J. (2006), p. 32.

⁵¹ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 92.

⁵² Cp. Fischermanns, G.; Liebelt, W. (2000), p. 87.

⁵³ Cp. Schmelzer, H.; Sesselmann, W. (2008), p. 98.

⁵⁴ Cp. Chang, J. (2006), p. 32.

⁵⁵ Cp. Cook, S.; Macaulay, S.; Coldicott, H. (2004), p. 22.

⁵⁶ Cp. Jashapara, A. (2004), p. 135.

⁵⁷ Cp. Ragab, A. (2009), p. 5.

⁵⁸ Hammer, M.; Champy, J. (1993), p. 33.

⁵⁹ Cp. Weihrich, H.; Belardo, S. (1997), p. 21.

⁶⁰ Cp. Yahya, B.N. (2002), p. 105.

⁶¹ Cp. http://www.jimis-web.org/articles/v12_nl_p81/index.html; 2009-11-21; 11:42pm.

⁶² Cp. Weihrich, H.; Belardo, S. (1997), p. 21.

⁶³ Cp. Weihrich, H.; Belardo, S. (1997), p. 21.

⁶⁴ Cp. Weihrich, H.; Belardo, S. (1997), p. 21.

⁶⁵ Cp. Trotta, R. (2003), p. 77.

⁶⁶ Cp. Laguna, M.; Marklund, J. (2005), p. 53.

⁶⁷ Cp. http://www.hammerandco.com/about-bio.asp; 2009-11-27; 11:40pm.

⁶⁸ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 8.

⁶⁹ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 8.

⁷⁰ Cp. http://www.accel-team.com/scientific/scientific_02.html; 2009-11-27; 11:50pm.

⁷¹ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 8p.

⁷² Cp. Jeston, J.; Nelis, J. (2006), p. 3p.

⁷³ Cp. Laguna, M.; Marklund, J. (2005), p. 53.

⁷⁴ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 9.

⁷⁵ Cp. Jeston, J.; Nelis, J. (2006), p. 3.

⁷⁶ Cp. Jackson, B. (2001), p. 73.

⁷⁷ Cp. Jackson, B. (2001), p. 73pp.

⁷⁸ Cp. Laguna, M.; Marklund, J. (2005), p. 54.

⁷⁹ Cp. Dutta, S.; Manzoni, J.-F. (1999), p. 6.

⁸⁰ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 14pp.

⁸¹ Cp. Grover, V.; Kettinger, W. (1998), p. 376.

⁸² Cp. Laguna, M.; Marklund, J. (2005), p. 54p.

⁸³ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 18p.

⁸⁴ Cp. Grover, V.; Kettinger, W. (1998), p. 377.

⁸⁵ Cp. Grover, V.; Kettinger, W. (1998), p. 377.

⁸⁶ Cp. Sychowicz, J. (2008), p. 13.

⁸⁷ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 19.

⁸⁸ Cp. Sychowicz, J. (2008), p. 13.

⁸⁹ Radhakrishnan, R.; Balasubramanian, S. (2008), p. 14.

⁹⁰ Radhakrishnan, R.; Balasubramanian, S. (2008), p. 30.

⁹¹ Cp. Hammer, M.; Champy, J. (1994), p. 112pp.

⁹² Cp. Hammer, M.; Champy, J. (1994), p. 122pp.

⁹³ Cp. Hammer, M.; Champy, J. (1994), p. 40pp.

⁹⁴ Cp. Krickl, O. (1995), p. 212pp.

⁹⁵ Cp. Hammer, M.; Champy, J. (1994), p. 112.

⁹⁶ Radhakrishnan, R.; Balasubramanian, S. (2008), p. 42.

⁹⁷ Cp. Radhakrishnan, R.; Balasubramanian, S. (2008), p. 42.

⁹⁸ Cp. Hammer, M.; Champy, J. (1994), p. 190pp.

⁹⁹ Cp. Khosrowpour, M. (2006), p. 397pp.

• College: University of Applied Sciences Essen
• Grade: 2.0
• Author: Dipl.-Kfm. (FH), BBA Yasir Ashraf (Author)
• Publication Year: 2010
• Pages: 93
• Catalog Number: V145664
• ISBN (eBook): 9783640564514
• ISBN (Book): 9783640564859
• Language: English
• Tags: Business, Process, Management, Comparison, Between, Change, Initiative, Business, Process, Reengineering, Continuous, Improvement, Method, Sigma, Six Sigma, Prozessmanagement, Geschäftsprozessreorganisation, Prozessverbesserung, Prozessoptimierung, Change Management, Geschäftsprozessmanagement, Prozesse optimieren