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What is Business Process Re-engineering?
Is business process re-engineering really just a buzzword? Michael Hammer, the founder of the business process re-engineering concept, defines business process re-engineering, or BPR for short, as a methodology and technique with which organisations radically change their business processes with the aim of becoming more efficient and modern.
Most organizations feel automating a process is becoming more efficient however that is not necessarily true as old inefficient processes can be replicated in a new automated system. The intention should be more to look at a process wholistically, remove redundant activities, reduce turnaround times and improve the quality of output.
While the BPR concept originated from IT processes, it can be applied to any process from moving goods across locations to preparing for a Board meeting. The key is to look at each activity, ascertain the value it is adding and the associated cost with a view to increasing value while lowering cost. If automation is the answer, then sure go ahead but it should not be the starting point.
Let us take a look at a typical procure to pay process. The procurement process is usually initiated with requisitions from user departments having a specific need. Ideally, the user departments must not only ensure that the items being requested are required but also budgeted for. If not in the budget, the requisite approvals must be sought so that the purchase is authorised. This should not be an afterthought as this delays processing.
The role of Purchasing is to source the required item /service from the best vendor who can deliver the desired quality on time. Once the purchase order has been sent to the vendor, there is an obligation to pay that the purchaser is undertaking. On receipt of the goods /services, the receiver must validate that what has been received is actually what was ordered and the invoice corresponds to what has been received. Once a match of PO, receipt and invoice is done, then the invoice can be paid.
There should be no need for any invoice authorisation except for cash flow purposes. Usually, multiple levels of approvals are required in most organizations leading to processing, sourcing and payment delays.
BPR involves a deep dive into each activity, its inputs, processes and outputs with a view to making the process efficient, i.e. delivering greater value at lower cost. It involves stepping back and dissecting each element in the process. Of course, this is not as easy as it may seem as persons integrally involved will provide arguments as to why each activity is required.
Also, note that the idea is not to compromise on any controls and increase the risk to the organization. So while manual controls can add value where system controls are lacking, there is no need to overcompensate. The intention is to find an optimum balance.
A key component of BPR is change management. No improvement can be made to processes unless people are willing to make a change. This is essential for any BPR project.
It is recommended given the current global context, organizations consider BPR seriously and look to improve the value being delivered by optimizing processes through digitization, process automation or just simplification.
This article is a part of the Symptai's 12 Day's of Christmas Series, in the season of giving we present to you: Gift #5 the gift of Business Process Re-engineering