Week 5 - BPR Basic (part I)

In this lecture, it focuses on the definition, relationship and properties of the business process and an introduction of Business Process Reengineering (BPR).

What is BPR?

There are a lot of ideas of BPR. For example, in Redesigning enterprise process for e-Business, this book mention that “BPR is in essence a performance improvement philosophy that aims to achieve quantum improvements by primarily rethinking and redesigning the way that business processes are carried out.”.

Also, Michael Hammer and James Champy, in Reengineering the Corporation show that “A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer. “.

After reading different articles, I can conclude that BPR searches for quantum improvements rather that incremental ones (even though that may not always be possible.) and it effort will try to use IT to enable the process to be done in new ways that are qualitatively different.

Relationship of BPR and IT

BPR differs considerably from other prevailing management tools, due to its provision of radical change to existing process practices, which offers opportunities of better performance. BPR can only apply when deficiencies in existing processes can be re moderated either by combination of strategic avenue and BPR or BPR alone. IT is capable of modeling not only structured workflow, but also unstructured problem solving, which is of wide use in the re-engineering of business processes in the ERP system. The process analysis and study simulation enabled by disruptive IT also make it easy to come out the best workflow practices, which avoids any physical changes of the business processes prior to the actual implementation of the processes. All the possibilities provided by IT paves way for improvements in cost, quality, service, and speed, all of them being the objectives and pre-requisites of BPR.

Types of BPR

Some articles pointed out that there are 4 major types in BPR, they are Small-r, Big-r, Extensive process change and minimal software change, and Minimal process change and extensive software change.

1.     Small-r

Small-r is the BPR type with minimal process change and software change. It is an attractive approach for small to medium sized corporations as they don’t have the resources required to make modifications to their ERP systems. With cheap and fast small-r, they don’t need to make any major changes to the organizational processes either. However, it may miss the opportunities provided by other ERP software that requires process change.

2.     Big-R

In big-R, organizations make changes to both EPR software and their business processes. Large enterprises with cutting edge processes and resources to accommodate the radical ERP software change and customization takes this option as it can make the company the first one to reap the benefits of the new ERP developed through big-R. With ERP vendor acts as project partner, some of the costs are covered and some part of the risk shared in the meantime. The expense of this approach is the high cost of EPR software change and affected software upgrade.

3.     Extensive process change and minimal software change

When organizations adopt this BPR method, business processes are changed extensively with minimal software change. Corporations choose this alternative with the thought that changing people is easier and more cost effective than changing the expensive and complicated ERP software. Taking this approach can provide the company with the best practices in the industry with standardized and proven business processes. Further, ERP software update is easier as software change is trivial. When all the organizational processes made consistent with the processes provided in the ERP modules, the disadvantage appears that value-adding processes replaced with generic standard processes, which may force the company to give up some of its competitive strategies bundling with the old processes. To make things worse, the change of business processes may not even work, as the best practices in the industry may not suit the company at all.

4.     Minimal process change and extensive software change

Organizations opting this approach usually possesses value-adding processes that are unique to the company, thus it chooses to make extensive ERP software change to match the business processes. The corporation taking this approach can have a customized ERP system with better business processes not available with the ERP system implemented, though upgrade of the ERP software can be quite difficult because of the software change.