Business Process Reengineering in the Global World
Business Process Reengineering in the Global World
Nowadays increasing levels of competition combined with the major impact of globalization characterize the prevalent business environment, in which enterprises wanting to obtain profits or increase their market share must adapt to crucial changes. As a result, many innovative business methods were beginning to appear in the last few decades. One of them is business process reengineering (BPR), a concept, in which fundamental rethinking and redesign of business processes represent the essential tools to achieve dramatic improvements in critical measures of performance. Information technology (IT) is among the potential enablers to obtain improvements in BPR. This essay will focus on both the strategic importance of BPR for IT projects and the causes for failure in BPR projects as well as possible solutions.
To succeed in today’s global economy, enterprises must feature both organizational structures and business processes that not only are fast, low cost and flexible but also deliver consistent high quality. However, most traditional companies are struggling to fulfill these requirements mainly because of the way business management has evolved in the second half of the 20th century. Michael Hammer, originator of the business reengineering concept, argues that since the 1945-1960 era of business management evolution, in which the hierarchical or pyramid organizational structure with functional middle managers became popular as the best way to match production capacity and demand for mass produced consumer goods, not much has changed in the way traditional enterprises structure their employees and processes. These outdated business principles were convenient for their times, but in today’s global environment, they inevitably result in delays, errors, inflexibility and high overhead costs.
In order to cope with the predominating challenges posed by the economic situation, business process reengineering has become an important strategy to gain efficiency, reduce costs and achieve a competitive advantage. In practice, reengineering means to start over with a clean sheet of paper and rebuild the business to become more successful and competitive in comparison to competitors. Reengineering is not only about creating new business processes, but also focuses on creating a new company. When taking reengineering into account, one should ask oneself how the enterprise would look like, if it would be recreated under the current circumstances, thereby including the up-to-date level of technology and the latest trends in business.
According to Hammer, the answer to that rhetorical question inevitably consists out of four key elements, namely the focus on fundamentals, a radical redesign element, the potential for dramatic results and an orientation towards business processes. When focusing on reengineering, it is important to