The Failure of Business Process Reengineering

Let us start with a little history. In 1990, Business Process re-engineering emerged as a concept for integrating information technology into business processes with a cross functional perspective (Childe, Maull & Bennett, 1994, pp.22). Hammer and Champy(2001, p.35) on the other hand according to their famous book defined business process reengineering (BPR) as 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. BPR take in the methodologies, techniques from Information systems analysis, management, behaviour of the organisation and communication (Al-Hudhaif, 2009, pp.184). The pressure to meet expectations of customer is growing at a fast rate and Ronald tell us that the need for complete change is the way we work (as cited in Magutu, Nyamwange & Kaptoge, 2010).The total quality management (TQM) is found to be used to manage system cost according to quality requirements and a discrete event simulation is used to perform process reengineering and process improvement (Borgianni, Cascini & Rotini, 2008, 305-306).

Hypothesis

For this essay, we have developed the below hypothesis:

Hypothesis 1: Resistant to change will is one of the top failure factors that lead to the failure of implementing of BPR since BPR is all about implementing dramatic changes.

Business Process Reengineering Research

Various essay and studies estimated that about 70% failed to achieve the remarkable result that was intended (Hammer & Champy, 2001, pp.221; Chamberlin, 2010, pp.14). It is due to the high failure rate that we need to investigate on it failure factors to identify why it failed. Elmuti and Kathawala (2000, pp.34) came out with the list of 10 failure factors that lead to BPR failure from a survey conducted. This survey was derived from the 24 organisations which were mentioned that they failed in BPR implementation out of the 146 questionnaires returned from the 500 questionaries sent out to organisations throughout the United States. The 10 failure factors are shown in figure 1.

Figure 1: Failure factors that may contribute to business reengineering (Elmuti & Kathawala, 2000).

I would be discussing on the first 3 failure factors on the above figure 1 as Hammer and Champy(2001) on the other hand have another set of failure factors which in my opinions are more interesting to share.

BPR failure factors:

Inadequate understanding of business reengineering ( Elmuti & Kathawala, 2000, pp.34) 

You can understand something but you don’t have to lead but you can’t lead something you don’t understand. Of the 24 organisations, 78 percentages of them saw business reengineering as a mass chaos where there were no clear directions or clear solutions to many of the organisation problems. Hammer and Champy(2001, pp.229) further supported that by stated that in order to succeed un BPR, only one who is capable of thinking about the entire value added chain from production to sales and service can take the lead in the reengineering attempt and not just any senior management who has no clue on what is BPR.

Lack of an successful methodology to take on the reengineering plan ( Elmuti & Kathawala, 2000, pp.34)

Having a detailed methodology allow the organisation to know how it is suppose to start implementing BPR (Elmuti & Kathawala, 2000, pp.34). Carr and Johansson (1995, pp.86) stated that two third of the companies that surveyed used a structured framework or what they termed it as methodology. Carr and Johansson(1995, pp.86) informed that a methodoloy is 60 percent designed by a outside consultant, 20 percent developed in house and 20 percent a combination of consultant and in house. The advantage of an in house methodology is that it will present ideas that the employees are familiar with and easier to follow. An example of an methodology with regard to Aetna(Carr & Johansson, 1995, pp.87) includes methods for below:

• Project Selection
• Project planning which needs requirements for:
• Defining a mission
• Defining critical success factors
• Internal and external scans
• Defining gaps today and predicting gaps to be filled in the future
• Objectives on what will be delivered , to whom and why
• Steps to be taken
• Team formation
• Project management done by a reengineering team

A successful methodologies as stated by Carr and Johansson(1995, pp.87) is shown as below:

• A Successful BPR Framework
• Incorporates change management
• Provides for organisation communications
• Allow for radical change
• Prescribes clearly defined goal/ targets
• Provides a variety of tools to be used throughout processes as necessary
• Plans for customer/supplier input
• Integrates IT
• Is flexible enough to be tailored to the organisation needs.
• Lack of leadership support and low participation( Elmuti & Kathawala, 2000, pp.34)

Farina Group was one such organisation that has lack of higher management support that the business reengineering was abandoned (Newman & Zhao, 2008, p.413). The top management from Farina apparently didn’t want to change the business processes that are current existing when BPR is being implemented.

Try to renovate a process instead of altering it (Hammer & Champy, 2001, pp.222):

Hammer and Champy(2001, pp.222) stated that the most conspicuous way to fail is to not reengineer at all but conducting process changes and called it reengineering. The IBM Credit Corporation is such example that used to do it this way and failed before they finally change for the better. They first tried to automate their existing process which enabled them to commit to computer software instead of the previous offline system. This did not balance the work load to minimise wait times which they intend to. After changing the whole process by using queuing theory and linear programming techniques, they finally were able to solve the whole problem.

Don’t focus on business processes(Hammer & Champy, 2001, pp.223)

BPR should look in on business processes and nothing else. This is due to organisations is only as efficient as it business processes (Hammer & Champy, 2001, pp.223). An U.S subsidiary of major European company was one such example that failed in such a case by not defining the architecture of the work processes (Hammer & Champy, 2001, pp.224). Cardarelli, Ritu & Mohan(1998) also supported by saying that management must focus on the process and not event to make sure that the redesigned process affects the strategy positively now and into the future.

Neglect people’s values and beliefs(Hammer & Champy, 2001, pp.225)

Hammer and Champy(2001, pp.225) stated that when radical changes occurs, there must be a form of rewarding mechanism that cultivate the employees to exhibit the right behaviours to changes. Ford and DRG are examples stated by Hammer and Champy to successfully adapt to such changes.

Allow current corporate cultures and management attitudes to prevent reengineering from starting(Hammer & Champy, 2001, pp.228)

Hammer and Champy(2001, pp.228) stated that a company cultural characteristics can support or defeat a reengineering effort before it begin. They shared that companies that focus on short terms quarterly results may find it hard to be successful to reengineering longer horizons. Bias against conflict in organisation may feel uncomfortable challenging long established old rules.

Make reengineering happen from bottom up (Hammer & Champy, 2001, pp.228)

Hammer and Champy(2001, pp.228) stated that reengineering will never happen from bottom to top. Hammer and Champy(2001, pp.229) put it to two reasons on they are frontline employees and middle managers are unable to initiate and implement a successful reengineering effort. The first reason is that the push for reengineering must come from the top of an organisation as people near the front line lack the broad perspective that reengineering demands. Their expertise is largely bound to the individual functions and departments that they stay in. The second reason is that any business process will cross organisational boundaries and no midlevel managers will have the sufficient authority to insist on a process to be transformed. Furthermore, some of the affected middle managers will fear that major changes to existing processes might kill off their own power or authority. These managers have much invested in the existing ways of doing things and the future of the company may compromise their own career interests. They will fear changes and if radical changes threaten to bubble up, they may resist it. Only Strong leadership from above will induce people to accept the transformation changes.

Bury reengineering in the middle of the corporate agenda (Hammer & Champy, 2001, pp.230)

Hammer and Champy(2001, pp.231) stated that if organisations do not put reengineering at the top of their agenda, they will never get it done. They mentioned that without constant managerial concern, the natural tendency of doing what people pretty much want will be reverted back. This will result BPR to fail altogether.

Dissipate energy across a great many reengineering projects (Hammer & Champy, 2001, pp.231)

Hammer and Champy(2001, pp.231) stated that reengineering requires companies to concentrate their efforts on small number of processes at any given time. This is for example if customer service, research and development and sales processes all need radical redesign and nothing will really happen if all of them are done simultaneously.

Attempt to reengineer when the CEO is two years from retirement (Hammer & Champy, 2001, pp.231)

Hammer and Champy(2001, pp.231) stated here that the CEO is the head of the business. If any organisation attempts to reengineer when the CEO is one or two years away from retiring may take a dim and unenthusiastic view to reengineering. They stated that this is because a retiree may not want to deal with such complex issues that will constraint a successor. Another problem raised by them is that when CEO is about to retire, contenders for that post will want to focus on impressing rather than doing reengineering which could hinder their advancement such as reengineering.

Pull out when people start to resist to reengineering changes making (Hammer & Champy, 2001, pp.233)

Hammer and Champy (2001, pp.233) stated that people almost would resist to change. It is in a human trait to resist major changes. When managers are face to resistant and do not press on, it is almost likely that BPR will fail.

Drag the effort out (Hammer & Champy, 2001, pp.234)

Hammer and Champy(2001, pp.234) stated that reengineering is known to be a stressful job for everyone. Stretching it over a long period will discomfort start to surface. Normally 1 year should be enough for a company to move from articulation of a case for action to the first release of a reengineered process. Taking longer and people may become frustrated and the reengineering will fall apart.

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Conclusion

Based on the research on the failure factors of BPR, we could conclude that our hypothesis is not fully correct. It is found in the survey by Elmuti & Kathawala(2000) that non understanding of BPR as the top factors leading to failure. Resistant to changes has become ranked as number 5. Which allow me to come to a conclusion that although BPR is about dramatic changes, it is not necessary classified as the main factor for failure in the BPR implementation.