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EXAMINING THE RELATIONSHIP BETWEEN BUSINESS

PROCESS REENGINEERING AND INFORMATION

TECHNOLOGY

By

Natasha La Rock

A Graduate Research Report Submitted for INSS 690in Partial Fulfillment of the Requirements for the Degree of

Master of Science:

Management Information Systems

Bowie State University

Maryland in Europe

March 2003


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TABLE OF CONTENTS

Page

ABSTRACT iii

LIST OF FIGURES iv

INTRODUCTION 1

What is BPR? 1

Definitions of BPR 1

The Key Concepts 2

BPR as Radical Change 2

PROCESS ORIENTATION: FROM PROCESS TO STRUCTURE 3

BPR Process and Approach 3

MYTHS ABOUT BPR 4

BPR SUCCESS FACTORS/FAILURE FACTORS 5

Factors relating to change management systems and culture 7

Factors for Management Competency 8

Factors relating to Organizational Structure 8

Factors related to BPR Project Management 9

Factors related to IT infrastructure 9

SELECTING AN IT APPLICATION 10

RELATIONSHIP BETWEEN IS AND ORGANIZATIONS 11

BPR AND INFORMATION TECHNOLOGY 14

THE FUTURE: BPR AND ERP SYSTEMS 18

CONCLUSION 18

REFERENCES 19


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ABSTRACT

The purpose of the paper is to take a comprehensive look at Business Process

Reengineering (BPR), which is a popular term for the reoptimization of organizational

processes and structures after the implementation of new information technologies into

an organization. There is some evidence that changes in the use of information

technology (IT) in an organization may require major restructuring of the organization to

take full advantage of the technologies. This paper will attempt to demystify the myths

of BPR. It will examine the advantages and disadvantages of BPR in organizations. The

paper will also explore the various phases of the BPR process and the relationship

between BPR and Information Technology (IT). Information Technology should be

viewed as more than an automating tool but rather a fundamental way to reshape the way

business is done. The examination of IT will reveal the use of IT tools within the BPR

process which typically results in faster, better and cheaper solutions at each phase of the

BPR process. The primary methodology of the research will be through literature.


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LIST OF FIGURES

Number Page

Figure 1 Summary of key success/failure factors in BPR 6

Figure 2 BPR Strategies 10

Figure 3 Linking the World and Software 12

Figure 4 Multidimensional View of BPR 15


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Business Process Reengineering: Introduction

Business Process Reengineering (BPR) is known by many names, such as core

process redesign, new industrial engineering or working smarter. All of them imply

the same concept that focuses on integrating both business process redesign and

deployment of information technologies (IT) to support the reengineering work. Thispaper will attempt to introduce some of the more important aspects of BPR and the

significance and role of information technology in BPR. In addition, the paper will

explore two questions: where does BPR comes from and what is involved in BPR interms of principals and assumptions.

What is BPR?

Business process reengineering ideas are based on the premise that every

organization needs a sense of direction. Without that direction in the form of strategicplans and business plans, the organization has no foundation upon which to build process

improvements.

BPR is a method of improving the operation and therefore the outputs oforganizations. Generally the topic of BPR involves discovering how business processes

currently operate, how to redesign these processes to eliminate the wasted or redundant

effort, improve efficiency, and how to implement the process changes in order to gaincompetitiveness.

The purpose of BPR is to find new ways to organize tasks, organize people andredesign information technology so that the processes support the organizations goals. It

means analyzing and altering the business processes of the organization as a whole.

For a thorough and effective reengineering project, organizations should first

meet certain conditions before starting such a project. Initially, the management shouldabandon all the rules and procedures that have been used up to that time. In addition they

should abandon other inadequate organizational and production principles. At this point,

the design of a renovated and redesigned organization should begin.

The Definition of BPR

BPR was first introduced in a research program at MIT (Massachusetts Institute

of Technology) in the early nineties. The term was used in the description of Davenport

and Short's 1990 research project. They found out that the implementation of moderninformation technology in organizations means not only automation of managerial and

production tasks but that it also has a direct effect on the quality of the work done.

Davenport (1993), one of the fathers of BPR describes business process redesign as:

...the analysis and design of workflows and processes within and between

organizations. Business activities should be viewed as more than a collection of


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individual or even functional tasks; they should be broken down into processes

that can be designed for maximum effectiveness, in both manufacturing andservice environments.

It is argued by some researchers that there is no commonly agreed definition of

BPR. However, the bookReengineering the Corporation: A Manifesto for BusinessRevolutionby Hammer and Champy (1993) is widely referenced by most BPR

researchers and is regarded as one of the starting points of BPR. The following is their

definition of BPR:

[Reengineering is] the fundamental rethinking and radical redesign of business

processes. to achieve dramatic improvements in critical, contemporary measuresof performance, such as cost, quality, service and speed. (p. 32)

Dr. Michael Hammer is the primary originator and leading expert of the conceptof business reengineering and the founder of the reengineering movement. This point was

further discussed and developed by Hammer in his "Reengineering Work: DontAutomate, Obliterate", Harvard Business Review, 1990.

The Key Concepts

BPR seeks to break from current processes and to devise new ways of organizingtasks, organizing people and making use of IT systems so that the resulting processes will

better support the goals of the organization. This activity is done by identifying the

critical business processes, analyzing these processes and redesigning them for efficientimprovement and benefit. Vidgen (1994) defines the central key points of BPR as:

radical change and assumption challenge process and goal orientation

organizational restructuring

the exploitation of enabling technologies, particularly information technology

which means that by focusing on business objectives, processes are analyzed in the

organization, non-essential or redundant procedures are eliminated, and then IT is used to

redesign and streamline organizational.

BPR as Radical Change

BPR is a radical change rather than an incremental change. Davenport (1993)advocates radical change as:

Objectives of 5% or 10% improvement in all business processes each year mustgive way to efforts to achieve 50%, 100%, or even higher improvement levels in a

few key processes. Radical change is the only means of obtaining the order of

magnitude improvements necessary in todays global marketplace. Existing


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approaches to meeting customer needs are so functionally based that incremental

change will never yield the requisite interdependence.

One reason the change in BPR is radical rather than incremental is to avoid being

trapped by the way things are currently done. Dr. Robinson (1994) of IBM UK highlights

rapid IT innovation and increasingly intensive global competition as two main reasonswhy organizations have had to consider the introduction of radical change. Revised

processes drive the shape of an organization. These radical changes are not limited to

inside the organization but can transcend to other organizations, which generate newviews for an organization.

Process-Orientation: From Structure to Process

Many current business processes with their functional structures were designed to

enable efficient management by separating processes into small tasks that could be

performed by less skilled workers with little responsibility. Under this structure, the

higher skilled and more trusted managers made the important decisions. Traditionalstructural approaches to a business reengineering generally follow this sequential order.

First, a business strategy is proposed, then the business structures and processes are

planned, and finally they are implemented with IT. In comparison, BPR is regarded asprocess-oriented which is trying to overcome some problems raised by hierarchical

structures. That means, BPR as a process-orientation changes the structural relationships

between management and employers into the interactive processes between them. BPRattempts to radically break the existing process structures and replace them with

innovative solutions.

BPR Process and Approach

Process redesign, often called BPR, takes a clean sheet approach to the process,

which is usually either broken, or so slow that it is no longer competitive in delivering thecompanys value to its customer. Inputs and outputs are defined, and checked to ensure

they align with customers present, and future, requirements. New technology, methods

and data flows are considered in relation to the process. A new process is designed fromscratch using the above. The change is planned and implemented to achieve minimum

disruption. Where a fundamental redesign of the entire process is not required, processimprovement can take different forms like analysis and improvement, continuous

improvement or simply attempts to gain more control.

The most common approach to process improvement is to take an

underperforming process, which is key to achieving the business objectives, and create a

systematic analysis to determine the most important areas for improvement. These arethen addressed on a project-by-project basis. A temporary process improvement team

that primarily consists of people within the process controls the analysis and

improvement. Continuous improvement is the ongoing management of the process after

it has been redesigned and streamlined. This is part of an overall culture change thatneeds to be clearly thought through and well directed from the top of the organization.


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Davenport & Short (1990) define business process as "a set of logically relatedtasks performed to achieve a defined business outcome." A process is "a structured,

measured set of activities designed to produce a specified output for a particular customer

or market. It implies a strong emphasis on how work is done within an organization"

(Davenport 1993). In their view processes have two important characteristics:

a) They have customers (internal or external)

b) They cross-organizational boundaries

Processes are generally identified in terms of beginning and end points, interfaces,

and organization units involved, with special emphasis on customers. Examples ofprocesses include developing a new product, ordering goods from a supplier, creating a

marketing plan or processing and paying an insurance claim.

According to Davenport & Short (1990), processes may be defined based on three

dimensions:

a) Entities: Processes take place between organizational entities. They could beinterorganizational, interfunctional or interpersonal.

b) Objects: Processes result in manipulation of objects. These objects could be

physical or informational.c) Activities: Processes could involve two types of activities: managerial and

operational.

Myths about BPR

The concept of BPR has been around since about 1990, however it is widely

misunderstood and has been equated to downsizing, client/server computing and several

other management techniques of the past several years. Based on interviews andconversations with more than 200 companies, and 35 reengineering initiatives, Davenport

& Stoddard (1994) identify several reengineering myths.

The Myth of Reengineering Novelty: Reengineering, although based on familiarconcepts, introduces new concepts that are combined in a new format. These key

components have never been together before.

The Myth of the Clean Slate: Regardless of Hammer's (1990) sentiment: "Don't

automate, obliterate!" clean slate change is rarely found in practice. Or, as Davenport and

Stoddard (1994) state: A "blank sheet of paper" used in design usually requires a "blankcheck" for implementation. Therefore, a more affordable approach for most companies is

to use Clean Slate Design, which involves a detailed vision for a process without concern

for the existing environment. However, the implementation is done over several phasedprojects. Some opponents of BPR say that despite the delivery of radical design, it does

not guarantee a revolutionary approach to change. Moreover, a revolutionary change

process might not be feasible given the risk and cost of revolutionary tactics.


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The Myth of Information Systems Leadership: Information Systems (IS) is generallyviewed as a partner within a cross-functional team that is generally headed by a non-IS

project leader and a non-IS businessperson who has better control over the processes that

are being redesigned. The distinction between IT and IS begins with the idea that IT

offers strategic relevance. Moreover, IT has an impact on BPR projects that can improvethe quality of an organizations information systems management.

The Myth of Reengineering vs. Quality: Most companies have approaches toorganizational change including reengineering, continuous improvement, incremental

approaches, and restructuring techniques.

The Myth of Top-Down Design: The implementation and execution of the redesigned

processes depends upon those who do the work. Therefore, the participation and

acceptance and ownership should begin at the grass roots level and is essential forsuccessful BPR.

The Myth of Reengineering vs. Transformation: BPR is a process that contributes to

organizational transformation, however it is not the same as transformation.Organizational transformation is defined as, "Profound, fundamental changes in thought

and actions, which create an irreversible discontinuity in the experience of a system"

(Adams 1984). Organizational transformation is generally about the emergence of a newbelief system and necessarily involves reframing, which is a discontinuous change in the

organization's or group's shared meaning or culture. It also involves broad changes in

other organizational dimensions besides the work processes.

BPR Success/Failure Factors

In 1996 Davenport published an article entitled Why Reengineering Failed: The

Fad that Forgot People in which he reports:

To most business people in the United States, reengineering has become a word

that stands for restructuring, lay-offs, and too often, failed change

programs..companies that embraced [reengineering] as the silver bullet are nowlooking for ways to re-build the organizations torn fabric. (Davenport, 1996)

Also in 1998 it was reported that only around 30% of BPR projects were regarded

as a success (Galliers, 1998). BPR was not reaching its potential and there are variousreasons for its limited success. Some explanations of such high rates of failure for BPR

projects have been discussed in BPR literature. For example, employees resistance tochange as they consider BPR as threats to their jobs. In addition, BPR approaches lackdetailed guidance and support for the actual implementation of reengineering. Many

publications describe the situation before and after BPR but do not discuss the path to

reach the final situation. Some experts explain that one reaction to this failure was toretain faith in IT as a dominant support and just adapt business activities to IT.


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Figure 1. Summary of key success/failure factors in BPR (Al-Mashari and Zairi, 1999)


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Following the publication of the fundamental concepts of BPR by Hammer

(1990) and Davenport and Short (1990), many organizations have reported dramaticbenefits gained from the successful implementation of BPR. Companies like Ford Motor

Co., CIGNA, and Wal-Mart are all recognized as having successfully implemented BPR.

However, despite the significant growth of the BPR concept, not all organizations

embarking on BPR projects achieve their intended result. Hammer and Champy (1993)estimate that as many as 70 percent do not achieve the dramatic results they desire.

Having BPR repeatedly at the top of the list of management issues in annual surveys of

critical information systems shows executives' failure to either implement properly oracquire the benefits of BPR. These results make the issue of BPR implementation very

important. BPR has great potential for increasing productivity through reduced process

time and cost, improved quality, and greater customer satisfaction, but it often requires afundamental organizational change. As a result, the implementation process is complex,

and needs to be checked against several success/failure factors to ensure successful

implementation, as well as to avoid implementation pitfalls.

There are both soft and hard factors that cause success and failure of BPR efforts.The factors listed below are based on various articles and empirical research on BPR

implementation. These dimensions are:

change management

management competency and support

organizational structure

project planning and management

IT infrastructure

Factors relating to change management systems and culture

Factors relating to change management systems and culture are important to the

success of BPR initiatives. Change management, which involves all human- and social-

related changes needed by management to facilitate the acceptance of newly designed

processes and structures into working practice and to deal effectively with resistance, isconsidered by many researchers to be a crucial component of any BPR effort.

Effective communication is considered a major key to successful BPR-related

change efforts. Communication is needed throughout the change process at all

levels and for all audiences, even with those not involved directly in the reengineeringproject. Effective communication between stakeholders inside and outside the

organization is necessary to market a BPR program and to ensure patience andunderstanding of the structural and cultural changes needed as well as the organization'scompetitive position. Communication should be open, honest, and clear, especially

when discussing sensitive issues related to change such as personnel reductions.

As BPR results in decisions being pushed down to lower levels, empowermentof both individuals and teams becomes a critical factor for successful BPR efforts. Since

it establishes a culture in which staff at all levels feel more responsible and accountable


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and it promotes self-management and a collaborative teamwork culture. Empowerment

means that staff is given the chance to participate in redesign processes. Whenempowered, employees are able set their goals and monitor their own performance as

well as identify and solve problems that affect their work thereby supporting the BPR

efforts.

In reengineering, there is the human involvement element in which all peoplemust be openly and actively involved and should be consulted at all stages of the process

and its leaders. This includes line managers, process owners and those involved in IS and

human resources. The idea of experimentation is an essential part of a successfully re-

engineered organization and, therefore, people involved or affected by BPR must beprepared to endure errors and mistakes while reengineering is taking place.

Factors for Management Competency

Sound management processes ensure that BPR efforts will be implemented in the

most effective manner. The most noticeable managerial practices that directly influence

the success of BPR implementation are top management support and commitment,championship and sponsorship, and effective management of risks.

Commitment and leadership in the upper echelons of management are often citedas the most important factors of a successful BPR project. Leadership has to be effective

and creative in thinking and understanding (Hammer and Champy, 1993) in order to

provide a clear vision of the future. This vision must be clearly communicated to a widerange of employees who then become involved and motivated rather than directly guided.

Commitment to and support for the change must constantly be reinforced from senior

management throughout a BPR project. Sufficient authority and knowledge, and proper

communication with all parts in the change process, are important in dealing withorganizational resistance during BPR implementation (Hammer and Champy, 1993).

Barriers such as political, economic, and organizational risks are all associatedwith BPR-related change. And champions of the change play a major role in overcoming

these barriers and increasing the chance of successful BPR implementation. The

champions must be able to persuade top management of the need to change and tocontinually push the change efforts throughout the organization.

BPR implementation involves radical change to several systems in the

organization. Risks associated with acceptance of changes in the organizationalstructure, deploying emerging technologies with little familiarity, large investment in

new resources needed for the new processes, loss of personnel, and loss ofearnings (Towers, 1994; Clemons, 1995) are some examples of the many risksthat an organization may take when implementing BPR. Therefore, continuous

risk assessment is needed throughout the implementation process to deal with any risk at

its initial stage and to ensure the success of the reengineering efforts. Anticipating andplanning for risk handling is important for dealing effectively with any risk when it first

occurs.


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Factors relating to Organizational Structure

As BPR creates new processes that define jobs and responsibilities across the

existing organizational functions (Davenport and Short, 1990), there is a clear need to

create a new organizational structure which determines how BPR teams are going to

look, how human resources are integrated, and how the new jobs and responsibilities aregoing to be formulated. An adequate job integration of organizational human resources

infrastructure is important to a BPR project's success. When individuals within a process

perform a series of tasks efficiently, product quality, processing time, and cost are allgoing to improve. However, the move to integrate human resources necessitates a careful

consideration of all related organizational changes. Effective BPR cross-functional teams

are a critical component of successful BPR implementation.

Team members should be experienced in variety of techniques. Teams should be

made up of people from both inside and outside the organization (Hammer and Champy,1993). The determinants of an effective BPR team are as follows: competency of team

members, their credibility within the organization and their creativity, teamempowerment, motivation, effective team leadership, proper organization of the team,

complementary skills among team members and adequate size. As BPR results in amajor structural change in the form of new jobs and responsibilities, it becomes necessary

for successful implementation to have formal and clear descriptions of all jobs and

responsibilities that the new designed processes bring along with them.

Factors related to BPR Project Management

Successful BPR implementation is highly dependent on an effective BPR

Program management, which includes strategic alignment, effective planning and projectmanagement techniques, identification of performance, adequate resources, effective use

of consultants, building a process vision integrating BPR with other improvement

techniques. Proper planning for the BPR project with an adequate time frame are keyfactors in delivering a successful BPR project on time. Effective use of project

management techniques and managing people-related issues have also a crucial role in

smoothing the flow of the process redesign stages. Measurement of project progress

should also be maintained continually throughout a BPR project.

Factors related to IT infrastructure

Building an effective IT infrastructure is a vital factor in successful BPR

implementation. An adequate understanding of technologies for redesigning businessprocesses is necessary for proper selection of IT platforms. Effective overall system

architecture, flexible IT infrastructure and proper installation of IT components all

contribute to building an effective IT infrastructure for business processes. The ITinfrastructure and BPR are interdependent in the sense that deciding the information

requirements for the new business processes determines the IT infrastructure. In

addition, recognition of IT capabilities provides alternatives for BPR. Building aresponsive IT infrastructure is highly dependent on an appropriate determination of


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business process information needs . This, in turn, is determined by the types of activities

within a business process, and the sequencing and reliance on other organizationalprocesses.

An effective IT infrastructure follows a top-down approach, beginning with

business strategy and IS strategy and passing through designs of data, systems andcomputer architecture. Linkages between the IT infrastructure components are important

for ensuring integrity and consistency among the IT infrastructure components. IT

standards also have a major role in reconciling various infrastructure components toprovide shared IT services that are of a certain degree of effectiveness to support business

process applications. The IT infrastructure shared services and the human IT

infrastructure components, in terms of their responsibilities and their expertise, are bothvital to the process of the IT infrastructure composition.

Selecting an IT Application

One main objective of BPR is to use IT to support radical change. Some authorsview IT as the central implementation vehicle of BPR. However BPR has not really

worked as its proponents expected. Davenport and Short (1990) attribute this problem toa lack of understanding of the deeper issues of IT. They claim that IT has traditionally

been used to increase the speed of work but not to transform it and BPR is about using IT

to do things differently. Therefore, IT plays an important role in BPR. Properlyimplementing IT can improve the competitive position of organizations. But

inappropriately implementing IT may create barriers to responding to the rapidly

changing business environment. Further, simply picking IT packages cannot achievesuccessful BPR if it is simply used to speed up the process rather than reengineer it. As

Davenport (1993) contends:

... information and IT are rarely sufficient to bring about the process change; most

process innovations are enabled by a combination of IT, information andorganizational/human resource changes.

IT can continuously reflect and reinforce bureaucratic and functional structures or

IT can help to create a leaner, flatter and more responsive organization. For example, ITtools that are designed for functional hierarchies are primarily designed to support

incremental improvements and cannot achieve the radical change in BPR projects.


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Figure 2. BPR Strategies (Light, 2000)

While information systems provide fast processing and response, they often fail toprovide the flexibility for human communication, which can lead to serious

consequences. This means IT may sometimes have a negative impact by merely

automating the existing processes. However, it could also have a positive impact if it is

deployed correctly in conjunction with the organizations goals. IT is the enabler toreengineer processes and is an important driving force for business transformation.

Relationship between IS and Organizations

There are many techniques for systems analysis and modeling, operations

research, information systems (IS), and human resource management to name a few.However, system development techniques play an important role in BPR that helps make

sense of the current systems. In addition, analyzing the potential benefits of the

redesigned systems can help identify those information systems that will function as thegreatest supporter for the radically redesigned processes.

Information systems are widely used in business and identify those systemsinserted into organizations to support data processing and the decision making process.

In general, information systems are regarded as a kind of structure, which reflects the

activities of the organization, and software system is a part of it. From this viewpoint,

information systems represent abstractions of social systems. The following figurerepresents the relationship between the world and a software system, with the software

system becoming an abstraction of the world. The following figure links the world and

software.


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Figure 3. Linking the World and Software (Cook, 1994)

The figure suggests that software is a concept model, which partially duplicates

and abstracts the behavior of things in the world. However they point out one potentialproblem, which is that software cannot totally model the real world. This is because the

world is unpredictable but software is as predictable as its behavior is preconceived. Also

as software is a part of the world, it is impossible to design software on the assumption

that its existence will not change the world. However, traditional system development isconcerned with software systems only and assumes that software

will not affect the basic structure of the organizations. What is not taken into account is

that new software solutions can provide new opportunities for business changes. That is,any designed information system is unlikely to be perfect for the purpose for which it was

designed, and this is why today many organizations have faced legacy systemproblems

because their computer systems cannot be changed to serve the changing circumstancesof the organization.

For BPR, it is likely that providing IT to support a process may change the

process itself, which leads to additional degrees of support. Therefore, if IT is accepted inorganizations then a change to the organizational environment will be necessary. This

suggests that the process of reengineering is dynamicand will inevitably lead to further

iterations in which the reengineered processes need to be reevaluated and redesigned. Theconclusion is that business reengineering and software development cannot be

independent of each other. The redesign of business processes will decide the

requirements of a software system, whereas the introduction of software systems willinevitably affect the way the business is currently running. The development of software


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systems and the process of BPR are considered interdependent. The evolution of

software systems should be based on two facts: first, the organizational software shouldbe dynamic, and second, the outcome of the software system operation is somewhat

unpredictable. That is, a software system cannot move from steady state to steady state. It

must constantly evolve to meet new goals, and to facilitate the development of

organizational processes.

It is obvious that the introduction of software systems will change peoples

perceptions as well as their behavior and, when such systems are implemented in anetworked structure, this has far-reaching impact on the behavior of organizations.

Peoples perceptions of organizations and the relationships between IT and organizations

may be different depending on which model is used. The three dimensions of anorganization include machines, organisms and processes. Each represents three waves of

organization theory. The first wave, to perceive an organization as a machine,suggests

that IT can be seen as a controllable resource, which is not part of the organization and isused to achieve specific objectives. The introduction of IT does not affect the

organizational structure but does affect the relationship between management andworkers. The second wave, regards IT as more integrated and less controllable. IT is an

element of an organization that has the potential to be an unpredictable resource.Typically, the workers have more ownership of the technology than management. The

third wave perceives an organization as a processand IT as a behavioral phenomenon.

Conventional system development methods consider an organization as amachine, whose behavior is merely determined by the behavior of individuals within the

organization. Systems development tends to concentrate only on the physical parts of IT

because it is hard to cope with the abstract things such as the perception and theinteraction of human beings. Unfortunately, these methods are not great for the analysis

of BPR because they only reflect the situations before and after the implementation of the

systems, but do not emphasize the change of peoples behavior once affected by IT.There is also a similar problem appearing in BPR, because it is common that many BPRmethodologies try to reduce the dynamic levels of business processes to predictable

management techniques. Methodologies focusing on static definitions of data, role and

processes to reflect organizational structures tend to remain less flexible for long periods.However these static methodologies cannot define dynamic processes because people

operate in dynamic manner and are prone to error causing a need for flexible systems.

From a systems viewpoint, an organization has more meaning as a whole than justas a sum of its parts. The characteristics of an organization cannot identify the

components of an organization. Today the greatest resource in organizations is the skill

and knowledge of people. Individual knowledge and technology does not only belong tothe people, but is also a part of the organization. Therefore, the behavior of organizationscan be regarded as a pattern of interactions between people. After the introduction of

software systems into organizations, the behavior can be understood as a pattern of

interactions between people, between people and software systems, and between thesoftware applications. The systems approach analyzes the impact upon organizations.

For this, the systems approach can be used to analyze the impact of IT upon

organizations, because the nature of IT can only be assessed in terms of its total impact.


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An organization is a creation of the perceptions of the people involved within it. Any

change in the organization will have an impact on peoples perception of theorganization. When analyzing business processes, we find that people interact with each

other within the process and are also influenced by that process. How people will react in

organizations depends on how they perceive a particular action, and their perception is

important in the process of interaction. Today IT plays an important role in organizationsbecause people use their systems to interact with others and the environment. Therefore

any changes in IT may cause changes in organizational structure. Harrington (1991)

suggests that systems methodology is a successful way to analyze the impact of ITorganizations because it not only reflects the way people tend to interact, and therefore

capturing the essence of how people organize, it also shows the changes that occur as a

whole rather than just a part of the organization.

BPR and Information Technology

There is a relationship between BPR and information technology (IT). Hammer

(1990) considers it to be the key implementation of BPR. He says the use of IT is tochallenge the assumptions inherent in the work processes that have existed since before

the advent of modern computer and communications technology. He argues that at theheart of reengineering is the idea of discontinuous thinking. Discontinuous thinking is a

way to recognize and break away from the outdated rules and fundamental assumptions

that underlie operations. Usually, these rules are based on assumptions about technology,people, and organizational goals that no longer exist. Hammer (1990) suggests the

following principles of reengineering:

a) Organize around outcomes, not tasks

b) Have those who use the output of the process perform the processc) interleave information processing work into the real work that produces the

information

d) Treat geographically dispersed resources as though they were centralizede) Link parallel activities instead of integrating their results

f) Put the decision point where the work is performed, and build control into the

process

g) Capture information once and at the source

Davenport & Short (1990) argue that BPR requires taking a broader view of both

IT and business activity, and of the relationships between them. IT should be viewed asmore than an automating or mechanizing force but rather as a way to fundamentally

reshape the way business is done. Many researchers and practitioners have increasingly

considered factors related to IT infrastructure as a vital component of successful BPRefforts. Effective alignment of IT infrastructure and BPR strategy, building an effective

IT infrastructure, adequate IT infrastructure investment decision, adequate measurement

of IT infrastructure effectiveness, proper IS integration, effective reengineering of legacyIS, increasing IT function competency, and effective use of software tools are a few of

the most important factors that contribute to the success of BPR projects. This alignment


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of IT infrastructure and BPR strategy are needed to ensure the success of the BPR

initiative.

IT can best enhance an organizations position by supporting a business-thrust

strategy (McDonald, 1993). The business strategy should be clear and detailed. Top

management should act as a strategy formulator who provides commitment for the wholeprocess of redesign, while the IS manager should be responsible for designing and

implementing the IS strategy. The strategy describes the role of IT in leveraging changes

to business processes and infrastructures. IT strategic alignment is approached throughthe process of integration between business strategy and IT strategy, as well as between

IT infrastructure and organizational infrastructure. The degree of alignment between the

BPR strategy and the IT infrastructure strategy is indicated by including the identificationof information resource needs in the BPR strategy, deriving the IT infrastructure strategy

from the business strategy, examining the IT infrastructure strategy against the BPR

strategy, the active involvement of management in the process of IT infrastructureplanning and IT managers in business planning, and by the degree of synchronization in

formulating the two strategies. The following figure shows the multidimensional natureof BPR.

Figure 4. Multidimensional View of BPR (Light, 2000)

Business activities should be viewed as more than a collection of individual or

even functional tasks. They should be viewed as a way to achieve maximum

effectiveness. IT and BPR have recursive relationships. IT capabilities should support

business processes and business processes should be implemented in terms of thecapabilities IT can provide. Davenport & Short (1990) refer to this broadened, recursive

view of IT and BPR as the new industrial engineering. Business processes represent a


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new approach to coordination across an organization. IT's promise is to be the most

powerful tool for reducing the costs of coordination (Davenport & Short 1990).

The way related functions participate in a process can be differentiated along two

dimensions: degree of mediation and degree of collaboration. They define the Degree of

Mediation of the process as the extent of sequential flow of input and output amongparticipating functions. They define the Degree of Collaboration of the process is the

extent of information exchange and mutual adjustment among functions when

participating in the same process. In this framework, information technology is critical inreducing the Degree of Mediation and enhancing the Degree of Collaboration. Also,

innovative uses of IT would inevitably lead many firms to develop new structures,

enabling them to coordinate their activities in ways that were not possible before. Suchstructures may raise the organization's capabilities and responsiveness, leading to

potential strategic advantages.

Although, BPR has its roots in IT management, it is primarily a business initiative

that has broad consequences in terms of satisfying the needs of customers and the firm'sother constituents (Davenport & Stoddard 1994). The IS group may need to play a

behind-the-scenes advocacy role, convincing senior management of the power offered byIT and process redesign. It would also need to incorporate the skills of process

measurement, analysis, and redesign.

Davenport and Short (1990) prescribe a five-step approach to BPR:

Develop the Business Vision and Process Objectives: BPR is driven by a businessvision, which implies specific business objectives such as Cost Reduction, Time

Reduction or Output Quality improvement.

Identify the Processes to be Redesigned: Most firms use anapproach, which focuses on

the most important processes, or those that conflict most with the business vision. Afewer number of firms use the exhaustive approach that attempts to identify all the

processes within an organization and then prioritize them in order of redesign urgency.

Understand and Measure the Existing Processes: Important to avoid the repetition ofold mistakes and for providing a baseline for future improvements.

Identify IT Levers: Awareness of IT capabilities can and should influence processdesign.

Design and Build a Prototype of the New Process: The actual design should not beviewed as the end of the BPR process. In contrast, it should be viewed as a prototype,

with successive iterations. The metaphor of prototype aligns the BPR approach with

quick delivery of results, and the involvement and satisfaction of customers.

According to Malhotra (1998), 70% of the BPR projects fail. He states the biggest

obstacles that reengineering faces are:


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Lack of sustained management commitment and leadership.

Unrealistic scope and expectations.

Resistance to change.

Based on the BPR consultants' interviews, Bashein et al. (1994) outline thepositive preconditions for BPR success as: Senior Management Commitment and

Sponsorship; Realistic Expectations; Empowered and Collaborative Workers; Strategic

Context of Growth and Expansion; Shared Vision; Sound Management Practices;Appropriate People Participating Full-Time and Sufficient Budget. They also identify

negative preconditions related to BPR as: The Wrong Sponsor; A "Do It to Me" Attitude;

Cost-Cutting Focus; and Narrow Technical Focus. The negative preconditions relating tothe Organization include: Unsound Financial Condition; Too Many Projects Under Way;

Fear and Lack of Optimism; and, Animosity Toward and By IS and HR Specialists. To

turn around negative conditions, organizations should: Do Something Smaller First (pilotproject); Conduct Personal Transformation (change of mindset); and Get IS and HR

Involved.

King (1994) views the primary reason for BPR failure as overemphasis on thetactical aspects and the strategic dimensions being compromised. He notes that most

failures of reengineering are attributable to the process being viewed and applied at a

tactical, rather than strategic, levels. He discusses that there are important strategicdimensions to BPR, notably, Developing and Prioritizing Objectives; Defining the

Process Structure and Assumptions; Identifying Trade-Offs Between Processes;

Identifying New Product and Market Opportunities; Coordinating the ReengineeringEffort; and, Developing a Human Resources Strategy. He concludes that the ultimate

success of BPR depends on the people who do it and on how well they can be motivated

to be creative and to apply their detailed knowledge to the redesign of business processes(Davenport & Stoddard 1994, Markus et al. 1994).

Over the last few years, the reengineering concept has evolved from a "radical

change" to account for the contextual realism (Caron et. al 1994, Earl 1994), and to

reconcile with more incremental process change methods such as Total Quality

Management (TQM), towards a broader, yet more comprehensive process managementconcept (Davenport 1995).

Kettinger & Grover (1995) outline some propositions to guide future questionsinto the phenomenon of BPR. Their propositions center around the concepts of

knowledge management, employee empowerment, adoption of new IT's, and a sharedvision. Earl et al. (1995) have proposed a "process alignment model" that consists of fouremphases: process, strategy, IS, and change management and control and used it to

develop more BPR strategies. Malhotra (1998) has developed the key emphasis on these

issues based primarily on an integrated view of recent literature from organization theory,

organization control, strategy, and IS. King (1994) believes that although the currentinterest in BPR may end, process reengineering, in some form or another would endure.


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The Future: BPR and ERP Systems

According to Light (2000), organizations are continuing to implement business

process change projects and one of the most important factors of the BPR concept

throughout the nineteen nineties has been the wide scale adoption of Enterprise Resource

Planning (ERP) systems. It is important to examine the link between these two areas.ERP systems are process oriented and highly integrated standard software systems, which

are used to automate core corporate activities such as, finance, logistics and human

resources.

The ERP applications market has grown enormously over the past several years.

Interestingly, Light (2000) mentions that the key reasons for the adoption of ERP systemsare closely tied to those for the evolution of BPR - the need to deal with legacy systems

in a complex and dynamic business environment. Companies are now looking to improve

the management of global operations and employ innovative supply chain basedcompetitive strategies such as the formation of new types of industrial structures.

However, many existing systems have become so difficult and costly to maintain,inflexible and misaligned with a global business strategy that organizations have taken a

clean slate approach towards their IT and have implemented ERP systems. Managers ofERP projects have suggested to Light (2000) that ERP is the new BPR. The reason for

this is because a key aspect of any ERP project is the need for most organizations to

undertake some form of BPR exercise. ERP systems are process oriented and, due to theirhighly interconnected nature, require organizations that implement these types of system

to adopt a process-oriented philosophy. Therefore, if an organization has not undergone

an organization wide reengineering exercise, they will have to do so. Even if there areelements of a process orientation within an organization, it is likely that a certain level of

reengineering will occur. This can have a considerable impact on competitive advantage.

Conclusion

Dramatic changes in the business environment throughout the nineteen eighties

forced organizations to examine outdated modes of work and develop new focused

strategies based on new business models. Many business management concepts emerged

but BPR has probably been the most influential. BPR emerged as a concept gearedtowards a clean slate, radial approach. However, the original ideas did not take into

account the situations in organizations where factors such as the evolution of the ways of

work, organizational cultures and IT infrastructures had become significantly linked withorganizations. A variety of methodologies, tools and techniques for BPR projects have

developed out of implementation failures. As a result, the concept of BPR has survived

and has been broadened to become more commonly associated with multidimensionalprocess change efforts. Reengineering is not just a matter of fundamental and radical

improvements in performance, but is also an approach to analyzing and transforming the

nature of businesses and industries.


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