The organisations are facing the increased level of competition throughout the world and in order to be a part of this competition and to maximize their share in the market or to increase the profits
In today’s era the organizations are facing the increased level of competition throughout the world and in order to be a part of this competition and to maximize their share in the market or to increase the profits, they must always keep an eye on the changing environment of the business world and should keep themselves updated to survive. Everyday many changes are appearing in the business world and one of them is “BPR”. (OLALLA, M. F. 2000).
BPR can be defined as the “Re-engineering of an organization by examining existing processes and then restoring and change them for incremental improvement” (DeMarco, 2006), thus giving the organizations an edge over their competitors to be successful in the market or in other words we can say that re-inventing the way of doing business to increase the performance of the organization. (Radhakrishnan and Balasubramanian, 2008).
Hammer and Champy have defined re-engineering as a “fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed” (Hammer and Champy, 1993).
BPR is widely in consideration within the organisations and in this report we are going to discuss the important aspects of information technology and information systems in BPR and will analyse that how IT and IS are implemented in the re-engineering process of the organisations.
Role and importance of IS/IT in the implementation of BPR
IT has been a great part for the success of the businesses all over the world since years and “information technology is the technology of sensing, coding, transmitting, translating and transforming information” (Whisler, 1970). If we relate IT with the BPR it is said that “Information technology is an integral part of re-engineering as an enabler” (Hammer and Champy, 1993), as it allows the organisations to re-engineer their business processes. It is also said that the relationship of BPR and information technology is recursive. (Davenport and Short, 1990). The capabilities of IT must carry the business in their process and business process must be in terms that can be provided by the capabilities of IT . The major role that IT can play is to make it possible for the organisations to design a new process. If there is no change in the way of doing work and IT is just used to automate the process which is already in use and there will be no benefits from this automation or there will be minimum benefits. The organisations should not use IT just to automate the processes when thinking about re-engineering in the organisation. The organisations should think inductively when requiring the application of IT for re-engineering which means an organisation first looks the best solution and then thinks about what problems can be solved by using that solution. “A company can never re-engineer that first look at the problems and then think about the solutions provided by the technology.” (Hammer and Champy, 1993)
Most of the companies commit such errors as they see technology as how the new technology will help them in solving the problems faced by the current business processes. They should think how technology can help the business in improving their ways that are not being done correctly in their existing processes. “Organisations see re-engineering as an innovation for them. It helps the organisations to exploit the best capabilities for the achievement of new objectives entirely provided by IT”. (Hammer and Champy, 1993). BPR heavily depends on the power of information technology and systems for improving of the way the work is done by the organisations and for those who are responsible of using the information needs. Alcoa (an American firm) gives a good idea of utilizing the capabilities of IT in achieving new business objectives. The largest IT project was announced by the company in its history. They spent $150 in the efforts and held in about 26 countries and took many years to complete the project. It was a difficult task for the company but the idea was really simple which was “Lets employees around the globe communicate quickly and easily”. This initiative showed the basic fact of life in using the IT strategically and today all over the world organisations are focusing on connecting their employees, customers, throughout their functions and between the people who make important decisions. In the above example the company didn’t think of IT will solve their problems but they thought of the things that could be solved by the use of new technology. One of the major advantages of IT in re-engineering is its disruptive power. IT has the capability to break the rules and make the users think inductively and give their organisations a competitive advantage.
One of the best example of using IT in BPR as a competitive advantage is Amazon.com. Amazon.com started selling their books online without being present physically for the customers. In doing so they brought a huge change in the business of books store and broke all the rules by changing their process through the use of IT. Amazon.com also offers a function which alerts the customers automatically by sending the e-mails whenever a new book which is searched by the customers is published and this was only possible for the Amazon.com because of the internet technology. The effective use of IT does not mean to move the information faster but it means to do the things right. IT helps the organisations to be proactive when making decisions and to improve the performance of the businesses rather than getting the reports on it after the facts.(Radhakrishnan and Balasubramanian, 2008).
One more example of re-engineering the process through IT is of IBM when they reorganised their crediting functions. Previously it took between six days and two weeks to process an application from the credit department to the pricing department and then to the administration who use to write a quotation formally. Then IBM credit realised that processing an application normally takes 90 minutes and rest of the time is wasted in waiting the file on the desks of specialist, then the idea of re-engineering the entire process occurred. What IBM did was they replaced the four specialists who were processing the applications and hired a generalist who they called a “deal structurer”. The whole application was processed by a new generalist from the start to the end by using templates on a new computer system providing all the data and tools which each specialist was using before. The re-engineering resulted in reducing the turnaround time from 7 days to 4 hours and without any increase in the number of staff IBM was able to achieve improvement in the productivity and it was able to handle the credit applications 100 times more than before the re-engineering took place. (Hammer and Champy, 1993).
“Similarly the importance of IT in re-engineering can also be verified by one more example of ford motor company. In 1980s, they looked at their 500 employees at accounts payable department and realised that the employees were spending most of their time in tracking down the discrepancies between the purchase orders, invoices and receipts. They decided to re-engineer the entire process of parts procurement and they created an online database for the purchase orders. Whenever they issued a purchase order to a buyer, it was entered directly into the database and as they received the goods at the dock, someone from the department checks the database. If they find the shipment matches the order they accept it and if it does not they did not accept it in order to decrease discrepancies between what they ordered and what they received. As soon as they received a shipment, the database is updated and automatically a check is generated to be issued to the vendor at the same time. So, as a result of re-engineering at Ford, the number of employees were reduced from 500 to 125 and at the same time the there was a dramatic change in the efficiency. (Hammer and Champy, 1993).”
IS/IThave always helped the organisations in re-engineering their business process and as the whole globe is now a networked world so the organisations need to re-engineer their processes to cope up with the new trends as proper BPR would definitely reduce the cost of production and this is evident in the CISCO’s launch of a product called “MCO (manufacturing connection online)” in 1999. This “manufacturing connection online” was used to channel the orders directly and immediately from customers to manufacturers and suppliers. This new system reduced the cost of operations drastically for Cisco and reduced number of days involved in paying the suppliers, and also eliminated the cost of papers which were used for paper based products and brought the savings of $24 million for the cost of material and $51 million which was normally spent on the labour and a 45% reduction in the inventory. (Iroegbu, 2011)
Information systems are being widely used in the business and they are the systems which are inserted into the organisation in order to support the data processing and decision making. These information systems are regarded as a kind of structures reflecting all the activities of the organisations and a software system is a part of it. (Yih-Chang Chen, 2001).
Information systems which are supported by the surplus of information and communication technologies are sustaining the core business processes in most of the organisations today. IT is now beyond the gains of efficiency and effectiveness of 1960s and 1970s and are giving more advantages strategically which is going to transform the organisations of the future. Therefore, in order change a business process, it will involve the redesigning the information systems and information technology to support the new processes. (Broadbent, M. 1999) We are living in the period where there is a huge growth in the use of IS/IT by the organisations. Independently these information systems have no existence of their own unless taken in the context of an organisation and its business processes and IS/IT is considered as the main driver of the change in the organisation. It also plays a major role in the BPR process. BPR has changed the way organisations view IS/IT. It is also said that the re-engineering processes by the use of IS/IT support may give largest short-term payoffs from BPR. The move from the mainframe systems to the modern PC based networking systems is considered as the one of the useful aspect of IS/IT in the BPR, but sometimes it is a difficult task to change the application software as well as the platform. “Even internet has enhanced the capabilities of IS/IT in improving the business processes. IS/IT has helped the organisations to implement business processes innovatively and improve the quality of their operation in terms of time scale and accuracy as well as provided organisations with the new ways of working that help the organisations to be successful. (Parker et al 1988). But on the other hand when implementing BPR through IS/IT it has a negative image on the people as they feel it is causing the decrease in the middle managers role and numbers. (Dopson, S and Stewart, R 1993). Many surveys confirms that the use of IS/IT in BPR is enabling the majority of BPR initiatives. Most of the managers in the organisations are looking towards BPR as way of applying IS/IT in their business process to achieve their goals and to give the better quality of products and services to the customers.
According to the survey by Willcocks has highlighted the importance of IS/IT and its management is considered as the top 10 critical success factors for BPR programs and about 75% of the top 30% BPR programs had seen IS/IT as the key enabler in the radical process redesign and in the support of processes re-engineered. (Willcocks, L 1995). There are some new views on the use of IS/IT in the BPR and as the use of IS/IT is increasing, therefore the term BPR should be altered to “BP&ISR” and as per this new term the definition of BPR by (Hammer and Champy, 1993) “fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed” can be further re-defined and the new definition can be as “BP&ISR is the fundamental rethinking and radical redesign of an organisation’s business processes and information systems with an aim to achieve significant improvements in quality and service, and optimise costs and productivity” (Currie, 2003). It is a fact that is the IS efforts are focused in the requirement of the business instead of improving internal efficiency it will have a great imact on the business. IS specialist can easily give their contibutions to redesign the processes as they have expertise, they are technical and the style of their thinking, this could be done by looking at the limitations in the design of the processes that the tools and techniques of BPR may have and establish different ways of improving them. (Richards, N 1993).”
“This report presents the importance of IS/IT in implementing BPR and still it is difficult to understand the relationshop between BPR and IS/IT but we can say that BPR and IS/IT goes together in most of the cases. The organisation will have to consider the support of IS/IT in their processes and at the same time they have to keep an eye on the on their processes to be linked with IS/IT properly in order to get the best outcome. The examples have also shown that how different organisations re-engineered their processes using information technology and information systems and were successful in achieving their objectives. the proper use of IT and IS in the re-engineering of the processes will play a vital role in the future as internet has changed the ways of doing business and most of the customers are attracted towards internet shopping rather than going to the shops physically. Tesco, Asda, Sainsbury’s are the good examples of using IS/IT in their business processes to achieve their goals and upto an extent they are going towards success. BPR in terms of information technology and Information system can only be successful if needs and objectives of the businesses are directly realated to the activities of the process and the organisation must see the critical aspects of IT in their business processes before implementing it otherwise IT will only be playing the role of automation for their processes.”