Business Process Improvement

Business Process Improvement (BPI) is a systematic approach to help any organization make significant changes in the way it does business. The organization may be a for-profit business, a non-profit organization, a government agency, or any other ongoing concern.

BPI works by:

Defining what the organization's strategic goals and purposes are (Who are we, what do we do, and why do we do it?)
Determining what the organization's customers (or stakeholders) are (Who do we serve?)
Aligning the business processes to meet the customer's requirements (How do we do it better?)

The goal of BPI is a radical change in the performance of an organization, rather than a series of incremental changes (compare TQM). This radical model was popularized by Michael Hammer and James Champy in their book ��Reengineering the Corporation: A Manifesto for Business Revolution�� (1993). Hammer and Champy stated that the process was not meant to impose trivial changes, such as 10 percent improvements or 20 percent cost reductions, but was meant to be revolutionary (see breakthrough solution).

Unfortunately, many businesses in the 1990s used the phrase "reengineering" as a euphemism for layoffs. Other organizations did not make radical changes in their business processes, did not make significant gains, and wrote the process off as a failure. Yet others have found that BPI is a valuable tool in a process of gradual change to a business.

Table of contents

1 Principles of BPI
2 Methodology of BPI

2.1 Information Processing and BPI

3 Implementing BPI
4 See also

Principles of BPI

Base activities around outcomes, not routines: BPI is organized around outcomes, not the specific tasks required to reach the outcome. Organizations using BPI seek to eliminate the emphasis on routine that may not work well in an ever-changing political, business or legal climate.

Focus on the customer: Many organizations fail to do this. Routine sets in. Resources within the organization start to be allocated based on political needs rather than business or policy needs. Meanwhile, customer needs may have changed to the point that the organization may no longer effectively serve the customer and faces economic pressure or political pressure, such as the United States Postal Service.

Process first, not automation first: Although BPI may use automated planning tools such as enterprise resource planning, automation or information processing is not meant to be a substitute for BPI. An automated but inefficient system does not adequately meet customer requirements.

Benchmark regularly: An organization using BPI must continually and frequently determine if the costs of performing a business process outweigh the benefits. Therefore this organization must establish benchmarks, or a set of standards, against which the process must be measured. The benchmarks themselves must be quantifiable, attainable, and realistic.

Establish who owns a business process: Specific people, the process owners, must be placed in charge of a business process, be responsible for the performance and changes in the process, and be responsible for the success or failure of a process. Without personal responsibility, the process may fail.

Build control points into a process: There should be frequent points where the process owners and customers/stakeholders decide if the process is meeting current benchmarks and what they should do with the process. This may include halting the process if it fails to meet realistic benchmarks.

Standardize similar processes: Many organizations rely on an ad hoc approach to business processes. They make them up as they go along and change them without deliberate planning. A standardized system of preparing processes saves time, effort, staff hours, and money.

Make changes now: The change process should be done repeatedly, not merely once. Waiting for a perfect solution would mean no solution.

Methodology of BPI

Carrying out BPI is a project, so all principles of project management apply.

The first step in BPI is to define the organization's mission, existing structure and processes (AS-IS).

Then the BPI process owners should determine what outcomes would add value to the organization's mission and objectives (TO-BE).

Once the outcomes are determined, the organization's work force needs to be reshaped to meet the new missions and objectives, and a series of benchmarks, including cost metrics, should be put into place. It is during these latter steps that much of the resistance to BPI becomes apparent.

Information Processing and BPI

Although information processing is not meant to be the whole of BPI, it is a significant part of BPI. Successful BPI programs follow guidelines similar to these:

Do not think of existing procedures when designing new processes.
Put information processing power into the real work that produces the information rather than peripheral processes.
Move towards organization-wide data definitions
Capture information once, at the source, without duplicating data

Implementing BPI

Most resistance to BPI comes from within an organization. Managers do not wish to change existing structures; they reached their positions within the current system. The labor force may resist BPI because of fears of layoffs; however, an organization using BPI on a regular basis, argue many proponents, will already have the proper work force to meet existing business challenges.

Some organizations have implemented BPI on a smaller scale and report success. To do so, they learned the following lessons:

Start with a small process that can be completed in a short time frame
Set clear timelines
Do not spread resources thinly and focus on the short term payoff
Management and primary stakeholders must be involved, or else even a limited implementation will fail.