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Business Process Management



Abstract

The current paper outlines the main issues of business process management (BPM) and business process reengineering (BPR). The discussed question is the following – what are the main peculiarities of BPM and BPR? First, it discusses principles of two methods and differences between them. Second, the paper gives the definition of both management tools. Third, it discusses the impact of BPM and BPR on business. Moreover, the paper shows gains and losses of both methods. In addition, it presents valuable techniques aimed at successful implementation of the chosen method. Finally, the paper sums up the research about the most widespread approaches to gain success.

Keywords: management, development, success, challenges.

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Principles of BPM & BPR and Differences between Approaches

Business process management (BPM) is an approach based on the study, development, control and management of the processes running within the company. It is a management tool is aimed at boosting up improvement processes in the organization and increase customer’s satisfaction from consuming organization’s products and services. It involves a systematic approach to the review of the internal and external environments, improvement of the performance, promotion of efficiency and penetration of the strategy with the quality orientation. BPM includes ten main principles, which contribute to successful implementation of the approach and its beneficial influence on the performance. These principles include the following: principle of context-awareness, principle of continuity, principle of enablement, principle of holism, principle of institutionalization, principle of involvement, principle of joint understanding, principle of purpose, principle of simplicity and principle of technology appropriation. According to Burlton (2012),

Years of successful and not-so-successful process management experience have led to a set of best practices a number of fundamental principles that must be honoured in order to optimize returns to the company, the delivery of business results to customers and to satisfy the needs of the organization’s other stakeholders.

Principle of context-awareness means that business should implement BPM approach according to its step of lifecycle, level of development and sphere of activity. Principle of Continuity means that BPM approach involves a continuous process running at all steps of the company’s lifecycle. It is an effective management technique aimed at continuous improvement of quality. Principle of enablement involves creation of capabilities for every element of the company to develop and improve its performance. Principle of holism means that a company penetrates its activity with improvement orientation at all spheres of activity. Principle of the institutionalization means that a company creates positions or a department aimed at continuous development. It is required to have an effective team of professionals searching for the most appropriate areas of improvement.

Principle of involvement speaks for itself and states that every employee is capable of participating in the implementation of the BPM approach. Principle of joint understanding emphasizes that every element of the company should understand the meaning of the BPM approach. It is important not to use the language of the experts and complicate the fundamentals of the applied management techniques. Principle of purpose sets the main goals of the BPM tool according to the strategy of the company. Principle of simplicity states for the economic side of the approach. It should not cost too much and should bring benefits at the same time. Finally, principal of technology appropriation should make it possible to use modern technologies in the process of quality improvement.

Another effective technique applied in companies in order to improve and develop is business process redesign (BPR). It is a management approach, which involves review of all processes running within the company. The general idea of the approach is based on gaining achievements in the development of critical indicators of the company’s performance, which include costs, quality, service and speed. In order to understand the nature of this approach, it is required to define the term of business process. Business process is a systematic set of activities, which require a certain number and kinds of inputs, which contribute to the creation of a product or service according to the requirements of customers. Reengineering is based on the principle of changing the process by making it less costly, but more efficient.

According to Maleki and Beikkhakhian (2011), “Through reorganizing, eliminating some processes and finding new ways of doing things, BPR helps organizations to change their old fashioned structures into innovative processes.” It requires radical measures to be taken in order to bring benefits to the company and improve the quality of the final products and services. BPR has three main goals including customer orientation, effectiveness and efficiency. These goals have the basement of seven principles, which penetrate structural elements of the approach.

The first BPR principle circles around results. It states that a company should center on outcomes of the performance, not tasks. Another principle gives an entrepreneur an ability to identify all processes running within the organization and rank them according to the need of being redesigned. The third principle is to use information efficiently in order to bring improved outcomes. The fourth principle lies in centralizing resources even if they are geographically dispersed. The process of BPR considers transformation and radical thinking in order to improve results of the performance. Another principle of BPR involves linkage of the parallel activities of the manufacturing process. Its aim is to integrate processes instead of issues. The sixth principle suggests an entrepreneur to concentrate on those processes, which require taking decision immediately. It means that a control should be over areas, which need urgent reengineering. Finally, the last principle is based on taking information from the primary sources. Information is an essential element that can influence the development of business.

It may seem that BPM and BPR are similar approaches aimed at the improvement of the company’s performance. However, there are many differences between them. An employer should consider every aspect of these approaches to bring benefits from its implementation. It is a fact that accurate and careful implementation gives more results than mindless application of all existing methods. BPM and BPR have similar objectives including quality improvement and optimization of effectiveness. However, these two approaches use different techniques aimed to achieve the same goal. BPM is an approach, which is aimed to continuously improve processes running within company’s performance, while BPR has a radical aim to replace old processes and gain better results in significant indicators. BPR is a radical thinking process, which is a result-oriented and rough approach to change company’s performance. According to Goksoy, Ozsoy, and Vayvay (2012), “Business Process Reengineering has allowed many failing and even successful organizations to re-invent themselves to achieve performance improvements and position themselves in a better place in their markets.”

The main differences that have a high impact on the company are that BPR is more expensive than BPM, and it puts at risk the whole company’s performance. That is why the results of reengineering can be drastic and unpredictable. Moreover, BPM takes into consideration all processes, while BPR centers on a single process and replaces it with a better one. At the same time, reengineering is more time-consuming and expensive than BPM. Both methods have advantages and disadvantages. BPM is oriented on customer satisfaction, while BPM is oriented on the replacement of processes, which slow the performance of business. Nevertheless, it is necessary to consider all pros and cons in order to understand, which approach can be more appropriate and effective.

Advantages and Disadvantages of BPM & BPR

BPM is an approach, which has many advantages outlining its usefulness to the company’s profits. It helps organizations gain improved results in less time. It takes into consideration not only separate aspects of the company’s action, but all connection between various processes. Moreover, it takes into account information flowing from one stage of performance to another. The competitive advantage of the approach is that it visualizes necessary data and processes in general in order to implement changes most successfully. Despite the wide range of positive aspects and beneficial principles of the BPM, there are many doubts about its benefits.

There are enough disadvantages being taken into account in order to evaluate the efficiency of the BPM methodology. In some cases, BPM strategy can be harmful to business, as it becomes a limit to innovations. Process management does not mean radical implementation of innovations. It is proved that companies that decided to apply BPM will be less successful than those who are growing and developing at a rapid pace. However, there is a solution to the disadvantages, which can make them a competitive benefit. For example, business can create both exploration and exploitation departments of BPM. It means that theoretical issues will be boosted up by practical use of researched theories. It is required to have enough resources not only to explore but also to launch development theories.

Business process reengineering can become a key to success for many companies. It has many advantages, which have a direct influence on the business environment. First, it increases the effectiveness of the manufacturing process. All employees are involved in one mission – to make a breakthrough and update all elements of the company. BPR contributes to the improvement of functionality. It means that a company grows along with its capabilities and opportunities. It is important to grow and expand boundaries simultaneously. Moreover, this approach makes a company flexible and adaptable for the changeable business environment. It helps to adjust to the conditions of the surrounding world.

Finally, the most important aspect is that BPR improves critical indicators of performance, which have a high impact on company’s further activity. Despite the wide range of advantages, BPR has enough disadvantages to be considered wisely before its implementation. The main disadvantage of the BPR approach is that it requires the use of many resources. It is aimed to reduce costs in the future, but it needs much investment in order to be successfully implemented. Moreover, it may cause problems among employees. Some employees can hardly adjust to the radical changes of the company. On the one hand, a company can increase responsibility of those who are more flexible than others are. However, consequently, it will make those employees overwhelmed and will discourage them from effective work. Another disadvantage is that BPR centers on the strict control on the results, not taking into consideration expenses and processes aimed at goal achievement. It is a rough process changing the structure of the company, and it should be applied with accuracy and attention to all areas.

Critical Success Factors of BPM & BPR

Any improvement process requiring changes needs to have critical success factors, which can determine its keys to successful implementation. BPM has a base of five critical success factors. The first factor states that BPM needs to have enough resources and support from the top management of the company in order to be successfully applied. However, the main source of support should be based on sponsorship. Moreover, effect has a direct dependence on the knowledge of sponsors about BPM processes. Another factor is that a company should have a center of excellence. This department should be responsible for implementation of changes within the company. It should control and be aware of consequences and target goals of the implementation. Moreover, it should have enough positions in order to provide a company with valuable improvements. Competency manager, consultant, promotion specialist are included into the list of the required positions. The third factor means that personnel and the company should speak the same language. The performance of all elements should have the same aim. It is important to work in the same direction with employees. The fourth principle considers that BPM is an approach which cannot be applied once. It should be included into strategic plans of the company. The last factor considers that the company ranks improvement processes according to their priority.

In its turn, BPR has a range of critical success factors. One of the most important factors is collaborative working environment in the company. All changes should be introduced in a friendly environment with appropriate working conditions. Another key to success is support form the side of top management of the company. It is necessary to make BPR implementation useful. Moreover, the next factor states that a company should have complete IT support to create a competitive benefit of the company using BPR approach. The next factor suggests an employer to use training to make employees appropriate for the updated working conditions of the organization. Finally, BPR needs a stable source of financial resources. It is an approach replacing all old elements with modern concepts and principles. It does not improve, it creates a new basis. That is the reason to have enough financial resources to implement the approach.

Barriers to Successful Implementation of BPM & BPR

Both approaches are aimed at the improvement of the company’s performance. However, it is impossible to avoid some challenges in the process of its implementation. Business process management faces a range of barriers on the way to beneficial influence on the company’s activity. One of the most widespread problems of BPM is gaining sponsorship and financial support. It is a fact that a company cannot handle BPM implementation without the support of key stakeholders. Another barrier of BPM in the organization can become an internal system of communication. According to Moore (2011),

A comprehensive communication plan must start from the top of the organization, but not just stop there. Instead, it has to trickle down through different management levels to eventually address individuals who have big concerns about how the changed process will impact his or her job.

The most important aspects of this barrier touch upon the penetration of all levels of the company with changes provided by BPM approach. Top management should make sure that all elements are working in the same direction. Moreover, another barrier is related to the corporate culture of the company. It means that the employer should strive not to harm corporate culture with new changes. Employees should be developing along with the BPM modifications.

At the same time, BPR has its own barriers. The first challenge for a company can become the complexity of the BPR approach. It causes many difficulties on the way to success. This barrier is related to another one, which is the lack of desire to transform the company. The latter should be ready to introduce a new system of management and its principles. Another challenge can be to keep personnel on target tied with one aim. Employees should work in the same direction with top management. The final challenge faced by the company is poor timing and allocation of resources. Poor time-management and the lack of resources can influence the success of the company badly.

Summary

BPM and BPR approaches are two different ways to improve company’s performance. It is hard to state that one approach is better than another one. They both have their own peculiarities. Advantages and disadvantages of BPM and BPR show that an employer should be careful choosing an appropriate method for the company’s development. It is required to take into consideration all available resources, which can be targeted at goal achievement. Challenges of both approaches show that organizations should be ready to face difficulties on the way to success. Common barriers prepare entrepreneurs to walk through many obstacles that will complicate the process of goal achievement.

Regardless of the chosen approach, the process of improvements is not an easy task to obtain. Organizations should be sure that a company has all resources required for successful transformation. Research has shown that absence of the systematic plan of actions can harm organization instead of brining benefits to its performance. Finally, the company should penetrate its activity with principles of the chosen approach during all steps of lifecycle. It is obvious that it is impossible to implement changes and return to the previous norms and principles of performance. Once and for all, the company should strive to introduce improvements and grow with the help of new management policy.

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