Reengineering is a term used to describe the change of processes with the aim to boost the performance of a business. According to the definition of Hammer and Champy (1993), "reengineering is the 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."
In contemporary management theory, reengineering is known as business process reengineering, or BPR — a discipline, which analyzes and adapts workflows in organizations. BPR emerged as a technique of rethinking and redesign in business in the 1990s. It is an in-depth process which covers the company's basics. As economists put it, BPR is suitable for businesses which seek a ten-fold growth, rather than a 10 percent rise.
BPR is particularly interested in a company's processes rather than the organization's particular tasks and employees. A process is defined as a series of steps whose outcome is a product or a service. Research shows that the efficiency of processes translates into efficiency of the organization. Therefore, the management has to think of the business's organization in terms of processes rather than in terms of departments or units. Hence, apart from organization charts companies are advised to work out process maps as well, which illustrate the workflows within the organization. The process map is a mandatory prerequisite for the launch of the reengineering process.
Reengineering is usually a step-by-step development, as no business can afford to revamp all its processes at the same time. Decision-making takes into account the following criteria: dysfunction, importance and feasibility. The processes which do not function properly are of major concern. The processes which are key to customer relations are also a priority. The processes which are most susceptible to reengineering will also be high on the agenda.
Planning is a crucial part of reengineering. At this stage, the company has to identify the need for reengineering and to appoint a cross-functional team — a group of people with various expertise, representing all levels of the organization. The company also focuses on customer-specific needs which will be crucial for outlining the necessity for reengineering.
Another crucial factor for reengineering is the understanding of the existing processes. Therefore, many analysts recommend a thorough analysis and mapping of the as-in processes. If the company does not carry out a comprehensive as-in analysis, it may end up spending a lot of money only on the design of the to-be processes without achieving effective results. This phase mainly aims to detect dysfunctions in the system.
Following these preparatory steps, the company has to design its to-be processes. At this stage, it should provide several alternatives to the current organizational model. The company compares the effectiveness of its processes with those of similar organizations. These measures will help it identify possibilities of improvement of existing processes. Afterwards, the company has to take into account timing and costs needed for the reengineering efforts.
Having completed the analyses and preparations, the company proceeds with the implementation of reengineering processes. During the implementation stage, the reengineering measures have to overcome a number of setbacks. Hence, this phase is identified as the most taxing in the process. One of the major problems is that the environment is resistant to change. Therefore, some efforts have to be channeled into convincing the staff of the necessity for change. The next step is to work out a transition plan to ensure the smooth adoption of the to-be processes. Training programs also have to be ensured to acquaint employees with novelties.
The reengineering process does not end with the implementation of the changes, but is subject to continuous improvement. The implementation stage has to be followed by analysis of progress and results.
The efficiency of reengineering is still subject to debate among analysts. Research shows that between 50 percent and 70 percent of reengineering programs do not deliver the desired result (Hammer, Champy, 1993). As reengineering is expected to produce dramatic change, if it leads to slighter improvement in the organization's processes it may be considered unsuccessful. However, many researchers insist that even though in many cases BPR does not produced the intended results, it can be still worth the efforts and investment.