Academic journal article Journal of Small Business Management

Determinants of Business Process Reengineering Success in Small and Large Enterprises: An Empirical Study in the Canadian Context

Academic journal article Journal of Small Business Management

Determinants of Business Process Reengineering Success in Small and Large Enterprises: An Empirical Study in the Canadian Context

Article excerpt

Business process reengineering (BPR) consists of radically transforming organizational processes through the optimal use of information technologies (IT) to achieve major improvements in quality, performance, and productivity. A fairly new organizational approach based on information technologies (Davenport 1993; Hammer and Champy 1993), BPR's explosive dissemination really began in 1993 with the publication of the book by Michael Hammer and James Champy entitled Reengineering the Corporation: A Manifesto for Business Revolution. However, empirical research has shown that 88 percent of large firms in North America were already implementing BPR in 1993, at an average rate of four projects per firm (Hayley, Plewa, and Watts 1993). In 1994, the members of the Society for Information Management identified BPR as a major concern for organizations, on a level with customer orientation, development of organizational culture, and strategic alignment of information technologies (SIM 1994). A survey by Deloitte & Touche found that nearly 75 percent of 400 large North American firms were planning to increase the number of BPR projects in 1995 and 1996 (Maglitta 1995).

BPR is known to produce highly positive results for firms, including significant reductions in costs, errors, and times, increased customer satisfaction, and better overall organizational efficiency and effectiveness (Bergeron and Falardeau 1994; Eckerson 1991; Ramani, Yap, and Pavri 1995; Smith and McKeen 1992; Wilder 1991). In an interview with Moad (1993), Michael Hammer stated that although 70 percent of firms did not achieve all their BPR objectives, most achieved a large part of what they wanted to do. These figures match the findings of Bergeron and Falardeau (1994) and Bergeron and Limayem (1995) in surveys performed respectively on samples of 134 and 50 Canadian firms. The respondent firms reported success rates of 70 percent, in line with Hammer's assessment.

Origins of BPR

Business process reengineering originated in the 1950s as large firms began to explore the potential impact of computers on the efficiency and effectiveness of their business processes. Many approaches, methods, and techniques have since appeared and constitute the foundations of BPR as it is presently known. Davenport (1993) notes six areas which influenced the emergence of BPR: the total quality approach, industrial engineering, the systems approach, the socio-technical approach, the diffusion of innovations, and the use of information systems for competitive advantage.

The recent interest in BPR closely follows the "productivity paradox" observed by Roach (1987) in regard to information technology. Despite massive investments in these technologies between the middle of the 1970s and the early 1990s, neither researchers nor practitioners had yet been able to clearly demonstrate that major productivity gains had been made. The concept of BPR was thus seen as a way to change this situation - BPR would succeed where other approaches had failed in making IT investments profitable.

A number of advantages or benefits have been attributed to BPR (Davenport and Beers 1995): cost reductions (Case 1992; Terdiman 1992); increases in productivity (Eckerson 1991; Smith and McKeen 1992; Wilder 1991); a higher quality of goods and services 'offered (Barton 1993; Keen 1991; Rivera 1992); and a simplified organizational structure (Davenport and Beers 1995; Stanton, Hammer, and Power 1993). However, to gain these advantages, a specific set of conditions must be met: (1) the BPR project must have the visible commitment and full support of top management (Champy 1995; Hammer and Champy 1993; McKeen and Smith 1992); (2) a multidisciplinary and multifunctional steering committee must be formed and assigned to the project (Bruss and Roos 1993; Guha, Kettinger, and Teng 1992; Rivera 1992; Schnitt 1993); (3) an explicit methodology must be rigorously followed (Kaplan and Murdock 1991); and (4) enterprises must comply with the fundamental principles of BPR if they are to reap its potential benefits (Kettinger and Grover 1995). …

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