Business Process Improvement

Business Process Improvement (BPI) is a systematic approach to help any organization optimize its underlying processes to achieve more efficient results.

Overview

The organization may be a for-profit business, a non-profit organization, a government agency, or any other ongoing concern. Most BPI techniques were developed and refined in the Manufacturing era, though many of the methodologies (like Six Sigma) have been successfully adapted to work in the predominantly Services-based economy of today. While there are differences in the challenges that each type of industry poses, the fact remains that the core principles of BPI and how they apply to business improvement, remain portable across industries and functions.

It should be noted that BPI focuses on "doing things right" more than it does on "doing the right thing". In essence, BPI attempts to reduce variation and/or wastage in processes, so that the desired outcome can be achieved with better utilisation of resources.

BPI works by:
* Defining the organization's strategic goals and purposes "(Who are we, what do we do, and why do we do it?)"
* Determining the organization's customers (or stakeholders) "(Who do we serve?)"
* Aligning the business processes to realize the organization's goals "(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). Michael Hammer and James Champy popularized this radical model 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.

BPI: Key Considerations

Processes need to align to Business Goals An organization's strategic goals should provide the key direction for any Business Process Improvement exercise. This alignment can be brought about by integrating programs like Balanced Scorecard to the BPI initiative. e.g. When deploying Six Sigma, identification of projects can be done on the basis of how they fit into the Balanced Scorecard agenda of the organization.

Customer Focus Fast-changing customer needs underscore the importance of aligning business processes to achieve higher customer satisfication. It is imperative in any BPI exercise that the "Voice of Customer" be known, and factored in, when reviewing or redesigning any process.

Importance of Benchmarks BPI tools place a lot of emphasis on "measurable results". Accordingly, benchmarks assume an important role in any BPI initiative. Depending on the lifecycle of the process in question, benchmarks may be internal (within the organization), external (from other competing / noncompeting organizations) or dictated by the senior management of the organization as an aspirational target.

Establish Process Owners For any process to be controllable, it is essential that there be clarity on who is the "process owners", and what constitutes success/failure of the process. These success/failure levels also help establish "control limits" for the process, and provide a healthy check on whether or not a process is meeting the desired customer objectives.

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 existing structure and process at play ("AS-IS").

* Then, the BPI process owners should determine what outcomes would add value to the organization's objectives and how best to align its processes to achieve those outcomes ("TO-BE").

* Once the outcomes are determined, the organization's work force needs to be re-organized to meet the new objectives, using the variety of tools available within the BPI methodology.

Implementing BPI

Most resistance to BPI comes from within an organization. Managers often do not wish to change existing structures. 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 reported success, by doing the following:

* 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.

See also

* Business process interoperability
* Business Process Mapping
* Process improvement
* Project management
* Project planning
* Hoshin Kanri