BPR and IT: A Comprehensive Framework for Understanding BPR

Prof. Dr. Helmut Krcmar Dr. Bettina Schwarzer

Lehrstuhl fr Wirtschaftsinformatik Hohenheim University (510H) 70593 Stuttgart Tel. +711-4593345 Fax +711-4593145

BPR and IT: A Comprehensive Framework for Understanding BPR

Abstract Even though BPR has been widely discussed a throrough understanding of issues determining the success of BPR projects is still missing. This paper presents a comprehensive framework derived from literature studies as well as empirical studies in multinational corporations. The framework encompasses the conditions required before BPR projects are begun and the often discussed topics of processes, organisation, technology and people. It then looks in greater detail at issues of perception and understanding, process design, methods and tools, and process oriented IS management which we believe are the key to understanding BPR. The paper closes with conclusions for research and companies.

1. Introduction For several years new competitive challenges have demanded dramatic leaps in the companies operational performance. However, most traditional means of increasing performance did little more than locking in incremental gains. Increasingly, the companies turn towards a new IT-enabled approach - Business Process Reengineering (BPR) - which they expect to yield breakthrough levels of improvement. As BPR is an approach mainly developed and propagated by consulting companies, it is not surprising that the literature provides many successs stories but hardly any theoretical considerations. In the literature, the discussion of BPR is often reduced to a collection of buzz words. Even though most authors mention issues related to people, organization, processes, and IT, they do not provide indepth insights required to thoroughly understand and implement BPR. A number of diverse factors underlying these four issues make BPR so difficult and increase the risk of failing if not handled adequately. As Earl points out, the substantinal challenge is likely to be implemention (Earl, 1994, p. 29). Therefore, it seems most important to understand and consider these factors before and while conducting BPR projects. This paper provides a comprehensive framework for understanding BPR. After summarizing the key points of the existing BPR-literature, the framework is presented. The core elements "perception and understanding", "process design", "tools and methods" and "process oriented IS management" are described and the rationale for

including them in the framework is given. Finally, conclusions derived from the framework are discussed.

2. Literature Review Over the last few years the number of articles and books on BPR has steadily increased. The key points of most of the existing BPR literature (see for example Davenport/Short, 1990; Hammer, 1990; Kaplan/Murdoch, 1991; Davenport, 1993; Hammer/Champy, 1993) can be summarised in the following three statements:

BPR improves corporate performance significantly through radical transformation. BPR involves a fundamental rethinking of how the company does business. IT is a key enabler for making transformations of the business possible.

BPR and corporate performance Competition has been a recurring theme for the last decades. New standards of corporate performance were set through the 1980s, marked by time-based competition, globalization, customer service philosophies and quality programms. Applying these ideas may improve corporate performance. However, to become a leading-edge company is thought to require more of a breakthrough in corporate performance. These quantum leaps in performance are a typical promise of BPR. They are to be achieved by radical transformations of structure, roles and culture. Several authors point out the differences between BPR and "traditional" approaches like quality initiatives and continuous improvement (e.g. Leibs, 1992; Eliot, 1993; Davenport, 1993) which are based on incremental improvements. Due to the resulting large scale changes, the projects have to be supported and pushed by top management (Krass, 1992; Hammer/Champy, 1993). Successful implementation of the changes depends to a large extent on the unlimited buy-in of the employees in the departments. Therefore, everybody in the departments has to be involved in the projects to make the transformation take place. Rethinking the company The BPR movement percipitates a move away from monolithic and static organizational designs which were geared for repetitive and routine activities. Hammer/Champy define reengineering as "the fundamental rethinking and radical redesign of business processes [...]" (1993, p.). The power of BPR lies in the breadth of the definition of business processes as it captures cross-functional and cross-national interdependencies. BPR

reorients an organisation from performing as a cluster of functions - each very often pursuing its own objectives - to integrating activities across organisational boundaries and national borders based on a set of shared objectives (Kaplan/Murdoch, 1991). Furthermore, it implies that decision making structures, work flows, organisation, and information systems are redesigned in an integrated, often parallel fashion rather than independently or sequentially. Horizontal or lateral views of organizations emerge but not in classic matrix or project management forms but in activity, task-oriented, systemic forms (Earl, 1994). The resulting impetus is toward flexible organizational forms which can accomodate novelty, innovation, and change. IT as enabler Achieving the anticipated radical improvements in business performance depends to a large extent on the use of IT. Davenport/Short (1990) point out that there is a recursive relationship between process design and IT and that "each is the key to thinking about the other" (p. 12). This statement is typical for a totally different approach towards processes and the use of IT as compared to the 1980s. Whereas in the past IT was used to automate existing processes, it is now widely recognised that this will very often only result in high investments and increased operating costs but not in the anticipated improvements in performance (Dent, 1990; Erben, 1991; Stadler/Elliot, 1992). Today, the central premise is that IS is a lever for designing processes and therefore should not be simply overlaid on the existing organisational structure. Instead of treating the existing business processes as a constraint in the development of an optimum IT infrastructure, the basic logic of the processes itself is questioned (Venkatraman, 1991). Even though the importance of IT is widely acknowledged, very few articles consider how IT can be actually used in BPR projects and which role IS management plays in this context (Cash/Woolfe, 1992; Schwarzer, 1994b). Earl points out that it is the three aspects "transformation", "process perspective" and "IT-enablement" that make BPR different, new and something that deserves thinking about (Earl, 1994, p. 22). We want to stimulate this process by presenting a framework that incorporated different concepts.

3. Framework 3.1 Overview The last chapter summarized the most commonly expressed thoughts on BPR. We do acknowledge the importance of all the mentioned issues, however we believe that the key to understanding BPR ist to be found on a more indepth level. Figure 1 shows our

framework as being constructed of a number of different elements arranged in two frames and a core. Whereas the existing literature mainly focuses on the issues incorporated in the two frames, we want to stress the importance of the four elements in the core which we believe to be critical for understanding BPR.

Competitive Environment
ORGANIZATION

Process Design
P R O C E S S E S

Methods and Tools

T E C H N O L O G Y

BPR

Perception and Understanding

Process-oriented Information Management

People

Top-Management

Figure 1. Framework for understanding BPR. Any framework that tries to encompass different factors must necessarily argue why these factors were selected for inclusion and why others were left out. Our position is derived from literature reviews as well as our empirical research studies into process orientation and process management. The elements depicted in the two outer frames are generally accepted as important issues in the context of BPR (see literature review). The outer frame shows two preconditions that form the starting point for any BPR project.Once a project is started it is usually considered in terms of the overriding topics processes, organization, technology and people depicted in the inner frame. However, we believe that the key for understanding BPR lies in the four issues perception and understanding, process design, methods and tools, and the issue of process-oriented IS management, embedded in the two outer frames. The framework presented in figure 1 concentrates on the static picture of BPR: the dynamic aspects of what happens when BPR unfolds over time are not included in the framework. Elements of the process of change can be found elsewhere and will be integrated in further refinements of the framework. Also, as we will in this paper concentrate on the core elements we will not coer the other elements in separate chapters

but assume the reader to be familiar with the pertinent literature. This does not imply that these factors are less important - they just have been mentioned before often enough. In the following we will look at these four core elements in more detail and explain why we believe them to be of utmost importance for understanding BPR and running successful BPR projects.

3.2 Perception and Understanding Perception and unterstanding are closely related to the often discussed arguments of "rethinking the company" and "buy-in", but are usually not mentioned as issues themselves. Many authors implicitly assume that the employees perceive processes the right way and understand what process-orientation is about. However, our studies into process- orientation in multinational companies show that this perception cannot be taken for granted "in the companies" (Schwarzer, 1994; Schwarzer/Krcmar, 1994a; Schwarzer/Krcmar, 1994b). Interviews with managers from different departments in big German pharmaceutical and electronics companies showed significant differences between process perception in top management and IS departments on the one hand and R&D departments on the other hand (see table 1). Whereas top management and IS departments perceive operational processes like R&D as processes, it is important to note that in the departments processes are very often not perceived as such. Rather, the employees are focused on their own tasks and are not interested in how they are connected to other tasks. They lack an understanding of the cross-functional and cross-national character of business processes. Process Perception Top Management IS Department R&D Department Yes 19 14 3 No 16 No Comment 2 7 2

Table 1. Process perception in different employee groups in pharmaceutical and electronics companies. (Taken from: Schwarzer/Krcmar, 1994b) From our studies we furthermore conclude that the perception of processes depends on the type of processes as such. Even though top management perceived R&D as a process, they had problems relating process-thinking and BPR to strategic planning. In general, market-oriented and time critical processes like R&D are more likely to be perceived as processes than for example budgeting or strategic planning (Schwarzer/Krcmar, 1994a). These differences in process perception between different employee groups and between different processes are important to understand because they are the key to rethinking the company and getting buy-in for BPR projects:

As administrative and management processes are very often not perceived as processes, they are usually excluded from BPR considerations. However, in many companies these processes could be improved as well. Radically improved operational processes might be slowed down by traditional administrative processes. Therefore, all different types of processes should be considered for BPR-projects. Our studies show that the majority of employees involved in and affected by BPR projects, the employees in the departments, lack the understanding of what BPR is about as they are focused on their own tasks and are not aware of business processes as such. It is therefore not surprising that they are slow to join in and, at least in the beginning, do not come up with innovative ideas for process redesign. Awareness programms should be run for all employess affected by the project before the actual BPR project starts in order to create the required understanding and achieve buy-in from the beginning.

3.3 Process Design The core activity of BPR, "process design", is closely linked to the perception and understanding of processes. In the past, the notion of process design was mostly reduced to improving the single activities within a functional area as improvement efforts were strongly influenced by Taylorism. This has changed tremendously as the new processoriented thinking stresses the interfaces between the activities within and across departments. Therefore, process design has to be first of all interface design (see Figure 2).

activity understanding

A1

A2

A3

interface understanding
Figure 2: Activity versus interface focus.

One of the major problems encountered in interface design is defining the interfaces. Based on the theoretical work of Dunham (1983) we suggest that conducting business is fundamentally the conveyance of commitments. We propose that there is a negotiation process between the activities of a process that is concerned with the definition of the information flow, the quality of the information required and the costs allowable and incurred in the process (see Figure 3).

request

agreement

2
o

customer

supplier
3

declaration of performance 4

acceptance

Figure 3: Interface focus: a simple description of interactions between work flow activities. If processes are understood that way, then process design will differ dramatically from what has been done up to now:

The new process understanding focuses on the interrelatedness of the process steps. This systemic approach allows to evaluate changes in activity and process design in light of the overall process goals. This judgement from a different perspective leads to a different understanding and design of processes. For example, from the overall process perspective it can make sense to have only average performance on some activities in order to allow for vast performance improvements in other activities, thereby improving the overall performance of the process. Looking at the interfaces helps to identify activities not required in the processes. If an interface cannot be defined, the (potential) following activity is not linked to the predecessor. Based on this approach activities can be eliminated. The new focus of process design also leads to new methods of process design. As mentioned, the paradigm of negotiation about the interface now allows to model a

managerial process encompassing every operational chain of activities. These negotiations are about the characteristics of the interface and resemble negotiations between trading partners. Therefore, the notion of business processes is not limited to processes within a company, it might well span institutions. These changes of focus in process design from activity to interface result in new requirements for methods and tools to support BPR. The next chapter looks into these issues.

3.4 Methods and tools Various methods as well as tools to support the methods have been proposed for BPR. We will neither review each method nor evaluate specific tools. However, we want to point out some issues related to process descriptions, using tools for modeling and methods. These are

the necessity of embedding process descriptions in application architectures the consequences of re-using available CASE methodologies the relationship of BPR to traditional and newer work flow tools.

Application architectures describe the overall structure of a companys information system (Krcmar, 1990). As they abstract from details, the representation of business processes within the application architectures very often only reaches a low level of detail. However, for the joint design of processes and IT-use in BPR projects it is necessary to represent the fundamental business process in the application architecture. Furthermore, it should be noted that processes provide the best linkage between the strategic positioning of the firm and its application systems (especially in the alignment direction). Therefore, a description of the processes should be embedded in the application architecture and the tools used should support the hierarchical decomposition of the business processes. Very often the tools used to support BPR are traditional Computer Aided Software Engineering (CASE) tools. Support for BPR is seen as an extension of the UpperCASE environment and as such it uses the already existent process description methods of software engineering characterized by a hierarchical functional decomposition. Therefore, the tools usually do not provide support for describing the negotiations about the interface. For example, arrows linking the activities assume that the interfaces are agreed upon: the notion that both sides of the interface might negotiate about these

values cannot be represented. Furthermore, they cannot represent issues related to the sequence of activities or to time. The (CASE-)tools therefore fall short of supporting design activities during BPR, they can only document the final result. New approaches try to alleviate this drawback (Elgass/Krcmar, 1993; Scherr, 1993). In addition, they acknowledge that BPR is often done in teams. The recent interest in work flow systems makes it necessary to point out the relationship between BPR and work flow systems. Workflow systems are defined as software systems "which manage the flow of work between users" (Jagannathan, 1992, p. 295). BPR projects often concern themselves with designing work flows: from a work flow system point of view this is automated, transactional work flow. However, not using the capabilities of flexible work flow systems to allow for a smooth transition between ad hoc and transactional work flow might result in an overorganization of systems. Figure 4 describes an architecture for flexible work flow systems. Actual work processes are accompanied by work flow control systems and work flow planning systems. The work flow control system will be active and support ad hoc as well as transactional work flow.

organizational demands interaction with planner & manager

Work Flow Control System

active transactional and ad - hoc

Work Flow Planning System

integrated optimazation for transactional flexible specification

work process

Figure 4: Flexible work flow system. (Taken from Krcmar, 1993) As work flow planning systems contain process modelling components, the above comments on methods and tools to support BPR apply here too. BPR tools and work flow planning systems should use the same modelling paradigms such as the interface negotiation orientation paradigm and the same icons. Based on these considerations the following conclusions for understanding BPR and running successful BPR projects are drawn:

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Selecting a tool to support BPR, one has to be aware of the concept of processes underlying the software because the support they provide depends on the way the processes can be modeled with the software. Using a tool that does not fit the companies understanding of processes and BPR will, even though it supports the modeling of processes, not lead to the anticipated success. If BPR is understood in the sense of interface design finding an appropriate tool might still be rather difficult. However, the number of tools specifically designed to support BPR is increasing and their capabilities should be thoroughly examinded before selecting one of them. Even though the advantages of workflow systems are widely acknowledged their implementation as a result of a process redesign effort should be carefully considered. Implementing workflow systems as a new and trendy technology does not necessarily lead to performance improvements. It might even inhibit improvements if the system is too inflexible.

3.5 Process-Oriented IS Management Even though the importance of IT for BPR has been stressed in most publications on BPR, IS managements role and the consequences for IS management have hardly been considered. Our studies (Schwarzer, 1994a, 1994b; Schwarzer/Krcmar, 1994b) indicate that introducing BPR projects in a company on the one hand has a strong impact on the role and tasks of IS management. On the other hand, process-oriented IS management is critical for BPR projects. In the past IS management was very often perceived as a support function with no potential for changes or redesign (Scheer, 1991). With the introduction of BPR this role has to change as IT is to be used as an enabler for process redesign. IS management has to provide the departments with innovative solutions based on their knowledge of the capabilities of IT and the information processing requirements in the process. This new role and task description implies several basic changes for IS management. First of all, IS management is no longer a support function for automating existing processes but an important force in the redesign of business processes. Thus, the importance of IS management for the running of the business increases. Secondly, as IS management is supposed to provide solutions for whole processes instead of single tasks the focus of IS management activities has to change. Neither the strong task focus nor the strong national orientation of IS management of the past seem adequate in light of the new cross-functional and cross-national business process orientation. IS management has

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to become process-oriented in the sense that it considers IS solutions for processes as a whole. Closely connected to this change in focus is the organisation of IS management. Today, providing innovative solutions across organisational boundaries and national borders is often inhibited by the many independent IS departments with no overriding authority. Therefore, a redesign of IS departments seems necessary to allow for processoriented IS management. Only if the changes described above are successfully implemented, it will be possible for IS management to provide the innovative solutions it is expected to deliver. The support of the IS departments is critical for the success of the BPR projects because the functional departments very often lack sufficient knowledge of the capabilities IT has to offer. However, without this knowledge it is hardly possible to invent innovative solutions. Looking at IS management in the context of BPR the following issues should be understood: Before the IS departments can support BPR adequately it might be necessary to reengineer the IS departments themselves...

4. Discussion Any proposal for an eclectic framework, such as this one, can be argued about. However, we think it is most appropriate to point out issues so far mostly neglected, identify the implications and to stress the early nature of the research, that has up to now been done into BPR. We propose this framework for a number of reasons, amongst others:

to start a discussion of BPR on a different level to identify variables for empirical scientific research into the process and effects of BPR to provide a systematic framework for understanding issues related to the planning of BPR activities.

While BPR is often characterised as a business revolution one cannot help wonder how to make the revolution happen if all the factors in our framework have to fall into place at

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the same time. The construction of the framework lends itself to assume a rather evolutionary approach towards implementing BPR, whereas the paradigm shift from activity to interface focus might still be called revolutionary. With pointing out the consequences, if the framework holds, it is necessary to ask for more empirical research in BPR. The elements of the framework, though they might be interpreted in a contingency theory perspective, should rather be seen from an interactionist perspective. Our framework then provides variables for further BPR research. Especially we hope to embed the role of IT in a more detailed way. For example, the relationship between existing technologies and existing awareness of the ways of envisioning the use of IT for newly designed processes needs to be investigated in detail. We will therefore expand our research into BPR to identify missing and proven elements of the overall framework. Finally, we hope that the framework can be helpful for companies and individuals considering BPR projects and wondering about complexities of the undertaking and/or obstacles on the way. In this respect it can be seen as a checklist for discussion. Whilst we have proposed a number of factors, "we hope that seeing risk is avoiding risk".

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