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Business Process Reengineering

DAU GLOSSARY DEFINITION

Alternate Definition
Business process re-engineering (BPR) is defined as “The fundamental rethinking and radical redesign of business processes to achieve the dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed.” (DODI 5010.43, 2009). Championed first in the private sector, an alternative definition for BPR is “the analysis and redesign of workflows within and between enterprises in order to optimize end-to-end processes and automate non-value-added tasks” (techtarget.com, 2014).
General Information

What is Business Process Re-engineering

 

As it relates to Information Technology (IT), BPR has its roots in a 1990 article by Michael Hammer, published in the Harvard Business Review. In his article, Hammer pointed out that previous investments in IT had yielded disappointing results, and the primary cause was that companies were simply using newer IT to conduct ineffective processes faster (Hammer, 1990). Revolutionizing the way organizations refine processes and leverage IT are at the heart of BPR. Hammer (1990) stated that BPR is predicated on the notion of “discontinuous thinking”, or rethinking the fundamental rationale for how (and why) organizations’ conduct their operations. He maintained that breakthroughs could not occur simply by “cutting the fat” or automating existing legacy processes. Hammer maintained that old assumptions must be challenged, and old rules that caused the business to underperform in the first place must be changed – that is the essence of BPR.

 

Hammer (1990) established several foundational concepts for effective BPR. First, he stated that for teams to effectively analyze and optimize processes, they must first understand precisely what the process is intended to accomplish – said another way, what is the desired outcome. What must be achieved and to what level of quality? Once the purpose is understood, the process review team can then determine what value is added in each process step.

 

NDAA 2010, section 1072 requires that all DBS’ must employ BPR prior to obligating funds in excess of $1Million. In 2012, the DOD published the ‘DOD Business Process Reengineering Assessment Guidance’, which identifies BPR as “a logical methodology for assessing process weaknesses, identifying gaps, and implementing opportunities to streamline and improve the processes to create a solid foundation for success in changes to the full spectrum of operations.”

 

Why do Business Process Re-Engineering?

 

Within the DOD, BPR has its roots in Title 40/Clinger Cohen Act (1996). In essence, the CCA was intended to address several negative perceptions related to IT investments:

 

  • Money spent on IT was spent with no Business Process Improvement in mind
  • Little improvement in mission performance from money invested in IT
  • Implementation of ineffective information systems resulted in waste, fraud, and abuse
  • Outdated approaches to buying IT did not adequately take into account the competitive and fast paced nature of the IT industry and the continuing evolution of IT equipment and software

 

Many of these perceptions can be addressed and mitigated by conducting BPR prior to making significant IT investments. According to Hammer (1990), BPR is a process designed to “use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvements in their performance” (Hammer, 1990, p.104). Since then, the definition has been modified in many circles to replace “dramatic” with “meaningful” to better align them with the organization’s mission (Altinkemer, Ozcelik & Ozdemir, 2011). Techtarget.com amplifies this definition by saying “Business process reengineering (BPR) is the analysis and redesign of workflows within and between enterprises in order to optimize end-to-end processes and automate non-value-added tasks” (techtarget.com, 2014)

 

With these definitions in mind, it is easier to understand why Title 40, Subtitle III/Clinger Cohen Act compliance requires the use of BPR to support IT investment decisions. Specifically, BPR is identified in Title 40/CCA and discussed in Defense Acquisition Guidebook section 7.8.6.3; Redesigning the Processes that the Acquisition Supports. This section says that the sponsor (with program office awareness) must determine if “the business process or mission function supported by the proposed acquisition has been designed for optimum effectiveness and efficiency. Title 40/CCA requires the DOD Component to analyze its mission, and based on the analysis, revise its mission-related processes and administrative processes as appropriate before making significant investments in IT. There are a number of ways to accomplish this requirement, but this is known as business process reengineering (BPR) and is used to redesign the way work is done to improve performance in meeting the organization's mission while reducing costs.”

 

Hammer (1990) established seven principles of reengineering that typically guide BPR assessments.

 

  1. Organize around outcomes, not tasks
  2. Have those who use the output of the process perform the process (or contribute to shaping the process).
  3. Subsume information-processing work into the real work that produces the information
  4. Treat geographically dispersed resources as if they were centralized
  5. Link parallel activities instead of integrating their results.
  6. Put the decision point where the work is performed, and build control into the process. The managerial role is changing from one of controller and supervisor to one of supporter and facilitator.
  7. Capture information once and at the source.

 

By applying these principles, the DOD can improve efficiency in our processes, and optimize the value of IT investments as intended by CCA and the Government Performance and Results Act (GPRA) of 1993. Techtarget.com (2014) summarized research indicating that 63% of BPR efforts resulted in overall improvement in productivity (or commensurate cost avoidance and schedule reductions). These principles align with research conducted by Herzog, Polanjar, and Tonchia (2007) who summarized how the common theme of modern reengineered processes is the leverage of emerging technologies, particularly IT which enables the integrated automation of previously manual, paper-based processes to enable cost avoidance.

 

BPR methods

 

The DOD does not prescribe a specific BPR method that must be followed. There are many industry models for BPR implementation that could be used as a model. The DOD Business Process Reengineering Assessment Guidance (2012) does include 13 assessment questions to help guidance BPR efforts depending on the nature of the investment (development, modernization, research, technical refresh, or sustainment).

 

From the private sector, DeFelice and Petrillo (2013) summarized an overarching methodical approach based on BPR to improve management cost by optimizing the production process areas, general layout, and the selection and location of production equipment by concurrently redesigning processes, organizations and the integrated IT systems that support them. DeFelice and Petrillo (2013) summarized a 5 step model to conduct BPR as:

 

  • STEP 1 - Process Selection: The first step is to select critical business processes based on its potential to add value to the business in support of the organization’s mission. After process selection, the processes can then be mapped.
  • STEP 2 - Process Mapping: The goal of process mapping is to understand the current process or set of processes and associated problems. Project limitations and the process mission are also established at this stage. Process mapping is the most important stage as it provides a full view of the process in its entirety, both upstream and downstream along the process path. This also enables the identification of the value stream (what value is added by which process step).
  • STEP 3 - Process Improvement: After the team maps the process, improvement can begin. A process can be corrected, simplified or reengineered with the goal of optimizing value (minimal resource cost and schedule requirement).
  • STEP 4 - Process Verification: Once the team generates alternative process flows, verification of the choices can begin. The team determines the impact of each alternative on the organization as a whole, and the associated cost, time and other resource requirements.
  • STEP 5 - Process Implementation: The final step is to implement the new process and iteratively measure its performance.

 

Streamlining processes to support predefined outcomes and related performance measures helps support and justify IT investments in keeping with CCA intent, and helps Investment Review Boards (IRBs) prioritize potential investments given declining budgets. The elimination of unnecessary and redundant tasks, and the automation of certain steps by incorporating synergistic and collaborative IT solutions that reduce labor requirements and unnecessary redundancy are key to enhanced organizational efficiency and cost effectiveness.