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RE-ENGINEERING: A PANACEA FOR ORGANIZATIONAL CHANGE
ABSTRACT
In today’s ever-changing world, the Business environment throughout the world is also going through a continuous and rapid change. Increasingly driven by consumer’s preference, change and competition, companies are now vigorously looking for new ways to make their organizations and businesses more efficient and competitive. They are analyzing and evaluating their current systems, structures and goals and are trying to find new solutions to their business problems. The banking operations and functions which is intended to meet emerging challenges of bank consolidation, slashing operating cost, outsourcing, portfolio investment, payments and settlement system call for innovative banking practices through Business Process Re-engineering. This is to enable Nigerian banks to incorporate strategic innovative customer schemes in order to bridge the service gap inherent in Nigerian banking sector. This means that in this competitive environment, organizations will enhance its competitive advantage in its operation if it effectively design and implement Business Process Reengineering (BPR) selected processes.This research work studies Re-engineering: A Panacea for Organizational Change. The objectives of this study is to ascertain the role of information technology on business process re-engineering, examine the relationship between business process re-engineering and organizational change, uncover the impact of organizational resistance to change on business process re-engineering and to identify the critical success and failure factors of business process re-engineering. The data for this current investigation were obtained from primary, as well as secondary sources. The researcher analyzed the data collected based on the response from the questionnaire distributed. Chi square test statistics was used to test the hypotheses. Based on the findings of the study, the paper concludes that business process re-engineering has become a useful weapon for any organization that is seeking for improvement in its current organizational performance and intends to achieve organizational objectives; hence, business process re-engineering is a panacea for organizational change. To this end, it is recommended that reengineering process remains effective tool for organizations striving to operate effectively and efficiently, to achieve breakthrough performance and long term strategy for organizational growth. Organizations must be looked at in its entirety and also implement adequate IT infrastructure to enable successful BPR.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Today, globalization along with key driving forces such as customers behavior, competition among businesses and change in the working environment have created tough environment for organizations that have been working with outdated philosophies and principles of work practices. Although those outdated philosophies and principles succeed to cope up the socio-economic challenges of that time, they cannot fit into today’s new environment. The new environment requires organizations to realize new working practices that can make them to be responsive and flexible for the changing environment in order to create a dramatic increase in efficiency, productivity, and profitability. In doing so, organizations utilize various types of management tools such as total quality management (TQM), restructuring, business process reengineering (BPR), and so on.
That is why Graham says that re-engineering is a useful tool that has been adopted by and hailed as one of the current major drivers of change within many organizations (Graham, 2010). Business process re-engineering is a relatively new technique in management of business organizations.According to (Samali Violet Mlay et al, 2013), after the global recession of early 1980s, many organizations and firms across the world made attempts to revitalize tdheir performances. Most firms called for ‘downsizing’, so governments designed policies including retrenchment of working staff to cut public spending. But the extent, to which these reforms provided the changes needed, remained difficult to determine. With the integration of Information Technology (IT), business reforms became much easier.
The concept of re-engineering was first propounded by Michael Hammer, a former professor of computer science at the Massachusetts institute of technology (MIT), in the year 1990, in his article published in the Harvard Business review. The method was popularly referred to as business process re-engineering (BPR).BPR originators, Michael Hammer and James Champy maintained that re-engineering had a wider significance than mere processes. It applied to all parts of an organization and it had a lofty purpose.
According to BerihuAssefas’ (2015) work, business process re-engineering began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. According to Al- Mashari, (2010) an increase in consumer requirements for both product and service efficiency and effectiveness has resulted in BPR. Since the 1990s, Process Redesign or Business Process Reengineering has been embraced by organizations as a means to cut non-value-added activities (Grover &Malhotra, 2017). As rightly claimed by Hammer, the major challenge for managers is to destroy non-value adding work, rather than using technology for automating it. Hammer’s claim was simple; most of the unit being done does not add any value for customers and this work should be removed, not accelerated through automation.
A similar idea was advocated by Thomas H. Davenport and J. Short in 1990, at that time a member of the Ernst & Young research center, in a paper published in the Sloan Management Review. This idea, to biasedly review a company’s business processes, was rapidly adopted by a huge number of firms, which were striving for renewed competitiveness, which they had lost due to the market entrance of foreign competitors, their inability to satisfy customer needs, and their insufficient cost structure. Even well-established management thinkers, such as Peter Drucker and Tom Peters, were accepting and advocating BPR as a new tool for achieving success in a dynamic world. During the following years, a fast growing number of publications, books as well as journal articles, were dedicated to BPR, and many consulting firms embarked on this trend and developed BPR methods. However, the critics were fast to claim that BPR was a way to dehumanize the work place, increase managerial control, and to justify downsizing, i.e. major reductions of the work force, and a rebirth of Taylorism under a different label. Despite this critique, reengineering was adopted at an accelerating pace and by 1993, as many as 60% of the Fortune 500 companies claimed to either have initiated re-engineering efforts, or to have plans to do so.
Business Process Reengineering relies on a different school of thought. It believes in continuous process improvement.Re-engineering assumes that current process is irrelevant and there is need to commence another one. Such a clean slate perspective enables the designers of business process to focus on new process. This is to project oneself on what should the process look like? How do my customers want it to be like? How do best-in-class companies do it? What we might be able to do with no technology? Henceforth, organizations such as banks and other financial institutions need to optimize results from this model in real business situations.
In Nigeria, the change brought about by re-engineering in banks are reflected in product and services to give a new form or structure by introducing product and service scheme (such as credit cards,internet bnking,hassle-free housing loan schemes, educational loans and flex-deposit schemes) integration of the branch network by use of advance networking technology and customer personalization programmes (through Automatic Teller Machine (ATM) and 24/7 banking). In order to survive and flourish in a global economy,business must respond to major trends reshaping markets. Hence, the dynamics of the underlying forces at work require a renewed thrust on BPR in banks to contribute to management and diversification of growth horizons by impacting on productivity and profitability. Acting on this conviction, BPR has continuously improved organizational performance in Nigeria and the banking sector has in recent times witnessed tremendous re-engineering process.
Notable among these re-engineering processes is the directives by the Central Bank of Nigeria on bank recapitalization. The banks have also explored the opportunities provided by information technology (IT) to automate and improve customer satisfaction, e-banking, ATMs, integrate branch network etc. The modern business is characterized by stiff competition both locally and globally, hence, re-engineering process becomes a veritable engine of organizational survival. Besides an organization which relies on arm chair business process risks redundancy or even extinction in the face of modern technological order. The multiplier effects of BPR provide an impetus to the industry through impressive success across companies. For examples the bank recapitalization programme in Nigeria enables banks to be more resistant to liquidation and uncertainties.
Business process re-engineering is the analysis and design of workflows and processes within an organization. Hammer and Champy (2013) defines re-engineering as “the fundamental rethinking and radical re-design of business processes to achieve eremitic improvements in critical, contemporary measures of performance such as cost, quality, service and speed”.The implication of Hammer and” Champy’s definition of re-engineering is the need to redesign the business process so that waste is eliminated. Thus, to remain competitive and in order not to loose market share, there is need for repositioning and re-engineering of business process. The need for an organization to re-engineer its process according to Jones and Bartlett Publishers 2009, arises when the current process appear dysfunctional. There may be chronic problems, frequent breakdowns, excessive losses of time or money, excessive inventory or a breakdown in the quality of service.
Another factor in identifying weaknesses that suggest the need for re-engineering is the importance of any given process, such as assessment of how seriously customer service, employee morale, or profitability is affected. For an organization to re-engineer its processes, it has to start from its ground up design. This process involves a total re-conceptualization, rethinking, remodeling, redesigning, and restructuring of an organizations business process to enable it meet with the demand and challenges of change in the business environment, as well as competition. Re-engineering must be initiated at the highest level within an organization. It is a top down approach.
1.2 STATEMENT OF PROBLEM
Competitions amongst organizations have led them into changing their business processes. Organizations have discovered that their customers demand better treatment as well as improved products and services. If an organization could not re-engineer, the organization may face the risk of being sent out of business by their competitors, since they cannot meet up with the changes in consumer demand for quality products and services. Thus, this study focuses on Re-engineering: A Panacea for Organizational Change.
1.3 OBJECTIVES OF THE STUDY
This study seeks to accomplish the following specific objectives:
i. To ascertain the Role of Information Technology on Business Process Re-engineering.
ii. To examine the relationship between Business Process Re-engineering and organizational change.
iii. To uncover the impact of organizational resistance to change on Business Process Reengineering.
iv. To identify the critical success and failure factors of BPR
1.4 RESEARCH QUESTIONS
This study tends to answer the following questions:
1. What are the roles of information technology on business process reengineering?
2. What are the relationships between business process reengineering and organizational change?
3. What impact does resistance to change have on business process reengineering?
4. What are the critical success and failure factors of Business Process Reengineering?
1.5 RESEARCH HYPOTHESES
1. Ho: Information technology does not play a vital role on business process re-engineering.
H1: Information technology plays a vital role on business process re-engineering.
2.Ho: There is no significant relationship between business process re-engineering and organizational change.
H1:There is a significant relationship between business process re-engineering and organizational change.
3. Ho: organizational resistance to change does not have any impact on business process reengineering.
H1: organizational resistance to change does have an impact on business process reengineering.
4. Ho: Business process re-engineering does not have critical success and failure factors.
Hi: Business process re-engineering does have critical success and failure factors.
1.6 SIGNIFICANCE OF THE STUDY
This study has numerous significance to the field of learning, business organizations and the society at large. To the students, it will serve as a secondary source of data. This research work will be of great benefit to the students who will be writing their assignment, term paper, or research project on this or similar topics. The lecturers are not left out as it will add to their existing wealth of knowledge and broaden their understanding of the need for re-engineering a business process, as new findings have been made and new solutions proffered for businesses that are at the verge of collapse, as well as those that want to compete favourably in the competitive environment of business. With this, they (lecturers) will be able to impact same knowledge to the students who will be going into the labour market to put this knowledge into practice for their own benefit and for the betterment of the societyat large. It is also hoped that the results of this study will contribute in equipping the school library with current knowledge on business process re-engineering.
Furthermore, the study will provide deeper insight into what is needed in order for bank customers and individuals working in the banking industry to accept this emerging technology and thus, allow for improvement in banking strategies.The research is equally significant because it would provide answers to factors militating against the implementation of BPR in United Bank for Africa Plc., prove the success and growth associated with implementation of BPR, and highlight the areas of banking operations that can be enhanced via BPR. It will also be an invaluable tool for corporate managers, BPR implementers and the future researchers in a related area of study. It is significant because it determines the prospects of re-engineering in organizations.
1.7 SCOPE OF THE STUDY
The study is on Reengineering: A Panacea for Organizational Change. A study of United Bank for Africa, Plc.Broad Street branch Lagos Island, Lagos State.
1.8 LIMITATIONS OF THE STUDY
The main constraints to this study include,
1. Finance: due to inadequate finance, the researcher was unable to visit places where some relevant and necessary information for the study could be gotten.
2. Attitude of the Respondents: Some of the respondents were un-willing to fill the questionnaire while some misplaced the copies given to them.
3. Time Constraints: Due to limited time given for the study, the researcher could not get all the information needed for the study. However, the impacts of these limitations will be reduced to the barest minimum.
1.9 DEFINITION OF TERMS
Re-engineering - the fundamental rethinking and radial redesign of business processes to achieve drastic improvement in critical contemporary measure of performance such as cost, quality, service and speed.
Business process: is a set of logically related tasks performed to achieve a defined business objective.
Radical Change: In radical change, a key business process is the transformation of organizational element.It is essential to an organization's survival. Change leads to new ideas, technology, innovation and improvement. Therefore, it is important that organizations recognize the need for change and learn to manage the process effectively (Pamela et al, 20155).
Dramatic: Used for quantum leaps in performance, not used for small jumps
Organizational change: is a planned effort to improve a business capacity to get work done and better serve its market. Organizational change is about people. Real change happens when people realize that a new methodology, process or technology makes them more productive, more efficient or better able to serve the customer’s needs.
REFERENCE
Al-Mashari, M., Zahir, I., & Mohamed, Z., (2011). Business process reengineering: A survey of international experience.
Berihu, Assefa, (May 2015). Business process reengineering in Ethiopia. A short note on ‘Business Process Reengineering in Ethiopia’ as per the request of Prof. KeinichiOhno.
Davenport, T., & Short, J., (2010). The new industrial engineering: information technology and business process redesign. Sloan Management Review. 31(4), 11-27.
Ezigbo, C. A. (2013), Advanced Management Theory, Enugu. Immaculate Publication limited.
Graham R. S.,( 2010).Business Process Re engineering: Strategies for occupational Health and Safety.
Grover, V., &Malhotra, M., (2017). "Business process reengineering: a tutorial ontheconcept, evolution, method, technology and application," Journal of operations management, 15(1), 193-213
(Hammer, M. &Champy, J., (2013). Reengineering the Corporation: A Manifesto for Business Revolution. New York: Harper Business.
Jones and Bartlett Publishers 2009
(Samali Violet Mlay et al, (1-29-2013:23)The African Journal of Information Systems; Volume 5 | Issue 1Article 1. A Quantitative Analysis of Business ProcessReengineering and Organizational Resistance: The Case of Uganda.
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