BUSINESS PROCESS RE-ENGINEERING: A PANACEA FOR OGANIZATIONAL CHANGE
(A STUDY OF UNITED BANK FOR AFRICA PLC.)
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. 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
TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 7
1.3 Objectives of the Study 8
1.4 Research Questions 8
1.5 Research Hypotheses 8
1.6 Significance of the Study 9
1.7 Scope of the Study 11
1.8 Limitations of the Study 11
1.9 Definition of Terms 11
References 13
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Theoretical Framework of the Study 14
2.2 Conceptual Framework of the Study 16
2.2.1 Re-Engineering Defined 16
2.2.2 Business Process Defined 17
2.2.3 Organizational Change Defined 18
2.2.4 Business Process Re-Engineering Defined 19
2.3 Historical Background of the Study: A Brief History of
United Bank for Africa Plc. 24
2.4 Reviews According to the Objectives of the Study 26
2.4.1 The Role of Information Technology on Business
Process Re-Engineering 26
2.4.2 The Relationship between Business Process Re-
Engineering and Organizational Change 31
2.4.3 The Impact of Resistance to Change on Business
Process Re-Engineering 33
2.4.4 Critical Success and Failure Factors of Business
Process Re-Engineering 36
References 41
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1 Research Design 48
3.2 Area of the Study 48
3.3 Sources of Data 48
3.3.1 Primary Sources 48
3.3.2 Secondary Sources 49
3.4 Population of the Study 49
3.5 Sample Size Determination and Sampling Technique 49
3.6 Methods of Data Collection 50
3.7 Validity of Research Instrument 51
3.8 Reliability of the Instrument 51
3.9 Method of Data Presentation and Analysis 51
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.1Data Presentation 53
4.2 Test of Hypotheses 61
4.3 Discussion of Findings 66
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 67
5.2 Conclusion 67
5.3 Recommendations 68
Bibliography 70
Appendixes 77
Questionnaire 78
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF 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,acquisition, mergers, diversification, business process re-engineering (BPR), and so on. In the service delivery industry, especially banking, emphasis is now on re-engineering efforts as a means to improving organizational performance. This is because patterns of competitive advantage in the banking industry have changed dramatically over the years. High-technology banking via information technology is revolutionizing relationships between customers and financial institutions such that sustained growth, which requires more than just reckless risk-taking. As consumers increasingly demand for 24/7 banking services from the industry, banks that must remain competitive and profitable should be ready to offer electronic services that exceed their customers’ expectations. Moreover as business increasingly becomes globalized and bank customers equally spread their clientele, banks must reposition themselves to meet and exceed customer needs of fast funds movement across the globe. Banks have tried to respond to these challenges by way of re-engineering their operations and organization set ups.
That is why (Graham, 2010) 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. Business process re-engineering is a relatively new technique in management of business organizations. According to Mlay, Zlotnikova, and Watundu (2013), after the global recession of early 1980s, many organizations and firms across the world made attempts to revitalize their performances. Most firms called for ‘downsizing’, so government 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, Hammer and Champy (1990), 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 Assefas (2009), 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 (2001), 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 and Malhotra, 1997). As rightly claimed by Hammer and Champy (1990), 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 Davenport and Short in (1990), at that time a member of the Ernst and 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 Drucker and Peters (1993), 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, re-engineering 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 Re-engineering 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 liberalization of the banking sector has altered the patterns of competitive advantage in the industry. In fact, new banks have emerged that have either sent older ones out of business or made them a mere shadow of their former selves. Consequently, many of the older banks have had to re-engineer their operations in order to improve their performance and compete effectively with the new banks. The United Bank for Africa Plc., one of the oldest banks in Nigeria had to toll this line as it re-engineered its operations in order to survive and remain competitive in the industry. This 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 banking, 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 example 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 (1993), 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 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 THE PROBLEM
Competitions amongst organizations have led them into changing/redesigning 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.
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 society at 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 impact of these limitations was reduced to the barest minimum.
1.9 DEFINITION OF TERMS
Re-engineering - the fundamental rethinking and radical 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.
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
Graham, R. S. ( 2010). Business Process Re-engineering: Strategies for occupational Health and Safety.
(Mlay, V. S., Zlotnikova I. Z., and Watundu S. (2013). “Quantitative Analysis of Business Process Reengineering and Organizational Resistance: The Case of Uganda”, The African Journal of Information Systems, Vol. 5, No. 1. January, pp. 2-5
Hammer M. and Champy J. (1990). Reengineering Work: Don't automate, obliterate. Harvard Business Review, Vol. 69, No. 4, pp. 104-112.
Assefa, B. (2009). “Business process reengineering in Ethiopia”, A short note on ‘Business Process Reengineering in Ethiopia’ as per the request of Prof. Keinichi Ohno.
Grover, V., and Malhotra, M., (1997). "Business process reengineering: A Tutorial on The Concept, Evolution, Method, Technology and Application," Journal of operations management, Vol. 15, No. 1. May, pp.193-213
Davenport, T., and Short J., (1990). “The New Industrial Engineering: Information Technology and Business Process Redesign”, Sloan Management Review, Vol. 31, No. 4, pp. 11-27.
Drucker, P. F. (1993). Post-capitalist Society, Butterworth-Heinemann, Oxford.
(Hammer, M. and Champy, J. (1993). “Re-engineering the Corporation: A Manifesto for Business Revolution”, New York: Harper Business Review, p. 2
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