Learning Objectives

By the end of this chapter, you will be able to:

  • Define Business Process Improvement (BPI) and its primary goals.
  • Describe the five phases of the DMAIC framework (Define, Measure, Analyze, Improve, Control).
  • Define Business Process Reengineering (BPR) and its core principles.
  • Differentiate between the incremental BPI approach and the radical BPR approach.
  • Explain why BPR is considered a high-risk, high-reward strategy.

1. Business Process Improvement (BPI)

Business Process Improvement (BPI) is a systematic methodology aimed at making incremental improvements to an organization’s existing business processes. Unlike radical overhauls, BPI focuses on identifying and eliminating inefficiencies, bottleneck, and waste within a defined process to make it more effective and efficient.

Business Process Improvement methodology Figure 1: Business Process Improvement Goals

Goals of BPI

The primary objectives of BPI are to optimize process performance by focusing on:

  • Increasing Efficiency: Reducing the time, effort, and resources (cost) required to complete a process.
  • Improving Quality: Reducing errors, defects, and variations in the process output.
  • Enhancing Agility: Making processes more flexible and adaptable.

The DMAIC Framework

A widely used framework for implementing BPI is DMAIC, a core tool of the Six Sigma methodology.

flowchart TB
    D["🎯 DEFINE\nProblem & Goals"]
    M["📏 MEASURE\nCurrent Performance"]
    A["🔍 ANALYZE\nRoot Causes"]
    I["🛠️ IMPROVE\nImplement Solutions"]
    C["📋 CONTROL\nSustain Gains"]

    D --> M --> A --> I --> C
    C -.->|"Continuous\nImprovement"| D

    style D fill:#1565c0,color:#fff
    style M fill:#6a1b9a,color:#fff
    style A fill:#c62828,color:#fff
    style I fill:#2e7d32,color:#fff
    style C fill:#ef6c00,color:#fff
  1. Define: Clearly define the problem, scope, and goals.
  2. Measure: Collect data to establish a baseline of current performance.
  3. Analyze: Identify the root cause of the problem.
  4. Improve: Implement solutions to address the root cause.
  5. Control: Sustain the gains by monitoring performance.

2. Business Process Reengineering (BPR)

Business Process Reengineering (BPR) is the radical redesign of an organization’s core business processes to achieve dramatic improvements in critical measures of performance, such as cost, quality, service, and speed.

BPR involves radical redesign of business processes Figure 2: Business Process Reengineering Concept

The core concept is to start with a “clean sheet” approach: “If we were starting this company today, how would we design this process?”

Key Principles of BPR

  1. Radical Redesign: Reinventing the process from scratch.
  2. High Goals: Aiming for 10x improvement, not just 10%.
  3. Top-Down: Requires strong senior management support.
  4. IT as Enabler: Using technology to enable entirely new ways of working.

3. Comparison: BPI vs BPR

Feature BPI (Improvement) BPR (Reengineering)
Goal Incremental, continuous improvement Radical, dramatic improvement
Scope Narrow, specific process Broad, cross-functional processes
Approach “As-is” analysis, bottom-up Clean sheet, top-down
Risk Low High
Enabler Statistical control (DMAIC) Strategic Information Systems

The Risk Factor

While BPR offers high rewards, it is high-risk. Many BPR projects fail due to resistance to change, lack of leadership, or unrealistic expectations. BPI is generally safer and focuses on culture of continuous improvement.

Common reasons BPR projects fail:

  • Resistance from employees who fear job losses or loss of status.
  • Weak or changing top management support once the project becomes difficult.
  • Scope too large, trying to redesign everything at once.
  • Technology-first thinking, buying software before redesigning the process.
  • Underestimated cost and time, especially for training and data migration.

Because of these risks, many organizations moved from large one-time BPR projects to BPI and, more broadly, to business process management (BPM), which combines continuous improvement with occasional redesign.

4. Worked Example: BPI with DMAIC at a Hospital OPD

A private hospital in Pokhara receives complaints about long waits in its outpatient department (OPD).

  1. Define: Goal: cut average time from arrival to seeing a doctor from 2 hours to under 45 minutes within three months.
  2. Measure: Staff record times for 300 patients over two weeks. Average total: 118 minutes, of which 50 minutes is the queue for registration and payment.
  3. Analyze: Root causes: every patient registers and pays at one counter; returning patients fill in the same form again; doctors start late because files arrive late from the records room.
  4. Improve: Online and phone appointment booking with a time slot; a separate counter for returning patients who are found by phone number; electronic patient records instead of paper files; QR payment at registration.
  5. Control: A daily report of average waiting time by department; a weekly review meeting; targets displayed to staff.

Result: the average wait falls to about 40 minutes. The basic process (register, pay, see a doctor) is unchanged; it is simply done faster. That is BPI.

5. Worked Example: BPR of Bank Account Opening

The old process at a bank:

  1. The customer visits a branch, collects a paper form, and fills it in by hand.
  2. The customer submits copies of their citizenship certificate and photos.
  3. A staff member checks the documents and enters the data into the core banking system.
  4. The form goes to the branch manager for approval and to head office for compliance checks.
  5. The account is opened in two to five days; the debit card arrives by post later.

The reengineered process starts from the question “How would we open an account if we were designing it today?”:

  1. The customer downloads the bank’s app and enters their details once.
  2. They upload photos of their identity documents and complete a video or e-KYC check.
  3. Automated checks verify the data against identity and compliance lists; only exceptions go to staff.
  4. The account number is issued at once, and a virtual card and QR payments work immediately.

The redesign removes the branch visit, the paper form, and the re-keying of data. It needs new technology, new compliance rules, and new jobs for staff who used to process forms. That is BPR: a different process, not a faster version of the old one.

Process Improvement in Nepal

Nepali organisations have used both approaches. Many banks have introduced online account opening and digital KYC; government services such as passport applications and tax filing have moved from paper queues to online forms with appointments; hospitals have added online appointments and digital records. The most successful projects combined new technology with changes in rules and staff roles. Projects that only computerised the old paper process often kept the same queues, just with a computer at the counter.

Summary

Organizations use both BPI and BPR to manage change. BPI is for fine-tuning and fixing existing processes using data (DMAIC). BPR is for blowing up broken processes and starting over to achieve a major competitive breakthrough. Information Technology is the essential tool that makes both approaches possible.

Key Takeaways

  • BPI makes incremental improvements to an existing process; BPR redesigns the process from a clean sheet.
  • DMAIC stands for Define, Measure, Analyze, Improve, Control.
  • BPR aims for dramatic gains but has a high failure rate, mostly for people and management reasons.
  • IT enables new process designs; automating a bad process only makes it fail faster.
  • Many firms now prefer continuous improvement within BPM over one-time radical redesign.

Discussion Questions

  1. Think of a slow process you have experienced (college admission, a bank visit, a government office). Would you improve it with BPI or redesign it with BPR? Why?
  2. Why do employees often resist BPR projects, and how can managers reduce this resistance?
  3. “Automating a broken process just produces a faster broken process.” Do you agree? Explain with an example.

Exam-Style Questions

Short answer

  1. What is business process improvement (BPI)?
  2. Expand DMAIC and state the purpose of each phase.
  3. Define business process reengineering (BPR).
  4. Give three reasons why BPR projects fail.

Long answer

  1. Compare BPI and BPR in terms of goals, scope, approach, risk, and the role of IT. When should an organization use each?
  2. Explain the DMAIC framework with an example of a process from a hospital, bank, or college in Nepal.