10/11/2014
Business Process Re-engineering: Why Indian Small and Medium Enterprises (SMEs) missed out on it?
Business process re-engineering (BPR) refers to analysis of organization’s existing business processes and re-designing them with an objective to remove waste, non-value added tasks/activities, redundant/duplicate work, and automate key elements of the process. The key point here is making ‘RADICAL CHANGES’ within an enterprise with an objective of seeing drastic improvements across the organization. Most often they are measure in some form of metrics i.e. cost reduction, faster processing time, higher output, increase sales etc. You can even measure each process’s ex*****on time. The list is endless.
I won’t go further into what Business process Re-engineering is and what are it’s advantages. Probably everybody knows that and will make this article boring enough to proceed ahead. My key point is despite proliferation of such popular management practices, small and medium firms (SMEs) have been unable to reap the benefits of BPR into their organizations. This is especially true in developing economies like India where more than 70% of the corporations fall into SME category. As per Government of India “Micro, Small and Medium Enterprises (MSME) contribute nearly 8 percent of the country’s GDP, 45 percent of the manufacturing output and 40 percent of the exports”. This statement speaks of itself that how much important such SME units are for a developing economy and the crucial role it will play in fostering India’s economic and social progress in years ahead.
While it is true that India’s big corporate players have added all BPR into their arsenal, allowing them to leverage their core competencies, SMEs have been unfortunate on that front. SME’s neither have required skill set nor they can afford to hire external resources to perform such exercise.
In this article, I want to share my thoughts and views, as observed in some of Indian SMEs, I happened to visit while I was in India. Though each of them belonged to different sector, ranging from textile to safety products, I observed common elements across each of them, which I would like to highlight below:
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(1) CULTURE: Corporate (Organizational) culture plays a very important role in embracing management tools like BPR. BPR is successful when embraced by each entity within an organization, ranging from CXO level to front line staff. Whether it’s a large, medium or small, it is true each organization has its unique corporate culture, but the issue lies that many of them don’t have any clue of the type of culture they operate in. When you don’t know where you stand, how do you align it with your vision and strategic goals? Successful organizations have made concrete efforts to transition towards the appropriate culture, which will adopt change and innovation, the underlying success factor for any BPR initiative.
(2) ORGANIZATIONAL STRUCTURE: Most of SMEs have a very rigid structures, especially in the case of brick-and-mortar type companies (Technology companies are an exception to this rule). Such organizations have a very low tolerance for risk and secondly, their are heavily family-dominated, i.e. preference to immediate family members, relatives and trusted/loyal friends over education, skills, performance and potential. This in turn leads to low employee morale, high employee turnover rate, and sectarian environment.
(3) HUMAN RESOURCE: Successful BPR efforts requires expertise, which is generally not found in-house. Hiring BPR consultants has mainly been luxury for large organizations mainly due to financial reasons. Often times the cost of implementing BPR initiative often outweighs the obvious benefits.
(4) VALUE CHAIN PERSPECTIVE: Value chain refers to the set of processes/activities that leads to value-addition to a product/service at each single step. A value-chain map allows an organization to identify the issues/bottlenecks/pain points etc. Most of the SMEs lack such perspective.
(5) TECHNOLOGY: Technology, especially information technology is one of the most important criteria for the success of any BPR initiative. Infusing technology at appropriate points in the enterprise architecture (right from the business process layer to the ex*****on layer) is the most potent tool any BPR practitioner can use. Despite the cost of technology falling in recent years, SMEs are still devoid of technology. Lack of quality human resources may be one of the reason why SMEs fail to appreciate the benefits of technology in their day-to-day operations.
CONCLUSION:
BPR should be seen as an investment. And just like any other investment, it will take a while before one can see any return on investment. SMEs will most likely succeed if they have right set of knowledge, skills and expertise within their organizations. BPR doesn’t always mean to hire top-notch consulting firm and let them tell you what needs to be done. With a right perspective, highly skilled workforce, good leadership, and innovative work culture, SMEs can definitely take their organizations to the next level.
Chetan V Mehta (PMP, CBAP, BPM)
