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Flevy Management Insights Case Study
Business Process Reengineering for a Growing Software Services Firm


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Business Process Design to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

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Consider this scenario: A fast-growing software development firm has been grappling with inefficiencies that have inevitably risen as they expanded their workforce by 80% in the previous year.

Despite the increase in human resources, productivity levels have not met expectations, and there has been a staggering rise of 60% in operational costs over the past six months. The firm has sought to reevaluate its Business Process Design to achieve a better balance between growth and operational efficiency.



Given the situation, there are a few immediate hypotheses concerning the organization's challenges. Firstly, rapid scale-up may have led to unstandardized and misaligned processes, ultimately resulting in communication gaps and reduced efficiency. Secondly, the firm might not have implemented proper business process management software, which can lead to disjointed operations. Lastly, the firm could lack a robust process documentation framework, causing knowledge gaps and leading to reduced productivity.

Methodology

A six-phase approach to Business Process Design can significantly streamline company operations:

  • Phase 1 - Discovery: Identify and document current processes. Develop a detailed understanding of the firm's overall operations.
  • Phase 2 - Analysis: Analyze current business processes to identify bottlenecks, redundancies, and inefficiencies. Use data analytics and modeling techniques to identify areas of improvement.
  • Phase 3 - Design: Develop optimized, standardized processes that align with the firm's strategic goals. Implementation of appropriate technologies should also be considered here.
  • Phase 4 - Implementation: Execute the newly designed processes. Provide comprehensive training and support to the staff to ensure smooth transition.
  • Phase 5 - Evaluation: Monitor the new processes, assess effectiveness, and revise if necessary. Key performance indicators (KPIs) can provide valuable feedback on process performance.
  • Phase 6 - Optimization: Continuously optimize processes based on evaluation feedback and changing business needs. Involve employees in optimization efforts to foster a culture of continuous improvement.

Learn more about Continuous Improvement Key Performance Indicators Process Design

For effective implementation, take a look at these Business Process Design best practices:

Business Process Master List (BPML) Template (Excel workbook)
Business Process Improvement (BPI 7) (139-slide PowerPoint deck and supporting Word)
Business Process Reengineering (BPR) (157-slide PowerPoint deck and supporting PDF)
Strategic System Design Toolkit (348-slide PowerPoint deck)
Process (2) - Analysis and Design (39-slide PowerPoint deck)
View additional Business Process Design best practices

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Potential Challenges

One concern is how to manage change resistance from employees during the process redesign. This can be mitigated by engaging employees early in the process, and providing proper training and support. The firm should effectively communicate the reasons and expected benefits from the Business Process Design activities.

Another potential challenge is making sure the redesigned processes align with the company’s existing systems and digital architecture. Prioritizing interoperability and adopting a flexible, open source architecture can help mitigate such issues.

Lastly, maintaining operational continuity during the transition is critical. Detailed planning and phased implementation can ensure the business operations are not overly disrupted.

Learn more about Change Resistance Business Process Design

Case Studies

1. IBM: After a significant reengineering project, IBM reduced its product development process from 4-5 years to just 2 years. This was achieved by streamlining workflows and eliminating redundancies.

2. Ford Motor Company: Through Business Process Design, Ford reduced its accounts payable department from 500 people to 125, significantly cutting labor costs. Ford achieved this by digitizing documents and implementing automation within its process flows.

Explore additional related case studies

Sample Deliverables

  • Business Process Design Plan (PowerPoint)
  • Change Management Framework (PDF)
  • Training Plan for Employees (MS Word)
  • Process Documentation Guide (MS Word)
  • Business Process KPI Dashboard (Excel)

Explore more Business Process Design deliverables

Best Practices for Business Process Design

Developing a successful Business Process Design requires adopting a few best practices. Firms should consider setting up a dedicated process improvement team. Establishing clear, quantifiable goals that align with overall business objectives can help guide efforts. It is also crucial to involve employees—the end-users of the processes—in the design process to ensure the changes are practical and meet their work needs.

Learn more about Process Improvement Best Practices

Role of Technology

Modern Business Process Design cannot overlook the role that technology plays in current operations. Prioritizing digitalization and automation can lead to significant efficiency gains. According to a recent article published in the Harvard Business Review, firms that adopted robotic process automation witnessed an average of 20% increase in productivity.

Learn more about Robotic Process Automation

Business Process Design Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Business Process Design. These resources below were developed by management consulting firms and Business Process Design subject matter experts.

Importance of Continuous Improvement

Process design is not a one-time endeavor but a continuous process. Incorporating regular feedback loops for ongoing process optimization is crucial. Techniques such as Kaizen can greatly aid in maintaining a state of continuous improvement.

Aligning Business Process Design with Strategic Goals

In the wake of the recommendations, executives might question how the Business Process Design aligns with the organization's strategic goals. It’s essential that the redesigned processes do not operate in a vacuum but rather support the broader objectives of the organization. The process design team must work closely with senior management to ensure strategic alignment. This involves mapping out key business objectives and determining how each process contributes to these goals. For instance, if the organization aims to enhance customer satisfaction, the process design should incorporate steps that reduce response times and improve service quality.

Additionally, the organization should consider adopting a Balanced Scorecard approach to align processes with strategic objectives. This involves setting KPIs across four dimensions: financial, customer, internal processes, and learning and growth. By doing so, the company ensures that process improvements are not just enhancing operational efficiency but are also driving the organization towards its strategic vision.

Furthermore, strategic alignment requires regular reviews of business processes in the context of changing market conditions and company goals. This dynamic approach ensures that processes remain relevant and continue to provide a competitive edge.

Learn more about Balanced Scorecard Customer Satisfaction

Scaling Business Processes in a Growing Firm

As the organization continues to grow, executives will likely be concerned about how the redesigned processes will scale. Scalability is a critical factor in Business Process Design, especially for a rapidly growing organization. The design must not only address current inefficiencies but also anticipate future growth. This means creating processes that are modular and adaptable, with the capacity to handle increased volumes without significant modifications.

One way to ensure scalability is to leverage cloud-based solutions, which can be scaled up or down according to demand. Moreover, adopting agile methodologies in process design can allow the organization to rapidly adjust processes in response to growth-related challenges. It’s also important to build a culture that embraces change, as employees are more likely to adapt to evolving processes if they are accustomed to continuous improvement.

In addition to technological and cultural considerations, the organization should also establish governance mechanisms to oversee process scalability. This could involve a dedicated team responsible for monitoring process performance against growth metrics and making adjustments where necessary.

Learn more about Agile

Assessing the Impact of Process Changes on Employees

Executives are right to be concerned about the impact of process changes on employees. Change can often be met with resistance, particularly when it disrupts familiar routines. It's crucial to manage this transition effectively to maintain morale and productivity. A comprehensive change management strategy should be developed, which includes clear communication about the changes, their rationale, and the benefits they will bring to employees’ day-to-day work.

To further mitigate resistance, the organization should involve employees in the redesign process, soliciting their input and feedback. This inclusion not only improves the quality of the process design by incorporating frontline insights but also helps build a sense of ownership among the staff. Furthermore, providing adequate training is essential to ensure that employees are equipped to handle the new processes. This might involve hands-on workshops, e-learning modules, or one-on-one coaching, depending on the nature of the changes.

Lastly, it’s important to recognize and reward employees who adapt well to the new processes. This can be done through formal recognition programs or informal praise from management. Acknowledging the efforts of employees not only boosts morale but also reinforces the positive aspects of the new processes.

Learn more about Change Management

Measuring the Success of Business Process Reengineering

After implementing the Business Process Design, executives will want to measure its success. The evaluation phase is critical in understanding the effectiveness of the new processes. This involves tracking a set of pre-defined KPIs that are aligned with the organization’s strategic goals. Common KPIs might include cycle time, cost savings, error rates, and customer satisfaction scores. It’s important that these metrics are measured consistently and accurately to provide a clear picture of performance.

Moreover, the organization should consider conducting a return on investment (ROI) analysis. This analysis can help quantify the financial benefits of the process redesign, such as increased revenue, reduced costs, or improved capital efficiency. According to a study by PwC, companies that engage in comprehensive process improvement initiatives can see a return on investment of up to 4 to 10 times the project cost.

It’s also valuable to gather qualitative feedback from employees and customers. Surveys, interviews, and focus groups can provide insights into how the changes are perceived and areas where further improvement may be needed. By combining quantitative data with qualitative insights, the organization can gain a comprehensive understanding of the impact of the Business Process Design.

Learn more about Project Cost Return on Investment

Additional Resources Relevant to Business Process Design

Here are additional best practices relevant to Business Process Design from the Flevy Marketplace.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Increased productivity by 20% through the adoption of robotic process automation, aligning with the Harvard Business Review's findings.
  • Operational costs reduced by 30% within six months post-implementation, counteracting the previous 60% rise.
  • Employee resistance to change was minimized, evidenced by a 40% increase in positive feedback on internal surveys after comprehensive training and involvement in the redesign process.
  • Customer satisfaction scores improved by 25% due to process enhancements that expedited response times and improved service quality.
  • Process scalability was achieved, with the firm successfully handling an additional 30% increase in workload without the need for significant process modifications.
  • Return on Investment (ROI) from the process improvement initiatives was calculated at 5 times the project cost, in line with PwC's study findings.

The initiative can be considered a resounding success, achieving significant improvements in productivity, operational cost reduction, employee satisfaction, customer satisfaction, and scalability. These results directly address the initial challenges faced by the firm due to rapid expansion and operational inefficiencies. The adoption of robotic process automation and the focus on employee involvement and training were particularly effective strategies. However, there might have been opportunities to further enhance outcomes through earlier engagement with employees to understand their insights and resistance points, potentially leading to even higher productivity gains and smoother implementation of new processes.

For next steps, it is recommended to continue the cycle of continuous improvement through regular feedback loops and KPI monitoring. Further exploration into advanced technologies such as AI and machine learning could offer additional efficiency gains. Additionally, expanding the scope of process redesign to encompass customer-facing processes could further enhance customer satisfaction and loyalty. Establishing a more formalized recognition program for employees who excel in adapting to and championing new processes could also bolster morale and encourage a culture of innovation and adaptability.

Source: Business Process Reengineering for a Growing Software Services Firm, Flevy Management Insights, 2024

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