Business Process Re-engineering: A Case Study of Allied Bank
Asif Arif (Date: 17.05.2011)
Business Process Re-engineering (BPR) is basically the redesigning and rethinking the fundamental processes of businesses with the purpose of improvement into performance measures like service quality, cost and speed of serving the customers. But here we will make evaluation to check how these performance factors, are furnished or improved by business process re-engineering.
1. Allied Bank Limited:
Allied Bank Limited is commercial bank in Pakistan, which was established in 1942 (before Independence) with the name of Australasia Bank, in Lahore (City of Pakistan). In 1974, the bank was renamed with Allied Bank of Pakistan and in 2005, finally the bank was renamed with Allied Bank Limited. Since last 60 years, Allied bank is providing commercial banking service to its customers, including Commercial banking, Depositing, Financing, Loans, Insurance, Debit Cards and other universal retail banking services in Pakistan. In past, the Allied Banks was running on Manual banking systems, but after emergence of technologies, banks has adopted the use of communication technologies and now Allied bank is working with 800 online branches which are providing technology based consumer & Business banking services to consumers and businesses.
The Allied Bank Limited is being running through broad level vision, mission and business values, which are guiding the business under pre-defined standards of operations. These includes;
Become Efficient and Dynamic Bank, which provides integrated banking solutions for becoming the best choice bank for consumer’s perspectives.
- Providing Customers With Value Added Services
- Meet the customer requirements by providing Innovative Solutions through high technology.
- Contributing Society by playing proactive role.
- Developing sustainable value for business through diversity, efficiency and continuous growth.
- Rewarding Dedicated teams according to performance and abilities of qualified employees.
- Showing High Performance
- Showing Integrity
- Services With Excellence
- Regular Innovation & Continuous Growth
The Allied Bank Limited is selected for this assignment report, we will analyze the effects of BPR in shape of improvement in Cost, Speed, Quality Services after conducted the BPR, here we will discuss the past performance of Allied Bank, at time of manual entries (Abl.com, 2011).
2. Business Process Re-engineering:
The business process re-engineering is known as the “Radical Re-design and Rethinking” of business processes, which are conducted to improve the performance measures like cost, quality, service and quickness. (Hammer & Champy 1994). Business process re-engineering is used by companies to improve their processes, solve any program, launch a new product, and replace the old technology with new one, use of internet & Digital Technologies. Michael Hammer and James Champy describe it as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality service and quickness in business operations”. The Following things must cover the BPR;
- The fundamental refers to the basic style or nature of company
- Radical states that processes are radically re-designed by forgetting the old processes and discovering the new processes and secondly, the processes must be defined by building strong bases not through
- Processes are important to re-design not only changes into jobs, tasks, frames and other processes
Concept of Business Process Reengineering starts from In past, the IT technologies are not widely used, and worked was done manually, but after the emergence of IT technologies, the use of IT technologies has been started by companies to collect, process and manage the information about company, processes, customers and other stakeholders. And after emergence of IT technologies, everyone started to find the ways for redesign its processes so to convert from manual to computerize information management.
The factors, which force the companies to conduct BPR in their systems are including, Information Technology Advancement, Change in Customer Needs, change in governmental policies, change in products usage, market competition and other factors, so to understand and meet the needs and wants of customers. But IT is known as the major enabler of BPR, because with the computer, organizations are improving its tasks and procedures with accuracy, speed, quality and better services ( Hammer & Champy 1994).
The companies are widely getting involves into process of re-engineering of its business performance. As discussed above, it has become a need for companies that wants to be;
- To gain the competitive advantage
- Improve the business process
- Act as Leader over into industry for following
- Rethink, reorganize and re-redesign the business process
- Achieve high rank from the
- Build the company’s image through change into
The above objectives are found for company to adopt the business process engineering. Here we will analyze the BPR outcomes for Allied Bank, and we will discuss the use of IT technologies in Business Process Re-Engineering.
3. Role of IT in Business Process Re-engineering:
Companies are widely adopting the approaches of Business Process Re-engineering which help in achieving multiple benefits for company and for customers through re-thinking and re-designing the strategies, and replacing the old strategies with new and updated strategies. The role of IT technologies is marvelous into business process re-engineering as IT is considered the major enablers of BPR due it is significant benefits and its coverage and effectiveness (Example Discussed later in Allied Bank Case). The role of IT is not limited to managing the BPR but at very broader level which includes the describing the vision for BRP efforts, developing strategies and action plans, monitoring results and making adjustments and continuous process improvement is ongoing process for walking with success of company.
The effectiveness of IT in Business Process Reengineering can be improved through focusing the performance measures and secondly re-thinking, Re-shaping, and Re-inventing the up to date activities within new environment of an organization. and the success of effective IT efforts can be evaluated through improvement in performance measures, cost, speed, Quality, range of services and by creating the value for customers (Omar E. M. Khalil, 1997, p.2).
4. Implementing BPR at Allied Bank Limited:
We will conduct analysis for allied bank to show the effectiveness of Business Process re-engineering in terms of cost effectiveness, time saving, fast processing, quality services and smoothens in procedures.
4.1 Allied Bank Before 2004:
Before 2004, the Allied Bank Limited was using the old methodologies for managing the banking processes, which includes the manual records of accounts, issuing cheque Books, manual crediting & Debiting accounts and huge involvement of paper works.
Which results a lot of extra money, times and complexity and even there are so many chances of frauds and chances of mistakes, omissions and rectifications, and Allied bank was categorized as third category bank among other banks, like Bank Alfalah, Meezan Bank, Askari Bank, Muslim Commercial Bank, Standard Chartered Banks and other Private Banks, which were using the computerized records and online banking services.
4.2 Market Needs:
At that time, the market needs were demanding the use of computer and internet technologies, like other banks are were offering the computerized record keeping of account holders, depositing & withdrawals through computerized systems, Inter-Branch online banking and other latest facilities of retail banking. And customers were liking the facilities of other banks, which also started to give credit cards for its clients, so it was need to conduct business process re-engineering in order to change its processes from manual systems to computerized systems.
4.3 Scope of Business Process Re-engineering:
At that time, the Allied bank was taken over by Ibrahim Group in 2004 and the new management started to conduct BPR across the organization in order to make it up-to-date banks like other banks. And the scope of BPR was decided to make changing, like;
- Computerized Accounts
- Printed Cheque Books
- Building Inter-Branch Online Network
- Automated Teller Machines Cards
- Computerized Statements
- Internet Banking
- SMS Alerts
- Other Important Reforms into Retails
4.4 Results of BPR:
After completing the Business process re-engineering, the infrastructure of Allied Bank was much more changed from previous. Now Allied Bank was providing almost all facilities like other banks in Pakistan. Now customers can use ATM Cards, Access Account through Internet, Transfer Money, Pay Utility Bills, Donations, Online Banking and other latest benefits of commercial banking. The old procedures and techniques were old fashioned, obsolete and time consuming, for example, the average time of a customer serving a customer has reduced, errors and omissions are now less and customer satisfaction is improved. Now we see in details how the performance parameters are improved with the help of Business process re-engineering.
5. Key Performance Indicators in Business Process Re-engineering at ABL:
As discussed above, the business process re-engineering is conducted to improve the vital performance parameters of an organization, which includes the cost, quickness, quality, services and flexibility into processes. So the main focus of BPR is to improve the performance parameters. According to the performance parameters, the business process re-engineering must produce the results in shape of improvement of performance measures in a favorable ways. Now we see the performance parameters and their favorable trend.
When the process are obsolete and not up-to-date and without computer technologies, then cost of operation is high, for example, in Allied Bank, the manual work was done into registers and papers, which costs high in terms of money, Time and quality. So when process cost is high, its directly affects the org. cost, and reduces the profits. So the BPR must be conduct and the results must be in shape of decline into cost of operations including all type of costs.
When process are old fashioned, then they cannot provide high quality works, like in Allied Banks, there arises quality matters frequently, like wrong postings, errors of mistakes, errors of omissions, errors of commissions spelling mistakes and non-productive reporting. So when BPR is conducted, the quality must be improved, like now Allied banks is using Computerized technologies, which are producing quality works and chances of errors are not existing.
5.3 Response Time:
When Allied Bank was using manual procedures, it takes more time to complete any task and the process are delayed. For example, when a customer goes to cashier and presents a cheque, according to old process, the check goes to at least 3-4 persons and passes through 3-4 register entries and then customer gets cash after at least 5 mins, and next customer gets delay due to slow process, but in new process, one window operation, when cheque is presented to cashier, customer gets in 1-2 min cash after single computerized enter and signature of cashier. So it all due to business process re-engineering, which has reduced the response time more than half as compared to old techniques of doing work.
Allied Bank in past was offering just conventional services of retail banking, which includes just deposits & withdrawals, lockers, loans and bills collection facilities. But after conducting business process re-engineering, the ABL is offering the competitive and up-to-date services by using internet & computerized technologies, like ATM, Credit cards, SMS Alerts, Internet Banking, Online Bill Payment, Mobile Banking, Insurance and Other latest Retail banking. this is all due to BPR, which has increased and modify the services which are up-to-date and competitive.
The Business Process Re-Engineering is an effective way to increase the profitability through achieving business objectives and customers satisfaction. Companies must periodically assess the needs of process re-engineering so that to remain up-to-date from market needs and practices. And recommendation includes focusing the performance parameters including cost effectiveness, increase speed, quality and services improvement. And secondly, the role of information technologies cannot be ignored as the other (Omar E. M. Khalil, 1997, p.2) cannot be ignored, so Companies must use the computerized and technology products for improving the performance parameters, which overall increase the performance of organization and help to achieve organizational goals. Secondly, the role of IT should be in the form of planning, educating and decision making at all level of organization regarding re-thing, re-shape and re-engineering the processes. And finally, company must re-design the process in such a way, that can help the company to achieve the competitive advantage, achieve high rank into industry as leader and build positive image in the customer mind by provide him high quality services to them.
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