Nigerian Banking Sector Essay Example

called Business Reengineering.

To thrive in the competitive landscape shaped by globalization, new customer demands, and rapid advancements in IT, leading organizations have redesigned their business processes. They have utilized IT for a competitive edge while aligning with Total Quality principles for advantage, cost reduction, and increased profitability. The globalization of financial markets has led to a focus on global competitiveness and the need to improve customer service quality, speed, reduce operating costs, and enhance profitability performance.

Bank mergers and acquisitions along with up-to-date market strategies have driven the development of innovative banking services and personalized banking portfolio management. Alongside cost-cutting efforts, improving customer services is equally important.The objective of this study is to analyze the impact of Business Process Reengineering (BPR) on bank performance in Nigeria, considering the need for efficiency and customer satisfaction, as well as effective communication with employees regarding the necessity for change. The study will focus on factors influencing BPR implementation, adoption levels in Nigerian Financial Institutions, the facilitation of innovative changes through BPR, and strategies for effectively communicating change to employees. Given recent market forces such as demand and supply, competition, globalization, and information technology that have transformed the business landscape, this research holds significant value for organizations aiming to enhance operational performance. The literature review explores sources from the sass era that highlight pioneers who brought attention to BPR in the past. Their contributions are crucial for better understanding. The origins of process optimization can be traced back to Frederick Winslow Taylor's examination of activities in 1911 with a focus on finding the most efficient execution methods. This initiated an engineering tradition centered around thorough analysis, measurement, and incremental improvement

of activity performance.The work simplification movement, which emphasized enhancing job performance, was a prominent approach during this time period. In parallel, Henry Ford launched Ford Motor Company and focused on improving management processes. His revolutionary manufacturing approach involved designing an easily manufacturable car and implementing a production line where each worker had a specific task. As the car progressed along the production line, each worker added their part to create the final product. This approach reduced costs, increased production capacity, and enabled workers to afford their own cars.

In contrast, Taylor studied workers to determine the most effective way to perform specific functions. Ford redesigned the entire process and created a product that could be made on an assembly line. However, as organizations grew and added more people to their workforce over time, quick fixes were often implemented without changing the overall work structure rooted in original logic.

Unfortunately, this localized approach has resulted in complex processes that do not contribute much to overall effectiveness in today's business environment characterized by globalization of markets, changing customer requirements, and intensified competition. Therefore, new approaches were necessary for flexible organizational change.The concept of reengineering, which originated from management theories in the early 19th century and was introduced by Frederick Taylor in the 1900s (Sturdy, 2010), was first discussed in an article by Hammer (1990) in Harvard Business Review. This article focused on the concept of business process re-engineering (BPR) developed by Michael Hammer and James Champy. They emphasized that BPR should be applied to all parts of an organization and go beyond just processes, studying the impact of information technology on business processes. In 1991, they introduced the term

Business Process Reengineering and highlighted the need for fundamental changes. According to Hammer (2008), this widely used concept involves radically redesigning business processes with a focus on enhancing productivity and competitiveness to achieve significant improvements in quality, service, and speed. The desire for a new approach to organizational restructuring stems from realizing that current methodologies are based on outdated premises since these processes were initially manual procedures that were later automated as technology advanced. However, this automation did not address efficiency, control, or external factors like customer demands. Thus, BPR aims to improve efficiency and effectiveness across organizations by approaching business processes with a fresh perspective. It has gained attention in change management due to advancements in information systems and networks.BPR, which combines theories from organization theory, marketing, and informatics, emphasizes the importance of adding value for customers. This methodology encompasses various important contingencies. The concept of value adding was introduced by Porter in 1984 and mentioned in Simon's book 'Competitive Advantage' in 1994. Porter emphasized that every company consists of activities performed to design, produce, market, deliver, and support its product. These activities can be represented through a value chain.

In the context of a business unit, value refers to the activities performed by an organization that flow linearly from suppliers to customers. The primary activities of an organization revolve around adding direct customer value to the product or service. Supportive activities aim to ensure organizational and managerial control, coordination among primary activities, the development and maintenance of a corporate culture, and the establishment of a corporate image. These supportive activities are crucial for overall success.

Information and communication technology has significantly contributed to the effectiveness

of BPR strategies in recent times. According to Ross and Moore (2006), Business Process is a set of logically related tasks performed to achieve a defined business outcome. Business Process Reengineering (BPR) refers to the analysis and redesign of workflow within and between enterprises.The goal of Business Process Reengineering (BPR) is to completely transform a business, including its processes, technologies, management systems, organizational structure, and values. This transformation aims to achieve significant improvements in performance throughout the business. BPR involves evaluating and amending strategy, process, technology, organization, and culture while reducing outdated organizational goals.

According to various sources such as Meyer et al.(1999), Malay et al.(2013), Hammer and Champs (1990), Crower et al.(2002), Stoics et al.(2004), College (1990), Keen (1991), modern information technology plays a crucial role in gaining competitive advantage and supporting business activities in a dynamic environment. It has become increasingly important driver of the global economy. The competitiveness and well-being of countries like Nigeria are closely tied to their ability to innovate and participate in the IT industry.

The information revolution has facilitated the emergence of electronic networks as new trade systems. Virtual markets have replaced traditional shops through electronic business practices. This shift also applies to electronic banking systems. Advancements in satellite communication, more powerful memory chips, and software programming developments have accelerated the impact of IT on the economy.The impact of advancements in technology on organizational structures and human resource management has been significant. Middle management levels have decreased in size, while the importance of intellectual capital has grown. Both industrialized and developing countries are implementing policies and programs to accelerate the development and diffusion of IT. IT is increasingly recognized as

a crucial technology, with its fundamental, strategic, essential, central, enabling, and all-encompassing capabilities becoming more important.

In Nigeria, there is a well-established understanding of IT's potential to enhance competitiveness, modernize infrastructure and services, alleviate information poverty, and reduce transaction costs in various sectors such as macro-economic planning, public administration, education healthcare manufacturing finance and banking commerce transportation.

The goal of entering the information age is to improve the quality of human life by creating a competitive society driven by new-age technologies through transparent governance systems solid infrastructure and a skilled workforce. Many experts in Business Process Reengineering (BPR) believe that IT plays an essential role as a catalyst for reengineering efforts. However some argue that reengineering can be achieved without relying on IT. Nevertheless it can be concluded that IT plays a significant role in most BPR projects.Yates (1989), cited in Simon (1994), emphasized that there can be a significant variation in the time it takes for organizational change to occur after implementing IT. Moreover, the resulting change is often incremental after this delay. It is important to exercise caution when using IT as a catalyst for change, as it can also hinder progress. Neglecting logical constraints, system functionality, or utilizing inappropriate technological platforms may disrupt the effectiveness of IT.

In today's era of global competition, organizations are striving to adapt and innovate to maintain competitiveness. This text highlights the significance of implementing business process reengineering (BPR) to enhance operations. Nonetheless, regardless of the approach and techniques used for BPR, there are inherent risks involved. Managing and predicting these risks is crucial in order to avoid failures in BPR efforts.

A study conducted on First Bank Nigeria investigated how

process reengineering impacts organizational performance. The researchers employed a case study method and analyzed the data using simple percentage and regression analysis techniques. The findings revealed that BPR, service quality, innovative and strategic change all have a direct positive relationship with organizational success.

Ultimately, the success of business reengineering processes relies on their alignment with the needs and objectives of the company.The impact of the Business Reengineering Process on Nigerian organizations is significant in light of Nigeria's economic situation. It helps meet domestic and industry needs while promoting better performance, contributing to the achievement of organizational objectives. BPR has become a valuable tool for corporate organizations aiming to enhance current performance and achieve cost leadership. A study by Arrogance (2011) focused on Business Re-Engineering and Organizational Performance in Nigeria, specifically examining the case of First Bank Nigeria PLC (FAN) using paired data samples from 1986 to 2008. The study assessed the effects of reengineering operational processes on Fan's performance, testing whether it significantly influenced operational performance. In conclusion, reengineering processes remain effective tools for organizations striving for efficient and effective operation. It is recommended that organizations reengineer their business processes for robust performance and long-term growth and success. To test this hypothesis, the researcher measured Fan's operational performance using three major indicators: growth, profitability, and financial intermediation. Alternative measures such as annual changes in gross earnings, total assets, and total deposit embroiled were used to measure the bank's growth.The study conducted by Ringing, Racial & Hosanna (2011) aimed to explore the impact of Business Process Reengineering factors on organizational performance in Nigerian banks. The indicators used to assess profitability included profit margin, return on assets, and

return on equity. The extent of financial intermediation by the bank was determined based on the loans and advances to total deposit ratio.

The results showed that there was no significant growth for the bank during both the pre and post re-engineering period. However, it can be inferred that the re-engineering project improved the financial intermediation performance of the bank. It was concluded that while the re-engineering project had a positive impact on profitability, it did not affect growth or extent of financial intermediation for this particular bank.

To conduct their study, a survey method was utilized and a pilot test was carried out to meet the objectives. To ensure validity and reliability, a panel of experts examined the instrument. SPAS software was used to analyze data collected from various departments within commercial banks.

The findings confirmed that Business Process Reengineering (BPR) dimensions were reliable and valid. It was also found that BPR implementation is present in different operational processes within banks.In summary, this study aimed to identify BPR dimensions in Nigerian banks and assess the level of BPR implementation in these institutions. The results revealed that these dimensions include change management, process redesign/innovation, utilization of information technology (IT), and IT capability. Additionally, it was found that Nigerian banks have implemented BPR across various operational processes such as credit risk assessment, domestic and international services, branch operations, and e-banking activities. Based on these findings, further research on BPR in Nigerian banks can be built upon this study's results. A study conducted by Habit (2013) in Pakistan also explored the critical success and failure factors of BPR using survey methods. The findings showed a shift from a product-centered approach

to a customer-oriented approach among companies. This change has led to evolving priorities as companies strive to meet customer expectations and provide value. The study concluded that implementing change within an organization is challenging and requires effective planning by top management to align with organizational needs and resources. Management plays a crucial supportive role for successful implementation, with HR involvement being essential throughout the planning and implementation phases.Habit emphasized the importance of viewing BPR as a customized change tool instead of simply copying competitors, which would inevitably result in failure. He suggested that companies should identify tasks that require reengineering and utilize developed technology for successful implementation. Sharking and Patterson (2012) conducted a study in Patty, Thailand, using the exploration method to examine Information and Business Process Reengineering through the application of ICTs. The results highlighted the significance of continuous innovation in IT for its ongoing role in process redesign. As businesses prioritize process redesign, information technology plays a crucial role due to its unique attributes. The researchers recommended that employees embrace changes and demonstrate creativity in BPR projects to increase the likelihood of success.

In another study titled "Business Process Reengineering: Strategic Tool for Managing Organizational Change an Application in a Multinational Company in the USA," Gook's, Soy, and Vary (2012) aimed to investigate the effects of BPR on the production division of a multinational company. The findings revealed that employees perceived strong commitment and support from top management for reengineering projects. Ultimately, it was concluded that Business Process Reengineering is widely recognized as an effective change management concept and has been extensively studied as a valuable tool for organizational transformation

The study titled "A

Quantitative Analysis of Business Process Reengineering and Organizational Resistance: The case of Uganda" conducted by Malay, Colonization, and Wetland (2013) utilized both quantitative and qualitative methods. They employed cluster sampling to identify respondents within organizations and purposive sampling to select participants. Data was also collected through observation. The findings revealed that only 30.4% of BPR projects in Uganda successfully implemented usable Information Systems. Emotional responses from users such as 'Acceptance,' 'Testing,' 'Indifference,' and 'Anger' were identified as factors influencing project success or failure. Based on the results, the authors concluded that organizations in Uganda and other locations should consider reengineering their processes to enhance efficiency. They suggested prioritizing the softer aspects of BPR implementation during process reengineering.