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Business Process Reengineering

 
 Stop Automating Chaos and Start Reengineering Business Processes
 
This article was published in EDI World (November 1995), Electronic Commerce Management and Technology Integration. EDI is published monthly by EDI World, Inc. 2021 Coolidge Street, Hollywood, Florida.

Prepared By Dr. Mir F. Ali

After enduring over three decades of frustrating experiences dealing with inept technologies, making compromises for the quality of information, and accepting incremental improvements as a way of life, information technologies have finally started showing signs of maturity by delivering on long overdue promises of being “user friendly” and “seamless”. Recent performances by these technologies began to support conventional economic wisdom which speculates that new technologies boost productivity, lower the costs of production, increase the supply of goods, stimulate purchasing power, expand markets, and generate more jobs.

Information technologies, however, cannot be blamed exclusively for the problems in the business world over the last three decades. The introduction of computers was an electrifying era. Computing capabilities fascinated the public and it was easy for them to form unrealistic expectations. These expectations were only multiplied exponentially when Personal Computers were introduced in the early 1980's.

The introduction of PCs mesmerized the public in the same fashion that electricity did when it was first introduced in 1886. Scientists and engineers of that day predicted that electricity's widespread use would make the cities green, heal the breach between the classes, create wealth of new goods, extend day into night, cure age-old diseases, and bring peace and harmony to the world.

Perhaps the most damaging factor that contributed to the total disappointment and dissatisfaction with new technologies was the way businesses were automating chaos. There were all kinds of predicaments responsible for creating this situation. One reason is that businesses have been over protective of their environments. They have been very inflexible and have constantly resisted making changes to their policies and procedures for taking advantage of technologies. Instead, businesses have been constantly insisting to either modify the application software to suit their environments or to keep investing in the development of customized applications.

In either case, businesses have failed to examine their business processes and practices before utilizing technologies. Another reason for this phenomenon is that as an impact of the global fiscal condition, governments as well as businesses have been faced with the challenge to continue to deliver quality services with shrinking budgets and disappearing manpower.

Incidentally, it has created a gap between the demand and the ability to provide services at a level that is acceptable to the clients. Managers are faced with growing gaps and financial pressures, they are prepared to abandon strategic thinking and settle for the limited benefits of automating processes without incorporating innovation and reengineering into the equation. As a result of these actions, another gap has been created between the business needs and the so-called automated solutions. These gaps sabotaged the real potential for benefiting from the computing capabilities. The prime examples of this scenario are the Electronic Commerce technologies that are capable of offering far more benefits than they are currently being allowed to provide.

Another factor that is contributing significantly to user dissatisfaction is the way organizations are investing their efforts in the name of “do more with less.” Restructuring, downsizing and Business Process Reengineering (BPR) became fashionable and almost every organization has been rushing to use the so-called survival techniques to stay alive in the business. There are several problems with this rush. For instance, businesses are rushing towards something they would like to accomplish without knowing what, why, when, and how. They don't mind rushing and doing things over and over again but they do not seem to have any time for taking into consideration the impact of the changes on the service levels, products or people. Needless to say, this approach is turning out to be hazardous and is causing a great deal of frustration.

A couple of recent US studies show that companies continue to compound their financial and morale problems by downsizing. Researchers at the University of Wisconsin and San Francisco consultant Wyatt Co. found a high percentage of companies dissatisfied with their efforts at cutting costs and restructuring. Of the 530 or so companies in the study, 75% had cut positions and payroll, yet more than half reported profits and productivity unimproved. It doesn't necessarily mean that these techniques are not good.

What all this means is that businesses must learn how to use the techniques properly. They must stop automating chaos and they must learn how to reengineer their environments to maximize the potential for using information technologies. This is possible if and when organizations stop believing that technologies are panacea and start learning how to use technologies as strategic tools.

If businesses are truly interested in capitalizing on the potential benefits associated with BPR, they must be convinced that there is a genuine need to reengineer their environments, persuaded that there is a potential for real benefits, and committed that there is support for contributing to the process. The attitude towards work has to be changed to ensure “horizontal” thinking is practiced so that there is an appreciation for the overall impact of individual processes on the entire organization. The human factor must be a major contributor to this equation. Organizations have to be ready for change otherwise no techniques or technology can help.

It is not easy to avoid automating chaos when you are in a survival mode. It is preconditioned to so many factors that it requires a systematic approach to address these conditions. Based on extensive experience in the field of BPR, the following factors are identified to be critical for the success of any BPR initiative, regardless of whether it is a government or business environment:
  • As Peter Drucker noted, the focus must be on the fact that business organizations should be structured around the flow of information. The information-based structure is flat, with far fewer levels of management. The information-based organization does not actually require advanced information technology. All it requires is a willingness to ask, “Who requires what information, when and where?” However, it always helps if information technology is used intelligently;
  • The objective and the scope of the initiative must be clearly understood as Michael Hammer carefully defined BPR as the fundamental analysis and radical redesign of business processes and organizations to achieve dramatic performance improvements and the management of the associated business change; It should be comprehended that the desired degree of dramatic performance requires the same degree of radical redesign, and the magnitude of change should be dictated by the cultural readiness of the organization;
  • If not the CEO, the next most senior officer should be the sponsor of the project with the commitment and conviction to provide project directions. The sponsor should be responsible for articulating and providing the corporate vision/mission, strategic drivers, political realities, and compromises needed to be made;
  • Qualified consultants should be contracted to provide proper facilitation and to manage the overall objectivity. Initially the legal, engineering, medicine and other specialized organizations avoided hiring consultants assuming that consultants would not have the subject area expertise. These professionals ended up in a real mess. BPR consultants do not necessarily have to have the detailed subject area expertise as they can depend on the task force (pool of subject area experts); but there is no way any lawyer, doctor or engineer can substitute the BPR expertise required without making any compromises;
  • A task force must be established to represent functional areas with the dedication to work with the consultants in developing, validating, and optimizing of the business, information, application, technology, and organizational models;
  • The effectiveness of the business processes must be determined before they are tested for efficiency. Every business process must support the corporate mission by providing a service and every service must have at least one internal or external client;
  • The efficiency should be considered only for the effective business processes. Each business process should be optimized vertically and horizontally, removing the information bottlenecks, duplication, overlaps, and redundancies;
  • The possibility of using technology must be explored only for the effective and efficient business processes with the intention to further optimize these processes with the use of technologies. This is the only way to avoid automating chaos; and
  • The possibility of contracting out any optimized business processes must be explored in the interest of reducing operational costs. However, the impact of doing so must be considered.

The question is why do we focus on the business process. The answer is because of the following:

  • The concept of the business process is 200 years old;
  • In 1887, Frederick Taylor introduced the concept of reengineering business process and most of the business processes around us are based on the Taylor Model;
  • Most of the current business processes are inefficient, inconsistent, and inadequate because they are so old; and
  • Business processes offer tremendous potential for reengineering.

Perhaps the key is to have the courage to constantly validate the corporate assumptions by asking questions like: “Are we doing the right things (effectiveness)? And “are we doing the things right (efficiency)? This will lead to a continuous improvement in the performance of the people and the process. After all, BPR is a journey, not a destination.

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