CM51111 Structured Systems Analysis Techniques

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Business Process Reengineering a critique
CSM - Week 5 part 2
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Organisational Transformation

• Why do we need to embrace change?
• Competitive advantage - Porter
• Demographic change in markets
• age
• education
• geography
• Technological developments
• Competition from developing countries
• These reasons are leading to what?

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Organisational Transformation 2

• Globalisation of markets
• sourcing and buying of materials, services and
  products
• Marketing and selling of products
• this leads to
• Greater market choice
• which means
• Customers demanding and getting improved quality
  at lower prices
• need to have
• Much shorter product life cycle
• faster roll out of products

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Product Life Cycle
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Product Life Cycle shortened
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Product Life Cycle faster roll out
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Organisational Transformation 3

• Not all organisations face an identical challenge
• As Porter suggests it depends on the
• the industry
• the industry value chain
• the companys own (generic) value chain
• Here we are interested in the part IT/IS strategy
  plays in the organisations change strategy

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Business Process Reengineering

• Late 80s early 90s
• IT/IS was being used in radically new way
• Used to improve or eradicate processes rather
  than automate, for example in
• Davenport and Short (1990), The New Industrial
  Engineering IT and business process design
• The term BPR was used to describe the use of
  IT/IS to transform an organisation

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BPR

• The watershed publication
• Hammer M. and J. Champy (1993), Reengineering the
  Corporation a manifesto for business revolution
• Chapter 2 - Reengineering - the path to change
• BPR informally defined as Starting Over
• Formally defined 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 speed

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BPR - the keywords

• Fundamental
• Radical
• Dramatic
• Process

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The main concepts

• Fundamental rethinking
• ignores what is and
• concentrates on what should be
• Radical resign
• throwing away the old and
• inventing new ways of doing things

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The main concepts 2

• Dramatic improvement
• not marginal or incremental but
• quantum leaps
• Process
• removing focus from tasks, jobs, people,
  structure to
• processes

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What BPR is not?

• Automation
• despite the prominent role of IT
• automation is said to provide faster ways of
  doing wrong things
• Software Engineering
• associated with rebuilding obsolete IS
• automating obsolete processes
• Downsizing and Restructuring
• fancy terms for reducing capacity in times of low
  demand
• BPR is doing more with less

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What BPR is not? 2

• Delayering or flattening hierarchy
• even though it may produce flatter organisations
• Bureaucracy busting
• organisations need bureaucracy
• Quality improvement/TQM
• even though they have similar characteristic
• Kaizen - continuous improvement

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Some of the successes 1

• Cigna Corporation - financial services
• 70 countries employs 50000 people
• 20 reengineering projects
• saved 100 million
• Progressive insurance
• claims settlement
• 31 day cycle
• 4 hours

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Some of the successes 2

• LL bean Inc - order despatch
• 61 turnaround in 24 hours
• 93 achieved
• C. R. England - invoicing
• 5.10 - invoice cost
• 0.15 - achieved
• Philips petroleum
• 36 head office staff
• 12 achieved

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Some of the failures

• BPR failures are hard to pinpoint - nobody wants
  to publicise their failures, however,
• see system failures in text books
• only 16 of executives fully satisfied with BPRs
  results
• 68 experienced problems
• cutting jobs did not always lead to improved
  profits

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What the authors say

• Page 200
• many companies that begin reengineering dont
  succeed
• end their efforts precisely where they began
• make no significant changes
• achieve no major performance improvement
• fuel employee cynicism with yet another
  ineffective business improvement programme
• 50 to 70 do not achieve any dramatic result

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What the authors say 2

• Hammer M. (1996), Beyond Reengineering
• Forward page xii
• I have now come to realise that the radical
  character of reengineering, however important and
  exciting, is not the most significant aspect.

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What the other academics say - Boyle 1

• Boyle R. D. (1995), Avoiding common pitfalls of
  reengineering, Management Accounting, October
  1995 pp24-33.
• Identifies the drivers to undertake BPR as
• Increased competition due to deregulation
• Low growth and increasing competition due to
  maturing industries - product life cycle
• Fast growth and the lack of planning and
  development that can accompany it
• The spin off of a business unit
• Improve ROI in IT/IS - realising the full
  benefits of full integration
• A needed change of corporate culture

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What the other academics say - Boyle 2

• Following a survey of North American CIOs
• Deloitte and Touche in 1995
• Top 10 barriers to reengineering success
• 82 - Organisational resistance to change
• 72 - Inadequate executive sponsorship
• 65 - Unrealistic expectations
• 54 - Inadequate project management
• 45 - Case for change not compelling enough
• 44 - Scope expansion/uncertainty
• 44 - Project team lacked appropriate skills
• 44 - Lack of effective change management

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What the other academics say - Boyle 3

• Critical success factors
• 91 - Visible and involves executive sponsor
• 81 - Strong project management
• 70 - Compelling case for change
• 66 - High ambition
• 59 - Best and brightest team

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What the other academics say - Boaden 1

• Boaden (1996), Is quality management really
  unique, Total Quality Management, vol7, 5,
  pp553-570
• Boaden identifies a group of management
  techniques
• TQM - total quality management
• CI - continuous improvement - Kaizen
• WCM - world class manufacturing
• Guru theory
• HRM - human resource management
• BPR - business process reengineering

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What the other academics say - Boaden 2

• She asserts that
• all these techniques have broadly common elements
  and needs
• customer focus
• commitment by everyone - especially senior
  executives
• training and education a major element
• teamwork essential
• they could all be seen as management focus
  repackaged
• Boaden doesnt mention improved profitability

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What the other academics say - Mumford

• Mumford E. (1996), Business process Reengineering
  RIP, People Management, 2 May 1996 pp 22-28.
• Asserts that BPR is a FAD
• Identifies it as a vehicle for delayering and
  downsizing
• Points to the ATT in the US as an example
• In late 1994 a survey of 600 companies reported
  that circa 70 of US and European companies had a
  project underway

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What the other academics say - Mumford 2

• Identifies that BPR began to fade as a FAD in
  1994
• McKinsey quarterly - dramatic results in
  individual processes were accompanied with a
  decline in overall results
• BPR did not result in bottom line improvement
• CFO journal -
• only 16 of executives fully satisfied with BPRs
  results
• 68 experienced problems
• cutting jobs did not always lead to improved
  profits

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What the other academics say - Mumford 3

• Anatomy of failure
• Tendency to copy others
• in times of uncertainty organisations tend to
  copy each other
• The global economy idea led to businesses being
  influenced by consultants obsession with cutting
  costs
• Then become victims of their own downsizing and
  delayering - cost cutting

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What the other academics say - Mumford 4

• Anatomy of failure
• An absence of theory
• No real management theory underpinned the early
  increase in popularity
• Do it now, do it fast mentality
• The use of consultants
• The fast rise in popularity led to the use of
  untrained and incompetent consultants
• High fees low results - disasters
• No long term accountability

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Further Points

• Hawthorne effect - well documented phenomenon
• Can these techniques be described as management
  FADS?
• Do they have a life cycle of their own?
• Do good managers make use of the Hawthorne effect
  to increase productivity?
• Are they just devoid of there own ideas?
• Do high flyers attach them to a fad and all its
  buzzwords?

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Fad Life Cycle
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Further Points

• BPR
• Success or failure?
• Management technique or Management FAD?
• Change
• Radical or Incremental (marginal)?
• Read, for a positive view
• Taylor J. A. (1995), Dont obliterate,
  informate! BPR for the information age, New
  Technology, Work and Employment, Blackwell, pp
  82-88

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In Summary

• Think about Organisation Transformation
• Integration. The role of IT (networks) in
  redesign and BPR.
• Dont forget- Very big projects have a tendency
  to fail when expectations exceed real
  capabilities.

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Reading

• This weeks reading is
• Hammer and Champy Reengineering the path to
  change
• Taylor Dont obliterate, infomate BPR for the
  information age
• Mumford Risky ideas in the Risk Society
• Boaden is total quality management really
  unique?

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Next Week

• This weeks study reading is substantial
• Next week is put aside as a Self Study Week to
  complete this study
• I will be available in the office for questions