Tedi Heriyanto

Change is the only constant in today’s business environment. In fact, the 90’s has developed into the decade of radical change as businesses in the United States and around the world begin to realize that they are "entering the twenty first century with companies designed during the nineteenth century to work well in the twentieth."

Organizations are now addressing the need to remain or become competitive through dramatic improvements in quality, costs, time-to-market, and customer service. They are doing this by attempting to reinvent themselves by organizing work around processes.

Michael Hammer [Hammer & Champy, 1993] , the management expert who heads the reengineering movement refines reengineering 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."

The focal point is process. Another expert in the area, Thomas Davenport, divided processes into those that are operationally oriented (essentially, those related to the product and customer), and management oriented (those that deal with obtaining and coordinating resources).

Reengineering is about achieving a significant improvement in processes so that contemporary customer requirements of quality, speed, innovation, customization, interface are met. This entails seven new rules of doing work relating to who does the work, where and when it is done, and information gathering and integration.

Several specialized tasks previously performed by different people should be combined into a single job. This could be performed by an individual "case worker" or by "case team". The new job created should involved all the steps in a process that creates a well-defined outcome. Organizing around outcomes eliminates the need for handoffs, resulting in greater speed, productivity, and customer responsiveness.

Work should be carried out where it is makes the most sense to do it. This results in people closest to the process actually performing the work, which shifts work across traditional intra- and interorganizational boundaries.

This means that people who collect information should also be responsible for processing it. It minimize the need for another group to reconcile and process that information, and greatly reduce errors by cutting the number of external contact points for a process.

Information technology now makes the concept of hybrid centralized/decentralized operations a reality. It facilitates the parallel processing of work by separate organizational units that perform the same job, while improving the company’s overall control.

The concept of only integrating the outcomes of parallel activities that must eventually come together is the primary cause for rework, high costs, and delays in the final outcome of the overall process.

Decision making should be made part of the work performed. This is possible today with a more educated and knowledgeable workforce plus decision-aiding technology.

Information should be collected and captured in the company’s on-line information system only once—at the source where it was created.

Process reengineering requires innovation. Here is a six-step approach for process reengineering.

The need for change should be effectively communicated to company employees through educational and communication campaigns. Two key messages should be articulated: (1) a need for action and (2) a vision statement.

The objectives for reengineering must be in the form of a qualitative and quantitative vision statement. These objectives can include goals for cost reduction, time-to-market, quality, and customer satisfaction levels, and financial indicators.

All major processes in an organization should be initially identified. However, not all major processes should be reengineered at the same time.

Information technology and human/organizational issues act as enablers of the reengineering process. Technology evaluation has now become a core competency required of all companies. Companies should develop the ability to evaluate current and emerging information technology, and identify creative applications to redesign their existing processes. The current organizational culture should also be evaluated in light of the impending change to be brought about by reengineering.

The current process must be diagnosed as a means to understand it and its underlying assumptions. Broad performance parameters of existing processes must be determined. Process evaluation techniques from quality management such as flowcharts, fishbone diagrams, and quality functions deployment can be used.

Process redesign requires beginning with a clean sheet of paper. The creative nature of innovation makes it nonalgorithmic and nonroutine. Reengineers should suspend current rules, procedures, and values so as to create new process design.

Leadership is critical, not just to the implementation process but to the entire reengineering effort. The extent of change necessitates direct and continued engagement on the part of the senior executive and the senior management steering committee. Process engineering teams are typically responsible for implementing the new designs. However, support and buy-in from line managers are crucial to success because implementation changes accountabilities of line managers while expecting them to deliver on the improvements. Training employees in additional skills needed to perform in the new environment is also essential. The reengineered process design forms the basis for a pilot project that is followed by phased introduction. Post implementation assessment is usually made in relation to the objectives defined at the beginning of the reengineering project.

More than half of early reengineering projects failed to be completed or did not achieve bottom-line business results, and for this reason business process reengineering "success factors" have become an important area of study. Success factors are nothing more than a collection of lessons learned from reengineering projects. And from these lessons common themes have emerged.

The themes or success factors that lead to successful outcomes for reengineering projects are [ProSci, 1996]:

Top Management Sponsorship

Major business process change typically affects processes, technology, job roles and culture in the workplace. Significant changes to even one of these areas require resources, money, and leadership. Changing them simultaneously is an extraordinary task. If top management does not provide strong and consistent support, most likely one of these three elements (money, resources, or leadership) will not be present over the life of the project, severely crippling your chances for success.

Without top management sponsorship, implementation efforts in re-designing business processes can be strongly resisted and ineffective.

Strategic Alignment

The reengineering project goals should be tied to key business objectives and the overall strategic direction for the organization. This linkage should show the thread from the top down, so each person can easily connect the overall business direction with your reengineering effort. The manager should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value, and the vision for the organization.

Reengineering projects not in alignment with the company's strategic direction can be counterproductive. It is not unthinkable that an organization may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such reengineering initiatives are wasteful and steal resources from other strategic projects.

Moreover, without strategic alignment your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction.

Business Case for Change

In one page or less implementers must be able to communicate the business case for change. If it requires more than this, you either don't understand the problem or they don't understand their customers.

You may find your first attempt at the business case is 100 pages of text, with an associated presentation of another 50 view graphs. After giving the business case 20 times you find out that they can articulate the need for change in 2 minutes and 3 or 4 paragraphs. Stick with the shorter version.

Why is this important? First, your project is not the center of the universe. People have other important things to do, too. Second, you must make this case over and over again throughout the project and during implementation - the simpler and shorter it is, the more understandable and compelling your case will be.

Cover the few critical points. Talk to the current state, and what impact this condition has on customers, associates and business results. State the drivers that are causing this condition to occur. State what you’re going to do about it (vision and plan), and make specific commitments. Keep focusing on the customer. Connect this plan to specific, measurable objectives related to customers, associates, business results, and strategic direction. Show how much time and money you need and when you expect to get it back. No matter how long you talk, you will get resistance from some, and support from others, so you might as well keep it short.

The business case for change will remain the centerpiece that defines your project, and should be a living document that the reengineering team uses to demonstrate success. Financial pay back and real customer impact from major change initiatives are difficult to measure and more difficult to obtain; without a rigorous business case both are unlikely.

Proven Methodology

It is important to note that your methodology does matter. Seat-of-the-pants reengineering is just too risky given the size of the investment and impact these projects have on processes and people.

Your team members should understand reengineering, and they should know how to go about it. In short, you need an approach that will meet the needs of your project and one that the team understands and supports.

Change Management

One of the most overlooked obstacles to successful project implementation is resistance from those whom implementers believe will benefit the most. Most projects underestimate the cultural impact of major process and structural change, and as a result do not achieve the full potential of their change effort.

Change is not an event. Change management is the discipline of managing change as a process, with due consideration that we are people, not programmable machines. It is about leadership with open, honest and frequent communication.

It must be OK to show resistance, to surface issues, and to be afraid of change. Organizations do not change, people do, one at a time. The better you manage the change, the less pain you will have during the transition, and your impact on work productivity will be minimized.

Line Ownership

Many re-design teams are the SWAT type -- senior management responding to crisis in line operations with external consultants or their own staff. Unfortunately the ability of external consultants to implement significant change in an organization is small. The chances are only slightly better for staff groups. Ultimately the solution and results come back to those accountable for day-to-day execution.

That does not mean that consultants or staff are not valuable. What it does mean, though, is that the terms of engagement and accountability must be clear. The ownership must ultimately rest with the line operation, whether it is manufacturing, services, logistics, sales, etc.

You need both. You need the line organization to have the awareness that they need help, to contribute their knowledge, and to own the solution and implementation. At the same time you need the expertise and objectivity from outside of the organization. Building this partnership is the responsibility of the line organization, stakeholders and re-design team.

Reengineering Team Composition

The reengineering team composition should be a mixed bag. For example,

Moreover, keep the team under 10 players. If you are finding this difficult, give back some of the "representative" members. Not every organization should or needs to be represented on the initial core team. If you fail to keep the team a manageable size, you will find the entire process much more difficult to execute effectively.

According to a study by ProSci, which involved fifty seven companies from 26 countries, top-management sponsorship and change management were cited most frequently by the study participants as critical success factors. [ProSci, 1997]

The results from the study also provided a few surprises :

• One-third of the participants did not create a business case for their project.
• Success measures were weak:two-thirds did not know how they would measure the effectiveness of the process they used in their project.
• Participants appeared reluctant to judge their success¾ many of those who had completed their projects considered it "too soon to tell" how successful they were.
• Nearly one-third did not have a clear view of their "next steps," implying that they did not understand how their project fit into the organization’s long-term plans.

To remain or become competitive in today’s changing business environment, organizations need dramatic improvements in cost, quality, time-to-market, and customer service, they need business process reengineering.

But before they implement it, they need to understand the principles of reengineering, a six-step approach for process reengineering, and the reengineering success factors.

Chase, Richard B. and Nicholas J. Aquilano, Production and Operations Management:Manufacturing and Services, 7^th ed., Chicago:Irwin, 1995.

Hammer, Michael and James Champy, Reengineering The Corporation: A Manifesto for Business Revolution, New York:Harper Business, 1993.

ProSci, Reengineering Success Factors, 1996. [http://www.prosci.com/modl.htm]

ProSci, Executive Summary:Best Practices Report for Reengineering and Business Process Design Teams-Benchmarking Study, Colorado:ProSci, 1997.