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BUSINESS PROCESS REENGINEERINGSubashish Guha; William J. Kettinger; James T. C. Teng

To cite this Article Guha, Subashish , Kettinger, William J. and Teng, James T. C.(1993) 'BUSINESS PROCESSREENGINEERING', Information Systems Management, 10: 3, 13 22

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BUSINESSPROCESSREENGINEERINGBuilding a ComprehensiveMethodology

Subashish Guha, William J. Kettinger, and James T.C. TengThe n ew paradigm of business process reengineering seeks to achievedramatic p erforman ce improvement by radically redesigning theorganization; it replaces information systems development that hasfocused largely on automating and supporting existing organizationalprocedures. The Process Reengineering Life Cycle (PRLC) proposed inthis a rticle is a comprehensive, six-stage methodology with guidelinesfor envisioning a reengineering project, getting started, diagnosingprocess pathologies, and redesigning, reorganizing, and measuring thenewly co nfigured process.

SUBt\SIIISI I GUI-IAis o corzsulting anoiystw i th N C R C or p k C o-upcrat~rs omputingSystcms Ilieision ando PhII condidute in ISol llw University ofSouth Carolina,Columbia.\\'I l.,lJ~\M . K I T -'I' ING ER is dirrctor.Ilivision of Informu-tion a nd T'echr~ulogyResources, ond ossis-font deor~. ollege ofRusirms Administro-l ion. U~~ircrs i tyfS m th C or ol inu.J A M E S T . C . T E N Cis ossociotc profcsstro f S o f the Un iw rs i tyofS out h Carol inu.

ARDLY A DAY PASSES \VITIHOUTsome new event that challenges existingpara dig m. Chan ges are occurring on thepolitical, social, and econoniic fronts aswell as in science and technology. Megatrendsare no longer forthcoining-they are sweepingawa!, enti rc ins titu tion s. Mo des t impro vem entsarc n o longer acceptable . Astounding break-throug hs have alrcady been accomplished ill ge-nctic engineering. I f we can geneticall) rcengi-nee r biological sys t ems , why can ' t we a lsoreenginccr human organizations?Organizational diseases such as foot drag-ging, buck passing, empire building, and quickfixing have been with us for millennia. ,Mostpeople have accepted these aspects of organiza-tional burea ucratic life as ncccssary evils How-ever, organizational ch ang e is taking place in th eform of corporate restructurings, downsizings,an d process reengineering. Information technol-ogy-induced reengin rering is bein g offered as anew paradigm to radically redesign organiza-

tions an d t o orchestrate extreme gains by slash-ing costs an d achieving manifold impro veme ntsin productivity and quality.T h e resul ts of r eengineer ing e f for t s havesur faced among numerous organiza t ions , in-cluding Ford Motor C o., Eastinan Kodak C o.,A T &T , a nd D igi ta l E qu ipme nt Cor p . . w l~ i c hhave embarked 011 campaigns to rework howthey cond uct business. These com panies reportincreases in an d decreases in staffafter business reengineering. Digital Equ ipm enthas successfully consolidated 5 5 a c c o u n t i n ggroups into five, eliminating 45 0 jobs. ClCNARE Co rp. saves $1.5 million each year in opera-tions costs and has improved access to data withits $3.2-million reengineering effort.Increasingly, IS depart men ts are being askedeither to facilitate or to lead the organization'sreengineering efforts. Th e use of a meth odolo gycan better enable an organization to capitalizeon reengineering. Thi s article introduces a com -prchcns ke framework to help IS managers and

I N F O F I M A T I O N S Y S T E M S M A N A O E M E N TS U M M E R 1983 13


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the i r depar tments accompl ish s ign i fican t i n -p r o \ w ~ e n t sn busincss proccsscs.THE AGE OF REENGINEERINGI3usincss rccngincering seeks to redesign workprocesses to enha nce productivity an d competi-t i vc n css . T h e d e m a ~i d o r r e e n g in e e rin g h a shec ~i ucled h t lic fact tha t much of the busi -~icss-p rocess ogic currentl y in use is 40 or moreyears old. l'h cs c proccsscs wcre first dcsigncd asscqucn t ia l manual p roccdurcs and s temmedfrom a strong efficiency orientation tha t pushe dfor optimal proccdurcs and maximum controlwithiin d ep rt m en ts or functions, with l i tt lc at-tcntion paid to organization\r,ide orcu stom eref-fccts. As organizations grew, and more peoplewere added and proccdurcs modificd to meetimmediate needs, the basic process usually con-tinued to follow th e original logic.As aging manual proccsscs wcrc automated,thcrc nV:ls an imp ress io~i hat som e degree ofimprt~vcmcnt ccurred as well. In reality, thes einformation systems wcrc oftcn dcsigncd t o sup-I x ~r t~lrcadyragmented processes, and automa -tinn only maskcd the problem by increasingprocessing spccd. This localized, incrementalapproach has created extremely complex pro-ccsscs that cont ribu te little to th e overall effec-t ive~icss f organizations operatin g in today 'sbusi~icss nvironment.Cross-Functional ModelIncrcasingly, successful organiza tions are e n v -sioncd to he networked across functions an dd c s ig n e d a r o u n d b u s in e ss p r o c e ssc s r a th e rtha n functiona l 11icr;irchies. Achieving this dy-namic structure takes morc tha n th c latcst tech-nology :~p plied o th e existing procedures; mostc o m p : i ~ ~ i e sealize it rcquircs a rethinking ofb u s inc ss f u n d a m e n ta l s . T h e so lu t io n l i es i neffectively redesigning processes by reniovingunneccssary activities and replacing archa ic pro-cesses with cross-functional activities tha t sup-port pardlcl processing, speed, ser\,ice. quality,and innovation. The se richer proccsses must b esupported by enterprisewide information accessand communica t ion .Business reenginccring usually involves a fun-damental analysis of thc organization and a re-design of organizationa l str uc tur e, job dcfini-t ions, rcward structures, business work f l o u ~ ,control prnccsses, and in some cases, a reevalua-tion of the organizational culture and philoso-phy. Miin!. corp orati ons are comple ting s uch

processes has been suggested as a new paradigmof organizational change necessary in maintain-ing flexibility and compe titivenes s.In the age of reengineering, professionals i nt h c IS field are faced with de veloping new designtechniques to address the changing role of IS.Because reengineering projects are usually de-signed around business processcs tha t trans cendfunctional units, there is a need for greater lat-eral systems planning and interaction betweenIS designers and users than IS has been accus-tomed to in th e past . Rather than functioningasthe sole de\*elopers, IS professionals may beasked to act as coordinators or colleagues o n amultifunctional tcam made upo f operating stafffrom many functional depar tme nts. In this sce-nario, the opera ting staff provides direction a s towhat needs to be recngineered a nd IS staff me m-bers are asked to provide direction o n how t oconduct the reengineering. In other words, dowe ha w t he tools to handle th e job!THE PROCESS REENGINEERING LIFECYCLEAlthough tlierc is no standard methodologicalapproacll that ensures success in reengineeringcfforts. commonalit ies among approaches arepresent. This article proposes a more completerccngineering approach, referred to as the Pro-cess Reengineering Life Cycle (P RL C). Th is ap-proach, shown in Exhibit 1, offers a detai led ex-a m i n a t i o n o f t h e s ix m a j o r s t a g e s i n areengineering project. Th e activities within eachstage are discussed throughout th e remainder ofthis article.ENVISIONING NEW PROCESSESReengineering is so re\,olutionary in natur e th atnothing short of cham pionship from the to p canactivate such a ventur e.Th e organization's lead-ers start by examining how thcy would run theircompany if they had n o constraints. This re-quires a creative reexamination of how work isdon e and how i t cou ld be don e . Th is in i t ialPRLC stage involws the crucial co mponent ofaligning corporate goals and strategies with thereengineering effort. It is within this stage thatmanage ment c om mi tm en t is secured, vital busi-ness proccsses are identified, an d ITe nablers areexamined.Securing Commitment from SeniorManagementT he C EO , president, and leaders of all the ma-jor functional departments must rcalize thattheir efforts are required in guiding the directi on

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EXHIBIT 1 Six-Stage Process Reengineering Life Cycle

InitiateDiagnose

Reconstruct

Feedback

Monitor

Envision

_/---- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -"I,- ,

of the new processes and in selling the project toemployees. The proponents of a redesign projectface a formidable task, however, because thosein control of a business most likely have spentlargc parts of their livesworking with thc currentmethods; it may be extremely difficult to convince them that any rethinkingof internal processes is needed. The major task, then, is to present the potential benefits and costs to seniormanagement in a \vay that management will bereceptive and committed to the success of theproject.

Forexample, improvingcycle time maybe animportant objective of the rcengineering project. The faster information, decisions, and materials can flow through a company, the faster itcan fill orders and adjust to ch'mging consumertastes and competitive conditions. Implicationsof decreased cycle time are that:Q Costs are gencrally reduced as time is pared

from processes.Q Cash is generated because Icss capital is ticd

up in work-in-progress inventory.oCustomer service improves as a result of improved lead times.

Q Qualitv is higher because a process is not allowed to be accelerated until it produces firstrate products.o Organizational learning is enhanced becauserapid nell' product development cycles keepthe company in c lose touch with customersand their changing needs.

Q If productivity is defined as output per timeunit, then it also inextricably relates to cycletime.

Identifying ReengineeringOpportunitiesWhen confronted with the large numbcr of processes in a typical business. the problem becomes deciding which ones should be investigated for redesign. A useful definition of processmay help in this matter.

A process is a set of act ivit ies or logically related tasks tha t must be performed to accomplish a business objective. Processes to be reengineered should have high potential impact on thcbusiness. Usually, these processes have an identifiable owner and customers and may span multiple internal and intcrorganizational bound-

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/'rO"".S.S[).P".Y i s11c!lpJi11 i r r~ t n ( l e r -slrr~rdi~rgl l ~ l l ~ r ll l(!gilN!tl I)( / l l(!c l r ~ ll l 1 1 1 ~ ! ~ l I l . ~lo / /recolll/'fl" v:

:~rics.Known dcfcct s in a suspect process shouldbe identified and anticipated performance-iln-p r o v c ~ n c ~ t tcncltlnarks should be isolated.

Thinking in tcrms of proccss types is helpfulin g:~initlga 1xo;idcr unde rstan ding of wh at t heg iwn \ d u e cha in means to the company. Spe-cific dimens ions of a proccss can he categorizedas cntitics, objects, and activities. \Vithin thissch eme t here arc tlirce lcvcls of proccss entiti es:I) 1r1lerorguni:oliotlol processes. The means by

\vItich cornpanics al m g the same value chaininteract .I) l~~ le r f u n c f io r t a lrocesses. Those that cross

functional l~oundar ieswithin one organiza-t ion.II in/e rpers or~ ul rocesses. 'l'liosc tha t oc cur bc-twccn pcoplc \vithin one functional group.

T h e ob jec ts wit11 \r41iclt a busin ess processclc:~lsmay hc cither pltysic:ll or i~l fo rrn at io ~~ al ,rthey may contain eleme~ tts f b oth , Activities in-\ , o l \ ~ dn a proccss can hc classified as opera-tir~n:dor managerial, and s uch demarcation cans impli fy t l ~ cedirection of rcsponsibility an d ac-count:~l)ilityacross the entire process. Hy defin-ing an organization's proccsscs, the rccngineer-ing projcct cat identify problems and begin tod c \ ~ l n ~ ~hascline against which new processesc m h e c o ~np a rc c l.

Ccrtai~l lanning tools, such as value chainanalysis, business systcms pl:~nning, nd criticalsucccss factors, ma ybe used in the ide nti fic nti o~ ~of business proccsscs. Eitltcr a comprcl~ensi\~eor a t :~rgetctl metl lod can be used t o defineproccsscs.. h c c o m p r c l t c n s i \ ~ p pr o ac h a t t c m p t s t oidcntify all t he processes withi11 an organiza tiona n d t l tc n r an k t l ~ c m . l~ a r l c s c hwa l) Co r p .adopted this :lpproaclt a ~ l d dentified 24 busi-ness proccsscs tll:~ twould strcamline operations\eitlt th e in tcn t of a 10% annual revenue growthi ll a 10-ycar period. /\ltl~ougll he comprehensiveap lx ox li can provide an unparalleled oppo rtu-nity to co nsidcr th c organiza tion as a wltole, col-lccting the dat a can be t imc-consumingand maydivcrt th e team's at tenti on from th e truc goal ofrecnginccring. The targeted approach definestllusc processes known to bc most vit d t o the or-gan iza t ion , as de te rmined by reeng ineer ingtea m d iscuss ions , manager ia l a~orksl top s , rm;tn:~gcrial ntcrvicws.Identifying Enabling TechnologiesNe w technical cq~ab i l i t ies f da ta and commu-n ic :~t io i~sccl~nolu gies rc moving IT to th e fore-front i n its potc~l tial o induce business recon-f igur:~tion.Morc than jus t a too l , these new

tecllnologies are accelerating the pace of chang eat corporations by establishing new organiza-t ional forms and performance standards. Therccnglnccring project mus t identify enabling ill-formation technologies that provide the oppor-tunity to improve internal efficiency, satis@cus-t o m e r s , a n d a l l ow o r g a n i z a ti o n s t o i g n o r egeography . Technolog ies s uch as local a reanetworks (I.ANs), clie nt-server arc hit ect urc ,electronic data interchange (EDI), and execu-tive information systems (131Ss) are allowing or-ganizations to achievc lxrform ance gains.Aligning with Corporate StrategyAfter proccss reenginccring opportunities havebeen discovered and ITenablers identified, t henext step is tocomp are t he m with strategicgoalsto ensure that both external ( eg ., market) andintcrnal (i.c., efficiency) strategic arrangementsarc in sync with t he present or potential IT com-pctencies and t he infrastructure of t he organiza-tion. Strategic vision to leverage structural dif-f c r c n c c s o r d i s t i n c t i v e c o m p e tc n c i c s o f a norganization with IT, relative to in du st n com -petitors, may be the hasis for changing a n orga-nization's competitive position. Reengineeringefforts may differ greatly dependillg on varyingst ra t eg ic d i rec t ions- fo r exam ple , low-costcompetition. entry into new markets, seamlessbuyer and scller relationships, and high-qualityproduction. /\ review of strategic alignmentshould idcntify needlcss reengineering effortsthat e ither d o not have strategic significance orfor \vhicIt an IT base does not or canno t exist.INITIATING CHANGEThe initiation stage ensures that careful prepa-ration is conduct ed in antic ipation of organiza-tionwide radical chang e. Keengincering projectsmust b e staffed by thc r ight te am m embers t osustain t he effort. Th e project sh ould have defi-nite perfortnancegoals that can later provide them c t r i c f or j u d g in g su c c e ss , a n d th e s e g oa l ssltould be justified against antic ipat ed costs. Anin-house public relations campaign can be orga-nized to info rm employees of th e redesign proj-cct . A mcssage from the C E O or president ad-d r e ss in g tl ic n e e d , s c o p e, c o m m i tm e n t , a n dleadership of the project should be communi-catcd t o the employees.Organizing the Reengineering Team13ecause th e process of ree ngm ccri ng involves or-gan iza t iona l des ign a round proccsscs ra therth ;~ n u n c t io n a l I t ie ra rc hi cs . ~ n u l t~ f u n c t io nt a ~ m s i th mem bers from various parts of th e

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compa ny are the mo st likely agents of change. holder valu e.Th e four dimension s are:~ h e ; k i l l sof team memb ers &oild be broad and I) Financial success.should traverse functional units. I) Customer satisfaction.Management should first appoint a director I) Internal processes.of the reengineering project who is responsible I) Organizational learning.for th e project's cond uct a nd accountab le for itsresults. O ne of th e first tasks this person must Goals mus t be ambitiou s, radical, and highlyperform is to assemble and assign sevcral taskgroups. On e meth od of assembling a team is tofollow the announcement of the reengineeringproject with a memo to managers at all levels,further describing the redesign project and theneed for team volunteers. Candidates includethose wh o are knowledgeable in fun ctional areasand can dedicate significant amounts of theirtime. At least one me~ nb ermus t be knowledge-able about the current s tate of IT, especiallycomm unications networks and dat a bases.So me companies use multi ple tcanls of vary-ing compo sition a nd specialization for differentstages of reengin cering; in gene ral, howcver,members usually include executives from the ISdepartme nt and o ther major departments (e.g..finance. ~nar ketin g, nd man ufacturing) as wellas kcy staff an d linc manag ers from th e areas un-der stud y. An alternativ e approach is to assign ateam to study on e process from its starting ac-tivity to its end activities, which may in all pos-sibility cxtc nd beyond th e organization's exte r-nal boundaries.Rec:~usc eengincering is new and unknownto many companies, companies often enlist thehelp of consul tan ts . Hir ing those who havehelped other companies adds valuable expcri-ence to the team and brings in an outs ider 'sviewpoint and creativity.Setting Perfonnance GoalsT o clctermine tlic lcvel of succcss of t he reengi-neering project, th e perforrn:~ncc f thc new pro-cess must be measured and compared t o that ofth e processes replaced. C S C Index, Inc., a man-agcm cnt consultan cy, identifies tlirec rnc;lsuresof reengineering benefits:I) Time .0 Cost .I) Number of defectsA stud y of 15 of its clients pr oduc ed a n averagereduction of 48% in cost, 60% in defects, and80% in time. N olan, Norton & Co., another ma -jor rccngineering consulting firm, recommendsthe use of a balanced scorecard that mcasuresfour dirncnsions of p erformanc e. Thcsc mca -surcs reflect th e structural assu mpt ions of orga-nizations of th e future and scek to create share-

optimistic in nature. It is not unrealistic to sc tperformance goals of 50% to 60% i n~ p rovemcn tin cost and productivity or reductions in staffinghy one-half . Many reengineering consultantssuggest that lofty goals must be t l ~ carget ofrecngineering efforts to create t he organization-a l mome n tum neces sa ry to depa r t f r om thestatus quo.DIAGNOSING THE PROCESSES TO BEREENGINEERED\Vitli the staffing issues :~ n d erformance goalsdetermine d, the ~nultifunctiona leam begins anin-d epth investigation of the business processselected for rccngineering. T h e diagnose stage iscritical bccnuse ~t clarifies th e e xisting proccssand uncow rs hidden patl~ologies .Documenting the Existing ProcessT o redesign a business process, the organizat ioumust elearl? understand ho\v the existing pro-cess works. In doc um en tin g an existing proccss,the following criteria m ust b e me t:I) Depict tlic process from st art t o finish. whichmay cover several functions, departments ,

users, and external linkages.II Ident i fy components of the process (c .g . ,I S , h u m a n , p h y s i c a l . a n d o t h e r p r o c e s srcsources).Q Document the performance of the exis ting

process in tcrms of customer satisfaction, in-ventory turnover, cyclc time, waiting queues,defect ratcs, activity times, transfer rates, pri-ority rules. and ot he r relevant nleasures.0 D e c o m p o s e ;I la rgc process in to a se t o fsubprocesses and assig~~eam members , ae-cording to their expertise, to the appropriatesubprocesses.

T h e participants in a process should be intcr-viewed to reveal the flow of information andlinkages. Th e value added may be determin ed bythe na ture of th e information bcing processed.how it is processed, and t he resourccs used dur-ing processing. The time required for informn-tion processing, moving, and waiting should berccorded t o indicate costs and to act as a bench-m:~rk against which improv cd processes c an bcmeasured. Th e performance measures of t he ex-

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r t rr r 11 i l io t r . s( r tr r l r r t d i c d ;i lk r r o lr r r r r e r t l i . s l i clo s e t

isting process should reflect the organization'sg o a l s :~n dmiss ions . For example , a l c a d in ga u t o ~ ~ w t i v ccrvicc chain uscd revenuc quotasas its pcrform:~nccmeasure; as a result, it alien-atcd customers with needless repairs and, ulti-~iia tely , ecrcascd custo mer satisfaction a nd re-turn hu3iness. A sound ch oice of a perform ancerncaburc based on reeng ineer ing p r inc ip leswould 11:ave been service quality as evaluated byits custo~iiers .Uncovering PathologiesI'rocess pathologies ma!. Ix dcfin ed as work-flowactivitics. busincss policies, bureaucracies, andnon-due-addctl rolcs that hinder and fragmentth e overall effectiv eness of a busincs s process.. o uncover such pathologies, a critique of themisting value and non-\due-added work-f lowactivitics should 11c co ndu ctc d. For IS person-nel. this action iwo lves:O Identifying undesirable sequential activitiesan d unnecessary bureaucmtic steps.I) Idcntifying functional information systems

t l ~ ; ~ tan be integratcd into a single process-widc system.I) Questioning the need for various forms, ap-prw als , and re ports and identify ing :dl papcr

float and redundancies.O Identifying dysfunctional policies and rulcs,formal as well as informal.

O n c way of uncovering suc h pathologies is tograph the performance variables set in the initi-at e stage for each activity in the cu rren t process.For cs:~mple, f the goal is to reduce timc andcost , i t is bcncficial to draw th e incrementa lcosts, elapsed time _hottlencck delays, labor re-q u i r c m c n t s . a n d o th e r q u a l i t a ti v e m e a su r e salong each activity of the process. Such perfor-manec-measurc charts may l)e used for compar-ison with the redesigned process in the nextstagc, that of monitoring the project, to allowr c c n g i ~ ~ e c r i ~ ~ gcams to sclcct the optimal pro-ccss configuratio~ i.Many organizations use process design toolsthat generate PERT charts or process-activitynetwork diagrams. Such technique s, which havebeen in use in manufacturing process design,may be applicd in analyzing business processesand their inpu t uscd t o develop simulation mod -els of the proccss. N umcrous products arc : n d -ablc that allow th e developm cnt of unified data.process, and logic models. Keenginecring teamscan the n use these m odels to create business so-lutions and specifications for the design an d im-plcmenta tion of information sys te~i is uring thcrcdesign and reconstruct stages.

THE REDESIGN STAGEA business process can be redesigned to achieveperformance improvements in the areas of time,cost. producti\.ity, quality, and the amount ofcommitted capital . I n pursuing sue11 improve-ments. the reengineering team should not beI ~o u n d y e xi st in g c o ~ ~c e p t sf organization orproccss designs. Brainstorming is oftcn promot-cd to uncover sometimes wildly different proce-durcs that employ IT n ways that increase effi-ciency an d effectiveness. A systematic appro achthat uses the input from the diagnose stage toeliminate pathologies and that redesigns effee-tive process configurations is described next.Exploring Alternative DesignsIZxploring process design alternatives involvescreativity and a radical approach th at questionscvery procedure and principle that currentlygoverns task activities, approvals, and work flow.T he reengincering team should develop and in-vestigate alternative process redesign solutionsan d consider IT applications that may supporteach alternative. For example, an imaging sys-tem for credit transactions and authorizationsusing expert systems and work-flow automationmay provide one means for handling forms pro-cessing, routing, distr ibution, a~ i d pproval. Analternative is to consider a wide area netw ork(\\'AN) application tied into th e corporate SQ Lsewer toallow imm ediateapp rovals online by remote sales lpersonnel.Each of t l~eses olutio~is entailsdiffe rentork-flow activity, staffing, and cross-functional s u pp o r t 7 ' 1 1 ~ S r e e n g i n c e r i n g t e a m m e m b e r sshould be continually educating fellow teammembers about the opportunit ies that IT ma yprovide for alternative designs. T h e best processdcsign can then be considered before the finalselection of a supporting technology. \\'itlioutthis step, the result could be force-fitting newtechnologies to existing procedures.Designing New ProcessesTh e key to successful rcdesign is to constantlyquestion why a certain task is done, what are bet-ter ways of doing it, who s houl d hc responsible,and which information technology best supportsthe redesigned process. Most of these questionsare answered during the course of uncoveringpathologics in th e diagnose stage. IFundarnentalc l e ~ i ~ e n t shat must hc considered in selectingth e redesigned process include:I) Pattern breaking. Breaking age-old principlesan d rulcs (e.g., in this com pany , travel request

111ustbe approved at the un it , departmental,an d divisional levels).


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O Aligning with performance goals. Ensuringthat the performance goals set earlier are tru-ly aligned with process outcomes.O lob ass ignment . D esign ing a person ' s jobaround the goals and objectives of the pro-cess, not a single task.O Elimination ofhierurchies. Replacing bure au-cratic hierarchies with self-organized teams

working in parallel.0 Elimination of identified puthologies. Ques-tioning t he activities and roles used siniply torelay information i f these communicationscan be han dled with information technology.

C) Improving productivity. Moving focus fromwork fragmentation and task specializationtoward task compression and integration.O Appruisirtg information technology. Consider-ing thc appropriate IT configuration tha t can

support and enab le th e redesigned process.Redesign focuses on leveraging time. Pro-

cessing, transporting, and waiting time may allbe improved with a redesigned process and theapplication of IT. Vast amounts of time can besavcd by eliminating multiple approval lcvclsand noncritical control checks. by integratingdata processing into th e work that produces theinforma tion, and by eliminating wait buffers andmtegrating multip le tasks.An important redesign possibility involvesth e substitutio n of seq uential activities for si-multane ous oncs. This reduces th e waiting tim einvolved in processes and ca n be achieved by ap-plying online data bases and information net-works across the process so that concurrent in-formatio n access occurs at every node .Separate tasks within processes should be in-tegrated as much as possible into one job de-scription to keep important information frombeing lost as responsibility transfers across in-terorganizational boundaries. In redesign, ap-propr ia tc in fo rmat ion , inc lud ing immedia tefecdback on performance, should be provided t oline workers directly so th at problem s can be re-solved imme diat ely T hro ugh use of I T plat-forms that support cnterprisewise informationaccess, individual jobs can be designed to con-du ct parallel tasks an d to allow workers to ma kemorc info rmed decisions.Designing the Human ResourcesArchitectureReengineering a company is not limited to justits processes; the organizational structure of abusiness should be considered fair game duringreengineering. Indeed, t he s ubun it divisions ofan orga nizatio~i hould support t he processes

as much as possible. Reorganizing subunits tominimize unit interdependencies holds poten-tial for reducing costs and improvin g productiv-i ty . C o n f r o n ta t i o n s t h a t c o n s u m e t i m e a n dmoney can be bypassed. Minimizing interde-pendencies be tween subuni ts can be accom-plished by improving the alignment of objec-tives, tasks, and people within a single subunit.W he re possible, a designed hu ma n resources ar-chit ectu re should supp ort a free exchan ge of in-formation and a refocusing of decision makingand actions at the individual and work-grouplevels.Inevitably, recngineering may cause signifi-cant ch ange in the organizational structure an dhuman resources a rch i tec tu re . The redesignstage should include a human resources compo-nen t th at incorporates th e following:C) Redefin ition of job titles and positio ns affect-ed by change s in cross-functional processes.O Team-based management techniques, such asthe esta blishme nt of self-motivated teams as-signed to specific business processes on thebasis of unique skills individuals possess.O Continual organizational learning throughon-the-job training with em phasis on quality.t ime, and ou tpu t .0 Performance evaluation based on team pro-ductivity and measured by group effectivencss.0 l n c e n t i \ ~ s n d r ewar d s t r u ctu r es b a se d o ngroup performance and an individual's con-tr ibution to the team.C) Modification of management structures that

requ i re man agers t o he leaders as wel l asequals to team members.0 Continuo us reengineering project co n~ mu ni -cati on to all employees who provide feedbackon progress.PrototypingPrototyping has been widely used in traditionalsystems development because it creates rapidfeedback that helps deter min e systems require-ments. Prototyping techniques are extremelyuseful for reengineering projects because theycan be used to demons trate proposed redesignsthat would otherwise be difficult for people tocompre hend. C ASE tools have the capability todevelop rapid prototypes.Prototypes should be reviewed and evalu atedby the reengineering team; they provide man-ageme nt with a vehicle to make judgments to-ward a final process design choice. The US De-fense Depar tment adop ted a comprehensivebusiness process reengineering plan that madeextensiv e use of rapid prototyping. T h e result: a

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reconf igura t io~~f cxisting methods and a re-d u c t io n o f c o m m a n d wid e sy s t e m s f r o m 80to 43.Selecting an IT Platform111tegratio11, oopera tion, ease of migra tion,adap tab il i ty to new technologies, and en ter -prisewide information access and sharing areamon g the factors that influence the selection ofan IT platform to support the redesigned pro-cess. Th e ITbase must be able to support com-munication between corporatc systems and de-cen t r ;~l izeddivisional systems, as well as tiesuppliers, vendors, and custom ers using \VANS.,.he need for coopcration may result in down-sizing im~inframe-based ystems to LAN-basedopc11 sy st c~ ns sing objcct-oriented technology.Some reengineering consultants believe thatonly an ohjcct-oricn tcd infrastructure will allowdevelopers t o integrate an d imple ment systemsf a s t e n o u g h to m e c t t h e r e e n g in c u in g t im cframe..I hc critical nccd for information sharing andaccess determines the corporatc data base dc-sign requirem ents. This may lead to t he decisionto dcvclop an cnterprisewide information archi-tecture or distributed data bases. The IT plat-for111 selected mu st outlin e hardw are decisions(e.g., mainframe, minicomputer . o r nvrksta -tion-based configurations), softwarc decisions(c.g., operating systems), and a data architectureat all levels of systems imp lcmc ntati on. It m ustalso detail the appropriate software systems tobe implcm cntcd a t every level-for example, de-\dolmient of a dccision support systcm at theexecutive level and several integrated work-group applications for transaction processit~,o.Ilccisions must hc nmdc regarding IT deploy-mcnt of third-party softwarc, in-house softwaredevelopment kits to support applications dcvel-op n~ cn t , o f tware rccnginccr ing p lans , docu-ment ation , and training plans. Th c sclcction ofan IT platform for a pr ti cu la r process can bc rc-latecl to th e enterprisewide IT architccturc.RECONSTRUCTIONThis next stage is th e actual impleme ntation oft11c chan ge. As with any m ajor org anizationalchange, a mcthodical process should be adop tedthat takes advantage of small-scale pilot proj-ccts, user training, and extensive user feedback.LVhcn problems arise in this stage of reengi-wcring, thosc involved must retain their com-~n i t m e n t o t h e m a in i de as g e n e r at e d d u r in gp r o c e ss r e d e s ig n y e t m u s t b e a m e n a b le t ochanges rcquircd to facilitate t he installation.

Installing ITA major effort tha t is undertaken in the recon-struc t stagc is the deplo yment of new systems tosupport new processes. In th e extrem e case, th eexisting systems and technology are replaced en-tirely with new hardware platforms an d appliea-tion programs. For exa mple, several companieshave downsized their mainframe-based infor-mation systems with more f lexible and eost-cffective LANs and client-server architectures .Thc second option is software reengineering,which is the process of red esigning and reusingcxisting system code for migration to more ef-fective I~ardw are nd software platforms. A ma-jor direction in systems development is the re-verse reengineering of object code to producerecyclable source code. This source code maythcn be used in forward-engineering techniquesusing CASE tools for added capability and re-struc turin g of curren t systems. Software reengi-neering can help to improve the reuse, redesign,analysis, and performance of software systems.Amoco Corp. credits software reengineering inhelping wit11 software maintenancc, analyzingsource code, and providing s yst e~u s tructurecharts and complexity rcports with softwaremctr ics. Charles Ba ch m a~ , ounder and chair-man of Bachman Information Systems, lnc. ,descr ibes a s ix -s tep so f tware reeng ineer ingcycle: captu re, reverse engincering, enhance-ment. forward engineering, optimization, andgeneration.Several companics have chosen to radicallyovcrhaul current sys tems with new technologie sthat provide improved connectivity and cost/pcrformance ratios. Migration to LAN-basedplatforms a nd groupware applications based o nohjcct-oriented design has shown success, andseveral vendors ha& dcw lop ed groupware prod-ucts based on open systems to allow organiza-tions to dcvelop easily integrated applications.Reorganization ActivitiesA crucial clement for reengineering success isth e design of a new organizational structure con-sist ent wit11 the newly defin ed process. Th e hu-man resources architecture outlined in the re-design stage must be thoughtfully executed tominimize any disruption to employee morale.This stage focuses on a smooth transition to anew organization design th at incorporates suchimprovements as subunit reorganization, jobrotation and staff reduction, th e empowermentof remaining employees through training andeducational programs, and in general, improvingthequality of work life.

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Empowering workers mean s placing decisionpoin ts where work is pcrformcd-in essence, al-lowing individual workers t o control th e proccss.This basic assumption contradicts t radi t ionalbureaucratic theory that states that people do-ing the work have nci thcr t he t ime nor th e incli-nat ion to monitor and control their own workperformance. Building control an d accountabil-i ty into the work process is accomplished bymaking thosc responsible for producing infor-mati011 lso accou ntable for its processing. Prop-erly reorganizing the process an d related organi-za t i ona l s t ruc t u re s hou l d a l l ow em poweredemployees to use discretion in iudgrnent a nd sig-nificantly increasc th e possibility tha t th eir workcall he a rewarding experience.

Tra ining of personnel i nn newly installed pro-cess-based environment is critical. Because themajor doct r ine of bus iness rccngineer ing in-volvcs the climination of func tional hierarchiesand thc development of organizat ional s t ruc-tures based on processes, team-based manage-me nt t echniques are a t a premium.

I'erformnncc evaluation ta kes a new twist asteam performan ce rather than individual perfor-mancc becomes the primary rnctric of success.l ~ ~ c c n t i v e snd reward structures must be re-designed according to group performance. Indi-vidual rcward stru cture s need to he redefined ac-cording to th e individual's contribut ion to thetcam. T he changes brough t on by reorganizat ionmay cause rcsent~m ent hat m ust b c addressedby c o n ti n ua l c o n ~ ~ n t ~ n i c a t i o ne t w e e n t h ereengineering tcam and employees. In the longterm, however, the combincd people and pro-cess changes should producc an organizat ionbetter able to change an d learn.MONITORING THE NEWLYCONSTRUCTEDPROCESSESThis s tage has two dist inct com pone nts that fo-cus on performance measurement of the processand qual i ty improvement.Performance MeasurementT o determine th e l evel of succe ss wi th t hcrccngineering project, new processes must bemeasured for time , costs, productivity, quality,and capital, then compare d t o the processes theyreplaced. T o cnsure t he fulfi l lment of perfor-man cc improvem ents, a wide spectrum of mon-itoring mu st be atte mp ted . Several aspects of th eorganization must be continually assessed andcontrolled. Examples of hard measures include:I) Process performance. Cycle t ime, customer

scrvice, and qualit!

O IT performunce. Software complexity, infor-m a t i011 r a t e s , dow n t i m e , s y s t em us e , andpaper reduction (e.g., throu gh E-mail or anEIS).

O P roduc t iv i ty i nd i ces . F o r t h e pe r fo rm an ceof em p l oye es and p rod uc t i on a nd s e rv i ceoperations.

Monitoring should be based not only on suchhard mea sures bu t also on soft measures, such asmorale and customer good wil l . This mult idi-

the changes caused by the radkal ly reenginccrcdbusiness process.

This all-encompassing scope of perfon nanc cmonitoring rcquircs the at ten t ion and act ive en-dorsement of senior managenlent and marks amajor departure from the technicalities of EDPaudit ing. Th e new measure for process outcomeis directly tied t o overall corp oratc perf orm anc e.I f t l~ought fu l lyand horoughly ca rr iedout , thesemonitoring a nd integ ration efforts lay the foun-dat ion for the cont inuing success of the rc-designed process and the further diffusion ofthe reengineer ing approach to o ther areas ofbusiness.Links to Quality ImprovementFor reengineering to succeed. it must be linkedwi t h co rpo ra t c qua l i t y p rog ram s . I - l owever ,rccngineering goals differ radical ly from suchquali ty programs as total qual i ty management(T QM ) that a im at incremental gains . Th e fun-dam ental difference between qual i ty programsand reengineering is the focus on continuousimprovem ent as opposed t o goals that are presetbefore the reengineering projcct has begun. T h emonitoring stage provides a fundamental l inkbetween the radical focus of reenginccring andthe cont inuous incremental improvements ofTQM.

Con tinual mo nitoring of the rcdcsigned pro-cesses is essential, especially in the early stagcsof deployment. An efficient feedback loop mu stexist between th e monitoring stage and t he di-agnose stage (see Exhibi t I) . Such a loop pro-v ides an audi t of thc performance of the re-designed processes an d identifies processes th atarc candidates for further redesign to ada pt t ochange. It may be necessary to fme -tune certainaspects of the new process and associated ITuntil acceptable performance gains have beenachieved. I f the first reenginccring projcct is as ucces s , s en i o r m anagem en t m ay d i r ec t t hereengineering team to focus on ano ther processfor redesign.

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CONCLUSIONCorporate management is looking for ways toexploit organizational competencies, to regaincompeti t iveness, and t o achieve long-term sus-t ; l i n a l ~ il i t y . t e e n g in e e r in g h a s c a p tu r e d t h eimagin:ltion of these corporate Icaders. IS pro-fe ss iona ls a re be ing ca l led upon to take pa r tin th c c1i:lllcnging assignm ent of achicving ma -jor perform ance gains:Their par t ic ipatio n inrecngineering is vital.Although th e need for change is universallyrecognized, there has been no widely acceptedcsccution plan or methodology available to sup-port SLICII change. The Process Reengineer ingLife Cycle prese nted in this ar t ic lc may f il l thisvoid. This plan provides the new generation of

system s professionals w ith a detail ed frameworki n d i c a t i n g t h e s t a g e s , r o l e s , a n d e x e c u t i o nguidelines for achieving large-scale organiza-t ional change. I

Recommended ReadingDavenport, 'l'.ll., and Short. 1.1:. "Th e NewIndustrial lingineering: Information Technologyand Business Process Rcdcsign." Sioan~\lanagemcnfReview (Summer IWO)Scnn, ].A. "Reshaping Rusiacss Processes Thro ughRe~n~inee r ing . "lM h'efwork (hlarch/April1991).Stewart ,'l'.A. "'lh e Search tor the Organization ofT o m o r ru w . " 1:urlune (hlay 18. 1992).

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