The driving force behind all the changes which are taking place in the all the firm of the world are two Cs: customers, competition. The demands of the customers are changing day by day and this change in demand of customers pose new sets of challenges to the firms every now and then and hence firms have to change or modify their offering to customers accordingly. Firms who are able to do it in less time and less cost turn out to be the industry leaders.
Firms set their mission and vision statements on the basis of their short term and long term strategy and to attain those goals firms need to adjust themselves with the constantly changing environment. We have seen dominance of Japanese firms in automobile and electronic components, the reason for this dominance of Japanese firms over other firms round the world is their techniques. They change things fast and their people accept the changes fast.
Some people consider these techniques are useless but there are companies who have successfully implemented these techniques and have shown to the world that these techniques are valid and are implementable.
History of Reengineering
The concept of reengineering started in nineteen nineties when the Massachusetts Institute of Technology (MIT) conducted research entitled “Management in 1990”. The sole purpose of that research was to know the role played by information technology organisations during that time. Since that time a lot of research has been done on reengineering and different authors have different views on reengineering because of which it has raised a lot of controversy and disagreement among authors. There are some like Druker who believed that inputs from new and innovative concepts should be used to optimise the productivity of all the operations while there are some who believed that reengineering is a misconception and will soon disappear.
In the 1880’s Frederick Taylor suggested that process reengineering is used by managers to discover the best process (way) to perform the work thereby increasing the productivity of whole operation. In the early 1900’s Henri Fayol originated the concept of reengineering and explained it as a concept to derive optimum advantage from all the available resources by finding the best process to perform the work.
During the time of Taylor and Fayol, technology was a bit of constraint and it was really difficult for the large companies to design the process in cross-functional or cross-departmental manner.
Definition of Reengineering
The most popular definition of reengineering is” 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.” This definition of reengineering includes four essential points which can be summarized as follows:
- Fundamental Rethinking: While doing reengineering, business officials must ask them the basic questions about their business like “what is their business”? “What are their do they want to do in their business”? And “what they want to change?” Asking these questions bring clarity about the business operations and forces the people to look at the tactic rules which their organisation follow for doing business. Reengineering works in two steps. First, it determines what the company must do for the improvement and second, how they have to do it. Reengineering accepts nothing as it is, it ignores what is it like and concentrates on what it should be like.
- Radical Redesign: Radical redesign means to get into the details of the things and not to make superficial arrangements for the things which are already in the place but to get into the roots of the things and looking for new innovative and efficient ways to do the same thing more productively.
- Dramatic improvements: It is often said that business reengineering is about the business reinvention and not about business enhancement, business improvement or business modification. Hence, Reengineering is not about making small improvements but about making big, efficient and noticeable changes to achieve quantum leaps in the performance. Marginal improvements are required for the fine tuning of the operations but reengineering should only be bought in when there is need for big changes for the dramatic improvements Reengineering should be bought in only when there is a need for drastic improvements which includes changing the old things with the new things.
- Processes: This word “process” is central to reengineering and it gives hard time to most of the managers of the organisations because most of the managers are job oriented rather than a process oriented. Job oriented managers focus mainly on the job (task) at hand rather than the process involved for the job. Business processes are the collection of activities which takes in inputs of different kinds and creates the output which is of value for the client or the customer of the organisation. Reengineering not only focuses on the different departments of the organisation but also the organisation in a whole because of which reengineering see the full picture of the work moving from one department of the organisation to the another with keeping an eye on the operational hindrances on the way.
Steps involved in Process Reengineering
Process reengineering methodology mainly includes the following steps,
- Planning for reengineering: Planning and preparation play vital role for any process or event to be successful and the same applies to reengineering. Since reengineering involves major changes and is not for small improvements and also it may include heavy costs, there should be a dire need for reengineering. This step starts with the consensus of executives of the firm for the process reengineering. During reengineering the processes are reengineered in such a way that they acts work in tandem with the mission & vision statements of the firm. Understanding customer expectations is most important, because the processes needs to be reengineered in the way which will lead to maximization of customer satisfaction.
- Mapping and Analysing As-Is Process: Before reengineering any process, reengineering team should know the existing process. The underline aspect of business process reengineering is to bring the changes drastically. Process reengineering is not for small and slow changes. Many people advocate that it should be “To-Be” Analysis instead of “As-If” Analysis. The usefulness of this step is in identifying anything that prevents the process from achieving desired results and in particular information transfer between organizations or people and value adding processes and is implemented by using different models used for creation and documentation of activity and process models. Then with the use of activity based costing amount of time and amount of cost consumed by each activity is calculated.
- Designing To-Be process: This phase starts with looking for alternatives in the current situation which molds well with the strategic goals of the organisation. The first part of this phase begins with benchmarking which is comparison of the firm with the other firms in the same industry. It’s a general practice to select industry leaders for the comparison so that the firm can use its best practices. This is not necessary to select the firm for comparison from the same industry, once can chose any firm from any industry with similar processes. For example, both textile mills and food processing industries use Reverse Osmosis technology (process) for the purpose of water purification; hence they can be compared for water treatment process. Next we do activity based costing analysis for analyzing time and costs involved for different processes. Once ABC analysis is done To-Be models are prepared using different modelling techniques. This is important to know that this modelling is iterative process and different To-Be models are prepared for the analysis. At last we make trade-off matrix to select the best To-Be scenario.
- Implementing Reengineered Process: The implementation phase is that phase where reengineering encounter maximum resistance. It is because the environment is not readily changeable and hence, it is most difficult phase of all the phases in reengineering. As the firm invest a lot of time and incur heavy expenses for the planning phase it is justifiable to invest in training programmes for the employees of the firm for the cultural change. Winning the hearts of all the employees and motivating them is crucial for process reengineering. Next step is to make a transition plan to move from As-Is to the redesign process. The plan should be chosen in a fashion that it goes well with the long term strategy of the firm. Implementation of information technology which support reengineering is must for the process. The total amount of work which needs to be done for the reengineering is broken down into different components using work break down structure techniques and them these individual components are worked upon.
- Improve Process Continuously: The last but most important phase of any reengineering process is continuous monitoring of processes and the results which come from modified/improved processes. If there are deviations from the expected to actual then they should be taken care immediately. The performance of reengineering is measured by the competitive advantage the firm gain by reengineering, the amount of satisfaction of the employees, and the amount of commitment management shows.
Relationship Between Benchmarking and Reengineering
Both process benchmarking and process reengineering are the popular methods for developing requirements and setting goals. Both these methods were developed to bring about changes for the improvements in operations of the organisations. Benchmarking involves comparison of one firm’s processes with that of other firm while reengineering is concerned with redesign of operational processes.
The process benchmarking and process reengineering are completely different things but for experts they have something in common. Even benchmarking is used in one of the steps of process reengineering.
Both the processes i.e. benchmarking and reengineering have a lot in common. The benefits of using these methodologies come mainly in two areas:
- Selecting processes which needs to be reengineered is done by benchmarking studies rather than by arbitrarily looking for domain experts.
- Reengineering is always done in such a fashion so that the overall process should be customer centered. Inputs from internal and external factors are taken for this. Benchmarking can enhance this process by bringing in the experiences of the leading firms.
Reengineering and Benchmarking projects are like any other major project. They need to have applied flexibly and should accommodate new technologies and methods to obtain necessary information. Reengineering and Benchmarking are based on iterations, it is almost impossible to apply these processes in one shot.