Communications of the ACM

Communications of the ACM

A Wider View of Business Process Reengineering

By Delvin Grant
Communications of the ACM, February 2002, Vol. 45 No. 2, Pages 85-90
10.1145/503124.503128
Comments

The successes of business process reengineering (BPR) have been well publicized [7]; the failures have been much less publicized [5, 10, 11]. Approximately 70% of BPR projects fail [1] and some believe that figure may be even higher. Several obstacles to BPR have been documented [1, 2, 8, 9]. They include the lack of sustained management commitment and leadership, unclear definition of BPR projects, unrealistic scope and expectations, resistance to change, and inadequate resources. Another obstacle and a possible source of failure, often overlooked, is the narrow view resulting from the existing definition of BPR [4]. BPR is 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 [7]. The view depicted in this definition is too narrow because it focuses on processes and ignores other important aspects of institutions such as organizational structure, people, communication, and technology.

The principal claim of this article is that the views of BPR subscribing to Hammer's well-known definition are too limited because they suggest BPR is about making changes to processes, and that technology plays only an enabling role. This is inconsistent with the wider views exhibited in industry practice. Evidence for these claims is given here through analysis of published BPR cases of industry practice. The danger of adopting too narrow a view is that it misdirects developers to focus exclusively on processes while ignoring a variety of other possible reengineering opportunities that may result from a wider view. This has consequences for industry practice because the view developers take of a particular organizational reality strongly influences how they approach their work.

The published cases used in this research serve as a reality substitute for industry practice, which is a widely accepted research practice. The logic of this research approach is summarized in terms of Toulmin's Uses of Arguments [12] by applying his concepts of claim, warrant, evidence, rebuttal, and backing. Warrants are laws for claims about nature, values, norms, and regularities for claims about human affairs. Backing is the body of knowledge that is used to justify the warrant if challenged [12]—see the accompanying figure. The body of knowledge used here comes from case studies and the BPR methods literature.

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The Reengineering Problem Space

Successful reengineering requires a good understanding of the problem space to define the scope of the project, the areas of the organization most affected, and the complexity of the problem. A typical reengineering problem space (see Table 1) comprises five interrelated factors (processes, technology, people, communication, and organizational structure) and three managerial levels (strategic, managerial, and operational).

Organizations may be viewed as collections of interrelated processes. Guha et al. [6] defined three types of processes engineers should be concerned with: interorganizational processes are the means by which companies along the same value chain interact; interfunctional processes that overlap functional boundaries in the organization; interpersonal processes occur between people within one function group. To analyze a process we ask several questions: Is the process needed? Can and should it be redesigned? What purpose does it serve? Who is responsible for it? What competencies are required for someone to successfully complete it? Value chain analysis, business systems planning, and critical success factors may provide a context for these questions.

Technology is an essential component of modern businesses and is vital to most reengineering undertakings [7]. It creates barriers to entry and has become the basis for competition in industries such as banking, travel, and high-tech manufacturing. In understanding the technology, we try to determine if the business has the right amount, type, and mix of technologies. Local-area networks, intranets, client/server architectures, electronic data interchange, and executive support systems technologies allow companies to achieve performance gains [6]. Technology is not limited to hardware; it includes tools, techniques, and methods such as BPR, information engineering, joint application design, prototyping, computer-aided support systems, structured methods of development, and object orientation.

People—the human resources architecture—play an important role in the daily operations of companies. They are the primary decision-makers and the essential ingredient any human activity system. In redesigning the human resources architecture, we are trying to determine if the company has the right mix and quantity of human experts to achieve its goals. In performing reengineering we must redesign the human resource architecture to better support information sharing and decision-making [6]. Items for redesign in the people domain include: job titles and positions; team-based management techniques; team-based performance evaluation; individual and team compensation and reward; and individual and team authority and responsibility.

In redesigning the human architecture, effective communication is vital to organizational decision-making from the perspectives of technical communication and social communication. Technical communication concerns the ability of different types of technology (email, Internet, intranet) to effectively communicate. Social communication concerns the ability of people to understand each other. Consequently, reengineering must be concerned with the redesign of the communication channels for mutual understanding to improve decision-making, collaboration, and the free exchange of information. This should include improving the communication channels inside and outside the organization.

Structure defines the relationship between people and technology. It plays an important role in organizing people, technology, decision-making, control, and management. Poor organizational structure can diminish the success of the reengineering effort. Therefore, it should always be considered during reengineering [6]. Structural changes may include cross-functional teams, product teams, and the flattening of the management hierarchy. From a technology point of view it may include the relationships and controls between various technologies and should also support effective communication, decision-making, organization culture, shared sense-making, and congeniality.

Strategic management is the highest level of management where top officials determine the strategic direction of the company. Managerial management is where middle managers responsible for setting company policies and procedures necessary for accomplishing the corporate objectives set by the strategic management reside. Operational is the lowest level of management and is responsible for carrying out the daily operations of the company.

While it may be appropriate for reengineering to concentrate its effort on one or more of the five factors, it must not be at the expense of the others. This would be a mistake because it would ignore important interdependencies among the factors. For example, major changes in technology that are ill supported by the organizational structure, people, and process are likely to fail. Kodak, recognizing this fact, decided to postpone all BPR projects until its ERP systems were implemented. It felt that BPR projects were at risk if the technology infrastructure was not in place. The use of technology in reengineering non-manufacturing and manufacturing companies has not been fully exploited: a wider view or expanded definition of reengineering is necessary.

If the argument for a wider view has merit, we would expect that in practice not all of the interdependencies could have been ignored. Reality is indivisible and so we would expect to find industry practice is much broader and richer than the theories that inspired it. By applying the framework to analyze BPR projects we hope to reveal the breadth of reengineering practice reflected in industry.

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Illustrative Case Analysis

This study is an illustrative case analysis. Any claims about the broader view of BPR being typical and beneficial to industry should not be taken as statistically significant or empirically substantive. To make such claims would require empirical research where data is collected from a representative sample of many companies. The results of this study provide anecdotal evidence for the plausibility of our claims and serve to illustrate the application of the framework. This makes it similar to an exploratory study prior to the data collection effort of a major study.

Evidence of Industry Practice. A total of seven projects were analyzed. They were selected because they are classics that are widely published in the case literature; are widely read by students, faculty, and practitioners; and illustrate different views of the overall inherent complexity of BPR. Space limitations prevent detailed discussion of the Cigna case here, nevertheless, the results have been included to provide a more complete picture. Table 2 is used to map the seven projects to the framework. An entry was made in the matrix shown in the table to signify the factor that was the primary focus of the reengineering effort and the organizational level that was most affected by the redesign. While the redesign may have caused secondary changes in the company, they are not shown for two reasons—they are not the primary focus here and would unnecessarily clutter the table. For example, in the Mrs. Fields case, even though changes in technology occurred primarily at the operational level, secondary changes occurring at the upper levels of the company are not shown. Some cells of the matrix are blank because no primary changes were reported for that factor.

In-Depth Case Analysis. The case analyses that follow will be evaluated using Hammer's definition of BPR. This would disqualify projects that have technology, structure, people, or communication as the primary target of redesign. Nevertheless, these projects would qualify as BPR projects in industry. This helps to explain why we believe industry practice is much broader than the literature on BPR methods suggests.

Ford. This case provides strong evidence for the concept of BPR as defined by Hammer because the procurement function underwent major process changes. Prior to reengineering, the procurement function operated by sending a purchase order (PO) to a vendor, and a copy to the accounts payable department. When the goods arrived at Ford, the clerk completed a form describing the goods and sent a copy to the accounts payable department (A/P); the vendor meanwhile sent A/P an invoice. A/P compared all three documents (PO, receiving document, and invoice) and issued payment when they matched. A/P spent most of its time dealing with exceptions that took weeks to resolve. The function was reengineered so the need to match documents was eliminated. When the purchasing department issues a PO to a vendor, the information is simultaneously entered into an online database (DB). When goods arrive at Ford someone checks a DB for the corresponding invoice. If invoice and shipment are identical, the system automatically sends payment to the vendor, otherwise, the goods are returned.

It is very clear the procurement function was redesigned and that technology was the change enabler. The redesign focused primarily on the business procedures and practices of procurement to reduce the paperwork and cycle time. The number of procurement processes and the number of people involved were significantly reduced. The business assumptions, upon which the old procurement process functioned, were radically changed. Two of these assumptions were that procurement was so complex it required several people to perform it, and Ford paid when three related documents matched. These assumptions provided the impetus for the redesign of the procurement function. In this example three important criteria of BPR consistent with Hammer's definition are evident. First, there is convincing evidence that significant process or procedure changes occurred. Second, processes were the primary targets of the redesign effort. Finally, technology served as the enabler. This is classical BPR according to Hammer. When we apply the same strict standards to the other projects they fail the "Hammer test."

Mrs. Fields Cookies. In Mrs. Fields case, evidence of process or procedure changes is missing and hence it does not fit Hammer's definition of BPR. Inherent in Mrs. Fields' management style were a number of objectives she wanted to fulfill, including a non-bureaucratic and informal management structure, a flat organizational structure, tight control of daily operations even in her absence, and little delegation of authority. To achieve these objectives she decided to reengineer technology, organizational structure, and communication.

The company underwent major technology changes. After the redesign, technology was pervasive, affecting such things as scheduling, product mix, sales, hiring, communication, and product forecasting. The focus was on technology and it was the primary target of the change process. It opened new communication channels between employees and Mrs. Fields, and it enhanced the way she ran the business. Technology facilitated a flatter organizational structure, reducing bureaucracy and providing better control over the daily operations. A flat organizational structure meant managers would be closer to customers and could spend more time selling cookies. For this to happen, she had to find a way to perform the management functions of the business while managers spent more time selling cookies. A flat management structure was desirable because it reduced the amount of management required. It may be argued that getting managers to spend more time selling cookies to customers is a form of process reengineering. This is a weak argument because managers were already selling cookies and so the changes are insignificant such that Hammer would not consider them BPR.

It can also be argued that communication was reengineered because, in her attempt to be omnipresent, she needed a communication infrastructure to accomplish her objective. It can be argued that better communication was a primary driver for a flatter organizational structure. A flatter organization leads to more effective and efficient communication and management. Effective communication, even in flat organizations, is only possible with the appropriate technology. In this case study technology served as an enabler of change.

Rebuttal. One can argue that management is a business process and so it was being redesigned. If this were true we should see convincing evidence of radical changes to fundamental management practices and procedures that resulted from such change. We should also see evidence of significant changes to Mrs. Fields management style after reengineering. We see no evidence of change to either the management practices of the business or to her management style. Even if there were minor changes to either, according to Hammer, this would not qualify as reengineering but instead as continuous improvement. If her management style or the management practices had changed significantly, we would have seen major changes to the management function. It is somewhat evident the reengineering of technology served only to reinforce her management style and to support the business practices by allowing her to better communicate and maintain tighter control of the business. In summary, the case was about satisfying several management goals of Mrs. Fields through the use of technology.

Xerox. This case does not fit Hammer's definition because it is a good example of organizational structure, people, and technology BPR. The organizational structure was redesigned to facilitate the reorganization of the Corporate Information Management (CIM) Function. This was a response to the expiration of patents and increased competition from Fuji and Canon. Also at stake was the question of how should Xerox restructure itself to better deal with external treats and better satisfy its customers. In addition, it wanted to improve return on assets, and to increase market share. The redesign of structure focused on four major areas: corporate strategies and programs (CSP); corporate technology strategies (CTS); corporate telecommunication strategies (CTeS); and executive and office information systems (OIS). CSP was responsible for the transfer of technology from Palo Alto. CTS was responsible for creating the company's information systems infrastructure. The CTeS function was responsible for ensuring effective communication inside and outside of Xerox and included customers, suppliers, and industrial partners. OIS was responsible for application development of corporate functions.

The new structure caused major reshuffling of leadership (people). An inside candidate was chosen as CIO for her IT experience, her political influence, and her familiarity with Xerox. These were important leadership characteristics for the job. One of her primary objectives was to educate and hire the right people for CIM. She also defined roles and responsibilities for the centralized CIM group and for the decentralized business units. Changes to the organizational structure were accompanied by changes in technology. A three-level architecture was developed and implemented. It included general data processing, distributed processing, workstations, and OIS. These were necessary to better support the new organizational arrangements. For example, an effective telecommunications infrastructure was required to better inform employees about the availability of new technologies and their use.

We see no evidence of major changes in business practices or procedures as we did in the Ford case. The primary focus was the redesign of the organizational structure. For the successful restructuring, changes in people and technology were necessary. We conclude that this was an example where both people and technology served to enable successful corporate restructuring.

Rebuttal. It may be argued that process and structure are somewhat interdependent and by changing the structure we automatically change the business processes. To rebut this argument, the case stated that Xerox wanted to reorganize the CIM function to address the issues discussed earlier. There was no mention or evidence of changes to the business practices or procedures of the company. It is likely that the new structure and the new leadership brought about by the redesign led to business practice changes. However, the primary target of the redesign was undoubtedly the organizational structure. Therefore, people, technology, and processes served as enablers of organizational change. This is further supported by the lack of evidence suggesting process changes occurred after the redesign. If the case were about process changes we would have found ample evidence of this after reengineering as we did in the Ford case. This was clearly not the case.

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Conclusion

This study raises questions about what is the correct or appropriate view of BPR and argues in favor of a broader view for the following reasons: narrow views of BPR inhibit progress and contribute to BPR failures; wider views will advance academic research and industry practice. According to Hammer, BPR is concerned with making changes to business processes to bring about organizational improvements. This notion misdirects developers to focus exclusively on processes while other equally important factors (technology, structure, communication, and people) go unnoticed, are taken for granted, or are deemed external to the project scope. This leads to fewer BPR opportunities and successes. Our analysis of industry practice challenges the notion that processes are always the primary focus of redesign. It turns out that communication, people, processes, and structure have been reengineered, thus supporting our argument for a wider view of BPR. Therefore, we need to be conscious of the sources and the impact of our belief systems on industry practice.

In addition, we need to expand our view of BPR to consider the other factors as being equal players. This provides additional opportunities that will translate into project success. A surprising result is that processes were the least reengineered factor. They were the primary targets of redesign in two of the seven projects. We expected them to dominate because the word "process" is synonymous with BPR. Interestingly, the results show that only when processes are the primary targets of reengineering they fit Hammer's definition of BPR. We believe the leaders of these projects were probably heavily influenced by Hammer's work. The literature on BPR methods suggests that technology serves only to enable change, but we question conventional wisdom because we have seen examples where technology and other factors were the primary focus of redesign. The factor that is chosen as the primary target of redesign depends on the project objectives, the organization's mission and goal. It changes from project to project and is situation-dependent. As practitioners, we ought to recognize that inherent in every methodology is a prescribed view of the world that is not always correct or shared by those who use it, and we make conscious and subconscious assumptions that have profound effects on our work.

The empty cells in Table 2 may be explained by the small number of cases analyzed. All four cases can be found at the operational level of the organization. As we move up to the managerial and the strategic levels we find only two cases at each level. This suggests BPR may have a greater change impact at the operational level than at the managerial or strategic levels. This may be further explained by the project objectives because the Xerox case dealt with a strategic problem and ended up at the strategic level. Ford and Mrs. Fields dealt with operational issues and ended up at the bottom. The anecdotal evidence suggests the problem to be solved determines where the impact of redesign is felt and consequently the position of the project within Table 2.

Some readers may partially disagree with our interpretation of the cases. The fact that alternative interpretations are possible and have not been considered in the discussion of BPR sheds considerable doubt on the adequacy of Hammer's narrow BPR definition and the subsequent literature that uncritically builds on it. More research is needed to determine how industry actually handles BPR and whether BPR approaches adopting a broader view have a better chance of success than those following the narrow view.

It was not our intention to develop a complete BPR methodology, but instead to focus on a key shortcoming of current methodologies: a view of BPR that is too restrictive. A complete methodology needs to embrace additional concerns not addressed here. Reengineering may differ greatly depending on a company's strategic direction. Price leadership, supply chain, high-quality production, and micromarketing require different reengineering strategies with different outcomes. We recommend that after reengineering opportunities have been identified, steps should be taken to ensure they are in keeping with the company strategy, goal, and objective.

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