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2. BUSINESS REENGINEERING

Business reengineering is a very young discipline compared with ES; it was formally christened by Michael Hammer in 1990, whereas ES have been around for almost 30 years. Reengineering grew out of the quality movement, but it also has roots in work systems design, process innovation, and leading practices from management consulting firms. According to Hammer (Hammer and Champy, 1993), "Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance."

An alternate definition proposed here is: "Reengineering is the fundamental rethinking and radical redesign of an entire business system to achieve dramatic improvements in customer value and organizational performance."

  • Fundamental rethinking starts fresh by examining the mission and strategy, scanning the environment, as well as surfacing and challenging existing assumptions and policies -- not just accepting the existing situation.
  • Radical redesign starts with best practices and then applies innovative information technology (IT) -- not just improving incrementally.
  • Redesigning an entire business system includes products, services, management, IT, and motivation -- not just reworking the process.
  • Dramatic improvements are gains of at least 50% in measures such as functionality, cost, quality, and time -- not just 10 to 20% gains in internal measures of performance.

The primary focus of reengineering should be external -- on customer value expressed through products and services. The secondary emphasis should be internal -- on organizational performance organized around the work processes.

2.1. REENGINEERING METHODOLOGY

A methodology is a body of methods, rules, and postulates employed by a discipline. Most methodologies consist of three parts:

  • Purpose or goal state
  • Model or system with components, features, or dimensions
  • Process that achieves the purpose

Reengineering methodologies are basically formal design processes. For reengineering, the goal is creating a highly desirable or ideal business system that delivers greatly improved organizational performance and/or customer value. The design artifact is the business system that is divided into components, each one representing a different aspect or functionality. Finally, the design process is the reengineering life cycle, beginning with project definition and scoping, and ending with implementation.

A good methodology provides guidance and structure without being overly restrictive. It should also strike a balance between theory and practice. Methodologies should be thorough and disciplined without being too detailed and inflexible. Methodologies should occupy a middle ground between intuition and a cookbook. Some ideas are to provide principles, guidelines, and assessment tools, as well as examples, tips, and pitfalls.

2.2. BUSINESS SYSTEM

The business system is defined in terms of its constituent components or dimensions, and their linkages, interactions, and feedback. In this model, processes enabled by infrastructure components create desirable products and services that meet customer needs. This business system has two complementary perspectives: the internal organization and the external environment. The internal perspective is concerned with redesigning the process and enabling infrastructure components in order to achieve superior organizational performance. The external perspective, on the other hand, is focused on redesigning the products and services, as well as redefining and influencing the other environmental components in order to achieve greatly improved customer value and marketplace success. The business system is composed of the following components:

  • Customer:
    • Customer profile, market segment
    • Customer needs, values, perceptions, and expectations
    • Competition, market, and industry
    • External environment: demographics, social, political, regulatory
  • Product:
    • Product and service features: functionality, quality, time, and cost
    • Service process: product information, transaction, delivery, use, and repair
    • Cost, pricing, marketing, and sales
  • Process:
    • Workflow decomposition, mapping, measures, simulation
    • Activity triggers, suppliers and inputs, outcomes and interfaces
    • Policy, practices, procedures, methods
    • Workflow analysis and simulation: capacity, bottlenecks, constraints
  • Infrastructure:
    • Management
    • Expertise
    • Technology
    • Workforce
  • Environment:
    • Market
    • Competition
    • Government

2.3. INFRASTRUCTURE ELEMENTS

Organizational performance is largely dependent on processes, which in turn are dependent on the infrastructure. Jointly, the infrastructure elements and the processes determine the level and sustainability of organizational performance in the face of trends in customer needs, the marketplace, competition, and government regulation. The internal infrastructure is composed of the following elements:

  • Management:
    • Strategic planning: mission, vision, goals, objectives, and strategies
    • Performance management and workflow optimization: scheduling, assigning, structuring, monitoring, and controlling
    • Resource: planning, budgeting, logistics, optimization, and sourcing
    • Structure: organizational, team, job, role
    • Reward: measurement, appraisal, and compensation
    • Improvement: continuous, incremental, reengineering, change
  • Expertise:
    • Data, information, knowledge, expertise, organizational competence
    • Knowledge acquisition and management
    • Exploring, experimenting, learning, innovation, teaching
    • Centers of expertise
  • Technology:
    • IT platform and client/server architecture
    • ES: Knowledge repositories, performance support systems, personal assistants
    • Communications and groupware software
  • Workforce:
    • Motivation, development, empowerment
    • Staffing and career paths
    • Culture: values, beliefs, norms, symbols


FIGURE 1 The business system.


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