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An evaluation of the practical application of business process reengineering / Kevin J. Heinecke.

by Heinecke, Kevin J.

Reengineering (Management)

Organizational change -- Management

Corporate reorganizations

Strategic planning

Production management

192 leaves : ill. ; 29 cm.

Thesis advisor(s): Dr. Paul Hudec.

Committee members: Gene Wright, Joseph Papp.

Case study -- Proposition -- Theory and expectations -- Failures and successes -- Implementation barriers -- Organizational requirements -- Tools and methods -- Proposal plan for case study -- Recommendations -- Conclusions -- A: The self-assessment diagnostic -- B: Raw data for mtg assessment.

In the 1990s reengineering concepts were being implemented in organizations seeking new ways to cut business process cycles, decrease labor, and increase profits and market share. One of the original authors to document the basic principles of reengineering was Michael Hammer. His concepts were radical in contrast to traditional change practices in organizations. He claimed the only way to achieve dramatic improvements in organizational effectiveness was to essentially evaluate current processes, tear them down to the basic functions and rebuild new processes suited towards the support of the customer and not internal organizational red-tape.

Many of the reengineering initiatives attempted by companies failed or did not achieve the expected level of improvement. Estimates claimed 60 to 70% of all organizations which attempted to reengineer their businesses did not achieve noticeable success. In addition to the lack of successes, many organizations used reengineering as a method to cut staffs and strip away services and core competencies of their companies. Reengineering soon became synonymous with layoffs and cost cutting initiatives.

Regardless of the negative examples, there were also many well-documented successes. Major corporations, such as Ford and Mutual Life had implemented reengineering principles and succeeded at improving operating processes. However, due to the negative connotations of reengineering and its lack to generate promised improvements in efficiency or lowering operating cost to the organizations's operations, the emphasis to use reengineering as a method to address organizational problems dwindled by the end of the 1990s.

The author of this thesis is employed by an organization composed of several smaller organizations which were recently merged together. The organization has a vision to make considerable gains in their market by consolidating the efforts of these smaller companies. Several years after the mergers, the organization is still struggling with removing barriers among the different departments and connecting people together towards the corporate goals. These one-time competitors must now work together. Old alliances, differences in methodology, software systems, and cultures have kept any significant growth and synergistic benefits to a minimum, The promise of the reengineering principles and the need to identify solutions and methods for the author's organization has led the author to investigate the validity of reengineering principles and their application to the organization.

To determine the validity of reengineering principles the author investigated the causes of failure and reasons for successes from several sources which performed a postmortem of the reengineering movements. Utilizing the information supplied by these historical cases the author determines if reengineering principles are another management fad, quality initiative, or reshuffling of employees and tasks. In addition the author investigates potential application of current management techniques and technologies to enhance or resolve many of the original reengineering problems.

Investigations of the reengineering principles determined there is not one universal method, which can apply to every organization. Company size, product offering, culture, management style all play a significant role in successful application of reengineering tools and methods. Key to a successful reengineering program relies on choosing the appropriate reengineering team, executive management support and commitment, and creating an organizational culture willing to part with old habits and processes and embrace change. Historically, most documented failures have been attributed to a combination of lack of management commitment or inability to overcome existing cultures and momentum of the current business processes.

Once these minimal requirements are met the reengineering program can be enhanced by utilizing quality techniques, such as flowcharting and Pareto charts to understand current business operations and uncover non-value added functions. Benchmarking techniques can also be applied to gauge current operations against industry leaders to establish baselines and goals. Technology can also enhance new processes by using data management and workflow software. After understanding the strengths and weaknesses of these tools and techniques a reengineering plan can be developed and implemented.

In the final analysis of validating reengineering principles, the author concludes the original reengineering concepts suggested by Michael Hammer were sound. However, it may have been premature for most management techniques used and the technology available in the early 1990s. Most of the failures were due to poor implementation of these programs by management, the inability to stop the organizational momentum, technology and database systems unable to provide appropriate support. By implementing current database and ERP system technology, addressing and managing changes to organizational culture and processes, utilizing quality and benchmarking tools and techniques, and understanding the failures of the past, organizations have a much higher possibility to successfully implement a reengineering program.

Using the information obtained by the research and a survey of the author's organization, the author concludes the case study organization is not in a position to embark on a full-scale reengineering project at this time. The organization needs to address several cultural issues, organization structure, management practices, and ERP consolidation, before attempting to apply the reengineering principles.

This conclusion contradicts Hammer's original proposal to tear down the existing organization processes and start over. It is recommended the organization begin to position itself for making more significant changes in the future. It needs to begin evaluating current processes from order entry to manufacturing by utilizing benchmarking techniques to make qualified decisions to change process workflow. It cannot continue to make minor adjustments to a system burden with legacy processes and non-value added activities. A completely new approach is warranted, but due to the multiple sales channels, minimal staffing, and multiple manufacturing platforms and facilities, changes to processes will need to be addressed in manageable steps without affecting customer satisfaction.

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