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Lecture - Reengineering 1

The document discusses reengineering of business processes. It provides examples of outdated processes in Ford and an insurance company that led to inefficiencies. The solutions involved redesigning the processes to remove unnecessary steps, integrate activities across departments, and centralize information to streamline workflow. The principles of reengineering emphasize organizing around outcomes, giving process owners autonomy over decisions, capturing information at the source, and treating distributed resources as centralized.

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158 views3 pages

Lecture - Reengineering 1

The document discusses reengineering of business processes. It provides examples of outdated processes in Ford and an insurance company that led to inefficiencies. The solutions involved redesigning the processes to remove unnecessary steps, integrate activities across departments, and centralize information to streamline workflow. The principles of reengineering emphasize organizing around outcomes, giving process owners autonomy over decisions, capturing information at the source, and treating distributed resources as centralized.

Uploaded by

api-3759042
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Analysis and Design of Information Systems

Reengineering
Version 1.0

In 1990s the usual methods for improving performance (e.g. process rationalization
and automation) did not yield dramatic improvements that companies desired. Huge
investments on IT also could not bring the desired output. The reason behind this is
the companies were trying to do old fashioned works with new generation
technologies.

So, instead of working with computers to solve outdated processes we need to


reengineer the processes.

Old processes may include some strict rules like “departments should only focus on
their own department”, “Forms should be filled in completely and in order”, etc.
Reengineering involves in reorganization or rejection of some of these ideas. From
the redesigned process, new rules will emerge that will satisfy the demand of time.

Reengineering cannot take place for small and cautious steps. It may contain
uncertain results as well.

In Ford automobile company, the accounts payable department was as follows.


$
$

No. of Purchases

No. of Goods Received

Receiving Department
Purchase Department

Accounts Payable Department

If Everything Matched then Payment is Done


Bill

Suppliers

Figure: Ford Company’s Problem with A/C Payable Department

Rushdi Shams, Dept of CSE, KUET


The problem occurs when there is a mismatch among 3 documents. A/C payable
department then needed to generate report, hold up payment, check what actually
happened, etc.

The solution for the problem was very simple. It is provided below.

$
$
$

No. of Purchases No. of Goods Received

Receiving Department
Purchase Department

Looks in Database only when a bill arrived

Accounts Payable Department

If Everything Matched then Payment is Done

Bill

Suppliers

Figure: Solution for A/ C Payable Department

Mutual Benefit Life Insurance (MBL) realized that computer networks and shared
database are very helpful to make information available to every person and expert
systems could help to make sound decisions. MBL omits the boundary among
departments and created case managers whose job was autonomous. Case managers
handled application forms with expert systems. He might need help from higher or
senior officials but these officials’ roles will be only consultant. They will not control
his works/ decisions.

The trend of running towards cost, growth and control which evolved after WWII is
obsolete now. The main concern was to grow fast and without getting broken. At that
time low level employees were abundant and all educated people tended to go to the
top maintaining strict hierarchy. But today’s concern is quality, innovation and
service. Large number of people are now educated.

Conventional processes as they go through hierarchy and step by step it is difficult to


integrate them. Person to person, unit to unit delays are inevitable. As all the
departmental employees are confined within their department only, they cannot see
the whole functionality of the organization.

During reengineering, it is recommended to create two teams- one that will go


through reengineering process and the other that depends on the first team. It is
necessary to know what are the tasks and what they are trying to accomplish. It is

Rushdi Shams, Dept of CSE, KUET


recommended to know “why it happens” rather than “what happens”. Rather than
improving the process, it is better to determine which steps really add value to the
system and search new ways to achieve the result. It should be cross functional.
Means, if you reengineer one process, other processes should get benefit of it too.

Principles of Reengineering

1. Organize around outcomes, not around tasks. If a person involves in a department,


then organize his duties around what that department produces. It should not only
“that person does that and this person does this” concept. MBL case managers deal
with entire application form, not only checking certain fields.

Have a customer service representative who oversees- taking orders, translate that
order to product code, getting components, assemble the product and see delivering
the product rather than having only one or two for each of these processes. Customers
will now have one point of contact as well.

2. Have those who use the output of a process, perform the process. If any department
thinks that it needs a database then it can go to some software firm and urge them to
make one for them. They should not go to GM or DGM of them to finalize the
purchase of a database. They should be autonomous as they are only to use the
database.

3. Subsume information processing tasks into real work that produces the information.
This principle asks to move work from one department to another. An organization
that produces information should process the information as well.

4. Treat geographically dispersed resources as centralized. Decentralized resources are


very useful to those who use it. But it creates delay because of the presence of
bureaucracy.

5. Link parallel activities instead of integrating them. It omits the possibility of having
errors in the end.

6. Put the decision point where the work is performed and build control to the process.
It suggests that people who do the work should make the decisions as well and the
work should have some built in controls. It actually happens now-a-days because of
presence of computers and expert systems in organizations.

7. Capture information once and at source. Once upon a time information was
difficult to be conveyed between departments. But now it is easier. Today we can
collect information in the very beginning and store that on a database. This reduces
the conveying complexities.

Reading Materials

Reengineering Work: Don’t Automate, Obliterate by Michael Hammer:


Read it with care and thoroughly. Understand the principles. Find out any
mismatch between the principles and real life organizational structures.

Rushdi Shams, Dept of CSE, KUET

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