Page 248 - DMGT505_MANAGEMENT_INFORMATION_SYSTEM

Unit 13: Redesigning the Organization with Information Systems

Taylor’s scientific management once did. They defined business process redesign as “… the Notes
analysis and design of work flows and processes within and between organizations.”
They prescribe a five-step methodology for achieving process redesign. The methodology starts
with setting business vision and process objectives. Instead of rationalizing tasks to eliminate
bottlenecks, as done in previous process redesign works, they suggest that process redesign
should be performed on entire processes to achieve desired business vision and process objectives.
The second step is to identify the processes to be redesigned. This is similar to the Pareto
analysis practiced in TQM. Instead of redesigning all processes, key processes that offer the most
impact should be redesigned. The next step is to understand and measure the existing processes.
This is to understand the problems in the existing processes and to set baseline performance
measurements to judge future improvements. The fourth step in their five-step methodology is
to identify how IT can be leveraged in the process redesign. Instead of simply supporting
process redesign, Davenport and Short argue that IT can actually create process redesign options.
The last step is to implement a prototype of the process.
This prototype should extend beyond IT applications and into business organization and serves as
the base for iterative improvement before being phased into full implementation. The combination
of IT and business process redesign creates what the authors term new industrial engineering. Just
as scientific management created the original industrial engineering discipline, IT, and business
process redesign would be essential tools in the new industrial engineering discipline.
About the same time that Davenport and Short published their ideas on business process redesign,
Michael Hammer published his radical sounding concept of BPR. Hammer claims the process
rationalization and automation efforts of the past have not improved productivity and
performance significantly. He believes corporations were simply automating processes designed
prior to the wide usage of computers. This type of automation does not address fundamental
process limitations. He argues that corporations need to radically change business processes to
take advantage of computers. The reengineering efforts need to be broad and encompassing.
They should have cross-functional boundaries and utilize IT to enable the new processes that
come out of the reengineering efforts. In Reengineering the Corporation: A Manifesto for Business
Revolution, Hammer and co-author James Champy, further discuss the need for change. They
debunk Adam Smith’s labor specialization theory and the functional hierarchical organization
that resulted from it. They state that the new post-industrial economy, started in the 1980s, is
different from the mass production economy of the past. In this new economy, customers have
the upper hand, competition has intensified, and constant changes are normal for the conduct of
business. To compete in this new customer economy, companies need to reinvent how tasks are
performed. Instead of incremental improvements to business processes, companies need to start
from scratch and invent a better way of performing business processes. The goal of radical
change is to achieve dramatic improvements in critical, contemporary measures of performance,
such as cost, quality, service, and speed. Hammer and Champy offer a set of prescriptions to
reengineer business processes. The guiding principle is to organize around processes instead of
tasks. Workers who share complementary tasks report to the same supervisor even though they
do not share the same skills. In essence, the authors suggest that corporations should be grouped
along process boundaries rather than functional boundaries. Every process should have a process
owner. The role of the process owner is to attend to the performance of the process. They further
state that workers should be trained to perform all the tasks in the process rather than only a
single step. In other words, labor specialization, as espoused by Smith, Taylor, and Ford, should
be dismantled. Shared databases are essential to BPR. Traditional IT infrastructures have often
been designed to satisfy independent business. Various functions have their own information
systems and databases. This created barriers to process performance because transactions had to
be recreated in different applications and information replicated in different functional databases.
Using a common database eliminates this barrier and presents an opportunity to reengineer the
business processes without functional systemic limitations.

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