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Management Information Systems

Notes

Notes The key enabler for BPR is IT. IT serves as the disruptive technology that allows
generalists to do the work traditionally performed by specialists, enables everyone to
make decisions (as opposed to managers making all the decisions), and offers shared
databases that allow direct access to the same information regardless of functions.

13.2.2 Implications of Business Process Reengineering

Undoubtedly, Michael Hammer has garnered most of the BPR press because of the radical
rhetoric with which he communicates. However, the ideas expressed by Hammer (and later
Hammer and Champy) are similar to the new business process redesign concepts of Davenport
and Short. They agree that the processes should be transformed holistically rather than by fixing
bottlenecks in small increments. Furthermore, they agree on the essential role IT should play in
business process transformation. Most importantly, their ideas point to a formulation of the
process enterprise that is different from the functional hierarchical organization with which
corporations had been aligned. In their writings, the founders of BPR have repeatedly
demonstrated the poor coordination of functional organizations and the superiority of process
organizations in coordination and in achieving performance gains. In its most radical form, the
process enterprise is one that eliminates functional structure in favor of an exclusive process-
based structure. The more realistic approach for becoming a process enterprise is to have a
matrix structure of process-hierarchy and functional-hierarchy. Table 13.1 illustrates the
differences between process organization versus functional organization.
As illustrated above, process enterprise holds the promise of being more responsive to market
requirements, and it is suited for companies that offer differentiated products/services rather
than competing on cost alone. However, organizational realignment by itself does not result in
improvements. Organizational realignment has to be accompanied by change in management
practices and mindsets. A 1996 Harvard Business Review article by Ann Majchrzak and Qianwei
Wang of University of Southern California presents data supporting this viewpoint.

Table 13.1: Functional versus Process Organization

Functional Organization Process Organization
Work Unit Department Team
Key Figure Functional Executive Process Owner
Benefits Functional excellence Responsive to market
Easier work balancing because workers have requirements
similar skills Improved communication and
Clear management direction on how work should collaboration between different
be performed functional tasks
Performance measurements
aligned with process goals
Weaknesses Barrier to communication between different Duplication of functional
functions expertise
Poor handover between functions that affects Inconsistency of functional
customer service. performance between processed
Lack of end-to-end focus to optimize Increased operational
organizational performance complexity
Strategic Support cost leadership strategy Supports differentiation
Value strategy

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