Publication Date: October 25, 1996

The Re-engineering Equation: People + Technology

By Ken Shulman

Six years have passed since Dr. Michael Hammer's seminal article "Reengineering Work: Don't Automate, Obliterate" appeared in the Harvard Business Review to hoist the idea of "business process re-engineering" into the collective corporate consciousness. Born as the radical method to transform sedentary 20th-century corporate lambs into sleek 21st-century corporate lions, business process re-engineering is now seen as one of several theories, that, when properly and selectively applied, can help make a company competitive in today’s increasingly unpredictable marketplace. It is a theory that, more often than not, involves a partial or complete overhaul of a company's IT capabilities.

Defined by Hammer as "the fundamental rethinking and radical redesign of business processes," business process re-engineering involves a dramatic and profound analysis of the way a company conducts its commerce, followed by an equally dramatic revision of those processes.

Certainly, the shock therapy prescribed by Hammer and other business process re-engineering gurus has taken its share of knocks. "There is probably a 60 percent failure rate in business process re-engineering projects," says David Coleman, a re-engineering and groupware consultant at Collaborative Strategies in San Francisco. "Some surveys indicate an even higher rate."

As the father of the concept, Hammer obviously disagrees. In a recent interview with The Boston Globe, Hammer said that re-engineering had succeeded beyond his "wildest imagination." In the same interview, Hammer estimated that three out of every four re-engineering efforts have been successful.

Without a doubt, the concept has spawned an enormous network of consultants, business analysts and software products, as well as several Web resources and countless articles and books. Yet as the concept of business re-engineering matures, most in the industry realize that the re-engineering effort and the technology that accompanies it must be aligned with the company's business strategy if the effort is to be successful. Moreover, it must be aligned with the ideas and capabilities of the people within that organization.

"Bill Clinton had a sign on his desk that read 'It's The Economy, Stupid,' " says Coleman. "Most re-engineering people should have a sign that reads 'It's The People, Stupid.' "

Technology: What It Can and Cannot Do

One of the factors that can make or break a re-engineering project is the choice of software and hardware. With an appropriate use of information systems, a business can significantly leverage its working assets and become more responsive to both clients and competitors. Groupware and workflow software can provide the tools for an organization to share documents, to track inventory, to revise work patterns, and to accelerate production, distribution and customer service cycle times. But when a company looks at workflow or groupware products as a panacea for all its business ills, that company is usually disappointed.

"Too many people misuse these technologies," says Stowe Boyd, founder of Work Media, a Reston, Va., consulting firm specializing in the intersection of business processes and information processing. "And the results can be disastrous, as when they speed up the assembly line in the Charlie Chaplin film Modern Times. Business is not a machine. It is a society of people theoretically bound together by shared interests. When you introduce a new technology, you must do so in a way that provides people with the ability and the incentive to change. Most people are very happy to sign on with a program to build a better business. But if you make it seem that they are the things that needs to be fixed, like some broken pipe or sprocket, they will make that program fail."

The marketplace is rich with software products designed to support business process re-engineering. Nearly every major IT player—including Microsoft, Novell, Netscape, and IBM—has moved into the ballooning groupware and workflow market, offering products whose price can range from $250 to $2,500 per seat.

Groupware products, such as Lotus Notes, vastly expand management and employee access to data and information. Workflow packages, such as FileNet's Visual WorkFlo or DST System's Automated Work Distributor, analyze and redirect the flow of information both within an organization and among an organization, its suppliers and its clients. Both kinds of tools have been important factors in many successful re-engineering projects. In some cases, clients are even integrated into the business process, providing instant feedback that can be used in plotting manufacturing, customer service and marketing strategies.

Yet all too often the corporate remaking is focused solely on IT. Business environments are disrupted, and in some cases destroyed, when the technological tail wags the corporate dog. "In order for a re-engineering project to be successful, it must be sold as a future way of life for everyone," says Ted Lewis, change management and information resources consultant and president of Ted Lewis & Associates in Superior, Colo. "One of the most common errors an organization can make is to re-engineer a single process, and to think that a change in information systems is the solution in re-engineering. There are no quick fixes in this business, or in any other. And it can be very dangerous to rely on a software tool to provide corporate solutions."

Automation can help a company keep its footing on the shifting sands of today's business market. But simply speeding up a company's existing business processes is not the same as changing them. Many consultants with experience in re-engineering now recommend that a company conduct a thorough and comprehensive analysis of its business processes long before it even begins to consider the various groupware, workflow and other business process tools on the market.

Not an Isolated Solution

An increasing number of consultants and CEOs have begun to realize that an isolated installation of groupware and workflow packages is not sufficient to generate a successful and long-lasting corporate change. "One of Michael Hammer's most cited phrases is that in re-engineering you don't pave the cowpath," says Gordon Sellers, a consultant in Dallas, Texas. "My contention is that in our rush to purchase software and hardware solutions to our business problems, we've bought a whole lot of paving equipment."

A successful re-engineering usually involves a top-to-bottom collaboration in which a company asks itself what, how, for whom, and ultimately why it does what it does. In re-engineering, an organization literally learns how to learn, and learns how to learn quickly. Factors like leadership, team collaboration and long-term vision are usually far more vital to the creation of this learning environment than are the choices of hardware and software. Management must first instill its organization with a desire to change, along with a conviction that the desired change is not only necessary but within reach.

"I can tell right off if I'm in a company where employees actually believe in the vision of re-engineering," says Deborah J. Baxley, a consultant at IBM's New York City office who recently conducted a benchmark study of management processes in 37 Fortune 500 companies. "Much of this has to do with the charisma and the ability of the leadership. In companies with good leadership, employees are thinking about external customers, and not about internal politics or turf building. I know it sounds trite. But the successful re-engineering effort requires both short-term adaptability and long-term vision."

Most successful re-engineering projects share several key characteristics.

• The project involves the entire organization, and not just one or two departments such as IT or human resources.
  
• There is a concrete motivation behind the re-engineering, and an overall strategy that can inspire both management and employee confidence.
  
• Top executives are involved in the planning, implementation, and ongoing modification of the re-engineering process.
  
• And people within the organization are constantly reminded that they are participating in an enterprise that is both vital and exciting.

San Francisco consultant David Coleman cites the case of Oticon, a Danish manufacturer of hearing aids, as an example of an intelligent corporate makeover in which a change in technology and a change in corporate culture went hand in hand. On the verge of bankruptcy, the company was beset with low morale, slow cycle time, and exceptionally poor customer service. Its clients' hearing impairments made a telephone-based customer service system impractical. When Lars Carlsson became the new CEO in 1992, Oticon was communicating with its customers by mail, a system that required close to two months of work for every service call.

"He realized that he needed to change the whole company," Coleman recalls. "And it took him nearly six months simply to convince management that this change was necessary."

Having enlisted management support, Carlsson moved to a new, smaller building, with UNIX stations on every desktop and a groupware system allowing instant access to any document at all of the company's workstations. The architecture of the office was open, encouraging people to collaborate with each other. Departments were eliminated, and Carlsson set his desk in the middle of the work floor, establishing himself as yet another collaborator in the group enterprise. All paper documents were scanned into the system and then shredded. As a symbol of his commitment to automation and change, Carlsson had a large clear plastic pipe installed in the lunchroom, and funneled the shredded documents through this pipe as a constant reminder to his colleagues.

"He made customer service everybody's problem," says Coleman. "There was no finger pointing. No shirking of responsibility. After two years, the bottom line was up 500 percent."

Several software companies are offering customers the possibility of tailoring groupware and workflow applications to their own custom measurements. Lotus Consulting Group in Cambridge, Mass., advises the world's largest corporations on how they might best adapt the Lotus Notes application to their specific business needs. Meta Software, also in Cambridge, offers a tool with links to FileNet's Visual WorkFlo that allows potential re-engineering candidates to build a model of their actual business processes, and then to simulate the short- and long-term effects of any modifications. Visual WorkFlo, the flagship product of FileNet Corp. of Costa Mesa, Calif., encourages authorized users to constantly update and modify business processes after they are installed in the computer system to allow the business to adapt to a continually evolving market environment.

"The essential idea is that you have to understand types of information that people are looking for in their decision-making environment," advises Lewis. "Once you establish that, you can then define your overall data environment. When we then know what data to collect, and we know how to collect it, we can then start thinking about what type of technology platform and software we need to support these processes. There are a lot of great tools on the market. They can inject new life into an organization. Or they can completely overwhelm it. It all depends on how they are used."

Ken Shulman writes from Cambridge, Mass.

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DCI regularly offers seminars on re-engineering topics. Please see our online brochures for Business Process Re-engineering Best Practices and the Business Process Modeling and Analysis Workshop.

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