An Overall BPR Approach

Business process reengineering involves four fundamental components which are central to any organization: (1) defining organizational strategies; (2) improving processes; (3) applying technology; and (4) developing people. Strategies must be relevant to the overall mission of the organization, as well as to internal and external constraints and must be defined in such a way as to motivate employees. Processes are not determined by internal organizational requirements but by customer requirements (tempered by organizational constraints). Information technology is amajor facilitator for spanning processes over functional and organizational boundaries and for supporting process-driven organizations, but should not be applied merely to improve existing activities but to enable innovative responses in a dynamic, changing environment. The real challenge of any BPR initiative is to gain the support of people in middle management--the real change agents--who must identify change opportunities and perform them, while facing perceived threats from BPR which often is used to reduce hierarchies and downsize the work force.

Each of these components must be maintained in equilibrium with the other BPR components. Introducing new technologies, for example, without fully developing the human resource capabilities necessary to utilize/maintain the technology is an invitation to disaster. Undertaking to improve practices and procedures and a fragemented, hit-and-miss basis without developing an overall strategic plan or vision is likely to result in considerable "wheel spinning," waste of critical resources, and often, counterproductive processes.

Defining Strategic Objectives

It has been said that: "If you don't know where you are going, any road will get you there." There is equal truth in the notion that: "If you don't know where you are going, no road will get you there." In short, the first major component of a BPR involves the identification of the organization's strategic objectives.

Formulating a strategic plan is a prerequisite for the effective application of business process reengineering, whether in the private or public sector. Kast and Rosenzweig have defined planning as:

. . . the process of deciding in advance what is to be done and how. It involves determining overall missions, identifying key result areas, and setting specific objectives as well as developing policies, programs, and procedures for achieving them. Planning provides a framework for integrating complex systems of interrelated future decisions. Comprehensive planning is an integrative activity that seeks to maximize the total effectiveness of an organization as a system in accordance with its objectives. [9]

Traditional planning efforts in many organizations have tended to be "one-shot optimizations," drawn together periodically, often under conditions of stress. Under such circumstances, problem-solving often takes precedence over the establishment of long-range objectives. Program proposals frequently are based on "anticipated economic and demographic conditions"--a simple extrapolation of the status quo. When the overriding focus is on solutions to more immediate problems, the cumulative process becomes short-range planning albeit applied to a long time period. The results, benefits, and profits to be gained from such short-range plans cannot be assured in the long run and, in fact, may be lost in the crisis of disjointed problem-solving. A plan is of relatively little value if it does not look far enough into the future to provide a basis on which change can be logically anticipated and rationally accommodated.

It has been said that: "Few plans survive contact with the enemy." And indeed, rarely are policies and programs executed exactly as initially conceived. Random events, environmental disturbances, competitive tactics, and unforeseen circumstances may all conspire to thwart the implementation of plans, policies, and programs. In short, the traditional planning process does not provide an adequate framework for more rational decisions about an uncertain future. Fixed targets, static plans, and repetitive programs are of relatively little value in a dynamic society.

The concept of strategic planning has evolved over the past two decades as a response to this need for a more dynamic planning process--one which would permit continued efficacy of decisions to be tested against the realities of current conditions and, in turn, corrected and refined as necessary. As applied in government, it has been suggested that strategic planning: "is the process of identifying public goals and objectives, determining needed changes in those objectives, and deciding on the resources to be used to attain them. It entails the evaluation of alternative courses of action and the formulation of policies that govern the acquisition, use, and disposition of public resources." [10]

The term "strategic" has been applied to these planning activities to denote the linkage with the goal-setting process, the formulation of more immediate objectives to move the organization toward its goals, and the identification of specific actions (or strategies) required in the deployment of organizational resources to achieve these objectives. The term also was adopted to distinguish the scope of this process from the so-called "planning" which characterized much of the forecasting and other piece-meal efforts undertaken by industry and business concerns.

Strategic planning should be a continuous process which includes performance evaluation and feedback. Alternative courses of action should be examined, and the impacts and consequences that are likely to result from their implementation should be evaluated. Explicit provision should be made for dealing with the uncertainties of probabilistic futures. Major priorities should be identified and ordered, and the activities and functions of the organization can be integrated into a more cohesive whole.

The emphasis in strategic planning is on an orderly evolution--from a broad mission statement, to statements of more specific objectives consistent with the organization's mission, to more explicit policies and implementing decisions. This emphasis seeks to establish or reinforce linkages that often are missing in more disjointed, incremental approaches to decision-making. The focus of BPR is on the linakges between strategy and process rather than on the formulation of a comprehensive strategic plan. Nevertheless, the existence of an ongoing strategic planning process within the organization is essential to the overall success of the BPR initiative.

Business process reengineering is all about change. To facilitate change, it is essential that a broad strategic vision be shared across the organization. The involvement of senior management is critical during this phase of the BPR because of the radical character of this undertaking. Responsible managers in the organization must be willing to devote sufficient time and effort to fully understand the general concepts and objectives of business process reengineering. And they must be able to explain how these procedures will help the organization as a whole. Top management must set the example in terms of the BPR effort by demonstrating the willingness to take time away from other pressing problems to clearly articulate goals and objectives and to discuss strategic needs and expectations. Top management's participation in these efforts will help to convince staff at the various operating levels to devote the necessary and appropriate time and effort to the task.

The formation of a strategic vision should begin with an examination as to how the organization should operate if there were no constraints whatsoever. This examination should not merely address the question of how current work can be improved, but what activities should be carried out to achieve maximum performance of all measures. This analysis involves the alignment of the BPR effort with the organization's overall strategic objectives. If existing strategic objectives appear to be obsolete or inappropriate, their re-definition might be necessary in order to adopt to new externalities. A critical success factor is convincing management of the necessity of disregarding existing constraints and abandoning existing procedures and methods.

The values of all stakeholders--customers/end users, employees, policy-makers, and so forth--must be reflected in the strategic objectives of an organization. It is particularly important to develop an understanding of the organization's "customers" so that processes can be reengineered to focus on providing superior value to these recipients of the products and services of the organization. Often a formal customer value analysis is conducted. In some cases, much of the information regarding customer values can be uncovered through existing strategic planning or marhet research efforts.

Customer/User Analysis

Customer analysis and much of the accompanying literature falls into the area of for-profit business analysis. Many for-profit groups place great emphasis upon the goal of quality service. But what constitutes quality service, and how can it be measured and improved upon?

Traditionally, companies have relied upon internally defined customer service measures, which continually indicated a high level of satisfaction. However, as a companyÕs global aspirations have developed, methods of measuring customer satisfaction have been subjected to ever more intense scrutiny. An independent benchmarking study found that the common characteristics of successful international companies was a commitment to surveying customers' needs, tracking performance with sophisticated information systems, and operating compensation schemes for dissatisfied customers.

In 1993, Lochridge & Company surveyed some 60 major companies, as end-users of communication services from a range of providers, in an effort to identify the key elements of customer service. Lochridge's final report identified 19 high-level benefits fundamental to "the customer priority for consistent, problem-free service, a pro-active, responsive customer service organization, and global end-to-end coverage". These values were distilled into five aspects of customer service:

The notion of customers cannot be easily placed with all public sector applications. Citizens can certainly be considered to customers of public services. However, the relationship between citizens and local government is much more complex than the somewhat casual contacts that occur in most customer/business interactions. The reliance of government departments upon central accounting and purchasing operations also constitute a customer/service provider relationship. But here again, the relationship differs from the business world in that the "customer" usually cannot "shop around" if they are dissatisfied with the "service provider."

A more precise definition of customer analysis in the public sector would be of user analysis. Simply defined, user analysis requires institutions, departments, and other organizational groups to clearly look at the end-users that are being served and the level of services being provided to these users. From this evaluation, the service organization should then modify and improve the services it provides to its end users.

Both citizens and departmental users of public resources generate a direct or indirect cost within the local government when they access a service, but no one group directly profits from the other. This unique relationship requires customers to be viewed in a different light in the public sector. Emphasis must be placed on an examination of the quality of service provided and not on the potential or actual profit generated by the action. User analysis can be incorporated into the processes of change management, benchmarking, functional process improvement, and business process reengineering.

All government agencies face a major challenge--they have to find out what the users of their services really wanted--a major step that has been rarely taken by any governmental agency. In order to accomplish this step, public agencies must set clear and specific standards for customer service. Methods for achieving this objective vary from agency to agency.

Various techniques can be used to develop customer/user analysis: Futuring is a techinque that provides an organization the ability to determine what it wants to accomplish and what it should become in the future and how to get these points. The two steps of futuring, however, stress a more forward organizational planning. They include developing the preferred future and ways to realize the image.

Visioning takes a forward look at the future by establishing an effective organizational vision. Steps include the following:

o Creating organizational performance criteria

o Establish ethical standards of volunteers and employees

Visioning exercises are often implemented early in the business process reengineering to create agreement on purposes and values to assist in identifying users, issues, and strategies.

Regardless of the source of data customer/user satisfaction, the key areas to consider include:

(1) Value differentiation by various segments of the customer base. Not all customers have the same needs/wants when accessing the services/products of the organization.

(2) Priority among values. In all likelihood, it will not be possible to accommodate all of the values of all of the customers all of the time, and therefore, some criteria must be developed for establishing priorities among these different values.

(3) Organization's performance versus the "competition". How well is the organization meeting customer needs in comparison to other organizations that are providing the same or similar services or products? And in what areas are improvements in performance most obviously needed?

(4) Process implications. What does this mean for the way in which the organization current does business?

Identifying Core Competencies

Strategic objectives must also reflect the core competencies of the organization--what it does best, what it does well when compared to the "competition," and areas in which improvements in performance should be emphasized. An attempt should be made to match the resources of the organization with the opportunities and risks of the broader environment. This phase of the BPR begins with an analysis of the organization's strengths, weaknesses, opportunities, and threats (SWOT). By developing a SWOT analysis, an organization can determine what are its distinctive competancies which, in turn, will help determine what the organization should be in business for--what its mission should be.

A SWOT analysis requires senior management to respond to the following questions from their own point of view and from the point of view of the people with who they deal:

(1) Strengths: What are your organization's advantages? What does it do well? It is important to be realistic but not to be overly modest.

(2) Weaknesses: What could be improved? What is being done ineffectively and inefficiently? What should be avoided? Weaknesses should be considered from both an internal and an external perspective. It is best to be realistic now and to face any unpleasant truths as soon as possible.

(3) Opportunities: Where are the good chances for change/improvement? What are the interesting trends? Useful opportunities can come from such things as: (a) changes in technology and markets on both a broad and narrow scale; (b) changes in government policy; (c) changes in social patterns, population profiles, lifestyle changes, etc.

(4) Threats: What obstacles does the organization face? What is the competition doing? Are the required specifications for its mission, products, or services changing? Is changing technology threatening the "market position" of the organization? Does the organization have bad debt or cash-flow problems?

Carrying out a SWOT analysis is will often be illuminating--both in terms of pointing out what needs to be done and in putting problems into perspective.

The outcome of this phase of the BPR should be a shared strategic vision of what the organization can and should strive to become in the future. This shared vision should reflect the core values of the organization as well as certain fundamental principles to which the organization is committed. The following exhibit provides examples of the hierarchy of values, principles, and programs that should be recorded to document the shared strategic vision.

Determining Success Factors and Performance Indicators

The next phase of a BPR involves a determination of more specific strategies and priorities necessary for the organization to achieve the shared strategic vision. In this phase of the BPR, the emphasis shifts from the "why" and the "what" to the "how," providing a more specific focus for the reengineering efforts by establishing priorities.

It is important to identify critical success factors to provide a barometer of the overall performance by identifying what needs to be done well. These success factors should specify, at a high level, the major processes that have been identified are best measured. These factors, in turn, should be aligned with customer values and the shared vision of the organization. Rochart has defined critical success factors as:

the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where 'things must go right' for business to flourish. . . . As a result, the critical success factors are areas of activity that should receive constant and careful attention from management. [11]

Boynton and Zmud suggest that "CSFs provide a focal point for directing a computer-based information system development effort" by pinpointing key areas that require the attention of management. [12] Peat Marwick has developed a CSF model for higher education which lists 67 critical success factors measured on a yearly basis. This model, designed to be used by senior administrators, emphasizes the need to "compress information so that managers can focus their attention on high priorities in making and assessing decisions." [13]

Key performance indicators should be determined for each critical success factor. Establishing these performance indicators involves a review of current methods for measuring and reporting operational performance. M.G. Dolence has defined key performance indicators as a detailed list of measurements to monitor and evaluate management strategies--"numbers that can be used to indicate the effectiveness and efficiency of strategies and tactics." [14] Whereas critical success factors are preconditions for the success of a strategy, key performance indicators help maintain a sharp focus on what must be measured.

While critical success factors usually are limited to a relatively small number of factors and include "soft data" as well as external data, the key performance indicators are built on a much longer list but are limited to numeric data from internal sources. Key to these approaches is the development of a consistent format in which the data and analyses are presented. At the outset, organizational officials who are seen as the key users of these data should be interviewed to gather suggestions as to which indices to include in the system and how best to report these indicators. A list of topics and a presentation format should be agreed upon, but some flexibility should be afforded during the initial iterations to add to or refine the indices as new topics are suggested by the review of these data. Year-to-date figures often provide the most useful basis for comparisons, but monthly figures, comparisons with budgeted amounts, and year-end totals may also be important in monitoring of certain activities. Targeted estimates, projections, and extrapolations of data to identify trends may also be appropriate.

Periodic meetings (e.g., monthly) to discuss the key indicators is an important feature of this approach. The data should be provided a few days before these meetings with an executive summary of the key issues to be discussed. The participants can then focus on those items most pertinent to their areas of responsibility and should be prepare to comment on and discuss problems and trends that are evident from their perspectives.

It is likely that some of the data which were deemed appropriate for inclusion as key indicators do not exist or are not readily available in the format desired. Where monthly data have not been collected in the past, it may be necessary to reconstruct such data or at least start collecting it in order to have the necessary data points from which to draw comparisons. When data are not consistent from one year to the next (for example, because of a change in data categories), it may be necessary to recompute (or "crosswalk") the prior year's data to make them more comparable. In some cases, the units that provide the data may feel that the presentation format should be modified, and some negotiations may be necessary to arrive at an agreed upon format which both satisfies users needs and meets the perceptions of the source authorities.

Two or more units within an organization may track the same data and may provide different analyses and even conflicting information based on these data. In many instances, these different perspectives are useful, provided that the assumptions on which the data analyses are based are clearly identified and understood. In some cases, it may be necessary to agree upon one data set over another to avoid misunderstanding and confusion among the information users.

Endnotes

[9] Fremont E. Kast and James E. Rosenzweig, Organization and Management (New York: McGraw-Hill, 1979), pp. 416-417.

[10] Alan Walter Steiss, Public Budgeting and Management (Lexington, Mass.: Lexington Books, 1972), p. 148

[11] J. F. Rochart, Harvard Business Review (March-April, 1979).

[12] A.C. Boynton and R.W. Zmud, Sloan Management Review (Summer, 1984).

[13] Peat Marwick

[14] M.G. Dolence, Planning for Higher Education (1989).

Continue Text