Reengineering

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Reengineering

• Jacob Sarkar

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Outline

• Reengineering
• Systems Development process
• PIECES
• Factors to consider in Systems Development

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• What is reengineering?
• The radical re-design of broad cross-functional
  business processes with the objective of
  order-of-magnitude performance gains, often with
  the aid of information technology. (T. Davenport)
• any attempt to change how work is done- even
  incremental change to organizational
  transformation. (T. Davenport)

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• Why reengineer?
• Fix Problems, Seize opportunities
• The rules change

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• An Example at Ford (Hammer, 1990)
• In 1980s Ford wanted to cut costs. An analysis
  of different processes indicated that Accounts
  Payable had more than 500 people.
• Process

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• Factors to Keep in mind when considering
  reengineering.
• Need to break away from outdated rules and
  assumptions that underlie operations.
• Need to consider a cross functional perspective.

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• Need to focus on on what needs to be
  accomplished.
• Organize around outcomes not tasks.
• Have those who use the output of the process
  perform the process.

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• Subsume information-processing work into the real
  work that produces the information.
• Treat geographically dispersed resources as
  though they were centralized.
• Put the decision point where the work is being
  performed and build control into the process.
• Capture information once and at the source.

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• Adequate Training, managing change

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Change

• What is change?
• Kurt Lewin
• Unfreezing increasing the receptivity of the
  organization to possible change
• Moving Choosing a course of action and
  following it
• Refreezing reinforcing the equilibrium of the
  organization at a new level after the change has
  occurred.

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• What are the reasons for resistance to change?

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• Nicolo Machiavelli
•  "IT MUST BE CONSIDERED THAT THERE IS NOTHING
  MORE DIFFICULT TO CARRY OUT, NOR MORE DOUBTFUL OF
  SUCCESS, NOR MORE DANGEROUS TO HANDLE, THAN TO
  INITIATE A NEW ORDER OF THINGS. FOR THE REFORMER
  HAS ENEMIES IN ALL THOSE WHO PROFIT BY THE OLD
  ORDER AND ONLY LUKEWARM DEFENDERS IN ALL THOSE
  WHO COULD PROFIT BY THE NEW ORDER. THIS
  LUKEWARMNESS ARISES PARTLY FROM FEAR OF
  ADVERSARIES WHO HAVE LAWS IN THEIR FAVOR AND
  PARTLY FROM THE INCREDULITY OF MANKIND, WHO DO
  NOT TRULY BELIEVE IN ANYTHING NEW UNTIL THEY HAD
  AN ACTUAL EXPERIENCE OF IT."

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Systems Development Process

• (Whitten, Bentley and Dittman 2001)

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Feasibility Issues

• Operational Feasibility will the solution work
  in the organization
• Technical Feasibility is the specific technical
  solution feasible given the available technical
  resources and expertise
• Schedule Feasibility is the project timetable
  reasonable
• Economic Feasibility cost-benefit analysis
• Legal Feasibility Are the actions that the
  proposed system will perform legal.

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A Framework for Analyzing Problems and
Opportunities

• PIECES a framework for classifying problems and
  Opportunities (Wetherbee)

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PIECES

• Performance Analysis

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• Example 1
• A local credit union has been studying data about
  consumer loan applications. Over the past year,
  loan applications have increased 124 percent.
  The manager realizes that, if this growth rate
  continues, the current loan officers will not be
  able to keep up with the demand.
• What needs to be done?
• Improve Throughput

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• Example 2
• A construction company has been contracted to
  perform repairs and improvements for a large
  corporate site consisting of many buildings. The
  corporate site submits work orders to the
  construction company. The work orders go through
  a processing cycle that may include Information
  Systems, Purchasing, Accounting, Personnel, and
  Operations. Currently, an average delay of 62
  days occurs between the submission of the order
  and the arrival of the work crew to fulfill the
  order.
• What needs to be done. - decrease Response time

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• Information and Data Analysis

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• Example 3.
• The Accounting Department suspects that air
  travel reimbursements do not reflect minimum
  costs and bargains that could be obtained.
  However, it has no information to support its
  suspicions therefore, it cannot justify possible
  changes to its procedures.
• Problem?
• Lack of information regarding decisions or
  current situations

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• Example 4
• A personnel manager must allocate scarce overtime
  dollars to the supervisors of three manufacturing
  departments. The report that predicts the amount
  of work to be done does not break the information
  down to the department level.
• Problem?
• Lack of relevant information concerning decisions
  or current situation

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• Example 5
• The inventory manager for a large printing
  business must reorder paper and supplies each
  Monday. The clerk is given an inventory report.
  The report includes all 3,000 inventory items.
  The clerk has to compare quantity in stock and
  projected usage for each item on the report---
  just to identify items that need to be reordered.
• Problem?
• Information is not in a form useful to management

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• Example 6
• A hotel chain allows customers to make
  reservations for any hotel in the chain from any
  other hotel in the chain. However, when a
  reservation is made or canceled, it takes three
  days to get that information to the hotel that is
  affected. Meanwhile, that hotel may overbook or
  under book rooms.
• Problem?
• Lack of timely information

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• Example 7
• Customer receives notification that he has 8
  registered copies eligible for a software
  upgrade. Customer sends in order. Response
  cannot upgrade because he is not legally
  registered.
• Problem?
• Notification and order were processed across
  different data files
• Data Redundancy

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• Example 8
• Data on researchers who work with radioactive
  material is maintained in file cabinets organized
  by researcher name.
• Govt. requests data on every researcher that has
  worked with a particular radioactive material.
• Problem?
• Data inflexibility

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• Economic analysis

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• Example 9
• Mkt. Dept. needs to establish new prices for
  products. Needs cost breakdown by product. Has
  budgeted costs but no historical data on actual
  costs.
• Problem?
• Costs are unknown
• Other issues
• Costs are untraceable to source
• Costs are too high.
• Profits orders can be increased, access to new
  markets.

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• Control and Security Analysis

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• Example 10
• A distribution warehouse for farm machinery parts
  is experiencing a stock problem. The computer
  information system is releasing orders after
  checking the inventory file to ensure that the
  products ordered are in stock. However, when the
  warehouse clerk tries to fill the order, the
  parts are not always in stock. An analysis
  reveals that, when the stock clerks place new
  inventory on the shelves, they do not count that
  inventory. They simply accept the suppliers
  word that the quantity shipped is accurate.
• Problem?
• Too few controls

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• Efficiency Analysis

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• Example 11
• A manufacturing facility consists of 125
  workstations of various types. Different
  products go through different types of
  workstations during production. Management is
  concerned with the need to expand production, but
  there is no money to expand facilities.
  Management has observed two major limitations in
  current operations. First, separate orders for
  the same product are not consolidated. This
  causes workstations to be set up and broken down
  for the same product several times each day.
  Second, management has noticed that some
  workstations seem to be idle during some parts of
  the day and overworked during other parts of the
  day.
• Problem?
• Inefficient use of resources

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• Service Analysis
• Accuracy
• Reliability
• Ease of Use
• Flexibility
• Coordination
• (examples from Whitten Bentley and Barlow)

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• P - the need to improve Performance
• I - the need to improve Information and Data
• E - the need to improve Economics, control costs
  or increase profits
• C the need to improve Control and Security
• E the need to improve Efficiency
• S the need to improve Service

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Factors to Consider in Systems Development
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In Class Case Discussion

• Identify the various mistakes made during the
  course of the project.
• If you were managing this project, discuss what
  you would do differently?

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• Of all monsters that fill the nightmares of our
  folklore, none terrify more than werewolves,
  because they transform unexpectedly from the
  familiar into horrors.
• The familiar software project..has something of
  this character it is usually innocent
  straightforward, but is capable of becoming a
  monster of missed schedules, blown budgets and
  flawed products. So we hear desperate cries for
  a silver bullet - something to make software
  costs drop as rapidly as computer hardware
  costs. (Brooks, 1987)

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Hong Kong Airport (computerworld)

• The numerous computer-related mishaps that
  followed the pomp of the grand opening of Hong
  Kong's new Chek Lap Kok (CLK) International
  Airport were the result of insufficient planning
  and systems that were pushed to the breaking
  point, according to the vendors that supplied the
  systems.

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• Problems reportedly linked to faulty information
  technology systems included arriving planes that
  were stranded on the tarmac with no directions to
  parking gates passengers missing flights because
  of problems with the Flight Information Display
  System baggage lost and delayed when baggage
  handling systems crashed and problems with
  baggage reconciliation that led to at least one
  flight taking off loaded with baggage belonging
  to passengers who hadn't boarded the plane.

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• But representatives from the suppliers of two
  major systems indicated that the biggest problem
  at the airport was a system overload.
• Ian Stewart, regional vice president for
  Northeast Asia at international airline service
  supplier SITA, said systems weren't fully
  stress-tested until CLK opened for operation.

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• The extent of systems integration at CLK could be
  another cause for IT-related problems, Stewart
  and Davis agreed.
• "The information that comes through the flight
  information system feeds into other systems and
  vice versa, and so if you have any hiccup
  anywhere down the line, then it impacts the other
  systems and it will potentially impact airport
  operations and passenger flow," Davis said.

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• In defense of the systems failures at CLK,
  Stewart said, "Any airport the size of CLK, when
  it opens is going to experience problems. I don't
  care how well you test it, it's impossible to
  have something as complex as that without having
  some difficulties."

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Some Statistics

• Average Schedule was overrun 22. (40 of
  projects had an overrun between 0 and 50) -
  Genuchten 1991.
• Average cost overrun was 33 to 36. Genuchten
  1991.

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Why Overruns?

• Typical Scenario
• Marketing Manager - The product needs to be ready
  to ship in nine months
• Product Dev. Manager - The product is too complex
  to complete in nine months we need 12 months and
  that too is optimistic.
• Marketing Manager - You dont understand we have
  already announced the release date.
• Product Dev. Manager Thinks - !!! Oh well
  you will get it when we are done.
• Nine months later announcement - product will be
  released in another six months.

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• So why overruns?
• Other people set one's objectives, provide one's
  resources and furnish one's information.
• Lack of shared vision
• Schedules, budgets set too early in project and
  not updated.

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• Problem is compounded by
• User does not know what he/she wants
• User has generally never thought of the problem
  in the detail necessary for specification

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• Inadequate
• Communication
• Training
• Testing
• Goal Definition
• Buy in
• Change Management

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• Complexity leads to difficulty in enumerating
  all possible states- leads to unreliability
• Perfection and debugging
• Computer demands perfection
• Debugging syntax easy, conceptual difficult
• Obsolescence

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• Cole 1995 Genuchten 1991
• Project Objective Not Fully Specified 51
• Frequent changes in design 50
• Bad Planning and Estimating 48
• Technology New to the Organization 45
• Inadequate/No Project Management Methodology 42
• Insufficient Senior Staff on Team 42
• Poor Performance by Suppliers 42

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• People
• The User

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• The Champion (Management Support)

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• The Systems Development Team

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• Aligning Systems Goals and Business Needs

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• Project Management
• Project is a temporary sequence of unique,
  complex and connected activities having one goal
  or purpose and it must be completed by a specific
  time, within budget and according to its
  specification

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• Project Management is the process of scoping,
  planning, staffing, organizing, directing, and
  controlling the development of an acceptable
  system at a minimum cost within a specified time
  frame.

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• Change Management