A Strategic Approach to Business Process Redesign

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A Strategic Approach toBusiness Process Redesign
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Value Envisioned. Value Delivered.
Executive Summary
To successfully reengineer a business process,
there is a lot of work that must be completed
before the actual process is modified. First,
the
problem must be defined to set the course for the
optimal solution. Once the problem is understood,
the current state must be assessed, taking into
account the three key business components
people, process, and tools. After establishing a
baseline, comparing the current state to peers
will
help benchmark your position, and may provide
insight to revolutionary improvements. This
holistic
approach to analyzing the current state will
helpensure all variables of the business are
taken intoaccount, minimizing the likelihood of
failure.
redesign methodology, all while being cognizant
ofpotential pitfalls.
Problem Definition
When the problem and current businessenvironment
are understood, outlining the goalsand scope of
the initiative and ensuring theprojects
ambitions align with the corporate visionwill
provide the initial boundaries for the
project.Once the project is scoped, an execution
planshould be constructed to get an
understandingof the proposed timeline and its
relation with costand extent of the initiative.
After the scope andexecution plan are completed,
the work shouldbe sequenced according to the
business vision,culminating in a strategic
roadmap.
When reengineering business processes,generally
the goal is to decrease operationalcosts and/or
improve customer service. Manyfirms take a
reactive approach to decreasingoperational costs
by reducing headcount withoutimproved processes
or technology. This createsa one-time,
unsustainable savings that leads toemployees
working as efficiently as possible, butunable to
improve productivity. In fact, unlessthere is a
corresponding reduction in workload,this can
sometimes leads to further deteriorationof
performance due to the enormous burden leftto a
smaller pool of remaining employees. All ofthe
employees effort is consumed by
executinginefficient processes with bare-bones
staff andinadequate tools, which has a
significant negativeimpact on customer service
and employeewelfare. The stress on employees,
often high-performing employees striving to
maintain qualitylevels, may cause increased
incidents of burnout,which may lead to
abnormally high attrition rates.Although
reducing headcount is never easy, thetangible
savings are immediately realized, so it isoften
a go-to method to reduce operating costs.
A successful outcome is not guaranteed.
Ifmanagement support is not strong or the
projectis mismanaged, the likelihood of success
isseverely diminished. Similarly, if the
redesign isthrust upon staff or their management
withouttheir support, gaining adoption will not
only bedifficult, but it could cause failure.
Furthermore, ifthe solution does not adequately
fulfill the businessrequirements or the
technology does not integrateor strategically
align with the current enterprisearchitecture, a
win is unlikely.
A successful BPR project must have a
strongchampion, strong management team, a
thoroughcurrent-state assessment, and strict
adherence to a
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On the surface, if an area can operate with
thedecreased headcount, the workforce is
moreoptimal than it was before the staff
reduction.The problem is there are overt and
hidden risksand opportunity costs associated
with reducingheadcount without improving
processes and tools.
When every employee is fully utilized by
Businessas Usual operations, there is no
flexibility tohandle volume or staff
fluctuations. An increasein business volume can
only be addressed byincreasing headcount,
potentially exceedingthe operating budget and
eroding any costsavings. Something as simple a
thing as several
market share and overall shareholder value.When
implementing cost-cutting measures,a deliberate
business process redesign effort
employees being sick simultaneously can
severelyimpact productivity.
In addition to productivity goals,
customerservice (external customers, internal
customers,or both) will suffer when staff is
inadequate.When employees are working beyond
theircapacity, performance quality is at risk.
Reducedquality can manifest itself in final
outputs toexternal customers or a slippage in
Service LevelAgreements with internal customers.
Deliveringunacceptable products to external or
internalcustomers can result in increased
downstreamcosts due to increased customer
service after theprocess is complete. Not only
is the customerservice an additional burden on
the operatingcost of the organization, but
employees andcustomers also suffer, potentially
driving long-term damage to the company brand.
should be considered. Although quick
reductionsin cost are achievable without process
redesign,to achieve sustainable efficiencies and
maintaincompetitive positioning, organizations
must investin the tools and technologies to
drive success.
Before You Start
A variant of a famous quote by George
Santayanastates, You cant know where youre
going untilyou know where youve been. This
idea is a
fundamental principal when doing a
BusinessProcess Redesign initiative. Before
embarkingon an organizational improvement
project, youmust understand your current state,
and to takeit a step further, document your
current-stateunderstanding. Documenting the
current statewill increase the odds of success
by helping
Aside from performing additional customer
serviceactivities, the opportunity cost of
having every
employee fully engaged in Lights On, DoorsOpen
activities is that staff cannot be
reallocated.When the staff is fully consumed
with day-to-dayoperations, the ability to use
team members forimprovements or special projects
is eliminated.The inability to re-invest in the
business andits employees will directly impact
the ability toimplement strategic initiatives,
which may erode
communicate issues and provide a
concretebaseline to measure strategic
improvements.When documenting the current state,
thereare three key areas that must be looked
atthe people, the processes, and the tools (or
technology). Once the current state is
understood,comparing your findings with those of
your peersthrough a benchmarking exercise will
help identify
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Value Envisioned. Value Delivered.
your business strengths as well as
shortcomingsand allow you to set a clear path
forward forimprovement. The benchmarking
exercise shouldbe done in a measurable,
attainable, realistic,and time-bound manner,
which will not only aid indefining where to
devote your efforts, but will alsoreveal the
potential benefits to be rendered fromthe
endeavor.
People
When understanding the people impact of any
reengineering effort, you should focus on the
structural, functional, and cultural aspects of
the
organization. From a structural standpoint, you
should ask yourself, will this reengineering
effortallow me to streamline or consolidate the
structureof an organization? An example of this
type of
considerably different than how to best
approacheastern cultures. Our customs and norms
of
society are such that, if not accounted
forcarefully, they can have a devastating effect
onthe success of the effort.
restructuring is consolidating once-disparategrou
ps of resources performing the same functioninto
a single, shared-services organizationalstructure
. These types of transformations notonly have a
sizeable impact of benefit to anorganization,
but also require an equally sizablechange
program to ensure success.
In the end, people are people with lives
outsideof work. Taking stock in the value of the
peopleinvolved in any effort and the impact
initiativeshave on the lives of those in the
organizationis the key. Conduct a deliberate
approach toevaluating the impact a reengineering
effort
Most every reengineering effort will impact
theorganization at a functional level in some
formor another. For instance, initiatives
involving theimplementation or enhancement of
technologyto automate processes often eliminate
one ormore functions from a process end to end,
has on its people through understanding
theorganizational structure roles,
responsibilities,the attitude toward change, and
the overall
culture. This will go a long way toward
ensuringyou build a future-proof transformation
strategy.
thereby impacting the resources performing
thosefunctions. These impacts, designed to
improve
Process
quality or productivity, require change
programsthat are tailored to the impacted area
to extractthe highest benefit.
To improve operations, you need to
thoroughlyunderstand the Business as Usual
environment.To gain consensus on business as
unusual,
The cultural nature of an organization, its
reactionto change and the way in which it is
delivered
processes need to be documented and reviewed.The
best medium to document business
are often the most critical elements and must
notbe overlooked or miscalculated. For example,
inglobal initiatives, the way in which you
approachimplementing and communicating a large-
processes when analyzing them for a redesign
isto use business process maps. Business
processmaps are graphical, step-by-step
depictions ofan end-to-end process expressing
the workflow,
scale reengineering effort in western cultures is
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routing rules, and tasks involved. Often
theseare completed through interviews with
processassociates or through process shadowing.
Alsoknown as conducting a time and motion
study,this exercise captures the process, the
time tocomplete a task, and the at rest time
of the
requirements phase after you have prioritized
thelikely candidates for reengineering.
Tools
Another area important to any businessprocess
that must be evaluated is the toolsand
technology required to execute businessprocesses.
In todays rapidly evolving worldof digital
connectivity, technology capabilitiesare more
critical than ever before. Whetheryou are
introducing new disruptive technology,modernizing
existing assets, or simply broadeningthe use of
existing technologies, evaluatingthe impact a
new technology may have inimproving overall
business performance iscritical. Conducting a
thorough assessment ofthe technology landscape
of an organization inthe context of the desired
future state businessmodel and IT Roadmap can
mean the differencebetween evolutionary and
revolutionary gainsin business performance.
Identifying whatactivities require what
technology will helpdetermine what technology
should be replaced,improved, or eliminated.
Mission critical attributesof the desired future
state and the functionalcapabilities the
reengineering effort will demandof technology
solutions will need to be captured.Whether the
key requirements exist in theenvironment, need
to be augmented, or will needto be procured are
just some of the questions thatshould be asked
when documenting the currenttechnology
landscape.
process end to end. Once the maps are
created,they should be circulated amongst
process ownersand actors for review to ensure
consensus.
When creating process maps, it is good
practiceto create a master map that shows the
entire
business process end to end to put
individualfunctions in perspective with the
overall operation.Creating a master map will
also help drive out anydependencies and
interdepartmental relationshipsthat will need to
be considered during anyimprovement initiative.
The master map shouldbe detailed enough to
understand the processesand their relationships,
but simple enough that theentire business can be
understood.
After the master map is created, the
coreprocesses should then be elaborated.
Becausethis step is pre-work to help decide
where to startthe redesign effort, it is
important that a minimumset of data is captured
about each process andsub-process. A process
improvement initiativeis generally time
sensitive, so over-engineeringthe current-state
discovery and trying to captureevery nuance and
insignificant detail can stall theproject.
Instead, focus on making sure activitiesare
captured in the proper sequence, as well as
theactors who perform them and the time and
effortassociated with the process or task.
Additionaldetails like pain points, functional
technology gaps,workarounds, and other relevant
attributes shouldalso be captured, without going
overboard. Thiswill provide the basis for
identifying and prioritizingareas of high
impact. Leveraging Paretos Principleor the law
of diminishing returns are useful toolsin this
type of exercise. Leave capturing thetask-level
details of the process to the detailed
Peers
When the current state is well understood
anddocumented, it is potentially enlightening
tocompare your business to your industry peers.
A benchmarking activity can be performed
acrossfunctions, activities, and technology to
help
gain objective insight into where you stand
withyour peers regarding best practices, process
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Value Envisioned. Value Delivered.
maturity, or performance metrics.
Benchmarkingcan span all functions, or if
trouble areas havebeen identified, it can be a
concentrated effort. Ifyou find you are leading
the pack relative to yourpeers, or for
additional insight, benchmarking
the Exhaustive approach may be used. To
applythe Exhaustive approach, all the
processes inan organization are identified, and
then rankedby priority or urgency with the
expectation thatall processes will be addressed
to some degreeover the life of the program.
Depending on the
yourself against leaders in other industries may
beworthwhile to sustain your competitive
advantage,a goal of business strategy.
Regardless of whomyou choose to compare yourself
to, the exercisewill help determine what areas
need improvement,and how much improvement is
required to eitherachieve parity or potentially
surpass your industrypeer group.
thoroughness of the current-state assessment,
aPseudo-Exhaustive approach may be
performedby informally noting which processes
need to betaken care of first, and then triaging
that list usinga High Impact approach.
Planning
Once the scope is established, it is time
tocreate an execution plan. The execution
planshould address all the processes that are
tobe remediated and in what order. The plan
The current-state discovery helps you
understandwhere your company ranks, and creates
an
indisputable record documenting your
currentsituation. Once the current-state
assessment iscomplete, and you have compared
yourself withyour industry, it is time to answer
the difficult
should be created outlining key milestones
andtoll gates that must be accomplished for
eachstep in the plan, including project-level
goalsand dependencies, as well as other
initiativesin flight that require integration
or, at minimum,
questions of why and how fast you need tochange,
what goals you wish to achieve, and howto get
there. To maintain a long-term competitivediffere
ntiation, the following methodology shouldhelp
you realize your business vision.
coordination. After an execution plan is
created,project timelines, cost, and resource
demandforecasting can begin. The scope of the
project,the time to complete, and the cost all
must beexamined concurrently in accordance with
theTriple Constraint Theory. The Triple
ConstraintTheory states that a projects scope,
schedule,and budget are interrelated and
changing one
Methodology
Scoping
Once the current state is complete, it is
timeput your hard work to use and formulate
yourreengineering priorities. When selecting the
scope and the sequencing of the redesign, usethe
business vision as the overarching
selectioncriteria. With that in mind, the
primary decisionis which processes must be
addressed, would benice to address, and are not
worth the effort. TheHigh Impact approach is
the most prolific guideto making scoping and
sequencing decisions. Toapply the High Impact
approach, you look at thepotential processes,
and select those that are the
most important, generate the most revenue, or
thatbest fit with the business vision. As an
alternative,
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constraint must impact at least one of
theothers. To make these decisions
digestible,it is recommended that the most
important
identified, documented, and managed as early
inthe project as possible.
Lack of Executive Support
component of the triple constraint (cost,
scope,or schedule) be identified, and that
constraint
Because the project will at times lose steam,
newinitiatives will take priority, resources may
changeroles or leave, or the effort may turn out
greater
held near constant. Then the other two
variablescan be adjusted to maximize the success
of theproject with respect to your business
goals. Theplanning exercise will help solidify
where you
than initially envisioned, a management
Championis an absolute requirement.
Executive-level supportmust not be fleeting
managements drive throughthe duration of the
project will motivate the team
want to be and to understand how to get there.An
implementation roadmap is the next step.
and ensure the project retains the
momentumrequired for success.
Roadmap
The implementation Roadmap should be
ahigh-level Gantt chart that depicts the
activitie
Mismanagement
that need to be accomplished to
successfullycomplete each phase of the
initiative. It should
Beyond the obvious pitfalls of scope
creep,delivery delays, and cost overages,
poorproject management can sink a project fora
myriad of unforeseen reasons. To ensure
depict the order in which tasks, projects, or
groupsof projects (i.e. programs) should be
accomplished,how long they should last, and
general resource
project management isnt a reason for
failure,the management must be selected based
onskills, experience, familiarity with approach
ormethodology, and proven ability, not
purelyavailability or eagerness.
requirements. The Roadmap must take the
businessvision and objectives into account, as
well as
the decisions made in the scoping and
planningactivities, but should also incorporate
quick wins notonly to enable (if possible) a
self-sustaining fundingmechanism or ROI, but
also to provide the fuel forenabling a
sustainable transformation program.Often the
most difficult task in any multi-year
initiativeis not simply maintaining the original
scope andbudget, but sustaining the energy
created.The initial hope generated by the mere
thoughtof change through the inevitable ebb and
flow ofthe program must be capitalized on by
continuedsuccessful execution.
Lack of Employee Support
When key players and their management
cannotadapt to a new way of doing business, or
refuse toaccept and embrace the change, the
redesign isdoomed to failure. The current-state
organizationalanalysis helps quantify and
identify the Peoplewho will make the
initiative successful, and the
change management plan should leverage
thosepeople to help champion the project.
Reasons for Failure
Wrong Candidate
While laying the groundwork for a business
processredesign, potential pitfalls must be
identified
Attacking the wrong problem can cause a
projectto self-destruct. A process that is
inefficient
and addressed beginning as early in the
processas possible. Whether creating the
current-stateassessment or engaged in planning
and road-mapping activities, reasons for failure
should be
because a technology will not be enhanced, or
willrequire organization or logistical changes
that areimpossible, will be a no-win
proposition, and even
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Value Envisioned. Value Delivered.
if it is perfectly redesigned, insurmountable
hurdleswill cause the project to fail.
About Paragon Solutions
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In Conclusion
concerns in Process Optimization,
InformationManagement, and Information Insight.
Large or small, reengineering efforts are not
simple.The foundation of a successful initiative
is a completeunderstanding of your current
state. Arrive at a
For more information, please visit the
Paragonwebsite at www.consultparagon.com, or
call
solution that solves a business problem by
analyzingthe people, processes, and tools that
are impacted.After the solution is defined, plan
the approach
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based on a tested methodology, and implementthe
plan with discipline to make sure momentum is
maintained and expected gains are realized
quicklyand maintained to sustain momentum.
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To avoid failure, support at all levels,
fromexecutives to line managers, is required,
but
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ultimately the employees will dictate success.A
strong change management plan will help
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engage and motivate your employees, and
robustcommunication updating the company of the
projects wins will go a long way to promote
theawareness and drive required for a
successfulreengineering effort.
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