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REENGINEERING

Reengineering is radical redesign of an organization's processes,


especially its business processes. Rather than organizing a firm into
functional specialties (like production, accounting, marketing, etc.)
and considering the tasks that each function performs; complete
processes from materials acquisition, to production, to marketing
and distribution should be considered. The firm should be re-
engineered into a series of processes.
The main proponents of re-engineering were Michael Hammer and
James A. Champy. In a series of books including Reengineering the
Corporation, Reengineering Management, and The Agenda, they
argue that far too much time is wasted passing-on tasks from one
department to another. They claim that it is far more efficient to
appoint a team who are responsible for all the tasks in the process. In
The Agenda they extend the argument to include suppliers,
distributors, and other business partners.
Re-engineering is the basis for many recent developments in
management. The cross-functional team, for example, has become
popular because of the desire to re-engineer separate functional tasks
into complete cross-functional processes. Also, many recent
management information systems developments aim to integrate a
wide number of business functions. Enterprise resource planning,
supply chain management, knowledge management systems,
groupware and collaborative systems, Human Resource
Management Systems and customer relationship management
systems all owe a debt to re-engineering theory.
[edit] Criticisms of re-engineering
Reengineering has earned a bad reputation because such projects
have often resulted in massive layoffs. This reputation is not
altogether unwarranted, since companies have often downsized
under the banner of reengineering. Further, reengineering has not
always lived up to its expectations. The main reasons seem to be
that:
Reengineering assumes that the factor that limits an organization's
performance is the ineffectiveness of its processes (which may or
may not be true) and offers no means of validating that assumption.
Reengineering assumes the need to start the process of performance
improvement with a "clean slate," i.e. totally disregard the status
quo.
According to Eliyahu M. Goldratt (and his [Theory of Constraints])
reengineering does not provide an effective way to focus
improvement efforts on the organization's constraint.
There was considerable hype surrounding the introduction of
Reengineering the Corporation (partially due to the fact that the
authors of the book reportedly[citation needed] bought numbers of
copies to promote it to the top of bestseller lists).
Abrahamson (1996) showed that fashionable management terms
tend to follow a lifecycle, which for Reengineering peaked between
1993 and 1996 (Ponzi and Koenig 2002). They argue that
Reengineering was in fact nothing new (as e.g. when Henry Ford
implemented the assembly line in 1908, he was in fact
reengineering, radically changing the way of thinking in an
organization). Dubois (2002) highlights the value of signaling terms
as Reengineering, giving it a name, and stimulating it. At the same
there can be a danger in usage of such fashionable concepts as mere
ammunition to implement particular reforms.
Reengineering
Challenge
Reengineering implies changes of various types and depth
to a system, from a slight renovation to a total overhaul.
Some of the typical challenges our clients have:
A system was developed for us, but we'd like to change
several things, namely improve the system's functionality,
usability, security, stability and performance; change the
system's architecture or adjust it for another platform.
Unfortunately, we don't have the detailed documentation on
this system or a knowledgeable enough staff. How do we
implement the desired changes?
We have three systems with roughly the same functionality,
which work on different platforms. As these systems
supplement each other, users have to use all three of them.
This makes their work more complicated (starting one
system means first shutting down the other two) and adds a
lot of extra work for the system administrators (when a new
user is added, the data must be copied to all three systems).
We want to have one system instead of three.
We have a best-selling software solution and received an
order from a major client to modify it. However, no
company wants to undertake its maintenance. What shall
we do?
A software component was written by someone who is no
longer with the company, and there is nobody capable of
working on the system's maintenance. There is no
documentation or comments in the program. What shall we
do?
DataArt's Method
Early in 1993, an epochal event took place in the US. For
the first time in history, "white-collar" unemployment
exceeded "blue-collar" unemployment. In the experience of
older generations, a college education entitles one to a job
with an excellent earning potential, long-term job security
and opportunity to climb a career ladder. If there was an
economic downturn, unemployment was something that
happened to others.
Large-scale white collar unemployment should not have
come as a surprise. Since 1979, the US. information
workforce has kept climbing and in 1993 stood at 54% of
total employment. Forty million new information workers
had appeared since 1960.
What do these people do? They are very busy and end up as
either as corporate or social overhead if they work in the
public sector. They are lawyers, consultants, coordinators,
clerks, administrators, managers, executives and experts of
all sorts. The expansion in computer-related occupations
greatly increased the amount of information that these
people could process and therefore demand from others. It
is the characteristics of information work that it breeds
additional information work at a faster rate than number of
people added to the information payroll. Computers turned
out to be greater multipliers of work than any other
machine ever invented.
However, the greatest growth has been in government
which now employs more people than the manufacturing
sector. Government workers predominantly are engaged in
passing information and redistributing money which
requires compliance with complex regulations.
Who pays for this growth in overhead? Everybody does
either in higher prices or as increased taxes. As long as US.
firms could raise prices, there was always room for more
overhead. When international economic competition started
cutting into market share starting in the 1980s corporations
had to reduce staff costs.
Blue collar labor essential to manufacture goods was either
outsourced to foreign lands, or automated, using proven
industrial engineering methods to substitute capital for
labor. By the mid 1980s major cost cuts could come only
from reductions in overhead.
Overhead Cost Reduction
Early attempts announcing 20% or more across-the board
layoffs in major corporations misfired. The most valuable
experts left first to start up business ventures, most often
with the knowledge they gained while the large firms
lingered in bringing innovations into the marketplace.
Much of the dynamic growth of the Silicon Valley and of
the complexes surrounding Boston have their origins in the
entrepreneurial exploitation of huge research and
development investments of large corporations.
The next wave was even more wasteful, because overhead
was reduced by imposing cost cutting targets without the
benefit of redesigning any of the business processes.
Companies that resorted to these crude methods did not
have the experience how to measure the value-added of
information workers. Therefore, they resorted to methods
that may have been somewhat effective for controlling
"blue collar" employees. That was not successful because
the same treatment that was acceptable for factory workers
made the remaining management staff act in defensive and
counterproductive ways to protect their positions. Such
methods disoriented and demoralized many who were
responsible for managing customer service.
This is where reengineering came in. It applies well known
industrial engineering methods of process analysis, activity
costing and value-added measurement which have been
around for at least 50 years.
Appearance of Reengineering
The essence of reengineering is to make the purge of recent
excess staffing binges more palatable to managers. These
executives became accustomed to increasing their own staff
support as a means for towards gaining greater
organizational clout. An unspoken convention used by of
officials at high government and corporate levels, is that a
"position" in a hierarchy exists independently of whether
something useful is delivered to customers. The primary
purpose of high level staffs is to act as guardians of the
bureaucracy's budget, privileges and influence.
If you want to perform surgery on management overhead,
do not do it in a dark room with a machete. First, you must
gain acceptance from those who know how to make the
organization work well. Second, you must elicit their
cooperation in telling you where the cutting will do the
least damage. Third, and most importantly, they must be
willing to share with you insights where removal of an
existing business process will actually improve customer
services.
Budget cutters who do little else than seek out politically
unprotected components, cannot possibly know what are
the full consequences of their actions.
Reengineering offers to them an easy way out.
Reengineering calls for throwing out everything that exists
and recommends reconstituting a workable organization on
the basis of completely fresh ideas. The new business
model is expected to spring forth from the inspired insights
of a new leadership team.
Reengineering is a contemporary repackaging industrial
engineering methods from the past, rather something that is
totally original. This cure is now administered in large
doses to business enterprises that must instantly show
improved profits to survive. However, reengineering differs
from the incremental and carefully analytic methods of the
past. In political form it is much closer to a coup d'état than
to the methods of a parliamentary democracy.
Reengineering in the Public Sector
Despite admirable pronouncements about reengineering the
US. government, it remains to be seen if that may be a
smoke screen to justify more spending. As long as the
federal government continues to increasing taxes - an easy
way out of any cost pressures - the prospects of reinventing
the government will remain dim.
Reinventing government does not deliver savings if
meanwhile you keep expanding its scope. You can have
less bureaucracy only of you eliminate functions that have
demonstrably failed, such as loan guarantees, public
housing, diverting schools from education to social
experimentation, managing telecommunications and
prescribing health care. Except for defense, justice, foreign
relations and similar tasks which are essential instruments
of governance, public sector attempts at economic
engineering have always failed.
The latest Washington reengineering campaign may turn
out to be a retrogression instead of an improvement. You
do not enhance a stagnating economy by claiming to save a
probable $108 billions so that you can add over a trillion
dollars of economic control to the public sector.
An emetic will be always an emetic, regardless of the color
and shape of the bottle it comes from. It does not do much
for those who keep up a healthy diet by eating only what
their body can use. A cure claiming to be an emetic but
which nevertheless fattens will increase obesity.
Extremists
Reengineering is a great idea and a clever new buzzword.
There is not a manager who would not support to the idea
of taking something that is defective and then fixing it.
Industrial engineers, methods analysts and efficiency
experts have been doing that for a long time.
The recently introduced label of efficiency through
reengineering covers the adoption of radical means to
achieve corrective actions. This extremism offers what
appears to be instant relief from the pressures on corporate
executives to show immediate improvements.
reengineering, as recently promoted, is a new label that
covers some consultants' extraordinary claims.
To fully understand the intellectual
roots of reengineering, let the most
vocal and generally acknowledged "guru"
of reengineering speak for himself.
"American managers ...must abandon the
organizational and operational
principles and procedures they are now
using and create entirely new ones."
"Business reengineering means starting
all over, starting from scratch."
"It means forgetting how work was
done...old titles and old organizational
arrangements...cease to matter. How
people and companies did things
yesterday doesn't matter to the
business reengineer."

"Reengineering...can't be carried out


in small and cautious steps. It is an
all-or-nothing proposition that
produces dramatically impressive
results."

The Contributions of Mike Hammer


When Hammer was queried "How do managers
contemplating a big reengineering effort get everyone
inside their company to join up?" he answered in terms that
reflect the violent point of view of all extremists in how to
achieve any progress: "...On this journey we...shoot the
dissenters." The theme of turning destruction on your own
people remains a persistent motive: "...It's basically taking
an ax and a machine gun to your existing organization."
In view of the widespread popularity of Hammer I wonder
how executives can subscribe to such ferocious views while
preaching about individual empowerment, teamwork,
partnership, participative management, knowledge-driven
enterprise, learning corporation, employee gain sharing,
fellow-worker trust, common bond, shared values, people-
oriented leadership, cooperation and long-term career
commitment.
I usually match the ideas of new prophets with past
patterns. It helps to understand whether the what's proposed
is repackaging of what has been tried before. I find
Hammer's sentence structure as well as his dogmatic
pronouncements as something that resonates with the
radical views put forth by political hijackers like
Robespierre, Lenin, Mao and Guevara. Just replace some of
the nouns, and you can produce slogans that have been
attributed to those who gained power by overthrowing the
existing order.
It is no coincidence that the most widely read book on
reengineering carries the provocative subtitle, "A Manifesto
for Business Revolution" and claims to be a "seminal" book
comparable to Adam Smith's The Wealth of Nations - the
intellectual underpinning of capitalism. All you have to
remember is that there is another book, also bearing the
title "Manifesto," that successfully spread the premise that
the only way to improve capitalism is to obliterate it.
What is at issue here is much more than reenginering,
which has much to commend to itself. The question is one
of morality of commerce against the morality of warfare.
The morality of warfare, of vengeance, violent destruction
and the use of might has been with us every since primitive
tribes had to compete for hunting grounds. Societies have
recognized the importance of warfare by sanctioning a class
that was allowed, subject to some rules, to kill, while the
redeeming code of loyalty and self sacrifice for the good of
all would prevail.
The morality of commerce has been with us at least since
500 BC. It is based on shunning force, coming up with
voluntary agreements, collaboration even with strangers
and aliens, respecting contracts and promoting exchanges
that benefit both to the buyer and the sellers.
Just about every major national tragedy in the last few
centuries can be traced to the substitution of the morality of
warfare for the morality of commerce, under the guise that
this will lead to greater overall prosperity. Mike Hammer's
adoption of the non-redeeming expressions of military
morality have crossed the line what ought to be acceptable.
Reengineering is and should remain an activity in the
commercial domain and should be bound by its morality.
Leave the military language and thinking to those who have
to deal with the difficult choices one faces when
confronting the prospects of getting shot at.
Effectiveness of Revolutionary Changes
I have listened carefully to the extremists who are the most
prominent promoters of the proven old ideas now
repackaged as a managerial innovation. Their well financed
promotional efforts have succeeded in gaining at least
temporary respectability for "reengineering." I have found
that they have successfully translated the radicalism of the
1960's, with its socially unacceptable slogan "Do not
reform, obliterate!" into a fashionable, money-making
proposition. The clarion call for overthrowing the status
quo is similar to that trumpeted by the radical students who
occupied the Dean's office. Now the same arguments can
be fashioned into more lucrative consulting services. If you
ask what many of the radical proponents of reengineering
what they did while they were the University during the
1960's, you will find a surprising number who pride
themselves as erstwhile anti-establishment
"revolutionaries."
If you look at political revolutionary movements back in
time to the French Revolution, you will find their leaders
motivated by a fixation on seizing power from the
Establishment under whatever slogan that could be sold to
those who hoped to improve justice, freedom or profit.
Revolutionary leaders in the past 200 years, who were
mostly intellectuals who hardly ever delivered anything
other than pamphlets and speeches, have been consistent in
making conditions worse after they take over the
Establishment. There is one thing that all past revolutionary
movements have in common with the extremist views of
"reengineering." In each case, the leaders call for complete
and uncompromising destruction of the institutions as they
exist. It is only through this kind of attack on customs,
habits and relationships that newcomers can gain influence
without much opposition. The common characteristic of the
elite that agitates destructively for positions of leadership is
an arrogance that they are the only ones with superior
insight who can be trusted in what to do.
I am in favor of making evolutionary improvements in the
way people work. If you want to call that reengineering,
that's OK, though I prefer to call it "business process
redesign" because the other label has become tainted by
extremism. Besides, you cannot reengineer something that
has not been engineered to begin with. Organizations
evolve because it is impossible to design complex human
relationships as if they were machine parts.
What matters is not the label, but by what means you help
organizations to improve. The long record of miscarriages
of centrally planned radical reforms, and the dismal record
of reengineering as acknowledged by Mike Hammer
himself, suggest that an evolutionary approach will deliver
better and more permanent improvements.
Views on Business Improvement
Lasting improvements in business processes can be made
only with the support of those who know your business.
Creating conditions for continuous, incremental and
adaptive change is the primary task of responsible
leadership. Cut-backs that respond abruptly to a steadily
deteriorating financial situation are a sure sign that
management has been either incompetent or asleep.
Evolutionary change stimulates the imagination and the
morale. It creates conditions for rewarding organizational
learning and for inspiring employees to discover innovative
ways for dealing with competitive challenges and with
adversity.
Dismissing employees on a large scale, accompanied by
incentives for long-time employees to resign voluntarily,
will paralyze those who are left with fear and an aversion to
taking any initiatives. It will force out those who are the
most qualified to find employment elsewhere. You will end
up with an organization that will suffer from self-inflicted
wounds while the competition is gaining on you. If you
lose your best people, you will have stripped yourself of
your most valuable assets. Getting rid of people because
they have obsolete skills is a reflection of past neglect of
the organization to innovate and learn. Liquidating a
company is easy and profitable, but somebody ought to also
start thinking about how to rebuild it for growth. That is the
challenge of leading today's losers to tomorrow's winners.
How do you perform business process redesign under
adverse conditions? How do you motivate your people to
give you their best so that they may prosper again, even
though some positions of privilege will change or cease to
exist?
Business Process Redesign
To be successful, business process redesign depends on the
commitment and imaginative cooperation of your
employees. Business process redesign must demonstrate
that only by working together they can improve their long-
term opportunities. Business process redesign relies
primarily on the accumulated know-how of existing
employees to find conditions that will support the creation
of new jobs, even if that means that in the short run many
of the existing jobs will have to cease to exist.
In business process redesign, the people directly affected
by the potential changes study the "as-is" conditions and
propose "to be" alternatives to achieve the desired
improvements. In business process redesign everybody
with an understanding of the business will be asked to
participate. External help is hired only for expertise that
does not already exist anywhere internally.
Business process redesign calls for applying rigorous
methods to charting, pricing and process flow analysis of
"as-is" conditions. Process redesign is never finished during
the lifetime of a company. After implementing any major
improvement new payoff opportunities will always emerge
from what has just been learned. The primary objective of
the business process improvement is to create a learning
environment in which renewal and gain will be an ongoing
process instead of just a one time shock therapy. Adopting
formal business process flow methods and a consistent
technique for keeping track of local improvements allows
combining later on processes that were initially isolated for
short-term delivery of local gains in productivity.
Business process redesign balances the involvement of
information managers, operating managers and subject
matter experts. Cooperative teams are assembled under
non-threatening circumstances in which much time is spent
and perhaps wasted in discussing different points of view.
Unanimity is not what business process is all about.
Differences are recorded, debated and passed on to higher
levels of management for resolution.
Business process redesign requires that you perform a
business case analysis, which calculates not only payoffs
but also reveals the risks of each proposed alternative. This
is not popular because the current methods for performing
business case analysis of computerization projects call for
calculations that do not have the integrity for making them
acceptable to financial executives.
The overwhelming advantage of business process redesign,
as compared with "reengineering," lies in its approach to
managing organizational change. The relatively slow and
deliberate process redesign effort is more in tune with the
approach that people normally use to cope major changes.
Every day should be process redesign day, because that is
how organizational learning takes place and that is how you
gain the commitment of your people. At each incremental
stage of process design, your people can keep up the pace
with their leaders, because they can learn how to share the
same understanding of what is happening to the business.
They are allowed the opportunity to think about what they
are doing. They are not intimidated by precipitous layoffs
that inhibit their sharing of ideas how to use their own time
and talent more effectively.
Character of Reengineering
Reengineering, as currently practiced, primarily by drastic
dictate and with reliance on outsiders to lead it, assumes
that your own people cannot be trusted to fix whatever ails
your organization. reengineering accepts primarily what the
experts, preferably newcomers to the scene, have to offer.
In reengineering the consultants will recommend to you
what the "to be" conditions ought to look like, without
spending much time understanding the reasons for the "as-
is" conditions. The credo of reengineering is to forget what
you know about your business and start with a clean slate
to "reinvent" what you would like to be. What applies to
individuals or nations, certainly applies to corporations:
you can never totally disregards your people, your
relationships with customers, your assets, the accumulated
knowledge and your reputation. Versions of the phrase
"...throw history into the dustbin and start anew" has been
attributed to every failed radical movement in the last two
hundred years.
Reengineering proponents do not worry much about formal
methods. They practice techniques of emergency surgery,
most often by an amputation. If amputation is not feasible,
they resort to tourniquet-like remedies to stopping the flow
of red ink. Radical reengineering may apply under
emergency conditions of imminent danger as long as
someone considers that this will most likely leave us with a
patient that may never recover to full health again because
of demoralization of the workforce. It is much swifter than
the more deliberate approach of those who practice
business process redesign. No wonder, the simple and
quick methods are preferred by the impatient and those
who may not have to cope with the unforeseen long term
consequences on what happens to the quality and the
dedication of the workforce.
In reengineering participation by most of the existing
management is superfluous, because you are out to junk
what is in place anyway. Under such conditions, for
instance, bringing in an executive who was good in
managing a cookie company to run a computer company
makes perfect sense.
In reengineering debates are not to be encouraged since the
goal is to produce a masterful stroke of insight that
suddenly will turn everything around. Autocratic managers
thrive on an opportunity to preside over an reengineering
effort. reengineering also offers a new lease on the careers
of chief information officers with propensities to forge
ahead with technological means as a way of introducing
revolutionary changes. A number of spokesmen in recent
meetings of computer executives offered reengineering as
the antidote to the slur that CIO stands for "Career Is
Over."
Reengineering conveys a sense of urgency that does not
dwell on much financial analysis, and certainly not formal
risk assessment. Managers who tend to rely on bold strokes
rebel against analytic disciplines. When it comes to
business case analysis we have the traditional confrontation
of the tortoise and the hare - the plodders vs. the hip-
shooters. Sometimes the hip-shooters win, but the odds are
against them in an endurance contest.
Reengineering does not offer the time or the opportunities
for the much needed adaptation of an organization to
changing conditions. It imposes changes swiftly by fiat,
usually from a new collection of people imported to make
long overdue changes. Even if the new approach may be a
superior one for jarring an organization out of its ingrown
bad habits, it will be hard to implement because those who
are supposed to act differently will now have a negative
attitude to do their creative best in support of the transition
from the old to the new.
Reengineering has the advantage of being a choice of last
resort when there is no time left to accomplish business
process redesign. In this sense, it is akin to saying that
sometimes dictatorship is more effective than community
participation. Without probing why the leadership of an
enterprise ever allowed such conditions to occur, I am left
with a nagging doubt if the drastic cure does not ultimately
end up causing worse damage than the disease.
Constitutional democracies, despite occasional reversals in
fortune, have never willingly accepted dictatorship as the
way out of their troubles. On the other hand, the record of
attempts to deal with the crises in governance by drastic
solutions is dismal. Though occasionally you may find
remarkable short term improvements, extreme solutions
that have destroyed past accumulation of human capital
have always resulted in viewing an era of violence as times
of retrogression.

References
Business Process Redesign: An Overview , IEEE Engineering
Management Review.
Abrahamson, E. (1996). Management fashion, Academy of
Management Review, 21, 254-285.
Champy, J. (1995). Reengineering Management, Harper Business
Books, New York.
Dubois, H. F. W. (2002). Harmonization of the European
vaccination policy and the role TQM and reengineering could play,
Quality Management in Health Care, 10(2): pp. 47-57. "PDF"
Hammer, M., (1990). "Reengineering Work: Don't Automate,
Obliterate", Harvard Business Review, July/August, pp. 104-112.
Hammer, M. and Champy, J. A.: (1993) Reengineering the
Corporation: A Manifesto for Business Revolution, Harper Business
Books, New York, 1993. ISBN 0-06-662112-7.
Hammer, M. and Stanton, S. (1995). "The Reengineering
Revolution", Harper Collins, London, 1995.
Hansen, Gregory (1993) "Automating Business Process
Reengineering", Prentice Hall.
Ponzi, L. and Koenig, M. (2002). "Knowledge management: another
management fad?", Information Research, 8(1).
"Reengineering Reviewed", (1994). The Economist, 2 July 1994, pp
66.
Rummler, Geary A. and Brache, Alan P. Improving Performance:
How to Manage the White Space in the Organization Chart, ISBN 0-
7879-0090-7.
Retrieved from "http://en.wikipedia.org/wiki/Reengineering"
This annotated bibliography provides information on software
reengineering.
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