3190-90 Center for Information Systems Research Massachusetts Institute of Technology Sloan School of Management 77 Massachusetts Avenue Cambridge. Davenport James E. Short CISR Sloan WP WP No. Massachusetts. 02139-4307 . 213 No.n -^ O THE NEW INDUSTRIAL ENGINEERING: INFORMATION TECHNOLOGY AND BUSINESS PROCESS REDESIGN Thomas H.


213 WP No. Short June 1990 CISR Sloan WP No.i. Summer 1990. Short Sloan Management Review. Center for Information Systems Research Sloan School of Management Massachusetts Institute of Technology ^^** ^=^^RfF§ ^T /IPf i DP^/i/gy ..THE NEW INDUSTRIAL ENGINEERING: INFORMATION TECHNOLOGY AND BUSINESS PROCESS REDESIGN Thomas H. No.E.^RfES w. Davenport James E. J. 3190-90 ®1990 Published in T. 31. ?i *''*'rr r j Mil LIBRARJP L . Vol. Davenport. T*' M 7 2000 RECBVED .'Bh.H. 4.l.


1 . Frederick Taylor revolutionized the design and improvement of work with basic aim his ideas on work organization. As we to enter the 1990's. rising from worker to chief engineer at Midvale Iron Works. effons. however. no subsequent concept or tool has rivaled the power of Taylor's mechanizing vision. Taylor's by applying to in was to increase organizational productivity human labor the same engineering principles that had proven so successful solving technical problems in the to workplace. came to symbolize the ideas and practical realizations in industry that we now call industrial engineering (EE). Taylor. or the scientific school of management^ In fact. The ideas and capabilities offered by these two tools working together have the potential to create a new type of industnal engineering. After including detailed case studies from five firms engaged in substantial process redesign. task decomposition and job measurement. but still valuable. management research sites in using IT to redesign business processes are considered. we extract from the experiences of companies we studied a generic five-step approach to redesigning processes with IT. Examples are provided throughout of specific effons within these firms to use IT to radically redesign and upgrade particularly important business processes others as — some as pan of a total business redesign. Finally. to the two newer tools of the "information earlier. defining business processes in greater detail. though work design remains a contemporary IE concern. technology — the capabilities by computers. The same approaches that had transformed mechanical activity could also be used structure jobs performed by people. issues encountered at our more isolated. We then define the major types of processes.The New Industrial Engineering: Information Technology and Business Process Redesign Thomas H. Shon MIT Sloan School of Management Abstract At the turn of the century. software and telecommunications — and business process redesign — the analysis and design of work flows and processes within an organization. changing the way the discipline is practiced and the skills necessary to practice it This article explores in detail the relationship between information technology (IT) and business process redesign (BPR). We repon on research conducted in nineteen companies. Davenport Emsi and Young James E. age" are beginning transform organizations degree that Taylorism did offered These are information applications. along with the pnmary role of IT in each type of process.


and industrial engineers are the most likely individuals to have carried out. this type of work is as much in need of analysis and redesign as the manufacturing environments to which IT has already been applied. this redesign has most likely been in the it manufacturing function. the discipline of systems analysis. such come and IT has cenainly penetrated the that and services environments — in 1987 Business Week reported almost 40% of U. as practiced by IT professionals designing computer and telecommunications applications to meet business needs. business should be viewed it as more than a collection of individual or even functional tasks. IT's role in the redesign of nonmanufacturing work has been disappointing. EE's have begun to analyze work activities in nonmanufacturing environments. In short. IT should be viewed as is more than an automating or mechanizing can fundamentally reshape the way business done. materials logistics. capital spending went to information systems. and lE's have often taken the lead applying IT to manufacturing environments. instead should be broken into processes that can be designed for maximum effectiveness. To accomplish this. draws heavily from the work decomposition approaches of Taylorism and scientific management. relationship. rather than business functions or other organizational entities. Well-known examples of IT use in manufacturing include process modelling. With few exceptions. management information systems. Thinking about information technology should be in terms of how supports new or redesigned business processes. have Aggregate shown no increase since 1973. have office Many office work gone.S. limited environments. Each is the about the other.S. albeit as largely separate tools for use in specific. "innovations". and proactively to redesign Indeed. it is now necessary. and of the relationships between them. few firms have achieved major productivity gains. as shared stenography and typing pools. but their penetration into offices has been far less than in factories. Our research also suggests that IT can also have a stronger role in business process In leading redesign than that of useful tool.IT in Business Process Redesign The importance of both information technology and business process redesign is well known to industrial is engineers. many firms have found that a broader view of both IT and business activity. production scheduling and control. as Figure 1 edge practice. in most cases where IT has been used work in a given firm.^ billion a year — but IT has been used in most cases to hasten work rather than to transform in In fact. And thinking about business processes and process improvements should be in terms of the capabilities information . IT and key to thinking it BPR have a recursive illustrates. 2 IT used in in industrial engineering as an analysis and modelling tool. in both manufacturing and service environments.^ in the Given the growing dominance of service industries and administrative functions Western economies. some $97 it."* productivity figures for the U. force.

product delivery.:cessary to develop more flexible. companies must maximize within and across entire organizations a customer. In short. while simultaneously improving quality. rather than maximizing the performance of particular individuals or business junctions. entities.technology can provide. and customer service and management. businesses today face new competitive to and uncenainiies on a global and operational performance scale. rather than assigned to the single individual it Today. today's corporations do not have the luxury of such environmental stability.^ . outcome is spread over a group. Responsibility for an as in the past. industrial engineering.^ Individual tasks and jobs change faster than they can be redesigned. service and risk management. in Companies face mounting pressures improve strategic product development. recursive view of IT and BPR as the new Figure 1 The Recursive Relationship Between IT Capabilities and Business Process Redesign How can IT support business processes? Information Technolo Business Process Redesign How can business processes be transformed using IT? Why Now? Unlike Taylor's world threats at the turn of the century. In these areas firms strive to reduce cost and time to market. coordinarive and communication-based work capability. set of interdependent activities designed to produce value for a Such business processes are a new approach to coordinating its among organizational and information technology's promise — and perhaps ultimate impact — is to be the most powerful tool in the 20th century for reducing the costs of this coordination. We refer to this broadened. companies increasingly find r. team- oriented.^ Where Taylor could focus on workplace rationalization and individual task efficiency in confronting a largely stable business environment.

energy. These might include the process of a installing a windshield in an automobile factory. and procedures into to work activities designed produce a specified end result (work product). however. the purchasing department. carries out 1. typically involves multiple organizations and functions. In many of the firms we studied. or perhaps more usefully. . affecting whole also possible to cite examples of more detailed processes that meet the definitional criteria above. or completing redesign monthly departmental expense repon. processes have defined business outcomes. they cross organizational boundaries.g. This is similar to Pall's definition of process as "the logical organization of people. The user could be viewed as the customer of the process. materials. business. Processes have rwo important they have customers. that is. for example. and 2. though the implications of redesigning these detailed processes may be important only in the aggregate. analyzing processes in great detail was highly appropriate model for some purposes. work e. IT-driven process may also be desirable for these more detailed processes. Common examples of processes meeting these criteria include: Developing a new product Ordering goods from a supplier Creating a marketing plan Processing and paying an insurance claim Writing a proposal for a government contract The process of ordering goods from a supplier.What Are Business Processes? define business processes as a set of logically-related tasks performed to achieve a We defined business outcome. that is. The examples of processes mentioned thus organizauons or groups. and there are recipients of the outcomes. Customers may be either internal or external to the firm. and the supplier organization ail are panicipants. equipment. normally the occur across or between organizational subumts. It is far have been large-scale. The process outcome could be either the creation of the order. a broader view of processes was taken.. However. The eventual user of the goods. or a collection of units. in the firms that were truly beginning to redesign the way their business functions. Processes are generally independent of formal organizational structure. the detailed design of an information system or data to support a specific process. the actual receipt of the goods by the user." ^ A set of processes form a business system its — the way in which a business characteristics: unit.

for example. Recent IE literature also borders on process thinking when advocating cross-functional analysis. rather than a particular task or business function. as will be described below. ^^ At IBM. the context of factory floor automation. its Again. In this section. Other than the quality-oriented manufacturing process redesign many companies have undertaken. usually to automate and/or speed up isolated components of an existing process. companies often struggle to effectively implement BPR. Rather. but in fact the overall process was quite lengthy and unwieldy. each organizational subunit within the process had developed and optimized application. a materials management planning system. second manufacturing firm where we analyzed business processes. in a processes and impediments to process redesign and enhancement. usually on improving process control systems in a manufacturing is in when IT is discussed. This creates problems of communications within For example. most processes in major corporations have not been subject to rigorous analysis and redesign. based on our research findings. credit checking. cross-functional processes are only one possible type of process. In one of the manufacturing companies we studied. '^ although. many of our current processes result from a series of ad hoc decisions made by functional units. Industrial engineers and others who wish to improve the quality of operations are urged to look at an entire process. with litde attention to efficiency and effectiveness across the entire process. Indeed.A Brief History of Process Thinking Process thinking has become widespread over the past several years. all separate and running on different hardware platforms with different data structures. Redesigning Business Processes With IT: Five Steps Our message thus far is that. such as sales. "process management will be the principal IBM quality focus in the coming But process discussions in the quality is it movement's literature rarely even mention information technology. we outline a generic. ." ^ ^ for example. the capabilities of IT in mind. no one had ever analyzed the elapsed time from a customer's order to delivery. the procurement process involved a vendor database. Each individual department involved in the product delivery process. Many processes have never even been measured. but no own IT one subunit had looked at (or had responsibility for) the process in its entirety. years. that We observed. We believe the problems this firm experienced are very common in most businesses today. however. felt that it had optimized its own performance. many organizations need to redesign key business processes around the capabilities offered by IT. and accounts payable and receivable systems. Even fewer business processes have been analyzed with Most business processes were developed before existed. the focus context. and shippmg. due largely to the quality movement. modem it computers and communications even is When technology has been applied to processes.

but major steps are involved: develop the business vision and process objectives. and then the actual design and prototyping of the new process (See Figure 2).. Assuming that a company has decided its processes are inefficient or ineffective. it was typically done with the objective of simply "rationalizing" the process. This was the approach of . Figure 2 Five Steps in Process Redesign Develop Business Vision and Process Objectives Prioritize objectives and set stretch targets I Identify Processes to Be Redesigned processes identify critical or bottleneck i Understand and Measure Existing Processes • Identify current problems and set baseline i Identify Brainstorm IT Levers new process approaches i Design and Prototype Process Implement organizational and technical aspects Develop Business Vision and Process Objectives When process redesign has been undertaken in the past. understand and measure the existing process. identify the processes to be redesigned. and is therefore in need of redesign. We observed most or all BPR. and describe the primary roles of IT in each type.e. identify IT levers. inefficiencies. five how should it then proceed? This a straightforward activity. We then define the major types of processes we encountered in our research.five step approach to redesigning processes with IT. Each step is of these steps being performed in companies that were succeeding with described in greater detail below. without eliminating obvious bottlenecks and in any particular business vision or context mind. i.

both resulting need for cross-functional integration.the "work simplification" aspect of industrial engineering. the vision consisted largely of improving product quality.^^ Our research suggests strongly that rationalization is not an end in itself. . are beginning to ideal unit compete on the basis of time. are the on which to focus time reduction analysis. for example. but insufficient Excessive attention to cost reduction results in tradeoffs that are in itself usually unacceptable lo line. rationalization of highly decomposed tasks may lead to a less efficient overall process. however. extending his inquiry to every aspect of the job and the surroundings in which it is performed. While optimizing on other objectives seems to bring costs into optimizing on cost does not bring about other objectives. Furthermore. an important legacy of Taylorism.He is expected to supply the stimulus and show that job improvement or simplification of work is not only important but also is based on common-sense questioning aimed at uncovering the easiest. Instead of task rationalization. rather than . known vision involved adopting the best practices of Japanese automobile manufacturers.. Cost is an important redesign objective in combination with others. is to One common approach to cutting time from a product design process make the steps in the process begin simultaneously. in specific Each of these visions resulted objectives for process redesign. as we have defined them. Increasing numbers of companies. from the flow of paper work to the daily functioning of his subordinates. most economical way of performing a job. of which it is a partial owner. the company's senior a broad strategic vision into which the process redesign activity fiL^'* management had developed At Xerox.'^ Processes. process stakeholders. and is thus insufficient as a process redesign objective. redesign of entire processes should be undertaken with a specific business vision and related process redesign objectives in mind. • Time reduction - Time reduction has been only a secondary objective of traditional industrial engineering. this vision involved taking the perspective of the customer. including those of Mazda. in the and developing systems rather than standalone products. The most likely objectives for process redesign are the following: • Cost reduction - this objective was implicit in the "rationalization" approach. In most of the successful redesign examples we analyzed. Ford's well At Westinghouse. is An example of the rationalization approach given in the following quote out of a 1961 "Reference Note on Work Simplification" from Harvard Business School: A good manager asks himself why things are done as they are.

or freedom from defects. be they physical — such as in manufacturing a tangible product — or informational — such as in adding data to a in in customer file. time. all firms found it is it important to be specific in setting objectives. for example. Yet many of the managers in firms we studied believed in the value of learning and to empowerment objectives. and Xerox. and quality of process for making credit authorization decisions by embedding the knowledge of its best authorizers in an "Authorizer's Assistant" expert system. also found that could improve cost. Though difficult to know how much improvement possible in advance of a .^^ Of course. a 25% and a 30% reduction in improper credit denials. in the design of computers. and in most firms. using IT to ccx)rdinate design directions among the various functional panicipants. time. IT can lead either to greater empowerment of individuals. For example. in applying IT to the redesign of it several key manufacturing processes. is even to the point of quantification. and were struggling determine how to advance thenx Some firms have been able to achieve multiple objectives in redesigning processes with IT. Schein has pointed out that organizations often do not provide a supportive context for individuals to introduce or innovate with IT.sequentially. the strongest pressures are to produce tangible benefits. Finally. This successful redesign led to a $7 million annual reduction in the average time for each authorization. • Output quality - All processes have outputs. for example. its American Express. set out to improve the cost. This approach has been taken. Ford. and processes with only internal customers. and that the "informating" or learning potendal of IT in processes is often ignored. and quality simultaneously. reduction in costs due to credit losses. automobiles. Bruns and McFarlan^^ have described how Otis Elevator redesigned its elevator service dispatching process around an information system. or to greater control. • Quality of work life (QWL)/learning/empowerment is - A frequently neglected it objective of process redesign the work life quality of the individuals carrying out. Output quality has frequendy been the focus of process improvement it manufacturing environments. is just as important an objective in service industries. and copiers (by Digital Equipment. radically improving service quality and consistency. Zuboff has pointed out that IT-intensive processes are often simply automated. ^^ Moreover. The specific measure of output quality may be uniformity. AT&T Bell Labs. variability. Hewlett Packard. this should be defined by the customer of the process. telephone equipment. it is rarely possible to optimize ail objectives simultaneously. respectively).

prioritize processes in the order for Xerox managers must then which new IT applications suppon would be provided. and as a result. '^ Most information engineering however. the "stretch" goal was to eliminate invoices — to pay suppliers upon receipt of their products or services. The exhaustive approach to process identification is often associated with the "information engineering" method of information system planning (developed by James Martin in the early 1980's). first. many organizations have found the information engineering approach to be very time consuming. However. This is often difficult because most managers do not think about to the issue. The second. The means by which key issues processes to be redesigned are identified and prioritized is one of the in process redesign. in which an organization's use of data dictates both processes to be redesigned. There are two major approaches The which we label the "exhaustive" approach. its accounts payable Identifying Processes to Be Redesigned Our research suggests that most organizations could benefit from IT-driven redesign of all their business processes. little Although the process identification activity in some Xerox divisions took as as three months. process-oriented. places a practical limitation on total corporate redesign. . employed activities at several divisions of Xerox in Europe and the U. This goal has since been achieved with the aid of an information system to confirm expected deliveries at the loading dock. Setting goals that will stretch the organization will also provide inspiration and stimulate creative thinking. or reduce output errors from 12 per thousand to 1 per thousand.redesign. Even when total redesign was the ultimate objective. For example. the company selected a few specific processes for its initial redesign efforts. In the accounts payable process at Ford. attempts to identify only the most important processes or those most conflict with the business vision and process objectives. attempts to rigorously identify all processes within in an organization and then prioritize them order of redesign urgency. and in building IT solutions to support redesigned processes.S. are not One specific information engineering method. their business operations in terms of processes. Moreover. involves identifying business large business activity by data entity matrix. and the data entities used by them in a The clusters of activity-entity interactions in the cells of the matrix are the major business processes of the organization. and the design ouUine for specific processes. projects. a company might decide to reduce the time to bring new products to market by 80%. which we refer in to as "high-impact".. when there was insufficient commitment to total redesign. Ford has eliminated three quarters of the jobs in function. a few successful examples of IT-enhanced processes were viewed as a powerful selling tool. "reach should exceed grasp". using a minimum of time and effon. the amount of effort involved in process redesign.

and the scope of process analysis. however. the full CEO should designate a senior manager as owner and invest him or her with change authority. an important step was getting owners to buy-in to the idea of process it redesign. and organization units (functions or departments) involved. and broader view of the problem is fulfilling orders needs to be redesigned. that some processes only come together at the CEO level. and was the or problems identified as important fu^st process to be redesigned.. or. processes could normally be identified in a few senior management workshops (a discussion of process types. At IBM. in why identify them if they cannot be addressed? As a rough "rule of thumb".The alternative to the exhaustive approach is to focus quickly on high-impact processes. such as that presented below. would be a useful topic in such a workshop). there is simply not enough management do more. High-impact processes should also have owners. these Most organizations have some success. 10 . Funhermore. major processes per year attention to one to three per major business unit). the owner should be willing to change the status quo. In several companies. in this situation. most crucial to their If not. or viewed as one. is not important. useful to classify each process to be redesigned in terms of beginning and end points. Whether is broken down into three processes. the sales force was surveyed to determine the relative importance of multiple customer suppon processes. Processes that are fully contained within a single function or depanment can normally be the functional or departmental owned by manager under which they are earned out. receiving. or those idea of which business areas or processes are which are most "broken" or inconsistent with the business vision.^ companies have found it Whether the exhaustive or high-impact approach is used. redesign In virtually all the cases of process we analyzed. or through extensive interviewing. most companies ten to fifteen our research were unable to redesign and support with IT more than (i.e. as resources or time consumed became excessive. The difficulty with this. including in particular the customer uniL A thorough view of a process will usually result organization have previously taken. some organizations have abandoned the exhaustive approach. to Some of the business areas may need be further refined into processes. interfaces. may be aware that there are customer order entry A skilled process consultant might decide that the this whole process of negotiating. if on the same is level. at an early stage. a sales manager area. was felt that the owner's job should be either above the level of the functions and units the process crosses. the generation of special bids was perceived as being of highest priority. expanding the scope of the process analysis the key issue. the high-impact approach generally found it Companies we studied that employed sufficient Those companies taking the exhaustive approach have not had the resources to quickly address all identified processes. inefficiencies in the in a broader scope than managers within the For example.

Understanding and Measuring Existing Processes Companies had two primary reasons for understanding and measuring existing processes before redesigning them. Identifying IT Levers In even the most sophisticated industrial engineering approach. the time and cost was to cut time and expense out of a measured. to fu-st The conventional wisdom in IT usage has always been determine the business requirements of a function. Figure 3 illustrates eight critical IT capabilities and their organizational impacts. was also useful to have in hand a all list of the generic capabilities of IT in improving business processes. radical improvements over the status quo. an "80-20" philosophy is usually appropriate. consumed by the "untouched" process had to be accurately Wesnnghouse Productivity and Quality Center incremental cost and time consultants found that simply graphing the consumed by the tasks of a process can often suggest initial areas for redesign. Designers should be errors. Understanding and measuring existing processes can easily be overemphasized. If the redesign objective process. Knowing product development teams can exchange computer aided designs over large distances. it was important to measure existing processes to set a baseline for future improvements. First. than in making slate. might affect the structuring of a product therefore be development process. IT capabilities were thought of only after a process had been designed. Consideration of the role of IT redesign. Secondly. problems with existing processes needed to be understood so that they would not be repeated. As with the high-impact process identification approach. In several firms. with the process It redesign objectives and existing process measures hand. and then develop a system. brings to a process can The problem with this approach its is that an awareness of the capabilities IT that — and should — of its influence design. capabilities involve of ITs units. 11 . however. the "stretch" goal in redesigning a process was less eliminating problems or bottienecks. the process should not be measured for measurement's sake. this was accomplished brainstorming sessions. however. In the broadest sense. More specifically. for example. process. working with a clean though informed by past process problems and Similarly. in in in a process must done in the early stages In several firms. Only the specific objectives that are the focus for redesign should be measured. These graphs look like "step functions" showing the incremental contribution of each major task. or other business entity. improving coordination and information access across organizational thereby allowing for more effective management of task interdependence.

Figure 3 IT Capabilities and Their Organizational Impacts Capability .

two additional roles in were necessary on some underwriting cases: knowledge-intensive fields. are moving directiy from process modelling to code generation for high-priority processes. to Some computer-aided systems engineering (CASE) products are primarily designed models. the degree of control by a single individual or department (the more concentrated the process control. Some CASE products can actually generate computer code for the information systems application process. To streamline this lengthy and complex process. Others mentioned interviews included the simplicity of the design. that will suppon a modelled business Several Xerox divisions. We observed several different design criteria that is were used by companies in evaluating alternative designs. as Mutual Benefit's new underv-xiting process. the lack of buffers or intermediaries. In Xerox's case. the balance of process resources. the tool employed for several this purpose was Texas Instruments' Information Engineering Facility. and so fonh. Life's (MBL) redesign of its individual life insurance underwriting process imponant point about process design. and generally of any code generation product. The ability to rapidly draw models and will draw process make changes as suggested by process owners speed redesign and facilitate owner buy-in. in the likelihood that a design will satisfy the chosen design objectives. They repon improved productivity and high user A further benefit is that when the business process changes. and the generalization of process tasks (so that they can be performed by multiple individuals). In the past. presumes that process designers will use the "exhaustive" approach to process identification. Mutual Benefit illustrates a final. called MBL created a all new Case Manager. was prototyped This example illustrates the value of creating organizational 13 . such as lawyers or medical directors. and multiple employees involved. undertook a pilot project with the goal of improving productivity by 40%. as well and subsequently modified. multiple jobs. Most important. satisfaction with the resulting systems. utilizing a workstation-based computer system capable of pulling data from the over the that company. Upon experimenting with new role and underwriting process. of course. This role was designed to centrally perform and coordinate underwriting all tasks.Designing a business process is largely a matter of diligence to facilitate the "process" and creativity. the IS organization can rapidly modify the affected system. as described above. To integrate across the 12 functional areas. senior managers at MBL are confident of reaching the 40% goal in a few months. for example. line process. With the new role and redesigned process. drawn from "pools" of typists. however. the better). underwriting a life insurance policy was an assembly At MBL. MBL role. major CASE Use of this product. Emerging IT technologies. and clerical assistance. the firm learned specialists. are beginning of process design. it involved 40 steps with over 100 people in 12 functional areas and 80 separate jobs. one of products. IT support for it. data entry personnel.

no one nor even definable without the others. The concept of prototyping IT applications is rapidly gaining acceptance in the application development field. as we note above. There considerable interest in extending prototyping to business process changes and organizational initiatives. might otherwise be overlooked. Different types of processes require different levels of management attention and ownership. more importantly. along with a discussion and examples of the role of 14 .prototypes. These are the organizational manipulated in the process. mind. There are three major dimensions that can be used to define processes (see Figure 4). and. Each dimension and resulting process type IT. and have different business consequences when redesigned. and modified as necessary. after agreement by owners and stakeholders. the type of objects and the type of activities taking place in the process. including activities which. Also. without process thinking. and the resulting process types are described with examples. ^^ The implications of this extension are that process designs. entities or subunits involved in the process. in IT-driven process redesign. Yet the specifics of redesign activities vary considerably by the type of process under examination. Understanding and classifying the different types of processes organizations can appear to managers as a seamless entirely separate is imponant because web of interconnected processes. end result is much more to satisfy the customer. it would be phased into full implementation. knowing about multiple process types helps managers With multiple process types in these processes to their own experience. In this section we present three different dimensions in which processes vary. is Advocates argue that prototyping an IT change development in getting to the usually faster than conventional the "life cycle" likely end is result. is described below. As the process approached final acceptance. would be implemented on a pilot basis (perhaps in parallel with existing processes). a manager can begin to isolate particular processes for analysis and redesign. few managers are to relate familiar with process thinking. as well as IT application prototypes. Defining Process Types The five steps descnbed above are sufficiently general to apply to most types of organizations and processes. examined regularly for problems and objective achievement. need different forms of IT support.

Figure 4 Types of Processes Process Dimension and Type Entities Typical Example Typical IT Role Interorganizational .

All the tasks involved in a selling/buying transaction form a process for sellers. by much of the EDI movement Buyers and sellers involved in most EDI have concentrated on speeding up routine bills purchasing transactions. Increasingly. When Dillard's inventory of a particular pants style falls below a specified level. Dillard's Depanment Stores. how your textile numbers the components sells to you). simple market relationships are the most common source of critical interorganizational processes. retail. This goes classical concern with controlling the environment. a major customer of power generation equipment. but to link to the internal processes for creating and providing value led product to its customers' processes for using the product. Moreover. companies are concerned with coordinating acuvines that extend into the next (or previous) company along the value added chain supplier (e. Managers PGE called upon Westinghouse's Productivity and Quality Center. Haggar is notified is electronically. how your distributor it sells your product to the end customer. its DuPont is thus motivated not simply to sell a product. apparel. If Haggar does not have the cloth to manufacture the pants. Haggar Apparel. information technology this interorganizational linkage is the major vehicle by which executed and enhanced. and other early adopters of is electronic data interchange (EDI) illustrate. Yet much of the focus in improving market relationships through IT has been on a simple transaction level. or Several U. an interorganizational process approach was used dealing with at Portiand General Electnc (PGE). in At Westinghouse. and an increasingly imponant one for buyers seeking greater procurement quality. or even at all and use of the purchased product. many firms will need to help the buyer improve those processes.. sellers will lists. this is well illustrated interorganizational business process level.Much beyond our of this work implicitly suggests that it is no longer possible to improve significantly internal business performance without redesigning interorganizational processes.S. a national leader in process 16 . For most companies. Burlington Industries notified electronically. rather than on an Again. cost efficiency. and companies. and responsiveness. Few companies implementing EDI have attempted to redesign the broader is procurement process surrounding transaction automation — from the awareness that a product to the delivery needed. and Burlington Industries) have linked their business processes to speed reordering of popular apparel fashions. called Quick Response. As this example. to the development of approved vendor In the future. furnished along with the chemicals sells to its customers to ensiu^ their safe use.g. (for example. in need to look buyer processes which their products are involved. concept of "effectiveness in DuPont's is use" as the major criterion of customer satisfaction with a product to one example of a leading approach measuring the effectiveness of interorganizational processes. such as invoices or of materials. This concept DuPont to be it an early user of EDI-provided Material Safety Data Sheets.

asset management.. but cross several different functional or divisional units. or production scheduling. planning. warehouse management.g. Two companies firm's which recently have analyzed their key interfunctionai business processes are Baxter Healthcare Corporation and US Sprint Communications Company. the cost could be reduced from almost $90 to $10. with or without the aid of IT. could be reduced from 15 days to half a day. The data model definition and 17 . let Yet most firms have never even listed their key interfunctionai processes. and human resource management. product development. In manufacturing. and analyzed the current and future role of IT area. or service. one case. and equipment tracking as key processes. They may also include important financial control. such as new product realization. in the distribution company identified order entry. the to those strategies. The Center did have experience in EDI. the supporting them. assigning ownership to key processes. major interfunctionai processes. could lead to greater savings. 2** As part of month IT planning company defined 29 major in interfunctionai processes. are also typically interfunctionai. and product delivery are examples of e. management Customer processes. These processes are within (internal to) the organization. is A second major type of business process interfunctionai. The success of this IT planning its Baxter to incorporate the process definition approach into annual corporate planning process. including using EDI and bypassing much the purchasing department In altogether for most routine purchase orders.improvement. Most management processes. the time to execute a standard purchase order. the 1985 merger with American Hospital Supply provided the context for a major reanalysis of strategies. Interfunctionai processes should be viewed as task sets that achieve major operational objectives. for example. alone analyzed or redesigned them. effort led transportation. well-publicized to problems with its customer billing system prompted the company's IT function develop a strategic data model for the entire business as part of a entities comprehensive systems improvement program. At Baxter. personnel development. Sprint is now involved in a major new phase of the program. This model defined the corporate data key interfunctionai processes necessary to and run die business. making major changes overall procurement process. in their quality many companies found improvement programs that producing quality products and services required addressing difficult interfunctionai issues. such as strategic planning. For example. budgeting. and continuing to identify improvements — and ways to measure them — in each process. key business a seven and the alignment of the IT infrastructure effort. The Westinghouse team found that while in the implementing EDI could yield efficiencies on the order of 10%. purchasing. At US Sprint. but the team it assigned to work with PGE asked if they could analyze the entire process by which procured equipment from Wesringhouse and other suppliers. inventory. to help them implement EDI.

conferencing capabilities to build the core of a scattered around new systems The team was met in person. interindividual processes will become more common. conferencing. including GM's Electronic Data Systems (EDS) and several other IT vendors. It should be pointed out. Similarly. typically within a function or department. This type of process has become more important as companies shift to self-managing teams as the lowest unit of organization. As companies begin to acknowledge both the value of process thinking and the role of self-managing teams.other activities in the systems improvement program raised the IT organization's composite internal quality index by more than 50% in one year. As an example. the primary focus is on enhancing automobile product development (clearly an interfunctional process) through the IT-facilitated development teams. and cooperative work. local "groupware" area network-based mail. or a flight crew preparing a flight for takeoff at an airline. Examples of such processes might include a commercial loan group approving a loan in a bank. and created common data structures for the design process. and brainstorming tools). and only rarely . Because Ford has standardized on computer-aided design systems. a small team at Digital Equipment used the company's extensive electronic mail and integration business. Few third-party application software packages have been developed with support of a full business process in mind.S.^^ Several companies. that IT can make possible the execution of processes within teams of employees who may for its be scattered around a country' and even the world.g. organizations increasingly are realizing the need for interfunctional systems. and Europe. Ford is renowned ability to create new car designs through teams whose members are both in Europe and in the U. At EDS. numerous Digital facilities in the U. because all tasks within the process (and perhaps even the customer of the process) are within a small group. are actively exploring IT tools and group dynamics methodologies to facilitate the effectiveness of meetings and small group interactions.^"^ Interindividual processes is studying its implications for group decision making and may be the most efficient type.^ that A major problem in redesigning interfunctional processes is most information systems of the past were built to automate specific functional areas or parts of functions. engineers can share complex three-dimensional designs across the Atlantic. However. Information technology is increasingly capable of supporting interindividual processes. and companies will run into substantial problems in building interfunctional systems without such models. The company's Center for Machine Intelligence has developed a computersupported meeting room.. however. Yet very few have modelled existing interfunctional processes or redesigned them. hardware and communications companies have developed new networking-oriented products. and software companies have begun to flesh out the concept of (e.S. Interindividual processes are those involving tasks within and across small work groups.

robotics. 19 . is tangible things are either created or manipulated.Defining Process Objects Pnxesses can also be categorized by the types of objects manipulated by the process. the capturing and routinizing of decision logic. and should usually be redesigned before further automation particularly true in applied. factory-floor automation. Most logistical activities. Relevant IT capabiUties for these types of processes include the storage and retrieval of unstructured and multi-media information. manufacturing process flows are often the result of historical is circumstance. preparing a marketing plan. True. adding information to a physical object as moves through a process is a common way of adding value. The IT capabilities in the video are available today. It allows greater flexibility and variety of outcomes. This is low volume. A computer vendor's advenising videotape. combine the movement of physical objects is with the manipulation of information about their whereabouts. Now that these have been conquered. for example. The two primary object types are physical and informational. both UPS and Federal Express. new product design are examples of informational Many processes involve the combination of both physical and informational objects. for example. more precise control of the process itself. But the majority of information processes to which IT has been applied are those involving high transaction volumes and low transaction complexity. The potential for using IT to improve physical processes is well known. real. manufacturing the obvious example. track package movement closely with computers and communications networks. Processes for making a decision. ^^ Strangely. it Indeed. the emphasis needs to shift to processes incorporating unstructured tasks and performed by high-skill knowledge workers. and other forms of Still. or developing a object processes. or mixed-media databases. the proponion of informational processes already transformed by IT is probably lower than that of physical processes. ^^ Redesigners of physical processes should also consider the role of IT in providing information to improve processes. Shoshana Zuboff has described this "informating" effect in detail for the paper industry. Informational object processes create or manipulate information. In physical object processes. These benefits have been pursued for the past three decades in the form of computer integrated manufacturing. how artificial intelligence and "hypenext"'. legions of clerks have become unemployed because of computers. for example. but they are rarely applied to such information-intensive yet unstructured processes. Success in the logistics industry often dependent on the close integration of physical and informational outcomes in business processes. combine to lead a manager through the process of developing a budget for his depanment. and the application of far-flung and complex data resources illustrates to a problem. "job shop" manufacturing environments. reductions in throughput time. and elimination of human labor.

Few companies the notion of have rigorously analyzed managerial Even managerial activities involving defined outcomes (a central aspect of our definition of business processes) is somewhat foreign. and other managerial productivity and information tools have been trumpeted. and customer service processes.e. How would such managerial processes as deciding if on an acquisition or developing the agenda for the quarterly board meeting be treated as processes improved they were — i. 50 packages prepared with the system..g. limited as they are. enabling broader management participation across wider geographical boundaries. that the benefits have remained more potential than actual because of the absence of systematic process thinking. of the to guidelines. to facilitate the capital budgeting Managers in a fast-growing to and capital-intensive TI division were concerned that the time and experience necessary the division's growth. executive support systems. and few employees had the requisite knowledge to complete them accurately. or provide resources for operational processes. We believe. activities as processes subject to redesign. Capital request packages prepared with the system require far less time than the manual approach. Past uses of IT to improve therefore will focus almost processes. brainstormed. entirely We on managerial processes It is in this section. the potential of decision support systems. IT has been used to improve a specific managerial 20 . measured..^ not a new idea to apply IT to management tasks. and streamlining the time and resources a specific process consumes. One employee experienced in capital requests first reponed a reduction in package preparation time from 9 hours to 40 minutes. generating feedback on actions taken (the managerial version of "informating" a process). and conform better to the company's guidelines. Operational processes are those involved e. prepare capital budget request packages would become an obstacle to The packages were very complex. plan. For TI. Managerial processes are those which help to control. ^^ compared to an While many firms have developed executive information systems (EIS) managers. The system was developed by two industrial engineers with expertise in both the technology and process. and injected with IT capabilities? The generic capabilities of IT for reshaping management processes include improving analytic accuracy. For over twenty years.Defining Process Activities The examples given activities: operational thus far of typical business processes have involved two types of and managerial. have been largely operational. in the day-to-day carrying out of the organization's basic business purpose. Texas Instruments and Xerox's corporate headquaners provide excellent examples. product development and production processes. Texas Instruments has developed an expen system process. however. only three did not conform average often using a manual approach. at for their senior Xerox Corporation headquaners. the system has radically improved the capital budget request process.

and would be of ongoing imponance as they implemented process-oriented management. is management commitment to the changes any redesign Because processes themselves cut across various parts of the organization. Prior to the development of the EIS.(the system) lets us communicate at higher Management Issues in IT-Enabied Redesign Following the identification and redesign of the firm's processes (using either the exhaustive or high impact approach).process. including the IT and that the key staff and line groups likely Resources functions. will probably encounter resistance from other affected parts of is Both high-level and broad support for change necessary. i. made and agreed upon before adjournment. To perform the five redesign steps described above. The team composition was when some members of the group had some record of process or operations innovation involving IT. division prepared to planning documents in a and furnished different types of informadon to headquaners. and graphic templates for fast comprehension. even when customer is external. As the redesign teams selected processes for redesign and developed redesign objectives.e. the firms to we studied found that several key issues remained be addressed. Divisional plans were then created on executive workstations and all delivered instantaneously over Xerox's network to corporate management committee members. An EIS was developed that included standard formats.. specified information. We Management Roles Perhaps the greatest difficulty encountered by firms obtaining and keeping in bringing about IT-driven redesign will bring. These task forces included representation from by the changes. getting process changes implemented usually more difficult than determining what changes should be 21 . It to be affected Human was panicularly imponant the customer of the process be represented ideal on the team. organization structure implications.. and the need for continuous process improvement. a process redesign effort driven by a single business function or unit the organization. Plans often came in too late for the corporate management committee review them before the review meeting. the proper direction for the IT infrastructure. to decisions at the They can now read the plans beforehand and can move directly review meeting. discuss each issue below. new skill requirements. allowing revisions to be it.. several companies created a cross- functional task force headed by a senior executive. These issues included management roles in the redesign activity. the its planning process was somewhat haphazard. As one manager put speed and "^^ in greater depth. each different format. ". Of course. The workstations are even used in the meeting itself. they needed to work closely with is the managers and staff of the affected units. creating a function to perform IT-enabled BPR. the review of division strategic plans.

Age describes the company one of the few major corporations built after the Information began. would be resolved In customer of a process. sell a The company's redesign its arrival objectives involved both cost and rime: to be able to product within 5 minutes of at on the loading dock. to a While no firm studied has converted wholly organizations have process-based structure. new processes will be created that cut across the previous process-based organization. the company's Managing Director commented on his To change our business to the degree we have demands integration. and that that differences of opinion role. This does not mean that a process- based structure cannot be useful. GUS undenook $90 million project to redesign logistical processes with IT. But process responsibilities are likely to cut across existing functional and unit organizational structures.made. In and to be able to deliver a product to the customer's door an average cost of 60 cents. role: meeting these objectives. except that the cross-functional nattire of process redesign increases the number of stakeholders. because he's the one who can integrate across the entire organization. Ideally. process- 22 . its For example. ^^ Process Redesign and Organizational Structure A structure. John ScuUey. How involved should the Managing Director get in designing computer systems? My view is totally. CEO. Apple Computer Its beginning to incorporate a process orientation into as structure. the CEO also communicated any structural implications of the redesign effon to affected organizational units and staff (the implications of process redesign for structure are discussed in the next section). the largest home shopping company its Europe. Apple has recentiy moved away from a functional structure to what executives describe as an IT-oriented. such as function. managing process change is similar to other types of change management. a few is moved in this direction. An example of the importance of the CEO's role in process redesign in is found a at GUS Home Shopping. IT would play an important many cases. structural dimensions. It was necessary make clear throughout the organization that in favor of the was necessary. up to and including the redesign CEO. in abandoning altogether other this. product. thereby increasing the complexity of the effort It was also important to have strong senior management commitment to to the redesign effort. and then managing the redesigned process thereafter. but only that a specific process-based structure will have to be changed frequently to closely follow how business is done. or geography. second key issue Certainly is the relationship in between process orientation and organizational someone must be put charge of implementing a process change. There are risks to however: as business needs change over time. How can process organization and traditional functional organization be reconciled? One effect possible solution is to create a new organizational structure along process lines.

Again. and team and A functional identified. An Ongoing Organization for Creating Process Change Organizations that have redesigned key processes will also need to establish an ongoing organization to oversee continuing redesign and organizational "tuning". more conservative approach would be to create a matrix of functional and process responsibilities. being used to build an organizational infrastructure at the built.^ Several organizations that are moving toward IT-driven process management are conducting formal programs for the development of facilitation less reliance skills. "New Enterprise". same time a new IT infrastructure is being At Levi Strauss. In these must learn to convince rather than to dictate. when processes cut across organizational units. individuals in the IT function will also require a high degree of interpersonal skills to be successful as the "new 23 . is Such a program at American Airlines. which has heavily used IT to facilitate inter-organizational processes (including the "Quick Response" processes described to enable horizontal above. the company is encouraging individual decisionmaking communication and business processes.based. these recommendations change in managerial behavior are consistent with many other organizational maxims of the past several years.based. manager who uses those supplies the customer of the process). In most companies. more cross-functional communication and cooperation. to for them. Of course. and to ensure that information systems support process flows. called "Committing to Leadership". they just happen to be useful in process management as well. project. the manager who should have responsibility for a given process is not always easily The company may also wish to avoid traditional functional thinking in assigning it process responsibilities. These programs encourage on hierarchy. supplies acquisition to a rather than to the For example. they change the behavior of employees who do not work persuade rather than for to instruct. head of the purchasing function.and lower-level managers. New Skill Requirements to For process management to succeed over the long run. However. the analytical skills needed for redesigning processes are most likely to be found in the IT function. traditional sources of authority may be of littie use in process change and improvement Managers will often find themselves trying to cases. may be wiser to give responsibility for the process of (i.e. and more decisionmaking by middle. customer satisfaction-driven structure called lack of formal hierarchy. because of the cross-functional nature of most processes. The company relishes its Apple managers describe their roles as highly diffuse. However.. managers will need facilitation develop and influence skills.

Federal Express. and human resources. the an IT-driven redesign. placing function. headed by a On a project basis. e. has gone even further.. TTiere are a few emerging examples of such process change groups. like the management described above. and the development of shared databases. renaming it its IE organization the "Strategic Integrated Systems Group". industrial engineering. director-level manager. because particular functions in mind. organizational strategies for process However. there are several imponant advocacy roles they can play. 24 . process control. analysis. Ford Motor increasingly combines IT function key processes. Secondly. quality. these are appropriate technology strategies for most companies. as demand builds for process redesign expenise. and redesign. perhaps merging with the IE It function if there is one in the company. Process Redesign and the IT Organization Just as IT is a powerful force in redesigning business processes. and creating task forces with IT and IE representation for process its redesign projects. most application packages are designed with need to build robust IT professionals will technology platforms on which process-specific applications can be quickly constructed. finance.industrial engineers".g. process thinking has for the IT organization imponant implications few IT groups will and the technology infrastructure to lead it builds. The ideal group would combine the responsibilities of multiple functional areas. At United Parcel Service. IT group may need to play a behind-the-scenes convincing senior management of the power offered by IT and process redesign. which includes more than is EE's. the 1500 Industrial Engineering function. can also develop an approach or methodology for IT- enabled redesign. whether or not they are redesigning processes with IT. competitor. and giving it within the Information Systems responsibility for designing and implementing major IT-driven business changes. This implies a standardized architecture with extensive communications capability between computing nodes. the IT group can begin to incorporate the IE-oriented skills of process measurement. is the traditional locus for process redesign. Though have the power and influence First of all. information systems. as it employees with the industrial engineers to redesign did recently on a redesign of pans warehousing process. role. Silicon Graphics has it is created a specific process consulting group for ongoing process management. The UPS group incorporating IT skills in the IE function at a rapid rate. perhaps using the five steps described above as a starting poinL What must the information systems function do technologically to prepare for process redesign? IT professionals must recognize that they will have to build most systems needed to suppon (or enable) processes rather than buying them from software package vendors.

rather than hierarchical authority.K. must be robust enough to enable continued increases in functionality for the applications that support a particular process. and some forthcoming technologies will have substantial impact on the operational and management processes of the next decade. company 1985. ^^ The IT infrastructure. IT is continuing to evolve. Case Study: IT-Driven Process Redesign at Rank Xerox U. The group to restructure the organization around cross-functional processes. identifying high-level objectives for each process and creating task forces to define information and other resource requirements for each process. responsible for a process should constantly investigate whether Those new information technologies make possible new ways of carrying out a process. (RXUK).Continuous Process Improvement It is also important that process improvement be continuous. IT-enabled business process redesign must generally be dynamic. skills and O'Brien decided to keep a still somewhat functional formal structure. or "kaizen" (a Japanese term meaning continuous improvement). and then to identified the key business processes needed for the company succeed in its mission. the division's Managing Director.^^ Continuous process improvement occurs when the cycle of stabilizing. He began to see his own organization as a processes. if test bed for using integrated office systems to support integrated. constantly stressing process improvement through the application of IT. A key element in Kanban is continuous improvement. assessing. The concept of continuous process improvement has received considerable attention in manufacturing. because functional skills would be needed in a process 25 . company of Xerox Corporation. requires becomes first that the existing process be capabilities The performance of the process then predictable. in the quality movement. due largely to the impact of Toyota Motor Company's production and just-in-time inventory {Kanban) systems. the The company began business in 1987. and secondly. business such a concept were successful. its RXUK began senior management team reappraised external environment and mission. They created career systems revolving around facilitation cross-functional management. in who arrived at the business: first. As in the Toyota example. as discussed above. the company's strong functional culture and inefficient business processes would greatly inhibit its growth. he could use to redesign its RXUK as a model for customers. engaged in the at a national operating most comprehensive IT-driven process redesign of any company we have studied.K. and improving a given process becomes an institutional practice. The concept of process improvement. and its become accessible to analysis and improvement. has Rank Xerox U. O'Brien quickly came to to two realizations about RXUK's its company needed focus on marketing "office systems" rather than traditional reprographics products. In a series of offsite meetings. as developed stabilized. The changes RXUK the have been led by David O'Brien.

but new messages and thinking to our potential customers. RXUK's financial situation began to improve as it redesigned its business processes. using the in automated code generation capabilities of the Information Engineering Facility product. to prioritize the identified processes for The senior management team reconvened system life development. We were moving to a much more integrated view of the world and had to encourage a major shift in many patterns of the existing culture. logistics. The to Facilitating Director of processes and systems. integrated planning. fleet management). management. in many ways was very skillful and effective. This meant a very hard. The company emerged from a long period of stagnation into a period of 20% revenue growth. the company began to think about how own and from other providers) could enable and suppon that a the processes. Paul Chapman. logistics) and 145 different "micro" processes (e. new environment. The level of change was still very high. customer satisfaction. The personnel system has now been successfully completed. but managing the change required heavy personal attention: Of course. because it was viewed as relatively easy to attack.. could or would not manage in the called "facilitating directors".g. Several senior managers depaned because they cross-functional senior positions. this new attitudes of the philosophy in a in a different product-market environment. and because the level of organizational change might have been too great with a wholly new structure. the quality. tough program of selling the new ideas within the organization as well as an extensive and personal effort to get the thinking was in quite sharp contrast to some of the skills and company. skills and because personnel systems were crucial in tracking the development of the new required by the company. installed financial equipment management. Two new were created. and ' "honeymoon period accorded to new CEO's.^^ As the key processes were identified and information technology (its their objectives determined. substantially less time than with normal methods. information systems. O'Brien took great advantage of other for process the management. decided His new approach developing information systems around processes was necessary. The output of the process identification consisted of 18 "macro" business processes (for example. and personnel management.organization. one for organizational and business development. The personnel management process was first selected as the for systems implementation. We were introducing a change in management company which. organization identified the information engineering product discussed above as the only one consistent with a process orientation. Jobs not 26 . and tools to refine worked with an external consultant in using the system and confirm the process identification. and identified seven macro processes as of particular importance: customer order cycle. We faced all the issues of attitudinal change and retraining which any such change implies.

that cross organizational Yet managing by customer-driven processes intuitively appealing idea that has boundaries is an it. Order delivery time factors in was reduced from an average of 33 days markets were changing during improvement. this time. 6 days.directly involved in contact with customers were reduced from to 1 100 to 800. product development and marketing divisions have major cross- functional teams performing process redesign. will focus increasingly on the redesign of business processes with IT. We have only begun to explore the implications and implementation of of the companies this concept. heading a cross- Commitment to IT-driven process redesign by Xerox senior corporate management is also growing. where he functional team looking at corporate business processes. Though many other RXUK's the O'Brien credits the process redesign for much of Other Xerox divisions heard of of their own. Summary We believe that the industrial engineers of the future.S. and only a few companies have ventured into the area. question that information technology that a powerful tool for reshaping business skill The individuals and companies can master the of redesigning processes around IT will be well-equipped to succeed in the new decade and millennium. In short. Paul Chapman. worked well in the companies is that have experimented with And few would processes. RXUK's success with process redesign and began efforts Xerox's U. regardless of their formal title or the organizational unit that employs them. Many who have employed IT to redesign particular business processes have done so without any conscious approaches or philosophies such as those base with IT-enabled process redesign is we have ouUined here. has been seconded to Xerox corporate headquarters. RXUK's director of processes and is systems. 27 . the actual experience limited.

Quality Process Management (Englewood Cliffs. p. (1988) studied white-collar productivity and IT as one part of a broader inquiry into poor productivity growth. K. Our structurally-oriented definition also complements that of Schein. April 1987. Gilbreth.C. Technology and the Transformation of White-Collar Work (Hillsdale. G. the Center for Information Systems Research at the MIT Sloan School. D. A J.B. on 1914). See R." Industrial Engineering March 3. MA: MIT Sloan School of Management. 1 L." Special Economic Study.9. and McKinsey and Company. eds. Baily et.g. Baily and A. working paper no.S. working paper 90s:88-054. Innovation and the Productivity Crisis (Washington. Loveman. Loveman studied microeconomic data from manufacturing firms to estimate econometrically the productivity impact of IT in the late 1970's and early 1980's. 4. al. Morgan Stanley Co. 1990. N. A New Approach to IE.E. pp. Papers the Science of Administration (New York: Institute of Public Administration..E. 7-17. S." MFT Management (Winter 1989). is inevitable. Winter 1989. 1987). pp. For an alternative perspective. "What is Coordinauon Theory?" (Cambridge. 3-6.A." Sloan Management Review.F. Baily et. Crowston and T. 182. who focuses on human e. "IT in the 1990's: Managing Organizational Interdependence. Shon. Warren McFarlan. "Office Automation: Making It Pay Off. Loveman Dilemma: & 6. "America's Productivity Profile of the Information Economy. Van Nostrand Company. "An Assessment of the Productivity Impact of Information Technologies" (Cambridge. 2. Center for Information Systems Research." Business Week. James Cash. July 1988). Malone. rather than managed change. 1937). he argues that his findings in manufacturing raise serious questions about impacts in nonmanufacturing firms as well. In finding no significant positive productivity impact from IT." (Cambridge. Primer of Scientific Management (New York: D. Gulick and L. December 1987). MA: MIT Sloan School of Management. MA: MIT Sloan School of Management. See also S. (1988). p. Management in the 1990's." Honon's belief is that the external business environment is so unpredictable that surprise. (1988). and Michael Scon-Morton. "Notes on the Theory of Organization. who became chairman and chief executive of British Petroleum in March. John Rockart. and intergroup processes.: Lawrence Erlbaum Associates. pp. Malone. "Process Design Concept: 1989. Robert Horton.. T. 165. — and decision making.. "Information Technology and Work Organization.J. Pall. 8. February 1988). They found no evidence of significant productivity gain.: Brookings Institution.N. working paper no. G. Center for Information Systems Research. Chakrabarti. Edgar Schein. building and maintaining groups. leading and influencing. Kraut. 5. 134-146. 12 October 1987. 1988). al. F. 1987). see R. "Future Challenges to Management. Roach. Sakamoto.. Gulick. group problem solving processes in organizations 9. They also are grateful for the suggestions and ideas provided by Lynda Applegate. Honon. Rockan and J.References The authors wish to acknowledge the support of Harvard Business School's Division of Research. Urwick. NJ: Prentice-Hall.W." in L. 28 . 31. 7. See M. Ed. argues that his major concern in setting BFs course in the next decade is "managing surprise.

to employ the information engineering approach to redesign were selected because of their impact. . "The lE's future role knowledge worker productivity. Management in the 1990's. and F.S. J.H. pp. "IT-Induced Business Reconfiguration: The New Strategic Management Challenge. Jr.F. An overview volume is scheduled for publication by Oxford University F*ress in June 1990. for example. "Information Technology Puts Power Systems". in Control 17. Leonard-Banon. Jr. 1987. in IBM 12. p. "Beyond Vertical Integration Partnership. Gitlow and S. 29 .W." Harvard Business Review. Case Services #9-609-060. Harvard Business Review Sept. E. also G. See D. "Time Harvard Business Review. 1988). Rockart. pp. Johnson and P. McFarlan. the concept of organizational prototyping with regard to new information technologies. Quality and 11. Similarly. 22. Stalk. p. working paper 90s:88-064. J. "Innovative Cultures and Organi2:ations" (Cambridge. "IS Redraws Competitive Boundaries. The Deming Guide Competitive Position (Englewood Cliffs. S. Process Consultation: Its Role in Organization Development.-Oct. The relationship between business vision and IT has been explored by several researchers under the auspices of the MPT Sloan School's five year "Management in the 1990s" research program." 16. G.R. 15. "Reference Note on Work Simplification". 7-19.J. Adding 23. See." Industrial Engineering July 1987. Schein. July-August 1988. NJ: Prentice-Hall.S. 18. 1987. For example. Fall 1987. Kane. Center for Information Systems Research. Information engineenng and other redesign approaches based on data modeling are necessarily limited in scope.See E. I. W.J. "Managing the Data Resource: A Contingency Perspective" (Cambridge. rather than through information engineering. pp. M. Zuboff.A. November 1988). MA: MIT Sloan School of Management. 28. Cash and B. January 1987). "The Case for Innovation: An Expen System at Digital. MA: MIT Sloan School of Management." Sloan Management Review." unpublished manuscript. March-April 1985. The Next Source of See. 134 . The Rise of the ValueR. Goodhue. 1988). to 5. D. Volume Second Edition (Reading. 150. Bruns. 21 Dorothy Leonard-Barton introduced the implementation of Integrative pp. 5.I. see H. 10.W." paper presented at the annual conference of the MIT Center for Information Systems Research. 41-51. Pall. Quillard. In the Age of the Smart Machine (New York: Basic Books. it would be possible specific processes that 20. Gitlow. See also N. MA: Harvard Business School. Venkatraman.142. for example. Konsynski. July-August 1988. 1961) HBS 14. 89-94. MA: Addison-Wesley." Harvard Business Review.. Morris and G. — Strategic Advantage.H. Schein. Corporation. Purchase.R. 1987) Chapter E. (Boston.. working paper no. More than data is exchanged in many process relationships. 94-101. 19. — J. NY. Vining. pp. June 1989. improving 13. "IBM's Total Quality Improvement System. Lawrence.

1988 (revised 1989). 1988 (revised 1989). See Harvard Business School case study.X. Cusamuno." Lynda M. See also M. Mills. 25. 469- 486. and Exchange to Accomplish Work. information comes from personal interviews. Cook." Lynda M. March-April 89. 169. Cohen and D. Johansen. "Managing the Merger: Building Partnership Through IT Planning at the New Baxter. David O'Brien. M. J." in progress.M. 128-136. R. December 1989. J. Groupware: Computer Support for Business Teams (New York: The Free Press. Yet it is important to remember thai informational processes can be either operational or managerial.V. pp. September 1988. Shon. A case study describes the process and the creation of the expen system. other by Zuboff pnmanly involve informational processes. 32.L. and human resource development.S. "The Center for Machine Intelligence: Computer Support for Cooperative Work. Other Rank Xerox U.A. T. 37. MA: MIT Sloan School of Management. 30 . Harvard University. Office Systems Strategy (C): Developing the Systems Strategy.K. "Piney Wood". and D. One might consider managerial processes synonymous with informational processes.E. May 1988). "Groupware: A Key to Managing Business Teams?" (Cambridge. Applegate. R. Cash. address to McKinsey 1989.R. "Influence Without Authority: The Use of Alliances. Bullen and R. Germany.H. See G. & Co. See. 30.. Certainly the vast majority of managerial processes. such as budgeting. Pugh.R. November-December 1988. Some aspects of this process improvement are described in a Harvard Business School case "Xerox Corporation: Executive Suppon Systems. for example." Management Information Systems Quarterly. Johansen.I. Osborne. Reciprocitv. 106-111. information technology practice leaders. The Japanese Automobile Industry (Cambridge. and "Cedar Bluff in S. Also see C. "Time to Reform Job Shop Manufacturing.R.E. Hall.A. 35. quoted in "Rank Xerox U. "The Turnaround at U. Winter 1989. Center for Information Systems Research." Harvard Business Review. Munich. 1988).The Management College. 26. Friesen. working paper no.C. 36. industries discussed See cases on "Tiger Creek". Pall (1987). Ashton and F. so we believe that this separate dimension of process types is warranted. planning. Applegate and Charles S. Applegate. 4-17.Q." Harvard Business Review.24. A. Zuboff (1988).E. 29. Shon. See "Texas Instruments Capital Investment Expen System. 1985). 28. pp." case study from Henley . C.J. studv. involve informational objects. pp. and J. MA: Council on East Asian Soidies. Main and J.R. "Information Technology and Tomorrow's Manager. 27. Sprint: The Role of Improved Paimership Between Business and Information Management. 1988. L. June 34. 31.K.E. pp. Bradford." Harvard Business School." Organizational Dynamics. 33.

D. He has consulted at McKinsey and Co. degrees from MIT. Thomas H. degrees from Harvard University. Shon holds the S.B.. S. Short is a research associate at the Center for Information Systems Research at the MIT Sloan School of Management. and Ph. and the development of IT infrastructures. degree from Trinity University. Dr. and Ph. problem-focused teams and task forces. His research interests include how technology enables organizations to execute differential strategies through enhanced integration and flexible. and holds M.. where he directs research and multi-client programs. His current interests include the relationship between information technology and organization.D. and Index Group. Davenpon James E.A.is a partner at Ernst and Young's Center for Information Technology and Strategy in Boston.M. and has taught at Harvard Business School and the University of Chicago.A. 31 . He holds a B.

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