Main external and internal drivers of Business Process Reengineering
As a person with knowledge of business process reengineering, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fail to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how business process reengineering is thought up, formulated and then imparted down into the subsidiaries of the organization. The author hopes to have an in-depth understanding as to how the business process reengineering of organizations enables them to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon i.e. innovation and diversity. Innovation was discussed with regard to business process reengineering where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
This essay utilized business process reengineering as the model theoretical entity to review its present impacts and how it dealt with critical situations. From the analysis, key trends in business process reengineering were then identified, how it worked and its effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess the various business process reengineering systems and their strategies with regard to being suitable to critical situations, during which the internal capabilities of these business process reengineering systems in relation to the strategy being followed will be determined also. An overall analysis of the performance and effectiveness of business process reengineering systems was also conducted to assess and compare the capabilities of these systems with those of others. Gaps in the business process reengineering systems’ capabilities and organizational environment were then identified.
Finally, several choices of strategies to improve the operations of organizations through the use of a business process reengineering systems as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.
Business process reengineering can be defined as the efficient and effective implementation of the policies and tasks necessary to satisfy an organization's customers, employees, and management through the analysis and design of workflows and processes. Business process reengineering focuses on the careful management of the processes involved in the production and distribution of products and services (1993).
More often than not, small companies don't really have the capabilities to implement business process reengineering. Instead, these companies engage in activities that various schools of management typically associate with business process reengineering. These activities include the manufacturing of products, budget development, production and distribution.
However, business process reengineering deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with business process reengineering. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, business process reengineering includes the analysis and management of internal processes.
Palm, Inc. will be the model business entity that will be used in this research based on their history in business process reengineering.
REVIEW OF RELATED LITERATURE
Information Technology and Information Systems form an integral part of business process reengineering. There is an important distinction between Information Technology and Information Systems. Information Technology refers to the equipment and techniques that are being used to manage and process relevant information (1991). Information Systems, on the other hand, refer to either the hardware, software, people, or data that provide the relevant information about all aspects of the operations of businesses (1994).
Data and information are critical in business process reengineering, since these will help the management of a company in analyzing their present status in order to cut costs, increase profits, spot market trends faster, and communicate more effectively with customers. However, in order to achieve these goals, the data and information need to be relevant, accurate, complete and timely.
Computer networks play an integral part in the proper functioning of information systems as well as e-business technologies. Computer networks refer to a group of two or more computer systems linked together by communication channels for the purposes of sharing data and information. There are generally three (3) types of computer networks. Local Area Network (LAN) allows the connection of computers within a particular site, enabling people within that vicinity to easily share any software or hardware. Wide Area Network (WAN) allows the connection of computers at different sites either by phone or satellites. The last type, Intranet, allows internal corporate-wide networking (1994).
Computer networks play a crucial role in the proper functioning of information systems and e-business technologies. Through the efficient computer networking, the effective sharing of information and even expensive hardware is thus made possible. This in turn contributes to the improvement of the overall operating efficiency of the company coupled with an increase in productivity.
OVERVIEW OF PALM, INC.
Palm, Inc. aims for sustainable growth as a broad market leader in mobile computing as well as for segment leadership. In both cases, the Palm, Inc. brands will play a crucial part. Palm, Inc. is able to establish its broad leadership usually by acquiring other strong mobile computing companies and their products, which are then combined into a new, larger company. Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of the various Palm products. This practically results in economies of scale that is able to create a distribution network for both the local and international Palm products. If a market is already in the control of other mobile computing companies, Palm, Inc. devotes its attention towards the development of a premium segment with its various Palm products.
The mission of Palm, Inc. is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the company’s profitability. The strategy to achieve this involves four elements:
- Striving in order to reach a leading position in attractive markets
- Focusing on securing a competitive share of the mobile computing market segments.
- Working in order to improve the company’s efficiency and cut costs in operations.
- Continuous growth through selective acquisitions for as long as they are able to create shareholder value.
Drivers of Business Process Reengineering
More often than not, newly merged or acquired business entities don't really have an easy time adjusting to the changes brought about by the acquisition or take-over. As a result, these entities engage in activities that are somehow resisting to changes, including business process reengineering. Therefore, the major activities of the company such as the manufacturing of products, product development, production and distribution become severely hampered.
Companies today have to be efficient, flexible and profitable. Without these factors, it would be very difficult to compete in the global economy. Aside from participating in strategic alliances to fully enhance the resources they need to become competitive, many companies now evolve and expand through mergers or acquisitions.
Some businessmen argue that the fast pace of mergers and acquisitions ultimately becomes the external driving force behind business process reengineering (1994). Merging and acquisition deals may have the potential to create enormous economic and social consequences. They can easily drive away the major competitors within a country. They can also determine how and where people should work. However, earning the approval of the government for merging and acquisition deals would never be easy.
Business process reengineering undergoes through a series of stages. At every stage, the effective management of resources and cultural issues is critical. This is initiated by the identification of the business issues and their significance for the company’s activities. If not handled properly, this could lead to the further downfall of the organization instead of going upward towards the ladder of success.
The aftermath of most cases where companies lose ground on their marketing strategies often lead to the implementation of business process reengineering. Because of the adjustments that the company would have to endure while undergoing the process of business process reengineering, it is not surprising that at first the management would hold so much power and decision-making authority for precautionary measures. The management would have the tendency to consult its employees from time to time especially in making crucial business decisions in order to avoid the same marketing pitfalls. As a precautionary measure, the management would include having a perfectionist type of management to make sure that the new marketing strategies and business processes would remain consistently efficient. The motivation environment will be characterized through the establishment of a new structured set of rewards and punishments among employees ( 1995).
As time goes by the workforce and the management gets to jive with each other and get over the impacts of business process reengineering. Along with this is the changing of leadership type from autocratic to a democratic type. This way, the participation of all key stakeholders especially the employees will be more encouraged. If they feel something is right or wrong regarding the current business processes, or if they want to tell something important to the management, they can now be free do so without any worries. Also, the positive points of business process reengineering allow the management to have a feedback regarding the business policies and regulations being implemented. They will immediately know if there is any tension going on between or among the stakeholders involved. Thus, immediate action can be planned and implemented by the management to keep matters from getting worse.
PALM, INC.’S BUSINESS PROCESS REENGINEERING SYSTEMS
Palm, Inc. typically implements these specific business process reengineering systems in order to improve their business operations.
A. Transaction Processing System
This business process reengineering system is tasked to collect and organize operational data of the company’s activities ( 1992). For example, a typical operation within Palm, Inc. involves transferring $500 from the account of their client to the company’s checking account. This would seem like a single operation to the company, but in reality this transaction consists of two steps: debiting the clients account by $500, and crediting the company’s checking account by $500. If the debit operation succeeded and the credit did not, then the $500 would disappear.
The transaction processing system combines these two operations and groups them into a single transaction. This is done through the production of copies of the data in question, and these copies are then made to run the operations on the copied data. When both commands have successfully completed, the changed data is written back to the system in a single operation. If one of the operations fails, the copied data is simply discarded, and an error is reported.
For many years transaction processing was the domain of business process reengineering systems, especially since they these information systems were able to guarantee that any changes to the database would be completed. This worked well for most companies, and they could all even run on top of a database with a single client-server.
However, in recent years this model has also become more difficult to maintain. As the number of transactions grew in response to various online services, a single database proved to be very inefficient. Also, most online systems consist of a whole suite of programs operating together, as opposed to a strict client-server model where the single server could handle the transaction processing.
B. Management Support Systems
1) Decision Support System
This business process reengineering system goes beyond one-way presentations and sharing of applications to enable a focused exchange of ideas over the Internet or an Intranet. Researches have proved that electronic brainstorming is able to generate more and better ideas (1994). This is brought about by the combination of parallel idea generation and the utilization of focus group discussions and tools for the organization of ideas. Therefore, decision-making is done with a higher degree of consensus and a higher likelihood of implementation success. Meetings within Palm, Inc. would only take less than a fraction of time as expected. But more importantly, the employees walk away with the minutes of the meeting in hand, regardless of where they are.
Also, because the tools are web-based, the management of Palm, Inc. can choose the proper setting for the meetings, whether to place the clients in a conference room, set up a distributed meeting or a mixture of both. The management can decide whether the meeting should be done in real-time or whether the clients can participate and contribute their ideas only when their schedule allows them to. Either way, Palm, Inc. can be assured of getting the same focus and productivity while at the same time having a significantly greater flexibility in terms of scheduling.
2) Executive Information System (EIS)
The Executive Information System begins with the identification of problems. These include the gaps between the desired and actual states that cannot be easily closed easily because of the new knowledge that needs to be produced to support the decisions and actions needed to close them (1994). There are generally three (3) classes of such problems:
· problems occurring in business processes;
· problems occurring in knowledge processes; and
· problems occurring in Knowledge management processes.
Problems occurring in the business processes cannot be resolved through the use of Knowledge management solutions, but through knowledge processing solutions. The other two classes of problems, however, can be solved through the use of Executive Information System services. This Information System will identify, formulate, and evaluate the knowledge processing and knowledge management problems
This is the most important service that the EIS could provide. Failure to solve a business process problem within a company, for instance, may not be caused by a problem in the organization and structure of the company’s organizational knowledge processes. Instead, it may be possibly caused by a failure in solving an extremely difficult business process problem, even though available knowledge processes are working just fine.
There are certain instances, however, that it is not always very clear what the nature of the problem is, even if a knowledge processing problem exists. For example, the fact that the knowledge needed to support a particular decision is not there may be possibly caused by the fact that the knowledge exists, but is currently unavailable because of a poorly operating knowledge sharing process. Another possible explanation is that it could be caused by the fact that the process of the development of new knowledge claims is not open to most organizational participants.
The bottom line is the process on how the problem is formulated and diagnosed. Because of its experience in the development of the underlying conceptual foundations of Knowledge Management, the Executive Information System will be able to identify, formulate and evaluate knowledge processing and knowledge management problems within Palm, Inc.
3) Expert System
The Expert System is meant to solve real company problems which normally would require hiring a human expert to solve them (Nichols, 1994). Building the Expert system therefore first involves the extraction of the crucial information from a human expert. Such knowledge is often characterized as heuristic in nature. However, the extraction of relevant information from an expert in a way that can be used by a computer is generally a difficult task. Therefore, a knowledge engineer is needed to do the job of extracting this knowledge and building the expert system knowledge base.
The first attempt in the construction of the Expert System would unlikely be very successful. This is partly because the human expert generally would find it very difficult to express the necessary knowledge and rules needed to solve the problem. Much of it is almost subconscious, or appears so obvious that most human experts don't even bother mentioning it. Knowledge acquisition for the De Havilland Expert System would involve a big area of research, with a wide variety of techniques that also need to be developed. However, it is important for De Havilland company to first develop an initial prototype based on the relevant information extracted in the interview of the human expert, then make some refinements on it based this time on the feedbacks coming from both the human expert and from the potential users of the De Havilland Expert System.
In order to do such refinements from the prototype it is important that the De Havilland Expert System must be written in such a way that it can easily be inspected and modified. The system should be able to explain its reasoning and also be able to answer questions regarding the solution process. The system updating must not involve rewriting a whole lot of codes. It must include simply the addition or deleting localized chunks of knowledge.
The most widely used knowledge representation scheme for expert systems is rules. Typically, the rules do not have certain conclusions, but there is some degree of certainty that the conclusion will hold if the conditions hold also. Statistical techniques are often used to determine these certainties. Rule-based systems, with or without certainties, can be easily modified, thus making it easy to provide helpful traces of the system's reasoning. These traces can be further used in providing explanations of what it is doing.
Expert systems have long been used to solve a wide range of problems in domains which include medicine, mathematics, engineering, business, law and education. Within each domain, they have been used to solve problems of different types. Types of problem involve diagnosis (e.g., of a system fault or student error); design (of computer systems); and interpretation (of, for example, geological data). The necessary problem solving techniques tend to depend more on the type of the problems rather than on the domain.
C. Office Automation System
The Office Automation System would provide the incorporation of important documents of all types within Palm, Inc. through the integration of images into the Automation System (1995). The Office System would include applications such as word processing, database, and mail, all of which are able to access image documents. The storage of document images is made possible through the utilization of a variety of storage media such as microfilms and optical disks. An image access subsystem, on the other hand, provides to each of the Office Automation applications the uniform access to images stored on all of the media. The image access subsystem can then be used as a hardware controller to handle some of the complex events in the retrieval of images from the image storage devices. A relational database system must be used in order to organize the stored images so as to provide flexible access to the images and to isolate any effects of reconfiguration of the image storage system.
The results of the analysis carried out on the business process reengineering systems of Palm, Inc. indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the business process reengineering systems of Palm, Inc. could still be expected to improve faster than average.
The review of business process reengineering’s capabilities and drivers revealed very little inconsistencies regarding Palm, Inc.’s strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for Palm, Inc.
The analysis among the environment as well as the capabilities of Palm, Inc.’s business process reengineering systems revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of Palm, Inc.’s business process reengineering systems.
Also, Palm, Inc. has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.
Search Our Library. Search by Keyword, Author or Title