Re-engineering no longer code for ‘you’re fired’

(Based on an article published in the Bottom Line in December 2004)

In the past, BPI was called Business Process Re-engineering (BPR), which many people think is a euphemism for layoffs. BPR was also supposed to involve radical change. Today, you hear less about BPR and more about BPI because BPR has bad connotations. BPI is not about layoffs or radical change.

BPI is about gradual improvement of business process. A business case should determine whether the change is warranted. BPI is not just for large organizations. There are opportunities for BPI everywhere in any sized organization. But often these opportunities are undetected or ignored. Why?

One reason is that many organizations are so busy with day to day activities that there is no time to invest in making a change. Another reason is that we all become accustomed to a way of doing things. We have a "if it's not broken, don't fix it" mentality. The job gets done, even if it takes brute force to make it happen. Another impediment to making a change in business process is that there is a lack of independent advice on BPI.

Small and medium sized businesses often rely on a Value Added Reseller (VAR) or software vendor for changes to their business system. The VARs and the software vendors will make recommendations for BPI. But there is often the concern that the VARs and software vendors stand to gain from the recommendations in selling more software and services.

What to do? One source for BPI should be accounting firms. They often review business systems for controls. While they're at it, why not seek out opportunities for BPI? Sometimes internal resources will have the skill set to do it, but like VARs and software vendors, they may also personally benefit from their recommendations. Another option is to find an independent consultant to help you.

How is it done? Some consultants come in with grandiose recommendations based on theories. This approach is asking for trouble. BPI requires an understanding of an organization's Critical Success Factors (CSFs - what must be done well to be successful), and CSFs will vary across each organization. Are the existing business processes addressing the CSFs in an efficient and effective manner?

As well, you are unlikely to find the problem areas without conducting interviews with the people doing the work. As they say, the devil is in the details. Ask employees to describe a typical day in the life (their business process). Be alert for non value added activities such as re-entering information or wait times when documents sit on someone's desk. Ask the employees for an approximation of time spent on the activities. This will give you a sense of the potential savings with an improved process. Ask the employees to identify problem areas and bottlenecks. There is a wealth of information locked in their heads.

Another way to assess business process is use benchmarks. First identify the key performance indicators (KPIs), which should relate to an organization's strategy and its CSFs. The KPIs will be financial as well as non-financial measurements. It would be useful to compare an organization's KPI's with industry standards - if you can find them. Even if you find industry benchmarks, caution is advised. Other companies may use a different calculation for the same metric. Although there are challenges associated with benchmarks, the exercise is worthwhile in itself. KPIs can become a motivational force as employees try to find ways to improve performance. But there are also dangers associated with KPIs, especially if the improvement of one KPI is at the expense of another. That is why you sometimes hear of a balanced scorecard approach.

Once you have identified the opportunities for BPI, consider the alternatives. Sometimes it's just a matter of eliminating non value added steps. But often, BPI is facilitated by technology. Switching systems should be a last resort. First give the existing VARs and software vendors a high level requirements document and ask for an estimate to improve the business process. You should now have both the benefits and costs related to the change, and you should know whether there is a business case to proceed.

Look to technology to eliminate data duplication, which is still a huge problem for so many organizations. Employees often need to re-key or copy data from 1 place to another. And Excel is the usual place the data goes. Spreadsheets are inefficient and not completely reliable: errors can slip in through re-keying or calculation mistakes. There is no audit trail on changes and mistakes may not be detected. To make matters worse, spreadsheets are typically not shared across an organization and they are not updated as things change. So decisions are made with old data. There are tools, such as Business Intelligence system, to eliminate or at least reduce the reliance on spreadsheets. As well, VARs and software vendors have integration tools that could make a big difference.

Another technology that will improve business process is Work Flow. Work Flow includes the ability to automatically route transactions such as Purchase Orders to the right person for electronic approval. Use of bar codes and scanning is another source of technology that can improve business process. There is no shortage of technology that could potentially help. But technology for technology sake is a big waste. The technology investment must improve BPI and be supported by a compelling business case.

You may also be able to achieve BPI by using a different method or workaround to obtain results. For example when there is no need to setup a vendor and a payable, just generate what is called a quick cheque. BPI may be achieved by purchasing additional software, workarounds, integration or customization.

BPI is a process of looking around the corner. You never know what's around the corner until you look - and what you find could make a big difference.