A Strategic Approach to Business Process Redesign by Subhash Chandra

A Strategic Approach to Business Process Redesign

Value Envisioned. Value Delivered.

Executive Summary To successfully reengineer a business process, there is a lot of work that must be completed before the actual process is modified. First, the problem must be defined to set the course for the optimal solution. Once the problem is understood, the current state must be assessed, taking into account the three key business components: people, process, and tools. After establishing a baseline, comparing the current state to peers will help benchmark your position, and may provide insight to revolutionary improvements. This holistic approach to analyzing the current state will help ensure all variables of the business are taken into account, minimizing the likelihood of failure.

redesign methodology, all while being cognizant of potential pitfalls.

Problem Definition

When the problem and current business environment are understood, outlining the goals and scope of the initiative and ensuring the project’s ambitions align with the corporate vision will provide the initial boundaries for the project. Once the project is scoped, an execution plan should be constructed to get an understanding of the proposed timeline and its relation with cost and extent of the initiative. After the scope and execution plan are completed, the work should be sequenced according to the business vision, culminating in a strategic roadmap.

When reengineering business processes, generally the goal is to decrease operational costs and/or improve customer service. Many firms take a reactive approach to decreasing operational costs by reducing headcount without improved processes or technology. This creates a one-time, unsustainable savings that leads to employees working as efficiently as possible, but unable to improve productivity. In fact, unless there is a corresponding reduction in workload, this can sometimes leads to further deterioration of performance due to the enormous burden left to a smaller pool of remaining employees. All of the employees’ effort is consumed by executing inefficient processes with bare-bones staff and inadequate tools, which has a significant negative impact on customer service and employee welfare. The stress on employees, often highperforming employees striving to maintain quality levels, may cause increased incidents of burnout, which may lead to abnormally high attrition rates.

A successful outcome is not guaranteed. If management support is not strong or the project is mismanaged, the likelihood of success is severely diminished. Similarly, if the redesign is thrust upon staff or their management without their support, gaining adoption will not only be difficult, but it could cause failure. Furthermore, if the solution does not adequately fulfill the business requirements or the technology does not integrate or strategically align with the current enterprise architecture, a win is unlikely. A successful BPR project must have a strong champion, strong management team, a thorough current-state assessment, and strict adherence to a

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Although reducing headcount is never easy, the tangible savings are immediately realized, so it is often a go-to method to reduce operating costs.

On the surface, if an area can operate with the decreased headcount, the workforce is more optimal than it was before the staff reduction. The problem is there are overt and hidden risks and opportunity costs associated with reducing headcount without improving processes and tools. When every employee is fully utilized by ‘Business as Usual’ operations, there is no flexibility to handle volume or staff fluctuations. An increase in business volume can only be addressed by increasing headcount, potentially exceeding the operating budget and eroding any cost savings. Something as simple a thing as several employees being sick simultaneously can severely impact productivity. In addition to productivity goals, customer service (external customers, internal customers, or both) will suffer when staff is inadequate. When employees are working beyond their capacity, performance quality is at risk. Reduced quality can manifest itself in final outputs to external customers or a slippage in Service Level Agreements with internal customers. Delivering unacceptable products to external or internal customers can result in increased downstream costs due to increased customer service after the process is complete. Not only is the customer service an additional burden on the operating cost of the organization, but employees and customers also suffer, potentially driving longterm damage to the company brand. Aside from performing additional customer service activities, the opportunity cost of having every employee fully engaged in ‘Lights On, Doors Open’ activities is that staff cannot be reallocated. When the staff is fully consumed with day-to-day operations, the ability to use team members for improvements or special projects is eliminated. The inability to re-invest in the business and its employees will directly impact the ability to implement strategic initiatives, which may erode

market share and overall shareholder value. When implementing cost-cutting measures, a deliberate business process redesign effort should be considered. Although quick reductions in cost are achievable without process redesign, to achieve sustainable efficiencies and maintain competitive positioning, organizations must invest in the tools and technologies to drive success.

Before You Start A variant of a famous quote by George Santayana states, “You can’t know where you’re going until you know where you’ve been.” This idea is a fundamental principal when doing a Business Process Redesign initiative. Before embarking on an organizational improvement project, you must understand your current state, and to take it a step further, document your current-state understanding. Documenting the current state will increase the odds of success by helping communicate issues and provide a concrete baseline to measure strategic improvements. When documenting the current state, there are three key areas that must be looked at: the people, the processes, and the tools (or technology). Once the current state is understood, comparing your findings with those of your peers through a benchmarking exercise will help identify

Value Envisioned. Value Delivered. your business’ strengths as well as shortcomings and allow you to set a clear path forward for improvement. The benchmarking exercise should be done in a measurable, attainable, realistic, and time-bound manner, which will not only aid in defining where to devote your efforts, but will also reveal the potential benefits to be rendered from the endeavor.

People When understanding the ‘people’ impact of any reengineering effort, you should focus on the structural, functional, and cultural aspects of the organization. From a structural standpoint, you should ask yourself, will this reengineering effort allow me to streamline or consolidate the structure of an organization? An example of this type of restructuring is consolidating once-disparate groups of resources performing the same function into a single, shared-services organizational structure. These types of transformations not only have a sizeable impact of benefit to an organization, but also require an equally sizable change program to ensure success. Most every reengineering effort will impact the organization at a functional level in some form or another. For instance, initiatives involving the implementation or enhancement of technology to automate processes often eliminate one or more functions from a process end to end, thereby impacting the resources performing those functions. These impacts, designed to improve quality or productivity, require change programs that are tailored to the impacted area to extract the highest benefit. The cultural nature of an organization, its reaction to change and the way in which it is delivered are often the most critical elements and must not be overlooked or miscalculated. For example, in global initiatives, the way in which you approach implementing and communicating a largescale reengineering effort in western cultures is 1.800.462.5582  ■ www.consultparagon.com

considerably different than how to best approach eastern cultures. Our customs and norms of society are such that, if not accounted for carefully, they can have a devastating effect on the success of the effort. In the end, people are people with lives outside of work. Taking stock in the value of the people involved in any effort and the impact initiatives have on the lives of those in the organization is the key. Conduct a deliberate approach to evaluating the impact a reengineering effort has on its people through understanding the organizational structure roles, responsibilities, the attitude toward change, and the overall culture. This will go a long way toward ensuring you build a future-proof transformation strategy.

Process To improve operations, you need to thoroughly understand the ‘Business as Usual’ environment. To gain consensus on business as unusual, processes need to be documented and reviewed. The best medium to document business processes when analyzing them for a redesign is to use business process maps. Business process maps are graphical, step-by-step depictions of an end-to-end process expressing the workflow,

routing rules, and tasks involved. Often these are completed through interviews with process associates or through process shadowing. Also known as conducting a time and motion study, this exercise captures the process, the time to complete a task, and the ‘at rest’ time of the process end to end. Once the maps are created, they should be circulated amongst process owners and actors for review to ensure consensus. When creating process maps, it is good practice to create a master map that shows the entire business process end to end to put individual functions in perspective with the overall operation. Creating a master map will also help drive out any dependencies and interdepartmental relationships that will need to be considered during any improvement initiative. The master map should be detailed enough to understand the processes and their relationships, but simple enough that the entire business can be understood. After the master map is created, the core processes should then be elaborated. Because this step is pre-work to help decide where to start the redesign effort, it is important that a minimum set of data is captured about each process and sub-process. A process improvement initiative is generally time sensitive, so over-engineering the current-state discovery and trying to capture every nuance and insignificant detail can stall the project. Instead, focus on making sure activities are captured in the proper sequence, as well as the actors who perform them and the time and effort associated with the process or task. Additional details like pain points, functional technology gaps, workarounds, and other relevant attributes should also be captured, without going overboard. This will provide the basis for identifying and prioritizing areas of high impact. Leveraging Pareto’s Principle or the law of diminishing returns are useful tools in this type of exercise. Leave capturing the task-level details of the process to the detailed

requirements phase after you have prioritized the likely candidates for reengineering.

Tools Another area important to any business process that must be evaluated is the tools and technology required to execute business processes. In today’s rapidly evolving world of digital connectivity, technology capabilities are more critical than ever before. Whether you are introducing new disruptive technology, modernizing existing assets, or simply broadening the use of existing technologies, evaluating the impact a new technology may have in improving overall business performance is critical. Conducting a thorough assessment of the technology landscape of an organization in the context of the desired future state business model and IT Roadmap can mean the difference between evolutionary and revolutionary gains in business performance. Identifying what activities require what technology will help determine what technology should be replaced, improved, or eliminated. Mission critical attributes of the desired future state and the functional capabilities the reengineering effort will demand of technology solutions will need to be captured. Whether the key requirements exist in the environment, need to be augmented, or will need to be procured are just some of the questions that should be asked when documenting the current technology landscape.

Peers When the current state is well understood and documented, it is potentially enlightening to compare your business to your industry peers. A benchmarking activity can be performed across functions, activities, and technology to help gain objective insight into where you stand with your peers regarding best practices, process

Value Envisioned. Value Delivered. maturity, or performance metrics. Benchmarking can span all functions, or if trouble areas have been identified, it can be a concentrated effort. If you find you are leading the pack relative to your peers, or for additional insight, benchmarking yourself against leaders in other industries may be worthwhile to sustain your competitive advantage, a goal of business strategy. Regardless of whom you choose to compare yourself to, the exercise will help determine what areas need improvement, and how much improvement is required to either achieve parity or potentially surpass your industry peer group.

the ‘Exhaustive’ approach may be used. To apply the ‘Exhaustive’ approach, all the processes in an organization are identified, and then ranked by priority or urgency with the expectation that all processes will be addressed to some degree over the life of the program. Depending on the thoroughness of the current-state assessment, a ‘Pseudo-Exhaustive’ approach may be performed by informally noting which processes need to be taken care of first, and then triaging that list using a ‘High Impact’ approach.

The current-state discovery helps you understand where your company ranks, and creates an indisputable record documenting your current situation. Once the current-state assessment is complete, and you have compared yourself with your industry, it is time to answer the difficult questions of why and how fast you need to change, what goals you wish to achieve, and how to get there. To maintain a long-term competitive differentiation, the following methodology should help you realize your business vision.

Once the scope is established, it is time to create an execution plan. The execution plan should address all the processes that are to be remediated and in what order. The plan should be created outlining key milestones and toll gates that must be accomplished for each step in the plan, including project-level goals and dependencies, as well as other initiatives in flight that require integration or, at minimum, coordination. After an execution plan is created, project timelines, cost, and resource demand forecasting can begin. The scope of the project, the time to complete, and the cost all must be examined concurrently in accordance with the ‘Triple Constraint Theory.’ The ‘Triple Constraint Theory’ states that a project’s scope, schedule, and budget are interrelated and changing one

Methodology Scoping Once the current state is complete, it is time put your hard work to use and formulate your reengineering priorities. When selecting the scope and the sequencing of the redesign, use the business vision as the overarching selection criteria. With that in mind, the primary decision is which processes must be addressed, would be nice to address, and are not worth the effort. The ‘High Impact’ approach is the most prolific guide to making scoping and sequencing decisions. To apply the ‘High Impact’ approach, you look at the potential processes, and select those that are the most important, generate the most revenue, or that best fit with the business vision. As an alternative,

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Planning

constraint must impact at least one of the others. To make these decisions digestible, it is recommended that the most important component of the triple constraint (cost, scope, or schedule) be identified, and that constraint held near constant. Then the other two variables can be adjusted to maximize the success of the project with respect to your business goals. The planning exercise will help solidify where you want to be and to understand how to get there. An implementation roadmap is the next step.

identified, documented, and managed as early in the project as possible.

Lack of Executive Support Because the project will at times lose steam, new initiatives will take priority, resources may change roles or leave, or the effort may turn out greater than initially envisioned, a management ‘Champion’ is an absolute requirement. Executive-level support must not be fleeting; management’s drive through the duration of the project will motivate the team and ensure the project retains the momentum required for success.

Roadmap The implementation ‘Roadmap’ should be a high-level Gantt chart that depicts the activitie that need to be accomplished to successfully complete each phase of the initiative. It should depict the order in which tasks, projects, or groups of projects (i.e. programs) should be accomplished, how long they should last, and general resource requirements. The Roadmap must take the business vision and objectives into account, as well as the decisions made in the scoping and planning activities, but should also incorporate quick wins not only to enable (if possible) a self-sustaining funding mechanism or ROI, but also to provide the fuel for enabling a sustainable transformation program. Often the most difficult task in any multi-year initiative is not simply maintaining the original scope and budget, but sustaining the energy created. The initial hope generated by the mere thought of change through the inevitable ebb and flow of the program must be capitalized on by continued successful execution.

Reasons for Failure While laying the groundwork for a business process redesign, potential pitfalls must be identified and addressed beginning as early in the process as possible. Whether creating the current-state assessment or engaged in planning and roadmapping activities, reasons for failure should be

Mismanagement Beyond the obvious pitfalls of scope creep, delivery delays, and cost overages, poor project management can sink a project for a myriad of unforeseen reasons. To ensure project management isn’t a reason for failure, the management must be selected based on skills, experience, familiarity with approach or methodology, and proven ability, not purely availability or eagerness.

Lack of Employee Support When key players and their management cannot adapt to a new way of doing business, or refuse to accept and embrace the change, the redesign is doomed to failure. The current-state organizational analysis helps quantify and identify the ‘People’ who will make the initiative successful, and the change management plan should leverage those people to help champion the project.

Wrong Candidate Attacking the ‘wrong’ problem can cause a project to self-destruct. A process that is inefficient because a technology will not be enhanced, or will require organization or logistical changes that are impossible, will be a no-win proposition, and even

Value Envisioned. Value Delivered. if it is perfectly redesigned, insurmountable hurdles will cause the project to fail.

Wrong Technology Misunderstanding solutions capabilities or how a solution functions, or selecting a solution that doesn’t align with the enterprise’s technology strategy, may lead to the implementation of technology that cannot satisfy the business needs and will exacerbate the problem. Just because a sales team says a product can satisfy a requirement doesn’t necessarily mean it will, and if it can, it may not be in the manner you are expecting. Always do your homework!

In Conclusion Large or small, reengineering efforts are not simple. The foundation of a successful initiative is a complete understanding of your current state. Arrive at a solution that solves a business problem by analyzing the people, processes, and tools that are impacted. After the solution is defined, plan the approach based on a tested methodology, and implement the plan with discipline to make sure momentum is maintained and expected gains are realized quickly and maintained to sustain momentum. To avoid failure, support at all levels, from executives to line managers, is required, but ultimately the employees will dictate success. A strong change management plan will help engage and motivate your employees, and robust communication updating the company of the project’s wins will go a long way to promote the awareness and drive required for a successful reengineering effort.

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