1 Reengineering Work Dont Automate Obliterate Michael Hammer

1 Reengineering Work: Don't Automate, Obliterate Michael Hammer Harvard Business Review, July-August, 1990, pp. 104 -112 2010/10/18 授課老師: 林娟娟 教授 報告學生: 黃俊銘 學 號: 99756011

Outline 2 Introduction Background Two successful reengineering The essence of reengineering Seven principles of reengineering Conclusions

Introduction 3 Hammer said, “It is time to stop paving the cow paths. Instead of embedding outdated processes in silicon and software, we should obliterate them and start over. We should use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvements in their performance. ”

Background 4 Method for boosting performance - Process rationalization and automation haven't yield the dramatic improvements company needs Information technology - Heavy investments in IT have delivered disappointing results - Leave exist processes intact and use computers simply to speed them up The watchwords of the new decade are - Innovation, speed, service and quality

Two successful reengineering 5 Ford Motor Company - Accounts payable processes Mutual Benefit Life (MBL) Insurance - Processing of insurance applications

Ford - accounts payable processes 6 Search for ways to cut costs - Ford’s North American accounts payable department employed more than 500 people - Rationalizing processes and installing new computer systems could reduce the head count by 20% Look at Mazda - Only 5 people New goal - 80% reduction in head count (100 people)

Ford's old processes 7 Accounts pay Purchase order Purchasing department Purchase order Material control department goods Vender receiving document Accounts payable department invoice payment Ford Motor Company Old rule “We paid when we received invoice”

Ford's new processes 8 Purchase order Purchasing Department info. Database check Material conrol Department accept transaction if okay Accounts payable Department goods return order if not okay payment Ford Motor Company New rule “We pay when we receive the goods” Vender

Ford's dramatic improvement 9 75% reduction in head count (to 125 clerks) No discrepancies between the financial record and the physical record, material control is simpler and financial information is more accurate.

MBL - insurance application 10 Decision situation - The long, multi step process involved - Applications go through 30 discrete steps, 5 departments, involved 19 people - Turnaround time: 24 hrs(best), 5~25 days(typical) - Actual work done: 17 mins Goal - Improve customer service - Demand a 60% improvement in productivity

MBL's old processes 11 people department Customers Old rule – sequential processes

MBL's new processes 12 Case manager Customers Case manager + Workstations Databases Computer network Case managers Mainframe & shared databases Case managers with powerful PC-based workstations

MBL's dramatic improvement 13 Complete an application in 4 hrs Average turnaround time : 2~5 days Eliminate 100 field office positions Handle 2 times volume of new applications

The essence of reengineering 14 Strive for dramatic levels of improvement Break away from conventional wisdom and the constraints of organizational boundaries Be broad and cross-functional Use information technology not to automate an existing process but to enable a new one

Seven principles of reengineering-1 15 Organize around outcomes, not tasks Product/ Service people task An example of reengineering principle 1

Seven principles of reengineering-2 16 Have those who use the output of the process perform the process Vender computerbased data & expertise An example of reengineering principle 2

Seven principles of reengineering-3 17 Subsume information-processing work into the real work that produces the information Purchase order Purchasing Dep. check Database Material conrol Dep. accept transaction Accounts payable Dep. goods Vender return order if not okay payment An example of reengineering principle 3 - Ford

Seven principles of reengineering-4 18 Treat geographically dispersed resources as though they were centralized Vender dispersed resources centralized resources Dep. Unit An example of reengineering principle 4

Seven principles of reengineering-5 19 Link parallel activities instead of integrating their result Product/ Service parallel activities integrated result An example of reengineering principle 4 Product/ Service

Seven principles of reengineering-6 20 Put the decision point where the work is performed, and build control into the process Manager Expert systems Supervisor Worker An example of reengineering principle 6

Seven principles of reengineering-7 21 Capture information once and at the source Info. An example of reengineering principle 7

Conclusions 22 Think big Many area of the organization Executive leadership with real vision Commitment, consistency Information technology offers many options If managers have the vision, reengineering will provide a way

Reengineering Formally Defined 23 “Reengineering, ” properly, is the fundamental rethinking and radical redesign of business processes to archive dramatic improvements in critical, contemporary measure of performance, such as cost, quality, service, and speed. Michael Hammer & James Champy, Reengineering the Corporation: A Manifesto for Business Revolution (UK: Harper Collins, 2004), 35

24 Thank You!