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

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

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 Instead of embedding outdated processes in silicon and software, we should obliterate them and start over.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.” Introduction

4 Background  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

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

6 Ford - accounts payable processes  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)

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

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

9 Ford's dramatic improvement  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.

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

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

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

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

14 The essence of reengineering  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

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

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

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

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

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

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

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

22 Conclusions  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

23 Reengineering Formally Defined “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!