Chapter 8 • Basic Systems Concepts and Tools 337IDENTITYPRIORITYMANDATED FOLKLORE ABANDONBACKGROUNDDoes Process X define your firm to customers,
employees and investors?EVALUATING THE PROCESS PORTFOLIOYesYesYesYesNoNoNoNoDoes the firm carry this process out only because
it is legally required?Is excelling at Process X critically important to
business and performance?Does X provide necessary support to other Processes?FIGURE 8.6 Evaluating Business Processes (Keen, 1997)improvements in business processes by questioning the
assumptions, or business rules, that underlie the organiza-
tion’s structures and procedures, some of which could have
been in place for decades. New, disruptive, technologies
can be the catalyst for such radical redesigns (e.g.,
telecommunications, in general, and group meeting tools
such as WebEx, in particular, have changed the way
meetings among geographically dispersed employees are
conducted).
Simple questions like “why,” “what if,” “who says
so,” and “what do our customers think” can lead to
breakthrough insights that result in totally new business
processes. The goal is to achieve an order of magnitude
improvement, rather than incremental gains.
Two BPR success stories described by Hammer
(1990) have now become classic examples.
ACCOUNTS PAYABLE AT FORD MOTOR COMPANY
During an initial redesign of its accounts payable process,
Ford concluded that it could reduce head count by 20 percent
in this department. The initial solution was to develop a new
accounts payable system to help clerks resolve document
mismatches. This solution was based on the assumption that
problems with coordinating purchase orders, shipment
documents, and invoices are inevitable. The proposed new
system would help prevent the document mismatches.
Ford’s managers were reasonably proud of their plans
until the designers discovered that Mazda Motor Corp.
accomplished the same function with just five people. The
difference was that Ford based its initial system solution on
the old business assumptions. In particular, Ford had not
questioned its assumption that it could not pay a vendor
without an invoice. When Ford questioned its assumptions,
a truly reengineered solution was identified, as follows:
Capture the receipt of goods at the loading dock using
computer scanners and use the negotiated price to pay the
vendor based on a validated receipt of goods—instead of an
invoice. When Ford took a “clean slate” approach, the
company achieved a 75 percent improvement gain—not the
original projected 20 percent.MUTUAL BENEFIT LIFE INSURANCE Mutual Benefit
Life’s old insurance application processing was a 30-step
process that involved 19 people in 5 departments. Rather
than automating the old workflows across multiple people in
multiple departments, the process was radically redesigned.
Under the reengineered process, an individual case manager
is empowered to handle the entire loan application process.