It’s a common trap.
Organizations become enamored with information technology and see it as the remedy for all their problems. They hear that implementing an enterprise resource planning (ERP) or a customer relationship management (CRM) package will boost productivity and increase sales. Expectations are high.
But an IT solution, on it own, often fails to deliver the anticipated miracle cure. Here’s why: the technology-besotted business fails to assess the underlying business processes it seeks to automate. A business that ends up automating broken, inefficient business processes won’t realize the promised benefits of IT. An organization may layer the latest and greatest technology on business processes that have persisted for decades. Adding new technology to the same old processes, however, will never yield the hoped-for technology return on investment.
Any company looking at a major IT implementation should first examine its business processes. Here are four signs that you need to embark on business process reengineering program:
1. The Presence of Non-Value-Added Activities
A close and critical assessment of an organization’s business processes will probably reveal a few that satisfy a particular corporate policy — the reason for which may be long forgotten — but don’t contribute materially to the company’s business objectives.
Michael Hammer, in his seminal work, Reengineering The Corporation, summed up this particular problem: “We found that many tasks that employees performed had nothing at all to do with meeting customer needs — that is, creating a product high in quality, supplying that product at a fair price, and providing excellent service,” he wrote.
Hammer was describing business conditions he found in the 1990s, when he helped launch the initial wave of business process reengineering projects. But his observations hold true today. A business process that contributes no obvious value is one that needs to be reengineered.
2. Too Many Hand-offs
Any process that requires multiple hand-offs and re-entering data into various systems should raise a red flag. Such a fragmented way of doing business is grossly inefficient and ultimately a drag on cycle time. A business will struggle to ship products to customers on schedule if its order fulfillment process, for example, is overly complex.
Fragmentation also leads to redundant data entry, which creates additional problems when it comes to the consistency and integrity of data. Data duplication also places additional strain on overtaxed storage systems and hinders data analysis. Processes that lead to such problems should be stripped down, streamlined and reengineered to realize maximum efficiency.
3. Process Bloat
A particular business process may start out as clean and focused. Unfortunately, a process rarely remains in its pristine form. Indeed, an organization will frequently tack on additional steps to handle one-off cases and manage exceptions. So, the once-simple business process tends to accumulate complexity over time. A business that finds itself mired in cumbersome, bloated business processes should kick off a business process reengineering initiative.
4. Difficulty In Scaling Up
An enterprise on a high-growth trajectory often acquires a diverse mix of IT systems as it brings on new customers and launches new products and services. This approach to scaling IT, however, leads to inefficiency and poorly integrated systems. An organization finding itself in such a position will need to standardize and integrate its disparate systems to control IT support costs and enable a smoother process flow. Alternatively, it may opt to purchase and implement new enterprise-wide systems. Either way, the standardization project should begin with business process reengineering. Attempting to tie together existing systems (or install new ones) without first considering the underlying business processes is asking for trouble. Take the time to reengineer. The additional effort will ensure a solid technology implementation that lets your company scale to meet new business demands.
Time To Reengineer?
It’s always a good idea to take stock of your business processes — especially before taking on a large IT project. The chances are pretty good that a few of your key processes could use some reworking. At Lithyem, we seek to discover inefficiencies and effectively streamline our customers operations.
Are you looking to reengineer cumbersome or outmoded business processes? Contact us today.