The effect of technology on the art and science of business process re-engineering

By Marc Suben, CPA
Analyst in the Enterprise-Wide Resource Planning
Performance Support Division of RWD Technologies, Inc.

Business process re-engineering (BPR) has to do with the changes made to existing business processes to make them simpler and more innovative. This is done in many different ways. The ways that have been identified as being optimal are the ways that make use of robust information technology infrastructures. It has been proven that the more robust an organization's information technology infrastructure is, the higher the degree for success in executing an enterprise-wide set of changes.

Part of the measure of success of a BPR implementation throughout an organization has to do with how well-integrated business functions are throughout the organization. This means that business functions are deployed across business specific boundaries and are available on an enterprise-wide basis, beyond the originating business function specific boundaries. Robust information technology infrastructures refer to strong, reliable, platform-wide, consistent networks, operating systems, databases, communications, messaging systems, technology innovations, and depth of technology staff.

The more robust the information technology infrastructure is within an enterprise, the better implemented a business process re-engineering initiative will be. A measure of information system robustness has to do with the level of services deployed throughout an organization. Examples of services are organization-wide messaging, electronic data interchange, proactive management of infrastructure architecture, adherence to a set of standards, and the establishment of an environment in which an organization can develop and refine its systems. The ease by which a connection can be initiated and maintained with a number of applications updating all involved databases wherever they are located is directly impacted by the level of robustness in an information system infrastructure.

An example of a business process is the action a business purchaser takes when he/she wishes to make a purchase. The purchaser originates a purchase by filling in a purchase requisition form that is forwarded either by inter-company mail or in person to an approving corporate authority. Once approved, the purchaser goes to purchasing and fills out a pre-numbered purchase order form from which an authorized purchaser places the purchase with the vendor. When the vendor ships the goods, a packing slip is included with the purchased goods. Once the purchased goods arrive at the purchaser's doorstep, the purchaser's receiving department ensures that the packing slip corresponds with what is in the package. A receiving ticket document identifying what is in the package is filled out.

The receiving ticket document and the packing slip are routed by either intercompany mail or hand delivery to the accounts payable clerk who manually matches them up with the original purchase order and approved purchase requisition. Once the invoice is received from the vendor, all of these documents are manually put together and compared to ensure that what was originally purchased is exactly what was received and billed. If all documents match up perfectly, payment, usually in the form of a corporate check, is manually generated and sent by mail to the vendor. If there is a discrepancy between any of these documents, the discrepancy must be worked out prior to the bill being paid. The cumbersome parts of this process have to do with the way in which each of the documents makes their way to the accounts payable clerk, and the way in which the accounts payable clerk must arrange his/her filing system to accommodate this flow to ensure that all documents received can be properly matched up for verification. In this scenario, all financial accounting entries relating to the purchase of the goods would have to be entered by hand, as would the accounting entries relating to the disbursement of payment to the vendor.

Use the computing infrastructure to your advantage

A way to make this process either simpler or more innovative would be to take as many of the error-prone manual steps out of the process as possible and allow the organization's computing infrastructure to handle as much of this transaction as possible. What this means is that if the organization has at its disposal a robust computing infrastructure, or can acquire a robust computing infrastructure whereby all functions throughout the organization can read and write to one organization-wide, centralized database (as is the case with the use of ERP software), the greater the chance the organization has of automating many parts of this transaction. For example, if the original purchase requisition were originated in the computing environment and automatically routed to the approving corporate authority, the document could be directed to automatically appear at the authority's workstation for his/her approval.

When approved, the purchase requisition would automatically be converted into a purchase order by the system. Sending a copy of the purchase order to the vendor through electronic data interchange (EDI) technology would then automatically place the order. Upon shipment of the goods by the vendor, the vendor could send the packing slip to the purchasing organization's system by electronic data interchange. This document would be available for the purchasing organization's receiving department to check and verify. The receiving department personnel could make changes directly to the packing slip, thereby automatically creating a receiving ticket in the system. Once finished, these documents could be routed through the computing system to the accounts payable workstation. The computer would automatically match up all documents, the receiving ticket, packing slip, purchase order, and purchase requisition and hold them together in a specially designated place within the system for quick retrieval.

The vendor's invoice could also be sent by electronic data interchange, and could be quickly and automatically matched up with the preceding documents. If all documents matched up precisely, payment would automatically be generated by whichever method the vendor specified, check, direct wire, or any other feasible method of payment. If the documents did not match up precisely, the system could print or display an exception report identifying the discrepancy. Once the discrepancy is corrected in the system, the system could be directed to generate payment. In this scenario, all accounting books and records would be automatically updated to reflect the purchase of the goods, along with the corresponding disbursement of cash for payment to the vendor.

The above description is a method by which the simple act of making a purchase could be made simpler and more innovative through the use of a solid technology infrastructure. In the above depiction, many things changed. The most important changes to this transactional flow have to do with how the transaction is performed, and the ways in which the individuals involved with the process interact with the process. Clearly, individuals' daily job functions change significantly when these types of changes take place. By arranging the system so that the flow of documents from purchasing organization to vendor and back again occur through a dedicated electronic interchange system, as opposed to having them flow through the U.S. Postal Service, creates a much more efficient, quick, and responsive organization. In this scenario, the entire process of purchasing goods or services from a vendor becomes a simpler and more innovative process.

ERP software

A major tool used to implement BPR that makes use of robust information technology infrastructures is enterprise resource planning (ERP) software. This software puts an entire organization on a consistent application-processing platform that reads and writes to a single database in real time. Many technology managers have identified their ERP systems as being their organizations' most strategic computing platform. ERP brings BPR to every functional aspect within a business enterprise. ERP is also very large and complicated. It is very expensive and requires a great deal of time to implement and optimize.

Work flow management

Another major tool that is used to implement BPR and uses robust information technology infrastructures is workflow management. In this model, applications are integrated with an automated workflow server. This concept uses a set of industry standard components built on the CORBA standard. Objects are identified as industry specific and are able to be reused in all applications that are deployed throughout the enterprise.

In breaking BPR apart into its components, it is the technology that enables the science of BPR and it is the human factor that enables the art of BPR. Without the combination of these two factors working together, BPR becomes nothing more than a buzzword throughout an organization. Without these two factors enabling each component, business processes will not be made simpler or more innovative. It must all happen as though a symphony was playing a sophisticated piece of music. The instruments are the technology, and the people are the human factor. The conductor, the leadership, is what brings it all together to sound great and work well.

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