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New Management Tool

By Prof. Dr. Khawaja Amjad Saeed
Oct 09 - 15, 2000

During several past decades, several buzzwords were in currency. During 1980s TQM (Total Quality Management) was the buzzword. Reengineering was the buzzword for 1990s. Moreover, in Management literature a new chapter has been added namely, Inventing and Reinventing organizations. This article specially focuses its attention on Reengineering. Every person studying a basic course on management stands inspired and motivated towards introducing reengineering in business, commerce, manufacturing, agriculture and even in day to day activities.

The pioneers

Michael Hammer: The first book appeared in the world was entitled "Reengineering the Corporation: A Manifesto for Business Revolution" This was jointly authored by Michael Hammer and James Champy and was published in 1993. Later in 1996, Michael Hammer and Steven A. Stanton authored another book entitled. The Reengineering Revolution Handbook. This contain experiences shared in implementing Reengineering. Problems faced were identified. Share of failures was also stated. The role of consultants in respect of the above management tool was reviewed. Indeed this presents an interesting reading.

Big accounting firms: The book entitled "Reengineering the Corporation: A Manifesto for Business Revolution" was a hot seller and 1.7 million copies of the book were sold out. Three quarter of a million were sold in United States and one quarter of a million were sold in Japan. The remaining copies were sold out in Europe, Asia, Africa and Oceania. The popularity of the book can be gauged from the fact that it was translated in nineteen languages including Thai, Hebrew and Finnis.

The "Big Six" Accounting firms of the world also addressed the issues raised in reengineering and found tham same workable and they separately conduced studies in 1994 and confirmed the conclusions.

Motivated by the foregoing, 75% to 80% of US largest companies begin reengineering. During 1994, a sum of US $ 7 billion was spent by United States Corporations. This investment represented only personnel and consulting services. If technology cost is reduced, the investment represented $ 30 billion. During 1995 to 1999, twenty per cent growth per annum was registered.

Reengineering: driving forces: Based on the above two books, various driving forces relating to reengineering are now listed below. Page numbers indicated related to the first book written in 1993 by Michael Hammer and James Champy.

1) Reengineering involves a significant reassessment of what a particular organization is all about.

2) The Manager must ask a very basic question about what they do:

"If I were recreating this company today, given what I know and given current technology, what would it look like".

3) Organizations tend to stagnate when organizational members focus on their immediate neighbourhoods e.g. jobs and departments rather than on the larger patterns of relationships in which they work and influence the lives of others.

4) Reengineering thus involves redefining processes as patterns of relationships connecting organizational members with people outside the organizations

5) Example

Processing a customers order (weeks, months ....Now quick)

6) Reengineering means radically rethinking and redesigning those processes by which we create value (for customers) and do work.

7) Issues to be addressed:


Quality of Service

Overhead costs

8) No permanently winning formula

9) Hallmark of reengineering




10) Adding value for the customers

Improving service

Raising quality

Lowering costs

11) Process Innovation

Organizing around process rather than function

Manager should imagine that they are starting with a "clean piece of paper" [Thomas A. Stewart, "Reengineering: The Hot new Managing Tool", Fortune, (August 23, 1993).

Selected Success Stories

Nothing succeeds like success. The users of a management tool are convinced if they learn of success stories. Selected success stories are tabulated below:

Table No. 1

Selected Success Stories


Success Achieved

1. American Express

Reduction in annual cost by over $ 1 billion.

2. AT&T Global Business
Communications System Unit

Nine-figures loss into nine-figure profit areas:
i) Manufacturing
ii) Servicing
iii) Order fulfillment

3. Semiconductor Group of Texas Instruments

Reduced Cycle time of its order fulfillment process for integrated circuits by more than half. Achieved record results

4. Progressive Insurance

Reduced Cycle Time of its claims process from weeks to days.
i) Improved Customer Satisfaction
ii) Costs, reduced fraud and litigation
iii) Revenue per employees increased by 70%

Reengineering and Cost Management and Accountants

While Cost and Management Accountants have been doing excellent work in the past, it is high time that they should develop expertise in reengineering and use it as a niche for their innovative and creative role in the 21st Century. All sectors of our economy needs tangible steps to be to to operationalize reengineering to achieve productive results. Given the expertise, Cost and Management Accountants are well positioned to deliver the goods.

Dean: Executive Programs, Punjab College of Business Administration, Constituent College of Mohammad Ali Jinnah University, Lahore

President, Institute of Cost and Management Accountants of Pakistan (ICMAP) (1997-99) Member, Governing Council, International Federation of Accountants (IFAC)