The rise of reengineering
New Management Tool
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.
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
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
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
Processing a customers order (weeks, months ....Now
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
8) No permanently winning formula
9) Hallmark of reengineering
10) Adding value for the customers
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
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
1. American Express
Reduction in annual cost by over $ 1
2. AT&T Global Business
Nine-figures loss into nine-figure profit
iii) Order fulfillment
3. Semiconductor Group of Texas Instruments
Reduced Cycle time of its order fulfillment
for integrated circuits by more than half.
Achieved record results
4. Progressive Insurance
Reduced Cycle Time of its claims process
i) Improved Customer Satisfaction
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)