IT drives new business processes
1 April 2005 | 0
To discuss the topic of business process re-engineering, ComputerScope and Clarion Consulting assembled a panel of senior IT managers from some leading Irish sites. Roy Arnott, is head of IT Solutions at Bank of Ireland. He is among those IT professionals employed directly by the bank as opposed to the majority who transferred to HP last year as part of a major outsourcing of the bank’s IT functions.
Sean Connolly is Director of ICT services at the Revenue Commissioners with responsibility for the ROS online tax service.
Tom Moore is IT manager at Motorola’s software development in Cork. Also based in the southern capital is Donal Manning, as IT manager of Heineken Ireland. Hosting the event was Pat Millar of Clarion Consulting.
All of the participants had wide experience of business process re-engineering and were well acquainted with the challenges and pitfalls that face each project.
Can you tell us a little about each of your experiences with business process re-engineering in your own organisations. How radical were the changes you had to undertake and what were your reasons for doing them?
Sean Connolly, Revenue Commissioners
Effectively we’ve been using technology since about 1963, very much to replicate existing systems. The organisation is designed around taxes—Value Added Tax, Income Tax and so on—very similar to banks which are designed around different types of accounts.
So the structure was in place, and for the first maybe 20 years we were using technology for efficiency reasons, which was to take our existing clerical processes and do them more effectively on computers. Given the size of our business, dealing with perhaps 1 ½ million PAYE taxpayers, we got huge advantages from simply automating the systems.
Then a couple of things began to happen. From a technology point of view we could see that it didn’t make sense to have replication of things like names and addresses, so we found what we called IT reasons for saying that a different architecture was required for this business.
Secondly, the technology then was offering possibilities that weren’t dreamt of when we set out. We had gone from very primitive technology to things which enabled us to do things which were unthinkable.
And then the third element was that the whole attitude to public service was changing in that the notion of customer service began to emerge. So we had gone from technology automating existing processes into a total reorganisation and restructuring of revenue in the course of which most of the business processes were re-engineered.
Tom Moore, Motorola
We operate a software research and development centre that supplies products to the telecoms market, typically in network management. The IT organisation that supports that is an engineering IT organisation, not just a services organisation. We sit with the engineering community and deliver an environment and capability that allows them to develop products efficiently.
At first we had a centralised environment in Cork very much producing a product for the rest of the corporation. Life was simple, the process was simple, it was very much localised, and the business had only one output.
With the onset of distributed development through either co-sourcing, out-sourcing, or whatever, the way we work was distributed around the world. The development life cycle was split up and ‘globalised’ so our business processes hadto change to meet that challenge. The whole cycle that we went through was, I guess, like putting the cart before the horse. The strategic decisions were made in advance of us being able to re-architect our business processes and we had to play ‘catch-up’ afterwards.
I’ve been in the bank for three years. I can talk about the bank and I can also talk about insurance companies and other financial institutions where I used to work in the UK. It’s a similar story in the bank.
IT was brought in largely to update credible processes which were there since 35 years ago. I find the terms business process re-engineering and IT hard to pin down because simplistically IT is just automating business processes. That’s what we do in financial services.
Having said that, we are continually trying to improve business processes, improve the way we serve customers directly and indirectly, and to take cost out of the organisation so there is a continual review of processes. It is not a business process re-engineering scene, as such.
Some of the difficulties that we have had would be around legacy systems, both IT and business processes. They are so inextricably linked but many are so old and badly plumbed both in the business and IT sense that you just park them and walk away from trying to change them.
Ownership is a big issue too, and there are two aspects of that. One is that as an organisation of 18,500 people we have some very vague and cumbersome processes where it can be hard to pin down who actually owns a process and could respond to attempts to change them.
And then the other side is that there are a lot of processes which span what used to be different businesses or different functional areas and if we are either trying to re-engineer something end-to-end or trying to share processes and share assets we have to get stakeholder agreement for the job.
Donal Manning, Heineken
We don’t really use the term BPR in the true sense. We do a lot of work and have been doing a lot of work on process improvement but it is more incremental for delivering efficiencies rather than improvement on BPR. A lot of the projects we work on now would be very much strategy led, using some of the principles of BPR to support that. BPR is more about efficiency; strategies would be more about going for growth and the two don’t necessarily fit completely together.
Historically, in another organisation where I used to work, I was involved in a big BPR programme which, when I look back on it now, makes me cringe to a certain extent because it was BPR largely for the sake of BPR. Also it was very silo-based and we trying to move to a more process-oriented approach. The result wasn’t really what we anticipated it might be because I think we paid attention to the wrong things and not enough attention to the right things. There wasn’t a strong vision of strategy which would be supported by BPR. Instead the re-engineering itself was running the show and I think that’s risky, that’s dangerous.
Is there a danger that when implement a business process re-engineering project you could destroy part of a business culture? How do you safeguard against that?
I think we need to be careful about IT’s role in these projects. It is a very important role and IT needs to be there from the beginning, but you don’t want to mess too much with a culture. If you have wiped a culture out of an organisation it is going to be very hard to re-create it. So certainly it is not wise to mess with it. But the key, I think, is rather than IT trying to change a culture , you can bring the ideas, you can encourage and educate people but it is the business owners, the process owners themselves, who have to take the ideas on board. If they see fit to make the change then you support that.
Some business cultures can be negative.In some instances I would like to see that process wiping out and forcing a cultural change.
You need to be careful that you have, not a get out, but a way of creating another better culture. If it has to be recreated you are in big trouble. As long as you can replace it with something positive.
I think the thing with culture change as well, if you try to do culture change as a project you are really asking for trouble. Because it isn’t the project. It doesn’t have a neat start, it doesn’t have a neat end, it doesn’t have five phases with outputs and deliverables. It’s a programme that consists of lots of different projects. If you try to achieve culture change just through the implementation system X or Y, then you are really going to cause huge problems for yourself.
It is a phased process. You know when you have moved from one phase when you see change in behaviour, acceptance of process, acceptance of business change, and the cynicism being removed and more positive attitude returning.
I see it certainly in some places in Cork where people are concerned about the mother ship pulling the plug. You need to get past that to operating as a business. It’s about contributing and not worrying about what the negatives are. If you need a move or a change of culture, then please get together and make it happen. It is an ongoing process.
Our model is that we have learned over a couple of years that in any significant project the ownership is the business manager. We used to try and drive from IT but we have learned because of it. The key is to get a business driver with overall responsibility to hold the whole thing together.
In our place now we don’t have IT projects, except for purely infrastructure issues. We have business projects and that’s it. And even a small change like that makes a huge difference, to have the ownership of the business and give them the responsibility and we support them.
Moving away from the topic of culture, one of the things that’s come up is the difficulty, the danger of losing a lot of tacit knowledge that had been built up. You are in danger of throwing out the baby with the bath water. Have you come across that and how would you safeguard against it?
I think you would have to accept, certainly in our industry you are going to lose something. One of the reasons why the business is re-engineering itself is because it wants to do things differently. So there is an element you are going to lose and, to be honest, that you will probably want to lose.
You talk about value chain all the time in re-organising the business and where you want to be in that chain and because you might have had a level of skill, a level of knowledge in that area, it is not giving you high return any more and you want to move on to another part of the chain. You have to accept that but in saying that you have to be able to replace it with something else or else re-educate people and maybe even re-skill, whatever is required to make sure that you move forward.
I think it depends on the nature of the project too. If it is very much a back office type of project you can design it on a piece of paper and implement it and there is a good chance of success. If you are looking at processes that involve relationships, be it customer service or whatever, I don’t think you can just go into a dark room and design a new set of processes and then say, right lads, the way you did it is gone, we know better and this is how you are going to do it from now on. I think you need to involve the people who have the relationship to get a real understanding of how it works and what you can and can’t mess with. So it depends on the nature of the project.
Historically the difference between BPR and continuous improvement was that BPR was to introducing radical change. The idea was that the change would be significant and not incremental. And part of the approach of BPR, particularly by consultant companies, was to say ‘Forget what you’re doing now, that’s not relevant, we’re not starting from there. Go into the room, start with a blank sheet of paper.’
That changed because that was seen not to work and then it was ‘Go into the room with a blank sheet of paper but we’re going to have to go back and look and see what we did.’ If you miss that bit you’ve got a big problem. And that’s where you’ve got some sort of nightmare BPR stories where people did things and then a year later had to go back to what they did and wondered why.
I probably see the opposite side. The question was in terms of BPR causing a problem in terms of losing knowledge. I see it as a solution to knowledge that is gone in terms not only of people who have archaic skills and have lost touch. You sometimes have processes which have survived three generations of technology upgrades and have been wrapped or reprogrammed so many times. I know they cost a fortune to test. They are almost impossible to retain. They do what the process was originally designed to do but not really what it does any more anyway. You just run out of life and towards the end you’ve always got people wrapped in cocoons of cotton wool who really understand the scary bits of it.
So there is what we call a natural life and certain death of systems. The business people find it hard to understand that systems do decay and they reach a point where they have to be put down.
In the business model we use, we have got business ownership because every cent I spend is questioned. We are running a P&L which is really good for some parts of ownership and less good for others.
But it is good for determining what is the total cost of ownership and explaining what something is really costing. There is a lot more understanding what things really cost and we can go further and say that something will naturally cost more over time unless you invest and refresh either technology or the application of resources
There is only one problem. If you have got too cost-conscious a process, it might prevent you from doing something that’s very innovative. There is a degree of experimentation in this business. If you have to prove cost up front, then you could never justify the PC on the desk, for example. If you adopted a rigorous cost of all these things you would keep the status quo. Therefore I think there has to be some willingness to experiment
Accountants can justify the status quo really and can kill the vision. And that’s my point. You need someone who’s thinking ahead.
What are the remaining issues facing IT and BPR?.
What we’ve actually done is transfer all the paper to electronic data in terms of e-mail and organisation documents without any real plans. A huge volume of data is electronically generated and is held personally so I’m not aware yet of any organisation who has managed to organise electronic information outside the main applications whereby you distinguish between personal information and corporate information.
It’s a legislative legal nightmare as well as a problem for management, the separation of that sort of data means one thing in one country and something else in another country. It is a minefield if you start going down the road. Some corporations have tried to address it with internal policies and tried legal ways of enforcing it. It’s very difficult so big an issue that I don’t know if anyone can do it.
In the past the organisation had paper and did everything by files so you had all kinds of material. Now that’s kind of vanished so far as I can see. You don’t have the paper files yet the information is stored somewhere in the organisation, probably in somebody’s personal data.
I think it’s more accessible, We can find information within the organisation a lot more easily than we could ten or 15 years ago because it is electronically held.
But what I’m saying is that to find it you need a human to tell you where it is, in the sense that if I ask you tomorrow, say you sacked somebody, what’s the precedent for that? You could probably find something within your own stuff that no one else could find.
It depends on how well you’re organised.
In Victorian times organisations were good at organising knowledge, big organisations and index cards and people employed to build filing systems and so on. All these disciplines that were there for good reasons. We seem to have forgotten that.