Business Process Analysis - A Letter from America
Professor V.S. Arunachalam and Easwaran Subramanian
The Robotics Institute Carnegie Mellon University Pittsburgh PA 15213 USA
Abstract
This report is on the recent innovations implemented by American companies in
the way they manage their business and by the US government in supporting the
industrial and technological base in the country. American corporations visible
to outsiders are generally very large, with annual budgets running well above
the national budgets of many countries, and with a range of diverse operations
transcending divisional, organisational and national barriers. In responding to
changes in the global market place, they are continually introducing innovations
in process and product technologies and in product development and manufacturing
cycles. It is difficult to enumerate, let alone discuss, all the innovations
that are seen in US business today. Instead, we shall focus on innovations that
are significant and generic for improving business processes. This is relevant
as more than fifty percent of US firms are medium or small sized, and the
general competitiveness of US industry depends on them as well. In this report,
we do not discuss the recent trends in financial, merger, ROD and marketing
strategies and processes. Instead, we discuss only those issues related to
business processes that impact the ability of US business to meet the identified
market demands in cost, quality and time.
A phrase, now increasingly in vogue, to describe the efforts in process
improvements is Business Process Re-engineering (BAR). Hammer and Champ define
BAR as "the radical rethinking of the business processes to achieve dramatic
improvements in critical contemporary measures of performance as cost, quality
and speed." This characterisation of re-engineering is often interpreted in
multiple ways resulting in different models and methods of implementation of
business process re-engineering. Reported failure rates of about forty to
seventy percent for BAR applications in achieving stated goals can indeed be
attributed to the differences in perceived definition of what constitutes
re-engineering and the level of implementation.
In practice, implementations of re-engineering span from re-engineering local
process to a complete restructuring the entire organisation. Business process
re-engineering for local improvements have led to the development of analytical
models for optimisation of existing processes through simpler procedures and
incorporation of Information technology. Activity based accounting, an American
invention, is also used in conjunction with process re-engineering projects
efforts. The drive towards BAR in American industries has spawned an industry of
consultants and process mapping and simulation tools. A brief review of the
state-of-the art in analytical methods and tools such as IDEFO, SAT, BPMAT and
Design Process Matrix is also provided in this report.
At the other end, there are examples of well established organisational
structures and processes being totally replaced by new structures and flexible
processes. Such total re- structuring efforts may well include use of cross
functional teams, retraining and activities related to the management of
innovation as integral parts of the business processes, well beyond the
conventional activities of design, manufacture, and service of products. The
difference between successful and unsuccessful firms that use BAR appears to lie
more on the scope and coverage of the BAR efforts than on the mere application
of tools and methods. We illustrate the above inferences by discussing the
various models used by some US firms and the experience of a few select
industries in adopting BAR. There are examples of a laboratory re-engineering
itself and others from defence industries re-engineering themselves to
accommodate ending of the Cold War and declining defence budgets.
Re-engineering depends on people: the way they learn their jobs, work and
collaborate with their colleagues. Often, this involves learning new trades and
work practices, and embracing a new work ethic that transcends the narrow
specialization that the workers find themselves in. Past industrial innovations,
successful as they had been, practiced division of labor on the work force to a
degree that almost eclipsed the need for human ingenuity and innovation. BPR has
brought changes in the way the work force is perceived for effecting
organizational changes. Most successful examples of BPR are therefore from the
corporations that practice retraining programs. While bigger corporations have
the resources to re-engineer their processes and re-train their work force,
their successes also depend on how effective their suppliers in the value chain
are in practicing BPR. The problem of implementing BPR and the training of the
work force in supporting firms is generally believed to be the responsibility of
the individual firms. Contrary to general belief, the US government is not a
passive observer of the restructuring of business processes that are now
underway in the country. It is intervening actively by providing initiatives and
inducements to all firms for continuing education and retraining programs.
The US govemment is also intervening actively in an innovative fashion to fill
the gaps seen in US companies, specially in processing and manufacturing stages.
These are considered essential to keep American products globally competitive.
The US federal and university laboratories, large and successful as they are,
have been singularly ineffective in transferring these technologies to US
industries. Existing laws in place and concerns about patent rights and public
knowledge have discouraged close collaboration between the laboratories and
industries. The US government has introduced multi-agency (Defense, Commerce,
NASA, NSF and ARPA, and Transportation) programs in defense, dual-use and
civilian sectors supporting short term programs of research in high risk, high
value manufacturing process technologies. The major condition of support of such
programs is that the program should be commercially relevant to industry and
jointly pursued by laboratories and industries, with leadership and matching
financial contributions from industry. In this report, we discusses these
initiatives, known as ATP (Advanced Technology Program) and TRP (Technology
Re-investment Program) and their performance to date.
The success of Japanese firms in capturing a significant part of the US
automobile market in the 70's and 80's and their ability to adapt to changing
economic conditions, without undue changes in unemployment, triggered the
rethinking of the nature of business operations in American industry. A serious
search for new models of business began with the scrutiny of Japanese automobile
industry by US companies and business theorists. This involved studies on
process innovations, quality management and lean production technologies as
practiced by the Japanese. Meanwhile, Japanese firms are introducing information
technology in their work practices that not only preserves much of their
organizational and cultural advantages but also incorporates a few US
innovations. In this sense both are learning from each other.
The definition of Business Process Analysis is continually changing. It is, in
the economic jargon, both macro and micro: details of every process matter as
also the overall organizational objectives. Technology is not the only driving
force for re- engineering. Economic and cultural practices are relevant as well.
Knowledge generated by individual companies and business theorists and the
experience gained by its application will be the BPR tools and methods for
tomorrow. Even with a limited repertoire of techniques and relative inexperience
in applying them to business practices, BPR, currently, is proving to be
powerful approach for organizations wanting to be competitive.

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