Business Process Transformation

Varun Grover, M Lynne Markus

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317475514
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Featuring contributions from prominent thinkers and researchers, this volume in the "Advances in Management Information Systems" series provides a rich set of conceptual, empirical, and introspective studies that epitomize fundamental knowledge in the area of Business Process Transformation. Processes are interpreted broadly to include operational and managerial processes within and between organizations, as well as those involved in knowledge generation. Transformation includes radical and incremental change, its conduct, management, and outcome. The editors and contributing authors pay close attention to the role of IS organizations and information technologies in facilitating business process transformation. Each chapter places major emphasis on clearly articulating the "knowledge" generated, both theoretical and applied. The book incorporates case studies and tables throughout, and provides fundamental grounding for any stakeholder of business process transformation.

CHAPTER 1

CONSOLIDATING KNOWLEDGE ON THE JOURNEY OF BUSINESS PROCESS TRANSFORMATION

M. LYNNE MARKUS AND VARUN GROVER

Abstract: In this chapter, the authors trace their personal research journeys in business process transformation. Clear learning points are identified through each of the two different paths. One path focused more on theory and empirical work, whereas another was driven by practice and case studies. Despite these differences, the authors observe remarkable consistency in the themes across the two paths, particularly regarding the role of information technology and personnel. However, they also highlight significant gaps in the understanding of process representation, transformation, and alignment with other parts of the organization. The authors consolidate the knowledge from their experiences and describe the approach taken to compile this book. Gaps in knowledge are identified; the chapters in this volume are positioned as partially filling the gaps and providing a foundation for future work in business process transformation.

Keywords: Business Process Transformation, Process Research, Reengineering Evolution, Knowledge Gaps

INTRODUCTION

Today, processes represent sets of logically related tasks in which resources are deployed to achieve a specific outcome. Historically, work processes were often emergent, sporadic, unplanned, or ambiguous. In the industrial age, people began to develop systematic knowledge about how to organize machines and labor. Much of the latter half of the twentieth century was spent in designing these procedures in order to manage work and its contingencies. Herein lies the genesis of the functional hierarchy. In systems terms, the effort was in honing first-order feedback systems, where inputs, processes, and outputs were put in place and scrutinized to adhere to the requirements of a relatively static environment. Unfortunately, as the environment demanded more in terms of responsiveness and service, the systems proved woefully inadequate. Things came to a head in the early 1990s as various forces—such as highly publicized consulting programs, lack of economic benefits from information technology (IT) investments, cost-cutting pressures due to an economic downturn, and process ideas such as Kaizen and total quality management (TQM)—converged to create the bandwagon effect now called business process transformation (BPT).

Our collective bounded rationality creates problems of management attention. Fads catch attention because they hit a soft spot at the right place and right time. Such was the case for the phenomenon that swept corporations in the early 1990s and used combinations of words such as business, process, redesign, innovation, and, most commonly, reengineering. The mantra was to clean up or blow up “old processes” and put “new processes,” better suited for the changing environment, in place. Early books on this topic became phenomenal best sellers. Consultants repackaged old methodologies and printed glossy brochures and charged thousands for their “proprietary” solutions to “fundamental” business problems (Hammer, 1990). Surveys of senior executives indicated that by the mid-1990s, “reengineering” was the number one initiative taken by companies to achieve strategic goals. Academics, both cynics and proponents, jumped on the bandwagon. They wrote treatises on the benefits of radical change or why they had seen it all before. Against this backdrop, business process change initiatives played a dominant role throughout the 1990s as the preeminent managerial intervention to cut cycle time, enhance customer satisfaction, and improve business performance.

Much has changed since then. New waves of initiatives have claimed managerial attention. One was enterprise resource planning (ERP) systems, which promised turnkey IT solutions to tame jungles of functional systems. The Internet offered opportunities for sharing information within and outside the firm. And the management knowledge resources became a new source of competitive advantage. Other managerial fads, magnified by the popular press, include controversial outsourcing practices, the “inevitable” service revolution, and the undeniable importance of innovation in the new economy. These waves of change pushed process reengineering to the background—some experts even prophesized its decline or imminent death.

Of course, process reengineering is not dead. Processes are always with us. We would argue that, if anything, processes and their improvement are more important than ever, because they are the essence of how work gets done. With these waves of change, the notion of business process is being layered and morphed with newer and richer concepts. This is exciting stuff! When we think of processes plus ERP systems, we open up provocative issues about the standardization or transfer of “best” business practices and about seamless system interfaces and modernized information architectures. When we think of processes layered with knowledge, we raise issues about how individuals, groups, and organizations can create, reuse, and leverage tacit knowledge and about how firms can cooperate to create new knowledge products. When we think of service processes, we can explore service automation, consumer behavior, and changed information flows between organizations and their customers. Business process outsourcing raises issues of process standards and business networks. Innovation processes focus attention on exploration and discovery instead of exploitation and control. Furthermore, the interactions among these ideas stimulate creative thinking about deep-seated business challenges and opportunities. Whatever it is called today, BPT or any fundamental change in business processes is richly layered with contemporary concepts that are germane to the modern enterprise and demand research attention.

PATHWAYS TO KNOWLEDGE ABOUT BUSINESS PROCESS TRANSFORMATION

This book is intended to be a repository of cutting-edge research in the field with an emphasis on adding value to research and practice looking forward. Current research in an ongoing tradition usually focuses on knowledge gaps, and the studies we selected for this volume are no exception. They build upon a strong basis of what is already known about the subject and push it into new areas where there is less to stand on.

Consequently, in order to understand the contribution of this book, it is necessary to have a picture of what has come before. The approach we take here is to share with you our own research journeys in the BPT space over a number of years (Bashein et al., 1994; Grover et al., 1993). As we describe our independent knowledge-seeking pathways, we do not mean to belittle the contributions of our numerous collaborators and our interactions (in person and virtual) with many other scholars dealing with similar issues. We also do not mean to imply that our paths have arrived at inevitable and immutable truths. Rather, the paths are our attempts to explain “where we are coming from” in putting together this volume and to highlight the knowledge gaps that book chapters help to fill.

THE GROVER PATH

A number of my (and colleagues’) studies were funded by a grant from the Center for International Business Education and Research (CIBER) and the U.S. Department of Education. Our thinking evolved from conceptual to empirical with more granular examination of models pertaining to process transformation. Below, I trace this evolution by highlighting “learning points” for various project clusters.

Our early exploration of business process reengineering (BPR) was done inductively. In the early 1990s, the primary emphasis was on crystallizing definitions, concepts, and constructs that would form the useful vocabulary for BPR. We reviewed copious cases and anecdotes of organizational initiatives. Our early frameworks induced BPR to be a top-down initiative that required integrated direction from both corporate and IT strategic planning. We also believed that successful BPR needed an innovative organizational environment to support and accept such change. We recognized the adaptive relationship between BPR and IT infrastructure, needed for successful implementation. And we also indicated the importance of the continuous search for process improvement opportunities, facilitated by structural overlays in an innovative environment (Grover et al., 1993; Teng et al., 1994b).

Learning Point: BPR requires an organization-wide integrated approach where strategy, IT, and an innovative environment need to be aligned. Acceptance and continuous assessment of process change are nurtured through an innovative environment.

Our first empirical work examined structural and process risks in BPR, where the former indicates the scope of change from intrafunctional to interorganizational, and the latter, the extent of change, from incremental to radical. We found that the most prevalent projects were either high risk/reward or low risk/reward, with interfunctional projects generating the greatest satisfaction among their participants (Fiedler et al., 1994). In a related study, we found that the tight IT-strategy integration in the firm played a mediating role between the extent of interfunctional and interorganizational BPR and its perceived success. Such a relationship did not hold true for intrafunctional BPR, suggesting more piecemeal approaches involving local IT at this level (Grover et al., 1994). In another study, we examined businesses with low-cost and differentiation strategies and found evidence that firms pursuing greater low-cost orientation engaged in more interfunctional BPR and information systems (IS)-strategy integration strengthened this relationship (Grover, Teng, and Fieldler, 1995).

Learning Point: Cross-functional and cross-organizational projects benefit from an alignment of business strategy with IT. Low-cost-oriented businesses streamline cross-functional processes, and alignment of IT strategy with the cost orientation also helps.

In exploring the specific role of IT in BPR, we proposed a framework that describes processes in terms of their degree of physical coupling and information coupling. Physical coupling of inputs and outputs reflects a serial pattern, where the process consists of a large number of sequential steps performed by different functions. An example of this pattern can often be found in business expense processing that requires many layers of management approvals, auditor evaluation, filing of receipts, and so on. At the other extreme is the parallel pattern, where several functions contribute directly to the process outcome without intermediate steps. For example, both the manufacturing function and the advertising function are involved in the process of launching a new product, but the advertising function need not physically possess the product inventory or obtain authorization from the production function in order to advertise the product. Between these two extremes, there can be a mixture of both serial and parallel patterns representing diverse types of physical coupling between inputs and outputs of a process. In addition to, and sometimes instead of, relying on tangible input-output to orchestrate their activities, various functions involved in a process may collaborate with each other through information exchange to make mutual adjustments. The frequency and intensity of information exchange between two functions, termed information coupling, can range from none (completely insulated) to extensive (highly collaborative). We illustrate two sets of enablers that can transform processes—IT and organizational. The reduction of physical coupling in process reconfiguration may be enabled through the application of shared computing resources such as databases and imaging. With direct access to shared data and knowledge, various functions can participate in a reengineered process in a parallel fashion. The enhancement of information coupling is primarily enabled by the application of telecommunication technologies, such as a local area network and a variety of office systems products under the rubric of “groupware.” Application of these technologies may greatly improve communication and collaboration between different functions involved in a business process. We refer to these IT-enabled process changes as “hard” and “soft” reengineering, respectively. In addition, we argue that complementary organizational enablers, such as cross-functional teams, case managers, and process gener...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Series Editor's Introduction
• Foreword
• 1. Consolidating Knowledge on the Journey of Business Process Transformation
• Part I. Tracing Business Processes and Transformation
• Part II. Fundamental Approaches to the Analysis and Redesign of Business Processes
• Part III. The Role of Information Technology in Organizational Change
• Part IV. Transformation Across a Spectrum of Business Processes
• Part V. Success and Failure in Business Process Transformation
• Part VI. Trends and Challenges in Transforming Business Processes
• Editors and Contributors
• Series Editor
• Index