BPR Breakdown?

f ever there was a methodology that seemed a perfect fit for government organizations with overly rigid and bureaucratic organizational structures, it was business process reengineering. BPR promises organizations radical improvements in quality, cycle time and cost reduction,if the methodology is used correctly and uncompromisingly.

When it emerged in the early 1990s, BPR was greeted with great skepticism in government. But career bureaucrats and mid-level managers who pursued it were surprised to find much of the necessary commitment among top managers. Executives were attracted to a change approach with measurable short-term objectives that promised complete redesigns, not just tweaking of existing systems.

Political appointees seeking to make their marks in two- to three-year time frames saw great promise in a methodology that demanded dynamic breakthrough innovation.

For those executives with private-sector experience or a consulting background, BPR offered an opportunity to shake up conventional organizational thinking.

Of course, enthusiasm and strong support are not the same things as commitment and direct involvement. Nor do they guarantee success. Now, less than a decade after the appearance of Michael Hammer's 1990 Harvard Business Review article announcing reengineering's promise and potential, some consider BPR passé.

Critics point to the high rate of failure and the great difficulty in separating reengineering (an organizational reinvestment strategy) from downsizing (reducing organizational head count). Even advocates admit they underestimated the problems of implementing radical new designs and preparing the workforce to embrace the levels of change inherent in BPR.

Reengineering gurus like Hammer, James Champy and Thomas Davenport have issued various explanations, most of them focusing on how BPR failed to anticipate its impact on people. Davenport, a former BPR consultant at Ernst & Young, says: "People are starting to realize that changing how people work is more than reengineering."

Blessing BPR

In spite of all of the criticisms of BPR, it still is popular in the federal government, with the blessing of the Clinton administration, Congress and the General Accounting Office.

In April, GAO released a "Business Process Reengineering Assessment Guide" for agencies, which concluded that this "private-sector technique [could] help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors."

The 1996 Clinger-Cohen Act requires federal agencies interested in acquiring new information systems to reengineer their work processes first. GAO has been reinforcing that message with its work on strategic information management. Office of Management and Budget Director Franklin D. Raines' Oct. 25, 1996, memorandum to all federal agencies on "Funding Information Systems Investments" (in which he laid out what became known as "Raines' Rules") further underlines this requirement.

In the Defense Department, this year's Quadrennial Defense Review takes specific aim at core administrative, procurement and management support processes and prescribes reengineering to improve them.

Last spring, in a report from the National Performance Review and the Government Information Technology Services Board called Access America, Vice President Al Gore wrote, "The idea of reengineering through technology is critical. We don't want to automate the old worn processes of government. IT was and is the great enabler for reinvention. It allows us to rethink, in fundamental ways, how people work and how we serve customers."

The Debate Continues

Despite this high-level unanimity, not everyone agrees that BPR has a future. Much of the debate is about the tendency to use BPR as a label for a diverse change agenda. In some organizations, reengineering has been done badly, used as a cover for downsizing, or done primarily by outside consultants.

BPR is criticized as too narrow in breadth and too slow to prepare organizations for transformation. One critic, Don Tapscott, says in his book The Digital Economy (McGraw Hill, 1995) that BPR expends too much energy and too many resources getting organizations up to speed for today's requirements, slighting the greater challenge of tomorrow's requirements. Ironically, this is the same charge BPR advocates once leveled against total quality management.

Consultant Gary Hamel of Strategos Inc. in Menlo Park, Calif., sees a new "strategic convergence" where everyone learns and compares the same strategies. In Hamel's view, BPR and benchmarking will be the preferred approaches for those wanting to catch up,but will not be enough by themselves to put any one organization in the lead.

In government, pressures to provide services the public will regard as competitive and convenient (the FedEx effect on expectations, as it is sometimes called) and the increasing use of performance measures are forcing agencies to consider major operational changes. Hence, reengineering seems destined to be more important than ever.

Unfortunately, the new emphasis on doing more reengineering will not make BPR any easier to do well. The experiences of leading-edge federal organizations indicate that even the best designs and the most expensive consulting advice are no guarantee of BPR success.

Horizontal Perspective

The usual division of BPR effort is between business process improvement (a term made popular by Jim Harrington of Ernst & Young) and business process reengineering (popularized by Hammer and Champy). BPI, the less ambitious and more focused approach, aims for up to 50 percent improvement in cost, quality, cycle time and customer value. These are variables that are all key aspects of operational effectiveness.

BPR, the more ambitious and broadly focused of the two, aims to cut costs and cycle time at least in half. Much of the thinking behind BPR is cross-functional, i.e. breaking down functional and business unit boundaries and redesigning work flows and service delivery systems in terms of value added to the customer and the market.

What BPI and BPR share is the same horizontal perspective of enhancing performance across an organization from the customer through the organization and back to suppliers and contractors. Both approaches are concerned with all of the problems, delays, excessive handoffs, inspections, rerouting, and managerial interventions (not to mention all of the administrative barriers) built into bureaucratic work processes. But BPI is far more interested in:

• Streamlining.
• Running parts of the process in parallel and reducing steps and handoffs accomplished by flowcharting.
• Conducting a value-added analysis of the current system.

More radical BPR theorists see this as merely "picking the low-hanging fruit" and have moved to make BPR focus on complete redesigns that redraw organizational boundaries, change lines of communication and overhaul employee responsibilities.

BPI and BPR adherents share certain views. Both abhor simply applying new technology to solve old problems,"paving cow paths." And both despise the restructuring and downsizing efforts that were the rage in the early 1990s. Development of new organization charts is a waste of time until the fundamental work processes have been realigned, reengineering gurus say.

As for downsizing, they regard it as nonsensical and irrational. It can lead only to more downsizing, because the head count cutters simply demoralize the same workforce that is called on to change the culture and innovate.

Three New Forms

Once restructuring and downsizing are rejected, it is apparent that some new forms of reengineering have emerged. They have been labeled commercial or business practice reengineering, information technology reengineering and common process management. Each approach has objectives that resemble reengineering goals, and they are focused on process improvements. But they use different tools and tactics.

The Defense Logistics Agency uses the term commercial practice reengineering for its effort at fast-track, flexible supply chain integration. DLA, using Wal-Mart as its model, is trying to redraw its acquisition and logistical support processes along the lines of what the best commercial retailers are doing.

In a briefing at The Brookings Institution's annual Innovative Practices in Government seminar last summer, DLA officials assessed their pursuit of what they called an "agile resourcing" strategy and described how they systematically reviewed best commercial business practices for rapid assimilation into their organization. By rethinking the use of technology and business relationships, they redesigned their core supply chain processes.

Other agencies, including the departments of Agriculture and Veterans Affairs, also have had good results from commercial practice reengineering, according to the National Performance Review.

Information technology reengineering is emerging as a major new BPR variation. But in IT efforts, it's difficult to tell what's technology-driven and what's process reengineering-driven. Take the Social Security Administration's legendary success with its 800 phone service, often cited as an example of how government can attain world-class customer service standards. "In just 18 months, Social Security almost doubled its telephone answering capacity without adding new hires," the NPR has reported. "The agency did this, first, by working with AT&T to design a new network that provided the capacity and automated features found in the best toll-free business services."

Is this reengineering? In a report last June, GAO questioned where the toll-free telephone service would take SSA. Already 2,300 employees have been diverted from other tasks to handle phone calls, and that number must increase if other services are offered through the 800 number. Does the public expect to handle all of its SSA business over the phone? Is this desirable? When insurance companies put in telephone service centers and reengineered their service processes, they found that many customers were concerned about losing touch with the agent they were used to working with. Convenience provided a real trade-off against continuity of service.

The last of the three new reengineering hybrids is common process management (CPM). It involves integrating systems and communications among merging organizations. Lockheed Martin Corp. is undergoing CPM, as are a number of health care providers, banks and utilities. CPM is required when different organizations merge or bind together in an alliance or working partnership. Their systems are not usually compatible. It is important to leverage best practices from within, to choose or create a common process, and to get everyone to use that process.

Government doesn't have many mergers and acquisitions yet. But they may be coming. And there is increasing interest in linking related functions of separate agencies. Furthermore, government is used to making its contractors and suppliers adopt its own systems or crosswalk to its processes. The evident value of common platforms and linked networks will drive organizations to integrate systems.

One Label, Many Approaches

A close look at many efforts generally thought of as business process reengineering reveals

that they are almost always a mix of projects: some BPI efforts, some technology make-overs and a few select BPR projects. Some organizations have focused more radical BPR approaches on those business units and processes that were deemed furthest behind and used more moderate BPI approaches for more successful units. Other organizations have opted for short-term gains and quick-turnaround efforts to reinforce confidence in the organization and help pay for bigger, more radical redesign efforts.

BPR theorists might criticize either approach for being too shortsighted and underestimating the organization's willingness to pursue real change. But in the larger context of disappointment left by full-scale BPR failures, such approaches were simply prudent.

Prudence hasn't kept federal agencies from undertaking BPR efforts. But many, such as those in the Defense Department, are hardly the type of full-blown redesign initiatives called for by reengineering revolutionaries. Indeed, DoD's use of BPR is so dispersed and integrated into its overall management systems approach that it is sometimes hard to determine exactly what differences BPR has made.

The experiences of many federal agencies suggest that when BPR falls short, the problems usually can be traced to either the beginning or the end of the reengineering effort. At the beginning, agencies need to define the terms and the scope of their activity.

When the Environmental Protection Agency began considering how it might use BPR, it quickly became bogged down in a top management discussion about the core processes of EPA and who would be the "process owners" once a cross-functional redesign was put into place. This debate prevented EPA from using a full-scale BPR approach.

Another form of this problem is when agencies take forever to define and label the organization's core business processes. USDA's reengineering planning team encountered this problem early on. It finally hired an outside consulting group to develop a process map (a template overlaying the key work processes against the current functional structure) just so the BPR team could get beyond arguments about terminology. More focused and smaller-scale reengineering efforts conveniently minimize problems of definition, boundaries and control.

BPR is methodologically driven, and good reengineering relies on an array of analytical steps and tools. But who creates that methodology, and how is it used?

Conflict often arises between the consultants (internal or external), who view themselves as keepers of a disciplined approach to BPR, and agency employees, who want to get on with the changes. When this conflict occurs, the simplest solution is to fire the consultants and bring in another set to support the effort. Consultants will shoulder the blame, but the ultimate loser is reengineering itself, as users' confidence in BPR dwindles.

These up-front difficulties pale in comparison with the issues of conversion and implementation. Countless federal agencies have failed to follow through on workforce, customer, systems and programmatic changes. Despite reminders about the need to get ready for change, agencies always underestimate what has to be done and when.

Part of this is thinking of reengineering work processes as something mechanical or procedural as opposed to viewing it for what it really is,changing the culture. Chuck Winwood, leader of the Customs Service's cargo processing reengineering program, which affected half the agency's workforce, says Customs underestimated by tenfold how much work and how much communication would be required to get the workforce to change,even when employees (and their union) wanted to change.

Making change happen is even more difficult when many of the stakeholders are outside the agency, as the Social Security Administration is discovering as it reengineers the disability insurance process. In this case, state government workers are deeply involved in the process.

Some agencies have made the mistake of building in delays between the design of new processes and approval by top managers. In the interim, other forces within agencies have backtracked and savaged some excellent redesign plans. The backers of the status quo quite correctly interpret top management indecision about moving forward as permission to move backwards.

Implementation is often slowed because supporting management systems are not in place. Teams can't be formed if human resources managers haven't figured out how to select and evaluate team members. Information technology can't be aligned to fit cross-functional teams if budgeting and planning still is the province of functional offices. Workers can't be trained in new skills if huge amounts of time are consumed in discussions about how job responsibilities will be altered and to whom each group will report.

These problems can be avoided with concurrent implementation. If there is one underlying premise of BPR, it is that all work processes can be redesigned to work in parallel. Bureaucratic, one-step-at-a-time processes no longer are needed, thanks to technology and the drive for efficiency. The same premise must drive the applications of reengineering.

A.C. Hyde is a senior staff consultant with the Public Management Innovation Group in The Brookings Institution's Center for Public Policy Education.