Reengineering

Jacob & Sarkar

Outline

• Reengineering • Systems Development process • PIECES • Factors to consider in Systems Development

• What is reengineering?

– The radical re-design of broad cross-functional business processes with the objective of order of-magnitude performance gains, often with the

aid of information technology.

(T. Davenport) – any attempt to change how work is done- even incremental change to organizational transformation. (T. Davenport)

• Why reengineer?

– Fix Problems, Seize opportunities – The “rules” change

• An Example at Ford (Hammer, 1990): – In 1980’s Ford wanted to cut costs. An analysis of different processes indicated that Accounts Payable had more than 500 people.

– Process

• Factors to Keep in mind when considering reengineering.

– Need to break away from outdated rules and assumptions that underlie operations.

– Need to consider a cross functional perspective.

– Need to focus on on what needs to be accomplished.

– Organize around outcomes not tasks.

– Have those who use the output of the process perform the process.

– Subsume information-processing work into the real work that produces the information.

– Treat geographically dispersed resources as though they were centralized.

– Put the decision point where the work is being performed and build control into the process.

– Capture information once and at the source.

– Adequate Training, managing change

Change

• What is change?

– Kurt Lewin • Unfreezing – increasing the receptivity of the organization to possible change • Moving – Choosing a course of action and following it • Refreezing – reinforcing the equilibrium of the organization at a new level after the change has occurred.

• What are the reasons for resistance to change?

Nicolo Machiavelli

"IT MUST BE CONSIDERED THAT THERE IS NOTHING MORE DIFFICULT TO CARRY OUT, NOR MORE DOUBTFUL OF SUCCESS, NOR MORE DANGEROUS TO HANDLE, THAN TO INITIATE A NEW ORDER OF THINGS. FOR THE REFORMER HAS ENEMIES IN ALL THOSE WHO PROFIT BY THE OLD ORDER AND ONLY LUKEWARM DEFENDERS IN ALL THOSE WHO COULD PROFIT BY THE NEW ORDER. THIS LUKEWARMNESS ARISES PARTLY FROM FEAR OF ADVERSARIES WHO HAVE LAWS IN THEIR FAVOR AND PARTLY FROM THE INCREDULITY OF MANKIND, WHO DO NOT TRULY BELIEVE IN ANYTHING NEW UNTIL THEY HAD AN ACTUAL EXPERIENCE OF IT."

Systems Development Process

• (Whitten, Bentley and Dittman 2001)

Feasibility Issues

• Operational Feasibility – will the solution work in the organization • Technical Feasibility – is the specific technical solution feasible given the available technical resources and expertise • Schedule Feasibility – is the project timetable reasonable • Economic Feasibility – cost-benefit analysis • Legal Feasibility – Are the actions that the proposed system will perform legal.

A Framework for Analyzing Problems and Opportunities

• PIECES a framework for classifying problems and Opportunities (Wetherbee)

PIECES

•

P

erformance Analysis

Example 1: A local credit union has been studying data about consumer loan applications. Over the past year, loan applications have increased 124 percent. The manager realizes that, if this growth rate continues, the current loan officers will not be able to keep up with the demand. What needs to be done?

– Improve Throughput

Example 2: A construction company has been contracted to perform repairs and improvements for a large corporate site consisting of many buildings. The corporate site submits work orders to the construction company. The work orders go through a processing cycle that may include Information Systems, Purchasing, Accounting, Personnel, and Operations. Currently, an average delay of 62 days occurs between the submission of the order and the arrival of the work crew to fulfill the order. What needs to be done. - decrease Response time

•

I

nformation and Data Analysis

Example 3.

The Accounting Department suspects that air travel reimbursements do not reflect minimum costs and bargains that could be obtained. However, it has no information to support its suspicions; therefore, it cannot justify possible changes to its procedures.

Problem?

• Lack of information regarding decisions or current situations

Example 4

A personnel manager must allocate scarce overtime dollars to the supervisors of three manufacturing departments. The report that predicts the amount of work to be done does not break the information down to the department level.

Problem?

• Lack of relevant information concerning decisions or current situation

Example 5 The inventory manager for a large printing business must reorder paper and supplies each Monday. The clerk is given an inventory report. The report includes all 3,000 inventory items. The clerk has to compare quantity in stock and projected usage for each item on the report--- just to identify items that need to be reordered.

Problem?

• Information is not in a form useful to management

Example 6

A hotel chain allows customers to make reservations for any hotel in the chain from any other hotel in the chain. However, when a reservation is made or canceled, it takes three days to get that information to the hotel that is affected. Meanwhile, that hotel may overbook or under book rooms. Problem?

• Lack of timely information

Example 7 Customer receives notification that he has 8 registered copies eligible for a software upgrade. Customer sends in order. Response cannot upgrade because he is not legally registered.

Problem? • Notification and order were processed across different data files • Data Redundancy

Example 8 Data on researchers who work with radioactive material is maintained in file cabinets organized by researcher name.

Govt. requests data on every researcher that has worked with a particular radioactive material.

Problem?

Data inflexibility

•

E

conomic analysis

Example 9 Mkt. Dept. needs to establish new prices for products. Needs cost breakdown by product. Has budgeted costs but no historical data on actual costs.

Problem?

Costs are unknown Other issues Costs are untraceable to source Costs are too high.

Profits – orders can be increased, access to new markets.

•

C

ontrol and Security Analysis

Example 10 A distribution warehouse for farm machinery parts is experiencing a stock problem. The computer information system is releasing orders after checking the inventory file to ensure that the products ordered are in stock. However, when the warehouse clerk tries to fill the order, the parts are not always in stock. An analysis reveals that, when the stock clerks place new inventory on the shelves, they do not count that inventory. They simply accept the supplier’s word that the quantity shipped is accurate.

Problem? Too few controls

•

E

fficiency Analysis

Example 11 A manufacturing facility consists of 125 workstations of various types. Different products go through different types of workstations during production. Management is concerned with the need to expand production, but there is no money to expand facilities. Management has observed two major limitations in current operations. First, separate orders for the same product are not consolidated. This causes workstations to be set up and broken down for the same product several times each day. Second, management has noticed that some workstations seem to be idle during some parts of the day and overworked during other parts of the day.

Problem?

Inefficient use of resources

•

S

ervice Analysis • Accuracy • Reliability • Ease of Use • Flexibility • Coordination (examples from Whitten Bentley and Barlow)

• • • • • •

P -

the need to improve

Performance I -

the need to improve

Information

and Data

E -

the need to improve

Economics

, control costs or increase profits

C

– the need to improve

Control

and Security

E

– the need to improve

Efficiency S –

the need to improve

Service

Factors to Consider in Systems Development

In Class Case Discussion

• Identify the various mistakes made during the course of the project. • If you were managing this project, discuss what you would do differently?

•

“ Of all monsters that fill the nightmares of our folklore, none terrify more than werewolves, because they transform unexpectedly from the familiar into horrors.

•

The familiar software project…..has something of this character; it is usually innocent & straightforward, but is capable of becoming a monster of missed schedules, blown budgets and flawed products. So we hear desperate cries for a silver bullet - something to make software costs drop as rapidly as computer hardware costs.” (Brooks, 1987)

Hong Kong Airport (computerworld)

• The numerous computer-related mishaps that followed the pomp of the grand opening of Hong Kong's new Chek Lap Kok (CLK) International Airport were the result of insufficient planning and systems that were pushed to the breaking point, according to the vendors that supplied the systems.

• Problems reportedly linked to faulty information technology systems included arriving planes that were stranded on the tarmac with no directions to parking gates; passengers missing flights because of problems with the Flight Information Display System; baggage lost and delayed when baggage handling systems crashed; and problems with baggage reconciliation that led to at least one flight taking off loaded with baggage belonging to passengers who hadn't boarded the plane.

• But representatives from the suppliers of two major systems indicated that the biggest problem at the airport was a system overload. • Ian Stewart, regional vice president for Northeast Asia at international airline service supplier SITA, said systems weren't fully stress-tested until CLK opened for operation.

• The extent of systems integration at CLK could be another cause for IT related problems, Stewart and Davis agreed. • "The information that comes through [the flight information system] feeds into other systems and vice versa, and so if you have any hiccup anywhere down the line, then it impacts the other systems and it will potentially impact airport operations and passenger flow," Davis said.

• In defense of the systems failures at CLK, Stewart said, "Any airport the size of CLK, when it opens is going to experience problems. I don't care how well you test it, it's impossible to have something as complex as that without having some difficulties."

Some Statistics

• Average Schedule was overrun 22%. (40% of projects had an overrun between 0 and 50%) - Genuchten 1991.

• Average cost overrun was 33% to 36%. Genuchten 1991.

Why Overruns?

Typical Scenario Marketing Manager - The product needs to be ready to ship in nine months Product Dev. Manager - The product is too complex to complete in nine months we need 12 months and that too is optimistic.

Marketing Manager - You don’t understand we have already announced the release date.

Product Dev. Manager Thinks - ***!!!**&$ Oh well you will get it when we are done.

Nine months later announcement - product will be released in another six months.

So why overruns?

– Other people set one's objectives, provide one's resources and furnish one's information.

– Lack of shared vision – Schedules, budgets set too early in project and not updated.

• Problem is compounded by – User does not know what he/she wants – User has generally never thought of the problem in the detail necessary for specification

• Inadequate – Communication – Training – Testing – Goal Definition – Buy in – Change Management

• Complexity – leads to difficulty in enumerating all possible states- leads to unreliability • Perfection and debugging – Computer demands perfection – Debugging – syntax easy, conceptual difficult • Obsolescence

Cole 1995; Genuchten 1991 Project Objective Not Fully Specified Frequent changes in design Bad Planning and Estimating Technology New to the Organization Inadequate/No Project Management Methodology Insufficient Senior Staff on Team Poor Performance by Suppliers 42% 51% 50% 48% 45% 42% 42%

• People – The User

– The Champion (Management Support)

– The Systems Development Team

• Aligning Systems Goals and Business Needs

• Project Management – Project is a temporary sequence of unique, complex and connected activities having one goal or purpose and it must be completed by a specific time, within budget and according to its specification

– Project Management is the process of scoping, planning, staffing, organizing, directing, and controlling the development of an acceptable system at a minimum cost within a specified time frame.

• Change Management