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Reengineering Work:
Don't Automate,
Obliterate
Michael Hammer
Harvard Business Review, July-August, 1990, pp. 104-112
2010/10/18
授課老師: 林娟娟 教授
報告學生: 黃俊銘
學
號: 99756011
Outline
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Introduction
 Background
 Two successful reengineering
 The essence of reengineering
 Seven principles of reengineering
 Conclusions

Introduction
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Hammer said, “It is time to stop paving the
cow paths. Instead of embedding outdated
processes in silicon and software, we should
obliterate them and start over. We should use the
power of modern information technology to
radically redesign our business processes in
order to achieve dramatic improvements in their
performance.”
Background
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
Method for boosting performance
- Process rationalization and automation haven't
yield the dramatic improvements company needs

Information technology
- Heavy investments in IT have delivered
disappointing results
- Leave exist processes intact and use computers simply
to speed them up

The watchwords of the new decade are
- Innovation, speed, service and quality
Two successful reengineering
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
Ford Motor Company
- Accounts payable processes

Mutual Benefit Life (MBL) Insurance
- Processing of insurance applications
Ford - accounts payable processes
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
Search for ways to cut costs
- Ford’s North American accounts payable department
employed more than 500 people
- Rationalizing processes and installing new computer
systems could reduce the head count by 20%

Look at Mazda
- Only 5 people

New goal
- 80% reduction in head count (100 people)
Ford's old processes
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Accounts pay
Purchase order
Purchasing
department
Purchase
order
Material control
department
goods
Vender
receiving
document
invoice
Accounts payable
department
payment
Ford Motor Company
Old rule “We paid when we received invoice”
Ford's new processes
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Purchase order
Purchasing
Department
info.
Database
check
Material conrol
Department
accept
transaction
if okay
Accounts payable
Department
goods
return order
if not okay
payment
Ford Motor Company
New rule “We pay when we receive the goods”
Vender
Ford's dramatic improvement
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75% reduction in head count (to 125 clerks)
 No discrepancies between the financial record
and the physical record, material control is
simpler and financial information is more
accurate.

MBL - insurance application
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
Decision situation
- The long, multi step process involved
- Applications go through 30 discrete steps, 5
departments, involved 19 people
- Turnaround time: 24hrs(best), 5~25days(typical)
- Actual work done: 17 mins

Goal
- Improve customer service
- Demand a 60% improvement in productivity
MBL's old processes
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people
department
Customers
Old rule – sequential processes
MBL's new processes
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Case
manager
Customers
Case
manager
+
Workstations
Databases
Computer
network
Case
manager
Case managers
Mainframe
&
shared databases
Case managers with powerful PC-based workstations
MBL's dramatic improvement
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Complete an application in 4 hrs
 Average turnaround time : 2~5 days
 Eliminate 100 field office positions
 Handle 2 times volume of new applications

The essence of reengineering
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Strive for dramatic levels of improvement
 Break away from conventional wisdom and
the constraints of organizational boundaries
 Be broad and cross-functional
 Use information technology not to automate
an existing process but to enable a new one

Seven principles of reengineering-1
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
Organize around outcomes, not tasks
Product/
Service
Product/
Service
Reengineer
people
task
An example of reengineering principle 1
Seven principles of reengineering-2
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
Have those who use the output of the process
perform the process
Vender
Vender
Reengineer
computerbased data
&
expertise
Databases
An example of reengineering principle 2
Seven principles of reengineering-3
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
Subsume information-processing work into the
real work that produces the information
Purchase order
Purchasing
Dep.
check
Database
Material conrol
Dep.
accept
transaction
Accounts payable
Dep.
goods
Vender
return order
if not okay
payment
An example of reengineering principle 3 - Ford
Seven principles of reengineering-4
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
Treat geographically dispersed resources as
though they were centralized
Vender
Vender
dispersed
resources
Reengineer
centralized
resources
Dep.
Unit
Databases
An example of reengineering principle 4
Seven principles of reengineering-5
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
Link parallel activities instead of integrating
their result
Product/
Service
Product/
Service
parallel
activities
Reengineer
integrated
result
Databases
An example of reengineering principle 4
Seven principles of reengineering-6
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
Put the decision point where the work is
performed, and build control into the process
Manager
Expert
systems
Supervisor
Reengineer
Worker
An example of reengineering principle 6
Databases
Seven principles of reengineering-7
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
Capture information once and at the source
Info.
Reengineer
DB
An example of reengineering principle 7
Conclusions
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Think big
 Many area of the organization
 Executive leadership with real vision
 Commitment, consistency
 Information technology offers many options
 If managers have the vision, reengineering
will provide a way

Reengineering Formally Defined
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“Reengineering,” properly, is the fundamental
rethinking and radical redesign of business
processes to archive dramatic improvements in
critical, contemporary measure of
performance, such as cost, quality, service, and
speed.
Michael Hammer & James Champy,
Reengineering the Corporation: A Manifesto for Business Revolution
(UK: Harper Collins, 2004), 35
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Thank You!