September 10, 2012, 8:51 PM — It might go by the same name, but today's slimmed-down business process re-engineering bears little resemblance to its clunky predecessor.
Twenty-five years after management guru Michael Hammer popularized the concept of business process re-engineering, companies large and small are at it again -- only this time around with a few significant twists. Chief among them is the re-engineering of the IT organization itself.
Unlike the mega-projects of the 1990s that spanned multiple years and revolved around big, honking ERP systems that cost millions and produced disappointing results, today's process re-engineering initiatives feature multiple, quick-hit projects, many born out of pocket innovation labs within IT.
The methodologies are also different. Forget color-coded Gantt charts and waterfall development techniques. Today, it's all about lean manufacturing, Six Sigma and agile development.
In a nutshell, today's re-engineering is not a one-time event. Rather, it's an ongoing endeavor that involves continually refining and enhancing the hundreds of end-to-end steps involved in developing new products, acquiring and retaining customers, and making money. What it's not about is the software that automates these steps.
"You might re-engineer once, and it takes you from a 1 to a 5 in some area. But the world is changing fast, so what was a 5 quickly becomes a 3," says Daphne Jones, CIO at Hospira, a $4 billion pharmaceutical company in Lake Forest, Ill. "You have to figure out every day how to re-engineer back to a 5. It's a continuous journey."
That's why the savviest CIOs are re-engineering IT itself around those steps with an eye toward creating new streams of revenue and business value as markets advance at hyperspeed.
For example, at Boston-based John Hancock Financial Services, IT team members are organized around business processes, such as order-to-cash or procure-to-pay, rather than around various technology stacks or software applications.
"If you have people organized around the processes being delivered rather than in [technology] silos, that means those people are attentive to how the processes operate and how they need to evolve and change over time," says CIO Allan Hackney. "Re-engineering is constantly changing the status quo."