INFORMATION RESOURCES MANAGEMENT

EFRAIM TURBAN, Feature Editor
California State University at Long Beach

BUSINESS AND INFORMATION SYSTEMS RE-ENGINEERING

by Efraim Turban, California State University at Long Beach

Many companies are still unprepared to operate in the 90's. Business is encountering rapidly changing technologies and shorter product life cycles. Competition is rapidly increasing and customers' demands continue to rise. Companies have tended to use technology to mechanize the "old ways" of doing business. However, many information systems are 15 or 20 years old. Some of these systems cannot meet existing demands, others will soon be obsolete. Solutions in the past were geared toward piecemeal efficiency and control improvements. The needs of the 90's must be geared toward innovation, speed, service and quality. Companies must look for both their business processes and their supporting information systems.

Re-Engineering business processes has become an essential element in many companies' attempts to improve their competitive position in the marketplace. The power of modern information technology must be utilized to radically redesign business to achieve the major improvements in performance. Re-Engineering endeavors to break away from the old rules about how we organize and conduct business, and is a major hope to break away from the antiquated processes that threaten to drag businesses down. Information technology enables a new processþit does not just automate an existing one.

Through re-engineering, Ford was able to achieve a 75% reduction in head count of its Accounts Payable Department, previously consisting of 500 employees. Matching of invoices and check preparation is done automatically. Mutual Benefit Life has re-engineered its process of insurance applications. The processing of complex insurance applications which had taken from 5 - 25 days, involving 19 different employees, can now be done by one individual with an average turnaround time of 2 - 5 days--eliminating 100 field office positions.

Strategy for Re-Engineering Requirements

The re-engineering process is usually done as a top-down, business driven approach. Total commitment from senior management may mean success or failure. It begins by defining business and information system requirements. Studies must be done to identify the breakthroughs possible in operating improvements, to estimate the tangible benefits to the business and to outline a migration plan, specifying costs to obtain improvements. From this, the overall systems strategy for the organization can be determined and used as a visible and common reference point.

Re-Engineering is a tremendous effort that mandates change in many areas of the organization, not just in the business process itself. Job designs, organizational structures, management systems, and anything associated with the process, must be recreated in an integrated way.

Re-Engineering requires managers to look at the fundamental processes of the business from a cross-functional perspective. One way to ensure that perspective, is to assemble a team that represents functional units involved in the process of being re-engineered and all the units that depend on it. A prominent member of this team should be the director of information services.

What is Information System Re-Engineering?

Re-Engineering is the restructuring or redocumenting of outdated information systems to meet changing and new challenges in business today. It focuses on the reinvention of old software to reduce the many hours of up-front analysis required to modify or make continuous changes to poorly maintained systems. Successful re-engineering projects give new life to information systems and, in some cases, the antiquated mainframes can be used for several more years. The user community can gain substantial rewards as a result. Re-Engineering can be a cost effective means for achieving state-of-the-art applications, as opposed to removing all existing equipment and incurring the enormous costs of new hardware and software.

Many Information Systems departments are looking to system re-engineering to respond to the increased demands for better returns, higher quality and improved customer service. These changes heavily involve the users who must share in the benefits.

Information system re-engineering must be an equal partnership between Information Systems and users with mutually defined objectives and a strong appreciation for each other's goals and concerns. The job of IS is to make this experience as painless as possible, but one which will be beneficial to everyone involved. Issues of concern to users are:

1. How to do more with less while increasing competitiveness.

2. How to shorten the "time-to-market" while offering improved quality.

3. How to cut costs while offering extraordinary customer service.

Planning IS for re-engineering requires paying attention to these issues. It also means a dedicated effort to selling, training and involving the business functions.

Information systems can be used to help the business re-engineering. In some cases it is necessary to build new information systems. However, in many cases it makes sense to re-engineer the information system together with the business re-engineering. Finally, information system re-engineering can be done without a business re-engineering.