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The “Next Stage” for Reengineering
Roadmap for Successful Reengineering at The Fin. Serv. Company
April 27, 1993
04/20/23 - 2 -© 1993 Gemini Consulting. Reproduction with Express Permission Only. 06-roadmap
ConfidentialThe Fin. Serv. Co.
Purpose
ï Define Business Reengineering
ï Provide examples of other successful reengineering efforts
ï Outline approach for successful reengineering within The Equitable
- Emphasis is on existing reengineering projects
04/20/23 - 3 -© 1993 Gemini Consulting. Reproduction with Express Permission Only. 06-roadmap
ConfidentialThe Fin. Serv. Co.
Contents
ï Introduction
ï Roadmap for Successful Reengineering
ï Successful Reengineering at The Equitable
ï Appendix
Introduction
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Reengineering requires taking a holistic look at the way business is being done
Business Reengineering Defined
INTRODUCTION
Business Reengineering:ï Is a continuous transformation process
ï Is focused on exceeding customer expectations
ï Results in improving return to shareholders
Business Reengineering is comprised of:ï Improvements within each department
ï Improvements across departments
ï Continuous Business Transformation
Reengineering requires taking a holistic look at the way business is being done
04/20/23 - 6 -© 1993 Gemini Consulting. Reproduction with Express Permission Only. 06-roadmap
ConfidentialThe Fin. Serv. Co.
Reengineering is More Than Just Expense Reduction
Holistic Focus-Revenue
Generation and Cost Reduction
TIME
INTRODUCTION
LEVEL OF IMPACT
Internal Focus-Cost Reduction
Continuous Business
Transformation
Departmental Improvements
Improvements Across
Departments
SuccessfulReengineering
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The Implementation of All Three Stages of Reengineering Is Required to Achieve Significant Results
INTRODUCTION
Aspects ofDepartmental Improvements:
ï Emphasis on cost reduction, efficiency improvement
ï Simple decision structure, within one business unit
ï Not sustainable without culture change
ï Strategically neutral
ï Low external impact
ï Ease of implementation: high
ï One time
Aspects of Continuous Business Transformation:
ï Emphasis on redesigning business around current and anticipated customer needs
ï Complex decision structure requires customer and cross-organizational input
ï Sustainable culture change
ï Leads to new strategic direction
ï Significant external impact
ï Ease of implementation: difficult
ï Continuous improvement
Aspects ofImprovements Across Functions:
ï Emphasis on cost reduction, efficiency improvement
ï More involved decision structureóbetween two or more units; may require executive mandate
ï Somewhat more sustainable
ï Some strategic impact
ï Begins to have external impact
ï Ease of implementation: moderate to high
ï One time
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Reengineering Efforts Encompass a Variety of Projects
Examples ofDepartmental Improvements:
ï Work simplification: elimination/consolidation of unnecessary steps
ï Work elimination: elimination of unnecessary functions and activities
ï Automation of manual processes
ï Renegotiation of vendor contracts
INTRODUCTION
Examples ofContinuous Business Transformation:
ï Redesign of product delivery systemódecentralize vs. centralize
ï Redesign procedures and systems to expedite claims payment
ï Design organization and systems which allow decision making and information available at point of contact with customer
ï Restructure customer support and/or sales activities into client
teams
ï Segment customers and design system and operations to provide desired services
Examples ofImprovements Across Functions:
ï Consolidation of similar/related functions into one department
ï Consolidation of systems performing like processes
ï Consolidating vendor selection and terms negotiation for major products/equipment used throughout organization
ï Redesign of processes and procedures between interacting departments to improve service/reduce costs
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Successful Business Reengineering Benefits Customers, Employees and Shareholders
INTRODUCTION
ï Improved financial results- Increased revenue- Decreased expenses- Increased cash flow- Improved financial stability and return on equity
ï Improved competitive position- Increased new business- Increased retention of existing customers- More new business with existing customers
ï Improved organizational effectiveness- Increased cooperation across business units and functions- More flexibility and responsiveness throughout organization- Improved project and people management skills
ï Positions organization for continuous improvement- Creates a partnership relationship with its client base- Fosters culture which rewards continuous improvement efforts- Organizationís focus is expanded to include future opportunities
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Reengineering Success Stories
ï Defense Contractor Significantly Reduced Expenses
ï Insurance Company Drastically Redesigned Its Service Organization
ï European Financial Services Company Reverses Downward Spiral
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ConfidentialThe Fin. Serv. Co.
Reengineering Success Story #1: A Defense Contractor Significantly Reduced Expenses Through Major Cost Cutting Initiatives
Business Situation
Reengineering Activities
Benefits
ï Reductions in defense spending led to immediate need to reduce expenses to remain competitive
ï Conducted management interviews to identify organizational strengths to be leveraged and barriers to improvement to be removed
ï Conducted employee survey to assess perceptions of organizational effectiveness, work ethic, management, productivity and communications
ï Analyzed indirect costs to target opportunities for cost reductionsï Requested each department to provide cost reduction ideas totaling
25% of budgetï Conducted detailed probes of each functional area process flows,
interviews, and evaluations by service recipients to determine opportunities for improvement
ï Selectively reduced costs through work process flow improvements and user/provider determination of required service levels and functions
ï Organization streamlined through consolidations, span of control adjustments and elimination of required service levels and functions
ï Expenses were reduced $11.3MM (16.2%) without impacting functions critical to long-term strategic direction
INTRODUCTION
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Reengineering Success Story #2: An Insurance Company Dramatically Redesigned Its Service Organization to Retain Key Accounts
Business Situation
Reengineering Activities
Benefits
ï Facing potential loss of 17 key accountsï Noncompliance with industry standards
ï Surveyed and visited customers to identify their needs and issuesï Totally restructured service organization to be aligned by client
teams vs. functional orientation- Skill levels and roles and responsibilities of each new position
were defined- More than 1,200 people moved in this process
ï Redesigned 364 of 1,000 client forms to be more user friendlyï Redesigned sales programs to increase new business while
improving retention of existing clientsï Improved market research and product development process to
reduce new product cycle timeï Designed and installed management development program
ï Realigned service organization to be more responsive to client needs
ï Maintained all 17 key accounts worth $37MM annuallyï Increased new business from existing accounts totaling $144MMï Full compliance with industry standardsï Significant reduction in employee turnover
INTRODUCTION
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Reengineering Success Story #3: European Financial Services Company Reverses Downward Spiral by Decreasing Costs and Increasing Revenues
Business Situation
Reengineering Activities
Benefits
ï Expenses rising more rapidly than revenuesï CEO under pressure by parent company to deliver profit and
increase ROE
ï Conducted value chain analysis to assign administrative costs to sales revenue
ï Transformed passive service organization into lead generators via direct mail
ï Developed sales activity tracking and reporting mechanismï Prioritized system enhancements using return on investment
criteriaï Rolled out best practices of project management ï Redesigned branch network to attain profitabilityï Redesigned Product Development and Introduction processï Piloted a key new product
ï Increased profits from £1.6MM to £17MM in one yearï Reduced expenses by £6MMï Increased productivity in Administration 25%ï Increased revenue from lead generationï Turn around sales forceï Created customer-focused organizationï Built stronger executive team
INTRODUCTION
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ConfidentialThe Fin. Serv. Co.
Lessons for Successful Reengineering
ï Focus on improving financial results, not just expense reducing for maximum results
ï Reduce expenses in those areas not critical to long-term strategic direction
ï Support and encourage cross-functional alliances and multi-disciplinary projects
ï Focus on meeting and exceeding customer needs and expectations to improve competitive position as well as enhance revenue generation
ï Continuously improve the organizationís performance
INTRODUCTION
Roadmap for Successful Reengineering
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Many Worthwhile Reengineering Projects Begin With Best Intentions but Never Reach Their DestinationsÖ
SUCCESSFUL REENGINEERING
The Equitable
SuccessfulReengineering
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A Successful Reengineering Effort Requires Active Participation and Support from Multiple Players
SUCCESSFUL REENGINEERING
ï Project Leader
ï Senior Management
ï The Organization as a Whole
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The Project Leader Has Primary Responsibility for Ensuring Success of the Project
ï Communicate project objectives and expectations
ï Plan, lead and communicate project activities
ï Monitor project performance and fine tune as needed
ï Build teams and remove obstacles
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Careful Planning and Monitoring Allow the Project Leader to Avoid Potential Roadblocks
SUCCESSFUL REENGINEERING
The Equitable
Out of gas: resources not available when needed
Fork in road: cost/benefit analysis not
clear on direction to take
SuccessfulReengineering
Stop for safety check: customer needs met? quality measures set? productivity measures
set?
Take the scenic route-timeframes expand: action plan unclear and lacking short-term
deliverables
Parties set out in different directions: no clear
objectives, roles and responsibilities
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The Project Leader Ensures Each Project Element Is in Place to Achieve Success*
SUCCESSFUL REENGINEERING
Project Charter Defined
Benefit
ï Clear understanding of project expectationï Focuses energies of team members
ï Clear accountabilitiesï Deliverables defined and agreed uponï Helps guide implementationï Cross-organizational issues addressed in advance
ï Resource commitments obtained up frontï Allowances made for lead time of key resources
ï Time and resources available to effectively train staff
ï Potential problems/issues quickly identified so corrective action can take place immediately
ï Provides information for continuous improvementï Focuses on result achievement
ï Project benefits and costs fully presented, clarifies go/no go decision
ï Project financial results monitored on a monthly basis
* Detail provided in Appendix
Process, Deliverables and Responsibilities Defined
Resource Plan Developed
Training Plan Developed
Project Performance Tracking Mechanism Developed
Business Case Presentation
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The Project Leader Ensures Each Project Element Is in Place to Achieve Success* (cont.)
SUCCESSFUL REENGINEERING
Risk Assessment
Benefit
ï Plans made in advance to handle alternative scenarios
ï Helps determine speed of implementation of multiple projects
ï Focuses companyís efforts on responding to customerís needs and wants
ï Provides basis for internal measures
ï Focuses attention and resources on desired productivity, quality and financial results
ï Provides basis for continuous improvement
ï Impacted parties aware of project objectives and activities
ï Helps shape customersí expectations/perceptions
Service Quality Indicators
Internal Measurements
Communication Plans Developed
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Oversight by Senior Management Plays A Key Role in the Success or Failure of Reengineering Efforts
SUCCESSFUL REENGINEERING
SuccessfulReengineering
Not paying attention, took wrong exit: management not actively involved or monitoring results
achievement
Accident: business heads clash
Change in direction: top management shifts
priorities-again!
The Equitable
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The Oversight Function Provides Direction to the Project Teams
SUCCESSFUL REENGINEERING
OVERSIGHT FREEWAY
Ensure Project Success
Ensure Consistency
with Corporate Strategy
Maximize/ Accelerate
Payback and Return
Ensure Financial Targets
Achieved Identify New Opportunities Successful
Reengineering
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The Oversight Role Provides Emphasis, Support and Direction to The Reengineering Effort
SUCCESSFUL REENGINEERING
Objective Point of View
Benefit
ï Ensures projects support the specific needs and situation of The Equitable
ï Provides rational, apolitical direction
ï Effective allocation of resourcesï Avoids overlap and redundancies between projects
ï Serves as a catalyst for acceleration of benefits and over-achievement
ï Support provided to project teams for resolving conflicts and eliminating barriers
ï Removes barriers beyond the abilities or reach of the project team
ï Ensures projected savings are attainedï Allows potential issues and problems to be diffused/addressed
as they arise
ï Builds momentum for reengineering effortï Reduces resistance by creating awareness of projectsí scope
and objectives
Priority Setting & Integration
Sense of Urgency
Removal of Barriers to Success
Project Monitoring Process
Effective Communication
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The Oversight Role Provides Emphasis, Support and Direction to the Reengineering Effort (cont.)
SUCCESSFUL REENGINEERING
Project Support
Benefit
ï Increases project successfulness by providing necessary skills training through the Reengineering Resource Center
ï Identifying reengineering opportunities becomes an on-going process
Continuous Improvement
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Establishing The Equitable Reengineering Resource Center Supports Project Teamsí Efforts ...
Characteristics of the Reengineering Resource Center :
ï 6-10 dedicated resource people
ï Provides skills and analysis tools training
ï Analysis resources available
ï Project coaching offered
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OVERSIGHT FREEWAY
...Enables Each Project to Successfully Reach Its Objectives ...
SUCCESSFUL REENGINEERING
License suspended: project leader and team members
lack necessary skills
Caught speeding: not enough time or staff to
complete
SuccessfulReengineering
The Equitable
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...By Providing Necessary Resources and Training
SUCCESSFUL REENGINEERING
Tools
ï Benchmarking
ï Roles and responsibilities charting
ï Project benefit tracking
ï Business process technologies
ï Business modeling
ï Activity based costing
Capabilities
ï Facilitation skills
ï Problem solving/Team building skills
ï Team leader training
ï Project management skills
ï Coaching for Steering Committee presentations
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Clearly Defining Roles and Structure Results in a Successful Reengineering Effort
SUCCESSFUL REENGINEERING
ï Develop project management process which ensures thorough, clear project plan with necessary buy-ins and resource commitments obtained in advance
ï Develop mechanism to track project performance from planning phase to implementation through the achievement of project benefits
ï Establish on-going, active Oversight role
ï Establish process for coordinating and prioritizing competing resource demands
ï Provides mechanism for project support resources and skill building (e.g., Reengineering Resource Center)
ï Continually looks for additional opportunities for improvement
Successful Reengineeringat The Equitable
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Steps for Successful Reengineering at The Equitable
SUCCESSFUL REENGINEERING
Integrate and Prioritize
Executive Leadership TeamProgram Management Reengineering Resource Center
Business Head/Project Manager
Establish Goals
Oversight Decision
Analysis & Scoping
Define Project
Assessment
Support
Rework Update Success PlanDrop
Map Against Current Goals
Monitor and Report
Gain Organizational Buy-In
Translate/Begin Monitoring
Oversight
Go
Rework
No
Yes
Implement
Results/Impact
Establish Need for More Opportunities
Problem Solve
Identify Potential Analysis/Projects
Resource/Training
Technology
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ConfidentialThe Fin. Serv. Co.SUCCESSFUL REENGINEERING
ï Reengineering Elements Compiled
ï Individual Projects Assessed
ï Success Plan Developed
The Journey Has Begun; Initial Steps Have BeenCompleted
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¶ Compiled Reengineering Elements
SUCCESSFUL REENGINEERING
ï Outlined preliminary project plan and objectives
ï Collected the information necessary to follow the reengineering framework
ï Documented project elements as applicable
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¶ Assessed Individual Projects
SUCCESSFUL REENGINEERING
ï Conducted interviews with project leaders
ï Performed thorough financial analysis of business case
ï Followed-up with project leaders, associated staff and vendors as necessary to obtain additional information
ï Drafted strawmodel of project assessment
ï Reviewed strawmodel assessments with project leader to jointly produce project assessments
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¶ Developed Success Plan
SUCCESSFUL REENGINEERING
ï Outlined next steps critical to ensuring project success with the project leader
ï Looked for means of accelerating benefit realization
ï Identified new areas of savings opportunity
ï Determined the type and level of support needed from the Reengineering Resource Center to ensure project success
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A Well Thought Out and Supported Process Will Make The Reengineering Journey Successful
SUCCESSFUL REENGINEERING
ï Successful business reengineering effort will benefit the customers, employees and shareholders
- Improved financial results- Improved competitive position- Improved organizational effectiveness- Organization positioned for continuous improvement
ï To realize significant change, reengineering efforts must encompass all three stages
- Departmental improvements- Improvements across departments- Business transformation
ï To achieve the potential benefits, various parties within The Equitable must play an active role
- Project Leader ensures project has all project elements in place- Senior Management creates and participates in an Oversight role- The Equitable provides a Reengineering Resource Center to provide support to the various
projects
Appendix
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Contents
SUCCESSFUL REENGINEERING
ï Reengineering Elements - Detail
ï Oversight Charter
ï Oversight Function
ï Reengineering Resource Center Function
Reengineering Elements - Detail
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Reengineering Elements
Project Management ï Project Charter Defined ï Process, Deliverables and Responsibilities Defined ï Resource Plan Developed ï Training Plans Developed ï Project Performance Tracking Mechanism Developed
Performance Measurement ï Business Case ï Project Benefit Tracking ï Risk Assessment ï Service Quality Indicators ï Internal Measurements
Communication ï Communication Plans Developed
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Project Management
Project Charter Defined
ï Projectís mission statement/business objectives are clearly defined, documented, and understood by project team
ï Expected project results and deliverables are specific, documented and agreed upon by client and project team
ï Team membersí functions, roles and expected time commitment defined
Process, Deliverables andResponsibilities Defined
ï Project Action Plan comprised of tasks, deliverables, responsibilities and due dates documented for project activities through implementation
ï Plan is reviewed with and concurrence obtained from appropriate people from major areas involved/affected
ï Tasks and deliverables are prepared with intermediate milestones to easily monitor project performance
ï Roles and responsibilities of all people involved in project development and implementation are defined and communicated
ï Project activities and timeframes established are reasonable and efficient
Assessments
REENGINEERING ELEMENTS
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
Minimal CriticalProject Impact
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Project Management (cont.)
Resource Plan Developed
ï People, time, equipment, systems support and other resources required to support the project are defined for the full cycle of the project
ï Specialized resources and skill requirements are identified and necessary lead times documented
ï Commitments for resource requirements are obtained and published as soon as possible
ï Ability and willingness to change of key staff and resource individuals assessed and documented, and action plan developed to address potential obstacles
Training Plans Developed
ï New procedures and policies identified and developed
ï Parties requiring training identified and documented
ï Training resources defined and arrangements made to obtain: trainer, equipment, space, etc.
ï Training components designed
ï Training schedule developed and coordinated with relevant parties and published in internal communication vehicles
REENGINEERING ELEMENTS
Assessments1 2 3 4 5
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
1 2 3 4 5
Minimal CriticalProject Impact
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Project Management (cont.)
Project Performance TrackingMechanism Developed
ï Mechanism is developed to regularly and timely track project performance for the project team, senior management, etc. such as:
- adherence to time schedules- completion of deliverables
ï Process is in place to minimize schedule slippage through early identification and resolution of issues
REENGINEERING ELEMENTS
Assessments1 2 3 4 5
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
Minimal CriticalProject Impact
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Performance Measurement
Business Case
ï Business assumptions made in the development of the cost/benefit analysis of alternatives are defined and documented
ï Business assumptions have been validated
ï All financial benefits and costs pertaining to the proposed project and/or alternatives reviewed have been identified, analyzed and quantified, and are presented by month. Benefits and costs are calculated against 1993 budgeted amounts.
ï Non-tangible benefits and costs, if any, have been identified and assessment made as to their importance
ï Financial calculations indicating impact on balance sheet and income statement are made
ï Assessment is made as to likelihood of sustainability of cost savings and/or revenue enhancements
REENGINEERING ELEMENTS
Assessments1 2 3 4 5
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
Minimal CriticalProject Impact
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Performance Measurement (cont.)
Project Benefit Tracking
ï Process is in place to track project related benefits and impacts on a monthly basis
ï Defined plan has been developed to monitor performance and take corrective action to address gaps between desired and actual results and managed for continuous improvement
Risk Assessment
ï Risk assessment of variances in key cost/revenue drivers is documented
ï Impact of inflation and/or other rate changes is determined
ï Qualitative risks which might impact the customer are identified
ï Potential future scenarios are considered as appropriate
ï Regulatory/tax impacts are considered as appropriate
REENGINEERING ELEMENTS
Assessments1 2 3 4 5
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
1 2 3 4 5
Minimal CriticalProject Impact
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Performance Measurement (cont.)
Service Quality Indicators
ï Internal and external customer expectations have been identified and relative importance assessed as related to project scope
ï Specific industry indicators and measures most reflective of areaís ability to meet customer expectations have been identified
ï Specific and aggressive performance goals have been established and communicated
ï Baseline and ongoing performance data is collected and being reported
ï Defined plan has been developed to monitor performance and take appropriate action to address gaps between actual and desired results
Internal Measurements
ï Specific performance goals related to customer service quality indicators have been established for measurement of performance in project area such as productivity and quality
ï Baseline and ongoing performance data is being collected and reported
ï Defined plan has been developed to monitor performance and take corrective action to address gaps between desired and actual results and managed for continuous improvement
REENGINEERING ELEMENTS
Assessments1 2 3 4 5
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
1 2 3 4 5
Minimal CriticalProject Impact
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Communication
Communication Plans Developed
ï Project announcement letter written and appropriately distributed communicating projectís objectives, team members, expected time commitments, meeting frequency and location
ï Proactive internal communications plan including target audiences, modes of communication, frequency, and assignments of responsibilities is in place and is being executed
ï Proactive external communications plan to communicate changes and information to affected parties outside the organization (policyholders, vendors, agents, etc.) including media and timing of communications, and assignment of responsibilities is in place and is being executed
ï Project meetings are conducted effectively, with set agendas, meeting notes distributed and next steps identified, problem solving/team building tools utilized, debrief sessions held as appropriate, and action steps and issues followed up on outside of meetings
ï Milestone meetings are scheduled and held with appropriate attendance to present key deliverables, maintain project momentum, etc.
REENGINEERING ELEMENTS
Assessments1 2 3 4 5
Fully meets criteria
Partially meets criteria
Notavailable
Notapplicable
1 2 3 4 5
Minimal CriticalProject Impact
Oversight Charter
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Reengineering Oversight Charter
SUCCESSFUL REENGINEERING
The objectives of reengineering oversight are to:
ï Ensure the achievement of all financial targets relative to budget attainment
- 1993: $733MM
- 1994: $650MM
- 1995: $600MM
ï Ensure consistency with the corporate strategy
ï Ensure reengineering project success
ï Identify and initiate new reengineering / improvement opportunities
ï Maximize and accelerate the attainment of cost payback and ROI
Oversight Function
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Reengineering Oversight Function
To successfully achieve charter objectives, the oversight function must provide:
ï Fin. Serv. Co.-wide objective point of view- Furnish an overall, multi-department/multi-business perspective- Provide rational, apolitical direction- Lead with a fresh perspective, unbound by historical precedent- Tailor guidance to the specific needs and situation of The Fin. Serv. Co.
ï Decision making framework which ensures prompt and effective decisions- Agree on well-defined roles and responsibilities- Articulate clear and consistent evaluation criteria- Communicate a well-structured decision making process which is understood up front
ï Integrating and priority-setting mechanism to maximize results- Ensure cross-functional benefits are realized- Avoid overlap and redundancies- Identify and fill gaps between reengineering projects- Established criteria for setting priorities in the event of resource constraints
ï Sense of urgency with the ability to accelerate benefit achievement- Work with key business leaders to continually communicate urgency and accelerate results- Be a role model demonstrating the importance of reengineering- Serve as a catalyst for acceleration and over-achieving against expectations- Ensure properly high levels of resource commitment and senior management attention
ï Flexibility and adaptability to the environment- Tailor oversight emphasis to each projectís environmental situation and unique dimensions- Shape oversight control to impose the minimum levels of control consistent with success
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Reengineering Oversight Function (cont.)
ï Disciplined project management process- Establish plans with well defined tasks, detailed schedules and frequent milestones- Determine clear deliverables and expectations- Define required resources, including number of people and skill sets- Actively manage the process to ensure reengineering process discipline is continually achieved- Ensure a clear, visible, well-understood process
ï Benefits and impact monitoring process to ensure reengineering success- Establish agreed-upon targets and starting baseline linked to and consistent with the official budgeting system- Capture and report on benefits attainment- Evaluate and act upon cross-organizational and customer/marketplace effects of reengineering projects- Guard against benefit losses from suboptimal reactions to reengineering projects
ï Human resources coordination to facilitate staff changes- Monitor people issues pertaining to reengineering projects which are beyond the influence of project
management- Ensure linkages with Human Resources to support appropriate placement of people after project completion
ï Reengineering knowledge-transfer throughout The Fin. Serv. Co.- Establish a Reengineering Resource Center as a focal point for reengineering skills, capabilities and knowledge- Encourage approaches to deepen organization-wide learning about reengineering- Oversee development and articulation of standardized reengineering approaches
ï Reengineering Resource Center which provides facilitation and process expertise- Develop reengineering specialist resources to support project management and execution- Provide facilitation expertise which improves project team functioning and problem solving capabilities- Ensure oversight function support and expertise
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Reengineering Oversight Function (cont.)
ï Continuous process to achieve more savings through new opportunities- Continue encouraging bottom-up identification of reengineering opportunities- Set top down direction- Develop cross-functional perspective- Work across Fin. Serv. Co.ís ìvalue chainî of activities to develop potential opportunities
ï Effective communication process which creates awareness and supports reengineering successes- Determine messages to be communicated- Identify target audiences and desired timing- Select and support appropriate communication vehicles
ï Process to identify and remove barriers to success- Anticipate problems and barriers through active monitoring- Coach project team to resolve conflicts and overcome barriers- Actively take corrective steps to remove barriers beyond the abilities or reach of the project team
Reengineering Resource Center Function
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Reengineering Resource Center Function
To successfully achieve charter objectives, the Reengineering Resource Center (RRC) function must provide:
ï Resourcing support to any reengineering project at the level required. This could include assisting in the development of projects with line managers as well as being part of the project team or in periodic resourcing.
ï Project assessment capability on newly proposed projects. The assessment would identify:- How well the project maps to corporate objectives- If any additional information is needed- If the business case justifies the effort- What success plan activities should occur to ensure that the project objectives are met
ï Training and development to project team to include:- Problem solving/team building- Project leader/team member training- Coaching for steering committee presentations- Meeting facilitation- Roles and responsibilities charting
ï Reengineering technologies that are maintained by the RRC function to ensure consistency in usage. Those technologies would include:
- Business process flow analysis- Activity-based costing- Product management analysis- Project management skills and tools- Benchmarking support- Market segmentation research- Performance measurement tools
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Reengineering Resource Center Function (cont.)
ï Methodology and resources to analyze, scope and design new reengineering opportunities to:- Ensure that maximum coverage/benefit potential is realized- Fully utilize capabilities that currently exist (systems, databases, etc.)- Provide path forward analysis to drive continuous improvement
ï Support project leader in implementing corrective action to:- Provide a framework and process to generate solutions- Develop corrective action plans with project leader- Assist in implementing plans as required
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EOF
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Internal Reengineering Improvements
REENGINEERING DEFINED
Internal Reengineering efforts only go so far and not touch activities critical to business objectives.
Internal Reengineering efforts only go so far and not touch activities critical to business objectives.
Characteristics
ï Generally shorter-term focus
ï Emphasis on cost reduction, efficiency improvements
ï Scope within business unit headís jurisdiction
ï Requires awareness of which functions are critical to the companyís business objectives
ï Within business unit, employees function as one team
Examples
ï Work simplification: eliminating/consolidating steps
ï Eliminating unnecessary functions
ï PC automation of manual processes
ï Backlog reduction
ï Renegotiating vendor contracts
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Cross-Functional Improvements
REENGINEERING DEFINED
Cross-functional improvements may be attained by a cooperative effort from areas involved or may need to be mandated by management.
Cross-functional improvements may be attained by a cooperative effort from areas involved or may need to be mandated by management.
Characteristics
ï Mid-term focus
ï Focuses on improving and streamlining activities between departments
ï Needs on-going support and reeducation to fully achieve potential benefits
ï May require executive mandate to force action on difficult political issues
ï Emphasizes the company as a single holistic team, building coalitions throughout the organization
Examples
ï Consolidating like/related functions in one department
ï Consolidating systems performing like processes
ï Consolidating vendor utilization and negotiation for major products/equipment utilized throughout the organization
ï Redesign of processes and procedures between interacting areas to improve service/reduce costs
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Customer Focused Business Transformation
REENGINEERING DEFINED
The result is an organization focused on and responsive to the needs of its customers.The result is an organization focused on and responsive to the needs of its customers.
Characteristics
ï Focused on the future needs of customers
ï Requires active and continual feedback/involvement from customers
ï Looks at functions in terms of value they bring to the customer
ï May force drastic changes in the way business is done and how the company is organized
ï ìCustomersî become part of the team
Examples
ï Redesign of product delivery system
ï Decentralization to bring service closer to the customer
ï Centralizing functions to provide consistent timely service
ï Restructuring customer support activities into client teams
ï Redesigning procedures and systems to expedite claims payment
Power of Reengineering
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Summary
ï To attain significant financial benefits, a reengineering effort will require efforts in all three areas:
- Internal improvements- Cross-functional improvements- Customer focused business transformation
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Summary
VALUE OF REENGINEERING
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Potential Roadblocks to Success
SUCCESSFUL REENGINEERING
The Fin. Serv. Co.
Many worthwhile reengineering projects begin with best intentions but never reach their destinationÖ
SuccessfulReengineering
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Top Management Plays a Key Role in the Success or Failure of Reengineering Efforts
SUCCESSFUL REENGINEERING
The Fin. Serv. Co.
Not paying attention, took wrong exit: management not actively involved or monitoring results
achievement
Accident: business heads clash
Change in direction: top management shifts
priorities-again!
Many worthwhile reengineering projects begin with best intentions but never reach their destinationÖ
SuccessfulReengineering
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Role of Oversight
Fin. Serv. Co.-wide objective point of view
Oversight Charterï Ensure financial targets achievedï Ensure reengineering project successï Identify/initiate new opportunitiesï Ensure consistency with corporate
strategyï Maximize/accelerate payback and ROI
Sense of urgency
Top management active involvement critical to success of reengineering effort.Top management active involvement critical to success of reengineering effort.
Project management
process
Decision making framework
Flexibility and adaptability to environment
Benefit and impact monitoring process
Priority setting
Continuous improvement
Effective communication
Knowledge transfer
Project support (e.g., Reengineering
Resource Center)
Removal of barriers to success
Human resources
plan
SUCCESSFUL REENGINEERING
SuccessfulReengineering
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The Organization Must Position Itself for Success by Providing Project Support
SUCCESSFUL REENGINEERING
The Fin. Serv. Co.
License suspended: project leader and team members
lack necessary skills
Caught speeding: not enough time or staff to
complete
Many worthwhile reengineering projects begin with best intentions but never reach their destinationÖ
SuccessfulReengineering
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The Establishment of a Reengineering Resource Center Will Provide Project Leaders and Teams with Necessary Resources and Training
Project Leader/Team
Member Training
Coaching for Steering
Committee Presents
Provide your project teams with the tools and skills to be successful.Provide your project teams with the tools and skills to be successful.
Benchmarking Support
Facilitation Skills
Project Benefit Tracking
Methodology
Business Modeling
Business Process
Technologies
Problem Solving/Team
Building
Market Research and Segmentation
Project Management Skills
and Tools
RACI Charting
Activity Based Costing
SUCCESSFUL REENGINEERING
SuccessfulReengineering
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Summary
SUCCESSFUL REENGINEERING
ï A successful major reengineering effort at The Fin. Serv. Co. requires well planned projects with effective project leaders, active support and involvement by senior management, and an organization committed to providing the necessary skills training and project support
ï To make a significant impact on cost reduction
- Cost red- Cross-functional- Relook at how business is done
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Phases of Reengineering
REENGINEERING DEFINED
Reengineering efforts begin with focusing within a business unit, expands to improvements across business units, and eventually focuses on the needs and wants of your customers.
Reengineering efforts begin with focusing within a business unit, expands to improvements across business units, and eventually focuses on the needs and wants of your customers.
Benefits/Efforts
Time
Internal Improvement
Cross-Functional
Improvement
Change Way of Doing Business
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Graph from success story #1
Date
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Jul-86 Dec-87