The rebirth of re-engineering

Once again, it's all about business processes. But this time around, IT is leading the charge.

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."

Customers everywhere are demanding greater mobile access to services, tapping into social networks and showing no signs of a weakening appetite for multiple consumer gadgets. "If you haven't figured out that you have to expose your business rules and processes in new and different ways, I don't know how you'll survive," Hackney adds.

Jones has similarly organized Hospira's IT team around business processes, or what the company calls "value streams."

"I used to have SAP people and non-SAP people, and when someone called from the business, they wouldn't know who to talk to," she says.

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