Process Reengineering: No Cure-All, but a Valuable Tool

Article excerpt

Companies that have successfully implemented reengineering projects, particularly those in the financial service industry, have often found that while change is constant, sustainable competitive advantage without sustained effort is a myth.

Customer demands are continually evolving. Competitors turn out to be just as smart as you are - or if not, they will hire your best people to replicate your advantage. Legislators, regulators, and accountants periodically change the rules or tweak interest rates, keeping you on your toes at all times.

In the few years since the concept was launched and the term coined, "business process reengineering" has achieved pop-star status in the business world with all the adulation and resentment that such status implies.

It has been hailed as a revolutionary breakthrough and damned as "old wine in new bottles." It has been lauded as a panacea by those who have used it successfully and reviled as an overpriced placebo by the skeptical.

Proponents say that BPR is to the 90s what "strategy" was to the 70s and "quality" was to the 80s. Disbelievers counter that BPR is another elusive slogan more buzzword than solution.

But positioned correctly, business process reengineering can be the critical first step in creating a performance-improvement culture, one that can provide an organization with the flexibility and energy to anticipate change and sustain competitive advantage.

Why do you do it?

In no industry have the promises been as alluring as in the financial services industry. And in no other industry is the skepticism its great. Both the allure and the skepticism are understandable. The allure is based on the unquestionable fact that almost all segments of the financial services industry are in need of a major overhaul because:

* There are too many providers chasing the same customers.

* The regulatory environment that once protected inefficient organizations and industry segments is breaking down.

* The corporate cultures of financial services organizations are not attuned to the industry's new competitive realities.

* Customers are getting smarter and smarter.

Unfortunately, too many of the financial services providers that have undertaken process reengineering projects over the past several years have been dissatisfied with the results.

Although it is true that many projects did not achieve the anticipated dramatic improvements, the problem was not always with the concept, but with why it was used and how it was implemented.

Business process reengineering is intended to create competitive advantage. But too often, the approach is applied to create cost advantage - a very valuable competitive advantage in commodity businesses.

While creating cost advantage in financial services organizations is very important, most financial services firms say that they would prefer to compete on service. Cost reduction is usually more valuable to the shareholder than it is to the customerassuming it is converted into increases in market share or profits.

At Coopers & Lybrand Consulting, we have helped our clients use reengineering to produce dramatic cost reduction benefits. And, more often than not, these projects do evolve into true reengineering engagements. But, quite frankly, if all that is wanted is financial improvement, easier and less disruptive approaches should be considered.

I make this point because survey after survey has shown that what the financial services customer really wants is:

* Time-place convenience.

* Quick transaction turnaround.

* Quality execution.

* Responsive problem solving.

But BPR is very much for real and can help a company deliver what the customer really wants. At Coopers & Lybrand Consulting, our financial services practice was quick to recognize and utilize its potential to improve our client's performance. …