Re-designing Business Processes Using Information Technology James T. C. Teng, Varun Grover and Kirk Il. Fiedler zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONML M zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA ANY COMPANIES ARE UNDERGOING corporate-wide restructuring. A major element of these programmes involves the rethinking of current business pro- cesses. The need to improve business procedures has been recognized for years and many progressive corporations have had administrative structures in place that routinely examine work flows, but the concept of cross-functional process redesign has been developed only recently. Pressure from the environment has made it critical. Increases in foreign competition, sluggish economies and major advances in technologies have all contributed to this need for fundamental organizational change. The terms re- engineering or business process redesign (BPR), defined as a fundamental change to existing business processes, are rapidly gaining attention from both business and academic c0mmunities.l Many ex- amples of BPR success in achieving dramatic im- provement in quality, cost, speed and customer service have been reported. While competitive pressures might be a powerful motivation for BPR, a major enabler is information technology (IT). It is important to realize that while IT is not necessary for BPR, it has been a critical component of many successful BPR efforts. One noteworthy example of IT-assisted BPR, the case of Detroit Edison, is illustrated in Figure 1. By using IT to eliminate administrative steps, the company reduced the time needed to complete certain activities by 75 per cent. Another example involves Citibank’s transformation of its credit analysis system. Instead of processing paperwork, the proportion of time employees spent on recruiting new business increased from 9 per cent to 43 per cent while profits soared by over 750 per cent over a Z-year period. By compressing the effects of time and space, modern computing and telecommunications technologies offer the potential for breakthrough performance gains.’ For instance, IT can be used to improve organizational efficiency and effectiveness by elimi- nating delay, administrative intermediaries, redun- dant processing steps and by providing better access to information. These innovative applications of IT can be expected to fundamentally transform busi- ness processes within and between organizations. In fact, some studies have reported that the top issue facing senior Information Systems executives today is the reshaping of business processes through IT. Despite the great potential of IT-assisted BPR, corporations cannot arbitrarily ‘jump on the band- wagon’ and expect instant success. We propose that careful planning is essential for a well orchestrated Long Range Planning, Vol. 27, No. 1, pp. 95 to 106, 1994 Copyright 0 1994 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0024-6301/94 $6.00 + .OO