Pergamon International Journal of Project Management Vol. 14, No. 6, pp. 341-348, 1996 Copyright © 1996 Elsevier Science Ltd and IPMA Printed in Great Britain. All rights reserved 0263-7863/96 $15.00 + 0.00 S0263-7863 (96)00015-4 The impacts of business process re-engineering on organizational controls Siew Kien Sia and Boon Siong Neo Information Management Research Center (IMARC), Nanyang Business School, Nanyang Avenue, 2263 Singapore While much publicity and enthusiasm surrounds business process re-engineering (BPR), little attention has been paid to the consequential management issues, e.g. compression of respon- sibilities, empowerment of workers, reduction of checks and controls, and reliance on external partnerships. The important question is whether traditional management control functions have been eliminated, compromised, or rendered irrelevant amidst such dynamic organiza- tional changes, and if so, how does the management control function in a re-engineered organization evolve? This paper seeks to explore the research question by tabulating the experiences of 28 published BPR implementation cases. The findings seem to suggest a shift in the control portfolio towards higher reliance on automated control, deferred review, self- management, and market mechanism. Managers thus face the challenges of adjusting other organizational elements to facilitate the proper operations of such controls. Effective project management must appreciate the emerging management control structure since it is often the vehicle through which BPR is implemented. Inadequate attention to these issues can result in re-engineered systems that fail to consider critical risks or are prematurely self-defeating as they run contrary to the underlying control philosophy. Copyright © 1996 Elsevier Science Ltd and IPMA. Keywords: Organizational controls, business process re-engineering, taste interpendence, self-mamgement Introduction Re-engineering success story 1: The all-encompassing case manager! Several years ago at IBM Credit ~, arriving at a quote for computer financing took an average of seven days. Now, it takes six hours, largely because one person handles the entire deal from start to finish. Well, he sells the computer; he arranges the financing package; he checks the customer's credit background; he approves the interest rate used; he ensures the disbursement of the loan; he records the transaction... Re-engineering success story 2: Let them have everything! Lithonia Lightingz has designed a system called Light*Link that places all its relevant information in the hands of independent sales agents. These agents are empowered to act on Lithonia's behalf with all of Lithonia's customers. They can access a great deal of sensitive internal information such as production scheduling, pricing policy, engineering specifications, outstanding orders, project status, etc... Re-engineering success story 3: Get rid of that invoice! Ford Motor 3 used to have more than 500 employees work- ing in the accounts payable department, matching purchase orders, receiving reports and supplier invoices. The re- engineered system eliminates reconciliation to supplier invoices (external evidence) and reduces head count by 75%. Electronic payments will now be made once the receiving details match the purchase orders... Managers will probably gasp at the above stories as they contradict many of the sacredly guarded fundamentals of traditional control. But these are exactly the results of many business process re-engineering (BPR) efforts. Despite the increased risks, many organizations are responding enthusi- astically to BPR, believing that it will sharpen organizational competitiveness, enhance productivity, shorten cycle time, enrich job content, reduce handoffs, and improve customer service. Are organizations then prepared to accept higher risks of losses? How have re-engineered organizations dealt with control? These are the issues that this paper seeks to address. 341