Reengineering work: Don't automate, obliterate.

Abstract

It's no wonder companies rarely achieve radical performance improvements when they invest in information technology. Most companies use computers to speed up business processes that are decades, if not centuries, out of date. The power of computers lies in the freedom they give managers to break away from work routines that are based on technologies, beliefs, and objectives that no longer prevail. The way to release that power is to "reengineer" business processes--to abandon old ways of working and create entirely new ones. Most of our business processes are based on implicit rules with roots in the Industrial Revolution: "Customers don't repair their own equipment." "Local warehouses are needed for good service." These rules made sense when communication was slow, information was hard to gather and process, and people believed that only managers could make decisions. But today communication is instantaneous, information is readily available and easily processed, and employees are educated and expect to have a say in the business. Managers need to recognize and reject obsolete assumptions and imagine new ways of doing work that fit the times. Ford Motor Company set out to use computers to cut by 20% its accounts payable department. It was enthusiastic about its goal--until it looked at Mazda. While Ford was aspiring to have 400 accounts payable clerks, Mazda had only 5. In the end, Ford didn't just speed up its payables process; it reengineered it. Ford rejected the rule "We pay when we have received the invoice" and adopted a new one: "We pay when we receive the goods." The new process cut head count by 75% and improved the accuracy of the financial data at the same time. INSET: Why Did We Design Inefficient Processes?. [ABSTRACT FROM AUTHOR]