Business Process Reengineering General Background The idea of designing businesses has been around for a long time

and structured methods of doing this emerged in the 1980s (Dale, 1994). Business process reengineering is perhaps the most popular business concept since the 1990s (Davenport, 1998). Many organizations have initiated reengineering efforts and often use the term reengineering to describe what they do be it incremental process improvements, downsizing to even new information technology systems. This signifies the popularity of the concept of reengineering among businesses and even the public sector. The concept of engineering has however been around even before the 1990s; (Grover & William, 1998) some scholars argue that it is a derivative of scientific management and further enhanced by the value chain concept (Porter, 1985) popularized by Michael Porter. Business process reengineering also has its roots in quality management and process improvement however the key aspect of reengineering is starting from a clean slate. The competitive pressure to meet customer expectations is growing at an ever faster pace. The steady improvement of products and services is no longer sufficient to survive in the global marketplace. The need is for a radical change in the way we all work (Macdonald, 1995). Business performance improvement techniques include quality management, process improvement and process reengineering methodologies. Quality management methodologies for example Total Quality Management (TQM), Six Sigma and process improvement techniques like the Japanese Kaizen, Lean, Total Productive Maintenance (TPM) among others focus on improving existing process whereas business process reengineering (BPR) brings about completely new processes. The radical approach to BPR was pronounced as the only means of salvation for organisations trapped in outmoded and outdated business processes and general ways of working (Valentine & Knights, 1998). From a BPR perspective there non value adding processes should be obliterated rather than improving or automating them (Hammer, 1990). One may argue that reengineering is usually quite disruptive to a business and successful businesses never undertake reengineering efforts. As much as this argument may be true, in quality and process improvement techniques the degree of change, risks and desired performance improvements are much less than those of a reengineering exercise. In general, research shows that there are target improvements of 5-10% for Kaizen versus 20-30% for TQM versus 50-80% for reengineering (Grover & William, 1998). The Concept of Business Process Reengineering There are several models and approaches to implementing BPR and an organization should seek to adopt depending on their organizations needs and capabilities. (Drucker, 1993) wrote at the Wall Street Journal that A company beset by malaise and steady deterioration suffers from something far more serious than inefficiencies. Its 'Business Theory' is obsolete." No amount of reengineering will put a company on the right track without the right business theory. This means that organizations should not just jump into a reengineering exercise in the hope of attaining dramatic performance improvements if its underlying business strategy is already in the dogs. Companies are driven to reinventing the corporation by one of three forces; desperation or crisis (60% of cases); foresight (30%); ambition (10%) (Hammer,1990). Those driven by desperation must do something radical in order to survive; they have little to lose by leaping to a new, and untried, paradigm. Those with foresight anticipate that they will reach the desperation state unless they do something to avert it. The ambitious will move to a new paradigm to create crises for their competition. An organization seeking to undertake BPR must therefore examine some key elements of its organization structure beforehand for maximum gains in the BPR implementation. Three such analysis methodologies are functional coupling, architectural triad and the restructuring framework. Business process reengineering (BPR) is defined as the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed (Hammer & Champy, 1993). This definition means that BPR requires radical transformation as opposed to incremental change and hence the fundamental question an organization must address before adopting BPR is if there is a compelling business case for change. There is ample evidence that there is major risk and pain associated with re-engineering the total organization. Many organizations seeking to implement BPR fail, (Hammer & Champy, 1993) estimate that as many as 70 percent do not achieve the dramatic results they seek. These risks are compounded by the time it takes to accomplish the radical change (Macdonald, 1995). This mixture of results makes the issue of BPR implementation very important. BPR has great potential for increasing productivity but it often requires a fundamental organisational change. As a result, the implementation process is complex, and needs to be checked against several success/failure factors to ensure successful implementation, as well as to avoid implementation pitfalls (Majed & Mohammed, 1999).

Well documented BPR success stories have prompted managers to explore the philosophy however the resulting landslide of companies who have initiated their own process improvement efforts with little payback has made it apparent that a successful outcome to BPR maybe the exception rather than the rule (Marchland & Stanford, 1995). The major cause of the failure usually comes at implementation time because few companies can afford to obliterate their existing business environments and start from scratch. BUSINESS TRANSFORMATION Blyth summarizes Dixon, Arnold et al. presentation of process development with a business transformation diagram. This diagram has five phases describing different levels of business transformation: process automation, process simplification/improvement, business process redesign/-engineering, business scope redesign and corporate transformation. First two levels of business transformation are categorized as continuous improvements. Last three are categorized as re-engineering focusing on changing the direction of the organization. Basically, we are talking about innovations in both contexts. Both re-engineering and continuous improvements require innovations. They both introduce a new idea, practice or some object to improve organization's performance and as we remember an innovation is an idea, practice or object that is perceived as new by an individual or other unit of adoption In addition, we must remember that the organization's perception of the newness counts, rather than whether the idea or artefact is new to the world Organizations considering innovations go through the innovation-decision process (Figure 2). There are three different types of innovation-decisions in organizations. First, optional innovation decisions are decisions that an individual makes independently of the decisions by other members of a system. Second, collective innovationdecisions are choices that are made by consensus among the members of the system. Third, authority innovation decisions are decisions that are made by a relative few individuals in a system who possess certain status or position.

The innovation process has two sub-processes: Initiation and Implementation. The innovation process was originally described in (Zaltman, Duncan et al. 1973). The initiation sub-process is divided into two stages. The agenda-setting stage occurs when a general organizational problem is identified that creates a perceived need for an innovation. The term Performance gap is used in describing this kind of problem and it is defined as the discrepancy between an organizations expectations and its actual performance. In the matching stage the organization identifies a problem and opts for an innovation to solve it. Redefining/restructuring occurs when the innovation is re-invented for the needs of the organization and it prepares for the innovation. In the clarifying stage the meaning of the new idea gradually becomes clearer to the organizations stakeholders. Finally, routinizing the innovation ensures that it becomes part of regular activities in the organization and it loses its separate identity. (Rogers 2003)

Achieving business transformation requires that the innovation is adopted and the processes are really changing. Above we saw the innovation process, but the properties of the innovation are important factors influencing the process progress. Rogers (1995) define five main attributes that influence adoption of these innovations (Table 1). The minus sign after Complexity indicates that it has a negative influence on the adoption of the innovations

Reengineering typically involves the use of information technology to enable new ways of working (Grover & William, 1998). Most central is enterprise resource planning (ERP) software which is almost always implemented during a BPR exercise. ERP systems are configurable information systems packages that integrate information and information based processes within and across functional areas in an organization. Todays ERP systems are an outgrowth of traditional MRP (Material Requirements Planning) systems, MRP was designed to plan only for inventories i.e. based on desired production quantities (Shehab et al.,2004) an MRP system would look at the quantities of raw materials required, quantities on hand and procurement lead times and provide the planner information on when to order the raw materials. An ERP system not only provides all the functionality that MRP would provide but goes further to look at an organizations end to end business from sales planning, customer order management, production scheduling, inventory control, finance, accounts payable and so on. Although an ERP system is a pure software package, it embodies established ways of doing business. Studies have illustrated that an ERP system is not just a pure software package to be tailored to an organisation but an organizational infrastructure that affects how people work and that it imposes its own logic on a companys strategy, organisation, and culture (Davenport, 1998). According to AMR research, the leading global ERP vendors are SAP (43%), Oracle (22%), Sage (6%), Microsoft (4%), others (25%).

Principles in Business Process Reengineering :- The BCG Way. BCG is using a set of 12 principles that are used as guiding principles, rather than imperatives for the change process. Taking its starting point in the role of senior management and strategy, these guidelines basically describe the critical success factors for a reengineering project. The following list summarizes the BCG principles and provides a short interpretation of their meaning. y Senior management must lead reengineering: This means firstly, that senior management's role is to lead the change, but not to manage it. It is important to distinguish between these roles, where leading means facilitating, promoting and sponsoring, whereas managing means control and direct intervention. Secondly, senior management is responsible for "shaking the barrier", i.e. removing road-blocks set up within the organization by people opposing the change process. y Strategy must drive reengineering. The foremost strategic objective is to create competitive advantage. However, competitive advantage is not solely depending from company internal structures and processes, but is basically created through delivering service to customers. Consequently, the underlying strategy supporting the reengineering effort must take into consideration external effects. In addition, strategy must be balanced again operational improvement, i.e. changing the strategic direction must even result in sustainable bottom-line improvements. y Add value for customer. BCG has the thumb rule, that for every dollar in margin improvements through cost reduction, at least two dollars can be added as increased customer value. This aspect clearly points out the difference between reengineering and cost-cutting approaches, which have been running under the label. Cost-cutting, or downsizing, is a means for improved efficiency, but does not necessarily elevate effectiveness. y Focus on process, not function. The change team should contain people from all parts of the organization being concerned. However, it must be clear that the participation in the change team does not mean to represent a certain function and to serve as a sentry for its interests. Instead, all members of the team need to focus on the targeted processes. Also, people participating in a change team should be chosen upon their openness to radical change and ability to think "out-of-the-box". y Play to win. Reengineering is not a do it in your spare time job. It is necessary to assign the best available people to the project. Additionally, there must be clear incentives for participation in the effort, i.e. that career opportunities must exist for those who are dedicating themselves to the project.

Take a system view. Processes need to be considered from an end-to-end perspective, i.e. that they are looked upon from customer need to the satisfaction of the need. The customer thus plays a double role in being the determining factor for the design of the process, as well as its customer. This view is substantially different from the means-end analysis often used in traditional change projects, where customers are considered as the receiver of the outcome of a push-process. Preplan and learn as you go. It is necessary to stake out the over-all direction of the project, but it could be fatal to create a route description, since it must be possible to make adjustments during the change process. This also means that a process view is taken at the change effort. No one size fits all. There is no one best way to handle any occurring situation. This means that different approaches are required and that action being taken throughout the process is situated, rather than predetermined. It also requires that metrics for performance measurement must be chosen accordingly, i.e. that simple quantity measures often are inadequate as for example when looking at knowledge intensive work, such as R&D. Metrics matter. Customer often perceive a firm in a way that differs significantly from the way the firm looks at itself. Therefore, a company should use the same measure as their customers in order to create a common ground for measuring and evaluating performance. Care for the human dimension. Reengineering success stands and falls with the people in the organization. It is therefore imperative to understand and anticipate individuals expectations, emotions, and behavior. This includes to manage fear andresistance to change. This aspect is also the one being most frequently neglected. Reengineering is not a one-time thing. Reengineering cannot be seen as a one-time phenomenon, but must open the way for a cultural change that enables and encourages a climate of on-going change. In other words, the reengineering effort must prepare the fertile ground for organizational structures and processes that allow the company to continuously adapt to changing environmental conditions. Communicate, communicate, communicate. Communication is a crucial factor, and must include a communication plan that extends to all stakeholders employees, owners, unions, press, communities, etc.

Reengineering approach BCG uses a three stage process preparation, transformation, consolidation where each of the stages contains several steps. The actual redesign of business processes is considered as part of the transition management. Top management has a dual role in each of the steps, firstly setting directions and creating value, secondly to motivating individuals and creating commitment to change.

Figure: BCG reengineering approach When taking the step between different phases, the project is checked against a set of conditions of satisfaction. These check-points, or toll-gates, exist to ensure that all necessary actions have been taken in the previous phases. The different aspects to be considered canbe expressed in the form of questions or statements. Check-point 1 y Rationale for change. Is the rationale for the change initiative identified and communicated throughout the organization? The Why? and subsequently How? must be declared and communicated in a way that makes it understandable to all organizational members.

Senior management understanding and commitment. Has senior management accepted its sponsor role and is prepared to support the effort by all necessary means? A large-scale process improvement has to be sponsored and facilitated by senior management, not only through words, but through action. This includes to back up the project organization and to actively promote the effort. y Selection of processes. Have the process to be scrutinized been identified and have the right selection mechanisms been used? The selection of process should be based on the processes' value adding potential, i.e. that a limited number of high-potential process is selected first. y How much/long/fast? What is the scope of the project in terms of intention level and time frame? and Have the necessary resources been allocated in terms of financial and intellectual resources? A common mistake is to allocate too limited resources to the change project in terms of people and time. Also, the project objectives must be clearly set, but must not be unachievable. y Organizational readiness. Is the organization, i.e. the individuals working there, prepared for the effort and has it been communicated appropriately? When individuals are taken by surprise, they often react irrationally and defensive, i.e. that barriers are built, stakes are claimed and the considered threat then creates massive resistance. y Assign the best people. Who are the people being assigned to the project? Is it ensured that they are knowledgeable, committed to the project and not acting watchdog for other parts of the organization? In many organizations, managers do not give away their best people, but those they consider as troublemakers or under-performers. In others, people are sent to change teams as representatives of the unit they come from and are expected to guard their unit's or department's interest, instead of committing themselves to the project. Check-point 2 y Assess existing processes. What are the deficiencies of the current processes, i.e. where are the performance gaps in terms of time, quality, cost and service? This point assumes that there are identifiable process existent in the organization, otherwise, this step also includes the identification of work activities that conceptually can be grouped into processes. y Customer input and competitive assessment. How do customers perceive the organization's ability to perform in terms of time, quality and service? and How is the organization positioned in relation to its competitors with regard to the critical performance measures that have been identified? This point includes the external assessment of the company's performance by its customers, but also the process of benchmarking it against its competitor's performance measures. y Magnitude of opportunities. Which is the intended level of improvement that shall be achieved through the reengineering initiative and is it relevant and achievable? The objectives to be defined must satisfy the requirement of being ambitious with respect to the improvement's order of magnitude, without being unreachable. Stretch targets should only be used if the necessary elevation of the change process can be ensured. y New process vision. How should the new process work, i.e. how should the business logic look like, what are the necessary resources and how can the process be designed with respect to low cycle-time and cost, without compromising the required quality level? The process vision must include a sketch of the contained activities, required resources and competencies. If applicable, it should also include a description of the technological components required. Developing the process vision is an iterative process, where design prototypes are evaluated and refined. y Determination of major changes required. What are the gaps between the new process vision and the current process and what are the most important parts to be changed in order to establish the envisioned process? Mapping the existing process against the new process vision allows the identification of gaps and the required measures to be taken in order to establish the envisioned process. y Roadmap for change. What actions must be taken in order to bring about the changes that have been identified and in what way should these actions be taken? As mentioned above in the description of BCG's reengineering principles, this roadmap is not a fixed path, but can be adapted over time, i.e. that it serves as guidance, rather than prescription. Check-point 3 y New process documentation and validation. Is the new process valid and feasible and has it been documented? The new process design has to be finally determined and documented. At this stage, the connections with other process need to be identified and described, the chosen metrics defined and the required resources determined. y

Key peoples concerns addressed. Have the comments of all people being relevant for implementation and the adequate performance of the new process been gathered and considered? In order to ensure a smooth and friction-free implementation and deployment of the new process, the concerns of major stakeholders need to be taken into account. y Support systems consistent with new requirements. Are the process' environmental conditions sufficiently examined and the results determined? The support systems of a process - performance metrics, measurement mechanisms, evaluation procedures, reward system, responsibility structure need to be defined together with the process and are included in the description of the targeted future state. y Necessary investments funded. Are the necessary funds for implementation and investments, e.g. in information technology, available? These consideration should also include slack resources for handling possible operational disruptions related to the change process, and must include costs for recruiting, training and education of staff, as well as for possible lay-offs. y Major barriers removed. Are the concerns of people, resulting in possible resistance, taken into consideration and are the necessary organizational conditions available for the implementation and deployment phase? Barriers for change can emerge from insufficient organizational preconditions, lack of competence in change management and the use of information technology. However, the most important barrier can be found in the heads of individuals feeling threatened by the changes to come. y Road-map for action. Have all the necessary preparation steps been taken and can the implementation phase be initiated? Are the necessary steps of the change process identified? Change management is crucial to the successful conduct of any process improvement initiative. At this point the actions to be performed during the implementation and sub-sequent deployment phase are defined and prepared. Check-point 4 y Positive customer reaction. How are the transition process and resulting process and structures perceived by customers? The purpose of process improvements efforts is to deliver increased value to the process' customer and consequently the outcome of the change effort must be checked again these expectations. y Evidence of customer-oriented focus. Has the customer focus been considered and improved? There must be clear evidence that customer orientation has been imperative during the redesign effort and this premise must also hold for the implementation and outcome of the new process. y Improved decision making. Are decisions made by the right people on the right level in the organization? In order to improve a business process' ability to deliver value, decisions must be taken as close to the customer as possible. This is achieved through empowerment of people working in the process, i.e. that decision power must be transferred to those being responsible for the process outcome. y Business plan aligned with new capabilities. Has the business strategy and implementation plan been aligned with the organization's improved capabilities? No process oriented organization can be better than its overall business strategy.Consequently, strategy and capabilities must be constantly evaluated against each other in an iterative process. New capabilities make it possible to change strategy and changing strategies may require the development of new capabilities. y Evidence of improved responsiveness to market changes. Is it evidential, i.e. can it be clearly shown, that new capabilities have been developed that contribute to improved environmental responsiveness? Adaptability to changing environmental conditions is one of the guiding principles in any process improvement effort. At the same time, an extreme focus on operational efficiency might hamper the organization's ability to respond to changes in the market place. Consequently, both factors must be considered and balanced against each other. y Top-down vs. bottom-up In most of the BPR-related literature, reengineering is described as a top-down approach. Analysis and design starts with the assuring commitment from senior management, processes are analyzed and designed from an overarching level to more detailed levels. BCG follows this general principle, but also points out the necessity of including a bottom-up approach. Both cycles are run as connected iterations.

Senior executive agreement on need for change. Senior management agreement and commitment is not the only, but one of the most critical factors for success. Without this agreement on the need for change and sponsorship all sub-sequent steps can not gain the required creditability that is necessary for driving a project successfully. y Setting the course. Course-setting means to decide upon the general goals and directions for the change effort, but does not include detailed plans and procedures. y Assemble reengineering team. The reengineering team must be compiled on the basis of competence and is responsible and accountable for achieving the defined overall objectives. The reengineering team must include people with competencies in methods and tools, change management and organization, but not necessarily with in-depths knowledge about all operational areas covered by the project. y BPR team engages process teams. Each process is scrutinized by a team assuming responsibility for a specific process. The process teams are staffed with people covering the different competence areas covered by the process. Cycle 1 - Bottom-up y Design teams develop new processes and define requirements. The process design teams are responsible for designing the general design of the new processes and to define the performance requirements and propose metrics to be used. The results are transferred to cycle 2 for the development of more detailed plans, budgets and metrics, but they also serve as input to the problem identification step of cycle 1. y Identification of problems needing attention. The problem identification step is informed by the overall process development results in cycle 1 and the results from the results delivered by the teams being responsible for the detailed design of the processes operational characteristics. Identified problems are delivered back to management for evaluation and, if considered necessary, adjustments of the current process design. Cycle 2 - Top down y Communication of change imperatives and direction by management. Communication is, besides commitment and sponsorship, the most important management contribution to project success. The imperative and direction of the change effort must be communicated throughout the organization in order to gain understanding and reduce potential resistance. y Development of plans, budgets, performance metrics etc. on the basis of new processes. A new process design often makes the existing plans, budgets and performance metrics obsolete, since they often are designed to fit an hierarchical, functional organization. Consequently, they must be adapted to an organization based on processes. This development phase is informed by the general process design step in cycle 1 and the communicated needs and directions staked out by senior management. Cycle 2 - Bottom-up y Teams deliver results. The results of the development phase are documented and delivered. These results are used as the basis for further communication, but also to inform the problem identification step in cycle 1. y Case studies

1) The Conquering Power of the Small GTO Inc. is a small company which manufactures automatic gate openers based in Tallahassee, Florida. When the founder died suddenly, the company was in the type of dire straits that would appear to have made it an ideal candidate for reengineering: GTO was losing money on a monthly basis, it lacked a line of credit and suppliers shipped only on a COD basis. Employees were required to work 24 hour shifts to fill important orders and the salesmen were reduced to writing up minuscule orders to supplement their incomes. The new CEO, Chuck Mitchell, adopted "...a strategy made up of small gestures rather than sweeping moves." [11] These gestures consisted of creating an atmosphere of trust and optimism among GTO's harassed employees; by listening to and adopting their suggestions, improving their health and disability insurance, and when things started to turn around, increasing their pay and distributing bonuses from a profit sharing plan. The salesman were put on salary with with incentives. Acts such as fixing the leaky roof, allowing ten minute breaks, and keeping the coffee machine stocked convinced the employees that that Mitchell was "genuine." The following year, GTO witnessed a cultural and company turnaround. Net profits moved from being in the red to nearly $500,000. This was accomplished by a 9% increase in gross sales along with a 33% decrease in total operating and administrative costs. Employee turnover decreased equally dramatically. As employees began to seek outside education and were promoted from within, the number of returned goods fell. [11] GTO's dramatic turnaround was a result of many small steps which could be said to foster precisely the "culture of incrementalism" that Hammer and Champy warn against. The focus was on human resources rather than on processes. 2) Pepsi-Cola Manufacturing International Ltd.: GCS Implementation A Governance-RiskCompliance (GRC) Program Pepsi-Cola Manufacturing International Ltd. (PCMIL) has successfully executed a compliance initiative supported by BPM technology in response to a need for more efficient compliance with the corporate Global Control Standard (GCS). Their primary objective for this initiative was to streamline their preparations for SOX activities and to ensure compliance with GCS requirements. Using Interfacings Enterprise Process Center (EPC), PCMIL effectively integrated their GCS implementation with day-to-day operations in order to benefit from a unified approach to corporate governance and process management. They achieved significant cost savings for their internal GCS audit and extremely positive overall results. Challenge addressed Without a formal and central documentation system, the preparation time and, therefore, business disruption for internal GCS audits and SOX reporting was very high, and inconsistent process knowledge was a source of insecurity as it pertained to the outcome of the audits. PCMIL also needed to address an acute lack of easy accessibility to the documentation and process flows for auditors and employees, as well as inconsistencies and gaps in their process documentation that were compounding problems associated with manual audit preparation. Although approximately 100 critical processes had been mapped with Microsoft Visio and role matrices had been documented in MS Excel, processes were decentralized and managed manually and independently of GRC programs. PCMIL did not have a system in place to support their GCS implementation initiative, and frequent, manual process updates, as well as the audit process itself, were proving time-consuming and costly due to a lack of integration with business processes. Desired Outcomes In order to address the aforementioned challenges, PCMILs GCS compliance team sought to: Reduce preparation time, costs, and the risk of human error associated with GCS and SOX audits - Increase process clarity and transparency; improve visibility of risks; pass the GCS audit Create a Process Library that would include the highest priority aspects of critical process areas using industry-standard best-practices for process modeling (BPMN) Centralize processes; facilitate the management of the process lifecycle, including process-related information such as risks, controls, documents, business rules, roles, and resources Clarify and document roles and responsibilities to ensure segregation of duties for SOX compliance Establish a clear audit trail to facilitate the compliance side of continuous process improvement; reduce the need for manual process updates and reporting Generate reports automatically: Control Matrix, GCS Matrix, Audit Trail, SoD Report, RACI Report Process Undertaken and Roles Involved

y y y y y y

The GCS implementation initiative was extremely successful as it received full support from top management at PCMIL, the IT department, a dedicated Project Manager, and the core team assigned to the program. It involved employees at all levels of the organization in process modeling and training, so resistance to the end-result was effectively eliminated. PCMIL selected Interfacings Enterprise Process Center (EPC) as the supporting technology for its ability to embed global controls in their business processes. An important first step was the delivery of a Process Library in the form of a centralized EPC repository once PCMILs existing processes had been validated and migrated into the EPC. Cross-functional processes were mapped with the direct collaboration of the line-ofbusiness managers involved in Purchase-to-Payable, Inventory-to-Cost, Sales-to-Collection, Financial Reporting, and Fixed Assets. Top management at the plant, including Finance, Quality, Manufacturing and Inventory Control participated fully in the process, thus enhancing the proportional ownership of this important project. In addition, the local team benefitted from the participation of a steering team at headquarters providing oversight on a monthly basis PCMIL process modelers captured and documented process-related information, including documents, risks, controls, business rules, roles, and resources, that they then linked directly to processes in the EPC. They utilized the EPCs best-practice RACI (Responsible / Accountable / Consulted / Informed) framework to define roles and responsibilities and leveraged the EPCs integrated Risk Matrix to quantify and prioritize risks in terms of impact and likelihood. With their GCS compliance requirements embedded in their processes, PCMIL used the EPCs automatic reporting capabilities to generate process documentation and audit reports. Outcome(s) Achieved PCMIL met their primary objective by integrating global control and governance strategies at the process level. Rather than treating the internal audit process as a one-time or periodic project, they have integrated this GRC initiative as an ongoing part of business operations. The improved approach to GCS implementation was successful because it was easily adopted by employees at all levels of the organization; there are approximately 100 non-technical users accessing the system. Due to the centralized EPC Process Library, roles and responsibilities are clearly defined and documented, enforcing the segregation of duties for SOX compliance. The EPC has ensured that process knowledge is visible and consistent across the organization and easily accessible to PCMIL employees and auditors. This has increased Management and employee confidence around the GCS audit, as thoseinvolved are able to give precise and detailed responses to process and control-related inquiries. Risks are immediately visible, and controls are linked directly to the appropriate processes, and are being actively monitored in the EPC. The project team is currently determining the average cost savings associated with eliminating the need for manual process updates and with automatic report generation as part of the additional project phases. In the Fall of 2010, PCMIL confidently passed their internal audit and received positive feedback from their corporate auditors, who commented on the clear audit trail left by the EPC and on the consistency of process knowledge across the organization. Planned Next Steps PCMIL is continuing to document processes in other areas, starting with HR and Payroll, IT, Customs and Duties, Travel and Entertainment, and Safety. They have plans to further enhance the efficiency of the annual GCS audit by automating control testing and audit scheduling processes using EPC Workflow 3) Efforts (Effective Operations in Ports) by Interfacing EFFORTS is an initiative funded by the European Commission that seeks to take on this huge task. Made up of 37 partner organizations from 13 different European countries, EFFORTS seeks to streamline the movement of ships, transportation trucks, and other clients to European ports for the overall reduction in wait times due to unnecessary traffic. Their method of choice is Business Process Management (BPM), a methodology of analyzing port activities that helps them be broken down and understood. The task of port process modeling is made manageable with the help of the Enterprise Process Center (EPC). The EPC enabled EFFORTS to commence the task of documenting and analyzing the processes that moved the port, allowing them to build a repository of processes that can be examined and improved. The result will be a standardized process library on a generic level that will represent the best practices for port operations as such to allow the individualization of the operation in a specific port independent on the organizational type and ownership model The overall objectives of EFFORTS are Safe and efficient maneuvering and berthing of vessels in consideration of decreasing maneuvering space in fairways and ports by increase of ship sizes. Environmental-friendly ports and ships to allow co-existence of business processes

and citizens and further growth of the port industry without conflicts. Uniform risk assessment and risk reduction and management methodologies and tools. Increase of efficiency of port and service business processes (operations) and infrastructure of ports. Improvement of European port networks as interchange platforms and for mutual support. Assessment and inter-linkage of port-related training opportunities in Europe, new training opportunities to meet practice and social requirements and improve availability and quality of long distance and e-learning to address potential port and terminal employees including seafarers The Challenge Visualize and Understand a Complex system of Interdependencies and shared Operations The harmonization of port operations involves a highly complex system of interrelationships that must be untangled in order to increase the efficiency of port activities while also reducing traffic overhead. This harmonization is only possible by applying an abstract activity modeling schema to the port in order to categorize, define, and understand the complex functions that take place in the port. Process Dependencies: A port is a highly integrated system, with different entities competing for customers and traffic, while at the same time sharing services and space. This creates a sophisticated ecosystem of dependencies that must be maintained, improved, or eliminated. Interdependency: Real interdependencies are between port activities and a port entity. Must be organized to smooth out port operations and aiming at the least disturbance to the residents in the port vicinity Artificial interdependencies are not directly linked to port operations, but required for execution, and could be removed or mitigated from the port area. Interoperability Different systems should be able to communicate and exchange information without data loss. Project Buy-In Getting individual workers to expose their work processes in a process management effort is a challenge for most BPM initiatives even within a single company. The EFFORTS project was complicated by the fact that many competing entities were asked to expose their internal activities openly. This was obviously met with resistance, and so in order to ensure transparency, interoperability, and the cooperation of port workers, it was necessary that EFFORTS partners have a common platform for understanding how to improve effectiveness and efficiency in ports for everyone involved These are their requirements: Common understanding to demolish the language barrier Cooperative and concurrent development Providing taxonomy to relate processes to other organizational requirements (e.g. activity costing, resource utilization, risks and training). Matching individual enterprise resource planning tools with overall port clusters Application of balanced scorecard tools Sustainable approach to base further enhancement and development Processes were captured in the EPC according to the following methodology: Each entity in the port complex must be described in how their tasks relate to a higher level goal. Processes are to be modeled from the starting point of defining objectives and how they can be accomplished through tasks and services that act as functions between service providers and service users. Risks are to be mapped to processes. Port-based risks are a huge liability, but can only be managed when the process is captured to identify where the risks are evident. EFFORTS implement a modified version of the CIMOSA modeling framework in order to relate functional business goals to their underlying processes in a systematic manner. These requirements are enforced by a team of process experts called ISSUS who used the EPC to manage the task of creating process maps that clarified the interdependencies within the port while streamlining service and resource use.

The EPC also helped EFFORTS realize the benefits of BPM by making their process maps relevant to the everyday operations in the port. EPC provides a complete template to capture process with a simple notation that is easy to read and understand for non-IT users like port workers. These processes were exported as process books that made it easy to share among resources, entities, and companies, leading to an increasing support in the project as more port workers recognized the value of the EFFORTS initiative. With all entities in agreement on the value of process mapping within the port, it was no longer a problem to encourage competitors to cooperate and expose their internal processes The Benefits Greater Understanding allows for better use of existing resources and undeterred expansion The project was initially met with resistance. Some of the people working in the ports didnt see the need for abstract process charts because they felt their understanding of the operations was sufficient because it was based on a lot of experience. However, by focusing on a methodology and keeping the process modeling team focused on providing unambiguous process maps of all activities, the EFFORTS team achieved success in this project. Once complete, the processes that have been mapped and optimized in the EPC will represent a best practice framework for the supply chain management of an entire port. This library can be implemented at any time in the future, either to improve existing ports, or plan for more efficient, managed expansion of a port system. The value of these process libraries is inestimable and can bring value to ports throughout Europe and the world. The Solution Untangle the web of activities using a process approach There are several other EU-projects working to remove redundancies and capture port processes in order to standardize operations. Some have tried a role-oriented approach but the results are not helpful. For example, the role of harbor master in Hamburg and Bremen is not the same. If the activities that the harbor master conducts form the definition for his processes, different processes will be arrived when modeling the process for harbor masters at different ports. An alternative is to focus on the roles function, however this also creates redundancies. For example, the function of the port authority in a public port is different from the function of the port authority in a privately owned port. Because of this, it was decided that EFFORTS would focus its initiative on processes as activities that contribute to higher level goals. The challenges of dealing with such highly diverse entity relationships were overcome by employing a standardized process-oriented methodology. This made possible by the Enterprise Process Center (EPC) process mapping tool. Process mapping is required to understand the close functional relationships that drive the port, and the EPC made them easy to document and analyze. Key Benefits Providing an easy-to-use interface Generating clear and useful process outputs Providing a framework to model standardized processes according to a set methodology Centralized repository for standardization Building a knowledge center for distribution, building best practices Self-explanatory process charts and models 4) Turku University of Applied Sciences The HRM process for organizing teaching is a very crucial process at the Turku University of Applied Sciences. This process has many stakeholders: the director of education, degree programme manager, teacher and payroll department. The results from this process aredelivery information of the curriculum, base data for time tables, a yearly working plan for teachers, cost adjustment into cost pools, and salaries for teachers. The yearly working plans are made for a calendar year, not for an academic year. The process starts every year in August when the budget figures for next year are confirmed. Based on the budget the degree program manager plans the delivery of the curriculum for different study groups. At the same time, he plans other resources that will be allocated to teachers. Next step is to attach teachers to these courses and tasks like projects and tutoring. Based on this preliminary plan every teacher makes his yearly working plan containing also planned holidays. Before any information systems existed this was done using Excel-sheets that were printed, signed and sent to degree program manager for approval. If the plan needs modifications - like it use to do - teacher modifies the sheet, prints, signs, and sends it again. If the teacher works for some other degree program or for some project outside his own unit, the yearly working plan sheet is sent to the responsible

person in question. In the next round, the yearly working plan (printed and signed by the teacher, DP manager and other responsible people) will go first to your own unit's director of education. He both signs the plan as well and sends it further or he returns it for modifications. If necessary the plan will be delivered to other directors of education for approval. Finally, the plan will be sent to payroll department for cost adjustment, salary computation and archiving. All this should be ready before the planned calendar year begins. The above paragraph probably points out that the original process was very problematic, heavy and timewasting. There was evident performance gap between this process and possible fluent and fast process. Major problems were a) The cycle of a working plan was too slow b) It was difficult to follow the cycle c) It was difficult to keep up with the updates of a working plan d) A lot of errors in cost adjustments e) Data management was insufficient. These problems initiated the innovation process and this situation can be seen as the agenda setting phase. An idea of an information system answering above problems was presented and developed. The problems were matched with the future functions of the information system. Finally, the matching phase of the innovation process resulted in implementation Process Automation: First Information system The new information system was built with Microsoft Access using client-server technology. The system was implemented in one campus and therefore only small portion of the university employees used the system. Now the organization was on redefining/restructuring phase of the innovation process. The information system was still under development and new features were introduced during the first months after the implementation. The information system - called Tonni600 - provided assistance in cycling the working plans and it helped data management largely. For example, the system decreased errors relating cost adjustments and the reports were much clearer and easier to read than the old versions. However, the whole process was not automated. We still needed to print and sign the working plan reports. In addition, the plans were not moving to other locations of the university electronically, rather internal mail delivery was needed. Although the system did not solve all the problems and actually raised more questions as well the innovation - the information system - established its role in the organization and was soon part of the routines in this HRM management process. The success drew attention from other locations, but the system was not implemented any other locations. Thus, this system never reached the clarifying phase of the innovation process. Actually, the technology used in the information system limited the usability and diffusion of the system. Nonetheless, this interest and the existing problems served as agenda-setting phase for a new innovation process. A new information system taking full advantage of the existing information system technology was needed. Once again the advances in technology are solving many of the IS problems (Lyytinen 1987). The existing problems were a) It was difficult to keep up with the updates of a working plan b) Who has the archiving responsibility of the printed and signed working plans c) Cost adjustments needed still more accuracy d) The cycle of a working plan was too slow e) The usability of the system was limited to your own PC f) The data management capabilities of MS Access were not sufficient for a larger number of users. Despite the problems, this information system improved the planning process, but we were not doing business process re-engineering rather process automation. An innovation process and actual business process reengineering work started to build a new information system and to change the process better. A project called Tilipussi started in 2002 and a pilot version was introduced to plan the year 2004 BUSINESS PROCESS RE-ENGINEERING - WEB-BASED INFORMATION SYSTEM The new information system was totally web-based written with Java Servlets and using Oracle database. The information system was at the core of our business process reengineering. At the beginning new system was tested in one education unit (TELE), but it was soon adopted in HEALTH and TEB units as well. This new innovation was in the redefining/restructuring phase and many improvements were introduced in the system during the first year. A larger clarifying phase occurred in 2005 when the innovation was officially named as the tool where all working plans must be made. The decision was purely authority based and raised of course some protests. However, this meant that our organization really took the step into a new re-engineered business process. The new process improved and changed the way HRM process to organize teaching is now done. The

whole process is now electronic, even a simple electronic signature is used. The cycle that used to take easily weeks or even months shortened in a couple of days. The process documents itself; every modification is stored in the database. Cost adjustments are better controlled and practically error-free. The whole process is easier to understand and the responsibilities are clearer. Technically, the work can be done everywhere and database capacity is not an issue. Now the process is really a HRM process. The information system serves management better. The overall picture of the HRM process is now provided. We are now using coherent formats in working plans. The fairness of the personnel is easier to verify. This new process enables better reporting opportunities that have been lacking earlier. We now have a process that has solved the performance gap that existed in the original process and at the moment we are in the routinizing phase of the innovation process.