Business Process Re Engineering In Public Sector Business Essay

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The essay that I have chosen for CA441 Business Process Management is Business Process Re-Engineering in the Public Sector. The reason I chose this topic is that I feel it is something that has be changing quite a lot lately and it is something that usually affects us all.

The first definition that we should pay attention too is what a business process is? Well a business process refers to a set of internal activities performed to serve a customer. [1]So we can refer to Business Process Re-engineering in the public sector would be the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical success factors like:

Cost Reduction

Quality Enhancement

Service Improvement

Cycle Time Reduction

These would be the four main sections that we would expect to see an improvement in while implementing Business Process Re-Engineering. Unfortunately this isn't always the case in BPR, as some; if not all the critical success factors aren't always met. This is usually down to bad planning, were all factors aren't really considered and too many undefined processes exist. This of course means that while applying BPR, a set plan such as follow should apply:

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Scope of Project

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Create the "To-be" project

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Throughout this essay, I will look at some of the previous attempts of BPR in the public sector. I will also discuss the particular challenges that BPR brings and some successful approaches in the public sector. The essay shall then conclude on some suggestions for future projects and my final conclusions on my findings.

Example of how BPR can be used to automate a process.

[2]Diagram 1

Historical Background:

In recent years, business process re-engineering has become more popular due to the mass improvements in productivity, quality, cost reduction and competitiveness. This of course would encourage organizations to involve themselves with re-engineering processes but unfortunately for them, they don't always receive the benefits.

There are several previous failed attempts in BPR in both the private and public sectors. [3] One survey suggested that approximately 70 per cent of all private businesses in US and Europe has run, or is running, re-engineering projects. The same survey suggests that the failure rate of re-engineering attempts has been equally as high with over 70 per cent failure.[4] While in contrast, another analysis suggests that the re-engineering failure rate is likely to be even higher in the public sector, than it is in the private sector. This could be due to a number of reasons, mostly which are characteristics of public organizations that are beyond the control of the people who are re-engineering them.

Previous research/attempts of BPR:

One of the previous attempts in BPR that didn't meet all the critical success factors is that of PubliCorp. PubliCorp is a large civil engineering organization owned by a local government in Brazil. After several years of playing a monopoly over several other regulatory services, PubliCorp faced a crisis due to a change in the law of deregulation in the construction industry. This meant that PubliCorp had to rethinking and radical redesign its business processes in order to survive. They did this by hiring two companies to help; one being a local IT company and the other being a multinational management consulting company. The two companies then merged together and split in to two groups called the OR group and the IT group. The OR group was responsible for analysing PubliCorp's core business processes and to radically redesign them, while the IT group was responsible for the setting up of the new IT infrastructure.

Now after four years, the IT group are considered to have done a pretty good job on setting up the IT infrastructure and downsizing its applications. However the OR group was a little bit more complicated as they really depended on the co-operation of PubliCorp's staff; which they didn't get. [5] "Two pilot process redesign attempts involving two distinct departments failed in the implementation phase, mainly due to lack of interest from staff." The OR group also faced other problems as some redesign proposals conflicted with regulations established by law. This caused the OR groups proposals to constantly be contested by lawyers which was very anti-productive. These events led to the OR group eventually shifting its efforts to helping understaffed departments with critical activities.

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Now despite the CEO of the company claiming the re-engineering project was a success; it just wasn't. The company had invested over eight million into the project and no radical changes in their business processes had been effected and although some processes had been automated, there was almost no reduction in staff. So the re-engineering project inherited the name 'A successful failure'. An analysis of the project shows that there were three main reasons for the failure of the project.

The first was the levelling by the CEO, of political and objective goals. Meaning that the CEO was prepared to accept other results as long as the outcome was positive. Taylor described [8] "Problems arise because the changes which BPR sets into motion are affected by the prevailing culture and internal politics of an organization."

The second reason was the OR groups shift in focus from radical core process redesign, to local improvement and automation.

The third reason was the OR group hiding problems with the support from management, leading to a lack of awareness of the problems and a belief that the re-engineering project was being successful.

Another very good example of business process re-engineering in the public sector on a much larger scale and a lot closer to home is the HSE's PPARS. The personnel, payroll and related system (PPARS) was a proposed system that would support payroll, administration, attendance monitoring/control, recruitment and rostering. [6] The initial contract was given to Bull Information Systems Ltd (BISL) in July 1998. They anticipated having the project completed within two year with a budget of 9.14 million.

However not long into the contract, BISL realized that they seriously under estimated the terms and conditions of employment and practices between health agencies and that it would not be able to implement the system in the anticipated time zone. Three years later in 2001, BISL's contract was brought to a conclusion with only the administration elements of the system being implemented at an approximate cost of 17 million. However implementation was on separate versions of the system to meet individual agency's needs. So substantial redesign and rebuild was necessary when later adopting a single system strategy.

In October 2002 the project commenced again after a range of different companies carrying out technical configurations of the system. Now Deloitte Consulting Ltd was

engaged in the project and the new estimate was 109 million due to the extended scope of the project to include other regions. The project still endured several problems though following its commencement. This was due mostly to administrative problems and the lack of clarity regarding Deloitte's role.

In 2005 the PPARS project was brought to a halt due to the excessive amount it was costing. [7] According to the independent, costs at this stage were in excess of 220 million. The project was considered a complete failure with only a fraction of the functions being implemented. With 2590 different variances in practice, only 23% were configured into the system. It was hoped it would provide detailed information on its 136,000 staff for human resources as well as draw up rotas. However, it is only capable of paying 30,000 staff and storing information on 70,000.

In my opinion, PPARS would have to be one of the ultimate failures at an attempt of business process re-engineering. There are several reasons for the cause of failure within the project. Some of which are:

The scope of the project was undefined. The scope had changed numerous times throughout the time line.

Inaccurate technical specifications and configurations.

Severe lack of ownership. No one seemed to have the power to enforce decisions. This lead to no one really feeling responsible for project outcomes and people not knowing what their authorization of decision making was.

Lack of communication among parties involved. Poor turnout at meetings and too big of intervals between meetings.

Lack of clarity of Deloitte's role. Deloitte and the project team had separate visions of Deloitte's role.

Failed to keep implementation on pilot sites before moving on to others, thus causing more errors.

Particular Challenges of BPR in the public sector:

There are many challenges that face any organization while implementing Business process re-engineering. These challenges become somewhat stronger though while implementing BPR in the public sector. This is largely due to the BPR being a lot more complex since it involves a lot more stakeholders. This also means that the scale of administration and parties involved is a lot bigger too, which tends to cause communication problems between parties. This can also cause havoc in decision making, as people can become unaware of their authorization level in making decisions.

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The scope of a large project can also change several times throughout the years while it is being implemented, which can lead to the system becoming inaccurate and not fit for purpose intended. [9] Projects attempting large-scale change have a much lower probability of success than those attempting less ambitious change. [10] Sutciffe also identified several difficulties that applied to implementing BPR in the public sector such as

employee resistance to change and inadequate attention to employee concerns. He also talked about how inappropriate staffing and inadequate tools could affect the process of applying BPR. Other challenges that can hinder BPR approaches are the mismatch of goals and strategies, where the administration is prepared to accept other outcomes as long as it is positive. This in itself can alter the scope of the project and lead to a failed BPR attempt. Other possibilities could consist of lack of oversight of intended project. This would be mainly due to vague and inaccurate technical specifications and requirements. Cost escalation could also be considered a contributing factor to the failure of BPR as unspecific time lines or unrealistic milestones are set, which leads to more time and money being invested to see it through.

Of course these are just some of the challenges that can cause problems in the public sector while implementing BPR, but from reviewing and analyzing past projects, these seem to be the most common.

Successful BPR Approaches:

According to Davenport and Stoddard, there are four main components that characterize a genuine re-engineering approach. [11] The four main primary components consisted of:

An orientation to broad, cross-functional business processes, or how work is done. In other words, was the main target the core processes of the organization?

The need for, and possibility of, radical change in process performance. Where these identified early on in the attempt?

Information technology as an enabler of change in how work is done. Was IT identified as the main enabler?

Changes in organizational and human arrangements that accompany change in technology. Is the process change going to lead to dramatic changes in the organisational structure and human arrangements?

Davenport and Stoddard described that a BPR attempt would need to tick all four boxes above in order to be considered a genuine attempt. But we also must highlight that if a BPR attempt does thick all of the above headings, that it does not mean the attempt was a success. It just simply would mean that the attempt was genuine. If we look at the fist example of PubliCorp, we will notice it satisfies all of the above headings, however its attempt was perceived as a failure due to no radical changes in their business processes had been affected. So it just proves it was a genuine attempt.

However although PPARS also satisfies all the above headings, I'm not sure if we can even call it a genuine attempt as main target core processes seemed to change throughout the project and some radical changes weren't discovered early enough. Some will argue though that it still eventually satisfied the four primary components and therefore should be considered a genuine attempt.

[12] In fact some authors argue that a successful BPR is not possible in the public sector. There are too many uncontrollable factors that can apply to the public sector. Another author claims after his analysis he found that [13] 35% of BPR projects fail completely (they are given up or never implemented), 50% fail partially (main objectives are not achieved) and only 15% are successful. So although only a small percentage of projects were considered a success, there was still evidence that a successful BPR was possible in the public sector.

Since it is so rare for a BPR to be considered successful in the public sector, I really struggled on finding any information on a successful one. I guess a success story isn't as popular as the failed ones. A BPR in the public sector in Ireland though, that does stands out to me as a success is eflow. [14] eFlow is a tolling brand name of a company in Ireland which manages the collection of tolls electronically. Is is best known for operating the "barrier free" tolling system which was introduced on the M50 motorway around Dublin on 30 August 2008. Eflow has greatly reduced traffic congestion in Ireland and has saved the government a lot of money in wages as the entire process is automated. Unfortunately I couldn't find any specific documentation regarding eflow to analysis it further.

Suggestions:

It is suggested that if a project wants to be successful, it should follow a certain methodology. The methodology that a project should follow should be something like [15] envision new processes, initiate change, process diagnosis, process redesign, reconstruction and process monitoring. By following this methodology in this order, the organization should greatly increase its chances of success.

Other suggestions would be to involve all levels of management to insure everybody's voice is heard which will lead to a more co-operative response to the BPR. It would also be wise to keep implementation at a slow steady pace too, rather than a rushed project. This will leave time for revising and testing and should cut down on errors. It also might be a good idea to use benchmarking while making radical changes and redesigning core processes.

Conclusions:

In conclusion to this essay, we found that success in Business Process Re-engineering in the public sector was much harder to achieve than that of the private sector. This is largely due to administrators and stakeholders are on a much bigger scale which causes a whole range of problems. In my own opinion, I believe that another problem is that in the event of failure, the state takes a hit for the inaccurate project and the loss of money. While in the private sector, it usually comes down to one or two people who take the hit. Therefore steps to applying BPR are more carefully adhered too.

From this analysis though, we can see that it is possible to successfully implement BPR into the public sector, even though it is rare. But if the scope, cost, time and core processes are kept accurate and adhered to, the project should be implemented successfully. As Morgan Franklins Company said [16] Budget shortfalls, workforce attrition, aging systems, and a host of other factors will make it difficult for government programs to

perform as they have in the past. Sustaining existing programs while meeting customer service expectations will take innovation and significant effort to deliver services in the most cost effective and efficient manner possible. Processes will inevitably need to change.

1

http://www.slideshare.net/harikrishnanjl/success-and-failure-of-bpr-in-a-public-sector-industry (13/12/10)

2

http://unpan1.un.org/intradoc/groups/public/documents/un-dpadm/unpan041436.pdf (13/12/10)

3

Champy, J. (1995), Reengineering Management, Harper Business, New York.

4

Kock, N.F, McQueen, R.J. and Baker, M. (1996), BPR in the Public Sector: A Case of Successful Failure,

Proceedings of AIBSEAR Conference, V. Gray and V. Llanes (eds), pp.485-490

5

http://www.mngt.waikato.ac.nz/bmcqueen/WEBDOCS/pubs/aib96.pdf (14/12/10)

6

http://www.audgen.gov.ie/viewdoc.asp?DocID=888&&CatID=5&StartDate=1+January+2010 (14/12/10)

7

http://www.independent.ie/national-news/ppars-fiasco-as-costs-hit-8364220m-1891230.html (14/12/10)

8

Taylor; Grint and Willcocks(1995) Business Process Re-engineering in theory and practice pg 35

9

http://unpan1.un.org/intradoc/groups/public/documents/un-dpadm/unpan041436.pdf (14/12/10)

10

Sutcliffe; Journal of the American Society for Information Science, Volume 43, Issue 4, pages 273-275, May 1992

11

Davenport, T.H. and D.B. Stoddard (1994), Reengineering: Business Change of Mythic Proportions?, MIS Quarterly, V. 18, No.2, pp. 121-127.

12

N. Kock, R. McQueen, Is Re-engineering Possible in the Public Sector? A Brazilian Case Study, Business Change and Re-engineering 3 (3), 3-12 (1996).

13

R. Heeks, Most eGovernment-for-Development Projects Fail: How Can Risk be Reduced?, Working Paper Series N°. 14, (2003)

14

http://en.wikipedia.org/wiki/EFlow

15

http://unpan1.un.org/intradoc/groups/public/documents/un-dpadm/unpan041436.pdf (15/12/10)