Developments in IT have created more problems than solutions because of the “incompatibility” among the various parts of the supply chain. Information becomes knowledge only when the means to process it is in place and the process does not “distort” the message.

Like garbled voices coming over crackling phones in yesteryears, unless the heaps of data that technology spews out is processed in a meaningful manner, the “zero point” potential of information as useful knowledge is hardly realized.

For this to happen, the “gatekeepers” of the information, the regulators of the medium of exchange and finally the consumers of this process all need to understand each other and “talk” to each other much the same way conversations between groups of people result in dialogue only when there is a bottom-line consensus as to the topic.

Marshall McLuhan famously said that “The Medium is the Message”. Hence, the next part of the “connection” is in determining how well the medium is regulated with common protocols and standards that service the medium. Finally, the end users or the consumers need to be aware of their own potential as both purveyors or producers and consumers of content leading to what Alvin Toffler calls “Prosumers” who produce and consume content at the same time.

Need for Synchronous Exchange of Information

With this background, it becomes apparent that unless all the parts of the grid are in sync with each other there is progress and hence developments in IT have created problems of each part being “out of sync” with the other.

Hence, the issues of internet censorship, controlling access to information and finally, the ignorance of the users themselves create a potent and lethal cocktail where the promise of IT is subsumed by the perils of each part being out of sync with the other. It is the position here that there is no single entity that is responsible for the “noise”.

Rather, the issue here is one of “multiplicity” creating complexity and when one adds the “death of distance” (with the medium being geography independent) to the brew, what one gets is a virtual “tower of Babel” where the message is lost. Since there is no understanding as of yet among all the IT companies on how to interact to produce synergies and with the regulators maintaining neutrality without stepping in, the resultant problems have made it worse for everybody concerned.

As happened in the case of Telecom with “Ma Bell” and with Big Pharma where size and consolidation through mergers and acquisitions was the norm to control the market, IT companies realised quite early on that unless they controlled all aspects of the supply chain in a vertical as well as horizontal manner, they were unlikely to capture the hearts and minds of consumers.

Openness versus Control

However, this was easier said than done since the whole edifice of IT is built around “openness” where unless one part of the supply chain knows what the other one is doing in a transparent manner, they cannot work together. Thus, even though Microsoft tried to own all the parts of the supply chain, it found that nimble competitors like Google undercut its domination by offering technologically advanced and user friendly software.

Hence, the point to be remembered about IT is that it is like a jungle with no one dominant figure and since technology evolves according to Moore’s law as well as in leaps and bounds, the dizzying pace of change means that there is always room for newer companies and newer offerings that provide cutting edge solutions.

What this means is that without a clear understanding on what makes the structure and what supports it, the old parable of blind men and the elephant is an apt metaphor where the various actors are groping in the dark trying to understand the beast called IT with no single player being in a position to “call it” correctly.

Though the solution to this might be found in monopolies like Microsoft that offer seamless connectivity between different parts of the supply chain, as mentioned earlier, IT by its very nature is not suited to the “big is beautiful” mantra and since IT is like a complex adaptive system that has a life of its own and evolves according to the dynamics of system theory, any attempt to “force” monopolies in IT is likely to fail.

Dumbing Down of People

Added to this is the shortened attention span that bedevils most users, options like using multiple search engines to enhance the quality of web searching are unlikely to take hold since the minds of the users are becoming “shallower” because of the fragmented way in which we think due to the widespread use of IT.

The point here is that the original intent of IT was to encourage depth but with the profusion of devices and gadgets and media (internet, games, multi-media) the end result has been the “Dumbing down” of the average user. This has led to a situation where instead of harnessing IT for meaningful purposes, we find ourselves getting lost in the deluge of information without processing it into knowledge.

Further, unless consumers understand the nuances of production of content by themselves, the interaction between the aspects of producing content and at the same time consuming content is likely to be a rocky one.

Conclusion

The need of the hour is a concerted effort by all stakeholders to evolve meaningful steps for cooperation and understanding. Any media or technology that evolves over time needs a healthy balance between all the components with enough regulatory oversight. Given the fact that many judges do not understand the nuances of IT, the problem gets compounded as litigations take time to resolve.

As Thomas Friedman points out, the “great sorting out” of the issues arising from who owns the content, grey areas between giving free access and capturing user data as well as the overwhelming desire of many governments to curb the independence of the medium have all come together in a “perfect storm” that has grown beyond a menace to a full scale problem.

What is BPR?

“BPR is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed.”

Instead of starting with an activity flowchart, corporations are advised to start with a clean slate. They are then told to look into why they perform the tasks the way they do.

A Process Engineer will look at the activities to be performed and how they can be engineered to invest minimum resources and get maximum returns.

To illustrate the point, let us consider the example of Apple iPod. Apple rethought the way music ought to be made available to the consumers. The changes it brought were:

• Radical: While all other music labels were selling music via brick and mortar stores, Apple developed its iTunes software to sell music digitally. (Napster had made digital music available through a P2P platform earlier, but was sued by music labels for copyright violation)

• Fundamental: Apple sold single tracks as opposed to whole albums being sold at brick and mortar shops.

Apple just kept in mind the end need of the consumer and reconsidered whether conventions were required.

Why Re-Engineering the Corporation?

Business process re-engineering is required in two cases:

1. The organization has discovered some breakthrough methodology which will revolutionize its processes to give it more productivity and efficiency and therefore the entire process needs to be changes.

2. The organization has failed to keep up to date with the changing technologies. Since it did not continuously innovate, it is now faced with a “change or die” situation and business process re-engineering which helps integrate latest best practices into the processes are the only way to save the business.

How to Re-Engineer the Corporation ?

Information Availability: To fundamentally redesign a process, one must know the details involved. Details from internal and external sources must be captured and provided to the relevant people in the required time duration. This helps them to identify the bottlenecks and work around better ways of reaching the desired end.

Information Sharing: A BPR project is usually facilitated by a cross functional team. Most of the times, teams are spread across different geographic locations. Information needs to be successfully shared amongst various people to ensure the reengineering goes as planned and without hiccups.

Technology as the Solution: The new processes that are developed as a result of BPR initiatives deploy the latest technology to achieve the desired end results. Usually it is e-Commerce, automation or another technology driven solution that is implemented.

Business Process Re-engineering has become a very important buzzword in the BPM lexicon. Many corporations who were late in realizing the power and importance of BPM have to undergo re-engineering initiatives to ensure that they are still relevant to the marketplace.

Re-engineering initiatives are however expensive and may require certain downtime. This is the reason they are resented by many corporations.

Although Adam Smith called it “division of labor” and not business process management, he was referring to the same idea. The concept is illustrated with the help of a pin factory example as follows:

The Pin Factory Example

Adam Smith spoke about an old pin factory where each laborer would produce the whole pin i.e. from raw material to finished product himself. Smith realized that a lot of time of such a laborer was spent in moving from one job to another and switching tools required for different jobs. This time, he concluded, was being spent in an unproductive manner.

He then saw that in the same factory, when different people were doing different activities i.e. one man was drawing the wire, the second was shaping it, the third making only pin heads and the fourth assembling the pin to complete the product, this time was being used much more effectively. Productivity went through the roof and costs were cut into a fraction of what they were. The concept of process was born and was taking the developed western world by storm.

Adam Smith also realized that such simplification of individual tasks made it possible for the workers to increase their dexterity. The productivity increased even more as workers went faster up the learning curve. Lastly as the jobs were being reduced to simple tasks, it gave an impetus to mechanization. It is much simpler to make a machine to do one part of the process, rather than to make a machine to do the entire process.

Corporations Adapt the Business Process Paradigm

The above example by Adam Smith showed that it was possible to increase the productivity by a factor of 10 or more if processes were efficient enough. Corporations of the day realized this revolutionary idea and soon it became the bedrock of the industrial revolution. All business endeavors today try to compete with each other by building more efficient processes to meet the needs of their customers. Every Fortune 500 companies today claim to be process driven. The study of processes has today become a separate science which we call Business Process Management (BPM).

The idea of processes might be old, but it is still very much valid. Almost all business organizations that have become big have adopted the process paradigm. Some of the famous names are as follows:

• Ford Motors: Henry Ford’s idea of assembly line is a text book representation of an efficient process. It is no wonder than Henry Ford could therefore pay his employees more wages than his competitors and still make more profits. This was a large scale proof of the ideas propounded by Adam Smith in his 1776 seminal.
• Wal-Mart: Wal-Mart turned the tables on some of the big retailers of their day with process improvement. Wal-Mart’s use of RFID chips which help in automating the purchasing process and saving a lot of clerical effort, inefficiency and costs is a case study every student of business must go through. This too can be traced back to Adam Smith’s idea of mechanization. In today’s world we call it automation, but the basics remain the same.
• Dell: The story of Michael Dell’s innovation is well known today. Instead of producing and then hoping to sell, Dell’s model would initiate production only after the order was received. This helped them cut a lot of inventory and storage costs which don’t add any value. With a better process a newcomer like Dell could beat behemoths like Hewlett Packard, IBM and Compaq.

These examples show how some entrepreneurs learned the power of processes and later unleashed them to create history. Each of these entrepreneurs is a first generation entrepreneur but was able to amass far more wealth than many rich families had done over the period of many years. Process management and improvement therefore remains an important tool and organizations of all sizes pay attention to maintain and improve it. They know it can make or break their future.

• Expensive to Implement: IT systems have traditionally been expensive to implement. Although they streamline the processes and the return on investment is quite high, but a significant outlay is required upfront. This puts them out of the league of small and medium enterprises. It is only the big corporations that can afford them.

  However the recent introduction of cloud computing has the capabilities to face the challenge. Advances in technology are now helping smaller companies use software like we use e-mail. One just needs to have an internet connection, no set-up, no servers, no infrastructure required.

  One good example of the same is salesforce.com, which charges customers on a per user basis. Thus even small companies can have the benefit of good quality software irrespective of their size.

• Long Deployment Time: IT systems have also been traditionally plagued with long deployment times. Building a solution often takes months or years. However, the next wave of BPM tools has reduced the time by at least 70%. Instead of building the whole system from the beginning, one can combine pre-existing modules and tweak them to one’s own needs. Cloud computing is another viable alternative with almost negligible time lag in implementation.

• Inflexible Solution: Most companies have not built their IT systems all at once. It has been built at different times, by different people and using different platforms and technologies. The result is a series of applications that perform well within themselves but do not communicate with any external application.

  Since business functions in an integrated manner, it needs applications which do the same as well. But integrating different applications to support a synchronized process has become a difficult task. The IT companies are touting Service Oriented Architecture (SOA) as the solution. A discussion about what SOA really is, is beyond our scope. However, it must be noted that it is at a nascent stage and holds tremendous promise to make all system related woes disappear.

• Dynamic Environment: The last issue is the fact that environment keeps constantly changing. The system needs to be flexible too. IT systems need to live up to the challenge. Till now IT systems do not have an answer to this issue.

The two biggest buzzwords in IT, SOA and Cloud Computing are most likely to resolve the issues.

Gateways can split your processes into multiple paths. This is because the path which the process will take at execution is based on conditions at execution. It cannot be defined while designing.

Gateways thus model all the options that the process has i.e. all the possible paths that can be taken by a process at execution. Here are the types of gateways and when to use them:

Gateway Name	Symbol	Implication
AND Gateway		An AND gateway, helps to execute parallel tasks. It diverts the workflow on all pathways that meet into or it or come out of it. For instance consider the making of a car. There are certain tasks which can be executed in parallel and this will save time. Use an AND gateway to model such tasks in your Process model
OR Gateway		An OR gateway will allow one or more routings based on certain pre-defined criteria. For instance, if your customer is taking the car along with the service contract, then the OR gateway will make both paths active. But if the customer is taking only the service warranty or only the car, only one of the process paths will become active. Use the OR split when you are not sure about how many paths the process will need to take from the gateway when it is executed.
XOR Gateway		An XOR gateway is one which allows the process to take one and only one of the paths that come in it or go out of it. This should be done when the process will move along one of the many paths based on certain conditions. For instance, a candidate appearing for an interview can be selected or rejected but not both. Hence use the XOR gateway and define both selection and rejection paths. Based on the input selected or rejected, the process-flow will be diverted to one but not all of the relevant paths.

BPM Notations – Events

Event	Symbol	Implication
Start Event		The start event signals a process to start. Each process can have one and only one start event. It can be manual, automatic (timer based) or message based.
End Event		An end event completes the process. A process can have multiple end events. This is denoted with a start event having a shading along its circumference.
Intermediate Event		An intermediate event is any event that takes place between the start and end of the process
Message Event		Message events are meant to increase the co-ordination between different processes. A message event starts a series of steps in the current process based on a message it has received from outside the process. For instance, the purchasing process should be started after it receives a message from the store. In this case, the store is supposed to pass on information to begin a process. The messages can be automated to ensure that the execution takes place on time and as desired.
Timer Event		Timer events are useful control procedures. They initiate a series of steps automatically based on the time which has elapsed after an activity has been performed/ not performed. The primary use of these events is to provide the customer with service levels i.e. customer can expect a repair mechanic to reach them within 24 hours. They then notify the management is there has been no preparation to send the mechanic after let’s say 16 hours. A single timer event can have multiple escalation paths. For example: 16-18 hours: Project Manager 18-20 hours: Delivery Manager 20-22 hours: Service Delivery Lead Hence the escalation goes on till higher and higher levels till it gets executed. There are therefore no chances of material information being withheld since a program has been written to escalate it automatically.
Ad-Hoc Event		Ad-hoc events are events which have no defined time. These are initiated by users with requisite level of access at any time within the execution of a process. Termination of a customer order is one such process. If the customer wants to cancel an order, the process must be capable of handling these events. An ad-hoc event is initiated by an authorised user in the middle of the process to trigger a series of actions that replace the original flow of process. For instance a termination of an order starts the cancellation formalities and refund process and stops the processing of an order. Ad-hoc events may have defined users or a group of users. This is usually the management or the supervisory level of users. Ad-hoc events can be based on internal needs, for instance ad-hoc reports or external needs such as the one mentioned above.

They argued that even though strategic management was being pursued as an organization wide goal in companies worldwide, in effect they were doing a post-mortem of the business situation at hand.

Measurement was done only on the basis of financial information. Financial information reflected past performance.

There were no indicators of future performance as well as the strategic resources of human capital, intellectual capital as well as streamlined resources that were included in the measurement.

The move from cure to prevention

Citing this as the detrimental cause, Kaplan and Norton outlined a framework wherein performance will be measured on multiple dimensions. The weights given to financial parameters be proportional to their importance.

The combined share of factors that predict the future state of business had a greater weight than past performance.

This move was critical as managers would now have to ensure that they do not follow short sighted behavior to make their performance look better.

The number game had been changed to include qualitative aspects as well.

Kaplan and Norton realized that processes were the way that a company performs its operations. The superiority of a company is therefore directly related to the sustainable competitive advantage that its process help it to gain over its competitors.

Hence, not monitoring or measuring the processes would discourage companies to place a continuous focus on improving the processes. The balanced scorecard therefore recommends that processes get equal importance (if not more) as compared to the financial indicators.

This recommendation by Kaplan and Norton and its worldwide adoption by the Fortune 500 companies gave a thrust to the practice of Business Process Management.

Since every manager’s variable pay would, to some extent, depend upon the improvement they bring in the process, everyone in the organization started looking for ways and means to improve the process.

Business Process Management (BPM) was no longer the impetus of a handful of managers and executives located in remote locations.

BPM became the prerogative of each employee. The suggestion boxes that are seen in canteens worldwide are a symbol of this movement wherein the management solicits BPM ideas from all its employees and rewards those ideas which are found good enough to be adopted.

Measuring Process through Balanced Scorecards

Real time Data: First and foremost is the fact that information becomes available to management when it is most required. A dynamic dashboard can be prepared which is updated real time and managers can immediately identify any discrepancy and work to correct it.

Technology facilitates this real time transfer of data and arranges it in a particular format to create actionable information for the management.

Adding dimensions to the scorecard: A balanced scorecard will not give undue importance to any characteristic of a process. It recognizes that different processes can be measured by different metrics.

For instance, grievance redressal must be fast, even if it is a bit expensive. Hence measuring this process on costs will lead it in the wrong direction.

Most often, the measurement is done based on a combination of metrics designed each process and given weights.

Instead of giving weights arbitrarily, technology is harnessed and Analytic Hierarchy programming (AHP) is used to come up with appropriate weights that will ensure that no one factor gets undue emphasis and tilts the organizations focus.

The Balanced Scorecard therefore brings the concept of BPM to the strategic level. Also it provides a good mechanism to measure whether the process improvements are taking the organization in the correct direction.

• Manage its day to day affairs effectively and efficiently
• Have control over its internal workings driven by constant feedback
• Be responsive and proactive to changes in the outside environment.

But achieving these tasks consistently in the best possible manner is contingent upon the ability to design impeccable processes and put them together in a seamless system. Here are some of the challenges that one expects to face in this endeavor:

Processes Fit No Fixed Pattern

Although we have succeeded in figuring out the component processes, there is no fixed formula for putting them together. It is very similar to the study of the human brain, the functioning of which continues to be mysterious and illusive. This is where the skill of the entrepreneur comes into action.

Idea of Complex Systems

What makes it so difficult to assemble the component processes into a system is the idea of complexity. Complexity means that all the processes are inter-related and have many interaction points. Hence a small change can have a cascading effect throughout the organization. Also information is being constantly produced in the organization. It is difficult to aggregate them and make sense of them so that feedback can be used to initiate corrective action. Complexity is a very large number of inter-actions happening at any instance within the system.

Idea of Dynamic Systems

To add to complexity, systems are dynamic. This means that they exchange energy and information with the environment on a real time basis. Systems are never in equilibrium but rather always searching for equilibrium.

For instance consider the recent sub-prime mortgage crisis. With the collapse of Lehman Brothers many companies had to write off huge sums, Lehmann owed them. The speed at which a highly rated company went bankrupt shows the idea of dynamicity. A few months earlier anyone would have given credit to Lehmann Brothers. But at that time, it would have been sheer folly to be associated with Lehmann in any way. This shows that there are no rules in a dynamic system as everything is susceptible to change.

Concept of Variety

The complexity and dynamic nature of an organization combine with variety to produce an incomprehensible system.

Variety is the idea of possible changes in the environment. The idea is to forecast the possible states an environment can take and be prepared with a plan for each of these states. This is known as Ashby’s law of Requisite Variety. It states that only variety can combat variety. Hence to ensure that an organization maintains homeostasis, the variety of corrective actions must be greater than the variety of the environment.

Managing A Complex, Dynamic System Exposed To Variety

Organizations all over the world are researching ways and means to successfully manage complex dynamic and variable systems. However at the moment, it is a game of imperfections. The organizations with the less imperfections i.e. relatively stronger systems is a better system. As a summary, here is what makes it difficult:

• The number of scenarios that an organization can be exposed to is very large and unpredictable. (Variety)
• These scenarios can go on changing very fast (Dynamic systems)
• The effects these scenarios have on the organization are difficult to understand and manage (Complexity)