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First written on September 03, 2003 Revised and Updated on July 07, 2008 Reengineering the business - a case for SMEs Welcome to a presentation on Reengineering the business – a case for SMEs – ACCA Seminar on September 18, 2003 at International Conference Center, Kampala, Uganda Dear Ladies and Gentlemen, I am honored to be addressing all of you on the subject of "Reengineering the business - a case for SMEs" and thank ACCA and you all for the opportunity given to me. According to a survey published last week in "The New Vision", 86% of the enterprises in Uganda fall under the classification of SMEs and you could not have chosen a more appropriate subject. My complements to the ACCA team. Without wasting more of your valuable time, I will come to the subject straightaway.  Overview Reengineering is the new term for Business process reengineering (BPR). It is the redesign of business processes, associated systems and organizational structures to achieve a dramatic improvement in business performance.  The business reasons for making such changes could include poor financial performance, external competition, erosion of market share or emerging market opportunities.  Reengineering is not - downsizing, restructuring, reorganization, automation, new technology, etc.  5- Key components of an organization Strategy Structure Systems including Technology Processes Culture What is Reengineering ? It is the examination and change of five components of a business as per Michel Hammer: Strategy Processes Systems & Technology Organization ( Structure) Culture Definition Michael Hammer defines business process reengineering in his book 'Reengineering the Corporation' as: "Fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance." What is the difference ? Hammer focuses on one of the key concepts of Reengineering, that it is fundamental and radical. The alternative business improvement methodology is Continuous Process Improvement, which emphasizes small and measurable refinements to an organization's current processes and systems. Continuous process improvement has its origins in total quality management (TQM) and Six Sigma, a program that began at Motorola. Historical Perspective BPR, as a term and as a practice, has a tarnished history.  BPR became very popular in the early 1990s, however, the methodology and approach was neither fully understood nor appreciated.  Many times, improvement projects labeled with the title "BPR" were poorly planned and executed.  Employees and organizations cringed at the thought of another "BPR" experience. It was attempted in large organizations without taking into account the human side of enterprise as change in culture was involved.   The term itself is being used less or is being altered to "Reengineering" so that these types of initiatives are not associated with the "BPR" of the past. Reengineering Today Despite this abuse of the practice and tarnished name, the practice of redesigning business processes and the associated technology and organizational structure is more popular today than ever. Organizations continue to reexamine and fundamentally change the way they do business. Competitive pressures and a sluggish economy provide the impetus for continued efforts to "deliver more with less."  Reengineering remains an effective tool for organizations striving to operate as effectively and efficiently as possible. Reengineering is best suited for SMEs as momentum and inertia is not high and it is easier to change when small. Involvement, Commitment and Ownership are the keys to its success. 5 - Stages of Reengineering Planning Learning & Benchmarking Solution Design Business plan development Change Management Planning Stage Issue Identification, Problem awareness Project Scope, objective setting, Team formation Current state assessment, customer and associate needs, benchmarking and Technology review Vision development, Solution design, Business case development, Change management plan Implementation planning, design and development, Training plans, Managing change Implementation and measurements of results Learning & Benchmarking Preparing and organizing your team for process design Conducting research with employees, customers and vendors Benchmarking with other companies and uncovering new technology Creating core concepts and guiding principles Designing new process, organization and technology solutions Convincing other employees including TMT Business Plan Development This should present the benefits of change in financial parameters: Financial Impact Net Present Value Return on Investment – ROI Cost- benefit analysis Funding required and means of sourcing it Entry and Exit barriers – financial implications Change Management Planning and managing change, both cultural and technological, will be one of the most challenging elements for your organization . Understanding the key areas of change management, and the associated traps and pitfalls others have encountered, is critical to your success. Your employees will give the maximum resistance to change and you will have to prepare them mentally for the change Quotes on Change Anytime there is change, there is an opportunity - Jack Welch Everything now being done is going to be done differently; it's going to be done better, and if you don't do it, your competitor will - Anonymous Change is inevitable, except from a vending machine - Anonymous 10 Requirements for Change Vision Leadership Knowledge  Skills  Positive Attitudes Motivation   Resources Strategy  Plans Implementation Preparing for Change Phase 1: Define your change management strategy Prepare your change management team Develop your sponsorship model Phase 2: Develop change management plans Take action and implement plans Phase 3: Collect and analyze feedback Diagnose gaps and manage resistance to change Implement corrective action and celebrate success Managing Change Manage the human side of change, not just the business side. Create a communication plan. Actively manage resistance to change. If you cannot "Innovate" try "Imitating". Do not waste precious resources trying to reinvent the wheel. By adopting "Creative Imitation" you can probably do better than competition Try to learn from the past and from people who tried such changes. Do not try to bring in methodologies from different work cultures like the Japanese techniques of 5S, Kaizen, Kanban etc., for the sake of novelty. If you do, then make sure it becomes a habit by drilling it into your people. Changing Culture Direct face to face communication for mentally preparing the employees for the change process. Role Modeling or use of Symbolism Written Communications on key issues, strategies and plans followed by face to face meetings - Very few read or understand them unless they are explained face to face Appropriate changes in HR Policies to support the change Investments in Training. Substantial amounts are needed not for imparting new skills but for influencing values, attitudes and beliefs 10 Tips for bringing about change for SMEs Shed fat - become trim, fast and agile. Improve quality, cut costs, improve delivery and customer service.  Become market or customer driven  Bring in positive attitudes  Change old cultural beliefs. Discard ones which are no longer applicable. Communicate with all people and inform them why they have to change. Train and motivate people.  Encourage participative management and Empowerment at all levels.  Identify change agents at all levels and encourage them.  Monitor the process of change constantly as it is most difficult Story on Change Consider the story of a frog that was dropped into a pan of hot water. The frog immediately reacted to the heat by jumping out of the pan. Another frog was put into a pan of cold water on a stove. The burner beneath the pan was turned on low, then the heat was gradually increased so the temperature of the water rose only a degree at a time. Change was occurring, but because it was gradual the frog accepted it and stayed in the pan and was boiled and cooked. In a way, we're all in the same pan. We react immediately to dramatic changes, but we run the risk of getting cooked, if we fail to notice the little, slow changes occurring around us. Cited in The Best of BITS & PIECES and our acknowledgment to them. BITS & PIECES is a division of The Economics Press, Inc., 12 Daniel Road, Fairfield, NJ 07004,USA and copyright with Lawrence Ragan Communications, USA. Thank you very much and I am now available to answer any questions on the subject.  The above address was presented on behalf of Data, Figure & Co., Certified Public Accountants, Kampala, Uganda and at the invitation of ACCA, Kampala Branch. Please also see the following related pay articles in our pages: Managing Organizational Change and Culture Why implementation of strategic plans fail ? Written  by Madhavan T Gopalachary The views, opinions and interpretations are personal. Sponsorship does not mean that the sponsors endorse them. Editorial Policy © Copyright, Jul-08 . www.madgopes.com . Without prejudice. All rights reserved www.mmgindia.com is the official website of Madras Management Group, Chennai, India. www.madgopes.com and www.mmg.name are personal websites and all editorials are published under their banner to retain editorial independence. We would highly appreciate feedback from readers and it may be sent to ipr@mmg.name.