Exploring the interdependency between ...

Exploring the interdependency between reengineering and information technology by developing a conceptual model Peyman Akhavan , Mostafa Jafari, and Ali R. Ali-Ahmadi Department of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here (http://www.emeraldinsight.com/journals.htm?articleid=1563009). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Citation:

Akhavan, Peyman, Jafari, Mostafa and Ali R. Ali-Ahmadi (2006), Exploring the interdependency between reengineering and information technology by developing a conceptual model, Business Process Management Journal, Vol. 12, No. 4, pp. 517-534.

Abstract The contemporary business environment in which an organization exists is becoming increasingly dynamic. The pressing need to improve the existing business process in an organization, results in the appearance of a new field called Business Process Reengineering (BPR). Reengineering is a management technique to radically transform organizations for dramatic improvement. Reengineering is becoming an increasingly popular option for corporations seeking radical process change. Central to the success of reengineering is the coordination of information technology (IT) throughout the organization. Essentially, IT represents the core mechanism of information flow. When companies improve core IT processes, such as gathering data only once, integrating cross-functional systems or increasing information speed to customers, radical business process change is possible. However, for IT to be an enabler of reengineering or organizational change, it is imperative that managers are conversant with the various methods by which IT can help advance process change. At the same time, management needs to be aware of the numerous pitfalls that may doom any change effort using IT. In this paper the importance of IT in BPR and its role will be explained and a conceptual model will be realized. The present study also examines the links between IT infrastructure and BPR.

Keywords

BPR, Information technology, IT strategy, Business strategy, Organizational change, Process.

1- Introduction Business process re-engineering (BPR) is a management technique to radically transform organizations for dramatic improvement (Hammer, 1990; Hammer and Champy, 1993; Davenport, 1993). BPR movement has emphasized that managing change is a fundamental business skill. One of the fundamental tents of BPR is the requirement to apply information technology to the correct processes (Freedman, 2000). The foremost proponents of business process re-engineering, Hammer (1990) and Hammer and Champy (1993), convincingly argue the critical role of information technology (IT) in BPR. IT infrastructure helps organizations not merely in automating business activities, but also reshaping and redesigning business processes (Venkatraman, 1991). Furthermore, information technology (IT) is one of the most prevalent facilitators of process change. IT is often the primary catalyst, which allows a company to achieve its business objectives (Chan and Land, 1999). It is regarded as the essential “enabler” of reengineering. © Emerald Group Publishing

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Meanwhile, all companies that embrace reengineering are not successful in attaining their goals. By some estimates, 70 per cent of reengineering projects fail for one reason or another (Hammer and Champy, 1993). In some companies, failures are often attributed to internal organization problems. In other companies, projects fail because the IT organization is often viewed as an obstacle to innovation (Chan and Land, 1999). Despite the general understanding of the useful roles of IT infrastructure in BPR, empirical studies examining such types of relationships are scarce in the literature. Though there have been some studies, which have looked at the relationship between IT and BPR, most of these studies are case-based descriptions. For example, Broadbent et al. (1999) in a recent study demonstrated the critical role of IT infrastructure in BPR. Similar anecdotal case-studies were also elaborated by Hammer and Champy (1993). In addition, several researchers have argued about different roles of IT. For example, Hammer (1990) and Hammer and Champy (1993) argue that IT plays a critical role in BPR, while some others, such as Davenport (1993) and Hammer and Stanton (1995) believe that BPR is not an IT initiative, rather it requires to bring organization-wide IT resources together, in order to enhance customer responsiveness and business performance. IT resources, according to Grover et al. (1995), consist of IT infrastructure, IT competence, and organizational expertise in employing and sustaining IT-enabled work. Thus, IT infrastructure includes both technical and organizational capabilities that enable organizations to share information resources (Bhatt, 2000) Furthermore, it is important that managers understand the range of IT tools available that will allow a company to perpetuate a reengineering initiative. This understanding will lead managers to cultivate inductive thinking. This is a key point developed by Hammer and Champy whereby people recognize a powerful solution and then seek the problems it might solve. This objective of searching for solutions and seeking problems can be achieved once management has a better understanding of the IT organization and its applicability to everyday business and its relationships by BPR during change program (Chan and Land, 1999).

2- Information technology infrastructure Researchers consider adequate IT infrastructure reassessment and composition as a vital factor in successful BPR implementation (Moad, 1993). Adequate understanding and identification of enabling technologies for redesigning business processes (Barrett, 1994), proper selection of IT platforms (Guha et al., 1993), effective overall system architecture (Jackson, 1997), adaptable and flexible IT infrastructure and proper installation of IT components (Guha et al., 1993) all contribute to building an effective IT infrastructure for business processes (Al-Mashari and Zairi, 1999). IT infrastructure is defined as the extent to which data and applications through communication networks can be shared and accessed for organizational use (Broadbent et al., 1999; Wyse and Higgins, 1993). The main purpose of IT infrastructure is to provide consistent and quick information support throughout the organization to respond to dynamic challenges in the markets. Broadbent et al. (1996) declared that IT infrastructure consists of a portfolio of IT resources that are shared and used by firms. It consists of both technical and organizational capabilities to provide the opportunities to share IT resources within and across the firms (Broadbent et al., 1999). The IT infrastructure and BPR are interdependent in the sense that deciding the information requirements for the new business processes determines the IT infrastructure constituents, and recognition of IT capabilities provides alternatives for BPR (Ross, 1998a; Venkatraman, 1993). Building a responsive IT infrastructure is highly dependent on an appropriate determination of business process information needs. This, in turn, is determined by the types of activities embedded in a business process, and their sequencing and reliance on other organizational processes (Sabherwal and King, 1991). Variance in how activities are

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performed and the flow of materials, people, and information can be a source of competitive advantage (Hammer, 1990). Mudie and Schafer (1985) analyzed IT infrastructure in process terms, as they argued that IT infrastructure should not only facilitate the development and use of data, applications, and other processing technology, but also provide flexibility to meet the future business demands in workstations, processing types, and applications. At conceptual level, they viewed IT infrastructure as consisting of data architecture, communication networks infrastructure, and support organizations. Based on these studies, Bhatt (2000) used the following four dimensions of IT infrastructure: extent of intrafirm infrastructure: extent of interfirm infrastructure; extent of infrastructure flexibility; and extent of data integration. The first three dimensions are also used by Broadbent et al. (1999) in their study of IT infrastructure and the fourth dimension is taken from Mudie and Schafer (1985). Theoretically, intrafirm infrastructure refers to the scope of communication networks within an individual organization, and interfirm infrastructure refers to the scope of communication networks beyond an individual organization. Infrastructure flexibility refers to the extent to which compatible standards and protocols exist to allow heterogeneous hardware and software to communicate and meet present and future business computing environments. In sum, infrastructure capability captures the extent to which an organization's units and their respective databases are made accessible internally and externally via electronic linkages. According to Bhatt (2000), the first three dimensions (intrafirm infrastructure; interfirm infrastructure; and infrastructure flexibility) are not separate, rather they are highly correlated to each other. Therefore, for getting a meaningful measure, Bhatt (2000) combined the first three dimensions, and conceptualized it as network infrastructure. This could be correct because, presently, to deal with growing turbulent and dynamic environments, firms are increasingly forming network alliances via interorganizational networks to co-ordinate their activities. The use of widespread network connectivity between different firms makes it difficult to distinguish between intrafirm infrastructure, interfirm infrastructure, and infrastructure flexibility empirically. Interfirm infrastructure, by definition, includes intrafirm infrastructure. Similarly, extensive connectivity between different firms, by definition, meets the requirement of infrastructure flexibility. Data integration is distinct from other dimensions, because a high level of network infrastructure does not automatically presume a high level of data integration. Also, many firms are found to be constrained by their available network infrastructure to access relevant data from corporate databases (Nath, 1988). Following explanations, briefly define network infrastructure and data integration. 2-1- Network infrastructure A network infrastructure refers to the capabilities of communication networks that help in sharing of IT resources within and across the boundaries of a firm. For example, using integrated communication networks, such as electronic mail, video-conferencing, and computer-to-computer links, such electronic data interchange (EDI), information can easily be shared, manipulated and used for corporate applications (Yates and Benjamin, 1991; Madnick, 1991). The importance of network standards in IT infrastructure was noted by Steinbart and Nath (1992). In a survey of 186 firms, Steinbart and Nath found that most of the constraints in the development of interorganizational and global networks were associated with networks connectivity and networks standards. Similar arguments were also offered by Besen and Saloner (1994). According to them, one of the biggest stumbling blocks in development of network infrastructure has been the lack of standardization of the key technologies that support them. Incompatibility of barcode conventions, vendor-specific EDI technologies, and firm specific data transmission formats have been problematic to meet growing businesses and information requirements of organizations. The endeavors for adaptable, and portable standards are solutions, but shifting toward these standards is expensive and may take years to be fully established (Torkzadeh and Xia, 1992). © Emerald Group Publishing

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2-2- Data integration In coordinating the activities of an organization, different business units require access to consistent data about the activities of different departments (Goodhue et al., 1992). By increasing the standardization of data definition, codes, and formats, organizations can easily manage their IT activities and compare their performance with similar and comparable functional units (Goodhue et al., 1988).

3- IT tools for business process reengineering For managers to play an active role in reengineering or process changes, they must possess a basic knowledge of the mechanisms for change: the IT tools. This is not to say that non-technical managers need to be experts in each IT tool or system. These managers can focus on familiarity rather than expertise. The role of expertise should remain with the IT organization and expert consultants. Non-technical managers should make an effort to become familiar with IT reengineering tools and methods that can be used to implement process change successfully. According to Chan and Land (1999) there are some IT tools such as: ERP systems, outsourcing, enterprise software, internet, intranet, EDI, knowledge management, and legacy systems that will be explained as follows. 3-1- ERP systems Enterprise planning systems (ERP) allow the sharing of real-time information between manufacturers, customers and business partners. Some of the benefits include: shorter manufacturing cycles; increased communication between consumers and business partners; better supply-chain management; and greater control of cost and operation management. One application used commonly in ERP application is SAP, an enterprise software application that allows a tight coordination between sales, manufacturing, procurement, finance and accounting. Many companies utilize SAP for global integration across geographical business units. ERP solutions succeed when assimilation and training are implemented quickly and efficiently. The ability to introduce quickly via functioning system with little business disruption should be an underlying goal of a project. Equally important in ERP systems, especially as employees' roles and skills change, is providing adequate training before and after implementation. In the case of SAP or other ERP system, creating super users can ease the post deployment process by giving a functional department a central source of application information. Super users are users who are intimately familiar with an application, like SAP, within a single department. Not only does this lessen the burden on IT, but also it provides the first-level and ongoing support to all users within a functional department. 3-2- Outsourcing One of the more common trends in the IT industry in the past several years has been the use of project outsourcing. Outsourcing is an attractive choice because it allows companies to implement new technologies quickly, cut costs or improve IT services. However, the reality of outsourcing falls short of the perceived advantages. One of the inherent problems with outsourcing is the high relationship between technology and internal business processes. When systems are outsourced, systems and processes can often become dysfunctional (Caldwell and McGee, 1997). Companies seeking radical change will not find outsourcing a source of substantial productivity gain. However, for smaller projects, outsourcing can be a cost-effective solution. 3-3- Consulting firms Another popular trend is the use of outside consulting firms for a variety of services. Consulting firms and the use of analysts are key during the planning and implementation stages of reengineering. One reason companies turn to these types of companies is to prevent © Emerald Group Publishing

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making poor business decisions. Furthermore, because IT analysts are expensive to employ year round, companies can reap the benefits of this information by using consulting firms. Common research topics include business applications, operating systems and IT alignment with business processes. The use of outside consulting firms is key for major projects like reengineering, because it allows the company to receive the timely, precise information regarding new technologies. However, use of consulting firms should be limited to aiding the company in making informed decisions. In no way should a consulting firm take the place of the internal decisionmaking process. 3-4- Enterprise software In addition to ERP discussed earlier, other enterprise software solutions exist which can lead to dramatic improvements in information processing. Supply-chain systems allow suppliers, distributors and retailers to connect, similar to ERP systems. These systems allow a company to outsource specific portions of the production process to the best-equipped business partner. Furthermore, supply chain systems focus on supplier issues and are often more affordable than larger, more functionally integrated systems like SAP. Sales and business process automation is also becoming an increasingly popular area for reengineering. One reason for its rising popularity can be attributed to the falling prices of software. As software improves, prices will continue to fall while features will continue to grow. These types of systems seem more common in smaller companies, where legacy (mainframe) systems are less prevalent. Another popular area for software implementation is in business process reengineering (BPR) software. Although some of these software applications are limited in capabilities, the majority of packages will give companies a good start with the planning aspects of a reengineering project. Software prices begin at low prices for simple flowcharting and can go up to tens of thousands of dollars for sophisticated simulation/modeling software. Depending on the size of the company and the size of the reengineering project, BPR software is well worth investigating. 3-5- Internet Over the last few years, companies have been investing heavily in the Internet in hopes that a revolution would occur overnight. Many companies agree that using the Internet provides a competitive advantage to their business. Some of the areas which are driving the development of Internet applications in businesses tend to be directed toward communication and customer service areas. For instance, in the computer industry, the use of the Internet has had a severe impact on improving margins. With the Internet, a single point of distribution to all customers could be created at a fraction of the cost. Essentially, the Internet allows the barrier between the company and customer to be diminished. Some other benefits include: better communication, cost reduction, increased productivity and a flattening of the organization. However, not all companies experience the same level of dramatic business process improvement. Understanding the technical hurdles surrounding the Internet are pivotal before any business process strategy can be developed. Security, employee productivity and support are just a few of the main IT concerns. A company's decision to outsource its Internet business or develop a strategy internally using existing IT can have severe financial repercussions on a company. Other technical concerns include the reliability of Internet-based systems and management concerns. 3-6- Intranet An intranet is like an internal Internet for the corporation. An intranet is a software/hardware/network system that is accessible to the entire company. The term intranet is used because the information on the system is only accessible to employees within the company. Sophisticated security prevents people from outside the company from gaining access to company-held information.

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An intranet allows employees to use a software application, like an Internet browser, to gain access to a wide variety of information. Employees can access text, images, audio and video. The main advantage of an intranet is its ability to create a single point of distribution to the entire company. If all employees have access to the intranet, then information can be instantaneously distributed to all employees with little effort. Not only does the company save money on distribution, but it also improves information speed and corporate communication. Many companies are using intranet strategies for application training and for human resource management. When used prior to a new application launch, such as a SAP or ORACLE based product, an intranet training solution could disseminate important information to all users instantly. In addition, as updates and changes to the system are made, all employees can be notified immediately. 3-7- EDI Electronic data interchange (EDI) is still used in many companies for keeping customers and suppliers in contact with one another. Recently, EDI systems have improved by allowing more information to be communicated from the retailer back to the manufacturer. This is done by using bar-coding, which allows manufacturers to monitor consumer demands in different regions. The end result is better control of purchasing and inventory. Many companies have combined EDI solutions with ERP solutions like SAP to decrease their lead time. Not only does EDI allow companies to manage inventory, it gives the company the capability to smooth out the peaks and valleys in the normal production cycle. As the combined EDI/Internet systems become more secure, more companies will be able to utilize the technology as a source of cost reduction and process improvement. 3-8- Knowledge management The concept of knowledge management (KM) is a method that allows employees to gain access to the knowledge base of a company. Essentially, by allowing employees access to explicit and tacit knowledge, a corporation can develop more informed employees, which in turn, will lead to greater innovation. Explicit knowledge is common, public information. Tacit knowledge explains the difference between an engineer with one year of experience and an engineer with 20 years of experience. Certain types of expertise can only be acquired through extended periods of working knowledge. Knowledge management can be achieved through information repositories and specialized networks. A few years ago, these types of systems would be prohibitively expensive due to the high costs associated with enterprise wide computer systems. However, smaller clientserver applications are now available which can serve an entire organization at a fraction of the cost of older mainframe technologies. With KM, Duplication is reduced, flexibility is increased and the system has added value by generating revenue through an online commercial package connected to an Internet-based application. 3-9- Legacy systems Legacy systems, or mainframe computer systems, will continue to remain an integral part of corporations. During the 1980s, as computing costs continued to fall, many companies began switching their mainframe applications to less expensive UNIX based client-server systems. However, the long-term advantages of client-server over legacy systems are open to debate. Many companies switched to client-server in order to reduce costs and improve their functions.

4- The road to successful change through IT Much has been written about reengineering and the methods by which companies can achieve success. However, it is important for companies to understand the critical role interdependence plays between technology, practice, and strategy. Change within the organization is a constant learning process, lined with unexpected obstacles along the way. As managers plan for change, their strategy must take into account the interactions among all of © Emerald Group Publishing

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the business system components (Milgrom and Roberts, 1990). Management's goal should be to minimize the uncertainty through understanding the importance of IT in facilitating process change. The importance of task interdependence is often overlooked in reengineering planning. The goal of reengineering is to completely reinvent the business processes model. However, the “blank sheet of paper” approach is not always the most effective technique when working with IT processes. Since IT is to be the enabler in the process, a more useful approach is to:  understand the benefits and weaknesses of existing systems;  develop a model of the “ideal” system;  become familiar with recent technological offerings;  offer a transitory solution from the existing system to the proposed system. Before a new system can be devised, the existing systems and the interactions between these systems must be fully understood (Caldwell, 1994). It is important to determine whether steps are performed concurrently or in succession. For instance, in manufacturing processes, some companies have had success in moving away from a purely assembly line mentality to that of a pod assembly process. The routing of information between functional departments can also be improved in this manner. Equally important is an understanding of the nature of the processes that are occurring. Focus should be put upon the critical, important processes. For instance, dividing processes into value-added and non-value added categories could help differentiate critical processes from non-critical processes. In the case of automated processes, several categories can exist: document-based automation, such as electronic forms, or groupcentered automation, such as activity coordination (Willets, 1995). Another useful suggestion is constructing a process flowchart for the existing and proposed systems to aid with visual reference. Another important factor in determining the success of reengineering is the transitory process: the process of migrating the existing IT system to the new IT system. In most cases, this transition will involve a combination of many interconnected systems: hardware, software, networking equipment and customized programming. Project management, consultants and key employees can also have an effect on this transitory process. In all cases, it is important for managers to have a comprehensive understanding of the nature of information flow throughout the organization, from beginning to end, horizontally and vertically. This understanding will not only facilitate the reengineering process, but also provide a tremendous benefit to IT as an enabler of process change (Chan and Land, 1999).

5- Important role of IT in BPR Owing to the complexities associated with IT, its role in BPR has been debated by several authors. While authors like Davenport (1993a), Davenport and Short (1990) and Hammer (1990) believe that IT has a major enabling role in BPR, and that many BPR projects contain IT as one of its major components. Morris and Brandon (1993), for example, argue that BPR may not make use of IT. Guha et al. (1993),and Teng et al. (1994) suggest that installing new hardware and software, as well as using system analysis and modeling tools, are major components in BPR efforts . Additionally, some authors like Davenport and short (1990), go beyond viewing IT as an enabler for BPR, and consider it to be a driver for the re-engineering process as it is used essentially to model technically the organizational change . However, other authors like Boudreau and Robey (1996), believe that IT can also disable the change efforts. They argue that the use of IT in redesigning the business processes involves new structures, which inhibits changes in the future. They note that since the technical backbone of automated processes exists as software applications, any future change to the processes requires a reconstruction of these software systems. They also argue that BPR in itself will continue to build new legacy systems and organizations which need transformation. However, according to a survey of re-engineering practices, carried out by business intelligence, 60 percent of companies surveyed state that IT is a critical enabler for the reengineering efforts © Emerald Group Publishing

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(Harvey, 1995). To ensure successful use of IT in BPR, its capabilities, constraints and behavior need to be exhaustively understood. Higgins (1993) sees the role of IT in BPR as having three major aspects: (1) Knowing what new business opportunities are made possible with computer-based technologies; (2) Building an active platform of systems and capabilities (3) Focusing on the process of delivering new systems. Childe et al. (1996) classify IT applications in BPR under two groups, namely change technologies and support technologies. By change technologies, they mean analyzing, modeling and mapping existing processes, assessing their efficiency and effectiveness, measuring performance, and providing structured support for the change projects management and associated planning and control functions. They describe support technologies as relating to implementing IS to support the process configurations needed. Heiman (1988) argues that in organizations which depend heavily on integrated IT systems, managing change is shaped by these technologies, and that an information planning strategy is necessary to map organizational plans and structure to a business – wide communication infrastructure. Adequate use of open systems, fourth-generation programming languages, advanced Data Base Management Systems (DBMS), and software re-usability techniques may reduce the inflexibility of IT systems so they can support BPR more effectively (Al-Mashari and Zairi, 2000). Here some items such as Inventory , Lead time, Process ,Performance , Data exchanging, Internal communication, Access to suppliers, Information flow, Order flow, Strategy, Product, Marketing /sales, Services, Personnel, Technology, and Accounting that are really influenced by IT during BPR process are listed (Gunasekaran and Nath, 1997). After explaining about following items, our conceptual model can be appeared through theses explanations. 5-1- inventory problems Collins and Reynolds (1995) presented the experience of Microsoft Ireland’s reengineering program and explained how to solve inventory problems effectively. The company has solved the inventory problems in supply chain by using on-line stock control with advanced IT. So information technology can play an important role in corporation problems that are related to inventory. 5-2-Lead time IT can be used to integrate both hardware and software elements in organization that aim to reduce the lead time at various places in manufacturing organizations. It can be inferred that information technology affects the lead time in organizations and decreases it 5-3- processes IT can be utilized in the process of planning the reengineering of various business processes such as “process mapping” and identifying “value-added” and “non value-added activities”, using the simulation, modeling and analysis. 5-4-performance of company IT can save time and improve accuracy in exchanging information about company goals and strategies. It removes much of the human error inherent complex and repetitive tasks. IT saves money because it reduces errors, and the time it takes to accomplish tasks and all these , improve the performance of company. 5-5-data exchanging through relevant business IT can facilitate data exchanging through electronic data interchange (EDI). EDI is usually defined as computer-to-computer exchange of relevant business data .Therefore , EDI should be looked upon as an opportunity to change/eliminate intermediate processes.

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5-6-Internal communication In companies, internal communication is as important as outside communication. For example, networking the computers in a company and installing electronic mail system allows employees to send and receive messages among themselves that is possible through IT facilities. 5-7-Access to suppliers IT helps to increase the competition base through easy access to global suppliers on database. So there is no limitation on reaching and access to any supplier

5-8- Information flow Effective integration of various functional areas requires speeding up information flow in a business environment. The lead time for information flow has come down drastically through the use of advanced IT such as E-mail and fax. 5-9-Order flow For meeting the customer demand quickly, company needs to analyze the flow of information and materials along the supply chain. The simplification and standardization of the flow of materials and hence the flow if information may facilitate reengineering to improve the overall system and this can be done with the help of IT. 5-10-strategy formulation The formulation of strategy requires information about both internal and external factors. This implies that there is a need of handle a large volume of data and information processing which would help to formulate strategies for achieving corporate goals. IT systems can be used to collect and process these necessary data. 5-11-Product Product design and engineering, and process planning can be treated as a business process. The stages of product design and development can be integrated using IT tools such as CAD/CAE and CAPP. 5-12-Marketing/sales Marketing and sales are two of the most information intensive functions in business. Marketing research in particular will be a prime benefactor of IT innovations. Areas such as primary data collection, telephone interviewing, customer orders, payment of suppliers, forecasting and so on are easily available with the help of IT. 5-13-Services Improving the services of corporation is available by IT. For example improving the utilization of equipment, and eliminate unnecessary paperwork are some points that can be referred. 5-14-Accounting This area can use the online shared database and computerized information system for collecting and processing information about product price, make-or-buy decisions, capital investments and budgeting decisions including product-mix decisions. 5-15-Personnel Employees expect their organizations to take a more active role in addressing the stress they face in managing their work life with their home life, especially in BPR. Technologies such as Multimedia and internet can be utilized to improve the cooperation of employees with business to reduce the stress of workers in performing BPR, by open and more reliable communication systems. © Emerald Group Publishing

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5-16- Technology Technology selection, installation, and design of plant and equipment are some areas in technology field that IT can help.

6-Developing a conceptual model for illustrating the role of IT in BPR for better understanding of IT role and its importance in BPR, a conceptual model is presented in this part. Table 1 shows each item that can be influenced by IT with related functions. As it shown some IT functions are common between different areas. This table helps us visualize the function of our model as the role of IT in reengineering and also can be viewed from two perspectives: (1) the role of the function (e.g. internet, multimedia, EDI, CAD/CAM, ISDN,…) ,and (2) the role of the technologies themselves (e.g. CD-ROM, ATM, fiber optics,…). As declared, the IT has played a vital role in the success of the overall reengineering initiative. The conceptual model can be visualized through importance of IT on business process reengineering. The first level of model is illustrated in figure 1.

Strategy of organization

Business strategy

IT strategy

Assessment

Planning

Implementation IT based business process reengineering

Fig 1: First level of conceptual model

As shown in figure 1, the model consists of four main parts: strategy, assessment, planning and implementation. IT strategy is as important as business strategy so we should consider both of them in the model. Of course during strategy formulation phase, the organization should have enough data about internal and external environment that is easily available through IT. The business strategy should be clear and detailed. Top management should act as a strategy © Emerald Group Publishing

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formulator who provides commitment for the whole process of redesign, while the IT manager should be responsible for designing and implementing the IT strategy. The strategy describes the role of IT in leveraging changes to the underlying business processes and infrastructures. IT strategic alignment is approached through the process of integration between business strategy and IT strategy, as well as between IT infrastructure and organizational infrastructure . The degree of alignment between the BPR strategy and the IT infrastructure strategy is indicated by including the identification of information resources needs in the BPR

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strategy, deriving the IT infrastructure strategy from the business strategy, examining the IT infrastructure strategy against the BPR strategy, the active involvement of management in the process of IT infrastructure planning and IT managers in business planning, and by the degree of synchronization in formulating the two strategies The second phase of conceptual model is assessment. In this phase both organization and IT capabilities are appraised . During organizational capability appraisal, current situation items such as infrastructures, processes, structure, skills, management systems, culture and so on should be studied. And for appraising IT capabilities, architecture, tools, methods, and Processes should be reviewed. The next phase of conceptual model is planning which is one of the most important phases of model. Considering the pervious phases, the planning phase should be implemented carefully because the change program will be the main output of this phase and any mistake leads the organization to ruin. And finally the last phase is implementing which is the most important step of conceptual model. The major items have been identified based on the critical areas of industries. From the model, it can be easily noted that Inventory , Lead time, Process ,Performance , Data exchanging, Internal communication, Access to suppliers, Information flow, Order flow, Strategy, Product, Marketing /sales, Services, Personnel, Technology, and Accounting form the part of major business processes to achieve a dramatic improvement through a radical change named BPR. There should be some feedbacks after implementing phase in order to make some corrections in pervious steps. The conceptual model is depicted in detail in figure 2.

Area Inventory

Lead time

IT functions Data base

CAD, CAPP, CAE, CAM

Process

Simulation, modeling, analysis

Performance

CAD, CAM, CAE, CAPP

Data exchanging

EDI

Internal communication

Networking, e-mail, intranet

Access to suppliers

Internet, database

Information flow

EDI, networking

Order flow

CAM, database

Strategy

Internet, database, CIM,CIB

Product

CAD, CAE, CAPP

Marketing /sales

Internet, multimedia

Services

Internet, CAD, CAE

Personnel

Multimedia, internet, intranet

Technology

Internet, multimedia

Accounting

Database, EDI

Table 1: IT functions in each area of organization

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Business Environment

Technology Environment IT Strategy

Busines Need

Scope

mission

Strategic alignment

Competitors

Competencies

IT Governance

Competencies

Strategy

Business Strategy

Busines Enabler

Infrastructure

Infrastruct Work Processes

Skill Bu sin es s Env iro nme nt

I T Strat eg y

B usiness Needs

Sc ope

S cop e

Strateg S trateg iic c

Alig A l i gn n me nt nt

C om peten ci es

IT G ove rnanc e

C om pete nc ie s

Gove rna nce

B usiness Enabler s

Orga niz atio na l Cap ab ilit ies

Pro ces ses

Sk ill s , Pro P ro ce ss Work S truM cture a na, S ge ki lm s,e nt I mp ro ve me nt Imp nt Proce s se s Man age men S, ystem s, Proc est s Culture C u lt ure , L ead ersh ip

Pr ocess Enabling

S tra trategy te g y

IT Capa bil itie s

Pr ocess Needs

I nfrastru cture

Infra s truc ture Work

A rch i te cture

Ma na geme nt A pp roac h

T oo s l , Meth od s, a nd P roc ess es

Architecture

Process improvement

T ec hn olo gy Env iro nmen t

Busi nes s Strat eg y

Structure, Man Skills,ag Management Process, Systems, Culture Assessmen As s es s me n t

Ch an ge Pro grams

A pp il ca tio n Po rtf o il o Tra nsfo rmati on

Wo k r P roc ess R ed es ig n

Metho ds & To ol s Imp l emen tatio n

Org an zi atio na l Ta r ns fo rmati on

H i gh V - al ue Te chn ol og y I ni tia ti ve s

Tools, Methods, and Processes

Pl an n in g

Proces Enabler

Management Approach

Change Programs Application Portfolio Transformation

Work Process Redesign Methods & Tools Implementation

Planning

F E E D B A C K

Wor Process

IT Capabilities

Proces Need

Assessment

Organizational Capabilities

Organizational Transformation

High-Value Technology Initiatives

IT based business process reengineering

Internal

Information flow

Data

Process

Inventory

Lead time

Product

BPR

Access to suppliers

Personnel

Services

Marketing / Sales

exchanging

Accounting

Strategy

Performance

Technology

Fig 2: Second level of conceptual model of IT based BPR

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Implementation

communication

Order flow

7- Discussion Though BPR is a strong management technique for transforming organization to grasp dramatic improvement in a radical way, Implementing BPR is faced some problems without help of IT. IT acts as a lubricant for facilitating BPR execution in the organization . Central to the access of reengineering is the coordination of IT throughout the organization because IT represents the core mechanism of information flow which is so important in BPR activities. IT plays the role of a catalyst and a critical enabler in BPR programs. As process is the main target of BPR, IT can help BPR in analyzing, modeling and mapping existing processes, evaluating their efficiency and effectiveness and also the process configuration that is needed. Many items can be affected in the organization during BPR programs through IT. Information technology can solve inventory problems by using online stock control with the help of data bases. Lead time can be reduced by IT through CAD, CAPP, CAE, and CAM, processes can be analyzed, modeled and optimized by simulation and modeling tools. Data exchanging is facilitated by IT and communication in the organization and relationships between suppliers and also customers are developed. IT speeds up information flow in the organization to make it act rapidly in the fast changing environment. Products and services of the organization can also be affected by IT, product design and engineering, and process planning can be also integrated by IT tools. The organization can be equipped by special IT sensors that can sense market fast and carefully in marketing and sales activities. Accounting, technology selection and subjects related to employee are some another items that IT affects them during BPR programs. Altogether it can be said that one of the main objectives behind the development and implementation of any information system, is to enhance process capabilities within the organization. The user organization gains higher throughputs over its IS application portfolio because a large number of disparate systems and applications are replaced by an integrated one through IT in BPR programs. Of course Better control, coordination, and governance are achieved through easy exchanging and integration of the data created and used in different parts of the reengineered organization that has applied IT. The role of IT in organizations as a key factor of change programs is because it is perceived as an opportunity to enhance control and coordination while at the same time opening access to new global markets and businesses (Jarvenpaa and Ives, 1991). As devices of control that enable built-in efficiencies and effectiveness within processes, and hence within the organization, information systems, it seems, have completed a full cycle. They have come from haphazard system by system implementations of the 1960s and 1970s, to the emphasis on strategic alignment of systems with organizational objectives of the 1970s and 1980s, to the identification of redesigned business processes as the critical elements of organizational strategic planning to which IT investments must be targeted of the 1980s and early 1990s, to enterprise-wide computing – first with MRP, then with MRP II in the early to mid-1990s, to ERP in the early 1990s to ERP II which use an amalgamation of software solutions to enable and empower supply chain collaboration, control extending beyond the boundaries of the firm, but yielding efficiencies and measurable performance improvements never seen before in business.

Conclusion BPR and IT infrastructure strategies which are both derived from organization strategy are in need of effective alignment to ensure the success of the BPR initiative . IT can best enhance an organization’s position by supporting a business-thrust strategy. In this paper, the interdependency between business process reengineering and information technology has been explored and the role of IT in BPR studied.

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It is clear hat working smarter is the key to increasing productivity. The first step in working smarter is to shorten the time it takes to accomplish a task . Advanced information technology plays the leading role here, not by merely automating tasks, but by allowing a business to redesign its processes, discovering new and better ways of doing business .Whereas traditionally organizations have used information technology to automate the existing ways of doing things, currently, they are using IT not just to speed up routine processes, but to redesign those processes in order to achieve dramatic improvements in productivity. Many IT managers concede that a large part of their success derives from using IT to re-engineer business processes . So there is a tight relationship between business process reengineering programs and information technology. In this paper IT tools such as ERP systems, outsourcing, enterprise software, internet, intranet, EDI, knowledge management, and legacy systems for business process reengineering have been introduced and we understood that many areas in an organization such as Inventory , Lead time, Process ,Performance , Data exchanging, Internal communication, Access to suppliers, Information flow, Order flow, Strategy, Product, Marketing /sales, Services, Personnel, Technology, and Accounting are really influenced by IT and its tools during BPR process. And finally by a conceptual model, the relationship between information technology and business process reengineering has been explored.

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