Business Process Reengineering in Service Sector

Over the years, there has been a realization that for all businesses, manufacturing or service, change is key to success. Increasing costs, challenging timelines, cutthroat competition, and technological innovations are some of the major factors propelling change. Since most of the services are people / process oriented, the change is not easy to carry. Add to it, the fast vanishing geographical boundaries make the tasks even more difficult for the organizations. Whether the company operates in manufacturing sector or in services; organizations have been forced to rethink their strategies. Many a time, service sector has been ahead of manufacturing in the Business Process Reengineering queue. Improved Product / Service quality, reduced cycle time, reduced cost to the customer are direct outcomes of BPR.

BPR is essentially different from other changes in an organization that it defies the “Old wine in a new bottle” principle. Business Process Reengineering is by definition, the means by which an organization can achieve radical change in performance as measured by cost, cycle time, service, and quality, by the application of a variety of tools and techniques that focus on the business as a set of related customer-oriented core business processes rather than a set of organizational functions. The shift is imminent. Competition is now global as against Local or regional in the past. Markets are focused in comparison to Mass. Operations are flexible in contrast to controlled. The focus is on Best service than performance. BPR is the answer as it talks of radical change vis-a-vis Traditional approach which limits itself to incremental changes.

Business Process Reengineering involves tinkering with the organization’s DNA and producing an evolved species. The mistake companies tend to make is pick the wrong process to be reengineered, or make only superficial changes. According to James A. Champy – one of the founders of the management theory behind Business Process HYPERLINK “http://en.wikipedia.org/wiki/Business_process_reengineering”Reengineering, and proponent of a process oriented view of business management, BPR is not just about reducing cost but also improving quality, speed to market and changing the customer experience.

Why BPR?

The changing economic environment has led to an increasing interest in improving organizational processes to enhance business performance. BPR has been instrumental in success of various organizations. Sidikat, Ayanda (2008) in paper titiled, “Impact Assessment of Business Process Reengineering on Organisational Performance” concluded that business process reengineering has become useful weapon for any corporate organization that is seeking for improvement in their current organizational performance and intends achieve cost leadership strategy in its operating industry and environment.

Different objectives of BPR include:

Reduced transaction process time

Improved customer service

Increased volume of business

Reduced operating cost

Higher profitability

Improved Employee loyalty

Key enablers of BPR

BPR involves a rationale change at every level of organization starting with top management. The most important thing to keep in mind while implementing any such exercise is to work across processes and not functions. Equally important is to have a strong internal team that is working on the implementation. Key enablers of BPR can be listed as follows:

People

Management & Leadership

Organizational Culture

Functional Expertise

Instantaneous reaction

Performance Indictors – Quality, Lead Time, Cost, Service

Service Sector in India

The service sector has experienced rapid growth over the years as many nations including India shifted from a manufacturing-based economy to a service economy. A major spur in this shift happened as a result of computerization and advancements in telecommunication. Along with this shift, the consumers’ expectations have grown manifold. It is extremely difficult to meet desired service levels in today’s age without a shift from age old systems to high-tech advanced systems. Before discussing about BPR in service sector, a brief list of different Service sectors is as follows.

Trade

Hotels and Restaurants

Railways

Other Transport & Storage

Communication (Post, Telecom)

Banking

Insurance

Dwellings, Real Estate

Business Services

Public Administration; Defense

Personal Services

Community Services

Other Services

BPR & Service Sector

Though Business Process Reengineering has been instrumental in changing the fate of many manufacturing industries, it has played an equally pivotal role in service sector. Additional Ps – “People & Process” that differentiate Services from Products along with “PhysicaI Evidence” are the most important drivers leading to this overhaul. Suzanne Wintrob (1995) in research paper titled “It won’t work if users kept in dark” discussed the incomparable role of people in Business Process Reengineering. According to Sunil Chandiramani, National Director – Advisory services, Ernst & Young, “The external team (consultants) can facilitate the process, but it has to be led by the internal team.”

In recent past, many service sector companies have successfully seen the transition from being overloaded with papers to technology driven time-saving systems. In India, with government giving a go-ahead to private players in 90s, public sector companies felt the heat and started losing market share to private counterparts. The private companies implemented modern centralized core processing systems. Banking is one of many Indian industries where this transition holds true. Indian Post and Indian Railways are other two takers of this dynamism.

Banking & Finance

Public Sector Banks in India are the building blocks of Indian economy. Ironically, they had been deprived of all modernized systems till late 90’s. They offered the most basic services such as manual deposits and withdrawals as compared to a bouquet of services such as facility of ATM, 24-hour banking, E-banking, M-banking provided today.

State Bank of India is one such example which had undertaken a massive computerization effort to automate all it’s branches, implementing a highly customized version of Bankmaster core banking system. However, because of Bank’s historic use of manual systems void of centralization and problems in communication systems, it had to resort to decentralized system to start with. The need for reengineering arose because SBI along with other public sector counterparts started losing existing customers and were handicapped to tap the ever growing potential of middle class.

In 2000, SBI engaged KPMG for this overhaul and in 2002, KPMG recommended an IT driven systems to counter the private players’ led competition. To start with 3300 branches were selected for implementation which was later expanded to 14600 of SBI & affiliate branches considering unparalleled success. SBI planned to provide a single window system, better customer service, wanted to reach out to urban as well as rural population and control the customer switching along with many other objectives that it sought. The biggest problem that drove this restructuring for this Public sector giant was that since branches were not connected, the customer was a ‘Branch’ customer rather than a ‘Bank’ customer. Moreover Information Technology till now, was aimed only at Internal efficiency. Hence, it was planned to share operations for back-office functions and rework the workflows and processes.

Indian Postal System

BPR has aimed at radical improvements by means of elevating efficiency and effectiveness of the business processes that exist within and across department. The key for BPR is to look at business processes from a “clean slate” perspective and determine how they can best construct these processes to improve the way business is conducted. Department of Posts occasionally conducts workshops related to BPR involving the people such as Nodal Officers who are part of BPR strategy and implementation. India Post has been making several upgradations to existing systems and has started offering bouquet of services such as Money Transfers, One-stop bill payment (Telephone, electricity), Driving license renewals etc.

Speed Post, started by Department of Posts in August 1986 for providing time-bound and express delivery of letters’ documents and parcels across the nation and abroad, is the market leader in the domestic express industry.

Through ePOST service launched in 2004, customers can send their messages to any address in India with a combination of electronic transmission and physical delivery through a network of more than 1,55,000 Post Offices. ePOST sends messages as a soft copy through internet and delivered to the addressee in the form of hard copy at nominal charge of Rs 10 per A4 sheet.

ePayment is a comprehensive bill payment service offered by India Post to help meet the needs of the business customers. This allows collection of bills (telephone bills, electricity bills, university fee, school fee, insurance premia etc) on behalf of any organization. The collection is consolidated electronically using web based software and payment is made centrally through cheque from a specified post office. The payment information can be assessed online by the user.

Instant Money Order (iMO), the instant on-line money transfer service, provides speed, mobility, safety and reliability for money transfer. IMO is an instant web based money transfer service through Post Offices (iMO Centre) in India between two resident individuals in Indian territory.

Though the number of services offered is many, still huge gaps exist in quality as compared to international standards. To enable Department of Posts to achieve the business objectives of becoming the IT enabled complete service provider, Project Management Unit have been entrusted with the task of creating state of the art electronic network covering all its offices and all products and services including third party services and enable electronic transmission of information for conducting & monitoring operations, consolidating transactions data and generating an effective MIS. Business Process Reengineering groups were formed and their reports are being evaluated by concerned Divisions of Directorate, which would form the base to make the comprehensive IT strategy and roadmap for Department of Posts.

Indian Railways

It’s been long since computerized passenger reservation system was started by Indian Railways. Today the reservation related workload has increased manifold but railways have been able to manage the work without much increase in manpower. Different systems incorporated by railways includes-

Software Aided Train Scheduling & Network Governance – Main objectives of train scheduling are that it should be convenient to the passenger and feasible to run on the system. Introducing new train services and augmenting older ones is an art and a select group of planners are highly skilled in this task. Indian Railways have now started using information technology to aid the planning process.

Web Enabled Claims System – The world’s biggest employer, the Indian Railways, which earlier used to prepare various claim (Court/Accident) documents manually, has shifted to web claims format which maintains up to date database of all such cases. Thereby, eliminating complex file maintenance & providing for queries that gives the precise status of registered cases in Chief Claims Office.

Punctuality Module – This module was implemented in February, 2004. This module captures the delays involved in train running at interchange points and detention causes for the delays at the divisional level. Based on this input, reports are generated for traffic managers.

CONCERT – Country-wide Network for Computerized Enhanced Reservation and Ticketing – developed by CRIS, is a total networking solution to Indian Railways Passenger Reservation System. Seat Availability / PNR / Journey Planner / Fare / Time Table enquiries and e-Reservation of tickets are available on the internet.

Along with above initiatives, ATM integration with reservation/enquiry system is being planned as well. A number of Banks in India shall be issuing Reserved and Unreserved Tickets through their ATMs under an arrangement with Zonal Railways.

It is not only the old stalwarts who have reengineered. Even the private sector and novice companies in upcoming sectors have seen this change. For Spencer’s, RPG Group’s retail chain, massive ramp-up in operations necessitated a series of restructurings. The chain planned to increase from an area of 2.5 lakh square feet to 15 lakh square ft i.e. from 52 to 400 stores. This meant that the older systems were no longer adequate. Hence, instead of doing an incremental improvement on the existing processes, the company introduced an automatic replenishment system. This has resulted in decreased stockouts and increasing efficiency. It may be concluded that BPR initiatives have less to do with controlling costs and more about managing business, which underlines the importance of this concept.