Process redesign: is it worth it?

• Author: Selander, Jeffrey P.

Editor's note: Reprinted and adapted from Management Accounting, January 1999, with permission. Copyright retained by the Institute of Management Accountants. This article depicts process redesign in a business environment; however, the implications and applicability for governments are straightforward.

Just say "business process redesign" or "reengineering" and anxiety reigns. The CEO and his or her operations team agonize over which projects to staff and fund and for what period of time. Project team members worry about the degree of improvement and/or cost savings that management will expect for their project. The rest of the organization is wondering whether to anticipate failure or expect breakthroughs for any given project. And everyone is asking the same questions and sharing the same concerns: How much can we expect to improve? How long will it take? What are the costs/benefits?

Process Mapping

Process mapping, or flowcharting, is a quick, effective way to develop a picture of the specific activities occurring within an existing process. When a team maps its steps in a process from an "as-is" perspective, it gets a better view of the current process, and it can discover any flaws in a broken process. It also understands the intricacies and failings of that process.

So often project teams will overlook this crucial step of mapping the existing process. In their eagerness to fix a problem, they may deem it a waste of time. This is a big mistake. Without a good baseline map of the existing process that all team members understand, they cannot move forward in the right direction. At best, that causes delays and frustration. At worst, it can cost a company millions in wasted money, resources, and lost opportunities.

Debate is growing over the mechanics of how to do process mapping, but many software-platforms exist that can do the job. To produce maps, we primarily use flowcharting software where it is possible, to export the list of steps and their descriptions to a spreadsheet. The link to a spreadsheet enables the entire process to be quantified more readily. It is important to be able to enter process and cycle times for each step as well as work flow percentages through each step.

The process maps are formatted (sometimes these maps are called deployment charts) into horizontal bands to illustrate where and by whom an activity is performed. All activities that are performed with the customer (such as a sales call) are depicted in the top band. Activities performed by vendors are shown in the bottom band. This way the involvement by various constituencies can be isolated within the overall process. Exhibit i shows a sample process map and the types of information a user should get from each step.

Value Analysis

The next step is for the team to take the information it learned from the process map and conduct a value analysis. Using the process map as its blueprint, the team estimates the percentage of value a given process is providing to the customer. First, the team evaluates each activity on the process map individually and places it into the appropriate category. See Exhibit 2. Five of the categories are classified as non-value-added steps, and the sixth is considered value-added. The group should categorize each step using the following value-added test. If any of these questions can be answered "yes," the activity adds value and should be categorized as such.

* Is it linked directly to a customer need?

* Is the customer willing to pay for it?

* Does it bring you one step closer to a finished product?

* Is it linked directly to the functional mission?

If the answer to the preceding questions is collectively "no," most likely the activity is nonvalue-added and should be placed in...