Business Process Engineering at IBM

Subject: Management
Pages: 5
Words: 1427
Reading time:
5 min
Study level: PhD

Background information

IBM is one of the pioneer companies in manufacturing of IT equipment. Information technology has advanced a lot over the years creating increased demand for technology equipments.

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Process reengineering measures and initiatives

IBM identified that there were problems in its supply chain of hardware in Europe, Africa and the Middle East markets. More staff members were drafted into specific units of the supply chain.

Conclusion

Reengineering of business processes is one of the most radical and effective method of dealing with change. Reengineering also goes a long way towards reducing costs and improving quality of service.

Business Process Re-engineering at IBM

The present day economic environment is very competitive and dynamic. A firm has to continually review its operations, processes and policies in order to align them with contemporary methods of doing business. The business environment being very dynamic, it is imperative for a firm to embrace change if it is to survive or even maintain the same influence that it has in an industry. The need to meet changing consumer needs and to find cost effective ways of operation has made business process reengineering a necessity that cannot be overlooked. Business process reengineering is the essential rethinking and revamp of processes in a business in order to achieve enhancement in current measures of performance such as cost quality and speed. This paper studies the reengineering processes in IBM, the initiatives taken, successes or failures and performance metrics.

Background information

IBM is one of the pioneer companies in manufacturing of IT equipment. Information technology has advanced a lot over the years creating increased demand for technology equipments. More and more firms have emerged to cater for the increased demand as technology continues to change very rapidly. IBM was founded on the benchmark of producing machines that are specifically meant for business. Many other firms have penetrated this industry and the result has been fierce competition for the ever-growing market share. To stay abreast with current market needs and maintain its position in the industry, the company has undertaken rigorous change in its processes.

IBM’s change diamond

Having witnessed many firms trying to embrace new methods and processes in their operations without any success, IBM decided to take a different approach. A detailed research was carried out on how change was implemented by over 1,500 practitioners. They then came up with four key insights that are imperative to the success of any change program. These four facets as explained below are called the change diamond.

  • Realism: Change programs recommended or undertaken must be realistic and within the companies reach.
  • Systematic approach: A systematic approach should be taken instead of trying to change processes rapidly and randomly.
  • Improve skills of employees: As the company changes processes, the skills of employees must also be bettered for them to adopt the new system (Steven Maclaughlin, 2007).
  • Right investment: For real change to be realized the company has to undertake the right kind of projects and investments. Proper research is very important if a firm is to succeed.

Process reengineering measures and initiatives

Improvement in the supply chain

IBM identified that there were problems in its supply chain of hardware in Europe, Africa and the Middle East markets. More staff members were drafted into specific units of the supply chain. This is so because it was noted that the supply chain from ordering of machines to final delivery to the customers was taking too long.

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  • Formation of a process optimization team

IBM has formed a team that is bestowed with the task of aligning processes in the firm to ensure efficiency and effectiveness. This team conducts periodic reviews of the internal processes of IBM in order to identify areas where change is needed in order to make appropriate recommendations. This redirects focus from functions alignment to process alignment hence yielding better cohesion in the operations of IBM.

  • Development of personalized pro active systems

IBM has realized that overreliance on codified IT based systems when instituting changes in business process is responsible for failure of new processes to materialize. To effectively drive innovation and inventiveness, a personalized system is preferable over a highly digitalized one.

  • Formation of an integrated supply chain team

An ISC team was formed to oversee matters concerning the supply chain. Their main function is to identify weaknesses in the supply chain and identify measures that can be taken to improve performance (Stephen Maclaughlin, 2007).

  • Establishment of a supporting management team and a cross functional management system

The main function of this team is to monitor and assess the viability of the changes that IBM has undertaken in its processes. This team acts as a link between IBM’s processes and the senior management by relaying periodic updates on the firms processes

  • Focus on people change

IBM not only undertakes reengineering in process and structure of the firm but also people change is taken into consideration. Staffs at IBM undergo constant training to improve their skills and instill a positive attitude towards change. This ensures that change is embraced and that members of staff are fully competent.

How does IBM measure the success of its initiatives?

After undertaking all these initiatives to reengineer processes in IBM and adopt contemporary ways of operation, how then can IBM measure its success?

Whether or not there has been a reduction in the time taken for oversees customers to order and receive machines (Sharp & Dermot, 2008).

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  • Attitude of members of staff towards change, whether positive negative or indifferent.
  • Cohesion of different processes and business units within IBM.
  • Innovation and inventiveness amongst members of staff.
  • Quality of services offered to employees and the general reputation of the firm.
  • Operational costs, have they soared or gone down?
  • Level of skills and competence of employees.
  • Communication between senior management and other workers with regards to changes undertaken, are the senior mangers receiving appropriate feedback?

Impacts of process reengineering measures

Due to the ongoing measures being undertaken by this firm to redesign its processes, IBM has witnessed significant improvement in terms of quality of service, cost reduction and cohesion of operations. Here are some of the impacts:

  • Employment of more people in the supply chain of hardware has shortened the procurement time and consequently boosted sales in its overseas markets of Europe, Africa and the Middle East. The supply chain is now more efficient as customers can receive their orders within a shorter period.
  • Development of personalized systems as opposed to highly digitalized ones has led to innovations hence facilitating changes that have proved to be cost effective.
  • The integrated supply team formed to institute changes in the ISC has been very successful. This team has that has seen the general procurement time of machines greatly reduce.
  • IBM’s focus on people change and not merely process changes has gone a long way towards improving the workers mindset towards change. It is the nature of human beings to repel change, through training and participation of employees, IBM has adequately prepared its workers for change.
  • The process optimizing team formed to align processes within IBM can be credited with the great improvement in cohesion of operations and goal congruency.
  • Senior management of IBM receive accurate analysis’ of all the change programs undertaken by the firm hence are in a better position to decisions that affect those programs.

Has IBM succeeded at reengineering its processes?

The main goal of any business process reengineering measures is to improve efficiency and effectiveness in the production and sale processes. In addition, reengineering is meant to enable a firm to keep abreast with modern technology and methods in order to remain relevant (Page, 2010). Reengineering processes at IBM have been very successful. This is so because the company conducted thorough research on change before attempting to institute any changes in its system. IBM is therefore equipped with information that enables it to undertake redesign in areas where it is specifically required.

Many firms do not achieve success in process redesign because they undertake change programs that are general o their industry instead of identifying their specific needs (Jeston & Nelis, 2008).

Conclusion

Reengineering of business processes is one of the most radical and effective method of dealing with change. Reengineering also goes a long way towards reducing costs and improving quality of service. This is a drastic method and must be thoroughly evaluated before a firm attempts to reengineer its process. Many firms unlike IBM have tried and failed to successfully carry out business process reengineering. This is so because this process requires a lot of time, resources and knowledge for successful implementation.

References

Jeston, J., & Nelis, J. (2008). Business Process Management. London: Oxford press.

Page, S. (2010). The Process of Business Process Improvement. New York: Amacom publishers.

Sharp, A., & Dermot, P. M. (2008). Workflow Modelling: Tools for Improvementand Application Development. Toronto: Wiley.

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Stephen Maclaughlin, R. A. (2007). Emerald management first. Emerald group publishing limited.

Steven Maclaughlin. (2007). Emerald management first. Emerald Group Publishing Limited.