RE-ENGINEERING PROCESSES AND PROCEDURES: STARTING HOTEL BUSINESS IN MALAYSIA aRE-ENGINEERING PROCESSES AND PROCEDURES: STARTING HOTEL BUSINESS IN MALAYSIA INTRODUCTION Obliterating non-value work process is one of the major challenges faced by managers today in their attempt to maximize customer value, while minimizing the consumption of resources required for delivering their products or services. As such many had adopted the reengineerinz approach in analysing and altering the basic work processes of their business, ‘Re-engineering or also known as Business Process Re-engineering (BPR) is the fundamental rethinking and radical redesign of business processes, It is concemed in designing business processes that are optimized. effective, meet customer requirements, support and sustain organizational developments and growth to improve efficiency and deliver greater productivity. In Malaysia, BPR has become one of the important management approaches as the advent of globalization has necessitated the strategic shift of focus to the business sector. In line with the nation’s aspiration to improve business performance. attract foreign investment and enhance national competitiveness. current business processes especially those specified under the Third Induetrial Master Plan (MP3) need: to be improved, BPR of those busines: processes is conducted within its political environment as it needs to consider the interest of the citizens at large and tmsset the demand of its stakeholders‘RE-ENGINEFRING INITIATIVE FOR HOTEL INDUSTRY ‘The touriams services are one of the sub-sectors preveribed under the services sector under the IMP3. of which, hotel industry is one of the main ‘components. The other sub-sectors include construction services, business and professional services, education and taining services, integrated Jogistic services, health services. distibutive trade services, and ICT ‘The World Tourist Organization forecasts that international arnivals worldwide are expected to reach 1.0 billion by 2010. Malaysia tourism industry is expected to benefit considerably from the growth of international travel. Tourist arrivals to Malaysia are estimated to reach 24.6 million by 2010. Comeqpondingly. tourist receipts are aloo set to maize RMS9.4 billion by that year. ‘The anticipated growth in this industry requires the expansion of ‘tourism related industries particularly the infiastructures and facilities. This, ie sleo im line with the govemment’s effort towards the enhancement of ‘Malaysia's position as a leading global tourist destination Taking this factor into account, the Malaysian Goverment is focusing on to further {facilitate the growth of the tourism industry by taking the efforts to examine its regulations and procedures so that these will be streamlined to reduce ‘bureaucracy and enhance efficiency ‘SHE AS-IS HOTEL INDUSTRY BUSINESS PROCESS ‘The task of re-engineering the as-is hotel industry business process was undertaken by Malaysian Administrative Modemisation and ‘Management Planing Unit @ MAMPU under the Prime Minister's Department. The project was initiated i 2006 based on the findings of a‘survey and complaints from the hotaliars of the difficulties and the duration ‘taken to complete the whole process of starting a hotel business. These factors among others had contributed to the cost of doing business and mpacted Malaysia competitive index. ‘The as-is hotel industry business process involved five stages, ‘beginning from the registration of the company that will operate the hotel constructing the hotel building, registration of the employer/employee, ‘getting common pre-operational approvals before commencing operations land obtaining addition:l approvals for specific operational fictions Based ‘on the asis process, the total time taken for complete approvals was 546 ‘days or approximately one and a half year. This involved acquiring 72 types of Hicanceslapprovals from 2 total of 22. agencies at the ‘Ministies Department: at the Federal, State and Local Authouities levels. This situation did not angur well for Malaysia tourism indhctey a= ‘did not only drustrate the local investors but also became a hindrance in attracting potential fireign investors. MAMPU realised that this re- engineering project wes a very challenging task but we were determined ‘and believed that it would be successfull based on our aspiration that the ‘changes that would be made could help gain our competitive advantage nepiring fiwther, contimons and real change in the hotel business industry ‘BUSINESS PROCESS REENGINEERING (BPR) METHODOLOGY BPR of the hotel industry business process adopts a holistic approach that covers andtond cycles of the business process The methodology used is shown in Diagram 1. Within this methodology ‘“MAMBPU had adopted the SIPPOCC principles to re-engineer the end-to ‘end business process of the hotel industry.Prioritize, Parallel, Outcomes, Centralized and Control. It uplolds seven, Principles that can be used in the re-engineering prose:s namely to cophire information once and at the SOURCE, to INTEGRATE information processing work into the real work that produces information, to identify all processes in an organization and PRIORITIZE them in order of redesion urgency, to link PARALLEL activities in the workflow instead of just integrating their results, to organize around OUTCOMES, not tasks, to treat geographically dispersed resources. as though they are CENTRALIZED, to put the decision point where the work is performed. and to build CONTROL into the process as to avoid time wastage ingetting approval from the top. These principles were used extensively in the designing of the to-be hotel induutny business process. Basically. the BPR methodology used imvolved four main pprocercas ctazes as follows ‘Documenting curent business processes: Evaluate potential improvements: ‘Develop chort ani long tena recommendatione: and Implementing and monitoring the recommendations. poop a. Documenting current business processes ‘Documenting accurately the as-is hotel business processes is a prelude to the plaming of the BPR effort. In this phase, an outline otistegy with strategic ond ambitious but achievable goal was drawn up based upon the cuzent business processes. Numerous discussions were held by MAMPU with selected agencies at Federal and State level, Local Authorities and hotel operators to understand issues and problems faced in setting up the hotel ‘bucinece. Prelininery data ouch ae the time taken to proces: on application, number of approvals needed and umber of agencies involved in giving approval were discurced. These infomuation and feedbacks were very crucial and pertinent in the ze-engineering effort as based or the information collected, an end-to-end business process was drawn up, b. Evaluate potentialimprovementsAt this stage, based on the information collected, the as-is business process was reviewed and evaluated for potential improvements, particularly to identify charectesistics of potential processes to be re- ‘engineered. Three main characteristics used by MAMPU in the ‘evaluation are as follows: i. Dysfunctional: Which processes aze in deepest trouble (ost ‘woken or inefficient)? ii, Importance: Which processes have the greatest impact on the ‘company’s customers? iii, Feasibility: Which processes are curently most likely to be successfully reengineered? ‘The characteristics used acted as a guideline in determining which process is relevant and highly effective to be reengineered In ‘tandem with this, MAMPU had studied all the processes and procechues involved im setting up hotel basinese and recognized several aspects that were wosth improving. ‘Develop chort and long term recommendation: ‘The design of the improved business process is based on the seven ‘BPR principles represented by an acronym SIPPOCC. Based on these principles, it is paramount that all information sequined in processing hotel application is captured at the source-beginning As ‘such, it is important to identify the relevant information required at ‘he begining of each business process. The information collected is 6then integrated in the processing work to produce information required m making decision. These processes were then prionitized in order of redesign urgency and where possible its activities are linked parallel in the work flow. Finally, to avoid time wastage in getting approval. decision pout is introduced where the work ave performed and build control to prevent abuse. All the redesign process nmst be ‘organized around outcomes and not task. At this stage, fimther discussions and deliberations were conducted ‘with relevant agencies, hotel associations and hotels operators to seek their feedback on the feasibility of the proposed recommendations. ‘The proposed improvements which include reduction im time taken for approval and number of approvals required would be tabled for further deliberation and consideration before its implementation take place Upon agreement by all parties involved. a mew business process will be designed. <4. Implementing and monitoring the recommendations. ‘The implementation of the new business process is monitored and measured to ensure i achieves its desired goals and outcomes. In relations to the proposed BPR process. hotel operators through their respective associntions are also encouraged to give geedbacks om the amplementation effectiveness of the newly desigmed business processes. Based or these feedbacks, MAMPU reviewed and re evaluated these procerse: for Sahure improvement, ifnacescary.IMPROVED PROCESS OF HOTEL INDUSTRY “While maintaining the 5 stages in the improved business process, the re-engineering effort has delivered a dramatic amprovement in the overall process. The total time taken for complete approval has been reduced from ‘S46 days to 166 days. The mmaber of approvals required has been reduced fom 7? to only 44. These improvements have been made possible, among others, by stealining the work procestes, D &) Beauty salen; 1) Shops selling newspapers. books, postcards, films, cigarettes and souvenirs: and m) Advertisement board ‘To further assist hoteliers. hotel rating ranging from 1 Star to 5 Star are being used in issuance of the license The introduction. of the new ‘comporite license baced on the star rating of hotel lias eased the burden ‘of hoteliers as all the activities under the rating are standardized As such, if a hotel is being rated as a 5 stars hotel, then the hotel will have all the licenses stipulated for a 5 star hotels, These procedures reduce ‘the requirement for the hotelier to apply for new license each time new ‘business activities are added to the hotel as all the Licenses required are being integrated imto one. This is another example how the parallelization and integration principles under SIPPOCC are being used for this proposal. Langer Validity of Licences Period Prior to BPR, the validity of business licenses is only for one year and ‘expires on 31” December each year regardless the issuance date. Such policy creates umecessary burden to the hotelier. With BPR, hotelier now has the opton to apply License for 1 to 3 years. This is made possible by amending the by-laws relating to the trade, business and Rindustry of the Local Authorities. In addition, the validity period shall start fiom the date of application and expires on the same comespending date the following year(s). Apart from zeducing the ‘queues at the end of every year by spreading the renewal process ‘throughout the year, it also reduces the mamiber of times business needs to renew their licenses. This is another example how the outcome and ‘control principles under SIPPOCC are being used for this proposal. 4. Inmediate Commencement of Business Prior to BPR hoteliers may only start their operation upon approval of premises licenses The issuance of these lioanses may take between 1 fo 21 days and in some cases may extend to a month. This has caused hotelier to suffer dom loss of potential revenue With BPR. business ‘con commence immediately after receipt of aclnowledgensent fiom the respective agencies. Business licenses will then be issued within 7 days from the date of application The hotelier will also be given 60 days seprieve time, allowing them to AU dhe requirements imposed by the respective agencies, failure of which would result in revocation of the license. Thic new procedure is less burdening and can acculturate the ‘concept of self regulation among business commit. [BPR has climinated the clementary bureaucratic processes in the application of business licenses as immediate approvals were made possible. ‘The mew and improved process reduces time and costs which Later resulted in increase of customer's satisfaction. This is also another example of how ‘the seventh principle of SIPPOCC is applied where decision point are put swhare the work: ie performed and control by means of compliance. are build into the process, BEXTERNAL BARRIER “Making changes is 1 demanding process. It took MAMPU about ‘one year to complete the tad: of re-engineering the hotel industry business process, Net only ha it enriched our experience but the bomier ond ‘obstacles that we faced have taught us a lot when dealing with diversities and paradoxes. ‘As BPR deals with dramatic and radical change. the Arst bamtier that swe faced is resistance to cLange by process owner. As the as-is business process had been used for quite a long time. most process owner felt that ‘there is no requirement for them to change. To them the aris business ‘process had served them well and are still relevant in delivering the services required by the hoteliers. Much of this resistance is caused by lack of awareness and the realizetion that all business process need to be reviewed ‘and improve constantly to semain relevant and competitive. In. resolving this impasse, MAMPU had to disseminate knowledge on the relevancy and benefits of BPR and compliment with suitable and adequate BPR techniques as to enhance their awareness, chill and competencies. Ou the same note, change management initiatives are also implemented to ease the anigration to the new business process. “The second bamer that MAMPU faced was to deal with three different levels of authority, namely Federal Level, State Level and the Local Antharities Ac mentionad earlier, MAMPIT had caninated and ‘comroborsted with a total of 22 agencies that were involved in approving various kind of licenses. With such diversity, getting them to agree in implementing the proposed smprovements is an archon tack as all of them Ihave different sets of priorities and maudates to be casried out. As for the Local Authorities, this is further compounded by the fact that they have different sets of work procedures which are governed by different sets of “4by-laws. Failure to appreciate the business processes beyond their own intemal basinaro process ie one of the reasons why most ageucies re reluctant to accept and change thelr business processes. Improvement to ‘business process shouldn't be confined to the vertical aspect of the process Gatra-agencies) but must also include the horizontal aspect of the process Gnter-agencies). Such vision will not only transform the intemal process bout also help to esse and faclitate the business process dlow fiom one ‘agency to another agency. In other words, BPR nist not be dane im silo, but must take into consideration the effect and impact our own business process to the next receiving agency ‘The third and the last barrier MAMPU had to resolve was to deduce ‘the correct scenario of the aris hotel industry business process based on the information and feedbacks collected As these information and feedbacks ‘were gathered from both govemment agencies and the hoteliers (private sectors), there were instances shat these information and feedback were ‘conflicting. thus giving an opposite impression of the scenario. Differences in objective and priorities by both parties conmbuted to the various aticulation of the as-is business process scenario, While most of the goverment agencies felt that there is nothing wrong or inadequate with the seis businese process, the private sector are fill of complaints on the weaknesses of the as-is busines: process. This is understandable as private sector are more concemed with setting their business with ease but ‘government agencies have the responsibility to protect the well being of the society in which the business is set up. To resolve these conflicting views, MAMBU had to impress upon all parties involved that the hotel industry ‘business process re-engineering is for the benefit of the nation. As such, all patties involved mst collaborate and cooperate with each other in order to achieve the best for the nation. society and hoteliers. Government agencies snnitt act accordingly to facilitate in setting wp the business and in retumhhoteliers need to abide and respect the laws that protect the socisty within its vicinity, CONCLUSION, BPR is a continuous process. As such. its implementation and ‘effectiveness must be monitored and reviewed constantly. This isto ensure ‘that the improved process achieved its desired objective of starting up hotel industry in Malaysia. The improved business process of hotel industry is stil at early stage and MAMPU is taking every effort possible to msure the improved business process will have positive impact among potential investor and thus improved Malaysian competitiveness. 16