The Case of a Business Reengineering Project Failure

1. The Company PubliCorp (a pseudonym) was a large civil engineering organisation owned by a local government in Brazil. The organization was initially established to act as an inspection body, and later to supply the high demand from the government for construction services. PubliCorp held a monopoly in its field. A threat, though, started to emerge. It came from the deregulation in the construction industry. The prospect of deregulation called for a radical re-thinking and reengineering of PubliCorp`s structure and business processes.

2. The Project PubliCorp hired two large consulting companies to join forces in two project teams. One team (OR) tackled the redesign of processes and structure, the other team (IT) was assigned the task of setting up a new Information Technology infrastructure, based on the redesign

recommendations of the OR team. The centralization of information systems in the central data processing department (CPD) was one of the problems identified. CPD served as a bottleneck to the many departments processing public bids and coordinating construction projects. The OR and IT teams decided to tackle this problem by downsizing applications from the CPD mainframe to a local area network. This was done within six months despite PublCorp`s staff had been incited by CPD and union members to boycott the new applications. The OR team had its work to re-engineer the core processes considerably hindered by the opposition. The team analyzed and modeled several processes with difficulty, which added uncertainty to the subsequent changes. Additionally, two pilot redesign attempts failed in the implementation phase, mainly due to lack of interest from staff. Another problem faced was that some redesign proposals foundered on regulations established by law. The process of setting up public bids for example, was analyzed and redesigned several times. Only slight changes in the process could really be implemented, without making the process prone to be contested by lawyers representing companies that had lost bids to others. Four years after it had started, the reengineering attempt was hailed as a successful Business Reengineering project by some, including the CEO, who believed he had taken over an old-fashioned organisation and turned it with the help of Information Technology into a modern one. Others regarded the attempt as a failure from a reengineering perspective. No radical changes had been effected,

the total investment being US$ 8 Million. Staff had not been reduced, despite that the number of construction contracts granted to PubliCorp had been reduced. This meant that even the increase in efficiency achieved in some processes, would not be really materialized.

3. Why did this Business Reengineering Attempt Fail ? The first reason was the leveling, by PubliCorp`s CEO, of political interests with objective goals. The second was the gradual shift of the focus of the OR team from core Business Reengineering to problem solving and automating existing processes. The third reason was the hiding of failure signs. This happened consciously at first, for selfpreservation. Later, though, this became unconscious and was reinforced by social facilitation

Root causes for barriers to Business Reengineering implementation success.

Relationships Between Potential Barriers and Potential Causes of Barriers

Hard Implementation Barriers

Hard barriers are those, which have to do with things and regulations. Soft barriers are people problems. Hard barriers can be further broken into Information Technology problems, resource problems and legal obstacles.

Information Technology software and hardware, which are not suited to support a process based organization can evolve as a barrier.

One typical resource problem is missing space for a work team to get together on a regular basis. Team-members, that are physically separated should have easy access to electronic communication equipment, such as teleconferencing.

Legal obstacles can turn out to be severe barriers, not only in Brasil. In Germany various federal and state regulations hinder several Business Reengineering projects.

For example is the Siemens corporation not able to reap as much success from its reorganization efforts as it originally planned for, because workplace regulations do not support work time flexibility (Siemens, 1996).

3.3.2. Soft Implementation Barriers

Soft barriers are people problems. People resist organizational changes.

Type A Resistance against Business Reengineering Implementation

Resistance of type A describes resistance against reasonable thinking and actions. Managers need to be aware of the four most common reasons, people resist organizational change. These include: a desire not to lose something of value, a misunderstanding of the change and its implications, a belief that the change does not make sense in the organization, and a low tolerance for change Type B Resistance against Business Reengineering Implementation

Resistance of type B describes resistance against power usage. Affected people don`t call themselves resisters and consider their resistance mostly as of type B. Resistance is an indirect way for subordinates to say NO to change .

Internal individual resistance describes people behavior in the organization not accepting the project contents and/or management.

Internal group resistance describes group behavior within the organization. These groups can be formally or informally organized. A group of electronic specialists for example may resist the plan of being split up into work teams where they have work side by side with mechanical personnel.

External resistance is being performed by people outside the organization. Customers, suppliers, the public may develop considerable resistance against plans which interfere with their interests. If a train company for example plans to replace service personnel with teller machines, this might cause severe resistance by the customers.