Business Reengineering in Higher Education: Promise and Reality Copyright 1993 CAUSE. From _CAUSE/EFFECT_ Volume 16, Number 4, Winter 1993. Permission to copy or disseminate all or part of this material is granted provided that the copies are not made or distributed for commercial advantage, the CAUSE copyright and its date appear, and notice is given that copying is by permission of CAUSE, the association for managing and using information resources in higher education. To disseminate otherwise, or to republish, requires written permission. For further information, contact Julia Rudy at CAUSE, 4840 Pearl East Circle, Suite 302E, Boulder, CO 80301 USA; 303-939-0308; e-mail: jrudy@CAUSE.colorado.edu ************************************************************************ This file contains a Viewpoint article, "Business Reengineering in Higher Education: Promise and Reality," by James H. Porter, and its accompanying commentary, "We Must Apply the Principles of Business Process Reengineering in Higher Education," by Mark Olson The following Viewpoint is based on a paper written earlier this year and presented at the CUMREC meeting in May. The views were expressed to elicit discussion; they are not necessarily the views of the University of Chicago. ************************************************************************ BUSINESS REENGINEERING IN HIGHER EDUCATION: PROMISE AND REALITY by James H. Porter Over the past few years business managers have been told to obliterate, reengineer, transform, break[1] and do all sorts of things to their organizations. Should we be doing the same things within higher education? In this Viewpoint article, I take the position that business reengineering has not yet been applied within higher education institutions and, for the foreseeable future, will not be applied to a major university. In addition, process redesign, a specific step in the business reengineering process, should not be applied in most of our institutions of higher education. There are, however, significant changes and improvements we can make to integrate and improve our administrative processes that should be aggressively pursued. Reengineering in business vs. reengineering in higher education Business reengineering can be defined as: ... the fundamental rethinking and radical redesign of an entire "business system"--the business processes, jobs, organization structures, management systems, and values and beliefs--to achieve dramatic improvements in critical measures of performance[2] While the process described in this definition may apply to business organizations such as, say, manufacturers of electric toasters or cold cereal, business reengineering's application to higher education is not clear. If we are to reengineer our universities, what jobs, organization structures, and management systems do we radically change? What are the critical performance measures that will dramatically improve? To answer these questions, it may help us to compare a "business system" to a similar model of a "higher education system." One widely accepted business system model is Michael Porter's Value Chain (see Figure 1).[3] One interpretation of Porter's Value Chain is that the primary activities listed across the bottom, taken together, comprise the business processes of an organization. [FIGURE NOT AVAILABLE IN ASCII TEXT VERSION] A comparable model of a research university (see Figure 2) might substitute education and research as the primary activities, since they represent the core mission of such higher education institutions. In other words, education and research are the business processes in research universities. In addition, such a model might substitute general, student, and research administration for the support activities. (A colleague, who will remain nameless, suggested that the education business process be divided into three primary activities: recruiting, awarding degrees, and soliciting donations.) We can represent the business processes and support activities indicated in the university value chain model in a perhaps more meaningful format by organizing them into three tiers, as suggested in Figure 3. If we accept this three-tier model as a valid representation, then applying business reengineering implies a top- down transformation of all three tiers. To reengineer the university-- or any other organization--we ask, "What business are we in, and what business should we be in? Who are our customers? What products do they need? How should we be organized? What technology do we need to support our radically changed mission?" To answer these questions, we first would rethink the university's mission, including its core business, customers, and markets. We would then examine the environment, competitors, and market conditions. We then, according to business reengineering theory, might develop a vision of the university as a different organization. Maybe we should do away with the students and become a research-only institution. Maybe we should throw out the students, researchers, and administrators and go into real estate development. Or maybe we should ... Sure! Propose taking such actions to the trustees, faculty, and alumni of any major research institution and you will be fired, committed, or worse; however, some institutions--notably certain small private and community colleges--have taken reengineering-like actions, due to competitive or survival threatening situations (several such examples are presented below). An analysis of these few data points suggests that there may be a correlation between size and type of an institution and its propensity to reengineer, that is, small, private, and community colleges are more likely to reengineer than public and research universities. As university administrators, what does this model mean to us? It suggests that if we are on the staff of a major research university or public institution that is not in serious trouble, we are probably wasting our time to propose business reengineering. The model also suggests that if we are in a small, private institution or community college, and we are under severe financial or marketing pressures, reengineering may be our key to survival. Business transformation In theory, you do not have to make fundamental changes to the institution to take advantage of reengineering concepts. Reengineering is, according to some, the culminating phase of a multi-phase process. One such multi-phase process, presented in Figure 4, comes from MIT's Sloan School of Management.[4] We will refer to this model, which takes an information technology perspective, as the MIT 1990s Transformation Model. Levels 1 and 2 of this model are evolutionary and will result in incremental changes to existing processes. Level 1: Localized Exploitation --The use of computers to improve the efficiency of one business function. Examples include deployment of stand-alone student systems, financial systems, and human resource systems, which are frequently from different vendors, written in different languages, using different databases, and sometimes operating on different hardware platforms. Departmental shadow systems--which locally duplicate data from other systems--are another example of localized exploitation systems. While users across an institution may use these systems for transaction input and inquiry, local efficiencies and local control are the real goal of local exploitation systems. This is the current status in many if not most of our institutions. Level 2: Internal Integration --The interconnection of business activities through a common technological base and shared organizational vision. Level 2 organizations experience efficiency and effectiveness through cost reductions, the creation of value-added services, and improved information availability for decision-making. Organizational responsibilities are typically adjusted to take advantage of new capabilities. Few of our institutions are at this level. Most projects currently reported in the university trade press under the rubric "reengineering" and "process redesign" fall into the Level 1 or Level 2 categories. Levels 3, 4, and 5 in the MIT 1990s Transformation Model are revolutionary and will result in fundamental changes to existing business processes and supporting organizations, with both potential benefits and degree of resulting business transformation increasing as we move to higher levels. Level 3: Business Process Redesign --The redesign of business processes to take advantage of the enabling powers of information technology. This will result in redesigned organizational roles, reporting relationships, and managerial responsibilities. Even if we limit applying this level to only the "enabling technology" and the "administrative processes" tiers as seen in Figure 3, this level will be difficult to achieve by a major university because (1) the need to redesign our administrative processes has not been demonstrated, (2) the benefit from redesigning our administrative processes is not known, and (3) the organizational and management support required to redesign our administrative processes will be difficult to gain. (Remember, according to this model, most of us are at Level 1 and most of the systems and organizational projects we are currently implementing would be placed in Level 1 or Level 2 categories.) Level 4: Business Network Redesign --Inter-organizational integration through inter-company networks, electronic data interchange, etc. Examples include linking multiple companies' manufacturing and inventory records so that, say, a seat manufacturer knows the production schedule of a car manufacturer and can get the right color and style of seat to the production line "just in time." There is no equivalent requirement for network redesign, as defined, in higher education. Level 5: Business Scope Redesign --The redefinition of an organization's mission through the capabilities of information technology. When reengineering is applied in the corporate world, it may lead an organization to getting out of its old business or adding new businesses, such as selling information as a product or offering other value-added services. In higher education, if we get out of the education and research business, we are no longer in higher education. The MIT 1990s Transformation Model presents a dilemma in that the definition of business reengineering presented at the beginning of this article would fall somewhere between Level 3 and Level 5 (Level 4 should be ignored). Likewise, the definition of process redesign we are using falls somewhere between Level 2 and Level 3. One point the reader should note is that there are different levels of business transformation--and that process redesign and business reengi-neering are not the same activities. Process redesign is required to achieve business reengi-neering; however, business reengineering is not required to apply process redesign to an organization. Change options Given that most organizations are probably at Level 1 of the MIT 1990s Transformation Model, how can we proceed to change our organizations? Several possible approaches are presented in Figure 5. Using the three-tier model proposed in Figure 2, the MIT 1990s Transformation Model, and the change options outlined in Figure 5, our alternatives include: * Change the middle tier Change the enabling technology by, say, installing a new computer application. This can be accomplished without disturbing the other two tiers. Indeed, many organizations insist that new administrative application systems must not change current administrative processes. This is a Level 1 approach. * Change the bottom two tiers Level 1 change--install a computer system or make organizational changes to gain efficiency in one area or department. Shadow systems developed by, say, a unit, division, or department are Level 1 projects, as are financial, human resources, and student systems that are not integrated with other administrative systems through a common architecture and database. Level 2 change--integrate the current administrative processes using a common technological base and shared organizational vision. This will usually result in technology-driven change and will redefine some administrative organizational responsibilities. This is the path most universities should take--and are taking--no matter whether they call their effort a reengineering, transformation, redesign, or whatever project. Administrative process redesign--redesign the administrative processes. If the administrative processes can be redesigned, the result will be changes in the technology and process tiers--but no major impact on the top tier. True administrative process redesign will be difficult to achieve in a university, due to lack of support, opposition by vested interests, and limited demonstrated realizable benefits. Most universities should use the evolutionary, Level 2 approach. * Change all three tiers Reengineer the core business processes--education and research-- and all supporting organizations, including redesigning the administrative processes. This will require Board of Trustees and faculty support that will be impossible to achieve in most universities. In the MIT 1990s Transformation Model, Level 2: Internal Integration is the transformation activity applicable to most of our institutions. It allows us to take advantage of the enabling powers of information technology without significantly threatening the mission- related activities of the top tier that might result from reengineering, or invoking the resistance resulting from organizational changes that would result from administrative process redesign. Reengineering experiences in higher education There are no examples in the literature of business reengineering, as defined in this article, being applied within higher education. I can find no documentation of a university that has gone through a classic business reengineering process.[5] Some institutions have reportedly discussed reengineering and others have taken reengineering-type actions due to financial or other pressures. Business reengineering-like examples reported in the press include: * Small colleges, especially private institutions, are merging with larger colleges. For example, Mundelein College and Mallinckrodt College merged with Loyola University. Between 1988 and 1992 over thirty mergers were completed.[6] * Tougaloo College, under the leadership of its president, pulled together faculty, alumni, and administrators to establish a strategic plan to address serious financial problems. One action Tougaloo took was to lease college-owned property to businesses wishing to expand[7] * From 1985 to 1990, St. Mary of the Plains College operated a vocational training program in conjunction with a truck-driving school. High student-loan default rates by students in the vocational program are a major reason the college closed in June 1992[8] * Columbia University's Martin Meisel, member of a strategic planning committee consisting of administrators, faculty, and students, was quoted by the New York Times as stating that "What might emerge [from the planning process] is likely to be a different institution." However, Columbia's president, Michael Sovern, is quoted in the same article as saying "I don't think that the changes are likely to be the sort that anyone outside the institution will see."[9] (It will be interesting to see how these differences are resolved.) * Numerous community colleges have added traditional and non- traditional programs to meet specific local needs. Possible administrative process redesign examples are easier to find. CAUSE, for instance, surveyed its membership in August of 1992 with the following Readers Respond question: "Has your IT organization engaged in any reengi-neering projects on campus, i.e., looked at ways to make administrative processes more effective and efficient and to incorporate information technology into these operations?"10 The question, as phrased, reflects the existing confusion over the differences between business reengineering and process redesign that this article is attempting to address. The five projects highlighted in the Fall 1992 issue of CAUSE/EFFECT would be classified as Level 1 or Level 2 projects using the MIT 1990s Transformation Model. Four of the reported administrative process redesign efforts are summarized in Figure 6. Another administrative process redesign example is a major system implementation project at Columbia University. This activity was reported in Computerworld under the title, "Assignment: Reengineering."[11] While the author used the term "reengineering" to describe the ambitious undertaking at Columbia, what is described in the article is an administrative process redesign project which would be classified as a Level 2 project in the MIT 1990s Transformation Model. Reengineering in the business press: title inflation One problem we have in separating business reengineering efforts from traditional system projects is caused by the business press. Take, for example, the following scenario based upon imaging: Imaging is a technology that will receive much press coverage over the next few years. Most imaging applications are put in place to: (1) route electronic copies of forms for review, action, or approval, (2) track the status of these forms, and (3) provide electronic filing and retrieval of these forms. The forms used in an imaging application are about the same as the pre-imaging forms. The people reviewing the forms are the same people who reviewed the paper forms. The same decisions are being made. If the unit using imaging were placed in a black box, the outside world would notice little difference. The only indication that imaging was being used would be faster decisions coming out of the box and more money being sucked into the box. This is an example of a Level 1: Local Exploitation application of technology if there ever was one; however, you can be sure that any article covering imaging will declare the project to be a reengineering project. Conclusions and recommendations In my investigation of reengineering in higher education, I felt kinship with a cryptozoologist looking for Sasquatch or the Loch Ness monster. A cryptozoologist, in searching for these possibly mythical beasts, considers "... reports by eyewitnesses or indigenous peoples; descriptions in folk stories, travelers' accounts, old manuscripts and legends ... ."[12] As a cryptoreengineerist, I have talked with indigenous university computing peoples, listened to folk stories (presentations at conferences) and legends (from vendors), and reviewed old manuscripts (articles in the trade press), and have yet to find business reengineering in higher education. Maybe someday, someone will capture a real live higher education business reengineering specimen. Is there anything wrong with using the terms "reengineering" and "redesign" if we are actually engaging in Level 1 and Level 2 projects? If it helps you to sell the project to management or if you feel better about having a project with "reengineering" or "redesign" in its title, by all means, use the terms; however, if you really believe that you are going to significantly change your university's business or its administrative processes, or you are setting management's and user's expectations for important and major changes, you are in for serious problems. As the administrative and technology professionals in our respective institutions, we must be careful to understand what is implied as we consider applying concepts from the corporate world to higher education. Sometimes we lose our perspective and assume that the administrative processes we support are the institution. Business reengineering has had a major impact in the corporate world but will not be applied within our universities--except in an institution in serious trouble. Administrative process redesign should not be attempted, since there is no demonstrated need, no documented benefit, and no organizational support for such an effort. Rather than attempting business reengineering or process redesign, we should focus on achieving Level 2: Internal Integration described in the MIT 1990s Transformation Model. Let us use information technology to help the administrative organizations we have in place achieve their potential before we attempt major changes through redesign or reengineering. ======================================================================== Footnotes: 1 Michael Hammer, "Reengineering Work: Don't Automate, Obliterate," Harvard Business Review, July-August 1990; Dorine C. Andrews and Susan K Stalick, "Business Reengineering," American Programmer, May 1992; Richard L. Nolan, "What Transformation Is," Stage by Stage, September- October 1987; Robert Kriegel, If it Ain't Broke, Break It (New York: Warner Books, 1991). . 2 Michael Hammer and James Champy, "What is Reengineering?" Information Week, 5 May 1992, p. 10. 3 Michael Porter, Competitive Advantage (New York: Free Press, 1985), p. 37. 4 Michael Scott Morton, The Corporation of the 1990s: Information Technology and Organizational Transformation (New York: Oxford University Press, 1991), pp. 122-158. 5 In addition to searching the literature, we corresponded, via e- mail, with authors who have in the past addressed reengineering in higher education, and we also surveyed several e-mail-based special interest groups including discussions on TQM, executive information systems, and data administration. The requests were personal and contained no indication that information provided might be included in a paper on the subject; therefore, the responses are considered private. I believe it is fair, however, to state that no person responding could guide me to an example of business reengineering in higher education. 6 Karen Grassmuck, "More small colleges merge with larger ones, but some find the process can be painful," The Chronicle of Higher Education, 18 September 1991, p. A1. 7 Scott Jaschik, "In tight economy, Tougaloo shows how black institutions can use strategic planning to aid their special missions," The Chronicle of Higher Education, 2 October 1991, p. A1. 8 "Financial problems force college to close in June," The Chronicle of Higher Education, 4 March 1992, p. A6. 9 Anthony DePalma, "Short of Money, Columbia U. Weighs How Best to Change," The New York Times, 25 May 1992, pp. 1, 18. 10 "Readers Respond," CAUSE/EFFECT, Fall 1992, pp. 49-50. 11 Melinda-Carol Ballou, "Assignment: Reengineering," Computerworld, 9 November 1992, pp. 71, 73. 12 Peter Monaghan, "Cryptozoologists defy other scientists' skepticism to stalk beasts found in legend, art, and history," The Chronicle of Higher Education, 10 February 1993, pp. A7-A9. ======================================================================== For further reading: Readers interested in additional literature on business reengineering and process redesign are referred to the bibliography contained in "Reengineering: A Process for Transforming Higher Education," CAUSE Professional Paper Series, #9, by James I. Penrod and Michael G. Dolence (Boulder, Colo.: CAUSE, 1992). The paper contains an in-depth discussion of business reengineering concepts in the literature; however, the paper does not recognize that process redesign and business reengineering are very different activities. ************************************************************************ James H. Porter is Associate Director, Administrative Information Systems, at the University of Chicago. He is responsible for administrative systems planning, end-user training and support, and consulting services. Prior to joining the University in 1988, he was an information technology consultant in private practice. ************************************************************************ The following commentary accompanies the Viewpoint article by James Porter. CAUSE/EFFECT invites readers to share their perspectives through Viewpoints, and welcomes responses in the form of Letters to the Editor. Address your comments to the editor in care of the CAUSE office in Boulder, or to jrudy@ CAUSE.colorado.edu WE MUST APPLY THE PRINCIPLES OF BUSINESS PROCESS REENGINEERING IN HIGHER EDUCATION by Mark Olson When asked to write a commentary on Jim Porter's viewpoint that higher education is not a candidate for applying current business and corporate management theory regarding business process reengineering (BPR), I was indeed pleased. For Porter's argument must be read against a "reasonable man" theory, and its readers should pause to consider its troubling consequence if taken as a prescription for the decade ahead. Reading our own "corporate" texts, from The Chronicle of Higher Education to Change magazine, we are endlessly aware of the dire conditions and serious problems facing our institutions. These are indeed challenging times, times that demand our engaging in the rigorous analysis and redesign of our fundamentally broken business processes, and they demand new paradigms, new methodologies, tools, and theory such as we find in the reengineering and total quality management approaches. As I read Porter's argument, the central thesis of his viewpoint is that by definition, reengineering changes core processes fundamentally, and since our core processes are teaching and research, which he argues we do not wish to change fundamentally,1 we cannot logically do reengineering. My response is thatthis too-limited definition of reengineering ignores a key point. One of BPR's most- cited cases of reengineering involves Ford Motor Company's reengineering of its purchasing operations, saving hundreds of positions and providing great cost savings. Yet, Ford Motor Company still makes automobiles. Reengineering does not require changing our basic business objectives and mission. Higher education can, and must, in my opinion, reengineer most of its business processes to face the extraordinary challenges and opportunities of the 90s, and it will do so and still be in the education and research business. At Columbia, we are in the midst of a formal BPR pilot project, although we have informally reengineered many processes, from financial aid file management and registration to the entire delivery of student financial services and student systems support and management. Our sixteen-week BPR project, with the assistance of Coopers and Lybrand's consultants trained in quality tools and theory, is giving us techniques, tools, and methodologies to carefully and thoroughly redesign many, many "broken" processes. Faced with year after year of reduced budgets, inflating fringe-benefit charges, and demands for increased and improved support services, we have no alternative but to fix that which is broken. Fortunately, we do have extraordinary technological breakthroughs and advances to assist in our reengineering. Enabling technologies have emerged at just the right time, just in time. We are measuring outputs, mapping detailed steps in processes, costing current practices, and by thinking "outside the box," delivering new ways of doing business, using image, voice, and client/server technologies where applicable. Organizational structures have changed as well, as with our recent elimination of the bursar position and office--and we do things differently[2] Certainly higher education is not corporate America, and our distinctly not-for-profit mission, our core education and research mission, will not change fundamentally. But like our corporate counterparts, we face the challenges of competition, of rising costs, deteriorating facilities, the political realities of reduced government support and increased taxation, and of urban decay and unemployment, violence, and prejudice. Our challenges demand new responses-- reengineered ways of doing business--and BPR offers one model, one that must be considered. Buzzwords aside, rhetorical flourish and hyperbole ignored, the bottom line is that higher education is in trouble, and I believe that we must respond aggressively to meet the challenge, through change and dramatically reengineered ways of doing business. ======================================================================== Footnotes: 1 While my focus in this commentary is on administrative processes in higher education, many people are looking to new technologies to radically change the classroom, pedagogical tools, and instructional delivery, i.e., "reengineer" the teaching and learning process. 2 Porter mentions a New York Times article about Columbia's strategic planning process and changes that might or might not emerge. In fact, our new president, George Rupp, has brought many significant changes, in academic governance and priorities, with the appointment of three new deans/vice presidents, the separation of financial and administrative responsibilities, and fundamental shifts in the role of undergraduate education. The University is being reengineered from the top, call it what you will! ************************************************************************ Mark Olson is Deputy Vice President, Student Administrative Services, at Columbia University, responsible for academic records and registration, career services, student financial services, and student information systems. He has been dedicated to reengineering student services at Columbia for the past 3-1/2 years. ************************************************************************