Every Manager's Guide to Business Processes: A Glossary of Key Terms & Concepts for Today's Business Leader

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Summary: Outstanding executive summary, readable, insightful
Review: The fundamental role of information technology (IT) in the identification and transformation of business processes is clear in this outstanding contribution from Peter Keen and Ellen Knapp. This concise work serves to promote the dialogue between the IT staff and the business experts. It communicates powerfully like a well-written executive summary. Although it reviews in a critical way and consolidates gains in the task of coordinating business processes undertaken by total quality management (TQM), business process reengineering (BPR), the learning organization, time-based competition (and a host of related -isms), at another level it provides a breakthrough way of looking at old things in new ways. "It is because there are so many approaches to coordinating business processes, with information technology a major enabler of dramatic change, that so much of the process movements' ideas seem at once old and new" (p. 23). That breakthrough is entitled the "business process investment" framework (p. 30ff.). It is a framework for a conversation between the IT and the business roles and functions in the modern firm. If any doubt existed as to the fundamental significance of the business - IT conversation, then the references in this work on client-server, groupware, electronic data interchange (EDI), image processing, (computer system) integration, and UNIX, will put to rest any question as to the salience of the task. As usual, IT is the "enabler," the catalyst, the provider of infra-structure. For example: "Image processing joins client/server computing and groupware as a core technology for process innovation. It does not create but rather enables many forms and degrees of innovation that are simply not possible when physical documents drive the process" (p. 125). The inquiry undertaken by Keen and Knapp aims at solving what they call the "process paradox" (p. 165). Major business process reengineering efforts fail to furnish value-added, bottom line profits, in spite of being successful technically and even organizationally. That is the paradox: great benefits, no value-added. The resolution: the wrong processes were reengineered. A fundamental distinction exists between "...getting a process right and getting the right process right" (p. 165). But how do we tell what are the right processes to get right? The short answer is to distinguish "identity processes," which are a lot like "core competencies" (what a company does best), from "liability and background processes". An identity process is what makes a company what it is. For example, the guaranteed on-time delivery for Fed Ex; product innovation for 3M; Nordstrom's customer service; Managed Care in health insurance. In each case, the process stands for the company. That is the process into which development effort should be committed. What should be done with the other processes? If they can't be stopped, e.g., because they are mandated by law or the IRS, then they are candidates for out-sourcing. Find a company for whom the preparation of the candidate (liability) back-office process is an (asset) identity process. Then contract with them to do the (now out sourced) job. The success of ADP in processing payrolls for firms of all sizes is an example of this. "...Tax reporting and accounting are background liability processes for British Petroleum but identity asset processes or the Big Six accounting firms" (p. 49). This defines a "win-win" situation. Likewise, you can be sure that IT is a major cog in the mechanism generating this success. Implicit in the solution of what might be called the asset - liability process accounting equation is a detailed analysis of how the economics of processes add value to organizations. As usual, the genius is in the details. And Keen and Knapp provide plenty of them. One significant spin that is nowhere else available is to distinguish a process as a workflow from one as a coordination cost. The latter in particular is where IT shines and can make a significant difference. "Information technology is transforming coordination costs" (p. 22). Time after time, Keen and Knapp display a sophisticated understanding of the role of information as a strategic asset in the life of the organization. The argument is that companies exist at all because at particular times and places the coordination costs of goods and services are less than the transaction costs. That is, a firm can organize internally to coordinate processes to produce a good less expensively than it can purchase that good by means of a transaction in the market. IT is the fulcrum of this production lever: "...Information technology affects what is most fundamental to organizations: coordination costs versus transaction costs" (p. 21). From yet another perspective, Keen and Knapp offer a wealth of insights and new ways of seeing old things. For example, they cite the work of Nobel laureate Arno Penzias on information theory. Their Penzias Axiom is that anything that comes between the customer and the computer system that will completely fulfill his request will be removed (p. 157). When IT reduces the cost of obtaining the information needed for decision makes it promotes centralization; when it reduces coordination costs for customers and suppliers, it encourages decentralization (p. 74). Identify sources in telecommunications and computing technology of "discontinuities" that "change the rules of competition" (p. 90). Examples of this kind can be multiplied greatly. The subtitle of the work, "A Glossary of Key Terms and Concepts," sounds as though the book can be used as a reference. That is true. The harried business or technology manager or senior analyst can profitably dip in and out, and usefully follow the "see also" cross-references. Be aware, however, the alphabetic organization of concepts sustains a thematic and narrative coherence that fully supports and deserves a cover-to-cover reading. That in itself is a remarkable accomplishment in the context of an already break through contribution to the process development literature. --excerpt from my published review in COMPUTING REVIEWS, December 1996