Reflections on Reengineering

The sad news of the death earlier this month of Michael Hammer, the author, professor and analyst who made the concept of reengineering famous, caused me to reflect on how far organizations have come -- and how far they have to go -- in terms of standards of operating excellence. Today reengineering is a term and concept that is familiar and almost mundane> It's hard to remember how revolutionary and unnerving the concept was in the early 1990s.When Hammer's book "Reengineering the Corporation: A Manifesto for Business Revolution" came out in 1993, the financial services industry was very different from the business we know today. Banks were smaller, more regional, less efficient, and less competitive -- partly because competition was an easier, simpler matter. In most businesses, including banking, people anticipated long-term employment and jobs that didn't change much from year to year (or decade to decade). There was an interest in automation but most processes continued to be heavily paper-based. And most institutions didn't know very much about their customers. However, the industry was being starting to be shaken up by some big developments of the late 1980s -- fallout from third-world loans, the savings and loan crisis, the 1987 stock market crash, acceptance of interstate banking. Not only were many institutions unable to weather these storms (this was a period of dramatic M&A activity) there also was awareness that business-as-usual wouldn't be enough to guarantee success. It remains to be seen whether the industry simply was ready for the concept of reengineering -- a technology-based way of redesigning and transforming all kinds of business processes, in order to make companies more flexible and responsive -- or whether the popularization of the concept shook up the industry. Reengineering quickly took on a negative connotation, as it became synonymous with layoffs. And while efficiency and automation are core to the concept of reengineering, it was unfortunate to see how a potentially transforming set of practices and technologies got boiled down to being mainly about cost-savings and headcount. The turmoil the industry is going through now is reminiscent of the upheavals of 20 years ago, and it's inevitable that many companies are going to be transformed -- by choice or necessity. Whether or not those changes are called "reengineering" remains to be seen.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio