IN THIS ISSUE

Beyond Reengineering to
Principles for Success

By Julio Gil-Pulgar, CCSA, CIA

Dr. Michael Hammer and James Champy, co-authors of Reengineering the Corporation: A Manifesto For Business Revolution, worked in the early 1990s to initiate the reengineering revolution. At that time, they defined reengineering as, “the fundamental rethinking and radical redesign of the business process to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed.” They prescribed that before you can start to redesign a process, you must identify the customer’s problems and needs. Then, disregarding the old business process, you must redesign the process backward, using those recently identified problems and needs. 

Today, Hammer no longer believes that reengineering necessarily translates into the radical obliteration of existing processes. Indeed, he declares, “I no longer see myself as a radical person; instead, I have become a process person.” He defines process as, “an organized group of related activities that together create a result of value to customers.”

In his latest book, The Agenda, Hammer admits that reengineering failed to include other key elements that make an organization successful, and he lays out nine principles for organizational success: 

1. Make it easy for your customers to do business with you.     
2. Add more value for your customers.     
3. Create a process enterprise.     
4. Tame the beast of chaos with the power of process.     
5. Base managing on measuring.     
6. End the tyranny of the organizational chart.     
7. Distribute for, not to, the final customer.     
8. Redesign and streamline interenterprise processes.     
9. Embrace the radical vision of virtual integration.

Fittingly, these new management theories present internal auditors and CSA practitioners with a golden opportunity to add more value and to help their organizations excel. As control experts and management consultants, auditors can provide their organizations with reasonable assurances that these principles are applied efficiently and effectively by conducting CSA interventions with Committee of Sponsoring Organizations (COSO) or Canadian Criteria of Control Committee (CoCo) objectives.

For example, the third principle, “Create a process enterprise,” proposes that to dominate their markets in a customer-driven economy, organizations must become customer-centric and obsessed about processes. Through processes, Hammer proposes that the abstract goal of putting customers first is transformed into practical consequences. That is, the results that an organization delivers to its customers are created through processes. 

What better tool than CSA to ensure that an organization’s process is a good one? A facilitated CSA and process-based format promotes the designing, assessing, updating, and improving of processes. Through facilitated interaction, teams can ensure that the key qualifiers of tasks comprising the process are aligned to achieve the desired end result. 

Using any control framework, CSA facilitators can guide teams to assess the effectiveness and efficiency of the processes’ internal controls, triggering discussions with questions such as: 

• Do all of the activities in the process work toward a common goal?         
• Do all process workers have a clear understanding of the common goal?         
• Do all process workers internalize the process goals?         
• Do all process workers understand the “why” and “how” of their work?         
• Do all process workers know customer requirements and strive to meet them?         
• Do all process workers see themselves as collaborators, not as adversaries?         
• Does everyone look outward at the customer, not upward at the management hierarchy?        
• Is the process customer-focused?         
• Does the environment encourage process workers to align themselves around a common purpose to continue performing reliably at a high level?         
• Does the process have performance indicators?         
• Do all process workers understand how the process is performing?        
• Is there a process owner, or anyone who ensures the excellence of the entire operation?         
• Does the process owner support and enable people by educating all those involved and serving as a resource for them?         
• Are the compensation and reward systems linked to process performance?

CSA practitioners can add value and improve the organization’s operations by providing facilitation services including strategic planning support, business process reengineering support, benchmarking, performance measurement, or CSA. More specifically, practitioners of organizations seeking to embrace Hammer’s principles can use the power of CSA to provide management with reasonable assurance that each of these nine principles is applied effectively.