United States General Accounting Office

GAO Report to Congressional Requesters

December 1994 REENGINEERING

ORGANIZATIONS

Results of a GAO

Symposium

GAO/NSIAD-95-34

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-258900 

December 13, 1994

The Honorable Earl Hutto

Chairman, Subcommittee on Readiness

Committee on Armed Services

House of Representatives

The Honorable John R. Kasich

Ranking Minority Member, Subcommittee on Readiness

Committee on Armed Services

House of Representatives

As part of your request to review the philosophy and organization of the

Department of Defense’s (DOD) efforts to streamline its business practices,

we conducted a symposium in June 1994 to address private sector best

practices in reengineering. We briefed your staff on reengineering best

practices, and as a result, you asked us to provide this report, which

summarizes the key points made during the symposium. We will continue

to obtain information on successful reengineering efforts in the private

and public sectors and discuss our observations with consultants and

academics who have studied reengineering concepts and practices.

Background Although substantially reduced from Cold War levels, DOD remains the

largest U.S. government entity. DOD employs about 3.5 million personnel

with annual budgets ranging from $240 billion and $250 billion.

Approximately $88 billion is spent on business activities to operate and

maintain the defense infrastructure, including command and control,

finance, material management, and human resources. Maintaining a strong

national defense is dependent upon many factors. One of those is having a

set of business operations that efficiently and effectively support the

fighting forces. Today, there is great concern that efficiency and

effectiveness improvements within the defense infrastructure are not

keeping pace with those within the force structure. Furthermore, the

National Performance Review is spurring DOD and other federal agencies

to better serve its customers, empower its employees, and foster a more

productive government. Reengineering represents one of many ways that

allow DOD the opportunity to reduce cost and improve business processes,

while providing effective support to the fighting forces. We describe

business process reengineering in more detail in appendix IV.

Page 1 GAO/NSIAD-95-34 Reengineering Organizations
B-258900 

Results in Brief Five principles for effective reengineering emerged from the GAOsponsored symposium. While these principles are not intended to be an

all-inclusive list on how to effectively implement reengineering, they form

the basis of a framework for bringing about the radical change required to

reengineer business processes in a large organization. The principles

reflect the panel members’ views, which are not necessarily those of GAO.

• Top management must be supportive of and engaged in reengineering

efforts to remove barriers and drive success.

• An organization’s culture must be receptive to reengineering goals and

principles.

• Major improvements and savings are realized by focusing on the business

from a process rather than a functional perspective.

• Processes should be selected for reengineering based on a clear notion of

customer needs, anticipated benefits, and potential for success.

• Process owners should manage reengineering projects with teams that are

cross-functional, maintain a proper scope, focus on customer metrics, and

enforce implementation timelines.

We provide more information on each of the principles in appendix I.

Scope and

Methodology

We sponsored this symposium to obtain information on factors that lead

to successful reengineering. We invited executives from five companies.

The companies selected were cited in the literature or by experts as having

successful reengineering activities. However, they do not represent a

scientific sample of all companies that have succeeded in reengineering.

We discussed the material presented by the panelists and its applicability

to DOD with military consultants knowledgeable of DOD operations. (See

app. III.) We also selected a moderator who had knowledge of the subject

matter but no vested interest with the represented companies or DOD. A list

of panel members is in appendix II.

We are sending copies of this report to the Chairmen, House and Senate

Committees on Armed Services; other appropriate Members of Congress;

and the symposium panelists and military consultants. Copies will also be

made available to other interested parties on request.

Page 2 GAO/NSIAD-95-34 Reengineering Organizations
B-258900 

This report was prepared under the direction of Donna M. Heivilin,

Director, Defense Management and NASA Issues, who may be reached at

(202) 512-8412 if you or your staff have any questions concerning this

report. Other major contributors to this report are listed in appendix V.

Henry L. Hinton, Jr.

Assistant Comptroller General

National Security and International

 Affairs Division

Page 3 GAO/NSIAD-95-34 Reengineering Organizations
Contents

Letter 1

Appendix I 

Reengineering

Organizations

6

The GAO Symposium: Reengineering Organizations 6

Symposium Results: Reengineering Principles 6

The Challenge for the Future 14

Appendix II 

Symposium Panelists

16

Appendix III 

Military Consultants

18

Appendix IV 

Description of

Business Process

Reengineering

19

Appendix V 

Major Contributors to

This Report

20

Figures Five Principles for Effective Reengineering: 7

Principle 1: Top Management Must Be Supportive 7

Principle 2: Culture Must Be Receptive to Reengineering 8

Principle 3: Savings Are Derived by Focusing on Processes

Rather Than Functions

10

Principle 4: Processes Should Be Selected Based on Customer

Needs

11

Principle 5: Process Owners, With Cross-Functional Teams,

Should Manage Reengineering Projects

12

Abbreviations

DOD Department of Defense

Page 4 GAO/NSIAD-95-34 Reengineering Organizations
Page 5 GAO/NSIAD-95-34 Reengineering Organizations
Appendix I 

Reengineering Organizations

Many private sector organizations have adopted reengineering principles

to increase customer satisfaction and decrease operating costs by

eliminating nonvalue-added activities. To do so, many companies have

radically changed their ways of doing business. A detailed description of

reengineering is in appendix IV.

The GAO Symposium:

Reengineering

Organizations

In June 1994, we convened a symposium on reengineering. We brought

together executives from five Fortune 500 companies to get their input on

the critical elements needed to achieve success through reengineering.

The organizations selected were cited in the literature or by experts as

having successful reengineering activities and do not represent a scientific

sample of all organizations that have succeeded in reengineering.

The panelists and the organizations they represented were James D.

Fischer, Corporate Headquarters Program Manager, Process Management,

IBM Corporation; Joseph W. Joseph, Manager, General Motors Knowledge

Center, General Motors Corporation; Joseph M. Matejek, Vice President of

Reengineering, Aetna Life and Casualty Company; James D. Schoonover,

Director of Integrated Operations and Vice Chairman of the Corporate

Operations Network, E.I. duPont de Nemours and Company; and Gaye M.

Williams, Senior Member, Technical Staff, Business Process Engineering,

Bell Atlantic Corporation. Appendix II contains additional information on

these panelists and their reengineering efforts. Dr. Astrid E. Merget, the

Bantle Chair of Business and Government Relations at the Maxwell School

of Citizenship and Public Affairs at Syracuse University, moderated the

symposium.

Several military consultants present at the symposium expressed their

opinions on reengineering within the Department of Defense (DOD). This

report, however, focuses on private sector trends in reengineering.

Symposium Results:

Reengineering

Principles

Five principles for effective reengineering emerged from the symposium.

While these principles are not intended to be an all-inclusive list on how to

effectively implement reengineering, they form the basis of a framework

for bringing about the radical change required to reengineer business

processes in a large organization. The principles reflect the panel

members’ views, which are not necessarily ours.

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Appendix I 

Reengineering Organizations

Five Principles for Effective

Reengineering: 1. Top management must be supportive of and engaged in

reengineering efforts to remove barriers and drive success.

2. An organization’s culture must be receptive to reengineering goals

and principles.

3. Major improvements and savings are realized by focusing on the

business from a process rather than a functional perspective.

4. Processes should be selected for reengineering based on a clear

notion of customer needs, anticipated benefits, and potential for

success.

5. Process owners should manage reengineering projects with teams

that are cross-functional, maintain a proper scope, focus on

customer metrics, and enforce implementation timelines.

Principle 1: Top Management Must Be

Supportive “Top management must drive reengineering into the organization.

Middle management won’t do it.” -- Joe Matejek, Aetna

Committed and engaged top managers must support and lead

reengineering efforts to ensure success. This is because top management

has the authority to encourage employees to accept reengineered roles.

Also, top management has the responsibility to set the corporate agenda

and define the organization’s culture and the ability to remove barriers

that block changes to the organization’s corporate mindset. The panelists

agreed that a lack of top management commitment and engagement is the

cause of most reengineering failures.

Top management engagement does not mean that the chief executive

officer has to lead reengineering or that senior executives should manage

all aspects of the reengineering effort. As Gaye Williams pointed out with a

quote from futurist Joel Barker, “You lead between paradigms, and

manage within paradigms.” Senior executives play a leadership role in the

process management paradigm by effecting cultural change and removing

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Appendix I 

Reengineering Organizations

barriers, while the process owners (line management) are responsible for

managing or actually redesigning the work processes.

The distinction between leadership and management is demonstrated by

the experience at Bell Atlantic. Top management was fully engaged in the

efforts and regularly met with reengineering teams. However, rather than

being involved in the minutiae of redesigning the processes, top

management used its power to remove the barriers confronting the

functional managers who were trying to redesign along process lines.

Responsibility for redesigning the processes was left to teams that

understood the core processes.

Principle 2: Culture Must Be Receptive

to Reengineering “To be successful, reengineering [needs to be] embedded in the fiber

of our people until it becomes a way of life.” -- Jim Fischer, IBM

Symposium panelists said that one of the most important aspects of

successful reengineering is having a corporate culture consistent with

reengineering principles. The panelists stated that a culture receptive to

reengineering accepts the premise that corporate success in a globally

competitive environment requires that companies understand and respond

to the needs of their customers. Joe Matejek summed up this idea by

saying that their customers are “putting [our organization’s] feet to the

fire,” expecting “the same or better service as in the past” for less cost.

Failure to do this will ultimately result in loss of business. The panelists

also added that a culture receptive to reengineering requires that business

move beyond models of functional work organization to those of a process

orientation. Without a compelling and well-communicated vision of where

reengineering will take the organization, suspicion and mistrust can

prevail. In this type of environment, reengineering should not be

undertaken.

One cultural belief that fosters reengineering is that marketplace success

is based on the ability to respond to customer needs. Our panelists stated

that this is best accomplished by defining the organization’s customers,

determining their needs, and being equipped to fulfill these needs.

Defining the customer is not easy, but it is a necessary first step. Once the

customer is defined, several techniques are useful in determining customer

needs. These include customer surveys, focus groups, and market trend

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Appendix I 

Reengineering Organizations

analyses. Fulfilling needs requires communication throughout the

organization and an environment that promotes and reinforces an

orientation toward customers.

Another cultural belief that fosters reengineering involves moving from

functional to process management. According to Jim Schoonover, success

in process management requires a “holistic” view of the business. This

requires viewing the business across functional lines and focusing on

customer needs. This is a complete redefinition of the way organizations

traditionally perform work.

Our panelists emphasized the importance of communication in focusing

the culture on reengineering. Reengineering goals should be

communicated and explained consistently at all levels in the organization.

This kind of communication is especially important in reducing employee

skepticism and when corporate downsizing is forcing organizations to

modify their covenants with their employees.

IBM’s experiences provide valuable examples of communication in the

process of framing the organization’s vision and adapting the culture. IBM

had to reengineer in response to a major financial crisis. The crisis

affected IBM’s ability to maintain its full employment policy. However, in

its employee communications, IBM did not allow reengineering to become

a euphemism for layoffs. IBM stated that reengineering was necessary in

order to remain productive with fewer people and to meet employee and

customer needs. IBM’s Jim Fischer said that management’s honesty on

these issues helped gain employee commitment to the new environment.

According to Jim Fischer, when employees knew how they fit in the new

organization, they were more likely to help in implementing change. Jim

Fischer also stated that employees came forward to help because they saw

reengineering as an opportunity to survive and grow with the business.

Our panelists also emphasized training as an important tool in focusing the

culture on reengineering. Training in skills such as negotiation and conflict

resolution is required to get employees to work across functions. As

reengineering proceeds, training should be modified as necessary to best

support the process and should be provided on a “just-in-time” basis so

employees can understand and apply what they learn.

At General Motors, groups are encouraged to bring actual product or

manufacturing redesign problems to reengineering workshops. While

promoting learning through application, General Motors wants to ensure

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Appendix I 

Reengineering Organizations

that employees apply what they have learned and will continue the

reengineering process through implementation.

While communication and training are vital to the success of

reengineering, they alone will not be enough. To ensure that changes are

internalized, the new assumptions stressing coordinated and cooperative

efforts must become part of the corporate culture and system of norms.

Doing this may require that incentives and rewards be tailored to

encourage and reinforce desired behaviors.

Principle 3: Savings Are Derived by

Focusing on Processes Rather Than

Functions “The real value in reengineering is not within “towers.” Real savings

[occurs] when you can [perform] cross tower reengineering.” -- Jim

Fischer, IBM

The panelists agreed that major improvements and savings in

reengineering efforts would come from focusing on processes that span

across functions rather than within functions. DuPont’s Jim Schoonover

pointed out that reengineering that focuses on redesigning processes

yields benefits 10 times as large as attempts to improve the operations

within a functional area.

In their affirmation of the importance of process over function, the

panelists commented on the role of information technology in

reengineering. Panelists agreed that reengineering cannot be based on

information technology. Aetna disregarded information technology in

redesigning processes. According to Joe Matejek, requirements were

determined and processes were designed first, and then systems people

were tasked with developing systems to support the new processes.

Panelists also agreed that reengineering should not be framed by the

capabilities of existing computer systems. Gaye Williams mentioned one

organization that, despite substantial investments in information

technology, was forced to abandon a portion of its information systems

because it was no longer adequate for the needs of its redesigned

processes.

As it is important to tailor information management around redesigned

processes, it is also necessary to understand processes in relation to one

another. Since processes are interrelated, it is important that a redesign

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Appendix I 

Reengineering Organizations

approach ensure that the effects and linkages to other processes are fully

understood.

Coordination should take place not only when reengineering the activities

within a process, but also when designing measurements. Such

coordination will help assure that the activities and measurements are

complementary. Bell Atlantic’s Gaye Williams gave an example of how

conflicting functional measures could drain the overall organization. She

described a company where the sales department was assessed on how

many orders it generated, while the manufacturing department was

evaluated based on conformity to production projections. Although sales

had generated more than enough orders to keep manufacturing busy all

month, the manufacturing division shut down halfway through the month

because, according to flawed projections, the company had already met its

quota. The overall organization suffered because the metrics used to

evaluate functional performance were not aligned with overall process or

customer-related goals.

Success in reengineering requires fostering a sense of process orientation

and a willingness and ability to view reengineering outside of functional

“stovepipes.” This process orientation can be fostered without regard to

the organizational structure. However, reengineering efforts may result in

improvements in organizational structure.

Principle 4: Processes Should Be

Selected Based on Customer Needs “The process that is the most broken in its ability to meet the

customer’s needs [is the one that should be reengineered].” -- Gaye

Williams, Bell Atlantic

Successful reengineering requires answering several basic questions. Why

should the organization reengineer? What process or processes should be

reengineered? How long should reengineering take? With regard to how

long reengineering should take, Gaye Williams said, “How long you have is

how long it should take. If you have an immediate, pressing need, scope

and staff the effort to fit in that time window.” The organization’s climate

surrounding such issues as culture, leadership, and resource availability

will also help determine the answers to basic reengineering questions.

The panelists generally agreed that the most important reason to

reengineer is to meet customer needs. This may mean cutting costs to

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Appendix I 

Reengineering Organizations

lower price, as it did for Aetna, or decreasing cycle times, as it did for

General Motors. Panelists stated that internal considerations, such as

increasing profits or determining capacity requirements, may drive

reengineering efforts. However, they emphasized that reengineering in

response to meeting customer expectations offered far more dramatic and

compelling results than reengineering based on internal factors.

In an organization where the culture is properly positioned for

reengineering, process and project candidates should be assessed on the

costs and benefits anticipated. The costs of a reengineering project are the

dollar value of the resources consumed; the opportunity cost of using the

resources for reengineering as opposed to something else; and the human

costs, measured in terms of organizational morale. The benefits realized

for reengineering include increased customer satisfaction, decreased

operating costs resulting from the elimination of nonvalue-added

activities, and the resources saved by operating more efficiently. Costs and

benefits of reengineering should be presented in terms of the same metrics

that will be used to assess progress when the project is underway.

“Quick-hitter” projects—ones with quantifiable benefits, little cost, and

short implementation time frames—can be used to “prime the pump” for

future reengineering activities. Pilot testing is also a useful tool, when

possible, to build impetus for reengineering by generating benefits, making

converts of skeptics, and providing lessons learned.

Principle 5: Process Owners, With

Cross-Functional Teams, Should

Manage Reengineering Projects “[I] cannot conceive of any organization reengineering everything at

once. There has to be certain definable processes that [people] can

get their arms around.” -- Joe Matejek, Aetna

Once processes are selected, process owners must be identified. Ideal

process owners are usually responsible for or affected by a significant

portion of the process. Panelists stated that process owners should be

respected, trusted members of the organization; firmly engaged in

reengineering efforts; and actively recruited rather than assigned to their

roles. Such people are more likely to attract team members that are willing

to take the risks associated with reengineering. Process owners must be

engaged in reengineering because they will be responsible for

implementing redesigned processes.

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Appendix I 

Reengineering Organizations

Process owners are also responsible for recruiting and managing

reengineering teams. Panelists stated that teams should be limited in size

and composed of cross-functional membership. Critical mass for

reengineering teams is 6 to 10 full-time members. Having too many

members makes it difficult to get everyone together, while having too few

members places limits on what the group can accomplish.

Reengineering teams should have cross-functional representation to

ensure that the reengineering effort incorporates a holistic view of the

business. It is sometimes appropriate to include information technology

people on the team, as they need to understand the processes they will be

designing systems to support. Where applicable, union representation is

encouraged to maximize buy-in and participation. Participation of groups

with oversight or audit responsibilities would ensure that the new process

fulfills legal and/or regulatory requirements. Panelists generally agreed

that it is also useful to incorporate a person who knows nothing about the

process to act as a catalyst, or a “yeast,” to ask questions that make the

experts rethink the process. Finally, it is important that team members are

people who will be instrumental in selling the changes to others.

Consensus existed among the panelists that it is vitally important to

clearly define the scope of the reengineering project. Although process

reengineering must be done with respect to the whole, it is impossible to

try to reengineer everything in a large organization at once. Therefore, the

tendency to expand the scope—“scope creep”—must be avoided.

Periodically, the defined scope of the project needs to be revisited to

ensure the effort remains on course.

The results of reengineering should be assessed against metrics that have

meaning for the overall organization and are customer-focused. Metrics

that are financial in nature are not relevant in measuring process

performance. While financial metrics can indicate a problem,

customer-focused process metrics are required to identify causes and

solutions. Whatever the choice of metrics, it is important to remember that

the metrics should be representative of the expectations of reengineering

in terms of activities and benefits and are tied to the overall goals of the

organization. Metrics that do not add value to mission objectives are

meaningless.

Project plans should be based on a set time frame, with management

accountable for reaching the milestones. Joe Matejek of Aetna proposed

the Aetna’s 3-year model of no more than 6 months for redesign of a

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Appendix I 

Reengineering Organizations

process and no more than 2-1/2 years for full implementation from the end

of the redesign. Time lines should be strictly enforced. One way to enforce

implementation time lines is to fund the project only for the time allowed.

At the end of the project’s life, removing the projected savings from the

process’ budget allocation can serve as a powerful incentive to ensure that

reengineering projects are fully implemented and that projected benefits

are based on realistic assumptions. Management accountability is also

vital in ensuring that implementation proceeds according to plans. Unless

the leadership is as accountable as the employees, change will not occur.

IBM changed its incentive structure for senior executives to hold the

leadership responsible for change. Incentive pay for senior executives is

now based primarily on IBM corporate performance rather than division

performance.

The Challenge for the

Future

Gains from reengineering will not be maintained if the vision and the

supporting attributes in the corporate culture are not institutionalized.

After the effects of reengineering are realized, continued efforts to

improve reengineered process performance are needed along with efforts

to keep abreast of customer needs. These continued efforts require the

same degree of cross-functional team participation and senior

management engagement as the original reengineering efforts. Finally,

considering today’s rapidly changing environment, it is possible, if not

likely, that an organization may have to reengineer again to fulfill the

future needs of its customers.

DOD’s Director of Functional Process Improvement stated that the

principles presented in this report could apply equally well to DOD as they

do to the private sector. The director also stated that DOD has the added

burden of extensive information sharing and interoperability

requirements. He added that the real difficulty in DOD’s reengineering

efforts lies with implementation.

Military consultants present at the symposium stated that successful

reengineering efforts at DOD will require involvement and engagement from

the Secretary of Defense, with process ownership from uniformed military

leadership. Because of the permanent nature of its leadership, the

consultants proposed that the Joint Chiefs of Staff may be the organization

in which to pursue joint approaches in managing defense business

operations. The consultants also stated that DOD’s current reengineering

efforts should focus on a few key processes. However, the consultants

pointed out potential barriers to reengineering. These barriers include the

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Appendix I 

Reengineering Organizations

rigidity in accounting and budgeting systems and the absence of rewards

and incentives that encourage reengineering efforts.

Page 15 GAO/NSIAD-95-34 Reengineering Organizations
Appendix II 

Symposium Panelists

James D. Fischer: Jim Fischer is a Corporate Headquarters Program

Manager of Process Management at IBM.

While process management efforts began at IBM in 1989, the real trigger to

reengineering at IBM was an operating loss in 1993 of $8 billion. Like Bell

Atlantic, reengineering at IBM is framed by response to customer

requirements. One reengineering project involving manufacturing and

services in IBM’s parts logistics process has generated savings of

$100 million. Reengineering has also helped IBM handle the reduction of

its workforce from 400,000 to 250,000.

Joseph W. Joseph: Joe Joseph is the Manager of the General Motors

Knowledge Center, which is part of its North American Operations

Manufacturing Center.

General Motors was involved in process improvement work prior to

moving into reengineering. General Motors has focused many of its

reengineering efforts on design activities, which Mr. Joseph said can

account for 70 to 95 percent of production costs. In Mr. Joseph’s words,

“the impetus behind reengineering was to stay in business.” A 53-percent

reduction in construction lead time and a 78-percent reduction in

maintenance cost for a die cast tool design are examples of significant

improvement.

Joseph M. Matejek: Joe Matejek is the Vice President of Reengineering at

Aetna Life and Casualty Insurance Company.

Aetna is a 140-year-old, globally competitive firm. In the late 1980s, Aetna

saw its market share drop, prompting extensive customer surveying and

the use of focus groups to try to find the cause. The overwhelming finding

was that consumers were primarily interested in price and Aetna was not

price competitive. Therefore, Aetna’s reengineering efforts, which started

in 1990, have focused on cost reduction. For Aetna, employees equal cost,

making it necessary to meet customer needs with fewer people. The

workforce has been trimmed from 50,000 to 41,000. Further reductions

will bring the total number of employees down to 38,000 by the end of

1994. Reengineering has resulted in a 25-percent cost reduction, while at

the same time enhancing customer service. By the summer of 1995, Aetna

expects to have reengineered all of its business processes.

Page 16 GAO/NSIAD-95-34 Reengineering Organizations
Appendix II 

Symposium Panelists

James D. Schoonover: Jim Schoonover is the Director of Integrated

Operations and the Vice Chairman of the Corporate Operations Network

for DuPont.

DuPont began its work in the area of reengineering in 1988. By 1991 it had

began to venture into integrated operations. In 1992, DuPont moved away

from traditional functional organizations by eliminating departments and

focusing on the value chains it provides to its customers. Mr. Schoonover

characterized reengineering activities as “vital to DuPont’s survival,” with

savings amounting to about $1 billion a year.

Gaye M. Williams: Gaye Williams is a Senior Member of the technical staff

in Business Process Engineering for Bell Atlantic. Her responsibilities

include high-level business process mapping, training on reengineering

methodology, and facilitating process study and process improvement

teams. Prior to joining Bell Atlantic, Gaye Williams was an Associate

Director of Business Process Engineering at Texas Instruments.

In achieving success, Bell Atlantic has focused on reengineering its

processes to better fulfill customer needs. Cycle time in filling orders for

carrier-access service has been slashed, and error rates approach zero.

Page 17 GAO/NSIAD-95-34 Reengineering Organizations
Appendix III 

Military Consultants

Dr. Albert M. Bottoms (Retired, U.S. Navy Senior Executive Service): Dr.

Bottoms has served as Science Advisor to the Commander of the U. S.

Seventh Fleet and the Navy Chair at the Defense Systems Management

College. He is currently a visiting professor of Undersea Warfare at the

Naval Postgraduate School in Monterey, California.

Rear Admiral Rowland G. Freeman (Retired, U.S. Navy): Admiral Freeman

had a varied naval career in operations and acquisition, including research

and development management. He served as the Administrator of the

General Services Administration under President Carter. He is currently a

consultant in the international logistics area.

General Joseph J. Went (Retired, U.S. Marine Corps): General Went served

38 years in commissioned service. Following his assignment as Wing

commander, he served as the Deputy Commander of Fleet Marine Forces

Pacific; as the Deputy Chief of Staff for Reserve Affairs; as the Deputy

Chief of Staff for Installations and Logistics; and finally, as the Assistant

Commandant of the Marine Corps. He is currently a consultant on

strategic planning for defense related industries.

Page 18 GAO/NSIAD-95-34 Reengineering Organizations
Appendix IV 

Description of Business Process

Reengineering

Business process reengineering is a management technique for achieving

dramatic improvements in cost, quality, and customer service by making

fundamental changes in the way an organization defines its mission and

performs its work. Business process reengineering is based on a thorough

understanding of an organization’s customers, their needs, and the

environment. Business process reengineering is focused on improving

business processes that create and deliver value by satisfying the

customer’s needs. Generally, these processes cut across functional,

geographic, and organizational units.

Business process reengineering is typically characterized by

• a top management-driven effort to challenge the current organizational

mindset to one that is more receptive to customers and the environment;

• identifying and analyzing core business processes;

• applying cost/service/quality measures to determine how effectively they

are meeting customer needs; and

• making systemic changes to the organization’s structure, culture, roles,

and responsibilities in order to support reengineered processes.

Page 19 GAO/NSIAD-95-34 Reengineering Organizations
Appendix V 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

David R. Warren

Nomi R. Taslitt

Diane Blake Harper

B. Scott Pettis

Arnett Sanders

Jeffrey M. Stagnitti

Marilyn K. Wasleski

(709118) Page 20 GAO/NSIAD-95-34 Reengineering Organizations
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