Tradition and Technology

Topics: Eastman Kodak, Business-to-business, Business process reengineering Pages: 12 (3666 words) Published: April 3, 2011
Melissa Dailey and F. Warren McFarlan

Paul Davidson, Brian Dyrud, Lindsay Neal, and Jennifer Paterson

October 8, 2003
In 1994 Providian Trust was a company rich in tradition, experience, and a high level of personalized customer service. However, due to the lack of efficient business processes and information technology, Providian Trust was slowly slipping away from profitability and was allowing competitors to become more attractive to new and existing clients. The problems that Providian was facing were not going to be resolved by only implementing new technology, but rather a new environment and culture needed to be born. The company needed to be reengineered.

Reengineering as defined by Hammer & Champy (H&C) in their book Reengineering the Corporation “is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.” The four key words in this definition, fundamental, radical, dramatic, and process can each be used to describe Providian’s existing environment and why it needs to be changed.

In using the key word fundamental, H&C prompts companies to ask the following basic questions about themselves. “Why do we do what we do? And why do we do it the way we do?” Providian’s answer to the first question should have been to provide the highest quality in trust services by meeting client demands. However, Providian had not been meeting this objective due to increasing market competition and outdated reporting systems. The answer to the second question could be easily summed up in one word “tradition”. Most of Providian’s trust officers had 20 to 30 years experience of completing individualized tasks and keeping the relationships with their clients very personal. This type of environment promoted an extremely change-resistant culture based on set traditions.

The key word radical refers to radical redesign. This “means getting to the root of things: not making superficial changes or fiddling with what is already in place, but throwing away the old.” Providian needed exactly that, to throw away the old and put new business processes in place. Simply adding new technology on top of the existing culture would do no more than help them perform inefficient and outdated processes faster. Senior vice president of Trust, Investment & Treasure, Michael LeBlanc said “We knew that there was not point buying a new trust system or improving the technology unless we concurrently also completely rebuilt the culture and provided the training incentives to customer relationship people to completely revisit how they approach their clients.”

The key word dramatic refers to the quantifiable improvements in performance, cost savings, work force reduction, etc. H&C said, “Reengineering isn’t about making marginal or incremental improvements but about achieving quantum leaps in performance.” Providian aimed to do just that. In the business impact report, Providian estimated an annual savings of $9.2 million once the reengineered business processes and the new information system was fully implemented. The report also estimated a workforce reduction (FTE) from 840 to 660.

The fourth key word process is defined as “as a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.” H&C also states, “Most businesspeople are not process-oriented; they are focused on tasks, on jobs, on people, on structures, but not on processes.” Providian was very task oriented. One such task that was very inefficient and inaccurate was the generation of clients’ financial statements. Trust officers actually had to oversee and have their hand in each and every statement that was sent to a client. LeBlanc stated, “Every statement that was prepared for our 10,000 Personal...
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