Rejuvenating Business Licensing Process in State Government Agencies through Business Process Reengineering (BPR)

Transcription

1 International Journal of Management Sciences Vol. 1, No. 3, 2013, Rejuvenating usiness Licensing Process in State Government gencies through usiness Process Reengineering (PR) UmmiSalwa hmad ustamam 1, Syadiyah bdul Shukor 2, Zainalbidin Mohamed 3, Muhammad Ridhwan b. ziz 4 bstract usiness Process Reengineering (PR) is the fundamental rethinking and radical redesign of business processes to achieve drastic improvements in a particular organization. Reengineering identifies, analyzes, and redesigns an organization's core business processes with the aim of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed. The objective of this study is to understand the application flow and process used by state government agencies in issuing business license. 12 government agencies participated in a PR workshopsession in one of the states in Malaysia. During the session, 17 business licensing processes were reengineered with an effective range of improvement ranging from 10 to 98% improvement. For the purpose of this paper, only one licensing process of a state government agency was selected as a case study to illustrate the methodologyin-depth. Finding shows that by applying proper PR techniques, the business application process in state government agencies can be significantly improved. Keywords: business license application process, business process reengineering (PR), case study, state government agency 1. Introduction usiness Process Reengineering (PR) is not an uncommon concept in this modern world and is best understood as a never-ending process of improvement in performance. Most organizations, neither public nor private, have traditional bureaucratic procedures which hinder the performance and productivity level. Costly and time consuming business processes will cause inefficiency and ineffectiveness. Therefore, there is a desperate need to thoroughly analyze and reengineer the old-fashioned and obsolete business process to improve performance. This paper concentrates on analyzing and reengineering the business licensing process of a government agency. The purpose of this paper is twofold; first, it attempts to identify the bottlenecks in business licensing process in a state government agency. Second, it endeavors to redesign and reengineer the business licensing process in the organization to realize a system wherein speed, transparency, quality and economy become hallmark of all provisioning actions of an application for business license from clients. The paper begins by reviewing literature on business process reengineering. This is followed by a description of methodology used in data collection. Then, results and findings are presented. Finally, the conclusion section is presented at the end of the paper. 2. Literature Review usiness process reengineering or commonly known as PR is defined as 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 (Hammer &Champy, 1993). PR involves a thorough analysis of the current business processes and redesign to improve performance (Davenport & Short, 1990). There is an extensive literature on PR in the academic journals as well as books and magazines. However, there are very little about PR in the public organizations (Thong et al., 2000). 1 Faculty of Economics and Muamalat, UniversitiSains Islam Malaysia, Malaysia 2 Faculty of Economics and Muamalat, UniversitiSains Islam Malaysia, Malaysia 3 Faculty of Economics and Muamalat, UniversitiSains Islam Malaysia, Malaysia 4 Faculty of Economics and Muamalat, UniversitiSains Islam Malaysia, Malaysia 2013 Research cademy of Social Sciences 77

2 PR in Public Organizations International Journal of Management Sciences Parys and Thijs (2003) argued that PR is crucial for public sector organizations although it is difficult to be deployed. This is due to interlinked of departments and ministries. Therefore, change in one unit requires change in other interlinked organizations. This was explained earlier by Rainey et al. (1983) who summarized the differences between public and private organizations into three categories: environmental factors, organization-environment transactions and internal structure and processes. In terms of environmental factors, less market exposure for the public organizations resulting in less incentive for productivity and effectiveness, lower allocation efficiency and lower availability of market information; more legal and formal constraints; and higher political influences, including impacts of interest groups and the need for support constituencies. For the organization-environment transactions, there are more mandatory actions to the public organizations due to the unique sanctions and coercive powers of government; wider scope of concern and significance of actions in the public interest; higher level of scrutiny of public officials; and greater expectation that public officials act fairly, responsively, accountably and honestly. Finally, for internal structure and processes, the public organizations have more complex criteria; managers with less decision-making autonomy, less authority over subordinates, greater reluctance to delegate and more political role for top managers; more frequent turnover of top managers due to elections and political appointments; difficulties in devising incentives for individual performance; and lower work satisfaction and organizational commitment (Rainey et al., 1983). Process is defined as a single or combination of tasks that add value to inputs to convert them into output using human interactions, methodologies and techniques (Tenner &Detoro, 1992). Sethi and King (2003) recommended that business processes consist of different activities which define the pattern of work in an organization. The efficient processes serve to satisfy customers by converting input resources to desired output (Hammer &Champy, 1993). The importance of analyzing the existing business processes in organizations is to identify bottlenecks in systems (Evans, 1993). The bottlenecks could be investigated using Fitzgerald and Murphy's (1996) four critical phases for successfully implementing PR strategy in an organization. First, the core business processes to be redesigned should be selected. Second, the process team should be established to reengineer the core business processes. Third, the current business processes may be analyzed and examined to find bottlenecks in the systems. This phase also determines the satisfaction level of stakeholders with process outcomes. The final phase encompasses the strategy to reengineer the process to improve performance. 3. Research Methodology This study employed a case study approach suggested by Yin (2009) to gain an in-depth study about the research topic. This paper specifically discusses on how PR is utilized to rejuvenate the business license application process in a state government agency. The idiographic explanations inherent in the case study approach enabled a deeper understanding and detailed in-depth information that provided credible and valuable knowledge about the business license application process. Primary data were gained through in-depth interview sessions with officers who participated in a PR session (workshop style). Interview notes were then transcribed and reviewed for consistency. Inconsistencies were clarified with the relevant officers. The data collection method also involved establishing a case study database consisting of records and documentation of business licensing process flow. Finally, a final case writeup documenting the reengineering events and lessons learned was verified with the selected organization. For the purpose of this paper, one state government agency, known as G was selected to provide an idiographic explanation of the case study. The researchers have fully utilized the following 13 processes while conducting the PR for this organization:- 1. List all the activities in the process in sequence beginning with the customer and ends with the customer. 2. For each determine the: a. actual time of the value-added activity b. waiting time c. transfer time d. non-value added activity 3. Calculate the efficiency of the process: = [value-added time/total time] % 78

3 U.. ustamam et al. 4. Draw the process flow chart from the start to the end. 5. Draw according to the individuals involved and the department. 6. Draw the Pareto Chart. 7. Merge/combine possible activities. 8. Parallel time. 9. ctivities done by the same personnel or department should do it only once and on the most valueadded. 10. Question the need and justification of every step. 11. Introduce appropriate technology to remove the waiting, transfer and non-value added times. 12. If the new time is not reduced by at least 60% then it is not PR. 13. Draw the new process map. 4. Results and Findings s Is Process s can be seen from Table 1, the existing process to apply for a business license starts with the customer filling the application form and submits it to Officer I. Once he/shereceives the completed form, the officer is responsible to verify and register the application. He/sheis also responsible to issue an authorization card and open a file for the application. Then, the officer issues a request for payment slip and prepares a letter to the technical department for the committee.next, committee meets and mayapprove the application and Officer II and Officer III sign the minutes of. Finally, Officer IV signs the approval letter before the customer receives the business license. Table 1: Existing Process to pply for usiness License ctivities C D E F G H I J Customer fills out application form Officer I receives, verifies and registers application form Officer I issues authorization card C Officer I opens a file D Officer I issues payment letter and prepare a letter to E technical department C Committee F D Officer II approves minutes of G E Officer III approves minutes of H F Officer IV approves application I Customer receives business license J Work Process and Total Taken Table 2 shows the existing time taken to apply for a business license for each activity by each person responsible. The existing process revealed that the total time taken is hours. Out of hours, the actual time of the value-added activity is 1.17 hours and the total waiting time is hours. Figures in Table 2 also show that the longest waiting time is the committee (i.e. 101 hour). The existing process efficiency is 1.14% only which is 79

4 International Journal of Management Sciences quite low. From the table, it can be identified that the waiting time for a is too long and slows down the process. Table 2: Existing Process to pply usiness License ccording to ctivities Overall Taken Value- dded Waiting Transfer Customer fills out application form Officer I receives, verifies and registers application form C Officer I issues authorization card D Officer I opens a file E Officer I issues payment letter and prepare a letter to technical department C F Committee D G Officer II approves minutes of E H Officer III approves minutes of F I Officer IV approves application J Customer receives business license * is calculated in hour To e Process Total Overall Process Efficiency (%) 1.14 Non- Value dded ctivity Table 3(a) shows the process flow map where the activities instead of in sequence (Table 1) are arranged to run in parallel where possible. Table 3 (b) 1 illustrates the Pareto Chart for process to apply business license. The Pareto Chart revealed that activity F recorded the longest time taken which is 102 hours. The researchers applied PR principles and incorporated expert opinions to reengineer the existing process to apply a business license. The reengineered process to apply business license is reported in Table 3(c). It is recommended that the committee s function is to endorse all applications from time to time so that business license can be produced at a more efficient rate. Table 3(c) uses principle number 9 (as in the list) where a personnel/department should handle the process as minimum number of times as possible. Example for personnel b, all the activities if possible should be concentrated at 1 or 2 processes instead of, C, D and E. Thus, instead of 0.13 hours, it can be down to 0.05 (E). Table 3(a): Parallel ctivities ctivities C D E F Total Customer fills out application form Officer I receives, verifies and registers application form Officer I issues authorization card C Officer I opens a file D Officer I issues payment letter and prepare a letter to technical department E C Committee F D Officer II approves minutes of G 80

5 U.. ustamam et al. E Officer III approves minutes of H F Officer IV approves application I Customer receives business license J taken (hour) Table 3(b): Pareto Chart ctivity Total (Hour) F 102 H 0.17 I 0.17 E D 0.03 C 0.02 G Total Table 3(c): To e Process ctivity Total Taken (Hour) Total (Hour) PR a 0 a J b 0.03 b C 0.02 b D b E 0.05 c F d G e H f I Total Overall Process Efficiency (%) 84.6 The proposed reengineered process results as summarized in Table 4 shows a time reduction by 99% (i.e. from 102 to 1.39 hour) by using PR techniques. s a result, the efficiency process increases from 1.14% to 84%. This study provides good grounds for furthering the PR strategy that will improve the process efficiency. Table 4: Summary of Proposed Reengineered Process Result Process (hour) Total time taken (before PR) 102 Value added time 1.17 Waiting time Total time taken (after PR) 1.39 % efficiency (before PR) 1.14% % efficiency (after PR) 84 % shorten by (%) (99%) 81

6 5. Conclusion and Recommendation International Journal of Management Sciences This paper concentrates on analyzing and reengineering the business licensing process of a government agency. The PR process starts by listing out all the activities involved in processing the business license and ends by proposing a new process map for that particular process. In order to propose the new process map, the common PR principles such as paralleling the process, reducing the number of times a personnel handle the process flow, combining various processes and empowering other personnel to perform certain task were applied. Findings from this study show that the waiting time for decision to be made activity was the major culprit. This was quite common because the decision making is to be made by a committee but they meet regularly and between a long time span. Through PR process, it is recommended that the committee s function is to endorse all applications from time to time so that business license can be produced at a more efficient rate. It is recommended for public sector organizations to conduct PR if they were to sustain and function efficiently as PR process is a very practical, simple and easy technique to be implemented. Reference Davenport, H. T. & Short, E. J. (1990). The new industrial engineering: information technology and business process redesign. Sloan Management Review, 34(4), Evans, K. (1993). Reengineering and Cybernetics, merican Programmer, 6(11), Fitzgerald,. & Murphy, C. (1996). usiness process reengineering: putting theory into practice. INFOR, 34(1), Hammer, M. &Champy, J. (1993). Reengineering the corporation: manifesto for business revolution.harpercollins publishers, Inc. New York. Parys, M., &Thijs, N. (2003, September 3-6). usiness process reengineering; Or how to enable bottom-up participation in top-down reform program. Paper presented at the annual of the European Group of Public dministration, Lisbon, Portugal. Retrieved July 4 th, 2012, from Rainey, H.G. (1983). Public agencies and private firms: Incentive Structures, Goals, and Individual Roles dministration and Society, 15(2), Sethi, V. & King, W. R. (2003).Organizational transformation through business processreengineering: applying the lessons learned. Pearson Education, Inc., Singapore. Tenner,. R., &Detoro, I. J. (2000).Process redesign: The implementation guide formanagers. New Jersey: Prentice Hall. Thong, J.Y.L, Yap, C.S. &Seah, K.L. (2000). usiness process reengineering in the public sector: The case of the housing development in Singapore. Journal of Management Information Systems, 17(1), Yin, R.K. (2009).Case study research: Design and methods, applied social research methods series (4 th Ed., Vol.5). Thousand Oaks, C: Sage. 82