Don't (just) automate, obliterate: Why it's time to re-engineer the way we work
One of the best business articles I have read is Michael Hammer's "Reengineering Work: Don't Automate, Obliterate", published in HBR in 1990. Not only has it stood the test of time, it's increasingly relevant again at a time when artificial intelligence and automation are poised to make significant inroads into the fields of knowledge work, which have previously been seen as safe from technology.
Instead of using technology to mechanise old ways of doing business, leaving existing processes intact and using computers to simply speed them up, Hammer says:
"Instead of embedding outdated processes in silicon and software, we should obliterate them and start over. We should "reengineer" our businesses; use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvements in their performance."
"Information technology offers many options for reorganising work. But our imaginations must guide our decisions about technology - not the other way around. We must have the boldness to imagine taking 78 days out of an 80-day turnaround time, cutting 75% of overhead, and eliminating 80% of errors. These are not unrealistic goals. If managers have the vision, reengineering will provide a way."
This type of obliteration is now happening all around us.
Even the legal profession is changing - there really is that much disruption
My background is as a lawyer, a profession which has been more successful than most at keeping efficiency enhancing and cost-reducing technology at arm's length. In fact, if you look at most of the technology that law firms have adopted, it has more likely been used to increase the cost of services - think time recording and billing systems that can more effectively ensure that no six minutes of time can be overlooked. Not exactly revolutionary.
However, this is rapidly changing, as change is being forced on the profession in the same way it is in most other areas of business. One leading edge example is Ross Intelligence. Ross is built on Watson, IBM's cognitive computer. Watson is able to mine facts and conclusions from over a billion unstructured text documents a second whereas existing technology solutions rely on search technologies that simply find keywords, and traditional legal practice would involve a young lawyer doing a manual search. It's game changing.
Lawyers are realising that they have to change, and some are now making their own substantial investments in legal technology.
You can easily automate the current process
One thing that lawyers (and businesses in general) do is generate a lot of paper. Modern word processing has enabled much longer contracts - hundreds of pages long, as noted by Ian Apperley in his recent post Why don't New Zealand Companies win government tenders?. Disappointingly, all these extra words have not resulted in more customised arrangements that deliver better outcomes. Often they just address an even wider range of unlikely circumstances, that could be relevant but probably won't be. Because they are so long, the costs of customising at up to $700/hr are prohibitive, so the outcomes have not improved. In fact, they've become more "one size fits all", and often that means (using Ian's wording) "onerous, limiting, often ridiculous contracts that a small company can't sign".
Fortunately, technology now offers some solutions, both for the legal profession and for business in general. While document automation (sometimes referred to as document assembly) has been around for at least 20 years, it hasn't taken off as much as it could have. In my experience until recently, the systems have been clunky, difficult to work with, hard to integrate and have not been applied in the context of an overall business strategy. Some of you will have looked at document automation in the past, and been underwhelmed, because they have not delivered the benefits users needed, document automation systems haven't been widely used.
This has now changed, and modern document automation is incredibly powerful. It can be delivered on-premises or via the cloud, and as this webinar shows with APIs that will allow integration with nearly any system you can think of, including ERP, workflow, CRM, document signing, and document management. It can be used from very simple forms, to complex legal documents over hundreds of pages long, and you can prepare individual documents or "document packages" relating to an entire process. Already widespread in major banks and insurance companies, hundreds of thousands of document packages can be prepared by a single organisation per month.
Addressing one of the issues Apperley raised, you can start with a lengthy and comprehensive template, and by answering a series of targeted questions and pulling information from other systems, quickly narrow down to the bits that are relevant and which will make the greatest impact on whether the parties successfully achieve their objectives. No more 700 page contracts!
There are substantial opportunities then for any organisation to save a lot of time and money by automating their existing documents within their current processes.
The opportunity is bigger - You can also re-engineer the whole process
That may be enough reason in itself, but going back to Hammer's article, it would be missing the greater opportunity. Adopting document automation integrated with other easily available technology gives an opportunity to re-engineer the whole process.
In the United Kingdom banks are partnering with law and accounting firms and technology companies to re-engineer their ISDA documentation processes as they need to re-write thousands of "master contracts" to comply with new regulations. Allen & Overy 's David Wakeling said this would usually cost tens of millions of pounds for a premium law firm to do in a traditional way, even though he said it is "not necessarily hard legal work". With the re-engineered process, 95% of the person hours on the project are now negotiations, instead of documentation.
Government Procurement as an example
Apperley's earlier article and his follow up Creating a Level Playing Field struck a chord with me, and many other readers too, judging by the feedback. Last year I was on the board of a small software company and experienced first hand how government procurement can literally kill a company.
As Ian noted, there is substantial dissatisfaction with the process and outcomes, despite the significant effort that MBIE have put into developing Government Model Contracts and RFx procurement templates. It is not just a matter of preparing the paperwork more quickly - the whole process could be re-engineered.
I would suggest though that as much as we don't want 700 page contracts, we don't want two page contracts either. We want contracts that work for both parties. Part of the problem with the current system is that not enough up-front thought goes into what government wants and the documentation is not clear enough to bidders. Should they even respond, and if so, how can they really differentiate and provide the best possible service? The only way to tell is to ask time consuming clarification questions, and hope that doesn't count against you in evaluation. As Ian notes, many bidders opt out entirely - including for opportunities they could be successful in.
MBIE's own assessment of the current system has identified this lack of clarity as to what is required, meaning that responses are not as tailored or competitive as they could be, as a major problem. On the government side, they are dissatisfied with the quality of responses, even on large tenders with experienced bidders. Intuitively, it could be expected that small tender responses would be of even lower quality.
Bidders are also often frustrated that despite the long periods it takes government to get documentation out to market, the response times allowed for are ridiculously short. The costs of responding are very high, however. Government expenditure is $39 billion a year, and MBIE estimates that response costs on tenders are up to 10% of the contract size ($3.9bn). MBIE therefore estimates a 1% reduction of tender costs could save businesses up to $39m and provide better public services. It's an attractive opportunity.
With all the time and emphasis on preparing documents and getting them out the door, there is not enough time for thinking, discussing alternatives, and working out how the parties will work together in practice.
Imagine instead a coherent system where people were working as efficiently as modern technology allows. The wall of paperwork that is currently involved could be greatly reduced. Some is probably unnecessary anyway, while the rest could be prepared much faster and more accurately. Imagine if, as with the ISDA projects in the United Kingdom, preparing the documents was only 5-10% of the total time. Procurement teams on both sides would have more time to think about what great outcomes would look like, and to do deeper due diligence on each other which will help select the best partners and solutions, not just the biggest providers and the lowest perceived risk from vanilla solutions.
If just a 1% improvement could deliver $39 million of savings per annum, how much could we save - and how much better would our public services be - if the process was re-engineered?
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