: X (Engineering) Marks the Spot"> eWEEK: Do you think the cynicism and uncertainty has something to do with the culture of the consultant business over the last 10 years. They may be saying, we tried it once, were not going to do it again. Champy: The consulting industry has not done business as great a service as it could. In fact, you could argue that if it hyped ideas and solutions as being too simple, it did business a disservice. And I believe the industry as a whole has yet to perceive the depth of change, the operating change, that companies will have to go through. Im a strong believer in the idea that companies will have no choice but to reengineer and cross engineer at some point. But that means changing a huge set of operating procedures, and I think consulting firms failed to really develop clients in ways that the clients have the strength to take that on. Its hard work, very hard.Champy: Im not going beyond the cross engineering concept, because theres so much to do. And the world doesnt need a new idea at this point. I think consulting firms have used those labels frankly to stimulate business. But the world doesnt need a new idea. We introduced the reengineering concept in 1992 and I think only about 10 percent of real process change that companies have to go through has been done. Im not hanging my hat on anything new. In fact, Im a little uneasy of having the cross engineering term, because of the cynicism with which managers encounter new ideas. eWEEK: When you go into a company, you dont say, were going to X-engineer you. You start with something smaller, like lets fine tune your customer relationship management or define your business processes. Champy: We tell about the benefits of harmonizing operations between you and your suppliers and your customers. That benefit is going to require some operating changes that are larger that what you have experienced in the past. The companies with which we are doing this work have to really again begin with the principles of transparency and standardization. Get those ideas. It they dont get those ideas, the changes will be incremental at most. I try to get them to see the degree of change they are going to have to go through to do this work. I dont think there are many companies that understand it or see it yet. eWEEK: How do you get that 10 percent up to 20 percent? Champy: There is some combination of vision and fear. Right now theres a lot more fear operating than there is vision. But it grows to 20 percent or more when some management team starts to shift dramatically the way they think of their business performance. The way you get it going is to get people thinking more radically. Some set of business metrics, some set of performance metrics. Once they start thinking that way they see that they cant operate and just make incremental changes. They cant operate the way they used to and just make incremental changes. Its in appreciating the value of the radical ness of a business improvement. eWEEK: What industries do you like right now, in terms of those rethinking their businesses? Champy: Wal-Mart is doing the right thing. Their suppliers see an opportunity to do better. Thats what you have to do, you have to get to the point in a relationship with suppliers that they arent just there to beat you down in price. Its about making more margin while selling at a lower cost. Wal-mart is a leader in that kind of thinking. Dell also is a leader in thinking about the degree of integration. Ive also been watching the mortgage business, and the way that industry has consolidated. You can only be in that business if you are a big player, but its actually done a very good job of engaging its customers electronically and process wise. Its very efficient. eWEEK: So in effect, X-engineering success requires buy-in from suppliers and customers on each end of the business. Champy: Absolutely. Dell is an example of that. The supplier has to be totally open for costs, processes, and the buyers have to be open, so you can look at each others operations and say, this isnt just about CRM or throwing a product over a wall, its about designing what these processes are going to look like, eliminating redundancies and back orders and substantially improving performance while both are lowering their costs. eWEEK: How important is outsourcing to X-engineering? Champy: I believe outsourcing isor a willingness to outsourceis important, the willingness to share a process with someone else or give a way a process that someone can do better than you can. I think X-engineering requires knowing what your distinctiveness really is, and what youre good at. And then an openness and willingness to get rid of the rest. You have to focus on what you are good at. Were going to see increased outsourcing of processes way beyond the IT operations of a company. eWEEK: Can todays IT departments keep up with the pace of change necessary? Champy: Theres a systemic problem that IT departments have. Just outsourcing doesnt solve this problem. The problem is the old one of legacy. Most companies, whether they are spending inside or outside, are spending most of their IT budget on old systems and old processes. And they need to find ways to shift what they are spending to the new process and new systems. And thats a dilemma they have not solved yet. Many of them look to outsourcing to solve that but what they do is they outsource their processes and systems as they are. And they lock themselves in a 10-year deal that continues the status quo. Outsourcing per se is not he answer. The answer to keeping up is finding a way to stop doing the old stuff. And to be able to promise the development of the new. eWEEK: The old stuff being mainframes, client/server . Champy: Its not always defined by the technology, its defined by the application. Take financial services, which wants to be able to go to its customers an integrated set of offerings. But its IT infrastructure reflects a highly fragmented set of offerings. Every system was built to support a given product. Big banks have tremendous difficulty integrating new products and services and developing new products and services. The next round of changes in IT will be the need for companies to integrate their offerings, products and services.
eWEEK: Has consulting gone beyond X engineering yet? What are you hanging your hat on these days?