ICT-Enabled Business Process Re-engineering:

International Comparison

Ya-Ching Lee1, Pin-Yu Chu2, and Hsien-Lee Tseng3

1
Institute of Communications Management, National Sun Yat-sen University
70, Lieng-Hai Rd., Kaohsiung, Taiwan
yaclee@hotmail.com
2
Department of Public Administration, National Chengchi University,
64, Sec.2, Zhi-Nan Rd., Taipei, Taiwan
vchu@nccu.edu.tw
3
Institute of Public Affairs Management, National Sun Yat-sen University,
70, Lieng-Hai Rd., Kaohsiung, Taiwan
nova1219@gmail.com

Abstract. The purpose of this study is to investigate ICT impacts on BPR. By

comparing the data in the United and Chile, it is found that ICT adoption affects
BPR, and, BPR influences business performance. There are differences of ICT
adoption impacts on BPR and differences of BPR influences on the profit
among countries.

Keywords: Business process reengineering, Structural equation modeling.

1 Introduction

There are close relationships between the adoption of Information and communications
technologies (ICTs) and business process reengineering (BPR). The literature has
shown that ICTs change business practices to re-optimize business processes, along
with improving the efficiency and performance (for example, Sarkar & Jagjit, 2006;
Ziaul, Faizul, & Ken, 2006). However, most research usually focuses on one or two
enterprise applications, such as electronic commerce and enterprise resource planning.
Lee, Chu, and Tseng (2009) believe that previous studies do not offer a whole picture
about the mixed effects of various ICTs on BPR. Therefore, this paper explores the
national differences in ICT adoption and its impacts on BPR and performance.

2 Conceptual Background

Business process reengineering is an approach to re-optimizing business processes for

corporations, obtaining competitive advantage and enhancing business performance,
such as cost saving, quality breakthroughs, better customer services, time reduction,
and revenue increases (Morris & Brandon, 1993). ICTs are usually influential in
reforming business practices. Researchers finds that ICT is an important enabler of

G. Salvendy, M.J. Smith (Eds.): Human Interface, Part II, HCII 2011, LNCS 6772, pp. 278–284, 2011.
© Springer-Verlag Berlin Heidelberg 2011
 ICT-Enabled Business Process Re-engineering: International Comparison 279

BPR because ICTs enable the distribution of power, function, and control (Morton,
1996) and render information collection and its analysis, the development of strategic
vision, and teamwork efficient (Attaran, 2004; Akhavan, Jafari, & Ali-Ahmadi, 2006;
Freeman, 2000; Venkatraman, 1991).
Lee et al. (2009) suggest that ICTs change BPR in three dimensions: Workplace,
workforce, and structure. Time and space limitation disappear because of ICTs. By
telecommunicating from home or other place, ICTs provide the opportunities of direct
and cross-unit collaboration among geographically dispersed business units (Sarkar &
Jagjit, 2006). The second dimension ICT impacts BPR is changes in the workforce. A
growing spread of automation in companies is made available by the ICTs.
Automation eventually leads to the less need of human resources (Wymer & Regan,
2005; Sarkar & Jagjit, 2006; Ziaul et al., 2006; Lee et al., 2009). Organizational
structural reforms become necessary to align with ICT adoption (Venkatraman,
1991). Business units can thus diminish the process of mediation and increase cross-
unit collaboration because of the information share and exchange of ICTs (Teng,
Grover & Fiedler, 1994; Sarkar & Jagjit, 2006; Ziaul et al., 2006). As a result,
organizational hierarchies become flatter, and the degree of centralization of decision
making has been changed (Orman, 1998).
Past research mostly focus on IT performance (Santhanam & Hartono, 2003; Jin,
2006; Hendricks, Singhal, & Stratman, 2007; Francalanci & Morabito, 2008). These
research seldom link IT-driven performance with BPR, and thus, the consensus on the
performance measurement standards is still far from reached. In addition, the
performance of IT-driven and ICT-enabled BPR are not consistent. A great number of
firms implementing multi-year, multi-million dollar ERP projects do not reap benefits
from ICTs (Dryden, 1998) or gain small benefits relatively to ICT investments
(Lyytinen & Robey, 1999; Carr, 2003; Na et al., 2004). It is therefore important to
investigate business performance resulting from ICT-enabled BPR. In this paper, we
investigate the relationships among ICT adoption, ICT-enabled BPR, and the
performance.

3 Hypotheses and Research Questions

• Hypotheses 1a-1c: Resource planning infrastructure (RP) has positive and

significant impacts on workplace reforms (WP) (1a), workforce reforms (WF) (1b),
and organizational structure reforms (OS) (1c)
• Hypotheses 2a-2b: E-commerce infrastructure (EC) has positive and significant
impacts on workplace reforms (WP) (2a), workforce reforms (WF) (2b), and
organizational structure reforms (OS) (2c)
• Hypotheses 3a-3c: Workplace reforms (WP) (3a), workforce reforms (WF) (3b),
and organizational structure reforms (OS) (3c) positively affect business profit
(profit).
• Hypothesis 4: Workplace reforms (WP) positively affect workforce reforms (WF).
• Hypothesis 5: Workforce reforms (WF) positively affect organizational structure
reforms (OS).
280 Y.-C. Lee, P.-Y. Chu, and H.-L. Tseng

Workplace
Reform
(WP)

Resource
Planning
Infrastructure
(RPI)
Workforce
Reform Profit (Profit)
(WF)

E-commerce
Infrastructure
(ECI)

Organizational
Structure
Reform
(OS)

Fig. 1. Presents the ICT-enabled BPR model

4 Results
The research responses are from chief information officers or senior information
systems managers in the United States and Chile. The sample size is 248 from the
United States and 301 from Chile.
The SPSS 12.0 and AMOS 16.0 software packages were used for the statistical
analysis. Scale reliability and construct validity are tested with confirmatory factor
analysis (CFA). Based on CFA results, we discard items that load on multiple
constructs or have low item-to-construct loadings (Anderson & Gerbing, 1988). The
loadings of items on their respective factors are highly significant (p < 0.01). The
goodness of fit index (GFI), comparative fit index (CFI), and Bollen’s fit index (IFI)
range between 0.82 and 0.87 for two countries (Bollen, 1989). The root mean square
of error approximation (RMSEA) values 0.061 and 0.067. The results find the data
converge and the fit of CFA model appropriate (Bentler, 1995; Bollen, 1989).

4.1 Results for Hypotheses Testing

The path coefficients of 2 countries are shown in Table 1.

Several notable and unanticipated results are discovered. In the United States, there
are two negative significant path coefficients: One from RPI to OS, and, the other
from OS to Profit, with standardized path coefficients of -0.19 and -0.09, respectively.
A possible explanation for why RPI does not have a positive impact on OS in the US
might be the company size. In the US, company size is much bigger than Chile.
Twenty-five percent of US firms have more than 2,000 employees. In Chile
companies with over 1000 employees account for 18.7% and 8.6% of all companies
in the sample, respectively, much lower than in the United States, large firms having
proportionally greater spending on human resources might impact profits.
 ICT-Enabled Business Process Re-engineering: International Comparison 281

Table 1. Results of structural equation model analysis of individual country models

Path coefficients USA Chile

RPI-WP 0.19* 0.09*
RPI-WF 0.34* -0.01
RPI-OS -0.19* 0.09
ECI-WP 0.39* 0.26*
ECI-WF -0.15 -0.02
ECI-OS 0.24* 0.08
WP-WF 0.37* 0.34*
WF-OS 0.63* 0.43*
WP-PRO 0.16* 0.10*
WF-PRO 0.13* -0.01
OS-PRO -0.09* 0.04
X2 554.47 530.03
DF 202 202
p-value 0.00 0.00
GFI 0.84 0.86
RMSEA 0.084 0.074

5 Conclusion and Discussion

ICTs play a key role in business activities and improve business performance
(Brynjolfsson & Hitt, 1996; Kohli & Devaraj, 2003). The literature is of shortage in
examining the moderating effects of BPR and cross-country comparisons. This paper
applies multiple-group structural equation modeling to test the ICT-enabled BPR
Model to clarify the relationships among ICT adoption, BPR, and performance. The
results confirm discovery of previous research that ICT adoption affects BPR, and,
BPR influences business performance. However, the impacts are not all always
positive in this research. There are differences in ICT adoption impacts on BPR and
differences of BPR influence on profit among countries.
In the case of the United States, the resource planning infrastructure and e-commerce
infrastructure positively affect workplace reforms. The resource planning infrastructure
negatively affects organizational structure reforms despite of improving companies’
workforce. E-commerce infrastructure positively impacts organizational structure.
Profits are positively influenced by workplace reforms and workforce reforms. For
Chile, workplace reforms are positively affected by the resource planning infrastructure
and e-commerce infrastructure, leading to profit improvements. Though enterprises in
282 Y.-C. Lee, P.-Y. Chu, and H.-L. Tseng

Chile adopt new communication and information exchange tools to accomplish tasks
without space constraints, they avoid dramatic workforce reforms and organizational
structures reforms, which are more central and evolutional to business processes (Bhatt,
2000; Venkatraman, 1991; Ziaul et al., 2006). The finding in this study showing is that
profits are indirectly affected by workplace reforms also suggest that workplace reforms
are more peripheral to business operations. However, the results of current research
demonstrates that firms can take advantage of workplace reforms to efficiently
exchange the management processes and reduce the travel and communication costs
(Hammer & Champy, 1993; Tippins & Sohi, 2003). The requirement of ICT usage to
telecommunicate and teleconference to engage in interrelated work activities (Hammer
& Champy, 1993; Tippins & Sohi, 2003) forces firms to simplify and automate
management processes and more efficient (Hammer, 1990). As a result, the
organizational structure flattens and involvement of employees in empowerment
activities increases.
This research also indicates IT paradox. That is, ICT-enabled BPR do not always
lead to positive performance (higher profits). This is especially true when the
organizational structure or workforce does not align with the adoption of the resource
planning infrastructure. The pay-off of ERP implementation may take time to come
clear (Sarkar & Jagjit, 2006; Ziaul et al., 2006). Therefore, further investigation is
encouraged to examine impacts of the ERP infrastructure on BPR and performance in
the long run.
There are several contributions of this paper: 1. Empirical evidence is offered to
refine impacts of ICTs on business process reengineering and performance from the
firm-level studied in past research to the country-level. 2. The associations among
ICT adoption, BPR, and performance haven not been strongly connected. The
findings in this paper help to understand the complexity of ICT adoption and the
prediction of BPR outcomes. 3. The national differences in ICT adoption and its
impacts on financial performance are explored. It is worth noting that ICT-enabled
BPR does not necessarily lead to profits. The explanation of the inconsistency with
prior literature might be that ICT investment takes time to delay effects, and that the
financial index is not the only indicator for performance estimation. Santhanam and
Hartono (2003) believe that future tests of ICT capability have to consider the prior
financial performance of firms.

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