Making the case for improved efficiency

To re-engineer business processes, firms need to focus on the business cases those processes serve

Over the past several years, Hedge Funds have been taking time to re-examine their business models with the goal of reducing their cost structures. Business process re-engineering can be an effective technique to achieve this.

The “science” of business process re-engineering was born from manufacturing industry, where tight margins made getting the manufacturing process right a necessity. In the mid-1990s, the same techniques were applied to business process cycles to gain efficiencies and effectiveness. Today, these concepts are starting to be applied in the hedge fund world with great success.

Making the case for improved efficiency

To re-engineer business processes, firms need to focus on the business case those processes serve. It’s vital that firms start by evaluating their current processes – and the objectives of those processes – when they begin looking to improve efficiency.

Often, a firm will begin by deciding that a particular functional area within their business can be enhanced. From there, almost inevitably, there arises a broader discussion about the overall process efficiency of the organisation. While looking at overall process efficiency can be helpful, a firm must not lose focus and must understand the drivers of improving business processing

Understanding a firm’s process efficiency is a large task. It deals with understanding the efficiency of many individual business processes – and how automated systems can support these processes.

This is a critical juncture in the review. The firm should review and question each process and why it is needed. Just because a process has been used within a firm for years, does not necessarily mean it is relevant today.

By following something like the 12-step plan outlined in the box (right), a firm can begin its business process re-engineering. It should help ensure that any process re-engineering is by driven by the needs of the business and not the needs of the process.

Process Efficiency Plan Spring2014

27th February 2014