Bigger is better in reengineering, study finds.

When banks set goals for reengineering projects, it's better to aim high than play it safe, a new study has found.

The survey, conducted by CSC Index, a Cambridge, Mass.-based consulting firm, also found that the major focus of bank reengineering initiatives is improving customer service. The main factor hampering the achievement of goals is getting information systems in place, the survey said.

David G. Robinson, president of CSC Index, wrote in an analysis accompanying the study that "Lower ambition more often results in missed goals - and bigger gaps between reach and results - than when the higher ambition is exercised."

The survey of 47 North American banks is part of a comprehensive study of the state of reengineering at 600 companies on this continent and in Europe.

Kevin Dougherty, a partner with Coopers & Lybrand Consulting in Boston, said the finding linking ambition with achievement confirms what he has seen working with financial institutions on reengineering.

But Deborah Williams, a technology analyst with the Tower Group in Wellesley, Mass., said "I'm surprised to hear that higher goals lead to greater success."

She noted that Tower Group research has shown "goals that are set too high are [sometimes] detrimental to achieving the goals."

Ms. Williams, however, was not surprised to hear that technology issues were a big concern to banks. "They are clearly equating technology with reengineering," she said.

Banks -- more than any industry except telecommunications -- reported that changing technologies were the driving force behind their reengineering projects.

The advent of new systems -- and increasing competition from other banks and nonbank financial service companies -- were the major external factors leading to restructuring initiatives.

Technology issues also surfaced as leading internal factors driving the projects.

But Greg Tucker, a CSC Index vice president in San Francisco, said that "banks are still struggling with" developing the right technology plan and having it come in on time and on budget.

He said streamlining the backoffice to cut costs remains a major focus for banks.

Mr. Tucker added that he was surprised that increased revenue was not a higher priority in reengineering. "Most people are focused on cutting costs," he said.

And while cutting overhead, updating technology, and other factors led banks to rethink business processes, the survey found the ultimate goal of many banks' projects is improving customer service.

That finding did not surprise analysts. "Everything is focused on that contact point with the customer," noted Ms. Williams.

The CSC Index survey also found that the specific goals set by banks in areas such as reducing costs, increasing revenue, shortening work cycles, and improving customer satisfaction were similar to those set by companies in other industries.

Reengineering Rationale

TOP EXTERNAL factors driving banks' reengineering

* Increasing domestic competition

* Advent of new technologies

* Increasing pressure from customers

* Product or service obsolescence

* Declining productivity

TOP INTERNAL factors

* Increasing cost structure

* Dissatisfaction with operations

* Need to maintain industry lead

* Inadequate information systems

* Declining productivity

Source: CSC Index

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