QUESTION:

What role did benchmarking play in the development of the BMS in QinetiQ?

Explain how benchmarking is or could be used to assist the implementation of a new business management system in your own company or another you know well. Explain your answers with practical examples.

Developing a business management system (BMS) in QinetiQ

QinetiQ is the result of a lengthy transformation from a set of independent government research and development establishments to a public limited company (plc), which is at the forefront of creating technology and its use in providing solutions for a variety of customers, to afford them a competitive edge in their market places. The transformation had many facets, mostly to do with the changing of attitudes and behaviors, and many initiatives and change programs were spawned to develop new skills and attitudes. This short case study examines one thread - the development of a business management system (BMS) based on the right processes to achieve the goals of the company.

In April 1991 the Defence Research Agency (DRA) came into being, bringing together four UK Ministry of Defence (MoD) establishments with some 15 000 people in eight major locations. The business of the Agency was to provide the MoD with advice on which it could make decisions in its equipment acquisition programs. At the same time, the MoD was looking at ways in which it could ensure better focus for its research spend, particularly in the light of the expected reduction in the defence budget, which in turn was the result of the changing political scene, following the collapse of the Soviet Union.

The rationale for the creation of agencies was simple - the UK government believed that there should be a clear separation between those elements of the civil service that provide advice to Ministers so that policy can be created and those that deliver a service consumed by the public (for example, the Passport Agency) or another part of government. It was felt that giving an agency more freedom to conduct its affairs should ensure that the service is delivered more effectively and efficiently.

In DRA, the plans to realize those twin benefits were drawn up by a newly appointed chief executive; John Chisholm, who was recruited because of his commercial acumen and his synergy with the business. There was much to do; duplication of activities to be removed, costs to be reduced through greater efficiencies, but most importantly DRA had to learn first that it was a supplier to a customer rather than a customer of its own work. It had to learn how to understand the customer and satisfy its needs. Another major change required was the need to accept managerial responsibility, in contrast to the ‘committee' where many could celebrate success but none would admit failure. Lastly, DRA needed to formalize its approach to quality. These needs were represented in a performance diagram (Figure C10.1) which compared DRA's performance against that of other suppliers to the MoD.

Each of the initiatives used to address these problem areas is a case study in its own right, but this one concentrates on the work done to improve formal quality and develop a truly process-based management system. By the middle of 1992, the main thrusts of change were biting. In preparation for running DRA as a trading fund, where just as with any commercial company, money is earned from customers to pay costs (as opposed to the ‘vote funded' system where a civil service establishment has a budget approved annually and the money voted to it by Parliament), the necessary financial systems and methods had been developed and deployed. The use of project management techniques to manage all of the customer tasks was being taught and managers at all levels were being prepared to undertake their changed roles to face customers and manage profit and loss.

The need to improve formal quality was addressed at two levels. First, the way in which the Agency needed to operate was described in process terms. The framework had five top level processes - Figure 2.

The processes were described in detail, both in words and in a set of process maps. However, while the business operated along these processes, the detail was not neces- sarily followed. Each of the top level processes was ‘owned' by a senior member of the executive, but little leadership was given along process lines. The diagram closely mirrored organizational lines and it was seen as a ‘structure' and not an interdependent suite of processes.

The MoD requires all of its suppliers to be registered to the ISO 9000 series and DRA needed to comply with the standard. In order to provide a local focus, the chief executive invited each of the business units (at the time there were some 15, ranging in size from 200 to 1000 people) to put in place the necessary processes and procedures to achieve certification by the end of 1996. The businesses at their own pace did just that and, while each of the systems was rooted loosely on the model shown in Figure C10.2, they were each unique in their methodology and style.

The effect of this was to create a set of fairly independent business units each operating in a slightly different way. This gave rise to two undesirable effects: co-operation between business units became cumbersome and the ability to reorganize rapidly to face a changing external environment was hampered. By late 1995, a new quality department was born with the initial remit of creating a single management system to meet the needs of the entire business and satisfy the ISO requirement. At about the same time the Agency was enlarged by the addition of the MoD's test and evaluation and other R&D assets - elements which operated in a different way to the research-based DRA. This gave rise to the Defence Evaluation and Research Agency (DERA).

The development of a single corporate management system began with an examination of the processes that needed to operate successfully.