I am pleased to have this opportunity to comment briefly on our reengineering activities and to extend a sincere "thank you" to the approximately 300 colleagues who have been hard at work on this vital project for many months.
Reengineering is about nothing less than making it possible in these rapidly changing times to sustain and enhance the excellence of this unique institution. Reengineering is how we will -- how we are -- lowering our costs and improving our services.
Eleven major reengineering teams are working intently to redesign how the Institute handles major "processes," including financial operations, equipment purchases, our information infrastructure, custodial services and -- the latest team to be formed -- student services.
Initially, we worked with consultants who were very familiar with reengineering's basic road map, but we have now virtually "internalized" the process, implementing course corrections to achieve a better fit with the culture of MIT. The process has been enhanced by the involvement of a growing number of faculty.
MIT cannot solve its mismatch between income and expenses simply by "growing" its income. While we have had some very good results in the fundraising area recently, and our endowment has performed well, we have -- by policy -- constrained the growth in tuition, and the outlook for research funding does not bode well.
We must, therefore, close the budget gap by becoming leaner, and we are already moving in that direction. The last year has seen a reduction of about 125 people in staff. It will surprise many in the community to know that virtually none of that reduction came about from reengineering. The reduction was achieved for the most part by not filling vacancies, and that could not have been done without the determined efforts of many people across the entire Institute to extend their efforts. As reengineering takes hold, of course, we will begin to see some further reductions in staff.
We have talked a great deal in the past two years about the plans for reengineering. We now are beginning to see some results. Here are two examples of how changes in the way we do business are resulting in savings to MIT:
- Significant savings in purchasing supplies, thanks to the Supplier Consolidation Team. They found that contracting with a single vendor rather than with thousands of companies would significantly reduce costs. The result: a savings of nearly $970,000 in the cost of supplies, lab apparatus, and furniture. The move eliminated our need to maintain large inventories, allowing us to close our Office of Laboratory Supplies.
- An annual savings of more than $170,000 in agency fees paid to temporary help agencies, thanks again to contracting with one firm, rather than many.
These are just two examples of the kind of savings that can be achieved through reengineering. The increased effectiveness and improvement in services that are the goal of reengineering will secure for MIT a future that will not only equal but exceed the Institute's historic contributions to this nation and the world.
A version of this article appeared in MIT Tech Talk on December 13, 1995.