The Traits of BPM: Six Fundamentals Necessary for Successful Process

Improvement Initiatives

Gaining A New Awareness of Your Business…

Howard Webb Director, Advisory & Consulting Prolifics

ABOUT PROLIFICS ADVISORY AND CONSULTING SERVICE

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Advisory & Consulting Services

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The purpose of Advisory & Consulting is to help guide, coach and equip our clients to succeed in improving their business processes

through the discipline of Business Process Management.

BPM Readiness Assessments (1 to 2 weeks)

Establishment of BPM Centers of Excellence (Office of BPM)

Strategic BPM Planning (Business and IT)

Facilitated Process Improvement Workshops

Business Analysis in the context of process improvement

Training and guidance in the use of Blueworks Live

Identification and definition of business rules

Data Architecture and Business Process alignment

Ongoing, longer-term BPM consulting/mentoring engagements

Industry-specific expertise

Services We Provide

WHAT IS BUSINESS PROCESS MANAGEMENT?

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Business Process Management

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BPM is Not a Methodology, a Standard or a Technology, nor is it a Project with a discrete start and stop.

Six Sigma

Lean

Lean Sigma

Balanced Scorecard

Kaizen

Rummler-Brache

TQM Etc…

Etc…

ISO 9000 Websphere BPM 8.0

Pega

Aris

Business Process Management

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“Business Process Management (BPM) is a holistic management approach that encompasses all aspects of a business including Strategy, People,

Processes and Technology, in order to deliver value to customers and other stakeholders.”

BPM is about fundamentally changing the way you view and manage your business

“Operational Transformation is the next frontier of business advantage.”

Peter Fingar and Joseph Bellini

Current Trends

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“Broadly speaking, investing in better coordination and management of process work has been on the rise, while incremental approaches are slowly declining, or at least

being integrated into larger, organization-wide BPM initiatives..” *

bpm six sigma Lean six sigma

Enterprise architecture Service oriented architecture

*BPTrends, The State of Business Process Management, Celia Wolf, Paul Harmon : www.bptrends.com

Challenges Limited resources

Competing priorities

Standardization (methods, technologies)

Increasing demands from both the business and customers

Management demand to show ROI

Gain process maturity and foster an environment of continuous

improvement

Struggling with complexity and change

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Realizing Your Business Strategy

The only way organizations can deliver value to their customers is via cross-organizational business processes

How well we execute our business strategy is determined by how well we manage and execute our business processes

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Traditional Management Model Redundant activities/duties Misaligned incentives/

compensation Isolated measurement

model Limited reuse Multiple breakpoints Multiple moments of truth No cross-organization

control Corporate

Dept A Etc. Dept B

Departmental Silo Perspective

Traditional Hierarchical

Management

Customer Customer

The Customer Experience

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Discontinuous thinking leads to disjointed customer experiences…

How many people or departments did I have to talk to just to get my issue resolved?

“Before I transfer you, is there anything else I can help you with?”

Process-Oriented Model Begin and end with the customer experience in mind

Incentives based on end-to-end process performance

Fewer handoffs, fewer breakpoints

Few moments of truth Process measures providing

visibility Corporate

Function A Etc. Function B

Cross-Departmental Perspective

Customer

Process 1

Process 2

Process 3 Customer

“At the heart of business process change is the notion of discontinuous thinking – of breaking away from the outdated rules and fundamental assumptions that underlie operations. Unless we change these rules, we are merely re-arranging the deck chairs on the Titanic.”

Mike Hammer

Changing the Business Model

Recognize the Signs of Process Failure

Even the best of processes become out of date and require modification

Strategy not embraced, not clearly articulated Unclear, limited communication mechanisms

Top down and bottom up

Functional metrics (or none at all) Manual controls (checking and re-checking) Personal systems – Technology not keeping pace

Spreadsheets Desktop databases

Process workflow implemented through email systems Staff working excessive overtime Poorly or non-integrated systems Frequent reorganizations

“We trained hard, but it seemed that every time we were beginning to form up into teams, we would be reorganized.

I was to learn later in life that we tend to meet any new situation

by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency,

and demoralization.”

Petronius (c. 27-66 AD) • Aid to Nero - Emperor of Rome

Recognize the Signs of Process Failure

Business needs to become more ‘Self Aware’

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In Psychology

The Gestalt ‘Cycle of Awareness’ is the notion that there is a process by which people start with a PERCEPTION of their environment This is followed by an AWARENESS of their actual needs and desires

Business should be no different People have a PERCEPTION of how things (processes) are occurring within their

organizations AWARENESS comes when we begin to examine those processes and find that

they may not have been operating anything like our perceptions

We were unaware:

How long things were actually taking

How much waste we were generating (time, cost, resources)

The opportunities we were missing

Our customers’ opinions of our products or services were not what we thought

Our processes were not really aligned with our business strategy

Losing a handful of key people could bring our business to a standstill

How reliant we were on personal systems (e.g. spreadsheets, email)

Business ‘Awareness’

Business ‘Awareness’

With new insights, business leaders can begin making decisions with greater understanding, awareness and confidence Decisions about what needs to change to realize goals and objectives

Which areas of the business are causing the greatest constraints on performance

How best to apply technology

How to organize to achieve improved process execution

What needs to be done to ensure customer satisfaction

How to maintain a competitive advantage in today’s global market

How to react quickly and efficiently to opportunities and external threats

Six Key Areas of Business Awareness

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Strategy Process

Performance

Customer

Change Technology

Gain and share understanding of your business strategy, goals and objectives

Make strategy real from senior management through everyone in the enterprise Clarify, Communicate, Execute

When decisions are made whether it be a reorganization or investment in new technology, FIRST understand how those decisions: Fit into the business strategy Will help achieve the goals and objectives

Strategy Awareness is when everyone in the organization can state explicitly where you are going and: Why their role is important How they contribute to strategic success

Strategy Awareness

Process Awareness is knowing how your processes ARE being performed, not just how you THINK they are being performed

How long they take How much they costs to execute How many people are needed What controls are in place How standard the tasks are

Before making any business or technology decisions…

Understand your processes Model (visualize) them for clarification and communication Verify what and how things are being done

Process Awareness

Process Models

Processes are invisible

They need to be modeled (visualized)

For understanding and clarity

To communicate what is actually happening

As a baseline for change…where we are today

To provide direction for where you want to go

Process models are the blueprint of your business

Would you build a house without a blueprint?

Why would you attempt to run a multi-million dollar business without one?

“Give the power to manage and change processes to your business process owners …and focus on how to enable faster change.”

Business Process Management –The Third Wave By

Howard Smith and Peter Fingar

Initiate, encourage and back process change

Understand what the process should do

Promote process value

Define and monitor process performance

Work for the best interest of the enterprise (end-to-end process) not just the department

Process Owners

Organize Around Process Teams Fewer handoffs means fewer break points

Teams cross-trained to support process activities vs. individual

‘heroic’ efforts

Team responsibility vs. blaming individuals

Process owner responsible for empowering teams

Teams are rewarded based on process performance

Performance Awareness

Performance Awareness is the discipline to identify key performance indicators (KPI’s), actually measure process performance AND tie it to continuous improvement

A recent industry survey* revealed a shocking 50% of respondents say they never or rarely define performance measurements

A stunning 65% say that “dedicated” process managers never or rarely use data to measure the success of their process execution!

*Source: BP Trends, February 2010: “The State of Business Process Management 2010”.

Measure Success “When you can measure what you are speaking about and

express it in numbers you know something about it ;

but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and

unsatisfactory kind.” Lord Kelvin

Individual Performance

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Team Performance

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Business Monitoring

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What Should be Measured Your customer doesn’t care about

Your production costs How many calls your call center can take per day About your cool new data warehouse

They care about getting the products and services they asked for, at a fair price, when they were told they would get them…and when they need help, they get it Don’t ask me “Is there is anything else I can help you

with?” when you haven’t helped me at all!

Start with the Customer… Measure results not activities

Customer Awareness

Look at your business through the eyes of your Customer…Would you want to do business with your company?

What is your organization’s definition of a Successful Customer Experience…is it the same as your customer’s definition?

Design your process around your customer…they are the reason you have a job

How we see ourselves is often different than how our customers see us…

Start looking Outside In vs. Inside Out Outside In thinking gives a whole new perspective on your business Does the customer care that we are doing this?

Change Your Perspective

‘The Outside-In Corporation’ – Barbara Bund

Tear Down the Silos

Hours, Days, Weeks, Months?

Who is your Customer?

Sacred Cow

Simplify Business Processes Complexity leads to

Us doing the wrong things Losing sight of the customer The customer losing interest in us

“Simplicity is the ultimate sophistication” Leonardo da Vinci

Simplifying business processes means enabling and

managing business decisions Extract business rules from business processes Encapsulate business rules in decision models Enable ownership of processes and decisions

Understand what is

important to your

Customers

Change Your Perspective

Awareness that things over which you have no control are going to change what you do

No matter how good you think your business is today, things change Market conditions change Political environments change Your processes become stale, under-performing

Continually monitor your processes in the context of both internal and external forces Your competition is not sitting still…do you want your customers as

badly as they do? Do you want someone else to take your job because the process needs

improving?

Change Awareness

Recognizing the need to change is a first step in recognizing the need for Business Process Management

The Need to Change

Internal Forces

External Forces

Take Action

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Take swift and informed action Show return and business value quickly

Quick wins are essential

Don’t fall into analysis paralysis and don’t get bogged down on ‘future state’ debates

You don’t have to boil the ocean…Think big, act small Focus on the greatest constraint based on your process objectives

Theory of Constraints

‘The Goal’ – Eli Goldratt

But…you Must understand your processes for it to work.

Change and Decision Management

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Technology Awareness

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Key Components of Business Process Management Model Business Processes

BLueWorks Live • Scoping • Visualize Processes

Orchestrate Process Workflow Business Process Manager 8.x

• Adding execution components to business process models • Implementing process workflow

Externalize Business Rules WebSphere Operational Decision Manager (ODM)

• Implementation and management of business rules

Monitor Performance Websphere Business Monitor Cognos

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Typical Process Problems

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Executive Management

Customer Service

Invoice Reconciliation Teams

Finance and Ops Account

Administration 1. Unstructured Tasks and Communication (ex: Paper or email)

2. Inefficient Working Environment Spans Systems

3. Inconsistent Prioritization

4. Incomplete or Inaccurate Data Flow Between Systems

5. Lack of Control Over System and Business Events (Exceptions)

6. Poor Visibility into Process Performance

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BPM Brings Order to the Chaos

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Executive Management

Customer Service

Risk Management Teams

Finance and Ops

Account Administration 1. Automate workflow &

decision making

2. Reduce errors and improve consistency

3. Standardize resolution across geographies

4. Leverage existing systems and data

5. Monitor for business events and initiate actions

6. Real-time visibility and process control

Customer Benefits:

• Huge Reduction in Manual Work, Errors

• Faster, More Consistent Issue Resolution

• Easier to Manage the Business

• Consistent Case Handling

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Parting Thoughts

Processes are invisible, they need to be modeled to be understood and communicated

Process ownership is critical to success

Externalize your business rules

Measure and monitor process performance

Manage business processes not departments

Leverage BPM technologies for maximum process improvement

BPM is a journey not a destination

Always focus on the Customers Perspective

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Parting Thoughts

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“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money

somewhere else.” Sam Walton

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Howard Webb practice director, advisory & consulting prolifics | office: (646) 380-2948| mobile: (314) 602-3341 Howard.webb@prolifics.com | yahoo IM: hwebb_prolifics