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Process quality management: a case study

of its use in determining the IT strategy for

a small business

C. Tagg

Open Business School, The Open University,

ABSTRACT

Process Quality Management is used to assist a small manufacturing businessdevelop an IT strategy. The resulting strategy and the subsequentimplementation of IT is discussed. This use of Process Quality Managementfor determining the IT strategy for a small business is evaluated.

INTRODUCTION

Introducing yourself as a computer scientist to a new acquaintance often leadsto a conversation which begins: 'My brother/uncle/friend has his own businessand he's been wondering whether he should get a computer. What sort shouldhe get?' The reasons for wanting a computer are varied: 'my accountant thinksit would be a good idea', 'I want to keep up with my children/grand children','to keep us up to date' but rarely arise from a clear business case for thepurchase. But, the recession has been hard on such small businesses and theycannot afford for the introduction of a PC to be an albatross [11], eitherfinancially or in time.

The trouble is that the attitude of small businesses is technology driven, butto use Peppard's [9] analogy, a high quality fountain pen will not of itself writea best seller. Both Weinberg [12] and Gilb [5] make the point that quality insoftware is relative; it depends upon making the goals of the system explicit.The small business needs an IS/IT strategy but it is not clear how this caneffectively be developed for a business which has the functions and issues of alarger company but very restricted resources. Moreover, the small businessoften suffers from a lack of expertise in IT, poor perception of the capabilities

Transactions on Information and Communications Technologies vol 8, © 1994 WIT Press, www.witpress.com, ISSN 1743-3517

86 Software Quality Management

and uses of IT, a lack of explicit business objectives, and substantial financialand organisational risks of failure.

This paper describes the case of a typical small manufacturing business,TF, which has been in business for 12 years, employs 5 people and is run by ahusband and wife team. It explains how Process Quality Management (PQM),was selected as the technique to be used for formulating an IT strategy, theapplication to TF and the adaptations that were made to PQM in the process.The events when the business subsequently acquired a computer are evaluatedin the light of the PQM analysis. The paper concludes by discussing theadvantages and drawbacks of using PQM for assessing the IT requirements ofa small business.

BACKGROUND

TF was founded by Roland about 12 years ago when he was made redundant.The business has been built upon Roland's expertise as a furniture maker, hisskills and enthusiasm for refurbishing second hand machinery, and his abilityto build up a network of customers amongst architects and designers. Thecompany makes high quality bespoke furniture and specialist joinery largelyfor the commercial market. Jobs are very varied, for example boardroomfurniture in fiddleback sycamore costing £4000 or the veneering of 60 doors inash at £100 each. In the last year there has been an increase in the number ofjobs completed for private customers including fitted kitchens. The companyhas grown gradually over the years and is weathering the recession. It has anannual turnover of £120,000 - £210,000.

TF currently employs three other craftsmen: a works manager, a trainedfurniture maker and a trainee. Helen, Roland's wife, is also a partner in thebusiness and works for TF for two days a week. She manages the paperwork,debt collects, liaises with customers and suppliers and does the design layoutsfor the kitchens. TF also has a part-time van driver, employs casual labour asrequired and sub-contracts some of the kitchen fitting.

The business is split between two building for historical reasons. Helenhas an office but also works from home occasionally. The office is dustydespite the extraction system as it not completely closed off from the machinefloor. TF has an impressive array of specialist machinery (veneeringequipment, spraying equipment, various sanders, planing machines, spindlemoulders, circular saw, routers and wood lathes) and a large stock of fittings,veneers and specialist timbers which enable them to undertake a very widevariety of work. They are currently considering moving to new premiseswhich will allow them to house the business under one roof and give themsome scope for expansion. The business is illustrated in figure 1.


Managing Quality Systems 87

KitchenGeneral public

Instal,

Sub-contractors

Furnitureshowroom

Roland's fatherretired IT adviser

Helen's fatherretired accountant

Suppliers.

VATInland

-̂ revenue

Roland "^e Helenteam"

>ed joinery

ArchitectsCommercialclients

Figure 1: Rich picture of TF at the start of the study

This study started because Roland was considering buying a laptop computer.He thought that a portable would be neater and take up less space than a full-size computer and that it would be convenient to take work home. He thoughtthat a computer would be useful for word processing and invoicing and wanteda computer to help with cutting lists by performing some of the calculationsand working out the best cutting layouts. The cutting list is an importantelement of the design process which is Roland's responsibility; he currentlycompletes up to 15 cutting lists a week. He also had some ideas of maintaining



records about each job on the computer. He had reservations about the use ofcomputers: "you have to be careful you don't get carried away and waste a lotof time pratting around".

IT STRATEGY FORMULATION

Whilst a small business such as TF may recognise that IT is a driving force andthat they have to be 'more responsive, flexible and innovative if they are tocompete successfully' [9 p.5], they nevertheless view IT operationally notstrategically. The initial conversation with Roland, the founder of TF, focusedon the technology (would a laptop survive the dusty environment of theworkshop).

In approaching a problem of this nature, it is difficult to scale downappropriate methodologies to the needs of a small business. The starting pointand language is wrong, for example Silk [10] begins by discussing the'information management partnership of IT professionals, middle and topmanagers'. Methodologies also take too long to complete; for example, thebusiness area analysis of Information Engineering [3], [8] is almost as time-consuming for a small business because it has many of the standard businessareas of a much larger concern.

In contrast, Process Quality Management (PQM) [11] when applied to theidentification of IT priorities, is an intensive, structured approach which onlytakes two days. It uses a critical success factor approach to identifying ITopportunities but combines this with a review of existing uses of IT.

PROCESS QUALITY MANAGEMENT

Process Quality Management (PQM) aims to assist management to reachconsensus on critical business activities, that is those activities which have thebiggest impact on the success or failure of the enterprise. It derives fromIBM's Business Systems Planning Methodology but uses critical successfactors to identify business needs. PQM focuses on quality and the output is aseries of Quality Improvement Projects (QIPs) and where appropriate anidentification of IT priorities. PQM claims to be 'a top down business ledapproach' [11 p. 106] and is most beneficial if used first for the wholeorganisation but it can also be used at project level. Although PQM appears tobe quite versatile, there are few examples of its use in the literature.

The entire PQM process is centred around a two day planning session. Itrequires a facilitator (frequently but not necessarily drawn from outside theorganisation) who assists with the methodology and ensures that follow-up



occurs. The steps in PQM are shown in figure 2. The next section describesthe application of these steps to TF, a process which was conducted over threeevening sessions - about six hours in all.

Before thsession

Define BusinessProcesses

2 hours

e

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Figure 2: The PQM methodology (from [11 p.l 11])



APPLICATION OF PROCESS QUALITY MANAGEMENT

A PQM study is chaired by the sponsor who is 'the person holding the mission,the leader of the particular management team' [11 p.107] and attended by allthe relevant managers (those with a 'direct interest in progressing the mission'

[11 p. 1121).

Conducting the briefing and choosing a team

Before the start of the PQM planning session, the facilitator briefs thesponsor on PQM and together they choose the team and prepare a briefing notefor all participants containing a draft mission and a list of appropriate businessprocesses. This is only supposed to take two hours even though the sponsor orfacilitator is also expected to gather together all relevant previous planningwork including producing a key relationships diagram showing the groups withwhich the sponsor and his team interact (both externally and internally).

In the case of TF, we decided that the author should both facilitate and runthe meetings. TF decided that the two partners should be involved (Rolandand Helen) but that it would be inappropriate to include their works manager.There was no existing mission statement, so defining this was obviously thenext step.

. Defining the missionIn the context of PQM, the mission is a vision and guiding light; 'the reasonwhy the particular management team exists' [11 p.l 13|. Moreover, having amission focuses attention on a common purpose and reduces complexity tomanageable proportions |4|. David |2| extends this notion in two directions.Firstly a mission is enduring not transitory and secondly it distinguishes theorganisation from other organisations. While Ward [11] stresses theimportance of a short, clear unambiguous statement, Steiner (in [2]) believesvagueness has its virtues. There is general agreement that a mission shouldcontain the overall intent of the organisation, an accountability to whom(customers, employees, shareholders etc) for what (products, services etc), and,an underlying set of core beliefs or values (the 'why').

Roland found it relatively easy to define the mission for TF despite the factthat the concept was new to him. His first version without any refinement was:

"To manufacture: (1) to a high standard, (2) so it won't fall apart, (3) tomake as much money as you can (but not always), specialised joinery andfurniture (including veneering and spraying)"



The elements of this were discussed using as a guide the elements David[2] found in a mission statement. The 'what' and 'for whom' in their caseseem to be inextricably linked. They have a wide range of products whichthey make for anyone who is prepared to pay for their specialist expertise.Their main customers are architects and designers but they have a growingmarket with members of the general public. To be more specific in themission, examples of their successful and unsuccessful jobs were considered.In practice TF could only define their product by example, they wouldn't makewindow frames unless there was something special about them, "becausesomeone else could do it much cheaper". Roland was concerned that theirproducts should work and be made to a high quality but was less concerned ifhe thought it might look ugly. His attitude was: "if the customer has thoughtabout the design, then it is quite interesting to make something that you thinkwill look awful as it doesn't always turn out as you expect". In consequencethe revised mission was deliberately vague on product and did not mentioncustomer but stressed the issues of quality and fitness for purpose. Getting theprice right for each job is important to TF this was also emphasised in themission. After a 30 minutes discussion, Roland and Helen agreed a missionwhich was subsequently slightly enhanced to be:

"For 'our team', to manufacture on an economically sound basis, highquality furniture, specialist joinery and associated products that are fit forthe purpose for which they are intended."

Listing the dominant influences and identifying critical success factorsThe dominant influences are a list (of typically 30-60 items) which the teambelieve could have an impact on the achievement of the mission.Brainstorming is used to get this list but reference is made to the keyrelationships diagram, the mission, past lessons and the future.

PQM uses Rockart's definition of a critical success factor (CSF): 'the fewkey areas where things must go right for the business to flourish' [11 p.l 16]. Itrecommends that the CSFs can be found by grouping together the dominantinfluences with each CSF devoted to a single issue. Five or six equallyimportant CSFs should ideally be identified in a PQM session.

Although a list of dominant influences was drawn up, there seemed littlenecessity because once again Roland found it relatively easy to define thecritical success factors for TF. This turned out a bit illusory when businessprocesses were defined as there was confusion between the two. Theycontinued to struggle with the definition of critical success factors throughoutthe study and never really resolved the issue of whether "Roland's rapport andexpertise" was a CSF. The final list of CSFs is shown in figure 3.



Defining business processesIn PQM, business processes are a series of activities (which may involveseveral functional areas) which are required for a business to functioneffectively particularly the processes required to fulfil the mission. A businessprocess is described by a verb and noun sequence avoiding adverbs oradjectives (which tend to describe desired results rather than the process).Unlike CSFs business processes are directly manageable and each one shouldbe 'owned' by one of the team (with not more than 3-4 processes per person).If a process required for the mission, is owned by some other team, acontrolling or negotiating process is needed. A general list of businessprocesses for the particular industry or project type is a useful starting point(Ward [11] provides some examples).

1 Maintaining and expanding customer network

2 Manufacturing to the right quality in the right timescales

3 Getting the right work mix to ensure utilisation of machinery, skillsand expertise, volume of business

4 Having the right team (personalities and skills)

5 Making enough money

6 Having the right premises/equipment/space

7 Maintaining stock (right stock with an up to date knowledge offittings)

Figure 3: Critical Success Factors for TF

A modified version of Ward's list of business processes formanufacturing/process industries [11 p.143-144] was used as a starting pointfor the second session on PQM. This proved to be a useful list although itneeded scaling down to the language of the small business. Moreover, the listis written for those that manage whereas many business processes are not onlyRoland or Helen's responsibility but they also do the work. In consequence,"Order materials" seemed preferable to "Negotiate raw materials supply" andthe "Make goods" process had no direct parallel with the list from Ward. Thefinal list of 25 processes meant that, not surprisingly, Roland and Helen areeach responsible for rather more than the recommended four processes.



Relating CSFs to business processesThis is the start of the analysis phase of PQM. A matrix is constructed(business processes down, CSFs across) with a 'x' to indicate those businessprocesses which need to be performed particularly well to achieve a CSF.New business processes emerge if the identified processes are not sufficient toensure the management of each CSF. An analysis section is added to thematrix to help identify most critical processes. This consists of: a count of thenumber of CSFs on which the process impacts, the assignment of a qualityrating, and the identification of 'big burners' - those processes which consumesignificant resources.

Figure 4 shows the first part of the matrix for TF with quality rated usingstars (five stars indicates no improvement is needed). Roland and Helen foundit difficult to identify the big burners so additional columns were added torecord the percentage of their time that they spent on each process. Thisproved a useful exercise since on the first attempt their totals was well over100%. Reviewing the time column made them aware of how much effort theywere each putting in to managing the business.

No.

123456

Process

Order materialsChase bad debtsInvoice customersDespatch goodsMake goodsManage manufacture

CSFs1

XX

2

X

XXX

3

X

4

XX

5

XXX

X

6

X

7

X

X

AnalysisQuality

***************#*#*****

CSF

311236

Time %R

9

42815

H

1515

Figure 4: Part of the business processes/CSFs matrix for TF

Establishing the Most Critical Processes (MCPs)The most important element of PQM is the identification of most criticalprocesses (MCPs). These are the processes where improvement is required ifCSFs are to be managed successfully (and hence the mission successfullyachieved). These can be identified by plotting the processes on a graph of CSFcount against quality rating with big burners highlighted. Processes wherequality is low and the number of CSF impacts is high are the most critical.Priorities for the management team can then be identified from the graph. An



additional factor which needs to be considered is that the quality of a bigburner should not be allowed to slip.

Figure 5 shows the plot of business processes for TF. The big burnerswere considered to be those processes which required 15% or more of Rolandor Helen's time. This was on the basis that their time is probably their mostvaluable resource. From the graph the priority list of most critical processeswas identified (see figure 6).

6-

5 -

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Process quality rating

P business process [P"1 big burner

Figure 5: CSF/Business process summary grid for TF



6.5.

7.14.

1.13.15.17.

Manage manufactureMake goods

Discuss and agree terms for jobManage cash flow andoperational plans

Order materialsManage premises and equipmentLook after workforceKeep abreast of relevant currentdevelopments

Big burnersimpacting onseveral CSFs

Impact on 4 CSFs*** quality

Impact on 3 CSFs*** quality

Figure 6: Most critical processes for TF

Reviewing the implicationsThe analysis reveals the processes on which effort should be concentrated inquality improvement projects (QIPs). In general, if CSFs and businessprocesses are unchanged, the processes will tend through time to move to theleft (quality declining) so annually the mission, CSFs, MCPs and QIPs all needreviewing for changes.

To review the IT implications, two columns are added to the businessprocess/CSF matrix. These grade the business quality and technical quality(on a five point scale) of the IT support for each process. Business quality israted by the business process owner, technical quality is rated by the ITspecialists. A plot of business quality against technical quality is used toestablish IT investment priorities. This is combined with information on thoseprocesses which have no IT support and those most critical processes and bigburner items where current quality of IT support is poor. This provides arational base upon which to debate IT priorities.

Roland and Helen considered the possible use of IT for each of the mostcritical processes (see figure 6). With "Manage manufacture" and "Makegoods" coming top of the list, the idea of computerising cutting lists wasconsidered but rejected because of the complexity of the task. The use of thecomputer to produce drawings was also discussed but rejected because handdrawn diagrams are more in keeping with their image. They felt that a wordprocessor would assist with "Discuss and agree terms for job" provided it hada spell-checker that Helen could master (her type-writing is poor) and that aspreadsheet might help her keep track of the debtors and creditors for the cashflow. Of the remaining most critical processes, a simple stock control system



would be useful but would need to be largely manual because of the split siteand dusty environment. Roland and Helen found the discussion of IT wasdifficult because of their lack of experience with IT but the most criticalprocesses in figure 6 provided the focus for a discussion on what was possible.

To counter their inexperience, a demonstration was arranged to show themhow the software identified could be used to assist with the processes. Thisincluded the word processing of letters and a simple debtors spreadsheet. Theresult of the demonstration was a recommendation that TF should considerbuying an entry level Apple Macintosh and using it initially for word-processing. This would also enable them to improve the quality of the onlyprocess that was zero rated, "Filing", by using the computer to keep track ofletters. The case for the purchase of a computer was not clear on the basis ofthe PQM analysis, and although TF were interested they decided they couldnot afford it. This decision was partially influenced by their works manager,Danny, having an accident and breaking a leg two days before thedemonstration.

IMPLEMENTATION OF IT STRATEGY

Following his accident Danny, the works manager, was unable to stand forlong for several weeks. He suggested that he could usefully spend the timegetting the invoicing sorted out on his computer. He proposed bringing thecomputer to the office and lending it to TF on a long term loan. The computer,a 386 PC with a dot matrix printer, had got Windows, Word for Windows (aword processor), a shareware accounts package and spreadsheet. Both theaccounts package and the spreadsheet are non-Windows products. Danny hasexperience of the accounts package which he used in a previous job but littleexperience with the rest of the computer.

For a period, the accounts package was used to issue invoices but therewere a number of problems which eventually resulted in them abandoning itand producing invoices using Word. A list of outstanding invoices was alsomaintained in Word and used for chasing debts and keeping track of incomingmoney.

Ten months on, the computer has become an invaluable tool for Helen butRoland does not use it and neither does Danny. Helen uses Word for letters,invoices and her debtors list. Recently, she used the Windows cardfile to enterthe addresses of her regular customers. She still finds that there is a lot shedoesn't understand with the computer but she now uses it in preference tohandwriting a memo. Over this period, business has boomed for TF and theyhave moved to the new premises and taken on more staff. Roland has decided



that he will not schedule himself to work on any jobs but use himself as areserve. He finds this has reduced the stress levels.

CONCLUSIONS

This case illustrates the difficulties of planning in any environmentparticularly that of a small business. Nevertheless, the partners of TF felt thatthe results of PQM repaid the time they spent on it, although they probablywouldn't have been prepared to pay for the facilitation. Interestingly, it hashelped them view their business in a different light and this has had subtle butdefinite payoffs. For example, the change in the way in which Rolandschedules himself was probably influenced by the analysis of time spent onbusiness processes. The recommendation from the PQM analysis to focus onword processing proved to be sound.

PQM was surprisingly easy to apply to a small business and provided auseful starting point for a discussion about IT. The changes made to theprocess improved its applicability. However, there were two major criticismsof PQM which emerged during the discussions. It proved to be backwardlooking and it was difficult to identify and incorporate new issues. Forexample, the customer base of TF was showing signs of change with anincrease in private customers. This trend has continued particularly in thekitchen side of their work. This change have seem to imply that image wouldbecome much more important. This is an area where a computer can beextremely useful but it did not emerge from the PQM analysis.

Further, the analysis largely ignored the kind of soft issues which arepicked up by methods such as Soft Systems Methodology [1]. These issuescan be very important where a small business is very much part of someone'slife. The rich picture shown in figure 1 was not drawn at the time of theanalysis but during the preparation of this paper. It now appears that the richpicture would be a useful resource during the identification of CSFs.Moreover, an appropriate rich picture may help to redress the audit-likeemphasis of PQM. The use of soft systems techniques in IT strategydevelopment is the subject of current research (see for example [7]).

REFERENCES

1. Checkland, P. and Scholes, J. Soft Systems Methodology in Action JohnWiley & Sons, Chichester, 1990

2. David, F. R. 'How Companies Define their Mission' Long Range PlanningVol.22, No. 1, 1989



3. Davids, A. Practical Information Engineering: the management challengePitman, London, 1992

4. Demb, A., Chouet, D., Lossins, T. and Neubauer, F. 'Defining the Role ofthe Board' Long Range Planning Vol.22, No.l, 1989

5. Gilb, T. Principles of Software Engineering Management Addison-Wesley,Wokingham, 1988

6. Hickey, G. 'Strategic IS/IT Planning' Chapter 4,1.T. Strategy for Businessed. Peppard, J. pp. 75 - 99, Pitman, London, 1993

7. Kaye, G. R. 'Developing an Information Technology Strategy: An Examplefrom Distance Learning in Management' International Journal of InformationManagement, No. 13, pp. 355 - 371, 1993

8. Martin, J. Information Engineering: a trilogy, Prentice-Hall, 1989

9. Peppard, J. 'Information, Technology, and Strategy' Chapter 1,1.T. Strategyfor Business ed. Peppard, J., pp.1 - 25, Pitman, London, 1993

10. Silk, D. J. Planning IT: Creating an information management strategyButterworth-Heinemann, Oxford, 1991

11. Ward, B. K. 'Planning for Profit' Chapter 5, Managing InformationSystems for Profit ed. Lincoln, T., pp. 103 - 146, John Wiley & Sons,Chichester, 1990

12. Weinberg, G. M. Quality Software Management: Volume I SystemsThinking, Dorset House, 1992


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