8:05-9:00
Making Process Real –Engaging the CXOs
Alec Sharp, Consultant and
Founder, Clariteq Systems
Consulting Ltd
Keynote presentation
Making Process RealEngaging the ExecutiveJuly 28, 2010 – Sydney, Australia
Alec SharpConsultantClariteq Systems Consulting Ltd.West Vancouver, BC, [email protected] www.twitter.com/alecsharp
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MakingProcessReal Facts and assumptions
The facts:I’ve spent many years working with “process” –often with people who don’t know, don’t want to know, or actively dislike it– many were C-level executives– I’ve learned a few things about how to bring them around.
The assumptions:– You’ve read the speaker bio– You’d prefer I just get on with it
So let’s dive in with three baseline ideas…
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MakingProcessReal
Workers –
It’s a horror film:
“My Incredible Shrinking
Employment Prospects!
Executives –It’s a ransom note from expensive consultants!
Managers –I have hundreds, and I don’t need any more!
1 – They might not love “process” as much as you do
“Process”
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MakingProcessReal Lots of evidence of fear of “process”
* not a nicecomparison
Downsizing and Reengineering:Corporate Lobotomy*
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MakingProcessReal Six Sigma in particular faces a backlash
JUNE 11, 2007
Inside:Six Sigma: So Yesterday? In an innovation economy, it's no longer a cure-all
The cover:3M’s Innovation Crisis: How Six Sigma Almost Smothered Its Idea Culture
A CEO I worked with:“I want to disband the Six Sigma group. They think the whole company is just a data collection mechanism being run for their experiments.”
Many other articles on six stigma
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MakingProcessReal 2 – Making the business case for BPM may not work
Benefits of BPM – the usual suspects
1. Reduce costs and increase efficiency(The perennial #1)
2. Improve customer service
3. Increased responsiveness
4. Regulatory compliance
BUT…
1. _________________________________________
2. _________________________________________
Fill in the blanks – why not promote BPM with these claims?
Every other discipline makes the same claims…
… so nobody believes you anyway.
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MakingProcessReal
“First, we need executive commitment…” – False!
Later, you need executive commitment, but it doesn’t start there.
Key elements:
• Examples are good, stories are better – start collecting!
• Simple visuals everyone can use to support their message
• Consistency and repetition
3 – You won’t start at the top
Mid-level –present compelling idea
or information
BP initiatives
Executive –“We need to
do this!”
BP initiatives
BP initiatives
Support!
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MakingProcessReal Executive interest – three to five key points
1. It’s essential to have clarity on what a business process really is
2. Existing performance measures are often functionally aligned and work against business processes
3. Success with business processes dependson taking a holistic view in which six enablers are considered
4. Enterprise system implementations must include a business process perspective
5. Business processes can’t be great at everything – a single differentiator or strategic discipline should be chosen
must cover
pick and choose
Whatever you do…Don’t preach,
don’t overreach
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MakingProcessReal 1 – What is a business process?
An “end-to-end, cross-functional, business process” is larger than most people expect when they think of “a process.”
Key point:Different process professionals will have very different ideas of what a process is:• Six Sigma• ISO 9001• Lean• Business Process Management (that’s us!)
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MakingProcessReal Process – the elephant in the room
It’s a PROCESS!
The problem – “process blindness”
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MakingProcessReal
end-to-end process: Fulfill Order
Different perspectives on “business process”
Logistics process
Sales process
A/Rprocess
Six Sigma –focus on defects and variation in “our lithography process”
Manufacturing process
Lean practitioner –focus on flow within in “ our fabrication process”
Functional perspective –focus on internal efficiencies in “ our manufacturing process”
Business Process Management –end-to-end alignment of “ our Fulfill Order process”
Fabrication Assembly
Packaging&
Labeling
litho
ISO 9001 –focus on documenting procedures in “our custom labeling process”
Procedure:This contains a lot of tiny tiny text that’s really much too small to ever be read by mere mortals. It describes a procedure for completing some minor task in a process. And, it goes on for a surprisingly long time, while I try to fill this silly little box just to make a point. Maybe I should have found some clip art of a book, or some such. But, it’s late and I just want to get this done!
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MakingProcessReal Does it matter? Yes!
IdentifyProspect
QualifyProspect
SolicitProspect
One process: Acquire Customer
IdentifyProspect
SolicitProspect
QualifyProspect
etc.
At a Financial Services company,important activities were seen as separate processes
Rewarded for number of prospects
Expected to contact allprospects
Rewarded for long-term viability
of client
Sequence, metrics, and rewards worked against the sales funnel.
Rewarded for high-quality
prospects
Identify likely prospects,
good fit
Smaller number of prospects, more time to tailor solicitation, higher conversion rate
Process and metrics supports sales funnel.
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MakingProcessReal An example for your repertoire – part 1
Telephone company needs to improve its Service Provisioning processes
Service Order
Managementprocess
FacilitiesManagement
process
Service Assurance
process
Installationprocess
Customer Updateprocess
• “Service Provisioning” – “ins”, “outs”, “moves” (install new service, disconnect service, relocate service)
• Five “processes” misidentified, five teams get started on “process” improvement –the directive is to “achieve operational efficiencies”
• Each team makes substantial improvements to efficiency in their “process,” largely through new constraints like batching and scheduling of orders
The outcome…? Service is worse! Financial impact! What went wrong?
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MakingProcessReal An example for your repertoire – part 2
Three errors – vague process naming, confusing proce ss with organization, and not focusing on what the client actually wanted fro m the triggering event
Customer Service
Network Monitoring
Installation&
Repair
Customer Records &
Billing
Facilities Management
Process: Move Telephone Service
Capture Service Order
Confirm Service Quality
Install Premise
Equipment
Activate Customer Account
Assign Network Facilities
Process: Move Telephone ServiceTrigger:Customer wants telephone service moved.
Customer result:Telephone service is moved
Telco result:Active account with receivable posted
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MakingProcessReal 2 – Cross-functional issues
The performance goals of the functions (divisions, departments, …) that participate in a business process usually conflict with the goals of the business process (if process goals are stated at all)
Key points:• A “process vs. function” diagram clearly
shows the different perspectives • A business process needs an owner to
rationalize the competing objectives
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MakingProcessReal Cross-functional and human issues
Wherein we introducethe perverse incentive,
the unintended consequence, and their ramifications
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MakingProcessReal Unintended consequences – are they the law?
In the introduction to Levitt and Dubner’s latest…
“Was there a theme to Freakonomics?”
“…the book did have a unifying theme, even if it
wasn’t obvious at the time, even to us.”
“People respond to incentives, although not
necessarily in ways that are predictable or manifest.
Therefore, one of the most powerful laws in the
universe is the law of unintended consequences.”
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MakingProcessReal Anticipating the unanticipated
“What we've got here is failure to communicate...”anticipate…”
“Unintended consequences”
are most often a failure to anticipate.
There are techniques and frameworks that help.
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MakingProcessReal A true story of Function vs. Process
Logisticsgoal:lower
shippingcosts
Salesgoal:
late-quartersales
A/R goal:
precision in collections
Manufacturinggoal:
maximize machine
utilization
Sales Manufacturing Accounts Receivable
Logistics
Process: Fulfill Order Process goal:Responsiveness by providing the shortest order-to-cash cycle time
ReceiveOrder
PlanOrder
FabricateOrder
DeliverOrder
CollectPayment
AssembleOrder
StageMaterial
MoveWIP
Poor process performance because everyone was working hard and meeting their targets !
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MakingProcessReal
Sales Production Accounts Receivable
Logistics
This doesn’t mean functions are bad!
triggering event
finalresultsProcess: Fulfill order
• A centre of expertise –an efficient way to provide resources across multiple processes
• Specialized skills, knowledge, tools• Work is ongoing• Organizational design is usually
based on functional areas• We prefer not to use the somewhat
negative term “functional silos”
FunctionProcess• End-to-end business processes
deliver essential results by aligning the work of multiple functions
• Results are discrete – “countable”• Must be explicitly identified and
managed as a whole
Ultimately, business processes are all about alignment
cylinder of excellence –
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MakingProcessReal Processes and functions – three key points
Customer Front Office
Finance Back Office
Operations
agency
Issue Operating Permit
� The first step in managing processes is to figure out what they are – they don’t identify themselves
� Performance goals for the functions must align with the performance goals of the process
� Processes need an owner / steward to set direction, ensure alignment, and resolve conflict
It takes concerted effort – nothing happens by accident
Has an owner!
Needs an owner!
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MakingProcessReal 3 – The enablers of a business process
The performance of a business process is determined by multiple factors – the enablers.
Key point:The factors that get the most attention (process workflow design and information technology) are seldom the crucial factors. The crucial factors are:• Motivation and Measurement• Human Resources• Policies and Rules
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MakingProcessReal The factors that matter
Business Process
enables enables enables enables enables enables
WorkflowDesign
Information Systems
Motivation & Measurement
Human Resources
Policies and Rules
Facilities(or other)
• Actors• Steps &
decisions• Flow -
sequence and handoffs
• Applications• Data• Information• Integration
• Employee assessment and incentives
• “Reward and punishment”
• Process performance indicators
• Constraints• Business
rules that the process enforces
• External & internal
• Workplace layout
• Equipment• Furnishings
• Skills• Matching
actors to tasks
• Recruitment, selection and placement
Enabler – A factor that can be adjusted to impact process performance.
Business mission,
strategy, goals, & objectives
Culture, core competencies,and management style
enables constrains
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MakingProcessReal
Consider each enabler during assessment and design
• Mismatch of work needs and facility
• No support for team work
• Layout that impedes flow of people or material
• Unavailable information
• Re-keying of data
• Missing functionality
• Awkward interfaces
• Lack of support for workflow
• Too many actors
• Non-value -added steps
• Duplicate steps
• Delays and bottlenecks
• Excessively sequential
• Inappropriate performer or process measures
• Internal rather than customer focus
• Measures of tasks vs. outcomes
• Mismatches between task value and performer
• Inappropriate recruiting and placement
• Too little empowerment
• Out-of-date policies or numerical limits
• Excessive review or approval steps
• Restrictive labor contracts
• Overly complex coding
Business Process
enables enables enables enables enables enables
WorkflowDesign
Information Systems
Motivation & Measurement
Human Resources
Policies and Rules
Facilities(or other)
Business mission,
strategy, goals, & objectives
Culture, core competencies,and management style
enables constrains
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MakingProcessReal
Eventually, we will determine how individual processes really work by mapping who, does what, when.
This allows the assessment of the as-is process, and design of the to-be process, enabler by enabler:
WorkflowDesign
Information Systems
Motivation & Measurement
Human Resources
Policies and Rules
Facilities(or other)
That’s the main reason we model as-is workflow
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MakingProcessReal 4 – Processes and information systems
When major information systems are implemented without regard to end-to-end business processes, overall results range from “okay” to awful. (How awful?)
Key point:Major companies often re-implement systems they already have in order to make them more process-oriented
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MakingProcessReal Misunderstanding “process”
• Global manufacturer implementing ERP
• Four primary modules:
– Sales
– Manufacturing
– Logistics
– Finance
• Determined to do it right:
“This will be a process-oriented implementation!”
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MakingProcessReal
How the “process-oriented” implementation worked out
Logistics function
Sales function
Production function
A/Rfunction
end-to-end process: Fulfill Order
Logistics process
Sales process
Production process
A/Rprocess
Salesmodule
Manuf’gmodule
Logistics
module
A/Rmodule
Logisticsmodule
Salesmodule
Manuf’gmodule
Accounts Receivable
module
Experience proves that software implementations are far more successful when they are truly process oriented
Conflicts: timing, coding, terminology, data formats, performance targets, …
Same software, process-driven implementation:
Missing the point about “process”:
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MakingProcessReal Success with ERP implementation
• Study by the late Michael Hammer,
“godfather of BPR”
• Observed that success of ERP implementations
varied wildly
• Worked with ~200 companies to assess their
degree of success with ERP implementation
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MakingProcessReal Success with ERP implementation
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Success (ROI, etc.) ranked from 0 - 100 5 10
Num
ber
of e
nter
pris
es
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MakingProcessReal The usual guesses…
Success (ROI, etc.) ranked from 0 - 100 5 10
Num
ber
of e
nter
pris
es
Normal distribution
Skewed optimistically
Skewed pessimistically
Reallypessimistic
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MakingProcessReal Winners and losers in ERP implementation
Success (ROI, etc.) ranked from 0 - 100 5 10
Num
ber
of e
nter
pris
es
WinnersLosers
Process first,
IT secondary
IT focus,Functional orientation
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MakingProcessReal 5 – Choosing what to excel at
A business process, like a company, can’t be all things to all people – it’s essential that a differentiator is chosen.
Key point:A lack of clarity around the differentiator, or conflicting statements about what it is, are a major source of stress and frustration
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MakingProcessReal
Great processes don’t try to be all things to all people –strive to be great at one differentiator, and good at the other two…
OperationalExcellence
ProductLeadership
CustomerIntimacy
Consistent, predictable, error-free, and efficient.
More efficient, but less flexible in changing direction or meeting needs of individual customers.
Tailors service delivery to the processes of individual customers.
More flexible for adapting to needs of individual customers, but less efficient.
Continuous and rapid introduction of new
products and services.
More flexible for adapting to needs of
new offerings, but less efficient.
The original reference:The Discipline of Market LeadersMichael Treacy and Fred WiersmaAddison-Wesley 1995
Too often, companies lack focus or focus on the wrong discipline.
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Process goals: know your “differentiator”
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MakingProcessReal The #1 differentiator problem
Engineering:Product
Leadership
Functional area 1
Functional area 1
Functional area 1
End-to-end business process
Participants in a single end-to-end business process aiming for different differentiators without realizing it
Finance:Operational Excellence
Sales:Customer Tailored
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MakingProcessReal More differentiator problems
• No clear differentiator –
Stuck in the Bermuda triangle
• A business process being specifically directed to excel at two differentiators, most commonly:• Operational excellence – “We must be the low-cost provider!”• Customer intimacy – “We must do what it takes for each client!”
• Making a strategic change to the differentiators without explaining the rationale to staff
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MakingProcessReal Recap – the three to five key points
1. It’s essential to have clarity on what a business process really is
2. Existing performance measures are often functionally aligned and work against business processes
3. Success with business processes depends on taking a holistic view in which six enablers are considered
4. Enterprise system implementations must include a business process perspective
5. Business processes can’t be great at everything – a single differentiator or strategic discipline should be chosen
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MakingProcessReal Contact info
� Me: [email protected]
� My company: www.clariteq.com� My book: Workflow Modeling, Second Edition
is now available (it’s a complete rewrite)
� Microblog: www.twitter.com/alecsharp� My ERwin data modeling blog: www.erwin.com/expert_blogs� See www.bptrends.com for “From the Trenches” columns