the business and people side of bpm joe demarco black belt consultant motorola schaumburg, il

The Business and The Business and People Side of BPMPeople Side of BPM

Joe DeMarcoJoe DeMarco

Black Belt ConsultantBlack Belt Consultant

MotorolaMotorola

Schaumburg, ILSchaumburg, IL

What type of projects?What type of projects?

• BPM ProjectsBPM Projects

• IT ProjectsIT Projects

• Process Change ProjectsProcess Change Projects

• Six Sigma Improvement ProjectsSix Sigma Improvement Projects

• Lean InitiativesLean Initiatives

• Corporate InitiativesCorporate Initiatives

• Etc.Etc.

Measuring effectivenessMeasuring effectiveness

E = Effectiveness of Improvement ProjectQ = Quality of Improvement ProjectA = Adoption of Improvement Project

100 = Total Effectiveness (10 x 10)

Key driving factors to determineQ (quality) and A (adoption)

Communicate

the criteriafor success

Define thereturn on

investment

Integratewith Org. Process

Govern and sustain the

improvement

Gainexecutive

commitment

Developorganizational

acceptanceto deploy

Sustained business

improvement

Have It

Getting There

Not Yet

Define the return on investmentDefine the return on investment

• Was an initial financial model created to validate Was an initial financial model created to validate ROI from the project?ROI from the project?

• Are the returns from the project worth the cost of Are the returns from the project worth the cost of deploying and sustaining the change?deploying and sustaining the change?

Gain executive commitmentGain executive commitment

• Does the sponsor agree with the end state?Does the sponsor agree with the end state?• Does the team sponsor understand the potential Does the team sponsor understand the potential

productivity dip?productivity dip?• Does the commitment to deploy the change Does the commitment to deploy the change

cascade down and across the organization?cascade down and across the organization?• Is success part of team sponsor’s performance Is success part of team sponsor’s performance

review?review?

Develop organizational Develop organizational acceptance to deployacceptance to deploy

• Has the pilot deployment been successful and Has the pilot deployment been successful and all feedback assimilated?all feedback assimilated?

• Has the change been communicated to the Has the change been communicated to the affected target groups?affected target groups?

• Are the impacted target groups willing to accept Are the impacted target groups willing to accept the change?the change?

• Has over 70% of the target audience taken the Has over 70% of the target audience taken the proposed training?proposed training?

• Have reward plans been created and executed Have reward plans been created and executed to motivate deployment of the change?to motivate deployment of the change?

Communicate the criteria for Communicate the criteria for successsuccess

• Have metrics been identified to track project Have metrics been identified to track project success?success?

• Have goals for sustaining returns been identified Have goals for sustaining returns been identified and are they readily available? and are they readily available?

• Is the measurement system for data collection Is the measurement system for data collection well defined and digitized?well defined and digitized?

Integrate with Organizational Integrate with Organizational ProcessesProcesses

• Have the changes been packaged into Have the changes been packaged into organizational processes and tools?organizational processes and tools?

• Has deployment plan for adopting the change Has deployment plan for adopting the change been created for the impacted target groups?been created for the impacted target groups?

Govern and sustain the Govern and sustain the improvementimprovement

• Has a Process Owner been established for Has a Process Owner been established for monitoring the new process/change?monitoring the new process/change?

• Does process owner agree to track performance Does process owner agree to track performance and provide feedback for improvements?and provide feedback for improvements?

• Is the organization structured to adopt and Is the organization structured to adopt and support the end state?support the end state?

• Does the business have a review mechanism in Does the business have a review mechanism in place to validate gains from the project?place to validate gains from the project?

Define the Return onDefine the Return onInvestmentInvestment

Project / Process Area Action ItemsProject / Process Area Action Items

Gain Executive Gain Executive CommitmentCommitment


Develop Organizational Develop Organizational Acceptance to DeployAcceptance to Deploy


Communicate the CriteriaCommunicate the Criteriafor Successfor Success


Integrate withIntegrate withCommon ProcessCommon Process


Govern and SustainGovern and Sustainthe Improvementthe Improvement


Communicate

the criteriafor success

Define thereturn on

investment

Integratewith Org. Process

Govern and sustain the

improvement

Gainexecutive

commitment

Developorganizational

acceptanceto deploy

Sustained business

improvement

Roadmap to success Roadmap to success with actionable planswith actionable plans

ROI ModelsROI Models

Measuring the impact of business Measuring the impact of business improvement projectsimprovement projects

The impact of engineeringThe impact of engineeringimprovement initiativesimprovement initiatives

Inputs

- Requirements

ProcessPerformance

- How much effort andtime does it take to

produce a product thatmeets requirements

with quality?

Outputs

- Products(HW & SW)- Defects

Improvement Initiatives

Historical ProcessCapability

- Productivity- Quality

• Goal is to increase process performanceGoal is to increase process performance– Reduce effortReduce effort– Decrease cycle-timeDecrease cycle-time– Increase qualityIncrease quality

Where are the savings?Where are the savings?

New ProcessPerformance


Improvement InitiativesImpact Process Performance

Value to Engineering

- Effort Savings

Re-Invest to Leverage Gains!Re-Invest to Leverage Gains!

Improvement Initiatives


- Effort Savings

Value to the Business

- Deliver More Products- Deliver Faster

- Deliver Higher Quality

New ProcessPerformance


Quantifying Value to EngineeringQuantifying Value to Engineering

• $ Value of Effort Savings =$ Value of Effort Savings =– Effort Reduction (in Staff Months) xEffort Reduction (in Staff Months) x– $ Cost for Engineering (in $ per Staff Month)$ Cost for Engineering (in $ per Staff Month)

Very Straight-forward


- Effort Savings

Quantifying Value to the BusinessQuantifying Value to the Business

• $ Value to the Business = Sum of$ Value to the Business = Sum of$ Value of additional products delivered$ Value of additional products delivered$ Value of time for introducing new products$ Value of time for introducing new products$ Value of quality$ Value of quality

More Complex

Value to the Business

- Deliver More Products- Deliver Faster

- Deliver Higher Quality

Value to the BusinessValue to the Business

• Deliver More ProductsDeliver More Products– Effort Savings x Effort Savings x Value of Engineering InvestmentValue of Engineering Investment to to

the Marketthe Market

• Deliver FasterDeliver Faster– Time Savings x Time Savings x Value of TimeValue of Time (value of delivering (value of delivering

a product early to the market or cost of delivering a a product early to the market or cost of delivering a product late)product late)

• Deliver Higher QualityDeliver Higher Quality– Reduced Defects x Reduced Defects x Value of QualityValue of Quality to the Market to the Market

How can we determine approximate business factors?

Some examplesSome examples

• Use what makes sense for your business Use what makes sense for your business and markets – scale down as appropriateand markets – scale down as appropriate

• Example approximations:Example approximations:– Value of 1000 Lines of Software CodeValue of 1000 Lines of Software Code

• Annual gross margin on software / total KLOC per yearAnnual gross margin on software / total KLOC per year

– Value of TimeValue of Time• Annual product gross margin / # products per year / 12 monthsAnnual product gross margin / # products per year / 12 months

– Value of QualityValue of Quality• Perceived customer perception of the cost of a defect or value Perceived customer perception of the cost of a defect or value

of not having themof not having them

What to do with the modelWhat to do with the model

• Use it across multiple projects for Use it across multiple projects for consistencyconsistency

• Compare relative benefits of various Compare relative benefits of various projects that impact multiple driversprojects that impact multiple drivers

• Make better investment decisions on Make better investment decisions on which projects to prioritizewhich projects to prioritize

• Finance typically uses NPV of investment Finance typically uses NPV of investment with hard savings onlywith hard savings only

Cost Benefit AnalysisCost Benefit Analysis

Init 1

Init 2

Init 3

Init 4

Init 5

Init 6

Init 7

Init 8

Init 9

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000

Cost to Implement (K$)

Net

Val

ue

of

Init

iati

ve (

K$)

Pearls

Dogs

Oysters

Quick Wins

Conclusion – Make better decisions and Conclusion – Make better decisions and drive improvements by:drive improvements by:

Init 1

Init 2

Init 3

Init 4

Init 5

Init 6

Init 7

Init 8

Init 9

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000

Cost to Implement (K$)

Net

Val

ue

of

Init

iati

ve (

K$)

Pearls

Dogs

Oysters

Quick Wins

• Understanding Understanding the full value of the full value of initiatives to your initiatives to your businessbusiness

• Understanding the total cost of initiativesUnderstanding the total cost of initiatives– IT costsIT costs– Organizational deployment costsOrganizational deployment costs– Sustaining costsSustaining costs

Thank YouThank You

Questions – Comments?Questions – Comments?

the business and people side of bpm joe demarco black belt consultant motorola schaumburg, il

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