Keynote presentation
8:05-9:00
Making Process Real –
Engaging the CXOs
Alec Sharp, Consultant and
Founder, Clariteq Systems
Consulting Ltd
Making Process Real
Engaging the Executive
July 28, 2010 – Sydney, Australia
Alec Sharp
Consultant
Clariteq Systems Consulting Ltd.
West Vancouver, BC, Canada
[email protected]
www.clariteq.com www.twitter.com/alecsharp
Making
Process
Real
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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Making
Process
Real
1 – They might not love “process” as much as you do
“Process”
Executives –
It’s a ransom note
from expensive
consultants!
Managers –
I have hundreds,
and I don’t need any
more!
Workers –
It’s a horror film:
“My Incredible Shrinking
Employment Prospects!
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Making
Process
Real
Lots of evidence of fear of “process”
Downsizing and
Reengineering:
Corporate Lobotomy*
* not a nice
comparison
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Making
Process
Real
Six Sigma in particular faces a backlash
The cover:
3M’s Innovation Crisis: How Six Sigma
Almost Smothered Its Idea Culture
Inside:
Six Sigma: So Yesterday?
In an innovation economy, it's no
longer a cure-all
JUNE 11, 2007
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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Making
Process
Real
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.
_________________________________________
Every
other discipline makes the same claims…
2.
_________________________________________
…
so nobody believes you anyway.
Fill in the blanks – why not promote BPM with these claims?
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Making
Process
Real
3 – You won’t start at the top
“First, we need executive commitment…” – False!
Later, you need executive commitment, but it doesn’t start there.
Executive –
“We need to
do this!”
BP
initiatives
Mid-level –
present compelling idea
or information
Key elements:
BP
initiatives
BP
initiatives
Support!
• Examples are good, stories are better – start collecting!
• Simple visuals everyone can use to support their message
• Consistency and repetition
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Making
Process
Real
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
must cover
Whatever
youprocesses
do…
3.
Don’t
preach,
Success with business processes depends
don’t
overreach
on taking a holistic view
in which
pick and choose
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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Making
Process
Real
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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Making
Process
Real
Process – the elephant in the room
It’s a
PROCESS!
The problem – “process blindness”
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Making
Process
Real
Different perspectives on “business process”
Functional perspective –
Business Process Management –
focus on internal efficiencies in
“ our manufacturing process”
end-to-end alignment of
“ our Fulfill Order process”
end-to-end process: Fulfill Order
Manufacturing process
Sales
process
Fabrication
Assembly
focus on flow within in
“ our fabrication process”
A/R
process
Packaging
&
Labeling
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!
litho
Lean practitioner –
Logistics
process
Six Sigma –
ISO 9001 –
focus on defects and
variation in “our
lithography process”
focus on documenting
procedures in “our
custom labeling process”
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Making
Process
Real
Does it matter? Yes!
At a Financial Services company,
important activities were seen as separate processes
Identify
Prospect
Solicit
Prospect
Qualify
Prospect
Rewarded for
number of
prospects
Expected to
contact all
prospects
Rewarded for
long-term viability
of client
One process: Acquire Customer
Identify
Prospect
Rewarded for
high-quality
prospects
Qualify
Prospect
Identify likely
prospects,
good fit
Solicit
Prospect
etc.
Sequence, metrics,
and rewards
worked against the
sales funnel.
Process and
metrics supports
sales funnel.
Smaller number of prospects,
more time to tailor solicitation,
higher conversion rate
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Making
Process
Real
An example for your repertoire – part 1
Telephone company needs to improve its Service Provisioning processes
• “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”
Service
Order
Management
process
Facilities
Management
process
Installation
process
Service
Assurance
process
Customer
Update
process
• 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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Making
Process
Real
An example for your repertoire – part 2
Three errors – vague process naming, confusing process with organization,
and not focusing on what the client actually wanted from the triggering event
Customer
Service
Facilities
Management
Installation
&
Repair
Network
Monitoring
Customer
Records &
Billing
Process: Move Telephone Service
Capture
Service
Order
Trigger:
Customer wants
telephone service
moved.
Assign
Network
Facilities
Install
Premise
Equipment
Confirm
Service
Quality
Process: Move Telephone Service
Activate
Customer
Account
Customer result:
Telephone service
is moved
result:
Telco
Active account
with receivable
posted
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Making
Process
Real
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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Making
Process
Real
Cross-functional and human issues
Wherein we introduce
the perverse incentive,
the unintended consequence,
and their ramifications
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Making
Process
Real
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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Making
Process
Real
Anticipating the unanticipated
“What we've got here is failure to anticipate…”
communicate...”
“Unintended consequences”
are most often a failure to anticipate.
There are techniques and frameworks that help.
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Making
Process
Real
A true story of Function vs. Process
Sales
Manufacturing
Process: Fulfill Order
Receive
Order
Plan
Order
Sales
goal:
late-quarter
sales
Stage
Material
Fabricate
Order
Manufacturing
goal:
maximize
machine
utilization
Logistics
Accounts
Receivable
Process goal:
Responsiveness by providing the
shortest order-to-cash cycle time
Move
WIP
Assemble
Order
Logistics
goal:
lower
shipping
costs
Deliver
Order
Collect
Payment
A/R
goal:
precision in
collections
Poor process performance because
everyone was working hard and meeting their targets!
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Making
Process
Real
This doesn’t mean functions are bad!
Sales
triggering
event
Production
Logistics
Accounts
Receivable
final
results
Process: Fulfill order
Process
• 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
Function
cylinderofofexpertise
excellence
• A centre
––
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”
Ultimately, business processes are all about alignment
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Making
Process
Real
Processes and functions – three key points
Has an owner!
agency
Customer
Front
Office
Finance
Back
Office
Issue Operating Permit
Operations
Needs an
owner!
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
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Making
Process
Real
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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Making
Process
Real
The factors that matter
Business mission,
strategy, goals, & objectives
Culture, core competencies,
and management style
enables
constrains
Business Process
enables
Workflow
Design
• Actors
• Steps &
decisions
• Flow sequence and
handoffs
enables
Information
Systems
• Applications
• Data
• Information
• Integration
enables
Motivation &
Measurement
enables
Human
Resources
enables
Policies and
Rules
enables
Facilities
(or other)
• Employee
• Constraints
• Workplace
• Skills
assessment
• Business
layout
• Matching
and incentives actors to
rules that the • Equipment
• “Reward and
process
• Furnishings
tasks
punishment” • Recruitment,
enforces
• Process
selection and • External Enabler – A factor
performance
& internal that can be adjusted
placement
indicators
to impact process
performance.
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Making
Process
Real
Consider each enabler during assessment and design
Business mission,
strategy, goals, & objectives
Culture, core competencies,
and management style
enables
constrains
Business Process
enables
Workflow
Design
• Too many
actors
• Non-value added steps
• Duplicate
steps
• Delays and
bottlenecks
• Excessively
sequential
enables
Information
Systems
enables
Motivation &
Measurement
enables
Human
Resources
• Unavailable
• Inappropriate • Mismatches
information
performer or
between task
• Re-keying of
process
value and
data
measures
performer
• Missing
• Internal rather • Inappropriate
functionality
than customer recruiting and
• Awkward
focus
placement
interfaces
• Measures of • Too little
empowerment
• Lack of support tasks vs.
outcomes
for workflow
enables
Policies and
Rules
enables
Facilities
(or other)
• Out-of-date
• Mismatch of
policies or
work needs
numerical limits and facility
• Excessive
• No support for
review or
team work
approval steps • Layout that
• Restrictive
impedes flow
labor contracts of people or
• Overly complex material
coding
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Making
Process
Real
That’s the main reason we model as-is workflow
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:
Workflow
Design
Information
Systems
Motivation &
Measurement
Human
Resources
Policies
and Rules
Facilities
(or other)
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Making
Process
Real
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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Making
Process
Real
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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Making
Process
Real
How the “process-oriented” implementation worked out
Experience proves that software implementations are far more
successful when they are truly process oriented
Missing the point about “process”:
Sales
process
Production
process
Logistics
process
A/R
process
Sales
module
Manuf’g
module
Logistics
module
Accounts
Receivable
module
Conflicts: timing, coding, terminology, data formats, performance targets, …
Same software, process-driven implementation:
Sales
function
Production
function
Logistics
function
A/R
function
end-to-end process: Fulfill Order
Sales
module
Manuf’g
module
Logistic
s
module
A/R
module
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Making
Process
Real
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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Making
Process
Real
Number of enterprises
Success with ERP implementation
0
5
10
Success (ROI, etc.) ranked from 0 - 10
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Making
Process
Real
The usual guesses…
Number of enterprises
Skewed
pessimistically
Normal
distribution
Skewed
optimistically
Really
pessimistic
0
5
10
Success (ROI, etc.) ranked from 0 - 10
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Making
Process
Real
Number of enterprises
Winners and losers in ERP implementation
0
Losers
Winners
IT focus,
Functional
orientation
Process first,
IT secondary
5
10
Success (ROI, etc.) ranked from 0 - 10
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Making
Process
Real
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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Making
Process
Real
Process goals: know your “differentiator”
Too often, companies lack focus or focus on the wrong discipline.
The original reference:
The Discipline of Market Leaders
Michael Treacy and Fred Wiersma
Addison-Wesley 1995
Operational
Excellence
Consistent, predictable, error-free,
and efficient.
More efficient, but less flexible in
changing direction or meeting
needs of individual customers.
Continuous and rapid
introduction of new
products and services.
More flexible for
adapting to needs of
new offerings,
but less efficient.
Product
Leadership
Customer
Intimacy
Tailors service delivery to
the processes of individual
customers.
More flexible for adapting
to needs of individual
customers, but less
efficient.
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…
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Making
Process
Real
The #1 differentiator problem
Participants in a single end-to-end business process
aiming for different differentiators without realizing it
Functional
area 1
Functional
area 1
Functional
area 1
End-to-end business process
Sales:
Customer
Tailored
Engineering:
Product
Leadership
Finance:
Operational
Excellence
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Making
Process
Real
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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Making
Process
Real
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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Making
Process
Real
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
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