As we explained in the article Measure Before Deciding, it is essential to measure the effectiveness of a process during a modeling exercise.
But why should one start from scratch? The APQC Process Classification Framework (PCF) provides practical metrics for each activity, within a process or a workflow, throughout their four level of classification. Basically, for more than 1,200 activities, the list of metrics offers around 1,700 metrics (formulas). It is a great starting point, instead of tinkering randomly. This is an immediate incentive to download it (1).
Starting from this, you can quickly earn value from your measurement exercise, when stakeholders want to quickly evaluate the process efficiency or the productivity of resources.
Be forward looking
Even if this exercise does not appear as something to do on the first run of your modeling workshop, the suggested metrics shown below take into account the income of the business entity and the value of materials purchased, in the case of the Purchase Order process for example. This provides a different perspective, depending on the volume of business of the company.
If the enterprise has an annual revenue of $ 20 million and carries 11,700 PO per year, it is a very different challenge for a company that has an income of $ 200 million.
Also note that one can also evaluate the process according to a group of higher processes; in this case, one may wonder what percentage of the time is dedicated to fulfill Purchase Orders on the overall procurement process (line 101455).
PCF Metrics example (click for details)
This table enumerates different metrics that could be used to explore financial perspectives that were not part of our original calculation model. These are the suggested metrics for the 4.2.3 Order material and services, from the previous article.
Going further : Process performance measurement
Measuring a process can be considered as a benchmarking activity, either by providing data for the current state or for the desired state. The previous articles focused on the process costs itself, including the duration of the activities and the cost of the resources involved in the execution.
Process benchmarking can also be used for process control or for process performance monitoring, and as suggested by the ABPMP (2). The process performance management is also a business activity when it is time to implement a business process management discipline within an enterprise. We will come back later on that specific topic.
Getting lost into figures
As you saw in this series of articles, we could lose the focus of our audience while measuring, given the variety of data that can be put on the table to obtain a better understanding of the business processes and their related workflows in different business units.
At the beginning of this exercice, we looked at the process itself to evaluate its costs and eventually evaluate how it could be streamlined to bring some savings and gain efficiency.
Furthermore, if we want to set some goals and some standards to attain and maintain, the measurement will need to be refined not only for the process itself, but also for quality, cycle time, delays or errors, likely to control the process.
Thus, we will need to define the goals of measurements, the things to measure, against what we will measure, where we will measure and who will be responsible to measure.
We will have to keep this in mind :
– The measurement itself is directly related to the quantification of data including in an accepted standard and quality (accuracy, completeness, consistency and timeliness).
– The metric is a quantitative measure that a system, component, or process has a given attribute. Metric represent an extrapolation or a mathematical calculation of measurements resulting in a derived value. The APQC PCF metrics act as such, by suggesting a good set of measures that are adding value to the understanding of the processes and the workflow.
– Finally, the indicators would be a representation of a measurement or a metric represented in a simple or intuitive way, to facilitate its interpretations against some goals when it is time to address performance or quality issue. The common green, yellow or red flags are a common example of measures set against a standard to reach.
In the next article, we will discuss about process simulation, to allow you to surprise your PMO, your CIO or you CFO.
(2) The ABPMP (Association of Business Process Management Professionals) provides a framework for a comprehensive business process management practice and for process performance measurement practices,
(1) The APQC Process Classification Framework is used worldwide to provide industry standard benchmarks, and members can gain access to benchmarking results when it is time to compare with other companies in a similar business activity sector.