Archives du mot-clé BPM

Process Maturity Matters

Beyond the business analysis, used occasionally during transformation projects, business process management encompasses the entire life cycle of operations and business support. Its main objective is to add value to customers or suppliers first.

Au lever du matin, le cycliste prépare sa journée à travers monts et vaux
Hit the road – Claude Lanouette (c)

The degree of process management maturity, the ability to achieve sufficient understanding to manage them, was measured by the Gartner Group (see 1a,b,c). It showed that 75% of companies have an initial recognition of operational deficiencies, without a structured action plan to address them (phase 1). Only 20% of companies recognize the importance of managing the processes by creating a corporate culture that leaves room for understanding, learn how to improve (phase 2). But process management help solving concrete situations that must be addressed, in order to take its place on the market.

Gartner Business Process Maturity Model
Gartner Business Process Maturity Model

However,there is only a slim 5% of companies that engage further. They try to control and instrument processes for continuous improvement; automation is one of the means to this instrumentation (phase 3). Other then try to optimize the relationships between business processes across functional barriers, partners and customers (phase 4). Once it crossed this stage, some companies link process results to desired operational and strategic outcomes into a closed loop (phase 5). Finally, the most proactive create best-in-class processes that remain sharp in the face of change (phase 6). To summarize, this slim 5% invest wisely to adjust themselves quickly to the growing demands of the global market, and even succeed in becoming leaders.

These goals are ambitious. How to get out of the pack and reach those high standards? Implement a management practice processes supported by management, socialized and especially as part of a well established governance framework is the only effective way; it is a collective commitment.

For many organizations, it is essential to generate short-term gains, and this is a good way to pass the level of maturity stage 1 to stage 2. In fact, a well-defined project around a problematic process will identify areas for improvement and measurable gains. Once the improvement benefits recognized , it will be easier to finance process automation to improve. For the organization having several small successes, it will be easier to go into Phase 2 of the maturity cycle.

It is also unrealistic to believe that an improved process relies only on technological solutions that often help to automate problems instead of correcting the deficiencies from the corporate culture (2). Is it surprising, in a market where infrastructure solutions resellers suffer a decline in sales, while the providers of cloud computing solutions and big data management are growing by promising so much? Are we talking here of corporate strategy or simply the sophistication of means, without a real target the end – to concentrate and focus on the customer?

Ignorance of real costs, lack of simulation before engaging in development spending and lack of governance processes, understood and supported by management? This is where we must intervene. Accompaniment during such an initiative is often necessary to establish the foundation.

The management challenge

When it’s time to set up a Business Process Management (BPM) practice, the magnitude of such an initiative requires solid foundations. It is possible that you need help to do this, to rely on best practices. Note that the solution providers providers, specialized in such practices, may have an offer that is often attached to a technological solution, which is not always desirable when you want to only build these foundations.

Another challenge highlighted by the McKinsey group is that business leaders are struggling to support their agenda (3). Leaders are not impressed by the analysis or greedy voluminous reports that will not advance their cause.

A good alternative for the management of your business processes would be to use a periodic supervision, but continuously, or hire process specialists who can assist you during discovery workshops or socialization of your transformation projects .

At the right time and the right place

Recognizing these facts, it is conceivable that your consultants do not need to be constantly at your side, since it’s up to your company to take over, for a successful process management initiative.

When you need to negotiate a consulting contract, this may be a good idea to schedule periodic presence with a consultant team to support you for longer, instead of investing an initial amount while you will not be fully prepared to engage fully. This can be a compromise solution, without having to start over with a bang.

This different approach can give you time to adjust and set up your governance process. Take the time to develop a clear vision of the performance of your processes to learn how to control them, beyond your sales results, focusing with you on the most crucial element – adding value for your customers and suppliers. Big bang type approaches are not always a guarantee of success.

However, if you already acknowledge that losses from your processes make you lose ground, it is better to go to full speed.

References

(1a) APQC details BPMM in an interesting article by Jess Cheer, « What Does ‘Fix My Process’ Even Mean? », providing more insights on the proper use of the maturity model.

(1b) Gartner PDF – Maturity Assessment for Business Process Improvement Leaders: Six Phases for Successful BPM Adoption

(1c) To a few differences, there are several variations of the business process maturity model (BPMM) – Comparison of 6 Business Process Maturity Models

(2) Claude Lanouette – CPBA – Avril 2104 – L ‘art d’automatiser ses problèmes – translation to be published soon…

(3) McKinsey Insights – April 2015 – Changing the nature of board engagement

Publicités

La maturité de vos processus

Au delà de l’analyse d’affaires, utilisée ponctuellement pendant des projets de transformation, la gestion des processus englobe le cycle de vie complet des opérations et du support d’entreprise. Son objectif principal est d’ajouter de la valeur pour les clients ou les fournisseurs, avant tout.

Au lever du matin, le cycliste prépare sa journée à travers monts et vaux
Tôt pour la route – Claude Lanouette (c)

Le degré de maturité de gestion des processus, cette capacité d’atteindre une compréhension suffisante pour bien les gérer, a été mesuré par le groupe Gartner (1) qui a démontré que 75% des entreprises ont une reconnaissance initiale de leurs déficiences opérationnelles, sans plan d’action structuré pour y remédier (phase 1). Il n’y a que 20% des entreprises qui reconnaissent l’importance de la gestion des processus en créant une culture corporative qui laisse place à leur compréhension, tout en apprenant comment les améliorer (phase 2). Pourtant, la gestion des processus peut permettre de résoudre concrètement des situations auxquelles il faut faire face, pour tenir sa place sur le marché.

Gartner Business Process Maturity Model
Gartner Business Process Maturity Model

Cependant, il ne reste qu’un mince 5% des entreprises qui s’engagent plus loin. Elles tentent d’améliorer et d’urbaniser leurs processus en mode continu, l’automation étant une des voies de cette urbanisation (phase 3). D’autres essaient ensuite d’optimiser les relations entre les processus transversaux – entre leurs unités fonctionnelles, leurs fournisseurs et leurs clients (phase 4). Une fois ce stade franchi, certaines entreprises établissent un lien direct entre le produit de leurs processus et leurs enjeux opérationnels ou stratégiques (phase 5). Enfin, les plus proactives s’alignent sur les meilleures pratiques de l’industrie pour s’ajuster rapidement aux exigences croissantes du marché mondial et réussissent même à devenir des chefs de file (phase 6).

Ces objectifs sont ambitieux. Comment sortir de la meute et atteindre ces standards élevés? Implanter une pratique de gestion des processus soutenue par la direction, socialisée et surtout s’inscrivant dans un cadre de gouvernance bien établi est le seul moyen efficace; c’est un engagement collectif.

Pour beaucoup d’organisations, il est essentiel de générer des gains à court terme et c’est un bon moyen de passer du niveau de maturité phase 1 à phase 2. En effet, un projet bien défini sur un processus problématique permettra d’identifier des pistes d’amélioration et des gains mesurables. Une fois les bénéfices d’amélioration reconnus, il sera plus facile de financer l’automatisation du processus à améliorer. L’organisation qui fait plusieurs petits succès aura plus de facilité à passer en phase 2 du cycle de maturité.

Il est aussi illusoire de croire que l’amélioration des processus passe uniquement par des solutions technologiques, qui contribuent trop souvent à automatiser des problèmes au lieu de corriger les lacunes provenant de la culture d’entreprise (2). Est-ce surprenant, devant un marché où les revendeurs de solutions d’infrastructure subissent un déclin de leurs ventes, tandis les fournisseurs de solutions d’infonuagique et de mégadonnées, en pleine croissance, promettent mer et monde? Parle-t-on ici de la stratégie d’entreprise ou simplement de la sophistication des moyens, sans vraiment cibler la fin – se concentrer et se centrer sur le client?

Ignorance des coûts, absence de simulation avant de s’engager dans des dépenses de développement ou manque de gouvernance de processus, compris et appuyés par la direction? C’est là qu’il faut intervenir. Un accompagnement au démarrage d’une telle initiative est souvent nécessaire, pour établir les fondations.

Le défi de la gestion

Lorsqu’il est temps de mettre en place un pratique de gestion de processus d’affaires (BPM), l’ampleur d’une telle initiative demande des fondations solides. Il est possible que vous ayez besoin d’aide pour ce faire, afin de vous appuyer sur des pratiques reconnues. Remarquez que les fournisseurs de solutions conseils, spécialisés dans une telle pratique, ont  parfois une offre qui est souvent attachée à une solution technologique, ce qui n’est pas toujours souhaitable lorsqu’on désire uniquement établir ces fondations.

Un autre défi souligné par le groupe McKinsey est que les dirigeants d’entreprise ont peine à soutenir leur agenda (3). Les dirigeants ne sont plus impressionnés par l’analyse ni avides de rapports volumineux qui ne feront pas avancer leur cause.

Une bonne alternative pour la prise en charge  de votre gestion de processus serait de recourir à un encadrement périodique, mais continu, ou d’engager des spécialistes en transformation qui peuvent vous assister lors d’ateliers de découverte ou de socialisation de vos projets de transformation.

Être là au bon moment

Reconnaissant ces faits, il est possible de concevoir que vos consultants n’ont pas besoin d’être constamment à vos côtés, puisqu’il revient à votre entreprise de se prendre en main pour réussir une initiative de gestion de processus.

Lorsque vous devez négocier un contrat de consultation, cela peut être une bonne idée de planifier une présence périodique de l’équipe conseil, pour vous accompagner pendant plus longtemps, au lieu d’investir un montant initial alors que vous ne serez pas entièrement prêts à vous engager pleinement. Cela peut être une solution de compromis, sans avoir à démarrer sur les chapeaux de roues.

Cette approche différente peut vous donner le temps de vous ajuster et de mettre en place votre gouvernance de processus. Il faut prendre le temps de développer  une vision claire de la performance de vos processus pour apprendre à les contrôler, au-delà de vos résultats de ventes, en focalisant avec vous sur l’élément le plus crucial – l’ajout de valeur pour vos clients et vos fournisseurs. Les approches de type big bang ne sont pas toujours le gage de réussite.

Cependant, si vous reconnaissez déjà que les pertes engendrées par vos processus vous font perdre du terrain, il est préférable de passer à la vitesse grand V.

Références

(1) Gartner PDF – Maturity Assessment for Business Process Improvement Leaders: Six Phases for Successful BPM Adoption (autre liens en recherche)

(1a) À peu de différences près, il existe plusieurs variantes du modèle de maturité  (BPMM) – Comparison of 6 Business Process Maturity Models

(2) Claude Lanouette – CPBA – Avril 2104 – L ‘art d’automatiser ses problèmes

(3) McKinsey Insights – April 2015 – Changing the nature of board engagement

Measure Before Deciding

As we discussed in Modeling: A Decision Taking Asset, a process model should include an estimate of the execution cost, adding value to any business case. Focusing on the importance of measuring while modeling, this approach is an invitation to conduct a team review of any initial calculation model with the Stakeholders, before submitting it to the Executive Board.

Understanding the current state (click for explanations)

12.4.1.7 Understand Current State
12.4.1.7 Understand Current State

Managing change and planning change involves understanding the current state and defining the future state of a business process.

At an early stage of any process improvement initiative, it is the best time to provide a first calculation model of the current state.

If you are brave enough and visionary, and the process is straight forward, it is a good idea to provide at the same time some initial thinking about potential savings along the process.

Calculation model (click for explanation)

4.2.3 Order Material Initial Benchmark
4.2.3 Order Material Initial Benchmark

Let us review the variables used for this calculation and evaluate how it adds value to the modeling exercise.

We estimate the annual expenditure to transmit daily 45 Purchase Orders at $790,000. It does not assess yet if the process is effective, but provides us a first dimension of the current cost.

One could infer that a 10% efficiency improvement would represent an annual saving of nearly $80,000. However, is this enough to trigger a process improvement initiative? Can we achieve this improvement with a minimum expenditure, to ensure a return on that investment?

By establishing a first measurement, it is easier to engage in this discussion with stakeholders, much better than presenting a process diagram alone.

In a second iteration of the calculation model, we might examine the process in term of transaction volume; we can already communicate to the process owner a cost per unit. Using the calculation model, we learn that for 11 700 Purchase Orders over a year, this output of the process each costs $67.60 to the enterprise. It is almost evident that the process owner never had an opportunity to figure it by himself in most cases.

Consider the real costs (section 1)

How can we establish an hourly rate beyond $90, in our calculation?

Payroll and Availability

The average earnings of a resource might seem the best way to pursue the calculation of a business process cost. However, is it enough? One must equally consider the social and side benefits paid to employees, to achieve a fair real-time rate. In that case, it is best to refer to the Human Resources Manager to agree on a factor across all processes.

One must additionally consider the number of weeks available to work, when resources are engaged in the execution of process activities. One could even subtract from the current 37.5 hours a week the different breaks and factor in absences, which will establish a realistic hourly rate.

One can even establish a full-time equivalent (FTE) to estimate the number of busy resources executing the process. This equivalent is particularly important when evaluating any process improvement requiring a reorganization of tasks, roles and responsibilities.

Consider the indirect costs (section 1)

We often overlook at the overhead allocation. There is a basic rule of setting it to 150%, which generally represents the enterprise’s operation costs such as rental space, amenities like energy and telecommunications, supplies, taxes, insurance and equipment related to IT systems (see reference in the bottom of the article for more details). There is a cost to maintain facilities where real people are working, want it or not.

Why must we consider these indirect costs?

As a plain vanilla example, an enterprise employing 200 employees, each earning $50,000 a year, will spend around $13 millions a year for the resources, available 1800 hours over that time period. In fact, it would make up to 360K available hours to execute all operational, support or administrative business processes.

Applying the 150% standard across all processes would represent an annual expenditure of approximately $ 20 millions, to convert into an hourly rate to fit in the calculation model. This expenditure is also a part of process execution cost, we must insist. In that case, it is best to discuss with the Financial Controller, to agree on a standard rate across all processes.

After establishing this standard rate, use it in all your process models. It is unrealistic to believe that one can model all business processes; in principle, if that were the case in our example, we would have 36,000 hours available, excluding outsourcing.

Efforts by activity (section 2)

This section presents no particular problem; however, why would we calculate the volume of activities on an annual basis? This is to answer this very relevant question: « But how much it cost us?” Implicitly, Enterprise CXOs are very close of their annual planning – both for income and expenditure.

Impact on decision-making

What we all learn from this exercise is that Stakeholders and Executive Boards too often underestimate the real cost of most of their business processes. As an indirect consequence, they may be reluctant to promote improvement initiatives because they underestimate costs and cannot envision big savings.

Relying on a standard calculation model attached to each process diagram becomes an additional incentive to encourage change initiatives. In fact, this is one good reason to believe that process modeling is more than process diagrams. There is often confusion between these two levels, as we already discussed before.

This first exercise is a good starting point, but to engage in a thorough discussion and set targets for improvement, it is also important to provide accurate measurements, much more to benchmark against standards of excellence.

In the case of Purchase Orders, to use our example, how can we investigate a little more? Using the metrics proposed by APQC, in the next article, we will review and evaluate if our calculation model can be refined to answer more questions from CXOs or Executive Boards, if any.

Reference:

The Power of Business Process Improvement – The Workbook, section Estimate Time and Cost, chapter 5, for a detailed review

APQC  PCF Video Gallery:

Modeling : a Decision Taking Asset

French version

In any business transformation project, the business analyst must quickly provide crucial information to stakeholders, assisting them in their business decisions, while avoiding disproportionate investment efforts in this exercise. A systematic approach to process modeling achieves this objective, provided that it is not only limited to a simple diagram intended to visualize what is at stake. To be complete, a process model should also include quantitative data.

Embed from Getty Images

Although the business case might bring a solid argument about the benefits of transformation, including the process diagram, the financial part is often seen as the ultimate priority. To make an analogy, when you need to choose a model home or a car, you do not limit yourself to their visual representation (the diagram); the financial aspect is a key part of your decision making.

Accordingly, one must quickly identify the following dimensions: the workload, the direct and indirect costs and the volume. This will lead to this very significant information for managers: the annualized costs. In some cases, it could be the monthly cost or the quarterly cost that could be a good narrative too. Quickly providing a first estimate of the total cost of the process, the modeling exercise will be better perceived and appreciated.

To measure adequately, remember that a business process is a repetitive sequence of activities, performed by people or systems connected by communication links and including associations with data objects. An initial trigger and one or many end point if the process splits,  must be clearly identified to properly define the scope of the process. These pieces of information are essential to quickly establish a good measurement. A complex process must be decomposed into sub-processes that are themselves also measurable models. Not surprisingly, if a process does not fit on a page, there is a good chance that you cannot measure it effectively.

Standard process diagram

The process example below, 4.2.3 Order Equipment and Services, illustrates this principle (click to enlarge).

APQC PCF standard descriptions to depict a processs
APQC PCF standard descriptions to depict a processs

You can use the standardized descriptors from the PCF – Process Classification Framework – provided by APQC, which applies to most businesses. The PCF is an excellent starting point to quickly create a diagram that can then be adapted to most operational contexts, when you need to explore and discuss with subject matter experts . In fact, the PCF is a checklist of 1,200 standardized activities that can be used to conduct a first audit of the activities to include in business processes diagram.

We underline again that a process is a repetitive activity that can be quantified, in this case producing and transmitting an order. The calculation unit here is 1 order – a basic unit on which we establish an annual volume.

The total quantification is a process instance repeated several times; just imagine that the first green circle is a token that will cross the process each time that an order will be processed. In this example, there is 2 end points. If 95% of the orders are approved, for 100 tokens, 95 will finish in the top red end event and 5 in the bottom red end event.

Standardized metrics model

Use such a standardized calculation model to quickly estimate the annual cost of this process (click to enlarge).

XLS Spreadsheet illustration

4.2.3 Order Material Initial Benchmark
4.2.3 Order Material Initial Benchmark

Applying this simple calculation model calculation, which takes into account the average wage and the actual availability of resources involved in the process, it is estimated that 45 purchase orders are issued daily through 3 administrative regions – east, west and center – of the company. Generally, the purchaser is seeking for 2 quotes for each good at competing suppliers.

To ensure greater accuracy, in cases where the practice is to request 3 quotes, one should change the measure reflected in the line « Solicit » 1 or more quotes, which would affect the cost execution of the process.

This is precisely the function of the calculation model to quantify as precisely as possible the identified activities.

The allocation of indirect costs is included in the calculation for a felt covering not only labor, but also the company’s operating costs, distributed on staff time. The norm is usually 150%. The process is equivalent to nearly 5 FTE (full time equivalents).

Thus by using a pragmatic approach, you quickly realize that this process of production and shipping vouchers would cost a nearly $800,000 per year to the company.

Of course, these figures must be based on the volume of sales and purchase volumes.

In short, this approach allows you to examine a process and provide rapid first financial data that will initiate a conversation about the different solutions to ease the process of evaluating whether the transformation is a priority.

If you were approached to meet subject matter experts, to clarify a situation and provide an executive summary, you will have invested a minimum of time and present your first investigation at the project board meeting without delay.

Your process model may be more appreciated than a simple diagram, to engage in a real business discussion.

In the next article, we will discuss about the calculation model, including costing and other metrics that can be used to establish the effectiveness of this process.

Reference: