Where is your Organization on the Journey to becoming ...

Where is your Organization Where is your Organization on the Journey to on the Journey to

becoming Process Based ?becoming Process Based ?

Pat Dowdle Pat Dowdle Process Strategy GroupProcess Strategy Group

ABPMP Chicago Chapter February 10, 2009

Copyright © 2009 Process Strategy Group, LLC 22

AgendaAgenda

Key Principles of Process Based Key Principles of Process Based ManagementManagementKey Findings on the JourneyKey Findings on the JourneyA Roadmap and an Assessment A Roadmap and an Assessment Are you Ready for PBM? Are you Ready for PBM?


WhatWhat’’s the Big Deal About Process s the Big Deal About Process Based Management?Based Management?

Processes are Processes are howhow you provide products you provide products and services to their customersand services to their customers


In RealityIn Reality……

Most Most do notdo not manage manage their processes, their processes,

or they manage or they manage processes in isolationprocesses in isolation


The ResultThe Result……

Most companies Most companies do not managedo not manage how they how they provide services to their customers.provide services to their customers.


Bad customer experiences:Bad customer experiences:

Changing a telephone carrierChanging a telephone carrierResolving problems on your computerResolving problems on your computerFixing an error on your credit reportFixing an error on your credit reportResolving a medical billing errorResolving a medical billing errorTimely response to a voice mailTimely response to a voice mailAirline flight delaysAirline flight delaysPhone tree hell Phone tree hell


Questions for you: Questions for you:

How are you involved in process efforts?How are you involved in process efforts?Does your organization manage processes?Does your organization manage processes?Do you use your SOX efforts for compliance and Do you use your SOX efforts for compliance and process improvements?process improvements?Do you have process owners for your key Do you have process owners for your key processes?processes?Do you have a view of your organization that is Do you have a view of your organization that is different than the organization chart?different than the organization chart?


Current Pains ..Current Pains ..Require a Process Focus:Require a Process Focus:

Products/services donProducts/services don’’t meet customer t meet customer expectationsexpectationsCompetitors are getting ahead on Competitors are getting ahead on price/product/service.price/product/service.Downward price pressureDownward price pressureChallenge of ERP and CRM to deliverChallenge of ERP and CRM to deliverInitiatives are poorly linkedInitiatives are poorly linkedCompliance mandates (SarbanesCompliance mandates (Sarbanes--Oxley)Oxley)


What is Process Based What is Process Based Management?Management?

A holistic management approach that focuses A holistic management approach that focuses on:on:

Promoting a processPromoting a process--based based culturecultureManaging Managing endend--toto--endend business processes to business processes to continuously improve cost, time and quality of continuously improve cost, time and quality of products and services delivered to customersproducts and services delivered to customersUnderstanding and meeting Understanding and meeting customer customer expectationsexpectationsIntegratingIntegrating diverse initiatives into a processdiverse initiatives into a process--oriented oriented approachapproachLinkingLinking incentives and compensation to process incentives and compensation to process performanceperformance


Customer Expectations

• Leverage existing programs• Identify linkages• Develop common terminology

• Processes named• Boundaries identified• Standard methodology• Infrastructure established

• Measurement Architecture• End-to-end performance• Best Practices • Benchmarks

Process Based Management Process Based Management

End-to-End Processes• Classification• Portfolio• Structure

Mindset / Culture

• How things are done• Values, Rules, Practices

• Awareness & Communication• Executive leadership• Process included in strategy

• Process Performance• Incentives / Compensation

Process-based measures

• ABC/M• ISO/Quality Standards• Baldrige• Six Sigma, etc

Initiative Integration

• Voice of the Customer• Customer driven Products & Services

A holistic management approach that focuses on:


PBM vs. BPM ,etcPBM vs. BPM ,etc

How is PBM different from other 3 letter How is PBM different from other 3 letter process acronyms?process acronyms?

Focused on the management approachFocused on the management approachIndependent of any specific tool, method or Independent of any specific tool, method or softwaresoftwareIs driven from the business with partnershipsIs driven from the business with partnershipsA robust assessment and roadmap to guide A robust assessment and roadmap to guide organizationsorganizations


Process Based Management at CAMProcess Based Management at CAM--II

• 1994-1997• Experiences of 7 companies heavily engaged

in reengineering, with negative consequences• Developed an approach to becoming process based

• 1998-2004• 5 case studies and additional research• Developed the PBM Loop for evaluating implementationprogress

• Collaborative research 2004-2008• Developed:

• PBM Implementation Roadmap • Assessment Framework

Copyright © 2009 CAM-I and Process Strategy Group, LLC 1313

Findings from PBM Case Studies Findings from PBM Case Studies and Research: Required Actionsand Research: Required ActionsMindset shiftMindset shiftIntegration of initiativesIntegration of initiativesExecutive engagement and commitmentExecutive engagement and commitmentProcess GovernanceProcess GovernanceProcess performance measuresProcess performance measures““ProcessProcess”” for Process Based Managementfor Process Based ManagementLong term perspectiveLong term perspective


Impact of Business Process Orientation:Impact of Business Process Orientation:Research results showed that Research results showed that withinwithin an an

organization:organization:

Greater levels of BPO reduced Greater levels of BPO reduced interfunctionalinterfunctional conflict and conflict and improved interdepartmental improved interdepartmental ““connectednessconnectedness””..

The greater the level of BPO, the greater the organizational The greater the level of BPO, the greater the organizational performance.performance.

•• 16.6% increase Leads to 19.4% performance improvement16.6% increase Leads to 19.4% performance improvement

The greater the level of BPO, the greater the organizational The greater the level of BPO, the greater the organizational esprit de corps.esprit de corps.

Per Dr Kevin McCormack (Business Process Maturity: Theory and Application; 2007)


On the Journey On the Journey ……..to become Process Basedto become Process Based

Assess where you areAssess where you are

Develop steps to get to your objective Develop steps to get to your objective


Why a PBM AssessmentWhy a PBM Assessment

Evaluate progress in implementation Evaluate progress in implementation Benchmark other business unitsBenchmark other business unitsFeedbackFeedback on strengths and opportunitieson strengths and opportunitiesDefine a path forwardDefine a path forward


Assessment CategoriesAssessment Categories

Governance

Culture & Adaptation

Strategy & Planning

Deployment&

IntegrationEvaluation

Process Knowledge Management

Organization Profile


Why an Implementation RoadmapWhy an Implementation Roadmap

To address issues like these: To address issues like these: where do we startwhere do we startwe arenwe aren’’t making progress t making progress wewe’’ve encountered roadblocksve encountered roadblockswhere do we focuswhere do we focuswe still act like functionswe still act like functionswe do not leverage our IT Projectswe do not leverage our IT ProjectsII’’m concerned this will not stick m concerned this will not stick


AwareCommitted

EngagedManaged

Integrated

Embedded

Realized

DiscoveryDiscovery

FoundationFoundation

TransitionTransition

Transformation

InstitutionalizeInstitutionalize

OptimizationOptimization

Management of individual process(s) Process Based Management

The Roadmap to PBM The Roadmap to PBM

Defined Defined ““PathwaysPathways”” for moving between Stagesfor moving between StagesIdentified detail steps for each PathwayIdentified detail steps for each Pathway

What, Why, How, WhoWhat, Why, How, WhoInputs & OutputsInputs & Outputs


RoadmapRoadmap

Pathway steps

Pathways to PBM

PBM Stages

AssessmentAssessment

Suggested Action plans

Gaps in implementation

Stage of PBM

Implementationof Action Plans

Diagnosis Prescription

PBM PBM –– Check up and PrognosisCheck up and Prognosis


AwareCommitted

EngagedManaged

Integrated

Embedded

Realized

DiscoveryDiscovery



Transformation




The Roadmap to PBMThe Roadmap to PBM--Discovery Discovery


Discovery Pathway Discovery Pathway

Key Outputs:

• Readiness profile• Inventory of methods, initiatives and tools• PBM Implementation Plan, including the Communication Plan

Key Roles:

• Advocacy Group• Sponsor• Senior Leaders


PBM Assessment OverviewPBM Assessment Overview

Strategy & PlanningExamines how your business strategy and Process Based Management (PBM) strategy integrate. Evaluates how the

organization executes its plan for implementing and continuously improving PBM.

GovernanceExamines the roles, responsibilities and structure in place to

oversee the implementation and

management of PBM.

Deployment & IntegrationExamines the extent to which PBM

deployment has been achieved, your approach for cross-process

integration, alignment with improvement methodologies, and

stakeholder involvement.

EvaluationExamines how measures

are designed and monitored to track the

implementation of PBM. Evaluates PBM

implementation against leading practices.

Process Knowledge ManagementExamines the structure and practices for capturing and utilizing process

knowledge.

Culture & AdaptationExamines how you communicate PBM strategy, develop and maintain PBM competencies, and adapt your culture to

PBM.

Organizational ProfileProvides an overview of the organization’s efforts toward Process Based Management.


Exercise : SelfExercise : Self--AssessmentAssessmentScore how well your organization is doing in each of the categorScore how well your organization is doing in each of the categoriesiesScore on scale of 0 Score on scale of 0 --1010

CategoriesCategories ScoreScore

Strategy & PlanningStrategy & Planning

GovernanceGovernance

Deployment & IntegrationDeployment & Integration

EvaluationEvaluation

Process Knowledge ManagementProcess Knowledge Management

Culture & AdaptationCulture & Adaptation

Total Score -


AwareCommitted

EngagedManaged

Integrated

Embedded

Realized

DiscoveryDiscovery



Transformation




The Roadmap to PBMThe Roadmap to PBM--Foundation Foundation


Foundation Pathway Foundation Pathway

Key Outputs:

• Process Classification Framework• Selection of a Process Improvement Methodology• Establishment of a PBM Office (including budget)• Establishment of the Process Council• Appointment of Process Owners for Prioritized processes

Key Roles

• Process Advocacy Group/ PBM Office• Process Council• Process Owners• Senior Leaders


Background

Classification FrameworkClassification Framework

Identity

Priority

Mandated

DefinitionDefines the company for itself, its customers and its investors.

Strongly influences how well identity processes are carried out.

Processes that are legally required.

Processes which support daily operations.

ExampleFed Ex - Guaranteed on-time deliveryMcDonalds - Speedy, consistent food preparation

Fed Ex - Airplane operationsMcDonalds - Food supply management

Regulatory reportingIncome tax filing

Many administrative & overhead functions like payroll processing, accounting, office management

Adapted from: The Process Edge, Peter Keen - 1997


Dept CDept A Dept B

Company X

Customer

Activity BActivity B

Activity AActivity A Activity CActivity C

Activity FActivity F

Activity XActivity X

Activity YActivity Y

Activity ZActivity Z

•Objective: Maximize departmental performanceManage budget centers• Separate / distinct activities

• Traditional management structure

Traditional View: Functional Traditional View: Functional

• Minimal focus on externalcustomer

• I report to my boss


Process Classification Management Structure

Process-based Measures Initiative Integration

Dept BDept A Dept CCustomer

Activity B

Activity AActivity C

Activity F

Activity X

Activity Y

Activity Z

• Focus is on the Customer ( I report to my customer)

• End-to-end process spans functional organizations

Objective: • Customer satisfaction• Manage time, cost and quality• Competitive advantage• Retain & attract customers

Process ViewProcess View

• Delivery of value addedproducts & services

Company X


Process Team Leader- Sub-process owner- Full-time

Process Owners- Top level management- Process & functional hats

Process Team- Subject matter experts- Rotate

•Formulate vision•Establish targets•Assess performance

•Obtain resources•Approve action plans•Integrate across processes

•Process design•Performance measurements•Oversee implementation

•Set process goals•Monitor performance•Identify improvements

Process Performers

Function Function Function

Process

Governance ModelGovernance ModelProcess Council- Process Owners- Functional top management

•Manage cross process issues•Monitor process measures•Link to strategy and op plan

•Allocate resources•Approve process changes•Manage the communication plan


AwareCommitted

EngagedManaged

Integrated

Embedded

Realized

DiscoveryDiscovery



Transformation




The Roadmap to PBMThe Roadmap to PBM--Transition Transition


Transition Pathway Transition Pathway

Key Outputs: Key Outputs:

• Documentation of the end to end processes• Current process metrics• The measured impact of the improvements• Updated performance plans, based on the performance of end-to-end processes• Prioritized process improvement projects, based on the key drivers of performance

Key RolesKey Roles

• Process Owners• Process Teams• Process Council• PBM Office


AwareCommitted

Engaged

Integrated

Embedded

Realized

DiscoveryDiscovery



Transformation



Management of individual process(s)

Reality: Path to PBMReality: Path to PBM

Process Based Management

Managed


Transformation Pathway Transformation Pathway

Key Outputs:Key Outputs:

• Process Governance• Cross-process integration plan• Cross-process measures and targets• Stakeholder follow up and assessment plan

Key RolesKey Roles

• Process Council• Process Owners• Process Teams• PBM Office

Create the Framework &

Governance for Cross-Process

Integration

Implement and Manage

Cross-Process Integration

Analyze Results and Take Action

Identify and Address

Stakeholder Issues

Define / Update Requirements

for Moving Forward


Aware

Committed

Engaged

Managed

Integrated

Embedded

Realized

Pockets of process success

PBM implementation strategy

Executive support

Process governance

Classification framework

Process teams launched

Process teams operational

Managing individual processes

Goals & objectives based on process

Process Council assumes ownership of PBM

Cross process integration and measurement

PBM transformation is part of goals & objectives

PBM goals & objectives are part of the organization’s culture

Alignment of integrated processes and strategy

Process performance tied to incentives

PBM extended externally

Processes are primary structure supported by functions

CI initiatives integrated, prioritized and resourced by strategy


PBM Roadmap PBM Roadmap –– Stages & MilestonesStages & Milestones

Minimal process effortsPBM Assessment completed


Other Items to Consider: Other Items to Consider:

Do Not map processes just to map Do Not map processes just to map mapping does not impact performance mapping does not impact performance Instead:Instead:•• improve prioritized processesimprove prioritized processes•• Measure and manage performanceMeasure and manage performance

Get people involved Get people involved not for them, but with themnot for them, but with themChange requires involvementChange requires involvement


Are you ready for PBM?Are you ready for PBM?Specific Conditions are in place: Specific Conditions are in place:

Success with other Success with other ““managementmanagement”” techniques techniques Support for managing and integrating crossSupport for managing and integrating cross--functional processesfunctional processesSome process successesSome process successesTechnology enablers in placeTechnology enablers in place

Business requirements dictate: Business requirements dictate: Better manage customer interactionsBetter manage customer interactionsIncorporate customer requirements into processesIncorporate customer requirements into processesHolistic view of how products and services are deliveredHolistic view of how products and services are deliveredImprove cycle timeImprove cycle timePreserve process knowledgePreserve process knowledge


More InformationMore Information

www.processstrategygroup.comwww.processstrategygroup.comPat Dowdle:Pat Dowdle:

847847--501501--43194319(([email protected]@processstrategygroup.com))

mailto:[email protected]

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