VACO CPE SERIES

August 19, 2009

Benefiting From Business Process Management &

Business Intelligence (Performance Management)

Consider that “Business” in this context = “Enterprise”

LawrencePROCESS WITH A PURPOSE

E. Lackey
Process Guidance, inc.
Raleigh, North Carolina
1 (919) 606-4988
lackey@bellsouth.net
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PROCESS WITH A PURPOSE
 Session Topics Are Complementary

oSession One --- Utilizing Business Process

Management Techniques to Identifying and Resolve
Process Issues

oSession Two --- Utilizing Business Intelligence to

Sustain Improvement and Enable Adaption to
Changes
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 BUSINESS PROCESS MANAGEMENT (BPM)
SESSION ONE AGENDA
•FOUNDATION
oWHY DO WE NEED PROCESSES?
oDEFINITIONS
oPROCESS LEVELS
oNAVIGATING THE CLUTTER
•
• THE BPM METHODOLOGY
oBPM TOOLS
oSYSTEMATIC APPROACH

•BPM SAMPLE CASE

• PROCESS WITH A PURPOSE
•BPM APPLICATION & ISSUES/ CASES FROM CURRENT EVENTS
•
•DESIRED BPM INTERVENTION RESULTS
•
•
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•
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 Why Do We Need Business Process?
A business process is the method that an employee follows to perform some work-related task. If a
business process isn't documented & taught, then employees invent their own processes to do their
work.

Most managers don't take the time to properly determine what the most efficient processes are or
they don't take the time to communicate these processes to those who need them most.

The absence of systematic processes generally results in a fiasco, usually at the worst possible
time. And as the organization grows, the potential for miscommunication, catastrophes,
inconsistency and inefficiency increases exponentially.

Al Einstein ---- Insanity: doing the same thing over and over again and expecting different results.

ØIf you do a lot of firefighting, you might be aWITH

PROCESS process wreck
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ØIf you have lousy work quality, you might be a process wreck
ØIf you have morale issues/ overtime, you might be a process wreck
ØIf your customers are not happy, you might be a process wreck
ØIf your boss is not happy, you might be a process wreck

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 PROCESS WITH A PURPOSE

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 BPM FOUNDATION

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 DEFINITIONS
oPolicy --- Documented set of principles and guidelines
o
oProcess --- An activity that converts inputs to outputs with added value that are
then inputs to the next process --- or are the end state
o
oProcedure – Step-by-Step method(s) used to convert inputs to outputs within
the process
o
oAlignment – Linking improved processes to achieve an organization’s goals

BusinessProcess
Business ProcessManagement
Management(BPM) (BPM) systematicapproach
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isisaasystematic approachto
tohelp
help
organizationselevate
organizations elevatethe effectivenessofoftheir
theeffectiveness theiroperating
operatingprocesses
processestoto
improveinternal
improve internalcontrol
controland
andoperating
operatingperformance
performanceacross
acrossthe
theEnterprise.
Enterprise.

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 PROCESS LEVELS EXAMPLE
Level One: Mission,
Revenue
RevenueCycle
Cycle Objectives & Strategy
(POLICIES)

Level Two: High Level

Sales View of Key Processes
Sales Book Order Deliver Invoice Collect
Contact Book Order Deliver Invoice Collect (POLICIES & PROCESSES)
Contact

Level Three: Top of

Bill Mail Working Level Processes
Bill Mail
(Processes)

Level Four: Functional

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Processes …. Work being
done
Level Five: Functional
Sub Processes … steps
of work being done
Level Six: Procedures/
Detailed Work Instructions
8
 The Business Mgmt System Clutter
ORG.
EXCELLENCE EFFECT. TL9000 CSQP
PROGRAMS ISO KAIZEN
9000
SIX
SIGMA TQC/
TQM
QUALITY
BALDRIGE
CIRCLES LEAN COSO
BMA
FRAMEWORK
(SOX 404)
SDLC

IF IT LOOKS LIKE A DUCK

ALL ARE QUALITY SYSTEMS

= SYSTEMATIC
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Based on work & concepts
APPROACH Of Edward Deming

BPM FOCUSES COMMON

COMMONELEMENTS
ELEMENTS---
---Standards/
Standards/framework/
framework/data
data
ON PROCESS •ISO
SUCCESS & DRAWS •ISO––PRICIPLES
PRICIPLES&&QUALITY
QUALITYMANUAL
MANUAL
•BALDRIGE
FROM OTHER •BALDRIGE------ATTRIBUTES/
ATTRIBUTES/ASSESSMENT
ASSESSMENT
•SIX
SYSTEMS •SIXSIGMA
SIGMA------DMAIC
DMAIC
10/22/09 •SOX --- COSO FRAMEWORK/ COMPONENTS/ ASSESSMENT MATRIX 9
•SOX --- COSO FRAMEWORK/ COMPONENTS/ ASSESSMENT MATRIX
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 BPM METHODOLOGY

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 BPM TOOLS & BUILDING BLOCKS
oENTERPRISE OBJECTIVES/ EMPHASIS are used in process design --- ensure
that processes support the enterprise’s direction and that policies are properly
aligned.
o
oBUSINESS RULES define how a particular transaction or activity will be
executed within the process --- process change may require a rules change ---
generally built into an automated portion of the process.
o
oPOLICIES AND PROCEDURES are the key building blocks for process success.
Procedures define the operations within a process --- activities that convert the
input into an output.
o
oPROCESS METRICS provide the level of process effectiveness generated by
the process/ procedures --- derived from Business Intelligence
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o
oVISIO, SMARTDRAW or other process mapping tools that are used to depict
WORKFLOWS and connections between workflows --- show manual & automated
steps --- enable view of critical process steps, control risk points, duplicated work &
process/ work constraints. If you can’t draw a picture ----
o
o
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 WHAT IFS/ WALKTHROUGHS/
SIMULATE VARIABLES PRIOR
BPM SYSTEMATIC TO EXECUTION
APPROACH

IMPLEMENT DESIGN:
•TRAIN
•CHANGE MGT
PROCESS OBJECTIVES/ •TEST
AS IS AND FUTURE •GO LIVE
PROCESS STATES

USING PROCESS PROCESS WITH A PURPOSE MEASURE

METRICS TO FINE- EFFECTIVENESS:
TUNE AND FURTHER •INDIVIDUAL PROCESSES
IMPROVE THE DESIGN •AFFECTS ON OTHERS
•COMPARED TO PLAN

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 APPLYING THE BPM METHODOLOGY
Aligns w ith Aligns w ith Aligns w ith YES
P R O C E S S O W N E &R O
S PE R A TOR S
YES YES
N ext level up
? N ext level up
? N ext level up
? IN V O LV E D IN A LL S T E---PESX P E R T S
NO
NO NO C reate theoretic al
T O-B E proc es s that
M eet w ith M eet w ithproc es s M eet w ith
proc ess M ap A S-IS proc es s from
addres s es ris k&s
m anagem ent to ow nersto ex plain operatorsto dis c us s end-to-end, identify
ineffic ienc ies
---
Identify c ritic al the projec&t projec&t interv iew for inputs, doc um ents
,
identify required
goals/ objec tiv es
/ identify goals& des ign inform ation proc edures,w eak nes s es
doc um entation &
s trategies objec tiv es & opportunities
c reate P roc es s
M etric s

E x ec ute
/
T es t theoretic al
Im plem ent the new
proc es s w ith
proc es s---
v ariables/ w hat-ifs
c om plete proc es s
& w alk through
doc s, train s taff
, from c urrent one
w ith operators
tes t& go liv e
NO
M onitor proc es s
res ults--- ac t on
les s than ex pec ted
m etric /sobv ious
is s ues
O ptim iz e the
M ov e on to the
proc es s--- follow-
nex t proc es s
up on c ontrol ris k s
tes ting outputs
& effic ienc y
opportunities
N ex t P roc es s

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D oes design need
YES
m ods or start
-over?

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 BPM SAMPLE CASE

Assignment is to help an enterprise identify and resolve

billing issues

Assume that Initial meetings with management & staff have

been completed and we are ready to begin the process
assessment
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 SAMPLE TOP LEVEL FLOW

Revenue
RevenueCycle
Cycle

Sales
Sales Book Order Deliver Invoice Collect
Contact Book Order Deliver Invoice Collect
Contact

REVENUE CYCLE OBJECTIVES:

oPROVIDE AN EXCELLENT EXPERIENCE FOR
HIGH THE CUSTOMER
LEVEL PROCESS WITH
oMEET/ EXCEED PROFITABILITY A PURPOSE
COMMITMENTS
OBJECTIVES oPROVIDE A SATISFYING WORK ENVIRONMENT
FOR EMPLOYEES
o

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 Billing Objectives are to:
•Bill on a timely basis --- CSAT & &
Invoice
Invoice Process
Process “As
“As Is”
Is” profitability
•100% invoice accuracy --- CSAT
& collections (cash flow)
Sales Staff •Increase throughput efficiency to
allow more analysis time for staff
Order
Input
I/ FACE

Billing/
NO
Receivab ERRORS? Print Sample for
Stuff & Mail
les Invoices Accuracy
System
YES

YES

Analyze/ PROCESS WITH A PURPOSE

Customer Price Escalate to
Info Correct IT for help
Rejects
Product NO
Customer
Master
Master ALL
COR
RECT
ED
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 “AS IS” Process Metrics
July 2009 Process
OBJECTIVE Results Objectives Variance

Timely Billing (Average

Days after Event) 6 1 (5)

Invoice Accuracy (#
disputes or calls) 15 0 Awful
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Billing Efficiency
(% 1st time pass through) 85% 95% (10) Pts

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 IDENTIFY ISSUES 15

JULY
RESULTS OBJECTIVE VARIANCE

Billing Efficiency 85% 95% (10) Pts

(% 1st time pass through)

Error type analysis & interviews with billing & IT revealed the following:
1.On average, 65% of errors result from sales staff order input mistakes
2.On average, 15% of errors result from customer master not being updated promptly
3.On average, 15 % of errors result from product master not being updated promptly
4.The remaining 5% of errors result from miscellaneous causes
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 “TO BE” PROCESS RECOMMENDATIONS
SHORT TERM SOLUTION RECOMMENDATIONS:

Issues --- Financial management holds billing clerks responsible for efficiency even
though most errors occur in upstream processes. The clerks say that they can fix the
issues faster than upstream staff.

•Billing clerks are “fixing” sales staff errors

•Billing clerks are “chasing” and with IT are correcting customer information errors --- sales is
responsible for maintaining accurate information in the customer master database
•Billing clerks are chasing and with it are correcting product information errors such as current
prices --- product management staff are responsible for maintaining the product master database
•
Recommendations --- Upstream process owners have no skin in the game. Adjust
billing efficiency for upstream caused issues and route errors to owners by email or
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trouble ticket. Financial management should work with upstream counterparts to include
corrections in process owners performance objectives.

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 “TO BE” PROCESS RECOMMENDATIONS
LONGER TERM SOLUTION RECOMMENDATIONS:

Issues --- Product and customer information exists in the billing system as well
as in the master databases. Invoices reject when the data is not in agreement
creating the rework done by billing and the upstream processes. These
databases have evolved over time using different formats and logic with
resulting interface issues.

Recommendations --- Management should consider establishing a data

warehouse as the single repository for critical information. An integrated ERP
system would provide the most benefit.
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Next Steps for Shorter & Longer Term Recommendations --- Slide 11

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 BPM Applications

Business Process Management methodology is applicable

for all enterprises that can benefit from process
improvements:

oCommercial
oNon-Profit
oMedical
oGovernment
oEducation PROCESS WITH A PURPOSE
oMilitary
oReligious

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 Current Process Issue Examples

State Government:
vState Employee Insurance Shortfall
vParole System Controls
vDHHS Medicare “Accounting Error”
v

DEFER UNTIL SESSION TWO

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WHAT PROCESS IMPROVEMENT LOOKS LIKE
oStrengthened Internal Control and Risk Management
oQuality & Efficiency at Higher Levels
oCustomer Satisfaction Enhanced
oEmployee Morale Improved
oEmployees Trained in BPM Techniques --- Sustaining

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 SOME CLOSING CONSIDERATIONS
CHANGE MANAGEMENT
ØProcesses are owned and managed by people but many
times, individuals become the process. A consistent, sustainable
process by definition is person neutral. A process is tailored to
meet enterprise objectives, not to fit the owner. In the absence of
direction, individuals will invent their own processes +-
ØThe BPM advisor must be prepared to add change managemen
elements to the BPM project plan.

REQUIRED FOR SUCCESS

ØProcess improvement requires

PROCESS “tops down” support to
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be successful
+ Influence process owners/ add to objectives
+ Visible management priority
+ Provide resources
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 END OF SESSION ONE

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