Process Day 2010 - Alec Sharp – Making Process Real Engaging the CXOs Recurso

1. 8:05-9:00
Making Process Real –
Engaging the CXOs
Alec Sharp, Consultant and
Founder, Clariteq Systems
Consulting Ltd
Keynote presentation

2. Making Process Real
Engaging the Executive
July 28, 2010 – Sydney, Australia
Alec Sharp
Consultant
Clariteq Systems Consulting Ltd.
West Vancouver, BC, Canada
asharp@clariteq.com
www.clariteq.com www.twitter.com/alecsharp

3. 3
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…

4. 4
Making
Process
Real
Workers –
It’s a horror film:
“My Incredible Shrinking
Employment Prospects!
Executives –
It’s a ransom note
from expensive
consultants!
Managers –
I have hundreds,
and I don’t need any
more!
1 – They might not love “process” as much as you do
“Process”

5. 5
Making
Process
Real Lots of evidence of fear of “process”
* not a nice
comparison
Downsizing and
Reengineering:
Corporate Lobotomy*

6. 6
Making
Process
Real Six Sigma in particular faces a backlash
JUNE 11, 2007
Inside:
Six Sigma: So Yesterday?
In an innovation economy, it's no
longer a cure-all
The cover:
3M’s Innovation Crisis: How Six Sigma
Almost Smothered Its Idea Culture
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

7. 7
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. _________________________________________
2. _________________________________________
Fill in the blanks – why not promote BPM with these claims?
Every other discipline makes the same claims…
… so nobody believes you anyway.

8. 8
Making
Process
Real
“First, we need executive commitment…” – False!
Later, you need executive commitment, but it doesn’t start there.
Key elements:
• Examples are good, stories are better – start collecting!
• Simple visuals everyone can use to support their message
• Consistency and repetition
3 – You won’t start at the top
Mid-level –
present compelling idea
or information
BP
initiatives
Executive –
“We need to
do this!”
BP
initiatives
BP
initiatives
Support!

9. 9
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 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
must cover
pick and choose
Whatever you do…
Don’t preach,
don’t overreach

10. 10
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!)

11. 11
Making
Process
Real Process – the elephant in the room
It’s a
PROCESS!
The problem – “process blindness”

12. 12
Making
Process
Real
end-to-end process: Fulfill Order
Different perspectives on “business process”
Logistics
process
Sales
process
A/R
process
Six Sigma –
focus on defects and
variation in “our
lithography process”
Manufacturing process
Lean practitioner –
focus on flow within in
“ our fabrication process”
Functional perspective –
focus on internal efficiencies in
“ our manufacturing process”
Business Process Management –
end-to-end alignment of
“ our Fulfill Order process”
Fabrication Assembly
Packaging
&
Labeling
litho
ISO 9001 –
focus on documenting
procedures in “our
custom labeling process”
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!

13. 13
Making
Process
Real Does it matter? Yes!
Identify
Prospect
Qualify
Prospect
Solicit
Prospect
One process: Acquire Customer
Identify
Prospect
Solicit
Prospect
Qualify
Prospect
etc.
At a Financial Services company,
important activities were seen as separate processes
Rewarded for
number of
prospects
Expected to
contact all
prospects
Rewarded for
long-term viability
of client
Sequence, metrics,
and rewards
worked against the
sales funnel.
Rewarded for
high-quality
prospects
Identify likely
prospects,
good fit
Smaller number of prospects,
more time to tailor solicitation,
higher conversion rate
Process and
metrics supports
sales funnel.

14. 14
Making
Process
Real An example for your repertoire – part 1
Telephone company needs to improve its Service Provisioning processes
Service
Order
Management
process
Facilities
Management
process
Service
Assurance
process
Installation
process
Customer
Update
process
• “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”
• 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?

15. 15
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
Network
Monitoring
Installation
&
Repair
Customer
Records &
Billing
Facilities
Management
Process: Move Telephone Service
Capture
Service
Order
Confirm
Service
Quality
Install
Premise
Equipment
Activate
Customer
Account
Assign
Network
Facilities
Process: Move Telephone Service
Trigger:
Customer wants
telephone service
moved.
Customer result:
Telephone service
is moved
Telco result:
Active account
with receivable
posted

16. 16
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

17. 17
Making
Process
Real Cross-functional and human issues
Wherein we introduce
the perverse incentive,
the unintended consequence,
and their ramifications

18. 18
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.”

19. 19
Making
Process
Real Anticipating the unanticipated
“What we've got here is failure to communicate...”anticipate…”
“Unintended consequences”
are most often a failure to anticipate.
There are techniques and frameworks that help.

20. 20
Making
Process
Real A true story of Function vs. Process
Logistics
goal:
lower
shipping
costs
Sales
goal:
late-quarter
sales
A/R
goal:
precision in
collections
Manufacturing
goal:
maximize
machine
utilization
Sales Manufacturing Accounts
Receivable
Logistics
Process: Fulfill Order Process goal:
Responsiveness by providing the
shortest order-to-cash cycle time
Receive
Order
Plan
Order
Fabricate
Order
Deliver
Order
Collect
Payment
Assemble
Order
Stage
Material
Move
WIP
Poor process performance because
everyone was working hard and meeting their targets!

21. 21
Making
Process
Real
Sales Production Accounts
Receivable
Logistics
This doesn’t mean functions are bad!
triggering
event
final
resultsProcess: Fulfill order
• A centre of expertise –
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”
FunctionProcess
• 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
Ultimately, business processes are all about alignment
cylinder of excellence –

22. 22
Making
Process
Real Processes and functions – three key points
Customer Front
Office
Finance Back
Office
Operations
agency
Issue Operating Permit
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
Has an owner!
Needs an
owner!

23. 23
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

24. 24
Making
Process
Real The factors that matter
Business Process
enables enables enables enables enables enables
Workflow
Design
Information
Systems
Motivation &
Measurement
Human
Resources
Policies and
Rules
Facilities
(or other)
• Actors
• Steps &
decisions
• Flow -
sequence and
handoffs
• Applications
• Data
• Information
• Integration
• Employee
assessment
and incentives
• “Reward and
punishment”
• Process
performance
indicators
• Constraints
• Business
rules that the
process
enforces
• External
& internal
• Workplace
layout
• Equipment
• Furnishings
• Skills
• Matching
actors to
tasks
• Recruitment,
selection and
placement
Enabler – A factor
that can be adjusted
to impact process
performance.
Business mission,
strategy, goals, & objectives
Culture, core competencies,
and management style
enables constrains

25. 25
Making
Process
Real
Consider each enabler during assessment and design
• Mismatch of
work needs
and facility
• No support for
team work
• Layout that
impedes flow
of people or
material
• Unavailable
information
• Re-keying of
data
• Missing
functionality
• Awkward
interfaces
• Lack of support
for workflow
• Too many
actors
• Non-value -
added steps
• Duplicate
steps
• Delays and
bottlenecks
• Excessively
sequential
• Inappropriate
performer or
process
measures
• Internal rather
than customer
focus
• Measures of
tasks vs.
outcomes
• Mismatches
between task
value and
performer
• Inappropriate
recruiting and
placement
• Too little
empowerment
• Out-of-date
policies or
numerical limits
• Excessive
review or
approval steps
• Restrictive
labor contracts
• Overly complex
coding
Business Process
enables enables enables enables enables enables
Workflow
Design
Information
Systems
Motivation &
Measurement
Human
Resources
Policies and
Rules
Facilities
(or other)
Business mission,
strategy, goals, & objectives
Culture, core competencies,
and management style
enables constrains

26. 26
Making
Process
Real
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)
That’s the main reason we model as-is workflow

27. 27
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

28. 28
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!”
28

29. 29
Making
Process
Real
How the “process-oriented” implementation worked out
Logistics
function
Sales
function
Production
function
A/R
function
end-to-end process: Fulfill Order
Logistics
process
Sales
process
Production
process
A/R
process
Sales
module
Manuf’g
module
Logistic
s
module
A/R
module
Logistics
module
Sales
module
Manuf’g
module
Accounts
Receivable
module
Experience proves that software implementations are far more
successful when they are truly process oriented
Conflicts: timing, coding, terminology, data formats, performance targets, …
Same software, process-driven implementation:
Missing the point about “process”:

30. 30
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
30

31. 31
Making
Process
Real Success with ERP implementation
31
Success (ROI, etc.) ranked from 0 - 10
0 5 10
Numberofenterprises

32. 32
Making
Process
Real The usual guesses…
Success (ROI, etc.) ranked from 0 - 10
0 5 10
Numberofenterprises
Normal
distribution
Skewed
optimistically
Skewed
pessimistically
Really
pessimistic

33. 33
Making
Process
Real
Winners and losers in ERP implementation
Success (ROI, etc.) ranked from 0 - 10
0 5 10
Numberofenterprises
WinnersLosers
Process first,
IT secondary
IT focus,
Functional
orientation

34. 34
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

35. 35
Making
Process
Real
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…
Operational
Excellence
Product
Leadership
Customer
Intimacy
Consistent, predictable, error-free,
and efficient.
More efficient, but less flexible in
changing direction or meeting
needs of individual customers.
Tailors service delivery to
the processes of individual
customers.
More flexible for adapting
to needs of individual
customers, but less
efficient.
Continuous and rapid
introduction of new
products and services.
More flexible for
adapting to needs of
new offerings,
but less efficient.
The original reference:
The Discipline of Market Leaders
Michael Treacy and Fred Wiersma
Addison-Wesley 1995
Too often, companies lack focus or focus on the wrong discipline.
35
Process goals: know your “differentiator”

36. 36
Making
Process
Real The #1 differentiator problem
Engineering:
Product
Leadership
Functional
area 1
Functional
area 1
Functional
area 1
End-to-end business process
Participants in a single end-to-end business process
aiming for different differentiators without realizing it
Finance:
Operational
Excellence
Sales:
Customer
Tailored

37. 37
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

38. 38
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

39. 39
Making
Process
Real Contact info
Me: asharp@clariteq.com
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