Measuring Process Efficiency

1. Determining right metrics for business process …
Too manyat times istooless,aswe want to measure everythingunderthe sun,whetherrelevantor
What factors shouldbe consideredtoensure rightmetricsare designedforthe process?
- Has end2endviewof the processconsidered
- Industrydynamics
- Businesspriorities
- IT platforms
End2End view
WhenworkingwithOutsourced3rd
Party Vendorstomanage businessprocesses,it’simportanttofocus
on theirefficiency(productivity) andeffectiveness(quality) butcannotaffordtolose sightfromthe
overall BusinessProcessperformance.Forexample,if focus isonlyonservice providerinvoice
processingcycle time withoutlookingatInvoice ProcessingOverallCycle time we maynotbe able to
understandorachieve …
Inefficiencyinotherprocesssteps,impactingoverinvoice cycle time
Vendorsatisfaction…eithernotgettingpaymentontime orwhenaccessingitscustomerportal
alwaysseesdelayininvoiceprocessing
not … withthe attitude … LET’s KEEP IT NOW
In thismad rushof busyschedule,we hardly
have time to lookat all the metrics andtake
corrective action or evenintrospect butstill
wouldneedmany … justto make ourselves
comfortable thatwe are measuring
everything
Is itthe rightapproach? Will thishelpthe
process move to the nextlevel …whenthe
worldisgettingso competitive andprocesses
shouldbe efficientand effective?Source: business2 community.com

2. It’simperative tosetfewEnd2End metricsto reallyunderstandprocesseffectiveness
Industry dynamics
EveryOrganizationisdifferentfromother, soindustryalsobringssome elementof itsownof nuances,
whichdefinitelyneedtobe consideredwhile designing metrics.The reasonbeingif we are notaligned
to howthe industryisshapinganddo relevantcomparisonof businessprocess,itwouldnotbe right
measurementof the efficiency&effectivenessof the processandinthe processmay nothelpus inthe
cost efficiencystructure.
Source: image.frompo.com
Source: Google.com

3. Businesspriorities
Everyorganization hastheirownprioritiesandrunbusinessbasedontheirpriorities,visionandvalues.
It isimportantto understandwell Businessprioritiesverywell before designingthe processmetrics.If
metricsare designedwhichdonotdirectionallyreflectsonBusinessprioritieswill have notmeaningas
there wouldnotbe any guidance andwillingnesstoimprove processandreapbenefits
For example,someorganizationsnegotiatevendortermsas Paywhenpaid,isitimportantforthemto
monitordiscountcapture?Itisa goodmetricto capture;however,asBusinessprioritiesare differentit
has notmeaning
IT Platforms
It isveryimportantto understandhowmuchIT systemsare integratedordisintegrated.The process
capabilitytoperformata certainlevel isdeterminedwithdesignaswell asITsystem/platforms.A
highlyintegratedsystemclubbedwithgoodprocessdesignwill have bettercontrol,highlyefficientand
effective.
Let’stake an example of Invoice processing- if POpenetrationis90%,ande-invoicingis90% of PO,
there wouldbe veryfewhandsrequiredtomanage the volume assystemwithautomatedPOmatching
will lowerInvoice processingcycle time &higheraccuracy.So,to measure e-invoicing%,will dependon
vendorbase andnature of metricswithine-invoicingmayalsowary.
So,it’sverycritical to set rightmetricsto measure the processbasedonthe Organizational Structure &
needs.Metricssimplyshouldnotbe copiedfromone Industry&Organizationtootherone;however
can be leveragedtounderstanddifferentperspective.Itisimportanttodecide which metricstobe
- Critical
- Overall process
- Service providerperformance
Isn’tcollective metricswithabove parameterswill helptotake the processestonext level?
Pls.share yourcomments,feedbackandsuggestions…