Business Process Optimization - Jan 2010

January 28, 2010

IIBA Rochester 1 January 28, 2010

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Why Are We Here?

Think about your recent experiences in the airport screening line, the hospital
ER, the “fast food” drive through or your neighboring department. Are they
always pleasant?

Sadly, not all processes function smoothly - often to your customers’ dismay.

Through business process optimization, your organization can strive for
effectiveness and efficiency through innovation and flexibility. It doesn't have to
be a complicated endeavor - learn how!


Who Should be Interested? Everyone!

A short list of sample engagements
Nursing home/assisted living facility Aerospace
⇒ Admissions process ⇒ Systems test environments
Financial services ⇒ Database maintenance
⇒ Capacity planning ⇒ Error resolution
⇒ Business development Records management
⇒ Client communications/ ⇒ Project management
relationships
Imaging systems
⇒ Quality assurance
⇒ Capacity planning
Telecom provider
Component manufacturer
⇒ Financial reporting
⇒ Procurement
⇒ Contract renewal
⇒ Production
⇒ Customer transition
⇒ Product quality assurance
Retail apparel
⇒ Inventory management


Business Process Development 101


Integrated Business Process Development: Definitions

process, n: a series of actions or operations directed toward a particular
result
business, adj: associated with a commercial or industrial enterprise
integrated, adj: to end the segregation of and bring into common and equal
membership in an organization; to unite
integrated business process development: to bring about a cross-
functional, organization-wide, consistent way of doing work


Integrated Business Process Development: Illustration #1

“Rising Demand for Larger Screen E-book Readers
May Cause Shortage in 2010”
In 2010, demand for larger screen e-book readers measuring
9.7 inches is expected to soar up to 320% year-on-year, says
Digitimes Research.

Marketing

Customer
Sales
Service

Logistics Production

Inventory
Management


Mind the Gap

of leaders cite boundary spanning as an important
capability at the senior executive level (vs. 91% at
the mid-management level and 43% at entry level)

of senior executives agree that their peers are
effective in working across boundaries (vs. 19%
for middle managers and 8% at entry level)

horizontal boundaries pose the greatest
challenge (i.e., function and expertise)
followed by geographic, demographic,
stakeholder and vertical

Source: “Boundary Spanning Leadership,” Jeffrey Yip, Chris Ernst
and Michael Campbell, Center for Creative Leadership


Mind the Gap (cont.)

Who are you? And how do you see yourself?
Individual Identity
Spouse, parent, friend,
sibling, manager, mentor,
leader, American,
conservative/liberal, etc.

Relational Identity
What is your relationship with others on your team? In your functional area?
Across your company?

Collective Identity
Who are you as a team and, together, what are you attempting to accomplish?

Source: “The Future of Leadership Development,” David V.
Daya, Michelle M. Harrison, Lee Kong. Human Resource
management Review, Volume 17, Issue 4, December 2007

Integrated Business Process Development: Why?

Develop organizational capability and alignment
Improve overall organizational efficiency and effectiveness
Ensure high quality products and services
Drive consistency, continuity and predictability of performance and results
Increase agility and flexibility
Emphasize process-dependency vs. people-dependency
Reduce confusion and the level of frustration
Maximize the ability to scale and grow

Increase customer satisfaction



Music Parts Plus, Founder and CEO Dominick Moreo
“We reached $1.2 million in sales our first year, shipping about
200 packages a day,” says founder and CEO Dominick Moreo.
“But we had an order error rate of close to 10%. That led to a
reduction in repeat orders, unhappy customers and our overall
expenses going sky high.”
(Source: “Picking to Win,” Bruce Welty, Material Handling Management, November 2009



What Really Motivates Workers? Results!
“Having just completed a multiyear study tracking the day-to-day
activities, emotions, and motivation levels of hundreds of
knowledge workers in a wide variety of settings, we now know
what the top motivator of performance is . . .
On days when workers have the sense they’re making headway
in their jobs, or when they receive support that helps them
overcome obstacles, their emotions are most positive and their
rive to succeed is at its peak.
On days when they feel they are spinning their wheels or
encountering roadblocks to meaningful accomplishment, their
moods and motivation are lowest.”
(Source: “What Really Motivates Workers,” Teresa M. Amabile and Steven J. Kramer, HBR.
January-February 2010)


Integrated Business Process Development: Illustration #3 (cont.)


Integrated Business Process Development: When?

Reactive
⇒ Fix major problems or disconnects
⇒ React to internal and/or external changes
⇒ Increase client/customer/partner/satisfaction President Obama said that
all the required intelligence
arrangements were in place
⇒ Come into compliance with regulatory
on Christmas Day (re: the
requirements
Christmas bomber); the only
problem was a “failure to
connect the dots.”


Integrated Business Process Development: When?

Proactive
⇒ Prepare for organizational development and growth
⇒ Proactively anticipate organizational and/or operational change
requirements
⇒ Anticipate new regulatory requirements and/or mandates

Our vision is to be the world’s biggest and best confectionery business.

Our priorities are focused on four key areas –
growth, efficiency, capabilities and sustainability.

“A major group-wide cost and efficiency program across all aspects of our
business - in sales and administration, in the supply chain, in the regions
and at the group centre. We are aiming to reduce the complexity in our
business and minimize duplicated activities”

Process Improvement: From the Customer’s Viewpoint

“Before working at Microsoft, I created a lot of
presentations — and like everyone else at the time,
I hand-cut graphs and glued them onto paper, sent
the text to the typing pool and made glass slides to
project on the wall. At the same time, I
experimented with the latest computer
technologies, figuring out how I could use them to
analyze and present data.
Trish May, Founder and CEO,
At Microsoft, I started thinking about the painstaking
Athena Partners
processes I had used for those presentations. I
wrote and presented a proposal to Bill Gates for a
new piece of software for the personal computer,
specifically to help people create presentations
without all the scissors and paper.”

Source: “The Road to the Cure,” New York Times, Sunday,
January 17, 2010.


Business Process Development: Assess (Current State)

Plan

Customer/
Assess Do
Clients

Verify


Process Capability Maturity Model

Accidental e ht g ni g a n a M . ) 9 8 9 1 ( stt a W , y e r h p m u H
. y el s e W n o si d d A . s s e c o r P e r a wtf o S
• Ad hoc
• Minimal process
• Not repeatable or predictable
• Chaotic Awareness
Stage 0 • Process in place and enabled
• Focus on execution
• Rigor and discipline
• Performance measures utilized
Stage 1 Predictable
• Guidelines broadened
• Repeatable
• Leadership being developed
• External benchmarking
Stage 2 Managed
• Alignment of goals
• Informed decision-making
• Cross-departmental leaders
• Accountability
Mastered
Stage 3 • Business process as a
core competency
• Change proficiency
• Integrated planning processes
• Principles guide action
IIBA Rochester 18
Stage 4 January 28, 2010

e ht g ni g a n a M . ) 9 8 9 1 ( stt a W , y e r h p m u H
Accidental . y el s e W n o si d d A . s s e c o r P e r a wtf o S
• Ad hoc
• Minimal process
Stage 1 Predictable
• Repeatable
Stage 2 Managed
Internet start-up – jump • Informed decision-making
in wherever needed • Accountability
and make it work. Mastered
Stage 3 • Business process as a
core competency
IIBA Rochester 19


• Ad hoc . y el s e W n o si d d A . s s e c o r P e r a wtf o S
• Minimal process
Stage 1 Predictable
• Repeatable
Stage 2 Managed
“We have too many competing IT • Informed decision-making
requests. Which is top priority? We • Cross-departmental leaders
need everyone to follow a detailed • Accountability
Mastered
submission and approval process.” Stage 3 • Business process as a
core competency
IIBA Rochester 20


. y el s e W n o si d d A . s s e c o r P e r a wtf o S
• Ad hoc
• Minimal process
Stage 1 Predictable
• Repeatable
Stage 2 Managed
• Accountability
“Based on historical data and your Mastered
documented assumptions, we can Stage 3 • Business process as a
deliver a finished product in four core competency
days for a total cost of $10,000.”
IIBA Rochester 21

e ht g ni g a n a M . ) 9 8 9 1 ( stt a W , y e r h p m u H
Accidental . y el s e W n o si d d A . s s e c o r P e r a wtf o S
• Ad hoc
• Minimal process
Stage 1 Predictable
• Repeatable
Stage 2 Managed
“I signed the mission-critical contract • Accountability
in your absence. It met all of our Mastered
Stage 3
business objectives and allows us to • Business process as a
core competency
opt-out based on mutual
performance metrics that I defined.” • Integrated planning processes
IIBA Rochester 22


• Ad hoc . y el s e W n o si d d A . s s e c o r P e r a wtf o S
• Minimal process
Stage 1 Predictable
• Repeatable
Stage 2 Managed
“I instated an emergency • Accountability
Mastered
closure and rerouted all activity Stage 3 • Business process as a
to runway 7L/25R. This will core competency
cause all aircraft to approach • Change proficiency
and take off from the east . . .”
IIBA Rochester 23

Process Capability Maturity Model (cont.)

Ad Hoc Alignment
Guidelines Principles-
“Anything Rules-based with
Broadened Based
Goes” Goals

Stage 0 Stage 1 Stage 2 Stage 3 Stage 4
Accidental Awareness Predictable Managed Mastered

Business Process Capability


Assessing the Current State

Define the Process Map the Process

Objectives
Scope
Expectations
Deliverables
Measures
Roles and Responsibilities


Define the Process: Definitions

Objectives
⇒ What are the objectives of optimizing this process?
Scope
⇒ What does this process include? Not include?
⇒ The process begins…
⇒ The process ends…
Deliverables
⇒ What are the process deliverables?
Measures
⇒ What metrics will be utilized to measure/monitor improvements to this
process?
Roles and responsibilities
⇒ Process owner
⇒ Sponsors


Define the Process: Example

Federal Aviation Administration (FAA) and the National Weather Service (NWS)
are considering plans to consolidate weather service offices
Objective: The FAA seeks to improve aviation weather services provided at
en route centers
Scope:
⇒ All locations (including remote services):
• 21 regional FAA, en route centers that control planes over the U.S.
• The NWS Aviation Weather Center (Kansas City, MO)
• 122 NWS weather forecast offices nationwide
• 21 NWS central weather service units (at FAA en route centers
providing 16 hours of services/7 days per week)
⇒ All technologies (e.g., weather/radar processors, terminals, displays)
⇒ All products and services (e.g., forecasts, advisories, briefings)
Expectations: Fewer sites, reduced personnel costs and increased services
(i.e., 24/7 provision)

Source: “GAO-09-887T,” U.S. Government Accountability Office,
July 16, 2009


Define the Process: Example (cont.)

Deliverables
⇒ Defining a common outcome
⇒ Establishing joint strategies to achieve the outcome
⇒ Agreeing upon agency roles and responsibilities
⇒ Establishing compatible policies and procedures to operate across agency
boundaries
⇒ Developing mechanisms to monitor, evaluate, and report the results of
collaborative efforts
Sample Measures
⇒ Service provision (hours/days in operation)
⇒ Forecast accuracy (for traffic management decisions)
⇒ Customer satisfaction (timeliness of data, number of complaints)
Sample Roles and Responsibilities
⇒ The Joint Planning and Development Office is responsible for planning
and coordinating with Next Generation Air Transportation System
(NextGen) to reduce duplication of efforts and ensure integration
• Restructuring facilities
• Transitioning technologies

Assessing the Current State

Define the Process Map the Process


Map the Current State Process

Document the current state process, not the desired future state
(i.e., “what is” vs. “what you’d like it to be”).
Involve a broad, cross-functional team.
Use flowcharts, diagrams and/or graphics. Make it as visual as possible.
⇒ Include an appropriate level of specificity and detail.
⇒ Document roles/responsibilities and measures associated with key
process steps.
⇒ Document key assumptions.
Verify the process map with knowledge experts/key stakeholders.

“I receive the
information by fax
“Sometimes I find a and key it into Excel.” “There are so many
document on my desk versions out there, I never
that could have been know what the customer
there for weeks.” actually agreed to.”



process steps.

“Culture eats process
for lunch”

fo lanruoJ ,nheoH .J arabraB ”.hcnul rof ssecorp stae erutluC“ :ecrruoS e cr u o S
ec uo S
e cr u o S
. 9 0 0 2 ll a F . t n e m e g a n a M n oit a m r of nI e r a c htl a e H

Business Process Optimization Sub-teams

Business process optimization sub-team(s)
⇒ Must have a clear charter, responsibility and accountability
⇒ Cross-functional/cross-departmental participation
⇒ Finite duration (i.e., development/transition of improved processes)
⇒ Enable the organization; not an alternative structure
Roles and Responsibilities
⇒ Team Sponsor: Senior Leadership Team; provides resources and
continuing support, removes barriers.
⇒ Team Leader: Coordinator, facilitator, provides focus and direction for
team, ensures alignment with management objectives.
⇒ Team Members: Cross-organizational, may include partner/client
representation, should include content expertise.
⇒ Subject Matter Experts: Invited on an as-needed basis.



process steps.


Sample Flowchart: Making Coffee
Value Map Key
VCR—Value creating
Take out coffee VCO—Value consuming
beans, grinder and NV—Non-value adding
filter
NV: 45 sec.
Measure/scoop beans Pot No
Wash and dry pot
into grinder clean?
VCO: 120 sec.
VCO: 60 sec. Yes
Place pot on coffee
Grind beans maker
VCR: 10 sec. NV: 10 sec.
Fill coffee maker with
Place filter in coffee water
machine VCR: 20 sec.
VCO: 20 sec.
Press “on” switch.
Pour ground beans Brew coffee
into filter
VCR: 120 sec.
VCR: 5 sec.

Analyze the Current State Process

Is the process clearly understood?
Have clear roles and responsibilities, related to the process, been
established?
Is the process consistently executed?
Are metrics in place to measure/monitor organizational performance related to
the process?
Does the process deliver the expected results predictably and consistently?
What part(s) of the process is working well? Not so well (i.e., gaps,
disconnects, redundancies)?
What is the level of satisfaction of all key stakeholders with the current state
process?
What is today’s level of process capability maturity?
How important is the process to overall organizational performance?


Business Process Development: Plan (Future State)

Plan

Customer/
Assess Do
Clients

Verify


Develop an Improved Process

Involve a broad, cross-functional team
Review the analysis of the current state process (i.e., What’s working? What’s
not working?)
Brainstorm ideas for improvement
⇒ Stretch/challenge the team
⇒ How can you accomplish the same end result cheaper, faster, smarter?
⇒ Eliminate disconnects, hand-offs, redundancies
⇒ Simplify! Simplify! Simplify!
Collect/review best practices (i.e., benchmarks)
Generate/prioritize improvement recommendations
⇒ Augment with benchmarks and best practices
⇒ Ask customers, co-workers, partners for input
⇒ Consolidate list, assess impact, prioritize
Map an improved process (i.e., desired future state)
Verify with key stakeholders


Dig Deep: The “5 Whys”

“The fries we’re serving are cold (and not meeting corporate standards)”
1st Why: Because the heat lamps are not on.
2nd Why: Because when the heat lamp switch is turned on it trips the circuit
breaker.
3rd Why: Because the power circuit has too many appliances on it (4 existing
and 1 new), overloading it.
4th Why: Because the electrician did not design the circuit to carry 5
appliances.
5th Why: Because we didn’t undertake any planning upfront – including an
environmental stress test.


Sample Flowchart: Making Coffee Take 2

We eliminated steps Take out filter
(e.g., measuring, grinding, containing pre-
placing beans in filter, filling pot measured, pre-
with water) ground beans
VCO: 20 sec.
We employed new technology
(i.e., a self-filling coffee
Place filter in coffee
machine)
machine with clean
We added back-up (i.e., more pot
than one coffee pot to ensure VCO: 20 sec.
clean pot always available)
We saved 5 minutes :50 Push “on” button to
seconds off what was originally automatically fill
a 6 minute :50 second process! maker with water

VCR: 20 sec.


Business Process Development: Do (Future State)

Plan

Customer/
Assess Do
Clients

Verify


Implement the Improved Process

Identify a process and/or a departmental champion
Implement the revised process in a subset of the organization, if possible
⇒ ß-test (if appropriate)
⇒ Test/modify/test/modify
⇒ Document any/all changes
Implement the improved process organization-wide
⇒ Ensure all stakeholders are involved and have bought in
⇒ Distribute process flowcharts, procedures, etc.
⇒ Train employees, if required
⇒ Document observations, comments, etc.


Business Process Development: Verify (Future State)

Plan

Customer/
Assess Do
Clients

Verify


Verify Results

Stabilize the process
Solicit input from all stakeholders
Measure results vs. the baseline
⇒ Monitor routinely
⇒ Communicate/celebrate progress
Continuously improve, as appropriate
⇒ Always look for a better way
⇒ Utilize a formal change process across departments
⇒ Keep all documentation current
Communicate! Communicate! Communicate!


Any Questions?


X
In Conclusion

“Ask not what your country can do for you but what you can do
for your country.”

—John F. Kennedy

“Ask not what your company can do for you but what you can do
for your company (and, in return, yourselves).”

—Jennifer Balonek, IIBA Member

Thank you for inviting The Hartman Group to speak
at your January IIBA event!


Business Process Optimization - Jan 2010

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