Organizations are increasingly recognizing that the sustainable deployment of process management can create significant customer and shareholder value. While technology is an integral component of any process management program, it is by no means the most important element. That’s not to say that Business Process Management Systems (BPMS) are not important. They are. Nor can we say that there aren’t issues around BPMS such as the seamless integration of BPMS with Service Oriented Architecture (SOA) and Business Intelligence (BI). There are indeed such issues to be resolved.
That having been said, establishing the right set of leadership behaviors is arguably the most critical factor in the sustainable deployment of process management. Call it process ownership or process stewardship if you will, but process management governance is a more encompassing and descriptive phrase. Process management governance is an essential ingredient in moving from one-time improvement efforts to the continuous improvement of a company’s critical business processes. It is no less important in assuring sustainability.
Process management governance relies upon the disciplined measurement of what’s important to customers and the explicit assignment of accountability for the performance of a company’s large, cross-functional business processes. The handful of companies who are making progress in establishing robust process management governance have found it to be essential to monitor metrics such as the organization’s performance in delivering ‘perfect orders’ (on-time, complete, defect-free, with an accurate, user-friendly invoice) and the organization’s level of responsiveness to customer inquiries, complaints and requests. Are you monitoring these metrics? Do you understand the current level of performance? Have you estimated the required level of performance? Do you have a plan to close the gap?
Similarly, these process oriented companies have found it important to develop a high level schematic which depicts the organization’s critical business processes along with a supporting document that details where each process starts, where it ends, what output it creates, and which departments need to collaborate in creating value. Such a high level schematic is indispensable in shifting perception from the traditional functional view of business to a more customer-focused business process view.
Know this – if the only schematic you have of the organization is an org chart, then that will influence how your leaders view the business. A high level schematic of how the company operates in process context is equally useful in assigning accountability for the performance of the company’s key business processes and communicating to employees. It equips the leadership team with the context to ask and answer the question, “Which of our business processes need to be improved by how much in order to deliver on our strategic priorities?”
Why is it vital to establish the disciplined measurement of what’s important to customers and the explicit assignment of accountability for the performance of a company’s large, cross-functional business processes? It is because in most organizations the deck is stacked against a customer-focused process view of the business! Plans are typically developed by department, budgets are assigned by department, even recognition and reward systems are often defined along functional lines. The right metrics and accountabilities are needed to create some balance between the traditional functional view and the process view of value creation. When companies embark on the process management journey it doesn’t take long before thoughtful leaders realize that the process perspective is a complimentary and an additional dimension of management. Most firms work diligently at managing businesses, departments, products and geographies. Once they understand the power of process management, they also appreciate the need to manage processes.
There are significant challenges in establishing these foundational aspects of process management governance. Two of the principal challenges in establishing the needed the discipline in measuring what’s important to customers are related to candor and linkage. When a company begins to measure performance from a customer’s point of view the initial results can be startling. The most commonly cited example is with respect to on-time delivery. Many firms find that while their performance in delivering their products or services when they promised it is 90% or higher, it is less than 80% when they examine the metric from the perspective of when the customer asked for it. Candor and honesty is needed here. Otherwise, firms will be tempted to focus on those metrics that makes performance look good and not on what truly depicts a fair picture of performance from a customer’s point of view. Also, the sustainability of the measuring what counts for customers will be compromised unless a company links customer-focused performance metrics to the traditional financial measurements and attempts to correlate improvements in process performance to improvements in financial performance. The linkage aspect involves making the monitoring and review of customer-focused metrics part of the company’s monthly operating review, along side the traditionally monitored results for revenues, gross margin, net income, and cash flow. The correlation of improvements in process performance to improvements in financial performance requires asking ‘what if’ questions such as, “What would the impact be on our ‘days of sales outstanding’ (DSO) if we were able to improve on-time delivery by X%?”
Two of the principal challenges in establishing accountability for process performance relate to providing process owners with the right ‘bargaining chips’ and employing reinforcing recognition and reward systems. The executives who accept accountability for the performance of a large, cross-functional process such as order fulfillment, new product development or supply chain, typically find that they need to influence the behavior of their peers. Only in the atypical case where a company reorganizes along process lines can a process executive have control over all the resources involved in executing a large, cross-functional process. To date this is rare. Instead, it is more common for the process executive to exercise influence, and in this respect bargaining chips are essential. Having the tools to provide transparency into the contribution of various departments on process performance is one such bargaining chip. Another is to provide the process executive with budgetary control on some essential aspect of resources needed to improve the process. One company found that taking the IT budget out of the hands of business heads, department heads and the CIO and giving the process executive the discretion for IT spending has provided the process executive with a powerful bargaining chip. Alignment of recognition and reward systems is equally important. This typically requires that a company takes a certain portion of executives’ and managers’ discretionary bonuses and assign it to observable, measurable improvements in the company’s critical business processes. This is easier said than done.
The disciplined measurement of what’s important to customers and the explicit assignment of accountability for the performance of a company’s large, cross-functional business processes are just two of the foundational elements in establishing process management governance. Those readers interested in other aspects of process management and related self-assessment questions are invited to view this author’s book, More for Less: The Power of Process Management at http://www.mkpress.com/MFL.
Process management governance serves to assure focus, discipline and organizational alignment.It provides the necessary framework for CIOs to deploy technology such that it enables the performance of the company’s critical business processes. In its absence, there is little likelihood of progressing from one-time improvements to the sustainable, continuous improvement of those business processes which create value for customers and shareholders.
About the author
Andrew Spanyi is the founder and Managing Director of Spanyi International Inc.
Andrew has nearly two decades of consulting experience including assignments as a Principal of the Rummler-Brache Group, and a Practice Manager with Kepner-Tregoe Inc.
His management experience includes assignments with SCONA as a senior Vice President and with Xerox Learning Systems (also known as Learning International) as a Director of Marketing and Business Development.
He has managed over 100 major performance improvement projects and has taken part in the development of dozens of sales and management training programs.
His clients in the private sector have included global organizations in the financial services, pharmaceutical, telecommunications, chemical and oil & gas industries.
Andrew?s areas of practice leadership include:
- Process Management
- Change Management
- Performance Measurement
He is regularly asked to speak at conferences and has published articles with magazines such as Industrial Engineer, Contingency Planning and Management, Wireless Review, Plant Magazine, Purchasing and Canadian Plastics.
He holds a Bachelor of Arts (Economics), and earned his MBA [Marketing/Finance] from YorkUniversity, Toronto, Ontario, Canada.