business process optimization - jan 2010

IIBA Rochester 1 January 28, 2010

January 28, 2010January 28, 2010January 28, 2010January 28, 2010

Upcoming Events

Date Description Food!

11 March 2010

"Requirements Management Center of Excellence" (CoE) -- Joel Karczewski, Assistant Vice President –Development from Paychex

Dinner event 5:30-7pm - Sanibel Cottage

8 April 2010"Networking: The Whys and Hows" --Sue Schnorr and Emily Carpenter


"Defining and Managing requirements


13 May 2010"Defining and Managing requirements for the web" -- Mike Johnson, Pixelpunk Creative


17 June 2010

"Unify IT and Business Needs" -- John Magill from Consulting Portal (http://consulting-portal.com/)


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

⇒ Admissions process

� Financial services

⇒ Capacity planning

⇒ Business development

⇒ Client communications/ relationships

� Aerospace

⇒ Systems test environments

⇒ Database maintenance

⇒ Error resolution

� Records management

⇒ Project management


relationships

⇒ Quality assurance

� Telecom provider

⇒ Financial reporting

⇒ Contract renewal

⇒ Customer transition

� Retail apparel

⇒ Inventory management

� Imaging systems

⇒ Capacity planning

� Component manufacturer

⇒ Procurement

⇒ Production

⇒ Product quality assurance

Business Process Development 101


� 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: Definitions


“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.

Integrated Business Process Development: Illustration #1

Marketing


Marketing

Production

Inventory Management

Logistics

SalesCustomer Service

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


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


� 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



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

⇒ Come into compliance with regulatory requirements

President Obama said that all the required intelligence arrangements were in place on Christmas Day (re: the

Christmas bomber); the only problem was a “failure to

connect the dots.”


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

Trish May, Founder and CEO, Athena Partners

Customer/ Assess

Plan

Do

Business Process Development: Assess (Current State)


Customer/ Clients

Assess Do

Verify

• Ad hoc

• Minimal process• Not repeatable or predictable• Chaotic

Accidental

• Process in place and enabled• Focus on execution• Rigor and discipline• Performance measures utilized

Awareness

• Guidelines broadened• Repeatable

Predictable

Stage 0

Stage 1

Process Capability Maturity Model Humphrey, Watts (1989). Managing the Software Process. Addison Wesley.


• Repeatable• Leadership being developed• External benchmarking

• Alignment of goals• Informed decision-making• Cross-departmental leaders• Accountability

Managed

• Business process as a core competency

• Change proficiency• Integrated planning processes• Principles guide action

Mastered

Stage 2

Stage 3

Stage 4

• Ad hoc


Accidental


Awareness


Predictable

Stage 0

Stage 1





Managed



Mastered

Stage 2

Stage 3

Stage 4

Internet start-up – jump in wherever needed and make it work.

• Ad hoc


Accidental


Awareness


Predictable

Stage 0

Stage 1





Managed



Mastered

Stage 2

Stage 3

Stage 4

“We have too many competing IT requests. Which is top priority? We need everyone to follow a detailed submission and approval process.”

• Ad hoc


Accidental


Awareness


Predictable

Stage 0

Stage 1





Managed



Mastered

Stage 2

Stage 3

Stage 4

“Based on historical data and your documented assumptions, we can deliver a finished product in four days for a total cost of $10,000.”

• Ad hoc


Accidental


Awareness


Predictable

Stage 0

Stage 1





Managed



Mastered

Stage 2

Stage 3

Stage 4

“I signed the mission-critical contract in your absence. It met all of our business objectives and allows us to opt-out based on mutual performance metrics that I defined.”

• Ad hoc


Accidental


Awareness


Predictable

Stage 0

Stage 1





Managed



Mastered

Stage 2

Stage 3

Stage 4

“I instated an emergency closure and rerouted all activity to runway 7L/25R. This will cause all aircraft to approach and take off from the east . . .”

Principles-Based

Alignmentwith

Goals

GuidelinesBroadened

Rules-basedAd Hoc

“AnythingGoes”

Process Capability Maturity Model (cont.)


Stage 0Accidental

Stage 1Awareness

Stage 2Predictable

Stage 3Managed

Stage 4Mastered

Business Process Capability

Assessing the Current State

Define the Process Map the Process�

� Objectives

� Scope

� Expectations


� 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


� 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


• 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


� 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.

“Sometimes I find a document on my desk that could have been there for weeks.”

“I receive the information by fax and key it into Excel.” “There are so many

versions out there, I never know what the customer actually agreed to.”










“Culture eats process

for lunch”

SourceSourceSourceSource: “Culture eats process for lunch.” Barbara J. Hoehn, Journal of Healthcare Information Management . Fall 2009.

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.


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.

Sample Flowchart: Making Coffee

Take out coffee beans, grinder and

filter

Pot clean?

Measure/scoop beans into grinder

Grind beans

Wash and dry pot

Place pot on coffee

No

Yes

Value Map Key

� VCR—Value creating

� VCO—Value consuming

� NV—Non-value adding

NV: 45 sec.

VCO: 60 sec.VCO: 120 sec.


Grind beans

Pour ground beans into filter

Place filter in coffee machine

Fill coffee maker with water

Press “on” switch. Brew coffee

Place pot on coffee maker

VCR: 10 sec.

VCO: 20 sec.

VCR: 5 sec.VCR: 120 sec.

VCR: 20 sec.

NV: 10 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?

Customer/ Assess

Plan

Do

Business Process Development: Plan (Future State)


Customer/ Clients

Assess Do

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!


⇒ 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.


appliances.

� 5th Why: Because we didn’t undertake any planning upfront – including an environmental stress test.

Sample Flowchart: Making Coffee Take 2

Take out filter containing pre-measured, pre-ground beans

Place filter in coffee machine with clean

pot

VCO: 20 sec.

We eliminated steps(e.g., measuring, grinding, placing beans in filter, filling pot with water)

We employed new technology (i.e., a self-filling coffee machine)

We added back-up (i.e., more


pot

Push “on” button to automatically fill maker with water

VCO: 20 sec.

VCR: 20 sec.

We added back-up (i.e., more than one coffee pot to ensure clean pot always available)

We saved 5 minutes :50 seconds off what was originally a 6 minute :50 second process!

Customer/ Clients

Assess

Plan

Do

Business Process Development: Do (Future State)


ClientsAssess Do

Verify

� 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.

Implement the Improved Process


⇒ Distribute process flowcharts, procedures, etc.

⇒ Train employees, if required

⇒ Document observations, comments, etc.

Customer/

Plan

Business Process Development: Verify (Future State)


Customer/ Clients

Assess Do

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?


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).”

X


—Jennifer Balonek, IIBA Member

Thank you for inviting The Hartman Group to speak

at your January IIBA event!

business process optimization - jan 2010

Business

goals informed

ceo dominick

knowledge

desired future

plan customer

document key

current state

key process