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Process Governance Practical Implementation – Making Process Governance Work - For Real!
Tom Einar Nyberg Head of BPM Capgemini Norway
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Agenda
§ The market we operate in
§ Why Process Goverance
§ Process Governance Model
§ Process ownership, roles & team Set-Up
§ Pracitical evaluation & improvement Regime
§ BPM Center of Excellence - & Services
§ DO’s and DON’T’s for implementation
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Our market and the environement we operate in is increasingly demanding – and requires constant improvement and development
Cost & Effectiveness
Control & Compliance
Changing markets
Customer Experience
The need for change and continous
improvement
This is the “new normal” – there is no going back !
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We need to focus on what we do every day – and at the same time we need to drive improvement to satisfy the «tomorrows» customers
Daily excelence in execution Continous improvement
VS
Our customers do not have an “Off-season” – which means that this needs to happen in parallell
Roles & Responsiblity
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Ownership / Captal Organisasjon Ledelsesprosesser Ressources
External factors
Principle: The organization should be seen as a value creating system. We need to constantly adopt the system to the external environment
Custom
ers
Government
Labour market
R&D
Personnel
Material
Economic
Products / Services
Products / Services Suppliers
Technology
Visjon, misjon, strategi
Budsjett, mål, og handlingsplaner
Styring og oppfølging
Kjerneprosesser
Støtteprosesser
Krav og retningslinjer
HR, Innkjøp, Økonomi
Administrasjon, Juridisk,
Kommunikasjon
Driftsnære leveranser
Infrastruktur, utstyr og IT
Produksjon Markedsorientering og produktutvikling Salg og distribusjon Service og
oppfølging
Board
Partners Competitors
Deliverables
Society
Market
Orders
Market
Governance
Profit
Laws and requirement Trends Expectation
Agreement Competition
Personnel Material Technology
ORGANIZATION SEEN AS A VALUE
CREATING SYSTEM
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Ownership / Captal Organization
Ressources
External factors
Custom
ers
Government
Labour market
R&D
Personnel
Material
Economic
Products / Services
Products / Services Suppliers
Technology
Board
Partners Competitors
Deliverables
Society
Market
Orders
Market
Governance
Profit
Laws and requirement Trends Expectation
Agreement Competition
Personnel Material Technology
Management processes
Vision, mision, strategy
Budget, goals and action plans
Control and monitoring
Core processes
Supporting processes
Requirements and rules
HR, Purchasing, Finance
Administration, Legal,
Communication
Production support
Infrastruktur, Equipement and IT
Production Market orientatation
and product development
Sales and distribution Customer service
The processes forms the «interconnected network» in the system The processes «aggregate» value across functions in the organization and creates value as the products and services are delivered to external customers.
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Improvement and development of the system must happen continouisly in the organization and must produce new actions for improvement
Do § Measure process
performance according to defined targets
§ Analysis of discovered discrepancies, improvement proposals and proactive risk control
Act § Process oriented
governance § Manage performance gaps
according to defined/new business targets
§ Initiate and prioritize business process improvement initiatives
Do § Implement planned
process changes § Change management
communication & training § Provide operational
process governance
Plan § Define objectives and
targets to support strategy § Manage and design
business process changes § (re)define business
processes ang governing documentation
§ re(define) business rules
Plan – Do – Check – Act § improvement of business value
§ The phases reflects the main elements that must be controlled in order to manage critical processes
§ The iterative cycle drives improvement and performance towards strategic goals
§ Establish defined services in order to execute each phase, including roles and responsibilities, critical to ensure implementation
§ The method can be applied to all organisations, irrespective of size and industry
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Limited time and internal focus – we have no time to make things permanently better - we will handle that once «things calm down…»
«Firefighting» in the organization creates
heroes
Prevention helps avoid crisis and problems
«Superman» vs «The Preventer» ?
Culutural influence ?
Different “mental-modes” in the organization – how to work with both sides in parallell ?
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Unit 4 Unit 1 Unit 2 Unit 3
The line organization is focused on resources, daily operations and execution. The process dimension should be improvement oriented.
Process 2
• Goals, results and budgets control • Organizational responsibliity, authority, managemnet • Owns resources with responsiblity for daily execution • Meets customers in their daily operations – and tries to
satifsfy their current needs • Must secure competence, quipment and support so they
can operate as planned
Process 3
Process 4
Results: Resources & Operations
Process 1
• Which goals and performance targets triggers the need for improvement ìnitaitives ?
• What is «good enough» based on current result acheivement, but also moving forward in this market ?
• How do we develop compared to our competitors, technology, cusotmers and the market – and is this process important in order to provide an competivie advantage ?
Value delivered: Evaluation & Improvement
Process dimension Line organization
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Unit 4 Unit 1 Unit 2 Unit 3
Process goverance works in «tandem» with the line organization – improving and developing processes, before «handing them back»
Proc
esse
s Process 1
Every day is a «new race» and a chance to either win or loose a customer
Process 2
Process 3
We develop to meet future customer needs and requirements - so that we can be «on top of the
podium» for the next race and season
Intervention: improvement and development
Feedback from the customers and the line organization
Improved design delivered back the organization
Daily execution
Line organization
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Reporting vs Evaluation – often missing «Call to action» Problem: The regime becomes «self-sustianing» – and grows un-checked – without increasing value
Pitfalls • Over-reporting • Internally and adminisration focus • Dedline for reporting is the «end-of-the-seqence» • Often missing «call-to-action» • Performance vs Status information
Pitfalls • Too «Qualitative» and unstructured • Reactive – triggered by complaints» • Unfocused – missing strategic priorities • Unclear tolerance levels and action plans • Missing external perspective
Reporting & Evaluation must provide ACTIONS – or the time is WASTED
Evaluation Reporting
Results that are currently achieved during daily operations of the organization– Focus on status and correction
Externally oriented towards the future and the organization as a system– How to change and improve
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The governance model must be clear and consise on several key elements in order to support the process effort.
§ The organization as a whole must be evaluated in terms of systemic value creation § Relevant roles must defined with clear allocation, accountability, responsibility § Processes must be delegated to a process sponsor and owner. § Processes must be evaluated in accordance with requirements determined by the owner § Clear accountability and responsibily for daily exection, performance results, budgets and resources § Clear accountability and responsibily for design, improvement, standardization, learning of processes § Evaluation model with clear structure, but also flexibility: Frequiency, scoring model, identification and
implementation of improvment actions § Top-down improvement vs Bottom-up improvement ? § Funding model for improvement actions – line organization vs process § Supportive services available to the process owners
The governance model should EVOLVE as the organization EVOLVES
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Typical roles that you have to define in the governance model (with a sample set of possible authority and responsibility)
Process co-ordinator
§ Responsible for coordinating process evaluation in accordance with requirements from the owner
§ Responsible for driving improvement actions. Can prioritize and initiate improvement, but must acquire funding approval for actions. Funding can be or pre-allocated or obtained from line organization on case-by-case basis
§ Defines process improvement team (where relevant)
§ Participates in process improvement team § Represents line organization – and daily “hands-on”
experience § Helps to evaluate process and identify actions for
improvement § May be assigned responsibility for improvement
actions
Process owner
§ Overall responsibility for the process and its goals § Typically high-level executive § Determines frequency of evaluation and assigns
coordinator § Accountable: Ensure that the process satisfies all
external / internal regulations and other requirements § Accountable: Process design, governing
documentation and other material
Team member
Governance Support
& Monitoring
§ Resources that support the process governance effort § Typically part of a central group (CoE support) § Can facilitate process evaluation and improvement § Supports several improvement teams § May also monitor process owners / coordinator and
make sure that they perform evaluation and drive progress on improvement actions
Line organization – Approval
entity
§ Management group, division leadership, or similar entity in the line organization
§ Provides strategic priorities, goals and direction § Approval authority, disposes funds etc. related to
process improvement
Line organization
– Process responsible
§ Responsible for implementing the process in their unit – as described by governing material
§ Provides resources, training, equipment and guidance to local employees so that the process can be executed as designed
§ Especially important in “multi-site” corporation
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Sample: The improvement team must follow a evaluation cycle. Actions are processed continously during the period
1. Evaluation Period 2. Evaluation Period
PR-1 EV-1 AF-1 PR-2 EV-2 AF-2
PR: Preperation EV: Evluation AF: Action follow-up
Preperation • Prepraration with process owner
• Revise strategic goals and priorities
• Status of actions before evaluation
• Coordiante and plan evaluation 1
Evaluation • Verity goals and parameters
• Team evluation of process using scorecard and evalaution methdology
• Identify actions for improvment
• Assign responsibiilty
Action follow-up • Check-point in order to make sure that actions make gorosess
• IMPORTANT NOTE – actions are worked on continously during the period
Preperation • Short preperation and confirm current goals and status
• Run-trhough of actions
• Plan execution of evalution 2
Evalution • Veriy evaluation • Identify actions for improvment
• Assign responsibiilty
Action follow-up • Check-point in order to make sure that actions make gorosess
• IMPORTANT NOTE – actions are worked on continously during the period
Actions Actions
Make sure that the improvement team has practical tools to support the cycle
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Evaluation must look at both «future» and «past» performace for the process. It must be both proactive and intervention base – and deliver ACTIONS !
Risks § What is the probability of failure occurring when executing this
process in the future ? § Are there any new hazards related to process exection ? § Do we see increased risk due to internal changes ? § Do critical activities have necessary controls in place ? § Have we defied clear internfaces and cooridnation with
external parties ?
Steering § Is our current process documentation at an appropriate level? § Do we have all legal and business requirements under control ? § Is the process implemented correctly in the organization ? § Are employees properly trained and confident in process execution ?
§ Can we control and manage execution in the organisation ? § Do we have best practises established and shared ?
Incidents § Is there a trend in incidents occurring related
to the execution of this process § Are there root-causes from incidents that indicate the process is either
not well designed, or lacking control over execution. § Do we have any audit findings that related to the process ? § Which improvement ideas have been proposed ?
Measurement § What are the strategic areas that our processes are working
towards ? § How is the current performance level compared to the line
organisations tolerance specification ? § Do we have clear performance parameters and data available to
monitor performance ? § Do we follow up on a balanced set of external and internal
dimensions ?
Actions
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Actions for improvement needs to be considered in an cross-functional context that drives enterprise performance
Manufacturing department view Sales department view
§ Problem: Drop in customer satisfactions
§ Desired results § Order cycle time of 1 day
§ Current results § Order cycle time of 9 days
§ Order fulfillment process
§ Problem: Inaccurate & late order forms
§ Desired reesults: § Zero incomplete order forms § 100% acccurate order forms § Orders submitted daily
§ Current results
§ Between 1-10 incomplet order forms § 83% accurate orders § Orders submitted weekly
§ Problem: Loss of market share
§ Desired results § Market share of 80%+
§ Current results § Market share of 66%
Marketing department view
Sales director VP of Supply chain Vice President of Marketing
It’s a problem with the order cycle variation – I am starting a SixSigma initiative
There is a marketing problem – I am going to hire some consultants
Activity level
Process level
End-to-end Enterprise level
It’s a problem with the order forms – I am going to create a new IT system
Improvement actions are often sub-optimized. They are iniated - although they are not looking at the complete picture. Can deliver «short-term» local improvment, in individual siloes – but they are not systemetic improvement for the entire organization
Adopted from Gaery Rumler –
Initiativ 1 Initiativ 2 Initiativ 3
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Performance gaps have to been seen in context with strategic importance
§ Performance data for processes must be seen in the context of delivering on strategic goals, KPIs and operational execution
§ The strategic impact rates how important the outcome of the process is in relation to strategic operationalisation
§ The process performance gap in delivering business outcomes is termed its effectiveness This rates how good the process is in delivering its product and services – its ”hit-rate” for customer needs
§ Process efficiency relates to the amount of resources consumed to deliver this outcome.
§ The strategic impact and outcome gap needs to evaluated together in order to priortise processes for business process improvement
§ The priority will determine which processes will receive support and allocated resources, time, and money
Evaluation of process performance
Stra
tegi
c im
porta
nce
Performance gap Low High
Low
H
igh
Strategisk importance vs Performance gap
Target quadrant
Performance -‐ Process 1
Performance -‐ Process 4
Performance -‐ Process 3
Performance -‐ Process 2
P1
Selection and priorities for improvement
P2
P3
P4
P1
P4
P3
P2
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Strategic KPIs sets «results» for the organization. Process performance tells you about «performance» availabe to achieve these results.
KPI, PPI, measures
Definition / Formula
PPI Performance
Measure 1
Measure 2
KPI Result / Delivery
Defined
Information
Måles vha
Data source
Organization
KPI = Key Performance Indicator Organization strategic target in their market – example: Nr of new employees hired per year This tells you what kind of results are being acheived by execution current procesesses in that market
Process
PPI = Process Performance Indicator Parameters linked to the execution of the process in the organization, example: Time spent on the recruitment cycle for an employee This tells you the peformance you have on your process. A process with the same performance can secure different results in different markets
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The performance dimensions that are being evaluation must be linked to a balanced set of stakeholders – both internal and external
Performance dimension
Time
Cost
Quality
Capacity
Effeciency
Total volum that the process can handle § Number of total transactions processesd § Flow capacity – number of orders handled I parallel
Satisiaction of customer requirements § Customer satisfaction § Error rate between actual result and specification
Resources consumed by the process § Dollars spent during process execution § Costs related to re-work
Time consumed by the process § End-to-end processin time form start to delivery § Delivery time vs planned time
Internal efficiency for producing the results § Resource comsuption / Transaction § % of time wasted on waiting
The measures that are chosen must help predict future performance for the organization
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Top-Down: Actions for process improvement Sample: Strategic actions are allocated (where relevant) to process improvement teams
Strategic scorecard Strategy map
Strategic plan and strategy map defined
Action plan & budget
Process teams performs
necessary improvements
Process coordinates
reports status & performance
Strategic scorecard
Scorecard for follow-up allocated and strategic
initatives identified
Allocation of budget for improvement actions by
scorecard owner
Result and performance follow-up based on strategic KPIs on scorecard
Process owner is allocated budget and starts actions
Proc
esse
s
Line
org
anis
atio
n
Actions related to processes Results
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Bottom-Up: Actions for process improvement Sample: Prosess teams propose improvement based on employee feedback and learning from operations
Action plan & budget
Process team performes necessary
improvement
Process coordinator
reports on results
Allocation of budget for improvment is done by line
organisation
Team suggests actions to improve process execution
Proc
ess
Line organisation
Employee learning from daily operations
Process owner allocates budget
and approves actions
Sugg
este
d ac
tions
for
impr
ovem
ent
Funding to perform
improvem
ent Process owner must approve action and possibly acquire additional budget from line organisation (dependant on required funding levels )
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In order to support the process governance implementation BPM CoE services are relevant
Technologies Complementary Services Main Services
MP01 Strategy Translation into Processes
MP02 BPM Demands Identification & Analysis
MP03 BPM Services Development Planning
MP06 BPM Results Evaluation
MP07 Culture Dissemination
CS01 Lean & Six Sigma Oriented Improvement CS02 Reference Models
Implementation CS03 Systems Specification
CS04 Process Automation
CS05 Business Rules Management
CS06 Process Auditing CS07 Risk and Internal
Control Management CS08 Competencies
Management CS09 Management of Improvement Projects
CS10 Process Cost Management
MS01 Process Architecture Maintenance
MS02 Process Modeling (AS-IS)
MS03 Process Improvement (TO-BE)
MS04 Process Documentation
MS05 Process Change Management
MS06 Process Performance Management
MS07 Process Management Training &
Education MS08 Process
Compliance MS09 Process Maturity
Management MS10 Process
Benchmarking & Innovation
T01 Process Modeling & EA Tools T02 SOA T03 BAM T04 ECM T05 BI
SP01 Administration of Models Repository
SP02 Administration of BPM Roles & Responsibilities
SP03 Administration of BPM Services Portfolio
SP04 Administration of BPM Human Resources
SP05 Administration of BPM Budget
Management Services
Support Services
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As the organizations process maturity improves – the governance model must evolve and adapt.
Strengthen control
Standardise execution
Systematic performance improvement
Best-in-class reference
Governance model
Level1: Initial § Processes are executed inconsistently and sometimes ad-hoc § The organisationdoes not offer stable support for the processes § Services often function – but they og beyond the planned time and budget § Tendency to promice more that the organisation can deliver – and deviates from process during crisis
Level 2: Managed § Processes are defined, understood and described in standards, procedures and tools § Execution of processes have different controls across locations § Process adherence is controlled on an ad-hoc basis and information rarely shared
Level 3: Defined § Best-practises processes are actively used as sources of learning to standardise
processes across locations § Initial use of measurement and control to ensure that deliverable requirement are being
met
Nivå 4: Managed § Process performance is measured proactively - . target achievement
is analysed and controlled § Standard processes are extensively used across locations and
benchmarked with external sources
Level 5: Optimised § Proactive and continuous improvement provides
innovative solutions to achieve strategic targets
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Summary: DO’s and DONT’s for practical implemenation
§ Establish the governance model early – and have it approved at the highest level § Define a model that will ACTUALLY work for your organization (not a theoretical one) § Make sure the model can evolve over time as the organization becomes more mature § Dont «push» the effort by instituting advanced governance – if the organization is not ready § Have very clear definitions on authority and responsiblity – you WILL be asked about this MANY times § Focus on ACTIONS – its the improvement that creates value § Make sure you have a defined mechanism for funding your improvement ACTIONS § Differentiate processes based on their strategic importance and improvement potential § Be pragmatic and flexible in terms of how solve praticalities § Intergrate the process work into the organization, don’t create a «SHADOW GOVERNANCE» § Limit administrative reporting – you already have a line organization that does enough of that § Support the process team with a central coordination function (CoE or similar)