After 20 years of IT dominance in management, it is time to get back to basics and bring process visibility out of the server cupboards and back into the hands of business managers.
To improve business performance, organisations must develop ‘process centricity’ – focus on better managing core processes by developing better visibility, insight and understanding of business processes across their organisations. Only then, can they manage processes to deliver greater value for money.
The Modern Business Process
The processes in question belong to service and administrative functions. These cut across business functions (departments) and combine the organisation’s sub-processes – what each function does – into single flow to produce products or services for customers. They are less visible than manufacturing processes and provide services such as making electronic bill payments through bank, payroll within an organisation, or even the capture, processing and mail-out of speed camera fines.
Historically, these processes existed as paper-shuffling bureaucracies where you could see the flow of the ‘paper trail’ between departments. Today, workflow automation systems and Enterprise Resource Planning (ERP) systems automate and control the flow of electronic information from one employee to the next, and provide system to manage processes and IT systems across the organisation.
The Process Dilemma
Despite automating service and administrative business processes to improve their efficiency and effectiveness – and certainly the original gains were revolutionary and substantial – we now find that managers lack insight and understanding of their business processes. At corporate level, executive managers are frustrated by business transformation or strategy execution programmes held up or sidetracked by complex business process and IT systems issues. They also struggle with operating expenditure blowouts and are unable to reduce these expenses and increase productivity and efficiency across core processes without spending more on new systems to deliver them.
At the business level, we see operational managers trapped in the middle between executive demands for efficiency and productivity gains and staff’s inability to deliver on these demands. Their staff know little about their processes and how they personally affect process performance. Their process perspective is limited to what they see in the application screens of their computer and the tasks they have to complete.
Often staff and managers may have hunch that process is performing poorly, but are unable to identify and quantify the problems. They lack insight into how the process works, how it performs, and what drives that performance. Consequently they struggle to lead initiatives to improve what really counts in the process.
Lack of Insight
Where manager of production process could easily tell you the defect rate and average cycle time of the process, most service and administrative process managers could not. In most cases, the systems and their management data contents are under-utilised. Managers simply fail to use measures and reports to get the data out of the system to quantify their insight into process issues to ‘drive’ better process management and improvement.
Because they perceive the ‘system’ as the ‘process’ itself, the popular performance improvement solution is to overhaul the IT system – expensive and onerous and mostly unnecessary. The system alone, however, is not the process, but simply tool to enable it – the real cause of performance issues is that processes are not visible because they are (1) hidden within an IT system; and (2) managed within the silos of an organisation’s functional departments, not across them.
Processes Lack
Visibility Before process automation, the physical flow of the paper trail was visible between sub-processes. Today most managers and staff are blind to that and only those with intimate knowledge of the IT system, such as the systems analyst, understand how work flows through the sub-processes. The connection points between sub-processes and signs of inefficiencies or ineffectiveness are hidden within the system, unseen or ignored by staff and managers.
Functional Silos
Because visibility and insight have been lost, current management frameworks (the strategy, structure, policies, measures and reports that ‘drive’ the process) tend to manage processes within the boundaries of departmental functions, not across them. Managing by functional department, not process, creates ‘functional silos’: individually managed business units inwardly focused on their own sub-process, oblivious to the broader organisational goals of the end-to-end process.
These frameworks facilitate and reward functional performance, not shared end-to-end process performance. End-to-end processes cross the boundaries of functions linking their sub-processes together, however, managers’ spans of control do not cross these boundaries – generally no one manager has responsibility for the end-to-end process’ coordination and performance. Consequently, functions within process optimise their own performance at the expense of the performance of the whole process.
Waste
Accordingly, we see many inefficient and ineffective processes plagued by unnecessary waste because their business functions don’t work together. ‘Waste’ – errors and the rework needed to correct them and overly complex processes – cause delays and queues in the process, creating slower processing times. This reduces the overall process capacity of how many transactions can flow through the process. The bottom line is unnecessarily high operating costs and negative impacts on customer service.
Process Centricity
To overcome these issues, organisations must reframe their process perspective – the answer is ‘process centricity’. Organisations must see, understand, and manage the process, not just the system, and must manage processes across the functions, not within them. The process must take centre-stage as the key enabler of customer service and business excellence. Organisations should:
1 Map the functional sub-processes to illustrate the flow of transaction through the process – including all the hand-overs between functions, error points, and rework – and join them together to create an ‘end-to-end process map’. This is quite different to procedure flow chart, which explains how the IT system works, as it illustrates the flow of transactions across organisational functions. Educating and managing staff with these maps helps lift process perspectives out of functional silos by bringing visibility of the end-to-end process to all staff.
2 Measure Build performance measurement capability to provide insight to the real performance of the process by developing performance measures and reports of process efficiency and effectiveness. With such powerful IT systems enabling processes, there is vast amount of untapped rich performance data sitting there waiting to be downloaded and utilised.
3 Manage Develop ‘process management strategy’ to provide the guiding perspective and management framework, integrating process maps and performance management infrastructure to ‘drive’ process management. Key to this is setting end-to-end process objectives and incentives that unite the business functions.
4 Improve Use this new framework to enable culture change towards pride in process visibility, management based on informed insight, and continuous improvement of efficiency and customer satisfaction. This creates the foundation from which to identify and understand key process problems and to undertake improvement programmes, such as ‘Lean Six Sigma’, to target the source of the problems.
With visibility and insight, process managers are able to get to the core of their performance issues to evidence and drive improvement, and utilise their end-to-end processes as enablers of str
