Business Performance for Documents
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1 document management WHITE PAPER Business Performance for Documents Cut Costs, Meet Strategic Goals and Manage Document Processes With Confidence contents 2 Introduction 3 DPM for Document-Intensive Industries 4 a New Science for Document Processes 5 The Balanced Scorecard 6 Defining Objective Metrics 8 Which KPIs Do You Use? 11 An Innovative DPM System 13 Conclusion
2 Introduction The Dow tells you how stocks are performing this very minute. Your dashboard tells you how your car is performing this very second. An electrocardiogram (EKG) tells you how your heart is performing beat by beat. Yet when it comes to measuring the performance of document management activities (such as mail/shipping and print/copy center operations), many businesses rely on quarterly results in spreadsheets and PowerPoint presentations. By most standards, monthly is very aggressive. Unfortunately, real-time or near-realtime performance management is elusive in business and nearly nonexistent outside of one s core competencies. Although a manufacturing company, for example, may use a dashboard to monitor the production line in real time, it can rarely monitor the supply chain so closely, much less operations like document processes. But support operations cost money and affect results almost as directly as the core business. Accordingly, this paper will explore the potential of applying business performance management (BPM) principles to advance document performance management (DPM) in a way that enables organizations to reduce costs; better manage documents as vital strategic, financial and information assets; and secure positive returns on investments from outsourcing. 1 An example of this approach spotlighted later in this paper is MAX, a document performance management system that enables companies to more effectively manage their document processes and outsourcing service providers. 1 The document outsourcing market will continue to increase from approximately $36.2 billion in 2007 to $46.8 billion in 2012, predicts market research and consulting firm InfoTrends (June 30, 2008). 2
3 DPM for Document-Intensive Industries Every business has a document process management burden, and for most, it s a growing one. Mail, print/copy/fax, records and office administrative services are standard operations. On top of these, most every business is under increasing pressure to respond more quickly and precisely to regulators like the SEC, Commerce Department, EPA, FDA, Labor Department, HHS (for HIPAA) and Energy Department. There is also the growing need to proactively prepare for electronic discovery (per the Federal Rules of Civil Procedure). 2 Meanwhile, many businesses are by their very nature document-intensive, e.g., legal, financial, pharmaceutical, government and higher education. Every organization should at least consider the value of leveraging the latest DPM methodologies, systems and tools to meet these document management challenges. Many organizations lack detailed and timely facts about how their document management activities are performing or where they are headed. They frequently estimate performance based on anecdotal information, or dated, hand-calculated, ballpark numbers. That s analogous to assessing your heart attack risk based only on your age and weight of three months ago. Ignorance is the silent killer, yet document process management deficiencies too often go unaddressed. Many organizations fail to establish complete policies, procedures and processes for document handling. is another trouble spot: It accumulates exponentially and is improperly stored for discovery purposes, sometimes simply disappearing. Workflows are inconsistent or ad hoc. File rooms are disorganized. IT systems can t support best practices. Metrics are undefined. Management s view of performance is fragmented across locations. Businesses pay fines for poor compliance with reporting regulations and discovery rules. Forward-looking companies are using DPM to control the cost of this growing document burden through benchmarking, measurement, management and proactive improvement of document processes in near real time. Using a combination of software tools and Six Sigma -based 3 performance methodologies, organizations are better managing their document assets in order to help improve business results, whether it s winning a court case, discovering a new drug or processing claims faster to increase customer satisfaction. Importantly, DPM also enables organizations to better measure the performance of service companies to which they ve outsourced their document operations. 2 3 The Federal Rules of Civil Procedure are the statutory system governing litigation in federal court. Amendments that took effect December 1, 2006, made electronically stored information subject to discovery (that is, presentation to the opposing party in a legal action) and increased pressure on organizations to better manage, organize and maintain their electronic data. Failure to comply increases the risk for fines and adverse court decisions. Six Sigma is a popular business performance management methodology that focuses on removing causes of defects in manufacturing and business processes. It employs a set of quality management methods, statistics and experts. 3
4 A New Science for Document Processes DPM can be seen as a subset of business performance management. BPM itself is a business and technology approach for setting strategic objectives, identifying the activities to reach them, quantifying performance of those activities, measuring success (or failure) in near real time and systematically improving deficiencies until the strategic objectives are met. As IBM says, BPM align(s) strategic and operational objectives with business activities in order to fully manage performance through better-informed decision making and action. 4 BPM is most prevalent in industries with performance metrics that are easy to define, quantify and collect, such as manufacturing, where automated devices churn out quantifiable production data. BPM, however, is a new science for such document processes as mail distribution, copy, print, imaging, records management and ediscovery. One reason BPM is new to this area is that companies tend to see document processes as a fixed cost of doing business a monolith of red tape. And unlike a production line, document processes don t overtly and obviously generate data that is plainly measurable against strategic business objectives. Whatever mail comes in just gets processed. Whatever time it takes to manage records archives is the amount of time it takes. The number of printers you own is how many you probably need, and how many copies they pump out is driven by one thing: somebody s need for a copy. That view is evolving as forward-looking companies find ways to translate document processes into hard numbers that inform a balanced scorecard. And to address deficiencies, more organizations are beginning to use systematic quality initiatives like Six Sigma, Lean and 5S. Forward-looking companies find ways to translate document processes into hard numbers that inform a balanced scorecard. 4 Global spending on business intelligence and performance management applications will reach $57.1 billion in 2008, according to a report released by AMR Research (May 13, 2008). 4
5 The Balanced Scorecard A balanced scorecard is a framework for measuring business performance that transcends short-sighted financial considerations. As its name implies, the balanced scorecard envisions organizations balancing today s financial performance with perspectives like the voice of the customer, HR and operations. A company might want to know whether customers are satisfied, employees are continuously learning and improving, and operations reflect best practices. Each of these four perspectives encompasses strategic objectives as well as the set of activities required to reach the objectives. Each activity is discretely quantified, measured and monitored in near real time in terms of volume, accuracy and timeliness. These activities roll back up into the four perspectives of the balanced scorecard financial, HR, operations, voice of the customer enabling any organization to instantly and objectively assess performance from the macro to the micro levels. It s important that the BPM system encompass all document processes across all divisions and geographies, whether activities are insourced, outsourced or a combination of both. Otherwise, the organization is simply building new silos that will eventually need to be integrated with the rest of the enterprise. Balanced Scorecard Pyramid Performance Voice Customer, Finance, Operations, Human Resources Activities Metrics Volume, Accuracy, Timeliness 5
6 Defining Objective Metrics Since there are many ways to talk about document performance management, let s consider a few terms for clarification. A service level agreement (SLA) is the contract an organization has with a service partner requiring the partner to perform certain functions at a pre-determined proficiency level, e.g., process all incoming mail within four hours of receipt, ensure 98 percent uptime on all print/copy/fax machines or produce any archived record within 30 minutes of a request. Very often incentives are included in an SLA if the service provider meets or exceeds certain excellence benchmarks. Conversely, there are penalties for underperformance. These provisions equate to a performance guarantee. + A metric is typically a percentage or ratio, such as on-time performance percentage or accuracy percentage. + A measure is a data point, e.g., 1,000 mail pieces. A key performance indicator (KPI) is a metric that an organization monitors through a DPM system to gauge compliance with an SLA and to make progress against a balanced scorecard. KPIs should be specific, measurable and results-oriented. 6
7 How to Develop an SLA STEP 1 Define the service area 2 Define the service activity 3 Define parameters 4 Determine percentage of time the client expects these requirements to be met 5 Define target 6 Identify measures & define metrics 7 Determine the data source 8 Establish a reporting time frame Example Incoming claims processing All incoming mail received by CBPS for the claims area will be opened, prepped, scanned and committed to the client workflow for processing. All documents will be prepped and scanned within 4 hours of receipt during normal business hours (8:00 a.m. to 5:00 p.m. Monday Friday). Target = 99% CBPS will ensure that 99% of documents are processed and committed to client workflow within the required cycle time. + # Documents + # Documents processed late + % on-time + Performance against target + % on-time = (# documents - # documents processed late) / # documents + performance against target = % on-time / target % Scanning application reports, traveler documents, manual logs Hourly, daily, weekly, monthly 7
8 Which KPIs Do You Use? Although the terminology is easy enough, several challenges arise with KPIs. One is deconstructing a KPI into the right set of metrics, or truly relevant SLAs, to clearly chart progress toward strategic objectives. A second challenge is finding indicators that can be rolled up into a DPM dashboard that enables a senior manager to view, at a glance, current overall performance against strategic objectives. The wrong KPIs can steer an organization off course. Whichever KPIs you choose, you can t etch them in stone. KPIs must be dynamic. Ten years ago, a bank, for example, might have set as a key performance indicator the percentage of paper statements mailed on time. Technology has made that KPI obsolete. A better metric for today might be the percentage of accurate electronic statements posted. It also makes sense to rank KPIs in terms of importance. The same bank during an economic crisis might place a special focus on three or four critical KPIs in addition to the metrics it monitors during stable business conditions. In general, you should have only as many KPIs as you need for a clear and effective view of your performance that leads to actionable results. By definition, a few KPIs tell the story of the rest. Just as a person driving a car can read only so many gauges speed, RPMs, engine temperature and fuel level a business can only monitor so many performance indicators before they are no longer key but superfluous. Cost per mail piece, for example, has implications for financial performance and volume management, so additional KPIs on these counts may be redundant. Once you understand the building blocks of DPM, the trick becomes putting them to good use. Here is a slice of life illustrating how an insurance company examined its processes, developed KPIs and a balanced scorecard, and improved performance: 8
9 DPM can conclusively answer the following questions: + Do you have a holistic view of your operations across all locations? + How does your daily operation support strategic corporate initiatives? + Are you getting what you re paying for? + How do your sites/locations rank against one another? + How does your operation rank against the competition? + can you justify investment decisions? A DPM Case Study Organization A life insurance company receives 40,000 claims per month on individual life, group life and annuities. It scans the claims into images, making them easy to process. Quick claims processing is a critical differentiator for the highly competitive, word-of-mouthdriven insurance industry. Processing claims in hours instead of weeks makes a big impact on customer satisfaction, market share and profit. Problem Despite suspected overstaffing, the insurance company was reporting substandard turnaround for receiving mail and scanning it into the database. Poor grades were based on anecdotal feedback from internal departments who had no view into the scanning process. No metrics were in place to judge scanning timeliness or accuracy against service level agreements. Solution The insurance company outsourced the scanning process to Canon Business Process Services, which deployed a best practices team. Led by a Six Sigma master black belt, the team applied BPM principles to the problem and documented all processes, implemented performance tracking and reporting, helped the client define an objective scorecard and associated metrics, analyzed true cycle time performance, recommended changes and kept the client apprised of progress. A Key Finding Objective measurement of KPIs indicated that work was in fact occurring within deadline, but that there were more efficiencies to be gained. Productivity could increase without redesigning workflow. Rather, the organization could better align staff with mail volume and eliminate interruptions. Results Better staffing saved the insurance company more than $150,000 annually in labor expenses. Staffing was reduced from 28 to 21 full-time equivalents. Cycle times were reduced from four hours to two hours. The client is now able to manage using an objective and balanced scorecard and has decided to outsource all of its document processes. 9
10 DPM helps organizations take business benefits like these and standardize them across all sites and lines of business. Executives can manage aggregate document performance through an intelligence-packed dashboard 24/7/365. They can drill down to the device, staffer or mail package level, and drill horizontally back and forth through time. Printer/scanner/copier fleets, mail systems and couriers barcode scanners provide data for DPM software to consume, enabling companies to monitor and continuously improve their document process performance. If performance in a particular site shows up as blue, or excellent, on the dashboard, the company can replicate this best practice across all sites and functions. If, on the other hand, one site or process is struggling in the red zone, the company can pinpoint the problem and launch a quality initiative anything from a short staff meeting or form revision to a three day Kaizen event or a full-fledged Six Sigma project using the most effective quality tool or tools until the process meets standards. 10
11 An Innovative DPM System As an award-winning document process management service provider, 5 Canon Business Process Services has advanced the concept that documents are vital information assets requiring active management throughout their lifecycle. The lifecycle of a document begins at its creation; evolves through distribution, storage and access; and ends with archiving or precisely timed destruction. Canon Business Process Services manages the linked processes that make up this complete cycle of events whether documents are in electronic form, paper form or both. With the help of Six Sigma methods and proven DPM technology, Canon Business Process Services helps reduce costs, minimize risk, improve performance and maximize value in the management of mail, copy/fax/print, records and more. This approach makes it easy for Canon Business Process Services clients to outsource their document processes with confidence and gain deep insight into the performance of their contracted services. Canon Business Process Services clients use the MAX performance management system to systematically measure, manage, benchmark and drive continuous improvement in all of these outsourced document processes. Clients can count on steady gains in operational efficiency, employee productivity and cost-effectiveness. As part of the MAX implementation, each client is engaged in conversations about the critical document processes that drive their business, surfacing key performance indicators that are monitored, measured and improved. Service level agreements are developed and process maps are created to provide an objective view of the current operation. Finally, the critical data is captured and imported into the MAXbasic or MAXadvanced Webbased system for performance monitoring and improvement. These tools are designed especially to manage document processes in near real time (unlike paper reports or static Web pages, which report monthly at best) Black Book of Outsourcing, annual user survey. Canon Business Process Services was named the number one document process outsourcing (DPO) vendor for the second straight year and was named to the prestigious 50 Best Managed Global Outsourcing Vendors list. 11
12 As with any quantitative application, the value of the business insight depends upon the quality of the data going in. Canon Business Process Services combines expertise in Six Sigma methodologies with deep knowledge of document processes in order to pinpoint data that is valid, reliable and statistically meaningful. Throughout an engagement, Canon Business Process Services adheres to the transparency philosophy promoted by author Glen Urban: Customer advocacy means faithfully representing the customers interests. It means giving them open, honest, and complete information because empowered customers will discover the truth through today s free information flow. It means talking with them, not at them. 6 In this spirit of transparency, MAX replaces assumptions and opinions about service provider performance with hard, unassailable data. And it lets organizations easily modify metrics or objectives as business conditions change. The MAX methodology is based on the careful research academic and experiential of dozens of quality management professionals with decades of real-world experience managing business performance, improving document processes, creating effective SLAs and identifying an organization s most important KPIs. 6 Don t Just Relate Advocate! Glen Urban, Wharton School Publishing,
13 Conclusion Although business performance management is always valuable, challenging economic times demand that organizations do everything in their power to cut costs and improve business results. So ensuring that all operations, including document processes, are objectively managed with near-real-time reporting can be a matter of survival. If survival is indeed at stake, then it relies on the imperatives we have explored in this paper: deeply analyze business processes; extract quantifiable metrics; define key performance indicators; consider customer, HR and operations concerns; hold service partners accountable with SLAs; monitor performance in near real time; populate a balanced scorecard; and aggressively tackle deficiencies. Like a manufacturer collecting data from the production line, an organization that takes these steps will be able to obtain critical details of its document Although business performance management is always valuable, challenging economic times demand that organizations do everything in their power to cut costs and improve business results. management activities in near real time. Recent advances such as MAX can help organizations monitor how document processes, once dismissed as a fixed cost, are making a positive impact on market share, profit and business performance. Whether survival or shareholder value is at stake, organizations can make surprising advances in meeting strategic business goals by driving continuous improvement in their document processes. Gone are the days of making decisions about these processes without a deep view into them. Using innovating DPM systems, tools and methodologies, businesses can feel confident that they are measurably improving operational efficiency, reducing costs and proactively preparing to meet the inevitable challenges that lie ahead. 13
14 Advancing Business Performance to a Higher Level 460 West 34th Street New York, NY Canon Business Process Services, Inc. is a leading provider of managed services and technology that enable organizations to improve operational efficiency while reducing risk and cost. Experts apply quality management principles and tools such as Six Sigma to advance performance to a higher level. The company offers services including BPO, imaging, records management, print, mail and ediscovery, and is an IAOP Global Outsourcing 100 Leader in 2013 for the seventh consecutive year. Based in New York City, Canon Business Process Services is a wholly owned subsidiary of Canon U.S.A., Inc. Parent company Canon Inc. (NYSE:CAJ) ranks third overall in U.S. patents registered in 2012 and is one of Fortune magazine s World s Most Admired Companies in Learn more at CANON, MAXbasic and MAXadvanced are registered trademarks of Canon Inc. in the United States and may also be a registered trademark or trademarks in other countries. All other referenced product, company or service names and marks are trademarks or service marks of their respective owners and are hereby acknowledged Canon Business Process Services, Inc. All rights reserved. Canon Business Process Services, Inc. Document Services White Paper v1
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