BEST PRAC TICES Includes a case study

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1 BEST PRAC TICES Includes a case study First Horizon: A Case Study In BPM Success Seven Steps For Successful BPM Implementation by Mary Pilecki with Bruce D. Temkin and Emily Van Metre EXECUTIVE SUMMARY First Horizon wanted to improve the speed, quality, and reusability of its process automation projects, so it created a business process management (BPM) project methodology and leveraged a business process management suite (BPMS). Along with the implementation process, a new culture based on business process developed, and it s spreading across the enterprise. An interview with Robert Salazar, who led this effort, revealed seven steps that he took to build this BPM culture including executive ownership and sponsorship, a flexible BPMS tool, and a requirement for collaboration across the entire project team. TARGET AUDIENCE Business process professional, chief information officer, strategy professional FIRST HORIZON HIGHLIGHTS BPM SUCCESS At Forrester s Finance Forum 2006, several financial services execs discussed their BPM efforts. 1 Forrester followed up with one of the speakers, Robert Salazar, VP of process management at First Horizon National, to gain more insight into his company s successful BPM efforts. 2 Under Salazar s direction, and with the support of Pat Ruckh, First Horizon s CTO, First Horizon has established a reusable approach for using BPM to improve sales and service processes. After completing five process improvement projects, First Horizon is seeing results in its efforts to automate and streamline operational processes in its mortgage banking line of business. Specific successes include: Faster project implementation. Salazar estimates that, on average, the time to deliver these comprehensive process management solutions was 30% lower than it would have been using traditional technologies and methodologies. Rapid user acceptance. The processes are intuitive and easy to learn, require minimal training, and enable very smooth transitions to new work methods. Measurable business value. All projects start with well-defined objectives and anticipated business return. Salazar reports that these initial process improvement efforts produced 70% of their value from automation, while 30% is gained through actual improvement of the process. Headquarters Forrester Research, Inc., 400 Technology Square, Cambridge, MA USA Tel: / Fax: /

2 Best Practices First Horizon: A Case Study In BPM Success 2 Nonstop demand. When the firm s first two BPM projects were implemented in 90 days surprisingly fast given that there was a brand new BPMS involved Salazar began to get calls from department managers offering their projects for the next BPM implementation. Request volume is now so high that there is a backlog of projects, and the process is moving from the mortgage banking area to consumer lending, retail banking, and commercial banking areas. SEVEN STEPS TO SUCCESSFUL BPM IMPLEMENTATIONS Forrester s discussions with Salazar uncovered seven key steps to BPM success: 1. Start with a common view of the overall process. Salazar found that there was a good understanding of key performance indicators (KPIs) at a functional level individual departments or groups understood their own universe. For example, customer service effectively measured their responsiveness in answering inquiries, and escrow knew how well they handled incoming and outgoing payments. But the handoffs for tasks across departments were not nearly as well understood. By doing an enterprise-level assessment essentially a gap analysis First Horizon determined that it needed a new methodology to create visibility to work in progress (WIP) throughout the organization. Its solution? Use BPM for workflow and as an approach to creating an understanding of the value of activities across the entire value chain. 2. Obtain CXO support. Marion McDougall, senior EVP of operations, was the early executive sponsor for BPM. According to McDougall: We needed a tool to manage the enhancement initiatives that would have more predictable results and better accuracy helping us get to the finish line faster. To educate managers and draw interest, McDougall asked Salazar to present a BPM overview in business terms at a monthly meeting of 100 VPs. The objective was to get managers to think about how they could transform the processes in their organizations. This executive support helped Salazar gain acceptance of the BPM strategy as well as funding for the initial projects. 3. Choose a flexible BPMS tool. To evaluate BPMS tools, Salazar formed a team that included an enterprise architect, data architect, business representation from the mortgage group, business analysts from the lines of business (LOBs), and many other IT support groups. Salazar told us that his evaluation and purchase strategy was to procure pragmatically, but evaluate strategically. The team evaluated the tool for enterprisewide appropriateness, but only initially purchased the tools needed to prove out the strategy. After an initial due diligence, the firm sent RFIs to four vendors. In the end, First Horizon chose Fuego BPMS from Fuego Software (now BEA Systems Aqualogic BPM) for two key reasons: Proven scalability. Although initial implementations were planned for the mortgage group, First Horizon anticipated the need for a BPMS that would support the entire company. So the team looked for a product with a history of proven scalability and enterprisewide deployments.

3 Best Practices First Horizon: A Case Study In BPM Success 3 Linkage between design and delivery tools. It was important that the IT group wouldn t have to translate process designs into the BPM engine by re-entering the decisions in the language of the tool. So the team picked an integrated solution (process modeling, analysis, and implementation) that makes it easy for design changes to be easily dragged and dropped into the portal. 4. Begin with valuable, manageable, cross-functional projects. To determine where to start, the team looked at the backlog of IT projects and identified those that had a very high ROI if executed well, but weren t too complex or too critical to the overall business. The team also looked at projects that would require collaboration across departments, anticipating the need to establish a methodology that would include efforts for breaking down silos. They chose two initial processes: a major exception handling routine within the mortgage loan origination process that was predominately manual, and a work management application for the loss mitigation department. 5. Develop a reusable project methodology. Leveraging the existing project management office (PMO) procedures, First Horizon developed a methodology that varied from traditional waterfall and other development methods in two major ways: The first difference is that First Horizon s methodology is process-centric. The efforts are focused around individual processes so discussions and tasks are oriented around the process to be improved and managed rather than on a particular technology or system design. The second difference is end-to-end collaboration. First Horizon process improvement teams ensure that the right parties are involved, and expect them to share their appropriate expertise and knowledge. How do they do this? Every team member has an ownership stake in the project exhibited by the fact that all core team members make the final approval for process implementation. Expectations are explicitly set at the beginning of a project, and the team won t undertake projects where involved parties are not fully committed to collaboration. 6. Establish a clear team structure. Along with a reusable project methodology, Salazar defined a set of roles required for each project team. While the project manager oversees the work, the firms found it very important to have a clear business owner of each process an executive with final accountability for the procedure. The role of the process owner is to encourage the process focus and act as a tie-breaker when issues cannot be resolved at the team level. Business analysts change with the projects, based on the LOB or departments involved, as do the functional experts who review and help design improvements into the process. The team is completed with a process architect and one to three BPMS developers depending on project size. The process architect leads the technical aspects of the process implementation including identifying reusable components and services (see Figure 1). 7. Communicate the successes. One of the roles that Salazar considers to be critical is that of a BPM evangelist. With the support of First Horizon executives like Ruckh and McDougall, and positive word of mouth from business managers, Salazar actively shares information about the success of BPM projects. Ruckh used his role as CTO to evangelize the BPM methodology across other groups within First Horizon National. Salazar has formed an enterprise BPM group (think of it as a center of excellence) to manage the BPMS infrastructure, support the building of capacity for process improvement throughout the company, and determine how to replicate success.

4 Best Practices First Horizon: A Case Study In BPM Success 4 Figure 1 Project Team Makeup Project manager Process owner Business analyst Project architect BPMS developer Staff trainer and developer Unit representatives Source: First Horizon Overall responsibility for delivering on time, within budget, with desired outcome Executive responsibility for the process Serves as a tie breaker when a team consensus cannot be reached Project scoping Process modeling Functional requirements definition Translates the business process models and requirements into BPMS tool set Identifies reusable components Develops processes within the BPMS tool Follows architect s design Procedure documentation End user training Composed of functional experts Review and collaborate Source: Forrester Research, Inc. W H A T I T M E A N S BPM SUCCESS REQUIRES A STRONG CHAMPION Our discussions with Robert Salazar highlighted a number of key steps for successfully implementing BPM. But even if companies follow those steps, they may not be successful. Why not? Because there s a secret sauce required for BPM success a strong and passionate BPM advocate. Salazar s leadership of BPM efforts at First Horizon is a good model to follow. Because BPM implementations require process, technology, and people changes, it s critical to have the right type of person leading the effort. Forrester believes that a BPM champion needs to be an executive who can do three things: 1) create and share a vision; 2) overcome inertia and organizational obstacles; and 3) energize a team through results. ENDNOTES 1 At Forrester s Finance Forum 2006, technology and business execs from Allianz Life, Bank of America, CSAA, First Horizon National, JPMorgan Chase, and Meadowbrook Insurance Group discussed their recent or planned BPM implementations. The panelists highlighted culture change, scope management, and process focus as important elements for effective implementation of BPMS. See the June 8, 2006, Quick Take Business Process Management Suites Implementation Best Practices.

5 Best Practices First Horizon: A Case Study In BPM Success 5 2 First Horizon National, one of the nation s top 25 mortgage originators, provides financial services to individuals and business customers. The corporation s three major brands FTN Financial, First Horizon, and First Tennessee provide products and services that include retail and commercial banking, capital markets, and mortgage banking. Forrester Research (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice about technology s impact on business and consumers. For 22 years, Forrester has been a thought leader and trusted advisor, helping global clients lead in their markets through its research, consulting, events, and peer-to-peer executive programs. For more information, visit , Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, Forrester s Ultimate Consumer Panel, WholeView 2, Technographics, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. To purchase reprints of this document, please resourcecenter@forrester.com