Whitepaper: Re-energise your business and increase profitability using effective business process management Wondering how to re-energise your business? With competition on a global scale, organisations are continually facing the challenge of how to energise their business to gain greater profitability, while ensuring their increasing customer needs continue to be met. As Gary Hamel argues in The Future of Management (Harvard Business School Press, October 2007), organisations using yesterday s best practices are neither adaptable nor creative enough for tomorrow s business challenges. Business managers are constantly asking: What do you do when you have attacked the revenue line, contained your costs, have your people working to breaking point, and the business is still not achieving your objectives? Whilst the answer is usually found through innovation companies innovate new products and services in order to gain a competitive advantage this can also lead to more substantial growth problems and unanticipated additional workloads and expenses. But innovation doesn t have to take this form. You need new thinking a smarter way of working that will support sales, grow margins, motivate staff and simultaneously improve customer satisfaction. What do you do when you have attacked the revenue line, contained your costs, have your people working to breaking point, and the business is still not achieving your objectives? Effective measurement, management and continuous improvement of your everyday business practices could be the difference between achieving gradual improvement or experiencing a quantum leap in profitability and business performance. August 2008 1
Demystifying business process management (BPM) The day-to-day running of your organisation consists of the performance of many interwoven business processes, assisted by employees and supported by your information technology systems. If you can make these business processes as efficient and seamless as possible, then your business will run at peak performance levels. Johan Nelis of Touchpoint, a field leader in providing BPM services to national BPM: the achievement of an organisation s objectives through the identifi cation, improvement, management and control of essential business processes. Johan Nelis Touchpoint and international clients, describes Business Process Management (BPM) as the achievement of an organisation s objectives through the identification, improvement, management and control of essential business processes. More than an initiative: Effective BPM must become a part of everyday business and management. More than just software: Although technology can support BPM, it does not provide BPM by itself. As Bill Gates once stated: automating an efficient process magnifies its efficiency, automating an inefficient process magnifies its inefficiency. More than process changes: BPM focuses on managing processes, not just improving or re-engineering them, because it is not simply the implementation or design of a process that ensures success, but rather a continuous, end-toend approach that is vital for sustained improvement. After all, a process can not be improved if it is not managed More than hype: BPM is an integral part of management. One consumer division of a worldwide bank implemented business process management to reduce costs and administration, to increase time spent with customers, and to enable business expansion into new markets. Following the incorporation of BPM, the division: Reduced its expenses ratio by half; Increased customer facing time from 19% to over 70%; Reduced errors from 30% to 5%; and Increased customer satisfaction 2
Results you can see now and in the future Various studies done in the past 25 years indicate that 60 80% of companies fall short of the success predicted from their new strategy. ( Mastering the management system, Robert S. Kaplan and David P. Norton, Harvard Business Review, January 2008, volume 86, issue no. 1) BPM, when executed effectively, not only provides you with business results, it provides you with ongoing insight into how well your processes are progressing towards achieving your business objectives. Cost reduction, increased customer satisfaction and improved marketplace agility Various studies done in the past 25 years indicate that 60 to 80% of companies fall short of the success predicted from their new strategy. are some of the results procured through BPM s value chain, which works by both defining your organisational strategies and focusing on the delivery of processes that contribute value to these strategies. Multiple national and international companies have achieved quantum results from successful BPM: 40% reduction in costs, improved customer service, and improved sales by 50% (Wealth Management) 100% more orders processed with 50% less staff (Telecom operator) Reduction of processing time for mortgages from 6 weeks to 3 days (Mortgage provider) Large impact on the cost to income ratio and large savings achieved in process re-engineering projects (International Bank) Halving of expense ratio and improved customer and staff satisfaction (International Bank) August 2008 3
If BPM is so good, why aren t more companies doing it effectively? As one CEO commented after experiencing the benefits of BPM, despite its It is amazing to see that, although business process management can provide such successful results, there are so few companies and leaders willing (or daring) to truly support and implement business process improvement initiatives. simple effectiveness: It is amazing to see that, although business process management can provide such successful results, there are so few companies and leaders willing (or daring) to truly support and implement business process improvement initiatives. When making the decision to move forward with a BPM implementation, many managers are reluctant to take on ownership of the project. When it comes to BPM there can be a perception that it s too hard, too confusing, too boring or been tried before. However, it is the combination of the right leadership and an end-to-end implementation approach that will make all the difference to the success of your BPM project. So if you are looking for a method that will generate a quantum improvement in your business, then fixing the boring stuff via a BPM program might just be your opportunity to make a difference. 8 essential ingredients to successful BPM BPM awareness is at an all-time high, with current surveys suggesting that if your organisation is not already doing BPM, it is likely to consider a BPM project in the next 12 months. But implementing BPM is not as simple as it would seem. Here are 8 essential ingredients you need to get it right: 4
1 Balancing strategy, project and process execution What spells the difference between successes and failures is the ability to execute plans (Bossidy and Charan, 2002) Poor execution is a chief factor in unsuccessful project and process management. So while creating the vision or strategy for an organisation is important, the real challenges lie in executing and fulfilling the strategy. If (quality strategy) x (quality execution) 2 = breakthrough results, then the execution has a significant multiplier effect. You can exceed expectations with an excellent execution of an average strategy You can miss expectations with a below average execution of an excellent strategy. If you have a gap in your execution capability or BPM knowledge, it s a good idea to invest in a third party to guide you to get it right the first time and achieve your What spells the diff erence between successes and failures is the ability to execute plans Bossidy and Charan (2002) goals. 2 One approach does not fit all BPM should not be implemented by following generic methodologies or steps, nor by adopting another organisation s successful BPM methodology. Each organisation will have its own needs, challenges and circumstances. Companies should first outline the results they want to achieve, and then leverage the benefits of a proven approach whilst ensuring flexibility to cater for organisational individuality. August 2008 5
3 Don t rush to automate Technology should be viewed as an enabler, not the entire solution. It is your people and processes that provide your business results, with technology providing automation and support. It is far more important to ensure effective processes before integrating complex IT systems. Organisations that chiefly use automation the integration of applications and software systems to drive improvement end up with systems that dictate and restrict their business. By improving and managing processes before automation, business managers can supervise organisational processes proactively and predicatively. 4 Invest in change that will provide required results Don t invest your money merely re-arranging deck chairs on the Titanic. Most organisations need radical change to quantum-improve their performance. A range of minor process improvements will not provide the significant and sustainable change required. To properly invest in BPM you need to be committed to three elements: understanding the value chain; making the required change to achieve your strategy; and communicating and managing the change throughout your organisation. 5 Don t re-invent the wheel If you don t have BPM expertise within your organisation, don t waste time and money attempting to define an improvement methodology and approach. Your effort will be better spent engaging the expertise you need outside the organisation, so you can expedite the achievement of your strategies and results. 6 Address the people aspects Organisations often repeatedly create processes, only to have them improperly adhered to by the business. Why is this? TouchPoint believes this is because processes are only one side of the equation. It takes people to carry out processes, and this is often overlooked. You can have the most efficient processes in the world, but unless you can convince people to use them efficiently (or at all) you have nothing. 6
You must engage the people in the trenches. Use line management to your advantage by first engaging managers and then having them help engage their people. In order to truly embed BPM in an organisation s culture, it is vital to gain the necessary support and buy-in from employees. This can be done through consulting with staff; listening; providing ongoing, transparent communication, and conducting education on new practices. It is also important not to put people who run your existing processes in charge of developing your new processes. It s difficult for any person to make a jump from business as usual to strategic innovation, particularly in a part time capacity. 7 Choose the right leader Inspiring leadership is vital to the successful implementation of BPM strategy, because management behaviour translates into the behaviours of staff. Only the leader and leadership team can instil the courage to carry out necessary reforms to improve organisational capability. As BPM projects are undertaken from the top down, it is the responsibility of the leader to provide the vision for the organisation its appearance, behaviour and aspirations. It is also the responsibility of the leadership team to continually manage the BPM strategy and to ensure it remains aligned with the organisational strategy. Candidates for leadership should be focused on increasing customer value and facilitating employee empowerment. Potential leaders must be ambitious and energetic, with the capacity to execute a well-thought out approach, and choose the right dedicated and capable people for the implementation. These are the very components necessary for an organisation to achieve high performance status. August 2008 7
8 Manage the benefits Processes need to deliver results over and over again before they really begin to transform your business. When entering into a BPM project, you should calculate the benefits you will gain before spending the money. Once this calculation is complete, you can then use it as a point of reference while you are executing the business change, and again to evaluate the results you achieve. It is also imperative to assign benefits to individuals, and to ensure that accountability for benefits is cultivated and enforced. Conclusion Your organisation s performance is based on a complex series of processes, enacted by your employees and supported by your technology systems. Yet these crucial, interdependent factors can be inefficient and incompatible. Business process management, or BPM, can reenergise your business by streamlining day-to-day processes, incorporating your people and technology, and implementing an execution-focused approach. Before implementing BPM, it is important to first ensure the necessary ingredients for success, including the selection of an approach designed specifically for your business, the privileging of processes before automation, and a carefully-chosen leadership team. With these, BPM will enable your organisation to fulfil its objectives and maximise profitability, customer and employee satisfaction, and increase competitiveness in the marketplace. For more information on how to increase your performance capability please visit www.adaptra.com.au To discuss how Touchpoint can help you implement or improve your Business Process Management or how Adaptra can assist with your Project Delivery, please contact us on + 61 2 9209 3299 or email our solutions team at adaptra@adaptra.com.au. 8