the power of process
TRANSCRIPT
The Power of ProcessThe Power of ProcessFor Driving Business ImprovementFor Driving Business Improvement
Fred Hess, Paramount Strategies LLCFred Hess, Paramount Strategies LLC
Brainstorm Conference - September 28-30, 2008Brainstorm Conference - September 28-30, 2008
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ProcessProcess is the Clark Kent of business is the Clark Kent of business ideas: seemingly mild and unassuming ideas: seemingly mild and unassuming but actually amazingly powerful. but actually amazingly powerful.
Michael Hammer,Michael Hammer, Agenda, 2001Agenda, 2001
The House-Building Contest How long does it take to build a house?
My baseline => 4 months
The rules are simple: normal tools must be used
building codes must be followed
no prefabricated components
only the concrete curing can be accelerated
must be finished and landscaped
The record?
2 hours, 47 minutes! 2 hours, 47 minutes!
Do you think process had something to do with it?
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InsightsInsights
Schedule improvement = 99.6%!Schedule improvement = 99.6%!
May not be the most cost effective approachMay not be the most cost effective approach
Percentage of non-value added tasks?Percentage of non-value added tasks?
Response to proposed project?Response to proposed project?
Teamwork - single focusTeamwork - single focus
Flawless executionFlawless execution
Lessons learned?Lessons learned?
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Definition of ProcessDefinition of Process
A process is a set of activities that produce A process is a set of activities that produce products and services for customers. products and services for customers.
GAO’s BPR Glossary of TermsGAO’s BPR Glossary of Terms
A process is an organized group of related A process is an organized group of related activities that together create a result of value to activities that together create a result of value to customers. customers.
Michael Hammer,Michael Hammer, Agenda, 2001Agenda, 2001
The term The term processprocess is a proxy for a business is a proxy for a business operation which is comprised of process steps, operation which is comprised of process steps, people and tools.people and tools.
Fred Hess, 2004Fred Hess, 2004
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Common Issues in CompaniesCommon Issues in Companies
CEO
Sales Order MfgProcure
mentShipping
VP VP VP VP VP
Functional departments are usually measured and controlled vertically
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Common Issues in CompaniesCommon Issues in Companies
CEO
CUSTOMER
Sales Order MfgProcure
mentShipping
VP VP VP VP VP
Order
Work usually proceeds through the company horizontally
Item
Dept M
tericsWork
An Aerospace ViewAn Aerospace View
PM
CUSTOMER
ProcurElectrical Mfg
FM FM FM FM FM
Contract Deliverable
Design StressF
unctional Focus
Work
Work usually proceeds through the company horizontally 88
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InsightsInsights
Department measurements and the flow of work are Department measurements and the flow of work are typically at right angles to each othertypically at right angles to each other
These vertical measurements typically do not measure These vertical measurements typically do not measure flow of work and can sometimes cause behaviors that flow of work and can sometimes cause behaviors that interfere with the flowinterfere with the flow
Aerospace and other large enterprises have many Aerospace and other large enterprises have many more functions than ordinary businesses so the silo more functions than ordinary businesses so the silo effect is greatereffect is greater
If there are no metrics or ownership related to the flow If there are no metrics or ownership related to the flow of work, it will probably of work, it will probably notnot improve improve
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A Real Life Example – Telecom ManufacturerA Real Life Example – Telecom Manufacturer
Sales
Finance
Mfg
Order
Deployment
Proposal
Billing
Collections
Client defined processes
The client team, with IBM help, had modeled the 8 As-Is processes and were now designing the To-Be processes, starting with Collections.
Do these really look like processes?
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SellFinanceProduct
MfgProcessOrder
DeployProposeSubmitInvoice
Collect
I convinced them that their 8 “processes” were phases of the same process.
What might this process be called?
What was the common business object that made it the same process?
A Real Life Example – Telecom ManufacturerA Real Life Example – Telecom Manufacturer
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The Proposal to Cash ProcessThe Proposal to Cash Process
SellFinanceProduct
MakeProcessOrder
DeployProposeSubmit Invoice
Collect
Order
CUSTOMER
Collections were running at 50% Customer satisfaction was poor.
How would you find the root causes?
The common business object is the “Order”
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Analyzing the Proposal to Cash Process
Sales MfgOrder DeployProposal BillingCollect
ions
CUSTOMER
What were the root causes?
What group suffered the most pain?
At what point did the salesman get his commission?
Who did the customer call for status or problems?
Who was responsible for customer satisfaction?
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Root Cause AnalysisRoot Cause Analysis
Customers won’tpay until systeminstalled
Customer paysslowly
Order notcorrect
Installation notcorrect Order must
matchproposedconfiguration(SAP)
Customerfacility notready
Scheduleslip
Customerscan’t pay
Collectionsrate notacceptable
Caused ByCaused By
Caused By
Caused By
Caused By
Caused By Caused By
Caused By
Configuratorout of date
Caused By
Customerschedulenot tracked
Caused By
Installationnot onschedule
Caused By
Proposedconfigurationnot correct
Caused ByConfiguratornot available
Prices in 3differentdatabases
Caused By
Caused By
Caused By
No one isresponsibleCaused By
FindingsFindings
The root cause of the collections problem was The root cause of the collections problem was primarily in salesprimarily in sales
No single role owned the customer for the No single role owned the customer for the duration of the transactionduration of the transaction
No one realized the number of potential No one realized the number of potential customer touchpointscustomer touchpoints
There was no mechanism for collecting and There was no mechanism for collecting and utilizing all customer informationutilizing all customer information
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A Touchpoint Analysis Was PerformedA Touchpoint Analysis Was Performed
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# TOUCH POINT DOCUMENT CUSTSAT
EFFECT. EFFIC. ACCESS CHANNELS
OVERALLPERF
TREND BUSINESS IMPACT
CURRENT IMPACT/ CHARACTERISTICS
DESIRED IMPACT/EXPERIENCE
GAP
1 Marketing/Sales
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Advertising
Branding
Communications
Product Launch
Public Relations
Trade Shows
6 Future Product Development
Develop Customer Plan
Develop Service Plan
Approve Service Plan
Develop Partnership Plan
Develop Account Plan
Clarification of Customer's Business Reqmt's
How did we proceed?How did we proceed?
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Salesman
Order/Finance
Mfg Engr
Buyer
Billing
Deployment
Collections
Customer
Got all roles together in workshop
Developed to-be requirements
Worked out the handoffs and interactions
Designed the end-end to-be process
RecommendationsRecommendations
Adjust the SAP business rulesAdjust the SAP business rules
Maintain current configurators and price Maintain current configurators and price databasesdatabases
Form customers teamsForm customers teams
Appoint a Chief Customer OfficerAppoint a Chief Customer Officer
Acquire/develop a customer information Acquire/develop a customer information database and applicationdatabase and application
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InsightsInsights
The focus on departmental, instead of end-to-The focus on departmental, instead of end-to-end, processes precluded their ability to end, processes precluded their ability to determine the root cause of the issuesdetermine the root cause of the issues
There was no ownership of the end-to-end There was no ownership of the end-to-end process measurementsprocess measurements
Business growth of 30%/year contributed to Business growth of 30%/year contributed to lack of focus on the customerlack of focus on the customer
The Request for Service Process
An outsource process for obtaining additional An outsource process for obtaining additional computing resourcescomputing resources
Projects take from 8 to 16 weeks to Projects take from 8 to 16 weeks to implementationimplementation
Average transaction time = 47 daysAverage transaction time = 47 days
Could take as long as 14 days to obtain a Could take as long as 14 days to obtain a license key to run an installed applicationlicense key to run an installed application
Quick-hit teams trying to improve process Quick-hit teams trying to improve process performanceperformance
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The Approach – Step 1The Approach – Step 1
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1. Analyze the Current State
DesignFlow As-is DesignFlow To-be
As- Is
To -Be
Checker
Eng Designer
Technical Writer
Drafter
Analyst
TeamLeader
Eng. Administrator
Design Eng
TL1ScopeWork
EA1Assign Number
TL2Check Concept
RN0-1Create/ModifyDesign Model
TW1Develop Spec.
Choose 1
Dev. Concept Desgn
Disapprove scope
Use Existing Dsgn
DE1R2
Choose 1RejectApprove
R2
D1
Doc. Detail Dwg
A1Submit Analysis
C1
Check Drwgs
Multithread
Reqts Cgng
Model OKModel not OK
2R4
R4
1
Choose 1Approve ResultsChnge ConceptChnge Design
DE2 DE3
TL3R1
R1
R3
R3
Checker
Eng Designer
Technical Writer
Drafter
Analyst
TeamLeader
Eng. Administrator
Design Eng
TL1Scope Work
EA1Assign Number
TL2Check Concept
RN0-1Create/Modify Design
Model
TW1Develop Spec.
Choose 1Dev. Concept Desgn
Disapprove scopeUse Existing Dsgn
DE1R2
Choose 1Reject
Approve
R2
D1Doc. Detail Dwg
A1 Submit Analysis
C1Check Drwgs
MultithreadReqts CgngModel OK
Model not OK2R4
R4
1
Choose 1Approve ResultsChnge Concept
Chnge Design
DE2 DE3
TL3R1
R1
R3
R3
Application Function, Data, Infrastructure
Org Design, Teaming, Skills,
Knowledge
Issues
Root Cause
Desired Capabilities
Process Enablers
OrganizationEnablers
ApplicationReqmts
Solution Ideas
End
Process Roles
E2E Current RFS Process (As-Is)
State 40
QA2/3 Check (state 33)Rework Loop
Approve
Approve
= Silo
Current State ProcessCurrent State Process
Requester
Delivery
Project Mgr
Solution Team
Prop Mgr
OutsourceMgr
Procure
Starts With: Request for ServiceEnds With: Implementation plan and solution components ready for implementation
Develop & DeliverProposal
DevelopSolution
Obtain Approval
Obtain Approval
Obtain Approval
Perform Acquisition
Services
Evaluate Request
Initiate Request
Package Request
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The Approach – Step 2The Approach – Step 2
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Project Goal:Systematic and Repeatable Approach
DesignFlow As-is DesignFlow To-be
As- Is
To -Be
Checker
Eng Designer
Technical Writer
Drafter
Analyst
TeamLeader
Eng. Administrator
Design Eng
TL1ScopeWork
EA1Assign Number
TL2Check Concept
RN0-1Create/ModifyDesign Model
TW1Develop Spec.
Choose 1
Dev. Concept Desgn
Disapprove scope
Use Existing Dsgn
DE1R2
Choose 1RejectApprove
R2
D1
Doc. Detail Dwg
A1Submit Analysis
C1
Check Drwgs
Multithread
Reqts Cgng
Model OKModel not OK
2R4
R4
1
Choose 1Approve ResultsChnge ConceptChnge Design
DE2 DE3
TL3R1
R1
R3
R3
Checker
Eng Designer
Technical Writer
Drafter
Analyst
TeamLeader
Eng. Administrator
Design Eng
TL1Scope Work
EA1Assign Number
TL2Check Concept
RN0-1Create/Modify Design
Model
TW1Develop Spec.
Choose 1Dev. Concept Desgn
Disapprove scopeUse Existing Dsgn
DE1R2
Choose 1Reject
Approve
R2
D1Doc. Detail Dwg
A1 Submit Analysis
C1Check Drwgs
MultithreadReqts CgngModel OK
Model not OK2R4
R4
1
Choose 1Approve ResultsChnge Concept
Chnge Design
DE2 DE3
TL3R1
R1
R3
R3
Application Function, Data, Infrastructure
Org Design, Teaming, Skills,
Knowledge
Issues
Root Cause
Desired Capabilities
Process Enablers
OrganizationEnablers
ApplicationReqmts
Solution Ideas
2. Develop the Requirements
The current Request for Service (RFS) is burdened by a process that contains a high number of roles, tools, hand-offs, manual activities and rework.
As-Is Baseline - Analysis
= 32
1. Initiate Request
State 0, 5, 10
Submit RFS
2. Evaluate and Route RequestState 15
Receive RequestValidate Request TypeAssign the RFS Category + QueueReroute as NeededValidate Form Content and Notify RequesterValidate Funding InformationLog Project/New Business RequestAssign to Resource
4. Develop and Deliver Proposal to Customer
State 30, 33Finalize Project Scope SummaryFinalize Proposal OutputsObtain Pricing AgreementPerform QA2/3Submit to Governance for Review and ConcurrenceRework as neededDeliver FAL and Project Scope Summary to
Customer
5. Obtain Approvals
State 40, 50, 60, 100
Route to Customer for Approval and SignoffPerform Customer Review/ResponseReceive Signature / Rework as NeededRoute to Governance for Final ApprovalObtain Governance
Approval
6. Perform Acquisition
ServicesState 162, 1 63
Acquire Hardware and SoftwareSchedule and Begin
Implementation
3. Develop Solution
State 20, 23
Identify Required Work ProductsContact Customer Within 5 DaysAssign ResourcesGather/Validate RequirementsPerform Quality Review w/in TeamFinalize Solution OutputsPerform QA1
Review
37Activitiesper step: + 14 + 26 + 20 + 56 = 209+ 56
Choicesper step:
Handoffsper step:
19 + 6 + 13 + 4 + 36 = 114+ 36
9 + 4 + 9 + 7 + 24 = 66+ 13
IT Toolsper step: 15 9 141015 11
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Major Contributor to Schedule Delay Major Contributor to Schedule Delay – Capital Requisition Approval– Capital Requisition Approval
13 roles required for approval
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FindingsFindings
Excessive number of non-integrated applicationsExcessive number of non-integrated applications
Many manual handoffsMany manual handoffs
Quick-fix teams were changing rules weeklyQuick-fix teams were changing rules weekly
Lengthy approval cyclesLengthy approval cycles
Manual trackingManual tracking
Multiple procurement systemsMultiple procurement systems
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The Approach – Step 3The Approach – Step 3
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Project Goal:Systematic and Repeatable Approach
DesignFlow As-is DesignFlow To-be
As- Is
To -Be
Checker
Eng Designer
Technical Writer
Drafter
Analyst
TeamLeader
Eng. Administrator
Design Eng
TL1ScopeWork
EA1Assign Number
TL2Check Concept
RN0-1Create/ModifyDesign Model
TW1Develop Spec.
Choose 1
Dev. Concept Desgn
Disapprove scope
Use Existing Dsgn
DE1R2
Choose 1RejectApprove
R2
D1
Doc. Detail Dwg
A1Submit Analysis
C1
Check Drwgs
Multithread
Reqts Cgng
Model OKModel not OK
2R4
R4
1
Choose 1Approve ResultsChnge ConceptChnge Design
DE2 DE3
TL3R1
R1
R3
R3
Checker
Eng Designer
Technical Writer
Drafter
Analyst
TeamLeader
Eng. Administrator
Design Eng
TL1Scope Work
EA1Assign Number
TL2Check Concept
RN0-1Create/Modify Design
Model
TW1Develop Spec.
Choose 1Dev. Concept Desgn
Disapprove scopeUse Existing Dsgn
DE1R2
Choose 1Reject
Approve
R2
D1Doc. Detail Dwg
A1 Submit Analysis
C1Check Drwgs
MultithreadReqts CgngModel OK
Model not OK2R4
R4
1
Choose 1Approve ResultsChnge Concept
Chnge Design
DE2 DE3
TL3R1
R1
R3
R3
Application Function, Data, Infrastructure
Org Design, Teaming, Skills,
Knowledge
Issues
Root Cause
Desired Capabilities
Process Enablers
OrganizationEnablers
ApplicationReqmts
Solution Ideas
3. Develop the To-Be Process
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1. Initiate Request
State 0, 5, 10
Submit RFS
2. Evaluate and Route RequestState 15
Receive RequestValidate Request TypeAssign the RFS Category + QueueReroute as NeededValidate Form Content and Notify RequesterValidate Funding InformationLog Project/New Business RequestAssign to Resource
4. Develop and Deliver Proposal to Customer
State 30, 33Finalize Project Scope SummaryFinalize Proposal OutputsObtain Pricing AgreementPerform QA2/3Submit to Governance for Review and ConcurrenceRework as neededDeliver FAL and Project Scope Summary to
Customer
5. Obtain Approvals
State 40, 50, 60, 100
Route to Customer for Approval and SignoffPerform Customer Review/ResponseReceive Signature / Rework as NeededRoute to Governance for Final ApprovalObtain Governance
Approval
6. Perform Acquisition
ServicesState 162, 163
Acquire Hardware and SoftwareSchedule and Begin
Implementation
3. Develop Solution
State 20, 23
Identify Required Work ProductsContact Customer Within 5 DaysAssign ResourcesGather/Validate RequirementsPerform Quality Review w/in TeamFinalize Solution OutputsPerform QA1
Review
To-Be Process - 1st Release To-Be Process - 1st Release
As-Is Activitiesper step
To-Be Activitiesper step
11 + 7 + 28 + 7 + 7 + 49 = 109
37 + 14 + 56 + 26 + 20 + 56 = 209
Results - Phase 1 Results - Phase 1
Removed non-value add activities 209 => 109Removed non-value add activities 209 => 109
Reduced roles from 37 to 30Reduced roles from 37 to 30
Reduced applications form 32 to 24Reduced applications form 32 to 24
Reduced handoffs from 66 to 30Reduced handoffs from 66 to 30
Removed many sources of reworkRemoved many sources of rework
Implement with WBI workflowImplement with WBI workflow
Focus on 21 most critical process stepsFocus on 21 most critical process steps
Set objectives for Phases 2 and 3Set objectives for Phases 2 and 3
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InsightsInsights
There was a lack of both a tool and data There was a lack of both a tool and data architecturearchitecture
Lack of clear process governanceLack of clear process governance
The process was assembled, not designedThe process was assembled, not designed
The quick-fix attempts actually degraded The quick-fix attempts actually degraded process performanceprocess performance
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The Dell Process AdvantageThe Dell Process Advantage
OrderBuy Parts
Look upstream and downstream for additional improvement opportunities
IdentifyNeed
InstallConfig
Solution
MaintainInventory
Get OK
Order
Ass’y Ship
Extranet
Upgrade
InsightsInsights
Dell’s integration with their customer’s processes Dell’s integration with their customer’s processes added valueadded value Control of standard configurationsControl of standard configurations
Workflow for approval and orderingWorkflow for approval and ordering
Easy inventory managementEasy inventory management
Provided clear competitive advantageProvided clear competitive advantage Harder for customers to buy from competitorsHarder for customers to buy from competitors
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Process Can Drive Schedule ImprovementProcess Can Drive Schedule Improvement
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• What percentage of the time (schedule) would you estimate is in the tasks?
• How much in the white space?
Proxy for elapsed time
Time
3333
Process Can Drive Cost ImprovementProcess Can Drive Cost Improvement
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• The Cost of process execution equals the sum of the cost of all activities times the number those activities are executed.
• How much cost is in rework?3434
Process Can Provide Tool RequirementsProcess Can Provide Tool Requirements
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Roles
1 hr
• Tool requirements are obtained by compiling the functional requirements from all the tasks that use the tool.
• Integration requirements can be derived by identifying tasks that require more than one tool.
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Process Can Provide Skill RequirementsProcess Can Provide Skill Requirements
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• Skill requirements are obtained by compiling the requirements from all the tasks on the role swimlane
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Process Has PowerProcess Has Power
An end-end cross-functional process can: An end-end cross-functional process can:
define how all groups/departments/roles must work define how all groups/departments/roles must work together to achieve the business objectivestogether to achieve the business objectives
show where the time is spent and where to reduce it show where the time is spent and where to reduce it
identify the cost of the activities in the process and show identify the cost of the activities in the process and show which ones can be reducedwhich ones can be reduced
identify the skill requirements required by each roleidentify the skill requirements required by each role
establish the functional requirements the applications must establish the functional requirements the applications must have to support the processhave to support the process
provide the context for root cause analysisprovide the context for root cause analysis
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Process is the most powerful and effective driver of business alignment and improvement
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Thank You!
Questions?
References:• Google: 4 Hour House• www.2hourhouse.com
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