Process Based Management The Power of Process Management

Transcription

1 Process Based Management The Power of Process Management By Andrew Spanyi First Annual CMA/CAM-I Summit Cost Management, Process Management and Performance Based Management September 6 & 7, 2006

2 Agenda What leaders want Challenges for CFOs Why transform traditional thought models? The role of process management at the enterprise level The systematic and systemic view Summary 2006 Andrew Spanyi 2

3 What Leaders Want Results AND Accurate and timely financial information Earnings reliability Precise forecasts Compliance Sustainable growth 2006 Andrew Spanyi 3

4 Challenges for CFOs External Factors Sarbanes-Oxley Globalization Information technology revolution Requirements Integrity Communication skills Sound controls Cost reduction Input to strategy 2006 Andrew Spanyi 4

5 Transforming Traditional Thought Models Far too often plans, budgets, rewards are defined by department Yet, value is created via the flow of crossfunctional business processes 2006 Andrew Spanyi 5

6 What is Business Process Management? In BPM is a Team Sport, I defined it as: The deliberative, collaborative, and increasingly technology-aided definition, improvement and management of a firm s end-to-end business processes Andrew Spanyi 6

7 The Power of Process The performance of shareholders is best served if we perform for our customers... The fact is I think it is a matter of behavior and Mindset. (Ben Verwaayen, CEO British Telecom, 2004) 2006 Andrew Spanyi 7

8 How Work Gets Really Done STRATEGY-GOALS OPERATING PLAN WORK PROCESS SUPPLY WORK WORK DEMAND 2006 Andrew Spanyi 8

9 What s Needed? A shift in conventional wisdom as it relates to: Strategy Leadership Engagement Growth M&A success 2006 Andrew Spanyi 9

10 Strategy Activities are the basics of competitive advantage. Overall advantage or disadvantage results from all of a company's activities, not only a few. (Porter, 1996) 2006 Andrew Spanyi 10

11 Engagement Conventional wisdom states that a firm needs to engage its employees in order to execute strategy. The needed shift in conventional wisdom is that process thinking can provide the needed context to engage the entire organization Andrew Spanyi 11

12 Leadership Know the business, insist on realism Set clear goals and priorities Reward the doers What We Need to Improve 2006 Andrew Spanyi 12

13 Growth Products/Services Markets Existing New Existing Flawless execution of product/service delivery Flawless execution of product/service delivery New Flawless execution of new product/service introduction Flawless execution of product/service delivery Flawless execution of new product/service introduction Flawless execution of product/service delivery 2006 Andrew Spanyi 13

14 M&A Success It s all about integration. On Day 1 of a merger and everyday that follows: customer orders are taken, purchase orders are placed, goods are shipped and received, invoices are issued, money is collected and bills are paid And all of the above is done flawlessly, safely, legally and on time Andrew Spanyi 14

15 Pictures Matter If the only picture you have of the firm is an organization chart, don t be surprised if that then dominates your leaders view of the business. CEO VP VP VP 2006 Andrew Spanyi 15

16 MANAGEMENT Executive Owner Process Owner SUPPORT processes: Customer Engagement CUSTOMER ENGAGEMENT Executive Owner Process Owner PRODUCT CREATION Executive Owner Process Owner Product Creation Management & Support Delivery DELIVERY Executive Owner Process Owner Source: Nokia 2006 Andrew Spanyi 16

17 Taking Action The minimum requirements are: The right metrics A plan Accountability for performance Enabling information technology 2006 Andrew Spanyi 17

18 Measures A company has little hope of providing value to customers if it doesn t even measure on a sustainable basis how it is currently doing in performing for its customers Andrew Spanyi 18

19 Measures P&L Impact Forecast Accuracy % Data Accuracy Production Master Cash-to-Cash Cycle Time Inventory Days of Supply % Faultless Invoices % Orders Received On Time to Demand Inventory Cycle Count Accuracy % Complaints Closed by Target Date Average Terms Average Days to Pay minus Average Terms Source: Air Products 2006 Andrew Spanyi 19

20 A Plan Process thinking can be a powerful force, as long as the firm applies it in a systematic and systemic way. That requires a plan which clearly answers the question Which of our core processes need to be improved by how much by when - in order to achieve our strategic goals? 2006 Andrew Spanyi 20

21 Accountability Companies struggle due to myopic measurement practices, and lack of accountability for cross-functional performance Andrew Spanyi 21

22 Enabling IT The role of information technology (IT) is fundamentally to enable the performance of an organization s business processes in creating value for customers and shareholders Andrew Spanyi 22

23 Summary Challenges for CFOs Must transform traditional thought models Measure what matters to customers The power of process management The systematic and systemic view Collaboration 2006 Andrew Spanyi 23

24 Thank you Andrew Spanyi Andrew Spanyi 24