Session 8: Process Critique
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1 CIS 4120 Fa12: Define/Innovate BP s Session 8: Process Critique Richard Welke Director, CEPRIN Professor, CIS Robinson College of Business Georgia State University Atlanta, GA Richard Welke 2002
2 Getting from As-Is to To-Be Metrics drive the transformation Value metrics Performance measures associated with the client s perception of value (tend to be external, effectiveness related) Process metrics Performance measures associated with the process owner s keyperformanceindicators (KPI s) for how well the process functions As-Is Service- Process As-Is V-metrics Submit screenplay Submit- to- Decide Decision to produce As-Is P-metrics What Service- we re doing Process Innovation & Improvemen t How we re doing it To-Be Service- Process To-Be V-metrics Submit screenplay Submit- to- Decide Decision to produce Innovatio n Improvemen t To-Be P-metrics 2
3 Things to note with critique The process (operational) and value (customer) metrics should justify your changes Your ROI (and business case) will be based upon these As you move through the critique/improve/ innovate stages following process discovery you ll likely: Discover new metrics Adjust definitions, measures and units of previous metrics Clarify which metrics are the true key performance indicators (KPI s) the two or three most important Question: What *is* a KPI (in operational terms)? Can you relate it to CSF (critical success factor)? Richard Welke CIS4120Fa12 Session 8: Process Critique 3
4 How BPM (should) approach improvement As-Is To-Be Set target based on to-be model Start by implementing the as-is model (with minor changes) Increment towards to-be gathering operational data and feedback Can use collected operational data to support Six-Sigma/Lean efforts 4
5 Improvement vs. innovation Improvement Innovation Level of change Incremental Dramatic Starting point Process (inside-out) Client (outside-in) Frequency of change Continuous Discrete end-point (can use increments to get there) Support needed Process owner Client owner Risk Moderate High (moderated if incremental used) KPI focus Operational metrics Client value metrics Substantially adapted from Thomas H. Davenport: Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press,
6 Shapiro s seven process critique questions 7R s of process innovation 1. Rethink 2. Reconfigure 3. Resequence 4. Relocate 5. Reduce 6. Reassign 7. Retool Adapted from: Stephen Shapiro The 24/7 Innovation Question How can activity frequency be reduced or increased? How would more information enable greater effectiveness? How would less information or fewer controls improve efficiency? How can critical resources be used more effectively? Example questions & apply when s Apply when.. An activity is non-value added but necessary There is low variation in the process or product There is high variability and low setup costs and times Higher accuracy is needed Greater segmentation would yield greater marketing effectiveness A high proportion of costs goes to data collection and controls The value received from information or controls is minimal Absolute accuracy is not necessary Utilization of key resources is low Critical resources are performing nonvalue-added or waste work 6
7 Shapiro s Re-Configure suggestions Question Apply when... R2.1: How can this activity be eliminated? R2.2: How can common activities be consolidated? They are low-value or waste activities Processes have a low value density Value received from activity is minimal (e.g., approving small amounts) Common activities are performed in multiple locations Common activities are performed inconsistently There are economies of scale (e.g., shared services) R2.3: How can reconciliation be reduced by putting quality at the source? Think client self-serve. R2.4: How can intermediaries and non-value added work be eliminated? R2.5: How can best practices from other industries be borrowed and improved upon? A lot of time is spent reconciling paperwork and correcting errors There is little accountability for errors Intermediaries add no value, and just relay goods, services When you have access to practices in other, similar organizations or processes (books, trade magazines, vendors, professional org s) 7
8 Shapiro s Re-Sequence suggestions Question R3.1: How can utilization predictions increase efficiency? R3.2: How can postponement increase flexibility? R3.3: How can concurrency reduce overall completion time? R3.4: How can the number of interconnections and dependencies be minimized? Apply when.. Accurate information on customer demand is available early Forecasting models have proved reliable Time compression is more critical than accuracy or inventory costs Product or service variations are relatively low Customers want customized products or services Inventory carrying costs are too high Forecasting models have proved inaccurate There are limited timing dependencies between activities Time compression is critical Rework is necessary due to late error detection Where there are bottlenecks, large queues, or frequent handoffs 8
9 Shapiro s Reduce suggestions Question R4.1: How can the frequency of the activity be reduced or eliminated? R4.2: How would more information enable greater effectiveness? R4.3: How would less information or fewer controls simplify and improve efficiency? R4.4: How can critical resources be used more effectively? Apply when.. An activity is non-value added but necessary There is low variation in the process or product There is high variability and low setup costs and times (e.g., small lot sizes) Higher accuracy is needed Greater segmentation would yield greater marketing effectiveness A high proportion of costs goes to data collection or controls The value received from information or controls is minimal Absolute accuracy is not necessary Utilization of key resources is low Critical resources are routinely performing nonvalue-added or waste work 9
10 Shapiro s Re-Assign suggestions Question R5.1: How can existing activities and decisions be moved to a different organization? R5.2: How can the activity be outsourced? R5.3: How can the customer perform this activity? R5.4: How can the organization perform an activity that the customer is already performing? R5.5: How can cross-training integrate and compress tasks? Apply when.. Another organization has skills or resources you lack You want different branding It is too difficult to change previous operating model or culture You don t perform the activity at world-class levels Another organization performs this activity at worldclass levels You have limited resources and want to focus on core competencies Customers want to be empowered to help themselves (self-serve) Certain customer segments are not profitable Costs need to be reduced The customer wants more value and/or convenience The organization wants to get closer to the customer Multiple tasks are needed to produce an outcome Processes are not complex enough to justify a specialist Only 20% of cases or less require special expertise 10
11 Shapiro s Re-Tool suggestions Question R6.1: How can the activity be automated? R6.2: How can assets or competencies be leveraged to create competitive advantage? R6.3: How can up-skilling, downskilling or multi-skilling improve the process? Apply when.. The current process is paper-based or manual and cannot be eliminated The activity suffer from errors, inconsistency, or reconciliation problems Greater transaction volumes are needed You have world-class competencies Growth potential in the existing business looks bleak Customer satisfaction is low (up-skilling) Multiple specialists are needed to produce an outcome (multi-skilling) Technology can create knowledge workers (down-skilling) 11
12 Improvement annotation suggestions Use color-coding of the process model to indicate where changes are to be made The As-Is would indicate which activities, gateways, etc. will be changed The To-Be would indicate where new activities, etc. are introduced Use different colors for different major objectives being achieved (i.e. the primary metric being affected) Use the same color for the As-Is and To-Be Use annotation to further highlight principle changes and/or objectives People will read a model more easily than a lot of text so make the models work for you! Richard Welke CIS4120Fa12 Session 8: Process Critique 12
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