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8/14/2019 VACO CPE SESSION I
1/25
10/22/09 1
PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
VACO CPE SERIESAugust 19, 2009
Benefiting From Business Process Management &Business Intelligence (Performance Management)
Consider that Business in this context = Enterprise
Lawrence E. Lackey
Process Guidance, inc.
Raleigh, North Carolina
1 (919) 606-4988
mailto:[email protected]:[email protected]8/14/2019 VACO CPE SESSION I
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
Session Topics Are Complementary
oSession One --- Utilizing Business ProcessManagement Techniques to Identifying and Resolve
Process Issues
oSession Two --- Utilizing Business Intelligence toSustain Improvement and Enable Adaption to
Changes
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
BUSINESS PROCESS MANAGEMENT (BPM) SESSION ONE AGENDA
FOUNDATIONoWHY DO WE NEED PROCESSES?oDEFINITIONSoPROCESS LEVELSoNAVIGATING THE CLUTTER
THE BPM METHODOLOGYoBPM TOOLSoSYSTEMATIC APPROACH
BPM SAMPLE CASE
BPM APPLICATION & ISSUES/ CASES FROM CURRENT EVENTS
DESIRED BPM INTERVENTION RESULTS
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
A business process is the method that an employee follows to perform some work-related task. If abusiness process isn't documented & taught, then employees invent their own processes to do theirwork.
Most managers don't take the time to properly determine what the most efficient processes are or
they don't take the time to communicate these processes to those who need them most.
The absence of systematic processes generally results in a fiasco, usually at the worst possibletime. And as the organization grows, the potential for miscommunication, catastrophes,inconsistency and inefficiency increases exponentially.
Why Do We Need Business Process?
If you do a lot of firefighting, you might be a process wreckIf you have lousy work quality, you might be a process wreckIf you have morale issues/ overtime, you might be a process wreckIf your customers are not happy, you might be a process wreckIf your boss is not happy, you might be a process wreck
Al Einstein ---- Insanity: doing the same thing over and over again and expecting different results.
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
BPM FOUNDATION
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
oPolicy --- Documented set of principles and guidelineso
oProcess --- An activity that converts inputs to outputs with added value that arethen inputs to the next process --- or are the end stateo
oProcedure Step-by-Step method(s) used to convert inputs to outputs withinthe processo
oAlignment Linking improved processes to achieve an organizations goals
DEFINITIONS
Business Process Management (BPM) is a systematic approach to helporganizations elevate the effectiveness of their operating processes toimprove internal control and operating performance across the Enterprise.
Business Process Management (BPM) is a systematic approach to helporganizations elevate the effectiveness of their operating processes toimprove internal control and operating performance across the Enterprise.
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
PROCESS LEVELS EXAMPLE
Revenue CycleRevenue CycleLevel One: Mission,Objectives & Strategy(POLICIES)
Level Two: High LevelView of Key Processes(POLICIES & PROCESSES)
Level Three: Top ofWorking Level Processes(Processes)
Level Four: FunctionalProcesses . Work beingdone
Level Five: FunctionalSub Processes stepsof work being done
Level Six: Procedures/Detailed Work Instructions
Book OrderBook Order
InvoiceInvoice
DeliverDeliver
BillBill
MailMail
Sales
Contact
SalesContact Collect
Collect
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
The Business Mgmt System Clutter
QUALITYCIRCLES
ISO9000
TQC/TQM
BALDRIGEBMA
CSQPTL9000EXCELLENCEPROGRAMS
SIXSIGMA
COMMON ELEMENTS --- Standards/ framework/ dataISO PRICIPLES & QUALITY MANUALBALDRIGE --- ATTRIBUTES/ ASSESSMENTSIX SIGMA --- DMAIC
SOX --- COSO FRAMEWORK/ COMPONENTS/ ASSESSMENT MATRIX
COMMON ELEMENTS --- Standards/ framework/ dataISO PRICIPLES & QUALITY MANUALBALDRIGE --- ATTRIBUTES/ ASSESSMENTSIX SIGMA --- DMAICSOX --- COSO FRAMEWORK/ COMPONENTS/ ASSESSMENT MATRIX
LEAN
KAIZEN
BPM FOCUSESON PROCESS
SUCCESS & DRAWSFROM OTHER
SYSTEMS
= SYSTEMATICAPPROACH
Based on work & conceptsOf Edward Deming
ORG.EFFECT.
COSOFRAMEWORK
(SOX 404)
IF IT LOOKS LIKE A DUCKALL ARE QUALITY SYSTEMS
SDLC
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
BPM METHODOLOGY
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
BPM TOOLS & BUILDING BLOCKS
oENTERPRISE OBJECTIVES/ EMPHASIS are used in process design --- ensurethat processes support the enterprises direction and that policies are properlyaligned.o
oBUSINESS RULES define how a particular transaction or activity will beexecuted within the process --- process change may require a rules change ---
generally built into an automated portion of the process.o
oPOLICIES AND PROCEDURES are the key building blocks for process success.Procedures define the operations within a process --- activities that convert theinput into an output.o
oPROCESS METRICS provide the level of process effectiveness generated by
the process/ procedures --- derived from Business Intelligenceo
oVISIO, SMARTDRAW or other process mapping tools that are used to depictWORKFLOWS and connections between workflows --- show manual & automatedsteps --- enable view of critical process steps, control risk points, duplicated work &process/ work constraints. If you cant draw a picture ----o
o
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
PROCESS OBJECTIVES/AS IS AND FUTUREPROCESS STATES
WHAT IFS/ WALKTHROUGHS/SIMULATE VARIABLES PRIOR
TO EXECUTION
IMPLEMENT DESIGN:TRAINCHANGE MGT
TESTGO LIVE
MEASUREEFFECTIVENESS:INDIVIDUAL PROCESSESAFFECTS ON OTHERSCOMPARED TO PLAN
USING PROCESSMETRICS TO FINE-TUNE AND FURTHERIMPROVE THE DESIGN
BPM SYSTEMATICAPPROACH
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
APPLYING THE BPM METHODOLOGY
Meet wi th
management to
Identi fy cri t ical
goals/ objectiv es/
strategies
Meet wi thprocess
ownersto explain
the project&
identi fy goals&
objectives
M eet wi thpro ce ss
operatorsto discuss
project& interview for
design information
M ap A S-IS proc ess from
end-to-end, identif y
inputs, docum ents,
procedures, weaknesses
& opportuni ties
Create theoretical
TO-BE proces s that
addresses risks&
ineff ic iencies---
identify required
documentation&
create Process
Metrics
Aligns withNext level up?
YES
NO
Aligns withNext level up? YES
NO
Aligns withNext level up?
YE S
NO
Test theoretical
process wi th
variables/ what-ifs
& walk through
with operators
Optimize the
process--- follo w-
up on control r isks
& eff ic iency
opportunities
Move on to the
next process
testing outputs
from current one
Monitor process
resul ts--- ac t on
less than expected
metrics/ obvious
issues
Execute/
Implement the new
process---
complete process
docs, train s taff,
tes t& go l ive
Does design needmods or start-over?
N O
YES
Next Process
P R O C E S S O W N E R S& O P E R A T O R S
INVO LVED IN ALL ST EPS- - -EXPERT S
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
BPM SAMPLE CASE
Assignment is to help an enterprise identify and resolvebilling issues
Assume thatInitial meetings with management & staff havebeen completed and we are ready to begin the processassessment
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
Revenue CycleRevenue Cycle
Book OrderBook Order
InvoiceInvoice
DeliverDeliverSales
Contact
SalesContact Collect
Collect
SAMPLE TOP LEVEL FLOW
REVENUE CYCLE OBJECTIVES:oPROVIDE AN EXCELLENT EXPERIENCE FOR
THE CUSTOMERoMEET/ EXCEED PROFITABILITY COMMITMENTSoPROVIDE A SATISFYING WORK ENVIRONMENTFOR EMPLOYEESo
HIGHLEVEL
OBJECTIVES
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
Invoice Process As IsInvoice Process As Is
Billing Objectives are to:
Bill on a timely basis --- CSAT & &profitability100% invoice accuracy --- CSAT& collections (cash flow)Increase throughput efficiency toallow more analysis time for staff
Billing/Receivab
lesSystem
OrderInput
ERRORS? PrintInvoices
NOSample forAccuracy
Stuff & Mail
Analyze/CorrectRejects
YES
ALLCORRECT
ED
YES
NO
Escalate toIT for help
I/ FACE
Sales Staff
CustomerMaster
ProductMaster
PriceCustomerInfo
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
AS IS Process Metrics
OBJECTIVEJuly 2009Results
ProcessObjectives Variance
Timely Billing (AverageDays after Event) 6 1 (5)
Invoice Accuracy (#disputes or calls) 15 0 Awful
Billing Efficiency(% 1st time pass through) 85% 95% (10) Pts
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
Billing Efficiency(% 1st time pass through)
85% 95% (10) Pts
IDENTIFY ISSUES15
Error type analysis & interviews with billing & IT revealed the following:1.On average, 65% of errors result from sales staff order input mistakes2.On average, 15% of errors result from customer master not being updated promptly3.On average, 15 % of errors result from product master not being updated promptly4.The remaining 5% of errors result from miscellaneous causes
JULYRESULTS OBJECTIVE VARIANCE
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
TO BE PROCESS RECOMMENDATIONSSHORT TERM SOLUTION RECOMMENDATIONS:
Issues --- Financial management holds billing clerks responsible for efficiency eventhough most errors occur in upstream processes. The clerks say that they can fix theissues faster than upstream staff.
Billing clerks are fixing sales staff errorsBilling clerks are chasing and with IT are correcting customer information errors --- sales isresponsible for maintaining accurate information in the customer master databaseBilling clerks are chasing and with it are correcting product information errors such as currentprices --- product management staff are responsible for maintaining the product master database
Recommendations --- Upstream process owners have no skin in the game. Adjust
billing efficiency for upstream caused issues and route errors to owners by email ortrouble ticket. Financial management should work with upstream counterparts to includecorrections in process owners performance objectives.
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
TO BE PROCESS RECOMMENDATIONSLONGER TERM SOLUTION RECOMMENDATIONS:
Issues --- Product and customer information exists in the billing system as wellas in the master databases. Invoices reject when the data is not in agreementcreating the rework done by billing and the upstream processes. Thesedatabases have evolved over time using different formats and logic withresulting interface issues.
Recommendations --- Management should consider establishing a datawarehouse as the single repository for critical information. An integrated ERPsystem would provide the most benefit.
Next Steps for Shorter & Longer Term Recommendations --- Slide 11
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
BPM Applications
Business Process Management methodology is applicablefor all enterprises that can benefit from processimprovements:
oCommercialoNon-ProfitoMedicaloGovernmentoEducationoMilitaryoReligious
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
Current Process Issue Examples
State Government:v
State Employee Insurance ShortfallvParole System ControlsvDHHS Medicare Accounting Errorv
DEFER UNTIL SESSION TWO
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
WHAT PROCESS IMPROVEMENT LOOKS LIKEoStrengthened Internal Control and Risk ManagementoQuality & Efficiency at Higher LevelsoCustomer Satisfaction Enhancedo
Employee Morale ImprovedoEmployees Trained in BPM Techniques --- Sustaining
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
SOME CLOSING CONSIDERATIONS
Process improvement requires tops down support tobe successful
+ Influence process owners/ add to objectives+ Visible management priority+ Provide resources
Processes are owned and managed by people but manytimes, individuals become the process. A consistent, sustainableprocess by definition isperson neutral. A process is tailored tomeet enterprise objectives, not to fit the owner. In the absence ofdirection, individuals will invent their own processes +-The BPM advisor must be prepared to add change managemeelements to the BPM project plan.
CHANGE MANAGEMENT
REQUIRED FOR SUCCESS
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PROCESS WITH A PURPOSE
PROCESS WITH A PURPOSE
END OF SESSION ONE