1 The Role of the CIO and IT in the Matter of Process
Improvement Tom Coleman, CBPP Chief Information & Process
Officer Process Owner, Strategic Planning ABPMP Chicago Meeting
Sears Holding Corporation 3333 Beverly Road Hoffman Estates, IL
October 14, 2010
Slide 2
2 ABPMP Agenda Sloan introduction Strategic issues Role and
position of process BPM toolkit / methodologies Role of IT
Results
Slide 3
3 Sloan Company Overview 104 year old company Privately held,
mid-sized Mfr. of specialized plumbing products Primary System:
Enterprise Applications
Slide 4
4 Major Sloan Locations Illinois (HQ, Design Center, Mfg, DC)
China (Design Center, Mfg) Arkansas (Foundry) Massachusetts (Design
Center, Mfg) Michigan (Design Center, Mfg) Mexico ( Mfg, DC)
California (DC) Pennsylvania (DC) Regional Offices
Slide 5
5 Sloan Products
Slide 6
6 ERP Success Distribution Degree of Success 1 2 3 4 5 6 7 8 9
10 Number of Companies Bell Curve X
Slide 7
7 ERP Success Distribution ( bi-modal curve) Degree of Success
Interpreted from a drawing done by Dr. Hammer in February 1998 1 2
3 4 5 6 7 8 9 10 Number of Companies Functional Focus Process
focus
Slide 8
8 2002 Process Direction at Sloan Sloan drivers during 2002
strategic planning 1. E asy T o D o B usiness W ith (ETDBW) 2.
Focus on customers and outcomes 3. Define goals in customer terms
4. See work in end-to-end terms (processes) 5. Focus beyond
continuous improvement to process design 6. Use metrics for
improving, not just accounting 7. Form a collaborative, team-based
organization 8. Think outside the box 9. Embrace a vision beyond
enterprise boundaries 10. Continuously learn Move towards becoming
a lean process enterprise An enterprise in which all work is
thought of, designed, performed, and managed as process work by
everyone.
Slide 9
9 NPDI New Product Development Process DGP Demand Generation
Process STP Source-to-Pay Process OAP Order Acquisition Process OTC
Order-to- Cash Process SPP Strategic Planning Process EPM Employee
Performance Mgt Process GQA Global Quality Assurance Process
S&OP Sales & Oper Planning Process MDM Master Data Mgt
Process ECM Engineering Change Mgt Process PCM Shop Process Change
Mgt Process CSP Customer Support Process AOP Annual Operating Plan
(Budget) Process BPM Business Process Mgt Process Strategic
Governance Process Governance Processes Core Processes Enabling
Processes 2002 Sloan Enterprise Process Model W WW
Slide 10
10 The Proliferation of Change Initiatives and Programs M&A
BSC Reengineering SoPK
Slide 11
11 Sloan Lesson Outbound Logistics Sub-process Order-to-Cash
Order Acquisition New Product Dev Customer Support Demand
Generation Strategic Planning Engineering Chg Mgt Master Data Mgt
Plant Maintenance Employee Perf Mgt Procure-to-Pay Sourcing
Business Process Mgt
Slide 12
12 Sloan Lesson Outbound Logistics Sub-process Order-to-Cash
Order Acquisition New Product Dev Customer Support Demand
Generation Strategic Planning Engineering Chg Mgt Master Data Mgt
Plant Maintenance Employee Perf Mgt Procure-to-Pay Sourcing
Business Process Mgt 12 Processes 6 Sub-processes each (avg.) 72
sub-processes ------------------------------------------------- 5
months dev each (avg.)
------------------------------------------------- 360 month effort
(1 team) 30 years of work (1 team)
Slide 13
13 Do we believe the only way to reach a global optimum is by
insuring local optimums? Source: E. Goldratt
Slide 14
14 Sloan Process Struggles The sum of the local optimums is NOT
equal to the global optimum (Eliyahu Goldratt) Incrementalism is
innovations worst enemy (Nicholas Negroponte) Chronic good enough
incremental investments deteriorate long-term market position
(Gartner)
Slide 15
15 Innovation is the transformation of a business process,
market offering, or business model to boost value and impact for
the enterprise, customers, or partners. Forrester Research
Slide 16
16 So What Kind of Change is Needed? CEOs thoughts on change
13% see little change 22% see moderate change 65% see significant
change Sloan executive: Transmogrification! How successful are you
at change? 15% very successful 32% successful 33% some success 20%
little or no success or no experience Source: IBM 2006 survey
Slide 17
17 Order To Cash Prospect to Order Product Development (NPD)
Goals Strategy Objectives Customer Support Old and New Wheels of
Competitive Strategy 1980 Source: Michael E. Porter (Competitive
Strategy) 2005 Source: T. Coleman Goals Strategy Objectives Finance
MfgMktg Sales Service HREngineering Other 1980 2005 Functions
Slide 18
18
Slide 19
19 BPM is a management discipline that treats processes as
assets that directly drive enterprise performance through
operational excellence, business agility, and strategic
differentiation. What is BPM at Sloan?
Slide 20
20 NPDI New Product Development Process DGP Demand Generation
Process STP Source-to-Pay Process OAP Order Acquisition Process OTC
Order-to- Cash Process SPP Strategic Planning Process EPM Employee
Performance Mgt Process GQA Global Quality Assurance Process
S&OP Sales & Oper Planning Process MDM Master Data Mgt
Process ECM Engineering Change Mgt Process PCM Shop Process Change
Mgt Process CSP Customer Support Process AOP Annual Operating Plan
(Budget) Process BPM Business Process Mgt Process Strategic
Governance Process Governance Processes Core Processes Enabling
Processes 2002 Sloan Enterprise Process Model W WW
Slide 21
21 DGP Demand Generation Process OAP Order Acquisition Process
STP Source-to-Pay Process OTC Order-to- Cash Process CSP Customer
Support Process SPP Strategic Planning Process EPM Employee
Performance Mgt Process BPP Business Planning Process QAP Quality
Assurance Process S&OP Sales & Oper Planning Process MDM
Master Data Mgt Process ECM Engineering Change Mgt Process PCM Shop
Process Change Mgt Process NPD New Product Development Process AOP
Annual Oper Plan Process BPM Business Process Mgt Process Strategic
Process Governance Processes Core Processes Enabling Processes 2010
Sloan Process Model
Slide 22
22 Integrated Processes (S&OP Example) Strategic Planning
Process Order-to-Cash Source-to-Pay Processes Demand Gen. Order
Acquisition Customer Support Processes New Product Development
Process Business Planning Annual Op Plan Processes Org Design Chg
Mgt Recruiting/On-brd Processes Sales & Operations Planning
Process
Slide 23
23 Process Design Process Implementation Process Improvement
BPM Business Process Management (Process Lifecycle Mgt) Monitor
& Measure
Slide 24
24 The BPM Toolkit SoPK BSC
Slide 25
25 Business Process Management (BPM) Process Lifecycle
Management Process Redesign Sustaining Improvement Process Redesign
Process Improvement
Slide 26
26 LEVEL 0 DIAGRAM VERSION
Slide 27
27 Process Out of Control (May require SI/CI)
Slide 28
28 Process In Control (May require redesign) Process is in
control but is not close to delivering the desired performance
Slide 29
29 LEVEL 0 DIAGRAM VERSION
Slide 30
30 Sloan Business Process Design (AKA BPR: Business Process
Design/Redesign) Symptoms, diagnosis, cure, treatment
Slide 31
31 Sloan Levers of Transformation Integrated with Sloans
Strategic Plan Process Redesign or Improvement Policies, Rules,
Procedures Computing & Technology Organization Structure Change
Management Roles & Job Changes Paradigm Shifts Communications
Knowledge Facilities
Slide 32
32 LEVEL 0 DIAGRAM VERSION
Slide 33
33 A Continuous Improvement Process (Incremental / Sustaining
Improvement) Define Problem Measure Problem Analyze Problem
ImproveControl From BPM Process D M A I C (other tools TOC, PDCA,
Lean, etc.) Ad hoc Improve- ment
Slide 34
34 Summary Improvement Types Process Design / Redesign
End-to-end process focus; pieces in context Use the as-is process
to understand not improve Focus is on new process design (to-be)
Tops down process decomposition Is always strategic Sustaining
Improvement Focus on pieces of an end-to-end process Use the as-is
process to zoom in on problems Focus is on root cause analysis
& problem solving Bottoms up work Often is not strategic
Slide 35
35 16 Best Practices for BPM 1.Strategy drives process 2.Focus
is operational excellence and strategic differentiation 3.Strategy,
process, resources, lead & lag metrics are aligned 4.Process
design is end-to-end and delivers the value proposition 5.Zoom in
to improve; zoom out to design 6.Methods used for improvement &
design differ 7.A toolbox of change and process methods is used
synergistically 8.For transformation, all the levers of holistic
change are engaged 9.Functions are morphed horizontally to be
process friendly 10.VPs have Executive Process Owner (EPO)
responsibilities 11.Powerful Process Owners are key leaders 12.A
Process Transformation Office is formed with BPM governance 13.A
Process Council of top executive lead 14.The best and brightest are
on process teams 15.Time is taken during process work for learning
& growth 16.Dont implement systems; implement processes
Slide 36
36 Emerging Role of the CIO and IT
Slide 37
37 CEOs Greatest Concerns Source: The Conference Board -- 2006
Survey of 658 CEOs and Chairmen
Slide 38
38 CIO Survey Says Greatest impact areas 1. Improving Business
Processes 2. Reducing enterprise operating costs 3. Increased use
of information/analytics 4. Improve workforce effectiveness 5.
Attracting and retaining new customers 6. Managing change
initiatives 7. Creating new products and services 8. Targeting
customers and markets 9. Consolidating business operations 10.
Expanding customer relationships 11. Supporting regulation and
compliance 12. Creating new sources of competitive advantage
Source: Major Technology Research Company 2010
Slide 39
39 Support corporate strategy and the customer value
proposition by helping to design, develop, and deliver world-class,
inter-enterprise business processes and support technologies Sloan
IT Vision Drive CEO Update:
Slide 40
40 IT Roles at Sloan 2000 --- Business Need --- IT viewed as
ineffective 2000 Traditional IT Process Improver Process Innovator
Entrepreneur Automation Continuous Improvement Process Redesign
Breakthrough Innovation IT Role:
Slide 41
41 IT Roles at Sloan 2003 --- Business Need --- IT viewed as
nuisance By some execs 2003 Traditional IT Process Improver Process
Innovator Entrepreneur Automation Continuous Improvement Process
Redesign Breakthrough Innovation IT Role:
Slide 42
42 IT Roles at Sloan 2004 --- Business Need --- Traditional IT
Process Improver Process Innovator Entrepreneur Automation
Continuous Improvement Process Redesign Breakthrough Innovation IT
Role:
Slide 43
43 Desired IT Role from Sloan CEO --- Business Need ---
Traditional IT Process Improver Process Innovator Entrepreneur
Automation Continuous Improvement Process Redesign Breakthrough
Innovation IT Role:
Slide 44
44 Conventional System Development Vs. Process Design
Development Conventional Project Preparation Business Blueprint
Realization Final Preparation Go Live & Support Sloan Process
Design Mobilization Diagnosis Design Development Implementation
Post Implementation Focus: -No change mgt -As-is process improved
-Automation -Limited learning -No org and job changes -Low ROI
-Functionally focused team -Functional bosses rule Focus: -Massive
change mgt -As-is process replaced -Innovation fully engaged
systems -Extensive learning -Org and job changes -High ROI
-Customer focused team -Customer is the boss
Slide 45
45 IT Considerations Tools alone do little to help the
organization An IT organization can gain high process credibility
by removing technology as THE major discussion point IT is usually
knowledgeable about whats possible Often IT is the only function
that sees across the entire enterprise The value of IT is
proportional to how integrated company systems are to core
processes in support of the value proposition IT should not define
itself by its tools
Slide 46
46 IT Must Dos IT must have its technical house in order IT
must step out of traditional roles IT must understand the change
imperative whether it is implicit or explicit IT must free itself
from keeping the lights on and other incremental work IT must
connect the appropriate methodology to the change imperative (e.g.,
process improvement, process design, PMO, CM, etc.) In many
organizations, IT must become process management leaders
Slide 47
47 IT Transformation CPO?CIO CIPO Version 3: ? BT: Business
Technology is a term first used by Forrester Research
Slide 48
48 IT Transformation CPO?CIO CPO? Version 3: ? BT: Business
Technology is a term first used by Forrester Research
Slide 49
49 If you are going to be successful with SAP you need to
forget about SAP. Tom Coleman 1996
Slide 50
50 Sloan Process Design Update 2004 Strategic Planning Process
(SPP) Master data Management Process (MDM) Engineering Change
Management Process (ECM) 2005 New Product Development Process and
Introduction (NPDI) 2006 New Product Development Process and
Introduction (NPDI) Tool Management Process (TMS) 2007 Customer
Support Process (CSP) (Phase 1) Employee Performance Management
Process (EPM) (Phase 1) 2008 Global Quality Assurance Process (gQA)
Order-To-Cash Process (OTC) Order Acquisition Process (OAP) 2009
Sales and Operations Planning Process (S&OP) Source-To-Pay
Process (PTP) 2010 Demand Generation Process (Planned) Innovation
Process (IP)
Slide 51
51 Sample Sloan Process Results Strategic Planning Process
(SPP) Generic strategy discussions to a full mgt process with the
BSC Employee Performance Mgt (EPM) SPP driving goals &
appraisal throughout the company Customer Support Process (CSP) XX%
call abandon rate reduced to X% New Product Development (NPD)
Multi-stage NPD with development silos eliminated to co-located
teams with stage-gates Order Acquisition Process (OAP) Automate
pricing/approvals; reworked credit process Quality Assurance
Process (QAP) Sigma/COQ levels; BPR/CI processes designed &
deployed Master Data Mgt (MDM) XX day SAP MDM loads to