Show me the money!

Introduction

The 2009 Standish research shows that only 32% of IT projects are successful. Which means that the new capability is successfully “installed”. But the sad reality is that in a large number of cases this new capability is not used the way it was intended. Thus only a fraction of the desired benefits (or value) are realised. So when the CEO says, “show me the money” or the value the CIO is often caught short.

There are many reasons for this failure.  There may be a lack of understanding about the true intent for the change. Competing agendas and conflicting priorities may dilute the focus. Then there is resistance from the people affected to adapt new behaviours and processes. A key reason is that organisations tend to put all the rigour and energy in the project “installation” and almost none for the benefits realisation post-installation.

Instead of the “installation” focus, the modern CIO needs to adopt a “realisation” or value mindset. With a realisation focus, CIOs ensure that project success is judged by the value created. This article suggests steps CIOs can take to instil a benefits management focus and show the “money”.

Executive Summary

Organisations are good at figuring out what must be done to address their business challenges and capture the opportunities. IT organisations are getting better at delivering technology capabilities to address these challenges. A lot of energy and capital is invested in developing these technology solutions. The plans appear sound. Why is it then that the outcomes fall significantly short of the original ambitions? In today’s markets, CIOs and other leaders cannot afford to spend large amounts of money and risk their reputation just deploying projects, when the success now depends on their ability to manage the change and actually getting the returns on investment (ROI).

Benefit realization mindset

Figure 1 – Realisation mindset

Getting a sustainable ROI requires carefully managing benefits realisation as well as managing the human aspects of the change. The benefits management process provides the framework for blended investment programs that integrate technological change, organisational change and business process design within a common context.

The purpose of the benefits management plan is to identify and organise all activities such that the promised benefits are achieved. It consists of benefits identification, benefits planning, monitoring, realisation and review. A realisation mindset guides the entire project/ program execution. Surveys show that organisations without well-defined benefits planning processes are significantly worse at getting project ROI.

All major changes require shifts in the way people (staff, suppliers, competitors and customers) think, manage and act. These changes will not just happen by themselves. They must be planned and carefully managed. The bigger the change, the larger is the impact and the disruption and resistance to the change.  If people don’t “buy-in”, the change is likely to fail.  In technology enabled changes there is a tendency to focus on the technology side of the project and under-estimate the human change dimension.

Keeping track of the “money”– Benefits Management Process

A benefits management plan is a critical tool for focussing the mind on the value.. It has five stages.

  • Benefit Identification is about clarity around the intent of the change. Benefits identification determines project scope.  The sponsors must be clear about what beneficial outcomes (or value) they want to obtain. Where the benefits will occur? When? Who will receive these? Who is responsible for the delivery of benefits? How the project outcomes link to the value?

Figure 2  – Benefits Management Process

  • Benefits planning stage covers all steps needed to leverage the project outcomes to realise the desired value. (E.g. The project may deliver new technology capability, people need to be trained, new processes and structures may need to be implemented, product/ service features need to be changed, new marketing programs may need to be devised.) In planning evaluate the organisation’s capability to execute and capacity to absorb the change. Also consider the various risks and capability to govern and support the change.
  • Benefits Monitoring covers many stages of the technology development / implementation process. It ensures that the benefits are not diminished during the project life cycle.
  • Benefits realisation should be performed from the time changes begin to be implemented right through to routine operations stage. It would indicate if more actions are necessary to realise the benefit or whether further benefits are achievable.
  • Benefits review captures on lessons learned.

Ten success factors for realising the value

  1. Active Sponsor – Effective management requires a single leader who is visibly committed to success and accountable for realising the benefits. Major changes need senior level executive leadership. Active leadership means selling ideas repeatedly and being there to overcome obstacles.  The sponsor should be accountable.
  2. Clear Intent – There must be clarity about the reasons for the change. What “pain” this initiative will address? How well do key people share the intent?  Is it aligned to the strategy? What would success look like? Is the “price to be paid (dollars, political, organisational)” justified? A lack of clear and shared intent at the beginning would invariably result in a weak or failed initiative.
  3. Business Case – There are many examples of weak business cases that have just sufficient funding for the technology solution. All the post implementation activities and resources are assumed to come from the “business as usual” budget. Without adequate funding and resources for change management in the business case, benefits realisation would be suboptimal.
  4. Full life-cycle governance  – In business changes are to be expected.  The business case will change when the circumstances change. At agreed project stages or upon discovering major variations, both the costs and benefits should be reassessed. If project costs are higher, ask if is it still viable? Should more benefits be found? Should the scope be reduced? Remember that the business benefits are the reason for the project and not technology installation.
  5. People – People are the greatest variable in a change. Systems are at times easier to change than people. Benefits realisation will depend on transforming the way people think and operate. Don’t underestimate the difficulties employees will have in learning to work with new systems that require new skills and new ways of thinking. Take the views of affected people into account early. Try and understand reasons for their resistance and develop action plans to address these. Align consequences and rewards with benefit realisation.
  6. Capacity for change – Do you really know your organisation’s capacity for change? Do you have executives who have a track record of leading the change? Are there are too many changes going on in the organisation? Be truthful with yourselves about what the capacity for change is and what is realistic and then plan accordingly.
  7. Relevant measurement – Measurements must clearly demonstrate how investments contribute to the beneficial outcomes. They must support decisions regarding progressive allocation of funding and resources via agreed “stage-gates”. Secondly, measurements help adjust the benefits path to changing environments. Techniques such as “results-chain” would help choose the right measurements.
  8. Clear accountability – Assign clear ownership to each of the measurable outcomes including project milestones and outcome measures.
  9. Independent governance – Importance of independent governance cannot be overstated. Investment governance board should ideally also monitor benefits realisation. This creates transparency around investment and the returns on investment, provides due diligence on the change initiative and holds sponsors accountable for the benefits. It also helps create peer pressure and reinforces good governance. Experience suggests leaving the entire governance to the sponsor alone is a mistake. Sponsors are known to downplay mistakes and to overstate success.
  10. Value Management Office (VMO) – A VMO serves two purposes; first it provides expert advice and tools to the sponsors for assessing value (validating business cases). Secondly, it helps monitor program progress, and provides rigorous value assessments to the investment governance board. A VMO, like a Project management office, would promote consistency in the approach as well as promoting transparency via reporting.

Benefits management is process is applicable to all initiatives and not just for technology. But changing the organisations mindset from installation to realisation is neither a quick nor an easy process. It requires an ongoing commitment from the top. This mindset enables a big picture view of capital investments and enhances ROI.

For more information on how to create a realisation mindset in your organisation please contact the author.

Fad-free performance management

IT magazine articles and whitepapers regularly publish articles such as, “Building a high performing team”, “Reinventing the workforce”, “Transforming the organisation” and the like. These articles have stories from large (usually overseas) companies where the CIO has turned an under performing organisation around (with the help of a brand name consulting firm with their brand name methodology). Local CIOs and IT managers read these articles and begin to believe they too need a major transformation program in order to turn their IT organisation into a “world-class” “high-performing” organisation.

Amidst all this hype about transformation and reinvention IT organisations forget to check if the organisation is performing the basics of people and performance management effectively. I have seen several IT organisations in which managers and team leaders are unclear about the requirements of their jobs. Apart from the mandatory annual performance review these employees are not given any feedback about how well they are performing their roles. If you ask an employee how their role supports the IT departments goals (or business goals) they often have no idea.

IT managers give many excuses as to why their employees have little understanding of their roles. Firstly, as IT managers come from technical ranks they have no people management training. Secondly, IT managers don’t like to have difficult conversations with their staff. Thirdly, many managers themselves are not clear about the business and IT strategy goals. No matter what the excuse, the end result always leads to the same outcome, an under-performing IT organisation! So what can be done? Here are some thoughts on how CIOs and IT managers can begin to manage performance.

IT managers give many excuses as to why their employees have little understanding of their roles. Firstly, as IT managers come from technical ranks they have no people management training. Secondly, IT managers don’t like to have difficult conversations with their staff. Thirdly, many managers themselves are not clear about the business and IT strategy goals. No matter what the excuse, the end result always leads to the same outcome, an under-performing IT organisation! So what can be done? Here are some thoughts on how CIOs and IT managers can begin to manage performance.

Five fad-free steps

Here are five fad-free steps to get to high performing teams. These are:

  1. Clarify the role,
  2. Understand customer needs,
  3. Improve things you manage
  4. Develop your team and
  5. Perform the role in the right way

1. Clarify the role

Every organisation and role exists to perform a function. At a basic level, the IT group normally exists to enable business by providing effective technology solutions that support business activities. The IT group is also responsible for running the technology operations in a cost effective, reliable and secure manner.  Each function within IT must directly or indirectly support these goals. Some teams focus on understanding business goals and needs; designers design solutions that are fit for purpose, developers build these solutions and operations staff ensure these solutions run reliably. Thus, understanding the role purpose is really not that complicated.

Most organisations have job descriptions of some kind. If they don’t, then the first step is to create one. I believe every job function, especially management roles, should meet the needs of the customers, improve people/process/technologies and work and behave in the ‘right way’ (team work, respect, enthusiasm etc). Sounds obvious don’t it? However, you would be surprised how many people don’t understand these expectations because many job descriptions fail to make these expectations clear.

2. Understand the needs of the customers

Every role has a customer. It exists to serve someone. Even the managing director has to serve the shareholders/ board. Most IT roles have internal customers. However, with the emergence of e-commerce, Internet banking and similar services, IT in fact services ‘real’ business customers. In addition to the direct customer needs, IT roles also need to understand the organisation’s needs. These are typically expressed via strategies, values, standards and architecture/ design principles.

Many IT people can become so inwardly focussed (because of processes, departments and skill-sets) that they forget that their role is to serve the needs of the customers. For infrastructure staff, their customers could be applications teams and for architecture staff, designers. Identifying who the customers are and ensuring that their needs are understood is the key to good performance.

3. Improve ‘things’ that you manage

Every manager is responsible for people, processes that control how the work is done and technology (e.g. applications and infrastructure assets). These elements together determine the effectiveness of service delivery and level of customer satisfaction. Even technicians and developers have systems that they look after, manage, fix, control.

Everyone is expected to improve the assets that they manage. This is fundamental part of a professional’s job and not an optional extra! There are many ways improvements can be made such as keeping applications maintainable, improving flexibility, reducing running costs, streamlining processes and improving service levels.

What if employees don’t have the authority or resources to make these improvements? At the very least, employees are expected to show how ‘things’ are better this year than the last and what they have done to make a difference, given the resources available to them. Ultimately, it is the role of managers to convince the ‘powers-to-be’ that improving the assets they manage is an integral part of the job of each employee and support the employees in this endeavour.

4. Develop your team

Improving their team and the people they manage are arguably the most important outcomes managers should be expected to demonstrate. Helping people grow, helping them improve their skills, giving them opportunities learn, gain more experience and deal with new challenges is not only important for the organisation but also for the manager. It helps the manager do their own job better and make a difference.

Developing people involves balancing individual aspirations and capability with the goals of the organisation as well as seeking development opportunities and empowering staff (i.e. giving them the tools and resources to succeed) where appropriate. The key to successful empowerment is to give staff information about the mission, objectives, strategy and dynamics of the organisation so that they can make the right decisions. Successful empowerment also involves providing support for staff if they fail, so that they can learn from their mistakes.

The key to managing for performance is to identify talent in employees and provide the right opportunities and rewards for these employees to take on more responsibilities. One organisation I knew measured managers on whether they were “exporters” or “importers” of talent.

5. Performing the role in the ‘right way’

Many IT people see their role in as being purely technical because the technical part of the job is what they are most comfortable with. However, customers and others expect more from IT staff than just technical expertise. Customers want better service and better solutions. They want IT staff to be responsive, reliable, collaborative and demonstrate team work. Many job descriptions and managers just assume that their staff know ‘the right way’ and don’t set correct expectations or address customer service in performance feedback discussions. This does not have to be a complicated process. I have seen some managers discuss these issues regularly in team meetings in which key customers and peers are invited to share their expectations. As a result, IT staff is encouraged to develop team values and behaviours.

Managing for performance

Most people want to do a good job. It is the manager’s role to clarify what a ‘good job’ or good performance means and how it would be measured. Clarifying the role expectations is the first step in managing for performance. Putting this into practice involves effort i.e. not just in formal performance reviews, but also in regular interactions with their teams.

Managing for performance need not be difficult. One does not need fads or big transformation programs or big slogans to get it right. People see through these big words when actions on the ground fail to match the slogans and strategies.

Keep it simple and fad-free! Get the basics right and ‘high performing teams’ will emerge.

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Beyond service management

Introduction

ServiceMost of the IT service organisations have adopted ITIL or similar service management disciplines. Service management requires new processes for users. Service is provided only after a service request is raised, new initiatives need a business justification, service level agreements need to be in place, and the list goes on. Any experienced IT manager would tell you that certain disciples are necessary to be able to deliver reliable and cost effective IT service.

Many IT groups get so bound by these processes and rules that they forget about the end customer satisfaction. Some customers find these processes cumbersome but just stop complaining. Others find the process of justification too difficult and their legitimate needs are not met. Here are some approaches that I have used to move from service management towards service excellence and high customer satisfaction.

Understand the business

IT organisations exist to support and enable the business. If IT staff, and I am not just talking about the business analysts, don’t understand the business, the ability of IT to provide excellent service is hampered. In the case of a communication failing to branch or store, I have seen IT staff being entirely focussed on service standards for their silo without having any idea of the real impact it is having on the business and customers. Improving IT boffins’ the business understanding is not difficult, but it does require a sustained effort. Especially when the IT group is large and not co-located with the users.

Visit the key operating areas

Regular visits by small IT teams to see the business operations is a must.  The idea is to meet the actual users of the systems and technology. See how well the systems and technologies support the staff do their job. Are they reliable? What happens when systems fail or are slow? Are the systems too difficult to use? Is there a training issue? The idea is to learn what is happening and to avoid the temptation to provide instant solutions.

Learn the business language

Every business has its own terminology and language. Teach IT staff the basics e.g. accounting, supply chain terminology or investment banking. Common language creates a greater understanding, breaks down silos and develops empathy.

Business analysis skills

IT staff can have a tendency to provide instant solutions even before they fully understand the problem. Learning how to ask questions, understanding the situation fully as well as gathering and analysing facts would ensure you are solving the right problems and providing good solutions.

Operational Account Management

The concept of account relationship managers is not new. Typically account managers focus on strategy and other big-ticket issues because they usually don’t have the time or desire to be bogged down with smaller issues.

Focus on operational issues

Use experienced service leaders to proactively focus on operational issues that affect the performance of the operating units. Assign them a small budget to authorise minor equipment upgrades or other improvements that address niggling issues. Larger issues would be escalated to relationship managers.

Example:  In one organisation, remote branches had very old PCs and others had a very slow network. Either user never reported these problems or they may have reported these problems in the past but no action was taken. The PCs were replaced from the refresh budget and the lines were upgraded at a minimal cost. This demonstrated that IT cares about user needs and is proactive.

Operational account managers will regularly meet with team leaders and managers from business areas to understand their problems. They will (along with team visits) identify training gaps, issues with aging equipment, systems usability issues and other process issues. At times, they will act as user champions inside IT to improve level of service and customer satisfaction.

Service Desk

Most organisations now have a central IT service desk. Using a service desk as a single point of contact for routine service requests is an established practice. Here are a few tips to improve the service desk:

Measure customer satisfaction.

Most service desks measure performance in a number of ways. Key measures include, calls answered within a defined time, calls abandoned, calls per agent and first call resolution (e.g. how many problems were fixed in the first call). Measuring customer satisfaction for a random selection of closed (and open) requests gives timely and specific feedback on the performance of the service desk, which can be achieved by follow up calls or emails soon after. This satisfaction measure should be used in addition to monthly or quarterly satisfaction measures, as the latter tend to measure the overall service.

Use of self-service

Many common problems, like password resets, result in a lot of users making phone calls to the IT service desk (especially on Monday mornings). Using self-service tools for these types of problems would free IT staff from doing boring tasks. There are many good examples of self-service used by Microsoft, Google and E-bay using FAQs, diagnostic tips, software downloads and password resets. With a small investment these techniques can be utilised in the enterprise as well.

Use of Web 2.0

Another way to encourage self-help is put solutions to common problems (FAQ) on a Wiki, blog or message board. Allowing users to post and contribute to the site would enrich the knowledge base. However, care should be taken to monitor the forum so that ‘bad practices’ do not propagate. Web forums are also helpful to identify areas where applications or services can be improved.

Customer Centric Metrics

Most IT organisations measure availability of the servers, websites and the network, which many times only have a loose correlation with the actual user experience. For example, network and servers may be working but a key business process may be running slow from an application issue or from being overloaded. Therefore, in addition to measuring the availability of the servers, CIOs should take steps to introduce customer centric measures.

Align measures to key business processes

The first step is to identify key business processes (e.g. loan approval, store checkout process) that are important for external customer service. The second step is to identify what system/s enable the service to be performed in an acceptable manner. The third step is to measure the performance (availability and response times) of these systems and then report these measures. These metrics clearly demonstrate how well IT systems support actual business performance.

Customer centric measures create a direct and measurable link between business operations, customer service and IT service. These measures help the IT staff to focus on more granular service indicators (e.g. in the retail environment measuring store checkout down time is more important than server/ network availability). Existing system performance measurement tools can be used for these measures.

Communication during outages

One of the major bugbears in many businesses is the lack of information from IT about major changes and outages. This becomes an important issue during major systems problems and installations. The IT team may be working very hard to fix the issue, but the business users have no visibility of what is going on and feel that IT is not taking their issues seriously.

Incidence manager

Assigning someone with the specific responsibility of communicating with key managers and team leaders during outages is critical. This person cannot get involved in the nitty-gritty of solving the problem but must focus on providing timely communications and updates via the available channels (e.g. recorded messages, phone calls, website updates and meeting key staff). Support Incidence manager with incidence coordinator/s.

Be visible

In one instance, we were having intermittent problems with a business process, which was affecting the business. We placed a technical person in the area for a couple of days. In addition to getting timely and reliable data on the problem, IT was able to demonstrate empathy and urgency, which went a long way towards improving service satisfaction. Similarly having people on ground during major changes cab boost confidence and lead to speedy problem reporting.

Summary

This is by no means an exhaustive list of ideas. Key thoughts here are to go beyond impersonal processes of service management and develop better business understanding, empathy and trust, leading to improved customer satisfaction.

For a detailed discussion and/or information on strategies for service excellence, please contact the author.

Promises! Promises!

Introduction

Beginning of a new year is time for new beginnings. We all make new resolutions, such as, regular exercise, giving up smoking. Over time one finds that these promises just fade away. Politicians too make promises at the beginning of their new terms and the result is the same, many broken promises.

Businesses are no different. Marketing is making promises and commitments, such as, to deliver goods on time or fix a customer problem. Customers value businesses that deliver what they promise. Customers trust increases. Confidence is eroded when businesses are not as seen keeping promises. IT is no different. Without customers basic trust that you will deliver what you promise, nothing else you do matters.

If keeping promises is important, why is it so hard to keep promises?

I have been reading a book called ‘Reliability Rules’ by Price and Schultz. It describes the challenges of Promises Management and how organisations can manage their promises and improve customer satisfaction and build brand. I believe these techniques are vary valuable for IT groups.

Common myths about promising

There are many myths about promising. People like (positive) surprises! Under-promise and over deliver! According to Price and Schultz, these are just that, myths. Customers value consistency over surprise. They want their realistic expectations to be met time and again.  If you always deliver early (surprise) customer may suspect you are over charging as the work is not as much as expected or may change expectations that you will always be early, thus defeating the purpose of under-promising. Continuing to over deliver increases costs. Customer likes the extra service but may not value it appropriately. Soon that would become the new expectation.

Fundamentals of reliability

There are three principles behind the reliability philosophy. These are Promise alignment, Promise clarity and the Moment of truth.

  1. Promise Alignment – Two drivers must be aligned; a) How well promises are made? b) How well they are kept? The challenge is that a lot of attention is given to delivering on the promises rather than on how well they are made in the first place.
  2. Promise Clarity – Promises must be clear both to the people who are carrying them out but also to the receiver or the customer. Promise making is poorly managed in most businesses. As a result employees shy away from making explicit commitments or try to distance them from the promise. (E.g. Rather than saying a problem will be fixed in 3 days, call centre says, I shall notify the Technical support today. This is not a clear promise to the customer).
  3. Moment of Truth – The moment of truth for the promise is when the delivery (or action) is made. At this time the customer evaluates what he thought he was getting against what is actually delivered. When there is lack of clarity about what was promised, it is difficult to confirm that the delivery meets the promise. Any resetting of expectations must happen prior to delivery otherwise disappointment is likely to result.

Six ways promises are broken

Six ways promises are broken
Figure 1 – Six ways promises are broken


There are six ways promises are regularly broken. Only one way relates to poor delivery on a well-made promise. This underscores the importance of improving promise-making processes.

  1. Making Unrealistic promises – Unrealistic promises result from pressure from customer or competition. Customers may have unrealistic expectations. Sometimes the capability does not match expectations. Not challenging this result in unrealistic promises.
  2. Making a promise that is unclear, inaccurate or incomplete – Vague or unclear promises result in two sides having different interpretations of what was promised especially if agreement from the receiver is not obtained.
  3. Making promise by making no promise – Even when no promise is made the customer may draw from their past experience and expect certain outcomes. When these don’t match the performance, dissatisfaction results.
  4. Failing to manage promises when circumstances change – Changes to specifications, or internal peaks may time to time result in delays in delivery. Failing to notify customer and reset expectations leads to broken promises.
  5. The promise is not passed on properly – In large organisations; the person who makes the promise is not always the person responsible for the delivery.  Failure to pass on the promise in a full and timely manner result in broken promises.
  6. A promise well made is simply not done – Even when none of the above failures occur, delivery team may still overlook a detail, fail to test an aspect and the delivery is not made.

Getting promise management right

Price and Schultz identify four focus areas to get the promise management right. These are a) Brand promise, b) Partner reliability chain c) Customer promise management and d) Dependability within. Reviewing these four areas for failures of promise management would identify opportunities to improve.

a)     Brand Promise

Brand promises get made by marketing or by policies (e.g. service standards). An example of brand promise is Volvo, which is known for passenger safety. Brand applies to internal service providers like IT as well. IT policies, service levels, CIO statements and past experience creates a “brand promise”. Generally the team that has to deliver does not make the promise. Over promising can create serious disconnects and repeated over promising results in scepticism within as well as with customers.

  1. Audit the brand promise to understand where the gaps between the promise and delivery are.
  2. Explicitly communicate the ‘true’ promise by customer charters, published service levels etc
  3. Does your delivery organisation understand the brand promise and their role within it? Do they have the tools to meet the promise? Realign job roles as necessary.

b)    Partner reliability chain

Organisations have suppliers, agents, third party service providers and other parties who help deliver the service or the promise. Where partners have poor reliability (track record, quality, customer service) it can have a major impact on delivery.

  1. Establish systems to evaluate partner reliability performance. Key measures such as, ‘delivery in full on time’ or ‘on time, in full on spec’ would identify gaps.
  2. Firm’s interactions with partners (last minute changes, time to pay invoices) can also have an impact on how well they work together. Review how the firm and the partners view themselves and each other, where brand promises align and diverge and what can be done to improve trust (e.g. sharing information, mutual compromise etc)
  3. Include partners in the improvement initiatives. Where partners play a key role in delivery, including them in process improvement initiatives would pay big dividends.

c)     Customer promise management

Customers can cause promise management problems by at times having unrealistic expectations or not fulfilling their side of the transactions (e.g. specifications signed off on time). They may not have a clear understanding of their role or may not have the capability.

  1. Ensure reliable delivery of the “basics”. Get your customers to define what is their basic expectation from your firm/ group in their language (e.g. Easy to deal with, knowledgeable about their business, possess technical expertise etc). Take steps to meet these consistently.
  2. Take charge in managing customer reliability – Some companies are starting with making their customer promises explicit. Don’t assume, get the details of what the customer is going to do sorted in advance. Ensure the customer understands the consequences of the delays/ broken promises by the customer.
  3. Work with customers on change management plans. Define what is the fallback plan, what are the consequences of change. Work with the customers to reset promises.
  4. Customers can be really disorganised they can benefit from your experience in making and delivering reliable promises.

d)    Dependability within

without dependable internal people and processes, an organisation cannot improve reliability. Reliability starts at home.

  1. Is reliability measured or valued inside the organisation? Are leaders walking the talk on reliability? Are you hiring highly reliable people?
  2. Break down the silos – Collaboration between teams and silos is essential to deliver reliably on promises. Cross-functional effort to see how promises get broken and how the teams can work together to address these issues is a start.
  3. Improve promise-making capability and keep track of promises made in some type of a central system.

Impact of lack of reliability is often under estimated. Attention to reliability via promises management is a powerful way for IT groups to create trust and build credibility for them as well as for the organisation.

Tips for a successful Business Process Management implementation

Introduction

It is a well-known fact that automation without process changes results in only marginal performance improvement. It is also true with process improvements without automation. When business and IT leaders collaborate and improve end-to-end business processes, the resulting benefits are many times higher than the routine cost reduction initiatives. Hence, organisations are increasingly looking at Business Process Management as a tool to increase competitiveness, develop business agility, increase process efficiency and reduce cycle times. According to Gartner, investment in BPM suites is literally twice the growth rate of legacy packaged enterprise applications. Clearly BPM has gained traction.

There are a number of vendors, some offering a plethora of tools that are integrated into a BPM Suite, and others offering the necessary tools in a seamlessly unified environment. All of the vendors see service oriented architecture as a necessary pre-requisite for a successful BPM strategy. Most vendors advocate a more agile methodology of quick, iterative projects and support continuous improvement.

This article aims to help organisations make a successful start to their BPM journey. Here we summarise key learning from our experience. For more information on this topic please contact us by email.

Why BPM?

Today’s businesses operate in a different world than the 80s and 90s when many business systems were developed. Legacy systems are often data-centric as well as product or function centric. They are not designed to be customer facing. They are also cumbersome to change. Business today demands constant change, and with ever shortening change cycles, customers and suppliers expect to interact via multiple channels and there is an increasing demand for self-service and strait-through processing. In this world, new, smarter systems are needed to accommodate rapid changes in the business processes spanning multiple legacy systems.  These systems also need to be able to accept input from a variety of new sources (e.g. web services, data-feeds, internet, forms, call centres and other applications etc).

To achieve this agility, organisations are beginning to adapt BPM approaches and tools. Focus is shifting from applications to managing and optimising business processes. In addition to the operational efficiency, businesses are looking for process agility, which is the ability to change operations, and the way it’s people and systems work, to adapt to change.

BPM use process models to coordinate the interactions between people, systems, policies, and information. A process centric approach has clear advantages. Transactional applications have hard-wired process elements and business logic that are slow to change. Secondly business processes are rarely completed within a single application. A process layer allows processes to be clearly defined, measured and refined. It allows quick changes to process without significant code changes. It also facilitates further automation by filling gaps and linking together applications. This allows greater value to be extracted from existing investment in applications and people.

BPM tools

A BPM suite is an integrated collection of technologies that enable control and management of business processes. BPM technology has roots in process management capabilities of workflow but unlike workflow it is not document centric. Typically a BPM technology suite includes:

Process Modelling – Typically with a visual design tool

Application integration – Out of the box plug-ins or APIs to connect to other applications

Process Engine / execution – Development and run-time environments to design and execute process activities

Process monitoring and analytics – Process measurement, monitoring and data analysis capability

Business Rules management – Rules databases to define business logic that governs and automates the processes

Collaboration portals – Tools for design for customer self-service and business partner collaboration via the web

Some vendors also provide pre-packaged frameworks to help organisations in specific industries get started more quickly.

 BPM Process


Figure 1 – Business Process Management – Process improvement cycle

BPM technologies have now advanced to provide a technology supported process improvement loop from modelling and simulation through to execution, monitoring and dynamic adjustment. Typically, tools cater for different user types and roles at each stage of the process (e.g. business analysts define process models while IT developers develop and integrate).

Gartner BPM magic quadrant contains software offerings with many different approaches to process improvement. Some are domain specific applications e.g. Siebel (CRM)/Guidewire (claims) with high level of domain specific processes. Others take the architectural approach using tools from IBM/Oracle/BEA or Tibco to integrate business processes together. Others are pure-play BPM suits from Lombardi, Savvion, or Metastorm. Pegasystems’ offers BPM Suite together with one or more industry-specific solution frameworks.

Point solution applications can help quickly address critical domain specific needs but may not be extended to other areas. The architectural/integration path is popular with many as it builds on existing investment in these tools and is universal in application. Pure play solutions provide a well-integrated environment for BPM and may be easier to use. Understanding the goals of the BPM initiative and organizations maturity in using technology should facilitate the choice of tools.

Tips for making a successful start in BPM initiatives

  1. Start with an important but contained process where the improvements would matter to the business. However, avoid the temptation to take on highly complex processes. Focus BPM objective to be working smarter and improving customer experience in a consistent manner, rather than head-count reduction.
  2. Start with an understanding of your current state. Take a “measure first” approach and determine the metrics important to your business.
  3. Unlike other IT projects, BPM directly affects how business users perform their daily tasks. Get a project sponsor who is strongly engaged in the initiative and the change management aspects. Business users should play a significant role in dynamically changing a process.
  4. Use experienced process analysts who live and breath process, for the process discovery stage. This stage sets the tone for the entire project and using wrong skills/people here will prove to be an expensive mistake.
  5. BPM projects are ideally suited for iterative or agile development methods. Don’t model to get perfection. Building consensus across silos is a challenge. Start implementing and use iterations to get the business rules and process flows right. Focus on delivering value and not just the requirements. Iterations don’t mean scope creep. Try to get a process operational within a 60-90 day window.
  6. Don’t get bogged down in too much internal detail or the technology. What matters is the benefit the end customer will get as a result of the process (e.g. faster loan approval, correct order fulfilment etc) and not the technology used.
  7. Service oriented architecture is desirable. Well-defined services will speed up integration, reuse and expansion.
  8. Manage expectations. Continuous improvement approach means features that are not there on day-1 can be added progressively. Demonstrations and simulations improve understanding and help get the user experience right. Communicate successes regularly to improve stakeholder engagement.
  9. BPM methodology is different than the typical IT project methodology. Avoid mistakes like “stove pipe” BPM or an “agile waterfall” practice. Engage the vendor full time during the architecture and design stages. Gartner now predicts that half of BPM projects will fail; follow best practices to make sure you don’t.For a successful BPM implementation, designing reusable processes is key.
  10. Rather than planning a silo by silo implementation; experience suggests that identifying and designing common processes and progressively reusing these across each business area will ultimately result in a faster and lower cost implementation. When processes change, cost of change also would be lower.

Figure 2 – BPM implementation options

Have a common team (2-3 members) that will focus on building common and re-usable artefacts and frameworks. Establish governance to reward re-use and discourage rework.

  1. Plan for change. Not only the rules and process models would change but also work patterns. Processes cross silos thus functional fiefdoms and roles of people would be affected. Address the organisational change implications such as roles, responsibilities and rewards early.
  2. Establish a rigorous structured testing, measurement and governance regime to ensure that the process performs as expected and is well controlled. Identify a few important process and ROI metrics to monitor the process effectiveness. Monitor the process to detect any problems before the customers do.

For a further discussion on how you can start BPM implementation in your organisation please contact the author.