Business Processes – an invisible opportunity to reduce costs

13 June

They are lurking within the walls of all organizations, functioning everyday with no one managing them. No one is looking to see if there are better ways of performing them to reduce costs and become more efficient. No one manages them because no one sees them, but they are there, eating away at profits. The ‘they’ I am referring to are your business processes.

This includes processes related to human resources, accounting, finance, materials management, project management and vendor management.

At home most of us have an attic or garage that is cluttered with old lawn chairs, window screens and sporting equipment. These items have piled up over the years and cause you to waste time finding things you are looking for. The difference between the overfilled attic and business processes is that you can see the clutter in your attic or garage and can put time aside to clean it up. Although they are out there organizations can’t see the clutter in their business processes and few companies are putting time aside to clean up their processes to make them more efficient and are missing an opportunity to reduce costs and work smarter, not harder.

As consultants we see the following in the marketplace as it relates to a companies processes:

• Cumbersome manual paper based processes.

• Islands of unconnected information.

• Little, if any, metrics to monitor performance.

• Serial processing and redundant re-keying of the same data.

• Limited use of the Internet.

What is interesting is that most companies know they have inefficient processes but don’t know how to go about addressing the problem. Undertaking a business process analysis initiative is no different than any other project. It needs to be funded and sanctioned by senior management, requires a willingness to change the way work is performed and addresses the following questions about the culture of the organization:

• Do we really want to be keying the same information to different databases?

• Do we really want to continue with paper based manual processes?

• Do we really want to operate without metrics?

• Do we really want to operate in an environment where there is little or no accountability for how we perform our work?

• Do we really want to continue to waste money?

The activities to conduct a process improvement initiative are:

  •  Identify the processes that must be analyzed.
  • Create a process map or ‘snap shot’ of the current process in its ‘as is’ state by reviewing the following work system (process) components:
  •  Customers – the internal and/or external people who use the product or service produced by the work system.
  •  Products or services – the products (physical items as well as information) and services the work system produces for its customers.
  • Business process – The set of steps or activities performed within the work system.
  • Participants – The people who perform the work within the business process.
  • Information – The data used by the people who perform their work.
  •  Technology – The hardware, software and other tools used by the participants to perform their work.
  •  Explore problems in the work system and find opportunities to improve it.
  •  Map the ‘desired state’ process.
  •  Implement the proposed changes.
  • Monitor and fine-tune the new process.
  • Manage change.

To move beyond process modeling to process execution we recommend that organizations explore the use of business process management software to monitor and manage their redesigned processes.

Research firm, The Gartner Group, predicts that business process management (BPM) software sales will be $3.2 billion in 2003 and increase to $6.2 billion in 2005. This software enables companies to optimize operations through process automation, process management and process innovation. The result is consistent repeatable business processes that can be monitored, managed and modified in real time as business conditions change.

BPM is a comprehensive solution that addresses the interaction of people and processes. BPM incorporates people into processes because at some point people are needed to make decisions about data. Business process management is using technology to encourage good habits and suppress bad ones and is much more than just making a paper form electronic. Business process management software incorporates business rules, roles and routing as well as integrating systems to offer true efficiency, avoiding duplication or omission of data during entry and monitoring of actions, through messaging capabilities, to ensure process timeliness. Storage is also more efficient when processes are managed and optimized electronically.

Because of its ‘point and click’ web-browser based design BPM software allows business-level staff to redesign processes without the need for software residing on their desktops and IT support. It makes them ask the questions like, “Who needs to be part of

this process, what do they need, and who or what ensures that the process is followed, not simply rubber-stamped?” However, IT staff is needed to implement the new process by connecting to systems to extract and import the data required to complete the process efficiently.

Another advantage of BPM is that it allows organizations to extend and leverage their legacy systems by automating the front end of processes, integrating the back-end systems and streamlining the whole process. With the process handled entirely through the system, progress can be tracked, and compliance with best practices is ensured and proven through a detailed audit trail. The end result is that it lowers the organization’s costs and frees up hours to reallocate to revenue generating and/or customer servicing activities.

Bottom line BPM allows you to manage change at the process level on a proactive basis instead of waiting for complaints that trigger reactive ‘fix-it’ mode activity. Isn’t it about time you see what’s lurking in your organization?

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