Lean times often present opportunities for analyzing, fine-tuning, and improving business processes. In fact, the economic survival of some organizations may depend on such improvements. Here are some pointers to help you build a successful process measurement program.
At this juncture in 2009, with an end to the recession nowhere in sight, a business process measurement (BPM) program might seem like the cherry on an ice cream sundae: nice touch, but not necessary. But consider the fact that identifying, redesigning, and monitoring just one critical business process could reap benefits in a few months, in terms of noticeable cost savings and/or happier customers. And for some companies, there's no time like the present to focus on what's (possibly) wrong with the business.
"When you're doing well, no one wants to work on fixing things; yet the economic difficulties that companies are dealing with right now will help them organize their thoughts," observes Constantine Kazakos, CIO with Reznick Group, P.C., a Bethesda-based accounting and consulting firm. Kazakos and other experts share their advice on how to make a process measurement program successful.
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1: Get tight with the business
I had to say it, right? Designing a metrics program in the vacuum of the IT department is never a smart idea. As an IT manager or executive, you're already aware that you need to be a part of regular business strategy and planning sessions. When it comes to BPM, it's imperative to have a solid handle on the business because this drives the goals and metrics of your program. Ensure that senior executives from the business are participating in your business metrics program from A to Z, as well.
2: Understand internal barriers
Even with the right sponsorship and stakeholders on your side, the plain fact is that some companies are culturally resistant to change and resistant to measurement. It's possible that resistance comes from a fear of accountability, says Adrian Cook, managing consultant in business transformation with PA Consulting Group in New York City. If you support a measure to answer all customer e-mails within 24 hours, then as a manager, you must figure out how to enforce it in your department. Dig into the cause of any resistance before you get too far down the road.
3: Measure a few things well
When starting a metrics program, select a few measures (or even a single measure) of high value to your business in the short term before you get started on long-term measures. According to Cook, there are three buckets of metrics: customer, financial, and operational. Right now, anything related to finances will get the attention of your senior management. "Today, people are mostly talking about liquidity and cash flow, the financial and economic measures."
4: Don't take the easy way out
Determining what to measure sometimes means taking the hard road, so be prepared to meet that challenge and present the business case to senior management. "A lot of organizations fall into the trap of measuring what you can measure, but [those processes] may or may not be the right ones to measure," says Michael Halperin, founder of business process management consulting firm Freebridge Services, in Southborough, MA.
5: Get the balance right
Your goals for a metrics program will depend, naturally, on the focus of your business. For instance, a company might have a highly efficient process but the effectiveness (the end product) is terrible, says Kazakos, who led business process reengineering efforts at Xerox and IBM. Conversely, a company might have a superb, high-quality product, yet it costs way too much and/or takes too long to produce it. "What you want to do is to balance the two, and it's a tricky balance," he says. You'll need to understand from business leaders which outcomes are most important in the final analysis.
6: Use benchmarks appropriately
Industry benchmarks are helpful but be careful that you don't sacrifice your brand or product to meet a benchmark by, for instance, cutting corners to save money. "The caution there is not to apply the industry benchmark to the thing that makes the business unique from a value or brand perspective," says Ric Merrifield, author of Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation and a senior executive at Microsoft. As well, experts warn that some benchmarks may simply be too broad and will need to be adjusted to your specific business process.
7: Talk to customers
Who knows better about what is working — or not — than your customers? Instead of assuming what are the top broken processes, conduct formal or informal surveys of your customers to find out their key complaints. You might be surprised at what you learn.
8: Use standard tools
Process measurement and metrics programs have been around for quite a while, so don't reinvent the wheel. Activity-based costing (ABC), TQM (total quality management), Six Sigma, and ITIL (information technology infrastructure library) are a few of the established methods that large companies have used for years to track and improve processes. However, small businesses with limited budgets to manage such programs will have to get creative. Consider the value of free or low-cost tools, such as Lean6 Six Sigma Tool 60812, for monitoring service and manufacturing business quality, or various Web measurement tools to help determine how well (or not) your processes are working for customers online.
9: Don't forget about IT metrics
Once business process metrics have been defined and implemented, it's IT's job to determine how the infrastructure needs to be tweaked to support key performance indicators and other goals of the program. "Which systems or points need to be up, based on critical business functions?" Halperin asks. Depending upon the business, this could be e-mail, a sales system, a claims system for an insurance provider, and so on. To prioritize your efforts, it's important to understand the financial impact to the business of those systems being down.
10: Hire a consultant with specific expertise
Unless you have a highly sophisticated IT department with process and analytics experts, you might need some outside help with your first metrics measurement program. To keep costs down, stay focused with your outsourcing. "I would recommend starting with a consultant who knows a method, make sure you train some of your own people on the method and tools, and go forward from there," Merrifield says.