Welcome…
Achieving Operational Excellence through Process Improvement.
Achieving Operational Excellence through Process Improvement
Vijay Jaswal Darren Brunt Andy Jones
Name this country: Richest in the world Largest military Centre for world business trade Strongest education system World centre for innovation and invention Currency the world standard of value Highest standard of living
Great Britain – Year 1900
“It is not the strongest species, nor the most intelligent that survive, but the ones that are most adaptive to change”
Charles Darwin
via BPM
Agenda 13.30 – 14.15
Building a Successful Performance-Driven Enterprise & Attaining Operational Excellence
14.15 – 14.30
Coffee Break
14.30 – 15.15
Building a Successful Performance-Driven Enterprise & Attaining Operational Excellence (cont)
15.15 – 15.30
Coffee Break
15.30 – 16.05
Process Improvement in Action
16.05 – 16.25
Laying the groundwork to ensure success & Building a Business Case
16.25 – 16.30
Q & A – Close
16.30
Drinks
Software AG At-A-Glance Revenue over €1 Billion 10,000+ enterprise customers Over 6,000 employees - 3,500 services consultants - 850 in R&D
Offices in 70+ countries Software AG Foundation
9 December 2010 | Software AG - Get There Faster | 6
Industry Thought Leadership
What is Operational Excellence?
What is Operational Excellence? Operational excellence is a goal of conducting business in a manner that: ¬
improves quality
¬
obtains higher yields
¬
faster throughput
¬
with less waste.
Operational Excellence in Sport
Processes are the lifeblood of an organisation Insurance Claim Process
What happens when operational excellence goes wrong?
What happens when operational excellence goes wrong?
“If the process is right, the results will take care of themselves.”
Takashi Osada 1993 (Author of The 5S's: Five Keys to a Total Quality Environment )
“Process” is the Common Thread
Over fifty years of management theory and practice…
1950 • Mass Production • PDCA Cycles • Total Quality Control
Shewart Deming Juran
2010
Process • Process Quality • Knowledge
is• Zero how the work done Defects • TQM gets• TPS/Lean
• Six Sigma • Business is executed • BPR How strategy Workers • CMMI • ISOExcellence • Technical How performance • Workflow is9000 optimised Changes How customers are Hammer satisfied Shingo Ohno Drucker
Crosby Peters
Rummler Porter
Bodek Womack Smith, et al Humphrey
• Lean Six Sigma • SCOR • BPM George Fingar Burlton
Many tools and techniques of process improvement Natural resources Suppliers
manufacturers
y = f(x) +
ε
$500
100%
$450
90%
$400
80%
$350
70%
$300
60%
$250
50%
$200
40%
$150
30%
$100
20%
$50
10%
$0
0% Salaries
Equipment
distributors
retailers
X
LSL
- 3s
One Sigma
+ 3s
USL
Process Width Design or Customer Width Requirement width (VOC) ÷ Process Width (VOP) = Process Capability
The Consumer
Transportation
Telecom
Supplies
What’s the next step??
Business
IT
BPM enables business & IT alignment…
What is BPM?
What is BPM? – The Analyst’s View
BPM is a discipline for improving and redesigning business processes from an outside-in perspective— spanning people, systems and organisations. BPMS are integrated tools that support process improvements by designing, executing, monitoring and optimising cross functional processes.
What is a BPMS? - A Simple View
A system to facilitate…
…Who Does… …What… …When in an Organisation (with the ability to hook into Enterprise Systems)
What is a BPMS? – More Expanded a set of tools that can be used to:
Define, Simulate, Automate & Measure Business Processes Provide connectivity “Hooks” into IT Infrastructure (SOA) Provide Continuous Process Improvement Facilitates the who does what and when
Effectively links People, Process & Systems
Complexity Example – Claims Processing People Call Centre
Notice of loss
Coordinator
Internal Assessor
Claims Handler
Claim
Allocation
Policy
Claims
Handling/ Assessment
Customer
Loss Adjuster
Settlement
3rd Party
Systems Customer
Fraud
Settlement
3rd parties
Admin
Complexity Example – Claims Processing People
People Call Centre
Notice of loss
Coordinator
Claim
Allocation
Handling/ Assessment
Customer
Loss Adjuster
Settlement
3rd Party
Process
Systems
Systems Customer
Internal Assessor
Claims Handler
Policy
Claims
Fraud
Settlement
3rd parties
Admin
?
“If the process is right, the results will take care of themselves.” Takashi Osada 1993 (Author of The 5S's: Five Keys to a Total Quality Environment )
A Quote by me!
“If the interaction between people, process and systems is right, the results will take care of themselves.” Vijay Jaswal – Software AG
UNIQA Insurance Group Case Study
Best places to apply BPM
Best places to apply BPM Processes where : They are repetitive
Best places to apply BPM Processes where: They are paper based
Best places to apply BPM Processes where: They are labour intensive
Best places to apply BPM Processes where: There is a high amount of human error
Best places to apply BPM Processes where: There is high regulatory compliance & governance
Best places to apply BPM Processes where: Excel, MS Access, post it notes, email are used to supplement IT systems
Best places to apply BPM Processes where: There is a high amount of deadline or SLA intensive steps
Best places to apply BPM Processes where: There is swivel chair integration
Best places to apply BPM Processes where: There is a breakdown in customer service
Best places to apply BPM Processes where: Subject Matter Experts are buried in admin!
Best places to apply BPM Processes where: There are high training costs
Best places to apply BPM Most importantly, processes where: There is strong buy in from business, users, IT & senior management
Collaboration is key
TD Bank Case Study
People Interaction
Human Interaction…
Mainframe Data
Account Data (CRM)
Supply Chain Partners
Workforce Location
Real Time Visibility
Focus on Business Results
Request Support
Validate Customer
Notify Sales of Customer Need
Customer
Process Issue
Resolve Issue
Notify Customer
Notify Partner Community
Escalate Request to Specialist
Enterprise
B2B
Modelling Processes
Tools for Process Definition
The Challenges of Process Definition…
Which is the correct process?
The Challenges of Process Definition…
Which is the correct process?
The Challenges of Process Definition…
Which is the correct process?
Architecture of integrated information systems (ARIS)
Measuring Processes (Business Activity Monitoring)
What is Business Activity Monitoring?
“Providing real-time access to critical business performance indicators to improve the performance & effectiveness of the business”
BI & BAM - What’s the difference?
How does it work ?
or s n Se
By taking transaction information from business systems and depositing it in a process warehouse.
or s n Se
or s n e S
Process Warehouse
What is Measured? Volumes – Anything that is expressed in terms of how many & how much
Velocities – How fast, cycle times, time to deadline, time-based SLA compliance
Errors – System errors, process errors, & business errors
Special Conditions – User defined business conditions
Sample dashboard
Rules Management
Business Rules
People Call Centre
Coordinator
Internal Assessor
IT
Finance
Customer
Systems
CRM
Finance
Supply Chain
External Database
Agencies
App Servers
Payments Application
Business Rules
People Call Centre
Coordinator
Internal Assessor
IT
Finance
Customer
Rules Engine
Systems
CRM
Finance
Supply Chain
External Database
Agencies
App Servers
Payments Application
BPM Benefits
Benefits of BPM Business
Technology
Business process transparency
Realise investment in IT
Business agility
Connects disparate systems ‘desiloing islands of technology’
Greater productivity Cost reduction Tighter control/compliance Improved customer service
More responsive to the business - new applications, faster, cheaper and more flexible Take advantage of service orientated infrastructure
= Greater Competitive Edge = Operational Excellence
Case Studies
Customer Success Stories ISSUE: Processing Bottlenecks Reduction in application processing time from ~18 days to 1 day. Better integration of external and internal systems to streamline processes and ensure accuracy. More effective management of forecasted business growth.
Customer Success Stories ISSUE:
Slow Time-to-Market Using BPM & SOA saves an estimated 50% in migration costs, related time and effort. Saved over $1 million with a corresponding 70% reduction in FTEs Reduced new product time-to-market by 90% & order fulfillment by more than 30%.
Cox Communications Video
Conclusion
Operational excellence is a goal of conducting business in a manner that: ¬
improves quality
¬ obtains higher yields ¬ faster throughput ¬ with less waste.
Process Improvement Tools…
Link people, processes and systems in the most effective way Enables organisations to break free from technology silos Ensures processes work first-time, every-time, on-time, and all the time Improves, automates and streamlines business processes so organisations can react faster, improve service and cut costs
BPM = An Operational Excellence Enabler
webMethods User Group 27th January Sainsburys HQ – Holburn www.beta.arisalign.com
Thank you!
Q&A
[email protected]
Demo…
Darren Brunt Software AG
Laying the groundwork to ensure success & Building a Business Case
Andy Jones Software AG
Why innovate ?
Risk of Failure
Distraction
Waste of Money
Why innovate ?
Opportunity
Competition
Innovation – the bridge to the future
We cannot solve our problems with the same thinking we used when we created them. -Albert Einstein
The Innovation Value Chain Innovation is not the product of logical thought, although the result is tied to logical structure Albert Einstein
Value Idea Generation
Too few Ref: Hansen and Birkinshaw London Business School
Idea Conversion
Can’t select
Idea Diffusion
Can’t execute
Can’t collaborate
Idea Generation Sources can be:
- External from your value network -
You can see problems they can’t They can see solutions you can’t
- Internal -
LEAN moves decision making down The unknown unknowns Understanding creates ideas
- Cross pollination -
Collaboration Recruitment Adaptation
A Portfolio of Opportunities
Insight into the Business
Social Networking
Idea Conversion – Selection and Development Selection – what kind of change is right for you ? • Incremental – improved operations ? • Radical – new business models ? • Disruptive – revolutionary new products or business models ? Initial funding • Assess value • Realistic criteria and expectation • A plan for exploitation
Recap: Best places to apply BPM Processes where:
• • • • • • • •
They are repetitive Paper based and labour intensive There is a high amount of human error High regulatory compliance & governance Excel, MS Access, post it notes, email are used to supplement IT systems High amount of deadline or SLA intensive steps Swivel chair integration – (copy & paste) There is a breakdown in Customer Service
• Subject Matter Experts, that hold all the process knowledge • High Training costs • Strong buy in from business, users, IT & senior management
Size Matters
Small Project Smaller Returns Learning By Doing Higher chance of Success
Big Project Big Returns Steep Learning Curve Higher chance of failure
The Balancing Act Perfect Design with Imperfect Execution - or – Imperfect Design with Perfect Execution
Process Execution Differentiation
Process Innovation Differentiation Target
Process Intelligence Implementation Point
Design/Implement Effort
Execution Sustainment Value
Time GetThere There Faster Get Faster
Execution Precision
Aspects of Business Value
User Productivity
Implementation Productivity
Fewer Rejected Invoices Reduced Errors
Component Reuse
Business Value Reduced Delays Less Inventory Held
Improved Compliance
Reduced Risk Reduced Cost Of Reporting
Faster Deployment Reduced Maintenance
Idea Diffusion
Nothing succeeds like success Proverb
Promote A culture of adoption
Success is never enough Martin Munoz – Sara Lee - Spain
•Reward those that distribute ideas •Reward those that make shared ideas work •Treat inbound ideas as being in the Idea Generation Stage •Standards simplify Idea Conversion • standard operating model • standard technology
Establish The role of the Evangelist
•Diplomacy requires an ambassador •Sales (internal in this case) requires a salesman
Case Study – Implementing change Address Known Problems (Stabilise)
Identify Unknown Problems (Improve)
Strategic Solutions (Reform)
Analysis, Strategy, Execution Discover, Measure, Monitor Phase 1
Controlling - CPI Phase 3
Quickstart
Project
Project
Project
Project Charter
Quickstart
Project Charter
Quickstart
Project Charter
30-50 days
Project Charter
Phase 2
Increment … Increment … Increment … Increment
Programme
But what came before ? How did innovation arise ?
Business change evangelist
What
Idea Generation
Ready ?
Yes
Address Known Problems (Stabilise)
Identify Unknown Problems (Improve)
Strategic Solutions (Reform)
Analysis, Strategy, Execution
Phase 1
Quickstart
Yes
Quickstart
Project
Project
Project
Project Charter
Quickstart
Ready ?
Phase 3 Project Charter
COO
How
Controlling - CPI
Phase 2
30-50 days
Project Charter
Mission : Reduce Opex
Discover, Measure, Monitor
Project Charter
Go !
Increment … Increment … Increment … Increment
Programme
Technology change evangelist
Idea Conversion
Ready ? Go !
Ready ? Go !
Best practice or your practice ? New measures, new roles
Number of ideas ?
Proportion of good ideas ?
Value from shared ideas ?
Successful conversion ?
Internal Venture Capitalist ?
External scout ? Internal Idea Broker ?
Conclusions
1.
Innovation : is a response to change and a necessary enterprise reflex : to anticipate or even create change is the most valuable
2.
Typical measures and approaches hide or even discourage it
3.
Conclusion: To Improve Innovation Study and measure your innovation value chain
3.
Generation - Communication internal and external Conversion - Reduce the cost/time of change - Increase execution precision Diffusion - Standard processes & measures - A communication network
Generation Conversion Diffusion
Thank you!