Welcome. Achieving Operational Excellence through Process Improvement

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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!

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