Process Improvement Through Performance Assessment
Leverage investments before upgrading ERP and CRM systems.
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Performance improvement and cost management of existing operational processes continues to be a top priority for many companies. Companies that want to improve cost management and drive process improvement must first understand their operational process performance. Measuring and monitoring techniques, and then determining the most effective and efficient path, will optimize and align your organization's people and processes.
Unfortunately, most companies are taking the longest and most laborious path to achieve this goal. Our research shows that many, if not most, management and implementation/consulting firms, along with CRM, ERP and business process automation system providers, continue to recommend and implement upgraded or new applications for automation. Ventana Research recommends that these approaches be postponed until a process-centric performance assessment is completed, in order to determine if and where new investments should be made.
Assessing the performance of operational processes has not been a high enough priority in companies. Instead, the majority of companies continue to focus on and invest in the automation of transactions by specific employees and roles. This investment in automation is usually followed by another sizable investment in data warehousing and BI systems to measure the resulting business and operational metrics. After years of teeter-totter business conditions and technology investment cycles, companies are beginning to realize that they must do a better job in measuring the performance of operational processes that span across departments and, in many cases, divisions of global corporations.
Many of the ERP, CRM, SCM, and business process management vendors would like you to believe they can help you manage your business processes, but most fall short because they don't provide a mechanism to define the operational processes visually and don't monitor them from a business perspective. Many of these vendors have now brought process management capabilities into their systems from a transaction-to-transaction perspective only; many other solutions require you to build process models for automation purposes before you can measure them. Driving improvements in performance requires planning and historical measurement to guide future investments.
Ventana Research strongly advises that the ERP and CRM investments of the last decade be fully leveraged and not upgraded until a thorough analysis is performed. This will require a new class of process measurement and operational business intelligence systems that can link the behavior of the operational processes with the results.
While there is a lot of industry and customer excitement about business process management, we advise companies to move forward cautiously to ensure the solution meets the real process improvement needs of the company, and to not invest in new solutions simply on the recommendation of external consulting firms or software providers.
Correlating transactions and operational performance isn't easy to do, because they aren't perfectly linked. Doing this requires a method to improve operational process performance by assessing business activities and processes to determine where and which changes must be made. This is difficult and requires examination of the individual people that drive transactions and the resulting performance. Companies can accomplish this examination by visually defining and measuring the performance of the operational processes.
Ventana Research recommends that organizations re-examine their existing and planned projects to determine if these investments will provide the process and performance improvements they really need. By analyzing existing operations of people, processes, and systems, and leveraging existing ERP and CRM investments, you will be better prepared to align the operational and IT aspects of your business.
Mark Smith is CEO & Senior Vice President of Research at Ventana Research (www.ventanaresearch.com), a research and advisory services firm.