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5/10/2005
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Process Automation Can Undermine Performance

Get process improvement right this time around.

The recent upsurge in interest in business process management (BPM) seems like a flashback to the 1990s. Remember how business process reengineering was going to solve all our problems and how executives got all caught up in business change? In the end, few organizations experienced fundamental improvement because they too often looked at processes in isolation and failed to focus on larger, corporatewide goals. If you're considering a BPM initiative, here's how you can ensure that the organization gets process improvement right this time around.

Start by recognizing that the point of almost all companies is to achieve financial, customer and operational goals that are in line with shareholder or owner expectations. With this in mind, do a thorough assessment of core strategic and operational processes to determine just what it is you're trying to improve. Examining core strategic processes, such as customer acquisition, bookings, billings, backlogs and order-to-cash, the focus is usually on continuously improving throughput. In the case of operational processes, such as manufacturing, order fulfillment and field service, companies usually measure efficiency alone.

Don't jump right into "automation that leverages people, processes and systems" — the typical BPM marketing hype. The point of the assessment is to identify ways to link the strategic and operational processes. Too many organizations embrace BPM to drive automation and efficiency without tying those initiatives directly to performance improvement. A manufacturer that has a strategic goal to improve product quality and reliability could well shoot itself in the foot with disconnected operational manufacturing process initiatives aimed exclusively at automation and cutting costs. Global 2000 organizations including Audiovox, BT and United Airlines have achieved significant operational efficiencies while simultaneously losing their competitive edge and falling short of performance targets. Successful BPM initiatives tie people, processes and technology to strategic performance improvement goals.

Just how do you connect process improvement to higher-level performance improvement goals? Once your assessment is complete, develop a process performance plan that describes the potential of your operational processes to contribute to strategic goals. If a strategic goal is customer satisfaction, for example, determine appropriate process benchmarks that can be analyzed accurately and consistently. In an order-to-fulfillment process, for example, order throughput and on-time delivery are important, but don't leave out other measures that might have a direct impact on customer satisfaction, such as fulfillment accuracy. Finally, set priorities for operational process improvement that will have the greatest impact on strategic objectives; these processes deserve management's time and attention and the application of technology.

When you consider BPM vendors, look for approaches that are attuned to your current operations, technologies and underlying business events and activities. Don't get distracted by mega-application providers that want you to upgrade your infrastructure unless you see clear evidence that the changes will contribute to significant improvements in both operational and strategic process performance.

What's new in BPM technology that will help link process and performance improvement? Tibco BusinessEvents lets you connect operational events such as customer orders or IT events such as systems outages to managerial performance monitoring capabilities. Similarly, Syndera's activity monitoring solution is geared to managers who need to link activities such as financial trade to portfolio management processes for proactive exception handling. And IDS Scheer, Lombardi Software and Savvion have advanced their performance-centric offerings so they can not only monitor processes but simulate them and link them to performance targets.

Don't get distracted by new approaches that just move you from transactional automation to process automation. Oracle and SAP, for example, are attempting to bring a process focus to legacy applications, but they have yet to enable a truly process-driven approach that's inextricably tied to strategic and operational performance improvement goals.

To succeed at BPM, assess for success, think beyond automation and make performance improvement your number-one process improvement goal.

Mark Smith is CEO and Senior Vice President of Research at Ventana Research. Write to him at mark.smith@ventanaresearch.com.

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