Process Ownership A Key Requirement For Sustainable BPM

Process Ownership A Key Requirement For Sustainable BPM Success Kem Tissiman Managing Director Rethink Management Consulting (Pty) Ltd www. rethink. co. za © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 1

Objectives • Help you to gain an understanding of – What Process Ownership is and its Importance wrt BPM – The Process Owner role – Key implementation requirements and challenges © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 2

Evolution of Performance Improvement Approaches Evolution of PI methods – early to late 1900’s Demand based natural evolution of operational and process improvement methods, usually by internal company resources • TQM • Six Sigma • Kanban • Lean • Quality Circles • 20 Keys • Kaizen BPR – late 1900’s BPM - 2000 BPR “packaged” and widely promoted by consulting companies. Often applied by external consultants and on an intervention basis. Immediate benefits, but not sustained. New approaches to Performance Improvement, aimed at delivering greater benefits and locking in sustainability: • BPM • E 2 E Process Ownership Traditional improvement methods embraced within these frameworks Focus on developing internal capacity/capability to undertake continuous operational improvement © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 3

Evolution of BPM (and Process Ownership) Evolution of PI methods – early to late 1900’s BPM - 2000 BPR – late 1900’s Demand based natural evolution BPR “packaged” and widely New approaches to Performance companies promoted have eagerly embraced the. Improvement, principles aimed of at delivering of operational. Many and process by consulting improvement BPR methods, usually greaterit benefits and locking companies. over the past decade, however, in hindsight is by internal company resources in sustainability: Often applied by external becoming clear that the results are not quite as positive as • BPM consultants and on an they first. Circles appeared. Recentbasis. studies suggest that • Quality • TQM • E 2 E BPR Process Ownership intervention • 20 Keys • Six Sigma success (wrt achieving Immediate benefits, but not performance and sustaining • Kaizen • Kanban Traditional improvement methods sustained. improvement) may be as low as 30%, and that benefits are • Lean embraced within these frameworks not sustained in the long term. Booz|Allen|Hamilton 2003 Focus on developing internal capacity/capability to undertake continuous operational improvement © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 4

BPM – what is it? • BPM is a management practice that provides for governance of a business's process environment toward the goal of improving agility and operational performance. • BPM is a structured approach employing methods, policies, metrics, management practices and software tools to manage and continuously optimize an organization's activities and processes. © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 5

BPM – what is it? Not one-off system implementation, BPR or process improvement project It’s a Strategic approach to delivering ongoing agility and operational improvement via continuous process assessment and improvement © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 6

What Is Process Ownership? • Process Ownership means assigning end to end responsibility for a process to a single individual, the Process Owner, across functional or department lines. • The Process Owner is the custodian of the process, from end to end, responsible for ongoing changes made to the design of the process. • Process Owners responsible for strategic development and health of core end to end business processes • Process Owner is a permanent internal role © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 7

Process Ownership vs Management Process Owner Process Manager Focus areas • Focuses on the process • Focuses on workforce design optimization management and addressing • Sets the performance targets: operational issues. ie • Manages workforce to – Sets overall process KPI’s achieve KPI’s – Sets silo KPI’s • Silo/departmental focus • End to end focus • Feeds back problems, issues, suggestions to Process Owner Profile • Process Analysis, Engineering, Improvement and Design skills • Operational Management skills © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 8

Process Ownership vs Management Both key to achieving good Process Performance: Process Owner drives improvements in process design and efficiency Process Manager manages the workforce to ensure that the current targets are being achieved, identifies potential design issues © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 9

Claims Process – Silo Structure Claim Mailroom Mgr Prep Docs • Process crosses several silo’s • Manager is both Process Owner and Process Manager • Solo’s focus on own performance • No one accountable for end to end performance Claims Mgr Scan Docs Manager Auth Mailroom Assess & Load Claims Dept Approve Central Payments Mgr Val<R 10 000 Calc Value Auth Calc Values Dept 1 st Signature Values Mgr 2 nd Signature Payment/Claim Completed Central Payments © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 10

Claims Process – Silo Structure Claim Mailroom Mgr Prep Docs • Improvement silo focused • Improvement not coordinated • Inter silo handoff problems remain, difficult to resolve • Common practice across silo’s lacking • Lack of time to focus on improvement Claims Mgr Scan Docs Manager Auth Mailroom Assess & Load Claims Dept Approve Central Payments Mgr Val<R 10 000 Calc Value Auth Calc Values Dept 1 st Signature Values Mgr 2 nd Signature Payment/Claim Completed Central Payments © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 11

E 2 E Claims Process Owner Claim Mailroom P/Mgr Prep Docs Claims P/Mgr Scan Docs Manager Auth Mailroom Assess & Load Process Owner looks after e 2 e design and e 2 e, silo KPM’s Process Managers responsible for • staff management and • ensuring departments/silo’s meet their performance KPM’s Claims Dept Approve Central Payments P/Mgr Val<R 10 000 Calc Value Auth Calc Values Dept 1 st Signature Values P/Mgr 2 nd Signature Payment/Claim Completed Central Payments © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 12

E 2 E Claims Process Owner Claim Mailroom P/Mgr Prep Docs • Improvement focuses across entire process, ongoing • Inter silo handoff issues resolved, cooperation improved • Common practices across silo’s • Time available to address continuous improvement Claims P/Mgr Scan Docs Manager Auth Mailroom Assess & Load Claims Dept Approve Central Payments P/Mgr Val<R 10 000 Calc Value Auth Calc Values Dept 1 st Signature Values P/Mgr 2 nd Signature Payment/Claim Completed Central Payments © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 13

Process Start and End Point Where should the end to end process start and end? • No simple answer. . • Rule of thumb: – Start point is the earliest point when you as the supplier of the requested service/item, assumes ownership for fulfillment eg receive confirmed notice of a need – End point is that point where the requested service/item has been delivered eg client need satisfied, and all related actions completed © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 14

Process Start and End Point – Start point is the earliest point when you as the supplier of the requested service/item, assumes ownership for fulfillment eg receive confirmed notice of a need – End point is that point where the requested service/item has been delivered eg client need satisfied, and all related actions completed © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 15

Process Owner Role 5 main requirements wrt the PO role: 1 Develops Process vision, strategy and objectives 2 Develops and implements process improvement initiatives (50%) 3 Monitors process performance across the organisation 4 Communicates with senior management 5 Develops and Manages policies and procedures governing processes © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 16

Process Owner Role 1 Develops Process vision, strategy and objectives – – – Set vision, strategy and performance objectives for the end to end process Ensure process strategy enables corporate strategy Gather and apply best practice to process © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 17

Process Owner Role 2 Develops and implements process improvement initiatives (50%) – – – Develops and leads formal process review and improvement cycles, to identify functional and cross BU improvements Collect improvement ideas from BU staff Develop and oversee roll-out plans for improvements to be implemented Ensure appropriate stakeholders part of planning and implementation process Ensure that Change Management addressed © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 18

Process Owner Role 3 Monitors process performance across the organisation – – – Define performance metrics for end to end process and silo process Reviews process performance and intervenes accordingly Identifies performance gaps and launches remedial initiatives © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 19

Process Owner Role 4 Communicates with senior management – – Resolves inter silo conflicts Feeds back to COO on current performance to targets Feeds back to COO on current and planned initiatives Meet business unit leaders to get input for strategy and communicate process strategy © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 20

Process Owner Role 5 Develops and Manages policies and procedures governing processes – – Manages all relevant policies and procedures related to process Refines and develops new policies and procedures on ongoing basis © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 21

Process Owner Profile Type of individual: • • • Someone who can positively influence improvement team members Able to communicate effectively within senior management levels Aptitude for process thinking and improvement Strong knowledge of process improvement methods and techniques Objective, able to do what is best for process performance and hence customers © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 22

Benefits • Permanent Process Owner Role enables – Sustained improvements due to permanent process custodian role – reversals and process degradation picked up and corrected as soon as they happen – Ongoing incremental improvements – Processes always aligned with corporate strategy – Consistent approach to process improvement across all process in the organisation – Easier replacement when incumbent changes © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 23

Benefits • End to End focus enables – Greater level of performance improvements – Reduced inter silo handoff issues – Early error detection and correction – Improved compliance – Improved agility – Improved silo process management – Improved overall end to end process management © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 24

Benefits Sustainable Ongoing Process Performance © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 25

Implementing Process Ownership • • Identify the core end to end processes across the whole organisation Implement an Organisational Structure to support the end to end Process Owner Implement Incentives to support new roles and behaviors Appoint the right people to the new PO positions – Skills, Experience profile, Passion • Empower the Process Owners – Clear roles and responsibilities – Establish trust in the process owners • • Establish clear governance and decision making structures Establish a process culture in the organisation – End-to-end vs Silo process understanding, with customer as focus – Visible process information – process maps, flows, parameters, KPM’s • Establish end to end performance visibility – Timeous performance measures and reporting – Dashboards © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 26

Implementation Challenges • • • Lack of senior management commitment Process Owners not fully empowered, scope curtailed Process Owner not involved from the beginning Part time Process Owner Process Culture not established Poor selection of Process Owner candidates – – Too junior Inexperienced Poor communicator Lacking in credibility • Decision making structures not clear • Silo vs End to End process owner conflicts • Limited career development opportunities © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 27

Conclusions • Process Ownership does not replace BPR Six Sigma, or other improvement initiatives • Lack of Process Ownership key cause of postimprovement performance degradation • Process Ownership is the part of BPM that ensures ongoing improvement and agility • Implementing Process Ownership in financial services will require a significant mindset change © 2007 Rethink Management Consulting (Pty) Ltd. IIR BPM Conference January 2007 28