The Institute of Internal Auditors Detroit Chapter Developing

The Institute of Internal Auditors Detroit Chapter Developing World Class Process Maps May 22, 2013 proprietary and confidential for more information please visit www. majoroakconsulting. com

If You Have Questions… If you have questions during the webcast: – If necessary, exit Full Screen View by pressing the Esc key – Submit questions through the “Ask a Question” button – Questions will be answered after the presentation portion is concluded proprietary and confidential for more information please visit www. majoroakconsulting. com 2

Earning CPE Credit In order to receive CPE credit for this webcast, participants must: v Attend the webcast on individual computers (one person per computer) v Answer polling questions asked throughout the webcast v When answering polling questions, select your answer and the click “Vote” button (next to the “Ask a Question” button) to submit / save your answer. v CPE certificates will be sent to the e-mail address on your Bright. TALK account within two weeks of this webinar. proprietary and confidential for more information please visit www. majoroakconsulting. com 3

Please tell us your member status A) B) C) D) E) Member Detroit Chapter Member Other Michigan chapter (not Detroit) Member of other chapter (not Michigan) Non member Student proprietary and confidential for more information please visit www. majoroakconsulting. com 4

Bios Adam Golden Co-Founder and Principal of Major Oak Consulting, a boutique Management Consulting firm Former Internal Auditor at D&B 20+ years Process Excellence CFO Magazine winner of “REACH” award for Outstanding Reengineering Achievement Co-Chair of the APA’s Strategic Payroll Leadership Task Force (SPLTF) Best Practices Subcommittee Process Geek proprietary and confidential for more information please visit www. majoroakconsulting. com Keith Fournier, MA, MBA, PMP Senior Management Consultant – CIO Advisory Services Former “Transformation” CIO Managed tens of millions of dollars of technology projects Received National Recognitions for ERP, Document Management and Geographic Information Systems implementations 20+ years (10 years consulting) Specialize in IT strategy, planning, acquisition, and implementation Project Management Geek 5

Agenda Process Mapping – Background Enterprise Mapping Current State Mapping and Analysis Capability Requirements Future State Process Mapping Best Practices / Wrap-up Q&A proprietary and confidential for more information please visit www. majoroakconsulting. com 6

What is a Business Process? Definition: A process is a series of steps or actions performed to achieve a specific purpose Processes are the foundation of all businesses, yet nearly all processes within organizations are undocumented proprietary and confidential for more information please visit www. majoroakconsulting. com 7

Customers Experience a Company’s Processes, Not its Functions Processes are what happen when functions come together to perform a task It’s normally poorly designed and executed processes that cause inefficiency and ineffectiveness in organizations, not functions Note: If the name doesn’t include a verb, it’s probably not a process FUNCTIONS Customer Service Dept Sales / Marketing Accounts / Credit Dept Production / Service Delivery PROCESSES “Receive & Process Account Application” “Onboard New Customer” “Bill & Collect From Customers” “Handle Customer Complaint” proprietary and confidential for more information please visit www. majoroakconsulting. com 8

So when do you map your business processes? Organizations map their process for specific “events” such as: Reengineering / Improvement programs – Reduce costs, remove waste, increase quality, increase efficiency, improve employee satisfaction, improve customer satisfaction, etc. Systems implementations Merger & Acquisition (M&A) integrations Sarbanes-Oxley / Compliance / internal controls awareness However, almost anytime is the right time to map your business processes. Process mapping is a useful tool to develop a shared understanding of issues/problems, build teams, produce brilliant ideas and unlock the potential in your business. proprietary and confidential for more information please visit www. majoroakconsulting. com 9

Polling Question #1 Are you are involved in projects outside of internal audit reviews? A) B) C) D) E) Yes, Reengineering/Improvement programs Yes, Systems implementations Yes, Merger & Acquisition (M&A) integrations Yes, Sarbanes-Oxley/Compliance/internal controls awareness No proprietary and confidential for more information please visit www. majoroakconsulting. com 10

Why map your business processes? Mapping processes enables organizations to: Understand what the process really is… − Detailed information of what is currently happening, who does it, predictability − Determine “real process” vs “perceived process” Measure the effectiveness and efficiency of the process Ensure the proper controls are in place Understand where waste and inefficiency exist − Delays, unnecessary handoffs, duplication of effort, etc − Impact on the customer or partners Develop new improved processes − Reduce or eliminate inefficiency − Improve the customer experience − Clarify roles and responsibilities proprietary and confidential for more information please visit www. majoroakconsulting. com 11

There are many ways to document a process It seems there are endless ways map a process. The Major Oak methodology for process mapping is thorough, complete and valuable to uncover current state issues and define future state opportunities. Process Mapping Examples proprietary and confidential for more information please visit www. majoroakconsulting. com 12

Process mapping involves a series of steps, from confirming process scope to future state design Before beginning the process mapping journey, it is important not to immediately rush into the detail of process maps. Process mapping typically takes place across four phases. Phase 1 Phase 2 Phase 3 Phase 4 Enterprise Overview Current State Mapping Capability Requirements Enterprise Process Map Current State Process Future Directions Data Analysis Capability Requirements proprietary and confidential for more information please visit www. majoroakconsulting. com Future State Design Future State Process 13

An Enterprise Process Map provides context and scope for your processes An Enterprise Process Map critically provides context (i. e. interfaces with other processes), as well as scope for processes (i. e. where the processes start and end) Note: Boxes inside the shaded box represent internal processes and boxes outside represent external parties. Enterprise Process Map (example only) proprietary and confidential for more information please visit www. majoroakconsulting. com 14

Polling Question #2 What tool do you use to map processes? A) Visio B) Power. Point C) i. Grafix D) Other proprietary and confidential for more information please visit www. majoroakconsulting. com 15

Each box on the Enterprise Process Map represents an individual process A process map presents the detailed activities of an individual process, who performs them, how they interact and which systems are used Enterprise Process Map proprietary and confidential for more information please visit www. majoroakconsulting. com 16

Polling Question #3 Have you ever built an enterprise map before? A) Yes B) No proprietary and confidential for more information please visit www. majoroakconsulting. com 17

Process mapping involves a series of steps, from confirming process scope to future state design Before beginning your process mapping journey, it is important not to immediately rush into the detail of process maps. Process mapping typically takes place across four phases. Phase 1 Phase 2 Phase 3 Phase 4 Enterprise Overview Current State Mapping Capability Requirements Future State Design Enterprise Process Map Current State Process Future Directions Future State Process Data Analysis Capability Requirements proprietary and confidential for more information please visit www. majoroakconsulting. com 18

How do you begin mapping the current state? A current state map focuses on what ACTUALLY happens in a process. Process mapping starts with an understanding of the process details by asking the following questions: Current State Process Mapping 1. What transactions are part of the process? 2. What are the specific tasks? 3. Who performs each task? 4. Who is the customer(s)? 5. Are there other stakeholders? 6. What are the decision points? 7. What systems are used? proprietary and confidential for more information please visit www. majoroakconsulting. com 19

There are many ways to gather data for the current state process map Tools to capture process information and gain an understanding of the current state include: Tip: Use a mixture of these techniques Existing documentation: always leverage any process documentation that already exists Interviews: one-on-one interviews with individuals who are managing, as well as performing the process Observations / Walkthroughs: watching a process or individual in action – can be transaction specific Workshops: targeted working sessions with a group of people involved in performing the process Conduct Interviews / Observe Processes DILOs (“Day In The Life Of”): shadowing individuals for a full day to experience first had how they handle the process proprietary and confidential for more information please visit www. majoroakconsulting. com 20

The process mapping workshop should be a fun and interactive experience Goal: To attain a clear, agreed upon depiction of the current state process Duration: Depends on the complexity of the process, but typically schedule a half day if under 8 attendees and full day if 8 or more attendees Attendees: Include anyone that touches the process in the workshop Inputters to the process – Process stakeholders – at least one person per stakeholder group – Individuals managing and performing the detailed process – Receivers of the output of the process (internal customers) Facilitator: The primary role of the facilitator is to engage the attendees to ensure everyone is involved. The facilitator should be a skilled facilitator with process mapping experience – It’s best when the facilitator is not connected to the process being mapped – so they remain unbiased by the discussion In our experience, there is always healthy discussion about what really happens in the current state proprietary and confidential for more information please visit www. majoroakconsulting. com 21

Workshops: Process Mapping is a science, but don’t forget about the art Process mapping is both a science and an art. The science is knowing the make-up of a process and being able to distill down to each specific task and decision point. The art is the creative process of how to draw the process on paper to make it come to life. proprietary and confidential for more information please visit www. majoroakconsulting. com 22

Key Workshop Activities / Post Workshop Activities Have participants describe the process steps Ask the group for clarifications or comments Highlight areas of discussion Ask about the volumes / significance Tip: Write on Post-its or brown paper: § BU differences § Process exceptions § Manual steps § Re-work § Where errors occur § Materiality Wrap up and Post Workshop Activities Thank everyone Roll up your draft map (brown “butcher” paper) Capture key takeaways or parking lot items Start drafting your current state process map The true goal of the workshop is to identify all of the process steps – you’ll have time for validation and quantification later Follow up on any open items or questions proprietary and confidential for more information please visit www. majoroakconsulting. com 23

A process map without swim lanes is like a bike without pedals It is extremely difficult, maybe impossible, to improve a process if you don’t know who is responsible for performing the activity. The benefits of swim lanes are: Tip: Setup a You know who is responsible for each step in the process swimlane for every process You can see how many people actually touch the process participant You can see back and forths between the same people You can see the hand-off points and where things could fall through the cracks proprietary and confidential for more information please visit www. majoroakconsulting. com 24

Key elements of your process map should include: Activities Roles Sub-Processes highlighted Tip: Don’t cross connector lines that link process steps Tip: Include multiple views of timeline / cycle time Timeframes proprietary and confidential for more information please visit www. majoroakconsulting. com Permanent Key Notes Temporary 25

A current state map is the basis for uncovering process issues and opportunities for improvement Once the current state has been mapped, it’s time to validate, analyze and add supporting detail to the map. Examples of current state analysis include: Tip: Review the draft Validate the map with the core functional team Identify manual tasks that can be automated map with core team to validate you got it right Identify any task that can be eliminated (non-value added) Quantification of activities, tasks and transactions – – – – Cycle times Volumes Defects Handoffs Wait times Costs Timeframes Process loops / rework proprietary and confidential for more information please visit www. majoroakconsulting. com 26

Process Analysis can take numerous forms. Here’s a few examples: Activity analysis Activities Email request in inbox Prepare quote request Send to manager for review Review quote for errors Take paper back to originator Prepare paperwork for client Follow up client Submit order Await confirmation of order File confirmation No. of tasks Cycle time (hrs) Time (hrs) 4 2 0. 5 1 1 2 4 0. 5 10 16. 5 % 100% proprietary and confidential for more information please visit www. majoroakconsulting. com Check Transport Operation Wait Storage � � 67% of time spent on NVA activities � � � 1 1 2 1. 5 3 4. 5 3 9 � 1 0. 5 6% 9% 27% 55% 3% 27

Process Analysis Example: Resource variation Open/View Verification Process Activity End Variance due to: System navigation & processing techniques Associate 1 Associate 2 Associate 3 Associate 4 Associate 5 00: 01 00: 07: 13 00: 14: 25 Duration (hh: mm: ss) proprietary and confidential for more information please visit www. majoroakconsulting. com 28

Now annotate the map, highlighting issues, opportunities, best practices and potential projects Improvement Projects Key Volumes Advanced Technique: Color code activity boxes to highlight activity subcharacteristics (manual, fax, regulatory, etc. ) Issues / Opportunities proprietary and confidential for more information please visit www. majoroakconsulting. com Best Practices 29

Sample Completed Process Map proprietary and confidential for more information please visit www. majoroakconsulting. com 30

Sample Process Map proprietary and confidential for more information please visit www. majoroakconsulting. com 31

Sample Process Map proprietary and confidential for more information please visit www. majoroakconsulting. com 32

Current State Mapping – Using the Output Finalize the map Tip: Use the final current state map as a training tool for new employees Identify improvement projects Discuss opportunities with team and management Prioritize improvement projects and kickoff next steps proprietary and confidential for more information please visit www. majoroakconsulting. com 33

Phase 1 Phase 3 Enterprise Overview Phase 2 Current State Mapping Enterprise Process Map Current State Process Future Directions Data Analysis Capability Requirements proprietary and confidential for more information please visit www. majoroakconsulting. com Capability Requirements Phase 4 Future State Design Future State Process 34

Capability Requirements must be determined before mapping your Future State Processes Before mapping future state processes, it is important to understand the future direction of the business and obtain consensus from the Management Team regarding their expectations and business capabilities required to support the business in the future. Key Questions: What capabilities do they have today? What capabilities do they need for the future state? What process, people and technologies are needed? What are the customer expectations at each key point of interaction with the business? proprietary and confidential for more information please visit www. majoroakconsulting. com 35

Determine expectations at each customer interaction point and the capabilities required to meet them Customer Contact / Key Interaction Points 1. 2. 3. 4. 5. 6. n. Process A Process B Process C Process D. . . … Process ‘n’ proprietary and confidential for more information please visit www. majoroakconsulting. com Customer Expectations Operational Capability Requirements Organization’s Expectations 36

Phase 1 Enterprise Overview Phase 2 Current State Mapping Phase 3 Capability Requirements Enterprise Process Map Current State Process Future Directions Data Analysis Capability Requirements proprietary and confidential for more information please visit www. majoroakconsulting. com Phase 4 Future State Design Future State Process 37

Future state mapping transforms from what actually happens to what should happen A future state map focuses on what SHOULD happen in a process by asking the following questions: Future State Process Mapping 1. Who should perform each task? 2. What should be the specific tasks? 3. What should be the decision points? 4. Who is the customer(s)? 5. Who are the stakeholders? 6. How should we resolve the issues with the current process? proprietary and confidential for more information please visit www. majoroakconsulting. com 38

Future state maps typically begin with the current state, but starting with a blank page can be powerful Start your ‘ideal’ state process map with one or all of the following techniques: Use your current state process maps and analysis to identify non-value add steps Re-sequence / amend the existing activities to streamline the process – Consolidate activities to one role where possible to minimize hand-offs Brainstorm fresh ideas from scratch (sticky notes!) proprietary and confidential for more information please visit www. majoroakconsulting. com 39

Identifying non-value add steps in the current state should involve all the relevant parties Remove non-value add steps proprietary and confidential for more information please visit www. majoroakconsulting. com 40

Ultimately, you’ll have a future state process map Current State Future State proprietary and confidential for more information please visit www. majoroakconsulting. com Key Differences: Removed non value-add (NVA) activities Automated steps Consolidated activities Work moved to the appropriate role 41

Wrap Up / Best Practices proprietary and confidential for more information please visit www. majoroakconsulting. com 42

Keep these Best Practices in mind when mapping within your organization 1. The people doing the work are the best source of realistic data – They are the ‘factual’ authorities on that work – treat them with respect – To get the ‘real story’, remove “bosses” from room during process mapping 2. Generalities are the enemy of good process maps - push for specifics 3. Gather data with multiple approaches - explanation and demonstration 4. Quantify as much as possible – quantification = relevance 5. Validate the process map – multiple times if necessary 6. Swim lanes make the map much more relevant 7. Capture process exceptions, but don’t map them 8. Real test is if the process map is vouched for by those doing the work 9. Break the process down into sub-processes wherever possible 10. The timeline tells a whole story in itself 11. Use flags, notes, colors and other visuals in your process maps proprietary and confidential for more information please visit www. majoroakconsulting. com 43

Questions? proprietary and confidential for more information please visit www. majoroakconsulting. com 44

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Speaker Information Thank You! Adam Golden Principal Major Oak Consulting, LLC agolden@majoroakconsulting. com 973. 701. 0872 proprietary and confidential for more information please visit www. majoroakconsulting. com Keith Fournier Senior Management Consultant Major Oak Consulting, LLC kfournier@majoroakconsulting. com 419. 344. 6504 46