Teaching Business Process Improvements – Making The Right Choice

A significant question in today’s competitive market that has direct business ramifications is how to assess the impact of business improvement projects and information technology changes before a commitment is made since an impact assessment can affect expectations of yield, return and quality improvements. Projects are often started without the baseline measures needed to asses the degree of improvement. More importantly, the ranking and impact assessment is often completely subjective. While subjective impact is important, it needs tempering with simple but more objective methods. Current approaches used to measure the performance of the business relate to processes, such as dashboards of metrics, value chain performance, and valuemanagement that all focus on the operational results rather than the processes are at the heart of the question. None of them provide preliminary insight or an assessment of which processes that should be improved, where the largest return is related to the larger risk or what will provide the greatest corporate impact for the least amount of investment or risk. There are few known business techniques or analytics that provide the insight required to assess the most significant business improvements prior to making that choice. Most analysis includes both qualitative and quantitative elements. Together, they provide the foundation for reasonable decision-making with regard to the situation being examined. Business processes are a series of actions or operations of producing something. The attributes of a business process can be either descriptive or quantitative. Businesses usually use one or more of these attribute(s) or metrics to represent the performance of the process (i.e. cycle time, inventory turns, and ratios of various sorts). Requirements for process improvement are statements supporting the need to change the actions within the process to improve its overall performance. This is a form of general requirements analysis. While some believe there is no way to generally analyze an enterprise others have examines some techniques to do so (Kowalkowski and McElyea). This paper will provide a step-by-step approach to examine and assess current business processes using a context based assessment method that allows you to understand the implications of changing the processes from various business perspectives. These context based methods also require some descriptive analytics to manipulate the working models. They provide a focused way to improve business processes based on requirements while examined the impact of the proposed changes to the business processes. Coupled with some quantitative measures, they can provide a means of assessing both return and risk. Background: The Competitive Environment and Processes Few disagree with the statement that the marketplace and environment for enterprise is more dynamic and complex today than at almost any other point in history. Given the competitive business world of global markets, there is an ever-increasing need for critical assessment of enterprise problems which demands a different set of analytic and problem-solving skills to assess those requirements. It also requires chaining different types of requirements together. In today’s market, it is essential to react to a business situation by (1) formulating the problem, (2) P ge 11200.2 analyzing the problem, (3) searching for solutions, (4) deciding upon an appropriate solution, and (5) specifying the solution. Of course, this approach to analysis has to be accomplished on time and within budget, and produce high quality results. Many organizations realize that gathering and organizing information about the enterprise is an on-going effort. Likewise, in building information systems, different requirements (statement of needs) are gathered and organized into a clear vision of why and what is required by whom, in some time period (when) and where it is needed. The on-going effort of maintaining this information can have a significant payback. What are the three types of requirements we deal with today? 1. Business requirements related to and resulting from some problem or situation the business faces such as entering a new market, a merger, consolidation, performance issue etc. The business itself is a complex adaptive system and must change with its environment or die. 2. Business system requirements created as the result of a response to the solution to the original business problem or situation. Examples are such as supply chain management, value chain improvement, customer relationship management, performance management etc. 3. Information system requirements focused on the automation aspect of the enterprise. This would include Business Intelligence, work flow, E-flows, core transaction systems etc. In other words, a ‘well engineered’ response to a set of ‘well articulated’ requirements of the business. Information systems are complex but not adaptive and can be engineered. Most published material deals with the last point as the purview of information technology or information systems capability in the enterprise. Less has been written about assessing the impact of changes due to those requirements. In each case it is important to know the type and the degree of impact. The other two are dealt with by various other parts of the enterprise, often by outside consultants. The adaptive nature of the business requirements requires a more general approach to analysis than that for an information system. The impact of change is determined through techniques of general analysis where the relationships of components of the enterprise are articulated and then related to each other. In the sense of business requirements, business process improvements are essential requirements. These requirements are descriptive statements that are relevant to the context and context envelopes of the organization. Therefore, requirements focus on these purposes: 1. Seeking improvement in efficiency and effectiveness, the business view. 2. Constructing information solutions to improve operational efficiencies, the systems view. Requirement statements stipulate desired needs. Within these statements, we find relationships that are expressed or implied between some resource, object or dimension of the organization. We suggest four key analysis points are supported by a change in the focus of analysis: P ge 11200.3 1. Identify the best place (highest yield, shortest time to yield etc) to start the business process improvement program. 2. Reduce the time to complete the analysis, a time to market or yield issue. 3. Improve analytics to drive the right results. 4. Know when you are done, have done enough analysis or further analysis will not help you. What is the Issue with Business Process Analysis Today? Many papers have been written about the failure or low yield of process improvement efforts. We have been using system development techniques to analyze processes. Sometimes they work and sometimes they don’t. The development techniques take more time and are more expensive. Process analysis and change must respond to the business need and as such it is part of the business systems requirements as opposed to the information systems requirements. They link to the problem – solution effort in the business and tie to the business requirements. Improving the analysis of processes to identify likely candidates for improvement has been a goal of many companies. The sheer volume of processes and the variety brought about by changing business configurations due to merger, acquisition, divesture, privatization and other strategies of businesses has put pressure on the analysis effort. Business processes (actions that are taken to support some purpose by a person or automated procedure) are never executed in a vacuum although some people may believe so. They are executed in context with many assets and enablers of the enterprise. Further, they have constraints or relationships that impact their usage. The enablers have characteristics of their own that may be severely impacted by process change or conversely impact the implementation of the new process. The entire set of influences or factors on a process is called “its context”. The context places pressures on the process and causes it to be analyzed for some improvement action. The degree of influence determines which processes might be a target for action. In addition, the results are used to identify the set of requirements. Requirements, as defined in the dictionary, are things essential to the existence or occurrence of something else and relate information about who, what, where, when, how, and why something is needed. This information must provide sufficient detail so that something can be engineered or built. Several strategies such as process replacement, workflow development, and automation via applications and so on are approaches used to fulfill those requirements. Along with the context of the process, there are attributes of the “context envelope”. A context envelope is a particular set of dimensions or categories of business elements connected to the process. Each dimension has attributes that distinguish the members of that dimension from one another. If the envelope is defined by documents (or screens) there are considerations such as how many documents are there, how often are they used; how big are they; and when are they used by a process. These dimensions of context influence the ranking of the processes. Each influencer has some set of attributes that can relate to the ranking of processes for improvement strategies. P ge 11200.4 Technique Used: Descriptive Analysis Analysis can be defined in different ways: (1) the separating of any material or abstract entity into its constituent elements or (2) a process used as a method of studying the nature of something for determining its essential features and their relationships. (Merriam-Webster, p.1