Intelligent Enterprise

» A growing number of companies are starting to implement the basics of documenting, analyzing and designing business processes, as well as process improvements. Yet companies must go beyond the basics to practice continuous process improvement.

Management and improvement of end-to-end business processes is difficult and requires more than a simple, one-time effort. Continuous process improvement means a fundamental shift in leadership values and disciplined measurement and management of the value that processes create for customers and shareholders. IT pros must think in terms of how technology enables performance as opposed to considering only siloed applications.

Those companies implementing business process management have learned that it can compress cycle times, reduce cost and improve responsiveness. But if you treat BPM as a once-and-done project, you run the risk of suboptimal gains or the gradual erosion of initial gains. If you cut costs by automating the customer-inquiry process, for example, but don't go on to analyze, redesign and manage the larger order-to-cash process, you'll miss further gains simply because the root causes of many customer complaints stem from the larger, end-to-end process. Similarly, if an insurance firm improves a process, such as claims handling, but then fails to continuously monitor, measure and manage that process, the initial gains will erode over time as staff, technology and business conditions change.

What's at stake? Nothing less than the ability to optimize performance. Sustainable process management demands a customer-centric leadership perspective, continuous measurements of what matters to customers, ongoing monitoring of process performance and executive accountability for improving key processes. Those who keep moving typically double their cost savings and efficiencies. In an era of commoditization and global competition, continuous process improvement is the difference between surviving and thriving.

Beyond Functional Thinking

Only about a third of self-proclaimed "process-oriented" companies have gone beyond the basics of BPM. Why? It all begins with the right leadership attitude and aptitude. Conventional mindsets remain the principle obstacle to the practice of process management. Most of us studied a particular academic discipline in college, be it marketing, finance, IT or engineering. Then, for most of us, our first job was in the same area. Career progression came about by demonstrating excellence in that area. It should be no surprise that many leaders view the world through a functional bias.

In spite of the compelling logic that value is created by business processes, many leaders cling to a functional view of the business, because they don't care to take a different view, they can't focus or they don't know how to form a different perspective (see "Why Leaders Cling to a Functional View of Business" below). If leaders cared to change, focused or knew how to change their view, they would measure what's important to customers in addition to monitoring financial metrics, such as revenue, earnings and cash flow. They would also assign accountability for the performance of business processes instead of only looking along functional lines.

Perhaps the triple threat of increasing customer power, commoditization and globalization will strike fear into the hearts of leaders and change mindsets and behavior. Thanks to the Internet, customers can access information, avoid pushy marketing messages and more easily make their own decisions. The pace of commoditization is relentless; just ask any telecom provider about its margins or any technology provider about the expected life span of new products. And globalization is letting competitors reach around the world farther, faster, deeper and cheaper than ever before. These three forces aren't hype and aren't likely to fade away.