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Process Measurement
© Leonardo Consulting 2015
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Copyright © 2015 Leonardo Consulting. All rights reserved.
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Based on the Leonardo, Measuring Processes course .
http://www.leonardo.com.au/documents/Leonardo-Consulting_Measuring-
Processes.pdf
delivered as part of the Leonardo Educational offerings:
http://www.leonardo.com.au/downloads/education/Leonardo-Education.pdf
3. 3
Process Measurement
© Leonardo Consulting 2015
Agenda
1. Process-based Management Context
2. A Methodology for Measuring Process
Performance
3. Failure Modes
4. Wrap-up
4. 4© Leonardo Consulting 2015
Bank: $30 million annual savings [USA]
Agency: -22% labour cost [Australia]
Retail: +25% customer satisfaction [Europe]
Manufacturer: -80% reported problems [Asia]
Insurance: -97% assessment time [Australia]
NGO: -80% procurement cycle time [Africa]
Aid: 75% reduction in cost [International]
Regulator: +500% productivity [Mid-East]
Process-based management works
7. 7© Leonardo Consulting 2015
Reasons for measuring processes:
• understand cross-functional performance
• align with strategy
• determine priorities
• drive improvement
• detect performance trends
• determine capability range
• uncover problems
• change behavior
• control risk
• benchmark performance
8. 8© Leonardo Consulting 2015
Agenda
1. Process-based Management Context
2. A Methodology for Measuring Process
Performance
3. Failure Modes
4. Wrap-up
9. 9© Leonardo Consulting 2015
ProMeasure® is the
Leonardo methodology for
process measures management
Process Measurement
Measure process performance
If you aren’t measuring
process performance, you
aren’t doing process
management, and can’t
know if you are doing
process improvement
Measures and
measurement methods
10. 10
SWOT, MoSCoW, Prioritization Matrix, Kano,
Suggestions, Pain-Gain Analysis, Worrywillie
Grid, Stakeholder Voting, Internal Selection
Criteria
Process Selection
Techniques
1. Select Process
Apply organization knowledge
Develop Knowldege
Management strategy
Assess Knowledge Management
requirements
Identify and plan Knowledge
Management initiatives
Manage Knowledge Management initiative
lifecycle
Maintain ICT systems & services
Develop ICT
strategy
Develop ICT
architecture
Implement & maintain ICT
solutions
Manage enterprise
information
Support ICT
system users
Generate innovative ideas
Collect ideas Prioritize ideas Select idea Develop idea
Maintain working environment
Acquire operations
assets
Maintain assets
Develop & execute Health &
Safety Program
Monitor working environment
quality
Resolve working environment
problems
Assure legal & policy compliance
Document compliance
requirements
Assign compliance
accountabilities
Monitor & report
compliance status
Resolve compliance deficits
Ensure data privacy & security
Define data privacy & security
policies
Develop & manintain data
managment controls
Communicate data privacy & security
standards
Audit data privacy &
security
Support staff lifecycle
Develop & maintain HR
policies
Recruit
employees
Develop & manage employee
performance
Reward & retain
employees
Redeploy & retire
employees
Onboard & maintain
employee information
Control financial resources
Perform planning & management
accounting
Manage
revenue
Perform general accounting &
reporting
Manage asset
accounting
Administer
payroll
Control treasury
operations
Control accounts payable & expense
reimbursements
Establish & maintain financial
controls
* Patrick van Abbema, 2009
Boundary Conditions
© Leonardo Consulting 2015
11. 11
Stakeholder Priority Matrix
Stakeholder Diagram
2. Understand Stakeholders
Process Vision Statement
What is this process supposed to achieve?
What do the stakeholders want it to achieve?
If it was working as well as the key stakeholders, require, how would we know?
© Leonardo Consulting 2015
12. 12
Measurement Themes
Satisfaction, Time, Cost, Quality,
Compliance, Capacity
A Balance of Measures
Internal /External
Lead/Lag
Quantitative/Qualitative
Atomic/Aggregated
Positive/Negative
3. Develop Measures
© Leonardo Consulting 2015
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Is there a difference between process
measures and organisational
measures?
© Leonardo Consulting 2015
14. 14
Good process measures ...
highlight performance trends
stimulate good behaviour
align operations and strategy
expose problems
determine priorities
create urgency
encourage improvement
deliver insights
predict outcomes
inspire commitment
© Leonardo Consulting 2015
15. 15
Do we have the correct measures?
Guess / Experience
Reference Models
Repeatable Methodology
Rationalise the Measures
The ultimate question:
Do we have a viable set of the minimum number of important measures of
actual process performance about which we have key stakeholder agreement
and for which we have a measurement method that can cost-effectively gather
objective, accurate data against a well-defined target?
© Leonardo Consulting 2015
16. 16
Measuring Alignment
Coordinate XYZ Program
Award
Competitive
Grants (Type A)
Allocate
Regional
Payments
Award
Competitive
Grants (Type B)
Award Competitive Grants (Type B)
Seek
proposals
Monitor
funding
agreements
Decide
funded
projects
Develop
funding
agreements
Resolve proponent
queries
Decide funded projects
Receive
proposals
Decide final
rankings
Evaluate
proposals
Moderate
assessments
Communicate
outcomes
Does the set of process
measures align with the
next highest process level?
Is there anything
missing in the set of
sub-process measures
compared to the next
highest level?
© Leonardo Consulting 2015
17. 17
Look for Performance
Leakage Points© (PLPs)
Where
4. Validate Measures
When
As little as is necessary to understand
current and trend performance of the process
Stable process, less frequent measures
Don’t become complacent about measuring an
improving process. Dig deeper.
Measures may need to change over time
Measure the results of change
© Leonardo Consulting 2015
© Roger Tregear, Leonardo Consulting
18. 18
For each measure we need to design an effective
Measurement Method
Is the MM reliable? Will it consistently provide
accurate data?
Is the MM cost-effective?
Is the MM so difficult to execute that it will eventually
stop being used?
Does the MM rely on special skills or tools that may
not always be available?
MMs are important
© Leonardo Consulting 2015
20. 20
Target the information
Report by exception
‘Pull’ vs ‘Push’ reporting
Visual Management
Presenting
performance data
5. Document Measures
© Leonardo Consulting 2015
21. 21
Value
Chain 1Process 1.1 Process 1.3Process 1.2
Lead the organization
Manage risk
& compliance
Determine
market strategy
Manage
capital
Develop
Vision
Support the organization
Deliver HR
services
Maintain
physical facilities
Deliver IT
services
Manage
finances
Value
Chain 2Process 2.1 Process 2.3Process 2.2
A System of Measurement
EPA
Measures
MMs
Reports
Response
m
Process
1.2
Process 1.2
The Voice of the Process - Process Owners are
accountable for responding to actual and potential
process performance failures.
The Result…
© Leonardo Consulting 2015
24. 24
Too few / too many measures
Wrong measures
Narrow focus
Measuring what is easy
Confidence not evidence
Unreliable data sources
False precision
Expensive collection
Fear of measurement
Lack of accountability
Detached from value creation
Common Failure Modes
© Leonardo Consulting 2015
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Why Measure Process Performance?
• Processes are the only way any organisation
delivers value to its customers/stakeholders
• No functional entity, by itself, can deliver value to
an external customer
• Organisations execute their strategic intent via
their business processes
© Leonardo Consulting 2015
28. 28
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