BPM (Business Process Management), CRM and Cross-Functional Enterprise-Level Customer-Focussed Business Processes

BPM (Business Process Management), CRM and Cross-Functional Enterprise- Level Customer-Focussed Business Processes Alan McSweeney

Objectives • To describe an approach to integrating operational processes into cross-functional customer focussed view for improved customer relationship management April 10, 2010 2

Scope • Concerned with cross-functional, enterprise-level business processes associated with customers and how organisations can take a cross-functional view to drive customer satisfaction • Not concerned with providing details on business process management, except where it is relevant to the cross- functional customer-oriented view April 10, 2010 3

Customer Service and Customer Satisfaction • Poor customer service is still pervasive despite awareness of the need for and benefits of improved customer service • Many organisations have not changed their business processes to deliver improved customer service and provide what customers want • Improved customer service means optimising end-to-end processes from the customer viewpoint − Involves linking multiple internal processes to get cross-functional view from customer perspective April 10, 2010 4

Illusion of Customer Relationship Management • Myth of CRM • Customers are not outsiders • We are all customers – utilities, service providers, financial institutions, government agencies • CRM is about how WE want to be treated • When we talk about customers (THEM), we mean us April 10, 2010 5

What Customers Really Want – More For Less • More Of • Less Of − Value − Aggravation − Responsiveness − Time to Complete Transaction − Involvement − Rigidity − Consideration − Cost − Dependability − Bureaucracy − Flexibility − Excuses − Lack of Integration April 10, 2010 6

What Organisations Try to Do – More With Less • More Of • Less Of − Work − Personnel − Customers − Facilities − Sales − Cost − Revenue − Margin April 10, 2010 7

Balance Between Internal and External • Need to balance management focus between “more with less” and “most for less” • More with less focuses on internal reductions: cost, staff • More for less focuses on external improvements • Only a cross-functional view of business processes can achieve this balance − Internal processes focus on operational functions − Cross-functional view links internal processes to get end-to-end customer view of organisation • Cross-functional processes are those that really affect customers – from start to end April 10, 2010 8

Cross Functional Processes – Crossing “Vertical” Operational Organisational Units April 10, 2010 9

Core Cross Functional Processes • Three cross-functional processes that are common to all organisations − Product/service delivery • From order/specification/design/selection to delivery/installation/implementation/provision and billing − Customer management • From customer acquisition to management to repeat business to up-sell/cross-sell − New product/service provision • From research to product/service design to implementation and commercialisation • These processes cross multiple internal organisation boundaries and have multiple handoffs but they are what concern customers • Cross-functional processes deliver value − Value to the customer − Value to the company • Integrated cross-functional processes means better customer service and more satisfied and more customers April 10, 2010 10

Core Cross Functional Processes and Customer View The customer sees across the structure and is not concerned with but is all too often aware of the operational elements, their complexity and lack of interoperability Product/Service Delivery: from order to completion Customer Relationship Management New Product/ Service Provision The organisation sees the structure vertically and in a compartmentalised view and all to frequently does not see the customer viewpoint April 10, 2010 11

Cross Functional View • Creating a cross-functional view shows you how your organisation really works • Can be used to identify real opportunities for savings as well as improvements • Creates a win-win of More For Less and More With Less April 10, 2010 12

Illusion of Attempting to Manage Outcomes • Outcomes cannot be managed, only influenced • Outcomes include: − Sales − Sales conversion rate − Revenue − Profit − Cashflow • Outcomes can only be influenced through activities: − Improved customer satisfaction − More sales activity − Greater value for money • Focussing on cross-functional processes is a key way of influencing outcomes and delivering value April 10, 2010 13

Illusion of Attempting to Manage Outcomes Activities Outcomes Develop and Sell the Right Product at the Right Price You cannot force customers to buy more products and Identify the Right Customers services Fulfil Orders Correctly and Satisfactorily Sell More Products/ Generate Manage Customer Relationships Services and More Profit More Profitably Be Easy to Do Business With Be an Organisation Customers Want to Do Business With Generate and Maintain High Customer Satisfaction April 10, 2010 14

Illusion of Attempting to Manage Outcomes Activities Outcomes But you can take actions Develop and Sell the Right and perform Product at the Right Price You cannot force activities customers to buy that will more products and increase the Identify the Right Customers services propensity of customers Fulfil Orders Correctly and to buy more Satisfactorily Sell More Products/ Generate Manage Customer Relationships Services and More Profit More Profitably Be Easy to Do Business With Be an Organisation Customers Want to Do Business With Generate and Maintain High Customer Satisfaction April 10, 2010 15

Barriers to Taking an Effective Cross-Functional View • No Focus on Cross-Functional Processes − No overall cross-functional business model − Too many point solutions without an overarching context • No Accountability for Cross-Functional Processes − No one is accountable for start-to-end activities − End-to-end processes not defined or even understood • No Measurement of Cross-Functional Process Metrics − No measurement of activities comprising cross-functional processes from start-to-end − Traditional rather than start-to-end metrics are pervasive − Designed to provide an inside-out view of organisation April 10, 2010 16

Single Barrier to Taking an Effective Cross- Functional View No Focus on Cross-Functional Processes Lack of Focus on Operations No by Senior Accountability No Management Measurement of for Cross- Functional Cross-Functional Processes Process Metrics April 10, 2010 17

Single Barrier to Taking an Effective Cross- Functional View • You need to get senior management involved and senior management must make the commitment to get involved • Must engage with the detail • Must understand the business April 10, 2010 18

Reasons for Taking an Effective Cross-Functional View • Products and services are becoming commoditised • No real differentiators • New products and services are readily and quickly replicated • Times to market are becoming much shorter • Start-to-end customer focus and service is real differentiator • Integrated products and start-to-end focus and service are difficult to commoditise • Combine service delivery with product/service • Need to look at business in terms of start-to-end processes April 10, 2010 19

Cross-Functional Processes “Horizontal” Cross Functional Processes – Externally Focussed Link Operational Processes Cross Organisation Boundaries “Vertical” Operational Processes – Internally Focussed April 10, 2010 20

Operational Processes • You have to have them, manage them, monitor them, update them • You cannot ignore them or do without them • They define day-to-day specific activities and associated controls • But you need to ensure that operational processes exist with a larger enterprise ecosystem April 10, 2010 21

Cross-Functional Approach • Connects operational processes in a start-to-end view • Identifies which key operational processes need to be improved • Defines the information that needs to be collected • Enables effective action to be taken • Links measurement to achievement of business goals • Becoming process-focused is a change in the way organisations operate from functions to processes April 10, 2010 22

Benefits of Cross-Functional Approach • Achieve better results from processes • Implement a consistent approach to assess and improve processes that are aligned with the strategy and business outcomes • Reduce costs by avoiding duplication in process improvement • Increase customer satisfaction by defining and aligning start-to-end business processes with measures that reflect customer needs • Improve productivity by eliminating process overlaps and ineffectiveness through the reduction of process complexities and implementing enterprise-wide standards April 10, 2010 23

Data and Information Gap • Within most organisations there is a noticeable information gap − Timely access to information − Access to accurate and complete information − Access to information at an appropriate level of detail − Inconsistent and patchy information from various business systems and units • Which of these statements apply to you? − The data is there but getting access to it is complicated or not possible − Finding and collating data across different information sources is often very difficult − Performance data is not available quickly enough to act on it effectively − There is excessive information that conceals what is really needed or important − Some of the information required is simply not being captured April 10, 2010 24

Data and Information Gap • Measuring the effectiveness of end-to-end cross-functional processes needs integrated information collection across operational processes To measure from end-to-end … … You need to aggregate individual operation measures into an integrated framework April 10, 2010 25

Closing the Information Gap • Closing the information gap is an essential pre- requisite of implementing effective and usable business process management • Responsibility of both the business and IT working collaboratively April 10, 2010 26

Data, Information and Action April 10, 2010 27

Data, Information and Action Cycle • Data refers to the source figures and numbers. It is the raw material for analysis − Data gap is the absence of the tools and operational processes to consistently collect, store, manage the data and make available tools to perform analyses. • Information is the value extracted from the raw data − Information gap is the absence of insight caused by the lack of defined metrics and indicators and their timely and accurate availability and usability. • Action is the need for operational business processes to ensure that the information presented is used and acted upon • The Data, Information, Action cycle means that there must be a continuum from collecting the raw data to using it effectively • Process to achieve this must be embedded in the organisation April 10, 2010 28

Key Measures • Overall financial performance • Overall operational • Performance of partnerships performance and alliances • Performance relative to • Product and service line competition profitability • Delivery of profit and value to • Client profitability clients • Client acquisition and retention • Client satisfaction • Staff performance April 10, 2010 29

Measure What Matters • If you measure what matters to the customer then you will be measuring what is important to the organisation • Creates an objective view of performance • Bear in mind that what get’s measured gets done April 10, 2010 30

Achieving a Cross-Functional View • Change of management attitude regarding customer centric processes • Widen attitude to process management from operational to cross-functional • Represents a significant effort and a new approach by management April 10, 2010 31

High-Level View of Areas of Management Refocus and New Behaviours Requirement Activities and Tasks Organisation view that shows key 1. Define what is important for customers cross-functional processes 2. Define the set of enterprise, cross-functional processes 3. Prioritise the critical enterprise, cross-functional processes and their constituent operational processes 4. Develop plan to implement enterprise, cross-functional processes 5. Define the organisation structure needed to operate the enterprise, cross- functional processes 6. Create plan for managing communications to articulate plan and its benefits Design enterprise, cross- 1. Modify the critical enterprise, cross-functional processes and their constituent functional processes to achieve operational processes business goals Define organisation structure 1. Identify organisational changes to create cross-functional alignment needed to operate the enterprise, 2. Update organisational structures to create roles and responsibilities to cross-functional processes implement cross-functional alignment IT systems that add value cross 1. Identify IT investments that deliver in improved business performance and added functions value 2. Implement IT systems Cross-functional measurements 1. Define cross-functional measurements that link overall customer-focussed that link performance to costs performance to cost and expenditure and expenditure 2. Collect information that populate cross-functional measurements Process for continuous 1. Define structures and processes to achieve continuous improvement improvement 2. Implement structures and processes to achieve continuous improvement 3. Measure continuous improvement April 10, 2010 32

Results of Management Refocus and New Behaviours • Focus on what matters to customers that includes: − Framework to measure customer-oriented performance − Structure to achieve customer-oriented improvements April 10, 2010 33

Attitude Inhibitors to Customer Centricity • Change to customer-centric operation requires learning, training and management − “I’m not in sales/marketing. Why are you talking to me?” − “I’ve been here for 20 years and I don’t see why we should change now.” − “I am willing to support the project 100% as long as it does not affect me.” − “This is the way it’s always been done and it’s worked well up to now.” − “I’ve got 15 minutes to talk to you. I’m very busy with important things.” • Attitudes that require change − Belief that you are smarter than your customers − Belief that you know best − Focus on short-term returns with no long-term focus − Operational thinking is not the job of senior management − Process will slow us down April 10, 2010 34

Tyranny of the Organisation Chart Cross-Functional Processes • The organisation chart by its nature emphasises vertical functions, seniority, vertical reporting lines • Creates local domains of influence and vested interests • An organisation chart view inhibits cross-functional process view • Everyone is partially responsible so no-one has Organisation overall responsibility Operational Functions April 10, 2010 35

Customer Centric Cross-Functional Measurements Measure from Start to Finish • Measure what matters as work moves through the organisation through the individual operational processes • Trends in these measurements will show the real health of your organisation April 10, 2010 36

Organisation Value Chains Value Chains • Value chains add value and confer competitive advantage when defined and linked April 10, 2010 37

Cross Functional Processes Link Operational Processes • Need a clear understanding of the organisation’s operational processes • Need to ensure that the operational processes are optimised • Cross-functional processes involve collaboration between operational processes April 10, 2010 38

Cross Functional Processes and Strategy • Effective cross-functional Measure processes deliver on the Achievement organisation’s strategy of Goals • Cannot divorce the Strategy organisation’s strategy from operational processes and their execution Delivered By • Collecting information on the performance of cross-functional Cross-Functional processes will allow the Processes execution of strategy to be effectively measured • Linkage between strategy, cross- Consisting Of functional processes and operational processes means individual process Operational Processes measurements can be linked to overall performance Set Goals • Allows goals to be connected to operational processes April 10, 2010 39

Sample Enterprise Business Process Models • The following sample organisational models illustrate implementations of aligned cross-functional business processes and have the following core characteristics: − Enterprise-level process definition − Focus on end-to-end cross-functional business processes that deliver value to customers − Designed for simplified communication − Common understanding of processes among process owners and users − Simple structures and frameworks − Appropriate use of external reference models and standards April 10, 2010 40

Sample Enterprise Business Process Models - 1 Business Environment Competitors, Governments Regulations and Requirements, Standards, Economics Customer’s Process Needs Business Core Processes Business Processes That Create Value for the Customer Controlling Measurement Process Process Customer Product Order Customer Processes That Acquisition Delivery Fulfilment Support Processes That Direct and Tune Monitor and Other Processes Report the Results of Other Enabling Processes Processes Processes That Supply Resources to Other Processes Channel Supply Human Information Business Management Management Resources Technology Acquisition Supplier’s Processes April 10, 2010 41

Sample Enterprise Business Process Models - 2 Align Supply Chain Innovate Plan Source Make Fulfil Customers Sell Build People Finance Information Environment Governance April 10, 2010 42

Sample Enterprise Business Process Models – Common Structure • Sample business process models have a common structure • Generic structure that forms a template for specific actualisations Operational Processes With Cross Functional Linkages Vision, Strategy, Leadership, Business Management Management and Support Processes April 10, 2010 43

Sample Enterprise Business Process Models – Common Structure Vision, Operational Processes With Cross Functional Linkages Strategy, Business Develop and Market and Deliver Manage Manage Management Products and Sell Products Products and Customer and Services Services Service Services Vision and Strategy Management and Support Processes Business Planning, Human Information Financial Facilities Merger, Resource Technology Management Management Acquisition Management Management Legal, Governance Regulatory, Knowledge, External and Environment, Improvement Relationship Compliance Health and and Change Management Safety Management Management April 10, 2010 44

Define Measures Linked to Key Processes Number of Profitability Customer New Per Inventory Turnover Customers Customer Business Environment Competitors, Governments Regulations and Requirements, Standards, Economics Customer Customer’s Process Needs Acquisition Cost Core Processes Business Business Processes That Create Value for the Customer Controlling Measurement Number of Process Process Customer Product Order Customer Customers Acquisition Delivery Fulfilment Support Processes That Processes That Complaints Direct and Tune Monitor and Other Processes Report the Time to Fulfil Results of Other Order Enabling Processes Processes Processes That Supply Resources to Other Processes Time to Channel Supply Human Information Business Management Management Resources Technology Acquisition Resolve Complaints Forecast Accuracy Supplier’s Processes Number of Delivery Payment Time Invoice Returns Accuracy Times Accuracy April 10, 2010 45

Actions to Achieve Enterprise Business Process Approach • Identify and understand the cross-functional, enterprise- level business process that create and add value • Understand and define the metrics that measure cross- functional, enterprise-level business process performance • Define a plan for managing and improving cross-functional, enterprise-level business processes identifying priorities and resources • Ensure there is sponsorship, ownership, accountability for results and recognition of achievements • Communicate the vision to the organisation April 10, 2010 46

Enterprise Business Process Models vs. Organisation Chart • How do the two compare? • Organisation Chart • Enterprise Business Process Models − Top-down structure focussing on − Functional areas that traverse operational areas operational boundaries − Focussed on internal organisation and − Focussed on end-to-end structure accomplishments − Compartmentalised − Joined-up Vision, Operational Processes With Cross Functional Linkages Strategy, Business Develop and Market and Deliver Manage Manage Management Products and Sell Products Products and Customer and Services Services Service Services Vision and Strategy Management and Support Processes Business Planning, Human Information Financial Facilities Merger, Resource Technology Management Management Acquisition Management Management Legal, Governance Regulatory, Knowledge, External and Environment, Improvement Relationship Compliance Health and and Change Management Safety Management Management April 10, 2010 47

Baldrige Criteria Framework • The Baldrige criteria framework focuses on continuous improvement that is concentrated on the customer, led by management, based on facts and data, and directed toward results Organisational Profile: Environment, Relationship, Challenges Workforce and Strategic Human Planning Resources Business Leadership Results Customers and Process Markets Management Information, Measurement, Analysis and Knowledge Management April 10, 2010 48

Baldrige Criteria Framework • Baldrige criteria framework is a superset of the cross- functional business process management view of an organisation in order to deliver improved customer satisfaction • Included here for the sake of completeness • We are concerned specifically with cross-functional business processes relating to customer service and customer relationship management • Baldrige criteria framework can provide a proven framework for this April 10, 2010 49

Mapping Sample Business Process Model - 1 Vision, Operational Processes With Cross Functional Linkages Strategy, Business Develop and Market and Deliver Manage Manage Management Products and Sell Products Products and Customer and Services Services Service Services Vision and Strategy Management and Support Processes Business Planning, Human Information Financial Facilities Merger, Resource Technology Management Management Acquisition Management Management Legal, Governance Regulatory, Knowledge, External and Environment, Improvement Compliance Health and Relationship Management and Change Business Environment Safety Management Management Competitors, Governments Regulations and Requirements, Standards, Economics Customer’s Process Needs Business Core Processes Business Processes That Create Value for the Customer Controlling Measurement Process Process Customer Product Order Customer Processes That Acquisition Delivery Fulfilment Support Processes That Direct and Tune Monitor and Other Processes Report the Results of Other Enabling Processes Processes Processes That Supply Resources to Other Processes Channel Supply Human Information Business Management Management Resources Technology Acquisition Supplier’s Processes April 10, 2010 50

Mapping Sample Business Process Model - 2 Vision, Operational Processes With Cross Functional Linkages Strategy, Business Develop and Market and Deliver Manage Manage Management Products and Sell Products Products and Customer and Services Services Service Services Vision and Strategy Management and Support Processes Business Planning, Human Information Financial Facilities Merger, Resource Technology Management Management Acquisition Management Management Legal, Governance Regulatory, Knowledge, External and Environment, Improvement Relationship Compliance Health and and Change Management Safety Management Management Align Supply Chain Innovate Plan Source Make Fulfil Customers Sell Build People Finance Information Environment Governance April 10, 2010 51

Challenges and Lessons Learned from Cross- Functional BPM Implementation Aligned Processes Aligned Measures Resources, Skills and Enabling Technology Knowledge Sharing Credibility and Simplicity in Communication Process Improvement Tools April 10, 2010 52

Aligned Processes • Understanding, defining and aligning business processes are key to success • Aligned processes increase return • Individual operational processes need to be connected to larger cross-functional processes April 10, 2010 53

Aligned Measures • Appropriate performance measurement available to all is important • Need to measure results of cross-functional processes and constituent operational processes • Ensures focus is maintained on what is important April 10, 2010 54

Resources, Skills and Enabling Technology • Dedicated, trained and skilled resources are important • Need usable, functional technology providing process design, mapping features • Ensure full-time responsibility April 10, 2010 55

Knowledge Sharing • Acquire and share internal and external expert knowledge • Implement knowledge sharing technology • Learn from others’ mistakes • Use appropriate external expertise April 10, 2010 56

Credibility and Simplicity in Communication • Need to communicate the need to operate in a business process oriented manner • Need to sell the concept to personnel • Showing results is necessary to get buy-in and sustain BPM initiatives April 10, 2010 57

Process Improvement Tools • Process improvement is core to BPM • Toolset is important April 10, 2010 58

Process Management Model Business Strategy, Business Models, Business Plans, Change Management Process Leadership Design and Implement Processes Process Performance Measure Actual vs. Target Performance Process Design Cause Analysis Create and Implement Solutions Process Knowledge Execution Continuous Process Redesign Management Improvement Improvement Improvement Gap Success Share Best Practices April 10, 2010 59

Business Process Action Hierarchy Business • Cross-functional Process Hierarchy processes need to be aligned with actions Cross Functional Cross Functional Process Process Consists of one or • Performance of more of … actions rolls-up to Process Process Process Process performance of Consists of one or more of … process Sub-Process Sub-Process Consists of one or more of … Activity Activity Consists of one or more of … Task Task Consists of one or more of … Step Step Step Step April 10, 2010 60

Sample Business Process Action Hierarchy • Sample set of actions associated with a process − Need to ensure that individual actions are aligned and their performance measured Sample Business Process Hierarchy Cross Functional Process Supply Chain Management Consisting of a Number of Processes Including Fulfil Order Consisting of a Number of Sub-Process Including Take Customer Order Consisting of a Number of Activities Including Check Customer Status Consisting of a Number of Tasks Including Validate Customer Account and Credit Consisting of a Number of Steps Including Enter Customer Details April 10, 2010 61

You Know You Are Achieving a Cross-Functional Customer View When … • You know what matters to customers • You measure what matters to customers • You identify and understand the key cross-functional, enterprise-level business processes • You start initiatives that focus on cross-functional, enterprise-level business processes • You link operational processes to cross-functional, enterprise-level business processes • You reward personnel based on contribution to customer satisfaction and performance April 10, 2010 62

Achieving a Cross-Functional View • There will be problems • You are encroaching on peoples’ territories • You are creating waves • Understand and deal with April 10, 2010 63

Summary • Too often organisations look to what is important to them and now what is important to their customers • Too often organisations are structured along operational lines • Poor customer service is still pervasive despite awareness of the need for and benefits of improved customer service • A cross-functional view of business processes shows what is important to customers • If you measure what matters to the customer then you will be measuring what is important to the organisation April 10, 2010 64

More Information Alan McSweeney alan@alanmcsweeney.com April 10, 2010 65

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BPM (Business Process Management), CRM and Cross-Functional Enterprise-Level Customer-Focussed Business Processes

by Alan McSweeney

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BPM (Business Process Management), CRM and Cross-Functional Enterprise-Level Customer-Focussed Business Processes Presentation Transcript