1. © Richard Welke 2002 CIS 4120 Fa12: Define/Innovate BP’s Richard Welke Director, CEPRIN Professor, CIS Robinson College of Business Georgia State University Atlanta, GA Session 8: Process Critique

2. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 2 Getting from As-Is to To-Be Value metrics Performance measures associated with the client’s perception of value (tend to be external, effectiveness related) Process metrics Performance measures associated with the process owner’s key- performance- indicators (KPI’s) for how well the process functions “As-Is” P-metrics “As-Is” V-metrics “To-Be” P-metrics “To-Be” V-metrics As-Is Service- Process To-Be Service- Process Service- Process Innovation & Improveme nt Improveme nt Innovatio n How we’re doing it What we’re doing Metrics drive the transformation

3. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 Things to note with critique The process (operational) and value (customer) metrics should justify your changes Your “ROI” (and business case) will be based upon these As you move through the critique/improve/innovate stages following process discovery you’ll likely: Discover new metrics Adjust definitions, measures and units of previous metrics Clarify which metrics are the true “key performance indicators” (KPI’s) – the two or three most important Question: What *is* a KPI (in operational terms)? Can you relate it to CSF (critical success factor)? 3

4. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 4 How BPM (should) approach improvement Set target based on “to-be” model Start by implementing the “as-is” model (with minor changes) Increment towards “to-be” gathering operational data and feedback Can use collected operational data to support Six-Sigma/Lean efforts “As-Is” “To-Be”

5. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 5 Improvement vs. innovation ImprovementInnovation Level of changeIncrementalDramatic Starting point Process (inside-out) Client (outside-in) Frequency of changeContinuous Discrete end-point (can use increments to get there) Support needed Process owner Client owner RiskModerate High (moderated if incremental used) KPI focus Operational metrics Client value metrics Substantially adapted from Thomas H. Davenport: Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press, 1992.

6. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 6 Shapiro’s seven process critique questions  Rethink  Reconfigure  Resequence  Relocate  Reduce  Reassign  Retool Adapted from: Stephen Shapiro The 24/7 Innovation www.24-7innovation.com QuestionApply when….. How can activity frequency be reduced or increased? An activity is non-value added but necessary There is low variation in the process or product There is high variability and low setup costs and times How would more information enable greater effectiveness? Higher accuracy is needed Greater segmentation would yield greater marketing effectiveness How would less information or fewer controls improve efficiency? A high proportion of costs goes to data collection and controls The value received from information or controls is minimal Absolute accuracy is not necessary How can critical resources be used more effectively? Utilization of key resources is low Critical resources are performing non- value-added or waste work 7R’s of process innovation Example questions & “apply when’s”

7. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 7 Shapiro’s “Re-Configure” suggestions QuestionApply when... R2.1: How can this activity be eliminated? They are low-value or waste activities Processes have a low value density Value received from activity is minimal (e.g., approving small amounts) R2.2: How can common activities be consolidated? Common activities are performed in multiple locations Common activities are performed inconsistently There are economies of scale (e.g., shared services) R2.3: How can reconciliation be reduced by putting quality at the source? Think client self-serve. A lot of time is spent reconciling paperwork and correcting errors There is little accountability for errors R2.4: How can intermediaries and non-value added work be eliminated? Intermediaries add no value, and just relay goods, services R2.5: How can best practices from other industries be borrowed and improved upon? When you have access to practices in other, similar organizations or processes (books, trade magazines, vendors, professional org’s)

8. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 8 Shapiro’s “Re-Sequence” suggestions QuestionApply when….. R3.1: How can utilization predictions increase efficiency? Accurate information on customer demand is available early Forecasting models have proved reliable Time compression is more critical than accuracy or inventory costs Product or service variations are relatively low R3.2: How can postponement increase flexibility? Customers want customized products or services Inventory carrying costs are too high Forecasting models have proved inaccurate R3.3: How can concurrency reduce overall completion time? There are limited timing dependencies between activities Time compression is critical Rework is necessary due to late error detection R3.4: How can the number of interconnections and dependencies be minimized? Where there are bottlenecks, large queues, or frequent handoffs

9. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 9 Shapiro’s “Reduce” suggestions QuestionApply when….. R4.1: How can the frequency of the activity be reduced or eliminated? An activity is non-value added but necessary There is low variation in the process or product There is high variability and low setup costs and times (e.g., small lot sizes) R4.2: How would more information enable greater effectiveness? Higher accuracy is needed Greater segmentation would yield greater marketing effectiveness R4.3: How would less information or fewer controls simplify and improve efficiency? A high proportion of costs goes to data collection or controls The value received from information or controls is minimal Absolute accuracy is not necessary R4.4: How can critical resources be used more effectively? Utilization of key resources is low Critical resources are routinely performing non- value-added or waste work

10. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 10 Shapiro’s “Re-Assign” suggestions QuestionApply when….. R5.1: How can existing activities and decisions be moved to a different organization? Another organization has skills or resources you lack You want different branding It is too difficult to change previous operating model or culture R5.2: How can the activity be outsourced? You don’t perform the activity at world-class levels Another organization performs this activity at world-class levels You have limited resources and want to focus on core competencies R5.3: How can the customer perform this activity? Customers want to be empowered to help themselves (self-serve) Certain customer segments are not profitable Costs need to be reduced R5.4: How can the organization perform an activity that the customer is already performing? The customer wants more value and/or convenience The organization wants to get closer to the customer R5.5: How can cross-training integrate and compress tasks? Multiple tasks are needed to produce an outcome Processes are not complex enough to justify a specialist Only 20% of cases or less require special expertise

11. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 11 Shapiro’s “Re-Tool” suggestions QuestionApply when….. R6.1: How can the activity be automated? The current process is paper-based or manual and cannot be eliminated The activity suffer from errors, inconsistency, or reconciliation problems Greater transaction volumes are needed R6.2: How can assets or competencies be leveraged to create competitive advantage? You have world-class competencies Growth potential in the existing business looks bleak R6.3: How can up-skilling, down- skilling or multi-skilling improve the process? Customer satisfaction is low (up-skilling) Multiple specialists are needed to produce an outcome (multi-skilling) Technology can create knowledge workers (down-skilling)

12. CIS4120Fa12 Session 8: Process Critique © Richard Welke 2008-12 Improvement annotation suggestions Use color-coding of the process model to indicate where changes are to be made The ‘As-Is’ would indicate which activities, gateways, etc. will be changed The ‘To-Be’ would indicate where new activities, etc. are introduced Use different colors for different major objectives being achieved (i.e. the primary metric being affected) Use the same color for the As-Is and To-Be Use annotation to further highlight principle changes and/or objectives People will read a model more easily than a lot of text so make the models work for you! 12