Getting Rid of the Uglies

If process can move its focus from the back-office of ERP and finance, then it has a chance to become the next killer application.

For the past couple of years the Australian Bureau of Statistics (ABS) has been engaged in a quiet revolution as it pioneers much new and highly innovative thinking about process. It has conducted significant grassroots experimentation around the ways project managers might alter the parameters of current data collections by stringing together related tasks to generate a new systems environment.

It is developing ideas about a visionary, component-driven architecture, which incorporates processes, and using a business process model residing in a Lotus workflow application to capture business knowledge and a process library to hold reusable processes and activities. And it has developed a diagramming scheme to graph patterns in business processes in the hope that it may prove feasible to automate those workflows, rather than have to build them repeatedly.

"Our thinking is that we should now start to revolutionise the way we think about what a system is, and how we deliver it, into: we have a graph, we have a process, and what are the points in this business process?" says director of IT architecture Don Bartley.

"Now what is a system? Well, a system is only those points in a process where it needs to interact with something to support its work, like a computer system. That's really interesting, because that gives you a framework for understanding which sets of services are required to support your business processes. But the whole thing is turned around the other way, because it's the business process that drives it, rather than the existence of some large application system that people need to fit to," he says.

So far the approach has proved effective mostly in helping the ABS to automate the things it already does. Ultimately the goal is to get people to think beyond the way things are done now to find new and better ways of getting the ABS's work done.

The ABS approach is in line with some new ways of attacking the whole issue of process. EDS principal, business process innovation services, Angela Frith, says if a component-based technology set is being used to automate processes, it is possible to define these processes as business rules linking process components or business use cases. Each use case is related to each business task with task owners, inputs and outputs. The result is a standard set of process components that can be reconfigured to meet the requirements of selling, originating and servicing different products. Some organisations are keenly adopting this approach.

"Many organisations today are driving towards a single sales and service platform to support all customer channels - phone, Internet and branch," Frith says. "With a single customer-facing platform organisations can achieve a consistent customer interface with the right processes and integration with back-end product systems. A single platform means the organisation can have one set of standard processes for common business functions for each product sale such as capturing customer credit information, regardless of channel."

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Grounded Approach

Disabused of the wild promises of the business process re-engineering (BPR) brigade that dominated the 1990s, many organisations are with the ABS in striving anew to streamline their processes and make them more efficient. And they are redesigning key processes to incorporate Internet and Web technologies.

After surveying businesses worldwide in 2001, US IT consulting firm Cutter Consortium says companies are saving money and streamlining business processes in order to do more with less during the economic slowdown and to ensure they survive and thrive in the Internet economy. In the 1990s, BPR was touted around the world by gurus like Michael Hammer and James Champy. Some companies used their theory to improve costs and efficiency dramatically; many more failed. Now the term "re-engineering" has fallen from favour, but organisations are showing strong interest in BP redesign or BP improvement, buoyed by the availability at last, via the Internet and e-mail, of the tools that can support the changes Hammer and Champy were on about . Today, says Cutter Consortium senior consultant Paul Harmon, author of Who's Profiting from Business Process Redesign, leading companies are positioning themselves to reap the benefits.

"With the fall of the dotcom companies, business process redesign has re-emerged," Harmon says. "In effect, established companies are trying to figure out how they can take advantage of e-mail, the Internet and the Web. They realise that they aren't going to change their companies into dotcoms. Instead, they are going to revise their business processes in incremental ways to take advantage of new technologies."

In a sense it is those technological advances that are at last freeing organisations from looking at IT solutions purely in technological terms, says Toll Holdings solutions development manager Andrew Rossington. Toll, Rossington says, purchases "incredibly complex and powerful" products to make life easier as it strives towards presenting a single face for the highly diverse group, and believes it is not that difficult for skilled people to use such products to put together. But Rossington says too many companies have neglected the analysis of the process in their drive to get solutions out to customers (see "Keep on Trucking", CIO February).

Rossington concedes in the B2B space or the integration space that effort becomes complicated by a factor of 10, because the organisation must consider not only business processes dealing with other business processes, but systems dealing with systems as well. But he says complexity should be no barrier to diligence in this area.

Frith says there are two main drivers for the current interest in business processes.

1. Organisations today have made significant capital investment in technology platforms, for example the enterprise-wide implementation of a workflow engine to drive costs out of an operation. Automation, however, will not achieve the step change in cost reduction benefits most organisations are seeking if existing processes are simply automated.

2. To ensure the return on investment is commensurate with the outlay, organisations are having to take another look at whether policies and processes are suitable. This means redesigning process flow into standard streams and identifying common process functions, simplifying business rules and identifying exceptions.

Organisations like Toll are responding to both. And very often, the CIO must drive the new thinking.

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CIOs Lead the Way

When Arnott's first started considering how its business model had to change in response to customer and supplier demand, CIO Sue Sutton decided to give the executive leadership something concrete to consider. She presented a vision of how that future might look if Arnott's dug in its heels, did not adopt a point of view, and did only what customers and suppliers asked. She made her point with business models displaying every one of the many different kinds of processes Arnott's would likely have to support in such a future world.

"That future model was incredibly complex and ugly looking," Sutton says.

"When you look at either end of the supply chain at the processes that are employed for how we actually talk to our suppliers, for example, we still use paper purchase orders," Sutton says. "Similarly at the customer end, the processes we use for taking orders, for delivering stock to store, all of that, are the same processes that we've used for many, many years. Those have all now fundamentally got to change, but there isn't anyone inherently in the business who understands how to re-engineer those processes and then apply technology to them, to enable us to participate in collaborative commerce." Sutton says in that sense, she is best placed to lead the organisational charge.

Many CIOs are finding themselves having to do the same. For instance, business consultant for management consulting firm Insytegroup Janice Fitzpatrick is working with a global mining organisation whose interest in process management (as opposed to mere redesign) derives from the fact that they have run such aggressive and successful cost reduction programs over the past few years - especially in procurement - that they have little more to squeeze out on costs.

Fitzpatrick says their interest in process management is focused on identifying processes and measuring them to see where further improvements can be made. "I think this is probably a significant driver for other larger organisations too. They are increasing capability rather than just cost reduction, and that is really only possible if you measure and manage process," she says.

Another reason for the renewed interest in process design and management is the drive towards process automation, which increasingly must be done at a level where it is embedded in key business processes to get significant improvements. Businesses have to identify and understand their processes before they can automate them.

Fitzpatrick says many earlier process redesign projects included process measurement but few included reporting process that monitored and reported in a serious way. Most of the measures were plain silly or were unsophisticated - that is, they did not look far enough ahead. Selecting good process measures and actually being able to measure is harder than it seems. Fitzpatrick says organisations effectively must adopt a Balanced Scorecard or Six Sigma approach, which is a major exercise in itself.

Other organisations are turning to a set of best practices in their bid to cut costs and optimise service delivery.

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Structured Approach

The Information Technology Infrastructure Library (ITIL) is a set of rules for how to deliver IT services more efficiently by improving management processes across IT departments that support networks, applications, databases and systems.

Gartner Australasia research director John Roberts says when it comes to service delivery many Australian government departments and organisations are adopting the ITIL standard to help them achieve standard, reliable and reproducible processes - and to help the CIO move up the "credibility curve". Roberts says securing such credibility depends on the CIO's ability to develop more of a service provider relationship with clients, so they can better understand what he or she is delivering. "The standard processes are not a bad way to start in terms of helping that along."

AXA Australia CIO Ian Campbell certainly thinks so. AXA has been following the ITIL general methodology broadly for about three-and-a-half years in its pursuit of improved service delivery and reduced unit costs. Campbell says ITIL provides organisations with generic service delivery processes like help desk, problem management, configuration management and capacity planning which they can map or modify according to their organisational structure and goals.

"We've used it to underpin our service delivery performance," Campbell says. "It probably helped us to reduce some costs and to look down the track a bit, particularly in the areas of capacity planning. The more consistent a methodology you follow, the more it just becomes ingrained into the organisation. It just becomes a way of doing business."

Campbell says having a methodology to follow helps to overcome attitudes like: "We don't do it that way here." Having transparency of results provides credibility.

META Group senior program director electronic business strategies John Brand says designing around the customer experience has proven to be the best driver for process re-engineering over the past five or so years.

He says those organisations that entered CRM from a "360 degree view of the customer" perspective have largely been the ones which have failed. Those which realised that the customer's 360 degree view of the company was much more important were able to avoid many of the internal political barriers. "There are some great examples out there of successful organisations that were able to use customer experience design principles combined with integrated supplier sourcing strategies to provide superior customer service while actually reducing operational costs," he says.

Toll Holdings is one of them. Rossington says Toll is effectively providing visibility into its own supply chain for a major customer, having dealt with the business challenges relating to the point at which it provides transaction visibility, the amount of data the customer's customers should be allowed to see and which data should be restricted. He says successfully achieving such a result meant carefully considering process from the customer's point of view before systems development began.

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Pragmatism Rules

Making gains in the area of process is all about being pragmatic, according to Axa's Campbell. CIOs must appreciate that nothing will get done unless they can improve the knowledge people have about process.

"You can draw a process diagram with 68 steps but no one is going to follow that," he says. "The processes have to be kept fairly simple. You've got to have people who have clear accountabilities and you've got to have a bunch of people who understand the way they are doing things and what their role is in it. I've seen people take the ITIL basic processes, which you can write fairly simply on a small page, and expand it to 60, 70, 50 or 40 steps, and you just think: 'No, it just doesn't work'," says Campbell.

The KISS principle - keep it simple, stupid - must be the order of the day, he says.

And experts agree it is vital that the organisation be able to tie all re-engineering project goals back to key business objectives and the overall strategic direction for the organisation. The CIO should be able to demonstrate this alignment from the perspective of financial performance, customer service, associate (employee) value and the vision for the organisation.

"Re-engineering projects not in alignment with the company's strategic direction can be counterproductive," the BPR Learning Centre states. "It is not unthinkable that an organisation may make significant investments in an area that is not a core competency for the company, and later this capability be outsourced. Such re-engineering initiatives are wasteful and steal resources from other strategic projects.

"Moreover, without strategic alignment, your key stakeholders and sponsors may find themselves unable to provide the level of support you need in terms of money and resources, especially if there are other projects more critical to the future of the business, and more aligned with the strategic direction."

SIDEBAR: Five Important BPM Issues

Organisations considering business process management (BPM) and ultimately establishing best-practices need to consider the following in a BPM solution.

• Flexibility in process design
• Extensibility in connecting current EAI, e-business and legacy infrastructure
• Are the processes based on components that can be shared across the enterprise?
• Future adaptability of usage of Web services
• Ease of use by the business people.

The fifth issue is the most overlooked. Ultimately organisations neglect the fact that the process in place is usually short-circuited by the workers because it's inefficient or simply not possible. The knowledge workers possess is the starting place of BPM. The solution must address the process from the bottom up as much as it addresses the need for the top to achieve the overall goals of the organisation.