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

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

Alan McSweeney

April 10, 2010 2

Objectives

• To describe an approach to integrating operational processes into cross-functional customer focussed view for improved customer relationship management

April 10, 2010 3

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 4

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 5

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 6

What Customers Really Want – More For Less

• More Of

− Value

− Responsiveness

− Involvement

− Consideration

− Dependability

− Flexibility

• Less Of

− Aggravation

− Time to Complete Transaction

− Rigidity

− Cost

− Bureaucracy

− Excuses

− Lack of Integration

April 10, 2010 7

What Organisations Try to Do – More With Less

• More Of

− Work

− Customers

− Sales

− Revenue

− Margin

• Less Of

− Personnel

− Facilities

− Cost

April 10, 2010 8

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 9

Cross Functional Processes – Crossing “Vertical”Operational Organisational Units

April 10, 2010 10

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 11

Core Cross Functional Processes and Customer View

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

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

April 10, 2010 12

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 13

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 14


Sell More Products/

Services and More

Profitably

Generate More Profit

Identify the Right Customers

Fulfil Orders Correctly and Satisfactorily

Manage Customer Relationships

Be Easy to Do Business With

Be an Organisation Customers Want to Do Business With

Generate and Maintain High Customer Satisfaction

Develop and Sell the Right Product at the Right Price

Activities Outcomes

You cannot force customers to buy

more products and services

April 10, 2010 15


Sell More Products/

Services and More

Profitably

Generate More Profit

Identify the Right Customers

Fulfil Orders Correctly and Satisfactorily

Manage Customer Relationships

Be Easy to Do Business With

Be an Organisation Customers Want to Do Business With

Generate and Maintain High Customer Satisfaction

Develop and Sell the Right Product at the Right Price

Activities Outcomes

You cannot force customers to buy

more products and services

But you can take actions and perform

activities that will

increase the propensity

of customers to buy more

April 10, 2010 16

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 17

Single Barrier to Taking an Effective Cross-Functional View

No Focus on

Cross-Functional

Processes

No

Accountability

for Cross-

Functional

Processes

No

Measurement of

Cross-Functional

Process Metrics

Lack of Focus

on Operations

by Senior

Management

April 10, 2010 18

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 19

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 20

Cross-Functional Processes

“Vertical” Operational Processes –Internally Focussed

“Horizontal”Cross

Functional Processes –Externally Focussed

Link Operational

Processes

Cross Organisation

Boundaries

April 10, 2010 21

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 22

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 23

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 24

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 25

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 26

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 27

Data, Information and Action

April 10, 2010 28

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 29

Key Measures

• Overall financial performance

• Performance of partnerships and alliances

• Product and service line profitability

• Client profitability

• Client acquisition and retention

• Overall operational performance

• Performance relative to competition

• Delivery of profit and value to clients

• Client satisfaction

• Staff performance

April 10, 2010 30

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 31

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 32

High-Level View of Areas of Management Refocus and New Behaviours

1. Define structures and processes to achieve continuous improvement2. Implement structures and processes to achieve continuous improvement3. Measure continuous improvement

Process for continuous improvement

1. Define cross-functional measurements that link overall customer-focussed performance to cost and expenditure

2. Collect information that populate cross-functional measurements

Cross-functional measurements that link performance to costs and expenditure

1. Identify IT investments that deliver in improved business performance and added value

2. Implement IT systems

IT systems that add value cross functions

1. Identify organisational changes to create cross-functional alignment2. Update organisational structures to create roles and responsibilities to

implement cross-functional alignment

Define organisation structure needed to operate the enterprise, cross-functional processes

1. Modify the critical enterprise, cross-functional processes and their constituent operational processes

Design enterprise, cross-functional processes to achieve business goals

1. Define what is important for customers2. Define the set of enterprise, cross-functional processes3. Prioritise the critical enterprise, cross-functional processes and their constituent

operational processes4. Develop plan to implement enterprise, cross-functional processes5. Define the organisation structure needed to operate the enterprise, cross-

functional processes 6. Create plan for managing communications to articulate plan and its benefits

Organisation view that shows key cross-functional processes

Activities and TasksRequirement

April 10, 2010 33

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 34

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 35

Tyranny of the Organisation Chart

• 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 overall responsibility


Organisation

Operational

Functions

April 10, 2010 36

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 37

Organisation Value Chains

Value Chains

• Value chains add value and confer competitive advantage when defined and linked

April 10, 2010 38

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 39

Cross Functional Processes and Strategy

• Effective cross-functional processes deliver on the organisation’s strategy

• Cannot divorce the organisation’s strategy from operational processes and their execution

• Collecting information on the performance of cross-functional processes will allow the execution of strategy to be effectively measured

• Linkage between strategy, cross-functional processes and operational processes means individual process measurements can be linked to overall performance

• Allows goals to be connected to operational processes

Strategy


Operational Processes

Delivered By

Consisting Of

Set Goals

Measure

Achievement

of Goals

April 10, 2010 40

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 41

Sample Enterprise Business Process Models - 1

Business Controlling

Process

Processes That Direct and Tune Other Processes

Core ProcessesProcesses That Create Value for the Customer

Customer Acquisition

ProductDelivery

OrderFulfilment

CustomerSupport

Enabling ProcessesProcesses That Supply Resources to Other Processes

Channel Management

Supply Management

Human Resources

Information Technology

Business Acquisition

Business Measurement

Process

Processes That Monitor and Report the

Results of Other Processes

Customer’s Process Needs

Supplier’s Processes

Business EnvironmentCompetitors, Governments Regulations and Requirements, Standards, Economics

April 10, 2010 42

Sample Enterprise Business Process Models - 2

Supply Chain

Customers

Innovate

Sell

Align

Plan

MakeSource Fulfil

Build

FinancePeople Information Environment Governance

April 10, 2010 43

Sample Enterprise Business Process Models –Common Structure

• Sample business process models have a common structure

• Generic structure that forms a template for specific actualisations

Vision, Strategy,

Leadership,Business

Management

Operational Processes With Cross Functional Linkages

Management and Support Processes

April 10, 2010 44

Sample Enterprise Business Process Models –Common Structure

Vision, Strategy,Business

Management



Develop and Manage

Products and Services

Market and Sell Products and Services

Deliver Products and

Services

Manage Customer

Service

Human Resource

Management


Management

Financial Management

Facilities Management

Legal, Regulatory,

Environment, Health and

Safety Management

External Relationship Management

Knowledge, Improvement and Change

Management

Vision and Strategy

Business Planning, Merger,

Acquisition

Governance and

Compliance

April 10, 2010 45

Define Measures Linked to Key Processes


Process




ProductDelivery

OrderFulfilment

CustomerSupport


Channel Management

Supply Management

Human Resources




Process






Number of New

Customers

Customer Turnover

Profitability Per

Customer


Cost

Number of Customers Complaints

Time to Resolve

Complaints

Delivery Time

Accuracy

Number of Returns

Payment Times

Inventory

Time to Fulfil Order

Invoice Accuracy

Forecast Accuracy

April 10, 2010 46

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 47

Enterprise Business Process Models vs. Organisation Chart

• How do the two compare?

• Organisation Chart

− Top-down structure focussing on operational areas

− Focussed on internal organisation and structure

− Compartmentalised

• Enterprise Business Process Models

− Functional areas that traverse operational boundaries

− Focussed on end-to-end accomplishments

− Joined-up


Management



Develop and Manage




Services

Manage Customer

Service

Human Resource

Management


Management



Legal, Regulatory,


Safety Management



Management

Vision and Strategy


Acquisition

Governance and

Compliance

April 10, 2010 48

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

Strategic Planning

Workforce and Human

Resources

Customers and Markets

Process Management

LeadershipBusiness Results

Information, Measurement, Analysis and Knowledge Management

April 10, 2010 49

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 50


Management



Develop and Manage




Services

Manage Customer

Service

Human Resource

Management


Management



Legal, Regulatory,


Safety Management



Management

Vision and Strategy


Acquisition

Governance and

Compliance

Mapping Sample Business Process Model - 1


Process




ProductDelivery

OrderFulfilment

CustomerSupport


Channel Management

Supply Management

Human Resources




Process






April 10, 2010 51

Supply Chain

Customers

Innovate

Sell

Align

Plan

MakeSource Fulfil

Build

FinancePeople Information Environment Governance

Mapping Sample Business Process Model - 2


Management



Develop and Manage




Services

Manage Customer

Service

Human Resource

Management


Management



Legal, Regulatory,


Safety Management



Management

Vision and Strategy


Acquisition

Governance and

Compliance

April 10, 2010 52

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 53

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 54

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 55

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 56

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 57

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 58

Process Improvement Tools

• Process improvement is core to BPM

• Toolset is important

April 10, 2010 59

Process Management Model

Cause Analysis Create and Implement Solutions

Process Redesign

Knowledge Management

Execution Improvement

Continuous Improvement

Measure Actual vs. Target Performance

Design and Implement Processes

Business Strategy, Business Models, Business Plans, Change Management

Share Best PracticesGap Success

ProcessLeadership

ProcessPerformance

ProcessDesign

ProcessImprovement

April 10, 2010 60

Business Process Action Hierarchy

• Cross-functional processes need to be aligned with actions

• Performance of actions rolls-up to performance of process

Business Process

Hierarchy

Cross Functional Process

Cross Functional Process

Process Process Process Process

Sub-Process Sub-Process

Activity Activity

Task Task

Step Step Step Step

Consists of one or more of …





April 10, 2010 61

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 62

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 63

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 64

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 65

More Information

Alan McSweeney

[email protected]

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

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