bpm (business process management), crm and cross-functional enterprise-level customer-focussed...
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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
Illusion of Attempting to Manage Outcomes
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
Illusion of Attempting to Manage Outcomes
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
Cross-Functional Processes
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
Cross-Functional Processes
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
Operational Processes With Cross Functional Linkages
Management and Support Processes
Develop and Manage
Products and Services
Market and Sell Products and Services
Deliver Products and
Services
Manage Customer
Service
Human Resource
Management
Information Technology
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
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
Number of New
Customers
Customer Turnover
Profitability Per
Customer
Customer Acquisition
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
Vision, Strategy,Business
Management
Operational Processes With Cross Functional Linkages
Management and Support Processes
Develop and Manage
Products and Services
Market and Sell Products and Services
Deliver Products and
Services
Manage Customer
Service
Human Resource
Management
Information Technology
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 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
Vision, Strategy,Business
Management
Operational Processes With Cross Functional Linkages
Management and Support Processes
Develop and Manage
Products and Services
Market and Sell Products and Services
Deliver Products and
Services
Manage Customer
Service
Human Resource
Management
Information Technology
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
Mapping Sample Business Process Model - 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 51
Supply Chain
Customers
Innovate
Sell
Align
Plan
MakeSource Fulfil
Build
FinancePeople Information Environment Governance
Mapping Sample Business Process Model - 2
Vision, Strategy,Business
Management
Operational Processes With Cross Functional Linkages
Management and Support Processes
Develop and Manage
Products and Services
Market and Sell Products and Services
Deliver Products and
Services
Manage Customer
Service
Human Resource
Management
Information Technology
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 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 …
Consists of one or more of …
Consists of one or more of …
Consists of one or more of …
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
alan@alanmcsweeney.com
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