optimizing business processes for performance management

©2004, Ventana Research, Inc.

Optimizing Business Processes for Performance Management

Mark Smith – CEO & SVP Research – www.ventanaresearch.com

Opportunities to Fundamentally Change Your Business Operations


In this decade we are facing a unique set of challenges.

Larger EmployeesChallenges

Effectiveness

EvolvingCompliance Issues

Risk

ImproveOperationalCompetency

Efficiency

Business Reality in this Decade


Despite widespread focus on efficiency improvements and information technology…Significant investments have missed the point in improving performance…

Are We on Target for Improving?


Personal Computing

1980s

Corporate Computing

1990s

Performance Computing

2000s

Individual

- Coordination

- Independence

Market Timing and Priorities

Company

- Efficiency

- Automation

People & Process

- Effectiveness

- Accountability

The business and IT imperative to align and execute a strategy and methodical process to efficiently improve

business and operational performance.

Performance Management


Almost Everyone “Knows” Managing Processes Is Broken

No real linkage between transaction apps and processes

Leverage of EAI to connects systems only automates transactions

Confusion on purpose of ERP and Business Process Management continues to misguide global organizations

Absence of process models explaining business operations

Failure to gain productivity across functional areas to common targets

Functional focus – not business process focus

Evidence points to numerous mistakes that companies make in managing processes


Almost Everyone “Knows” Managing Processes Is Broken

No real linkage between transaction apps and processes

Leverage of EAI to connects systems only automates transactions

Confusion on purpose of ERP and Business Process Management continues to misguide global organizations

Absence of process models explaining business operations

Failure to gain productivity across functional areas to common targets

Functional focus – not business process focus

Evidence points to numerous mistakes that companies make in managing processes

LIMITED EFFICIENY GAINS

NO STRATEGIC VALUE

NO COMPETITIVE ADVANTAGE


New Tactics Are Required

Need to develop compelling reasons for action based on business drivers

Efficiency through cross functional productivity improvements can be realizedEffectiveness drives new opportunity and resources for improvement across organization“How bad are you” assessments – ‘maturity’ appraisal based on key process performance indicatorsEmployees need to be leveraged efficiently to determine best prioritization and alignment


Performance Management Across Business

Workforce

Finance

Product & Service

Supplier Intelligence

Customer Intelligence

Corporate Systems

Information & Integration Management

Demand Chain

Supply Chain

Business Performance

Operational Performance

IT Performance

Organization & Business Process Areas for Improvement

Information Technology Organization

Business IntelligenceProcess & Content Mgt.


Process for Improving Performance

Alignemployees to improved direction by providing them the capability to set targets and incentives, train, score achievements, informing business and automating entire process.

Understandhistorical business and operations by providing methods to model, access, discover & interact on information

OptimizeExisting direction by enabling users to plan, forecast, collaborate, integrate information and act upon it.

Understand

OptimizeAlign

Understand. (Comprehend meaning and significance)

Align. (Move or adjust into proper relationship or orientation.)

Optimize. (Make as perfect or effective as possible.)

Performance

A best practice process provides a framework for aligning IT and business to improve performance.

Why a Process?

Ventana Research PerformanceCycle™


Imperative for Improving Operational Performance

Business DriversRenewed focus on maximizing operational performance demands timely and relevant information Realization that existing ERP & CRM systems have limited focus and investment into improving performance Demand and priority to improve operational activitiesrequires information and insight

Operational Performance Management is the practice of managing the effectiveness of operational-centric

business activities and processes to a common set of goals and objectives


Business Tasks

Business Events

Business Tasks

Business Tasks

Business Tasks

Business Events

Business Events

Business Events

Understanding Business Processes

A business process is a collection of business activities that are comprised of a set of business tasks, that create

business events, that are performed on a routine basis for a defined purpose and result.

What Are They?

SalesActivity

Marketing Activity

Business Process

Business Tasks

Business Tasks

Business Events

Business Events

Business Tasks

Business Tasks

Business Events

Business Events

Order Activity

FulfillmentActivity

Business Tasks

Business Tasks

Business Events

Business Events

Finance Activity

Business Tasks

Business Tasks

Business Events

Business Events

How Do They Work?


Examining Customer Life-Cycle Business Processes

Market Sell Service

Business Activity

Business Activity

Business Activity

Business Activity

Business Activity

Business Activity

Business Activity

Respond to Marketing Campaign

Events• Click to Web• Read info• Buy product• Leave page

Respond to Web

Advertising

Events• Go to Web • Read info• Buy product• Leave page

* * *Fulfill

View ProductInformation

Events• Click to Page• Dnld PDF• Read Pages• Leave page

ReviewPricing

Events• Go to Price• Compare• Competitor• Leave page

PurchaseProduct

Events• Add Basket• Cust. Info• Ship Info• Purchase

ReviewOptions

Events• Review• Read Info• Competitor• Leave Page

OrderChanges

Events• Logon• Enter #• Changes• Complete

Cross-UpSell Offers

Events• Click on Page• Read info• Buy product• Leave page

DeliverProduct

Events• Notify• Updates• Link Web• Leave Page

ShippingStatus

Events• Logon• Order #• Review • Service

ProductTrouble

Events• Web Site• Enter #• Find FAQ• Support

ChangeInformation

Events• Address• Favorites• Email• Leave page

ServiceProduct

Events• Go Support• Send Email• 800 Number• Online

ReturnProduct

Events• Go Support• Return• Print Page• Leave page


Business Process Management

Business Process Management (BPM) is the ability to manage business processes and provide the methods

to automate and improve activities and tasks for a particular business purpose.

What is It?

Why do we care?Efficiency – Enable individuals to maximize time on priority business tasks and maximize throughput.Control – Enable the direction and flow of transactions based on pre-defined set of rules and workflow.Responsiveness – Enable individuals to respond quickly to business events to maximize interactions.Improvement – Ability to systematically measure and monitor processes for optimizing performance


Taxonomy and Evolution of Business Process Management

Applications

Monitoring & Measure

Business Process Model

Dashboard & Scorecard

Business Events, Rules & Workflow

Process ControlIn

telli

genc

e Autom

ation

Transaction Management

Integration (Application & Data)

1995-2001

ModelingRules & WorkflowIntegration (EAI)

Monitoring & MeasuringControlAutomation

2001-


Business Challenges to Business Process Management

Change – The issues of change is so large that the value to cost ratio is not perceived to be high enough

Investment – Existing investment into business practices and enterprise applications are addressing this challenge

Pessimism – The business process re-engineering of 90’s did not deliver systems that facilitated value


Business Tasks

Business Events

Business Tasks

Business Tasks

Business Tasks

Business Events

Business Events

Business Events

Functional Taxonomy for Operational Performance Management

SCMActivity

CRMActivity

Business Process

Business Tasks

Business Tasks

Business Events

Business Events

Business Tasks

Business Tasks

Business Events

Business Events

PLMActivity

FinancialActivity

Business Tasks

Business Tasks

Business Events

Business Events

HRActivity

Business Tasks

Business Tasks

Business Events

Business Events

Integration - Application, Data and Event

Business Activity and Process Model

SAPSiebel Oracle SAP Peoplesoft

Business Rules & Workflow

Metrics and Analytics - Measuring and Monitoring

Portals MS Excel Dashboard Web Mobile


Improving Operational Performance Requires Rigor

Enables you to align your employees to business processes by monitoring events from business activities to ensure the highest level of responsiveness.

Enables you to understand your business activities by defining and linking information to them to gain the highest level of visibility.

Enables you to optimize your business processes by analyzing the related business activities to reach the highest level of efficiency.

Understand

OptimizeAlign

Understand. (To comprehend the meaning and significance of.)

Align. (To move or be adjusted into proper relationship or orientation.)

Optimize. (To make as perfect or effective as possible.)

BusinessProcess


Operational Performance Management Research

Assess how organizations leverage information to improve operational performance of business activities

and processes

Overview

ObjectivesAssess market and customersUnderstand perceptions and trendsAssess maturity and approachesExamine operational processes

AnalysisBest Practices and BenchmarksSoftware and Information Frequency

ResultsOver 900 companies analyzed across US, Canada, Europe and rest of world Sponsored Research


Challenges in Adoption for OPM

1. Not Fully Understand What is the Potential2. Cultural Changes and Issues of Information Visibility3. Shortage of Skilled Workers and Budget Not Available


Traditional Software Approach Choices and Combinations

Application Server & EAI – The focus on custom development and integration/infrastructure has longer path to operational deployments.

Business Process Management – The focus on automation and control and not on assessing process performance has limited potential.

Business Intelligence – The focus on enterprise deployments of reporting and scorecards has begun to meet the broader organizational requirements

Enterprise Applications (ERP & CRM) – The focus on improved automation-centric applications have fallen short for performance assessment and improvement.


Planned Approaches for ImprovingOperational Performance


Planned Approaches for OPM


Areas for Measuring and Monitoring Activities and Processes

0%10%20%30%40%50%60%70%80%90%

100%

ERM SCM CRM

How Important is Measuring and Monitoring Business Areas

Very Important

Somew hat Important

Neither Important norUnimportant

Somew hatUnimportant

Very Unimportant


Customer Centric FocusThe customer relationship management (CRM) set of business activity areas

includes:Call Centere-BusinessSalesServiceMarketing

The customer relationship management (CRM) set of business processes includes

Customer SatisfactionOrder to FulfillmentCustomer ContactCustomer Tracking & VisibilityCross Channel Interaction (e-Business to Traditional).


Customer Centric – Findings & Status

Priorities for Measuring and Monitoring

Call CenterCustomer ContactCustomer SatisfactionSales

Business Activities - Move to Daily and Real Time

Call CenterE-BusinessService

Business Processes - Move to Daily and Real Time

Order to FulfillmentCustomer Contact


Best Practices in Constructing Improvements

Business – Drive a user based approach that can adapt to roles and interactions for and between users

Pro-Active - Deploy exception based notification systems that alert individuals on responding to business events or pursuing business opportunities

Context – Leverage platforms that can process information based on rules and workflow for maximum context for users

Integration – Utilize event based data integration that can ensure real time processing of information that can be processed by the platform


Challenges in Existing Approaches

ERP – Applications are not designed for cross functional business activity and process monitoring

EAI - Addressing the ‘Silos’, application integration technology helped provide glue for organization to bring transaction and message flow

Process Management – Most product require you to automate and control processes before enabling you to measure and monitor

Business Intelligence – Traditional approaches do not have access, event or rules based processing to meet the business requirements for timeliness


Business Tasks

Business Events

Business Tasks

Business Tasks

Business Tasks

Business Events

Business Events

Business Events

Framework for Operational Performance Management

SCMActivity

CRMActivity

Business Process

Business Tasks

Business Tasks

Business Events

Business Events

Business Tasks

Business Tasks

Business Events

Business Events

PLMActivity

FinancialActivity

Business Tasks

Business Tasks

Business Events

Business Events

HRActivity

Business Tasks

Business Tasks

Business Events

Business Events

Integration Management

Performance Management

I2Siebel Oracle SAP Peoplesoft

Information Management

Understand – Optimize – Align Capabilities

Portals MS Excel Dashboard Web Mobile


Benefits of Enabling Operational Performance ManagementResponsiveness – Enable individuals to respond quickly

to business events that are part of their interactions with employees, customers, suppliers and customers.

Cycle Time – Enable the ability to reduce time between events and decisions at the business process level thus providing more cycles for revenue opportunities and cost savings.

Effectiveness – Enable individuals to maximize their role and responsibilities by providing them the information to drive action and prioritize to goals and initiatives.


State of Market and Customer Environment

Process ManagementProcess Automation – BEA, Filenet, HandySoft, IBM, Intalio, SAP, Tibco …Process Measurement – Fuego, IDS Scheer, Lombardi, Savvion …

Transactional-Centric (SCM, PLM, ERP)Enterprise - Oracle, PeopleSoft, SAP, SiebelMid-Enterprise - I2, Manugistics


Leverage & Build on ERP & CRM InvestmentsApplications that manage/improve processesElevate focus to operational managementLeverage vertical and domain expertise

Why Now?

The demand for aligning business and information technology to improve

process performance is next wave of business opportunity

Opportunity


Questions and Answers

Mark SmithVentana Research

[email protected]

www.ventanaresearch.com


Mark Smith – CEO & SVP Research

Mark is responsible for the overall direction of Ventana Research, and drives the global performance management research agenda, which covers both business and technology areas. He is also the Director of the IntelligentPerformanceConference and the community editor of IntelligentPerformance.com, the industry's first independent forum for information, news, and discussion about business performance management. Mark is a contributing editor for Intelligent Enterprise magazine. An industry veteran with more than 17 years of industry experience in business and technology, before founding Ventana Research, Mark worked at companies including SAP, META Group, Oracle and IRI Software.

[email protected]


Company & Mission

We are a Provider of Research and Consultation Services in Performance Management to business

and IT management

Research

Advisory

ConsultingOur research and advisory

knowledge provides direct value for assessment and recommendations

Our research and experience is leveraged throughout a year

for our clients to maximize investments

Our research is the foundation that provides valuable insight to our

knowledge of market


Background & Differentiation

Focus One research framework for business and technology coverage in Performance Management & Information Management

Expertise Experienced and knowledgeable analysts in performance management with over 21 years average experience.

Research Leveraging quantitative and qualitative research in Performance Management to drive innovation.

Service Research and services that deliver substantive value to end-user organizations through simple assessment and recommendations.

Influence Extensive industry, media and financial network for communicating research and best practices to market.

Trust Proven execution and performance for end-user organizations at all stages of maturity in leveraging information for business value.

Attributes

The team has significant experience in information technology, consulting, implementing, managing IT projects and providing guidance to organizations.


Educational Workshop

1 – 2 Days

Audit & Assessment

1 – 2 Weeks

Performance Services

Annual

Our Services Approach

We have a high value and low risk client engagement process to assist organizations in the mission of

adopting best practices, processes and systems for business and IT to improve performance

Performance Excellence• Access to Analysts• Access to Research• Consulting Days• Conference Discounts

Planning to Perform• Assess Environment• Analyze Options• Recommendations• Optimize Plan

Listen & Engage Session• Knowledge Transfer• Interactive Session• Address Key Issues• Input to Plan


Provide Research and Knowledge to Media & Associations

We partner with media to conduct research and maximize sponsor reach with market influence and lead generation. Ventana Research syndicates research to

over 750k people.


Performance Management Community and Research Site

http://www.ventanaresearch.com