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

Alan McSweeney

Objectives

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

April 10, 2010

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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 crossfunctional customer-oriented view

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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

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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

• •

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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

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What Organisations Try to Do – More With Less

More Of
− − − − − Work Customers Sales Revenue Margin

Less Of
− Personnel − Facilities − Cost

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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
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Cross Functional Processes – Crossing “Vertical” Operational Organisational Units

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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
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Core Cross Functional Processes and Customer View
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 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
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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

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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
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Illusion of Attempting to Manage Outcomes
Activities
Develop and Sell the Right Product at the Right Price Identify the Right Customers Fulfil Orders Correctly and Satisfactorily Manage Customer Relationships

Outcomes You cannot force customers to buy more products and services

Sell More Products/ Services and More Profitably

Generate More Profit

Be Easy to Do Business With Be an Organisation Customers Want to Do Business With Generate and Maintain High Customer Satisfaction
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Illusion of Attempting to Manage Outcomes
But you can take actions and perform activities that will increase the propensity of customers to buy more Activities
Develop and Sell the Right Product at the Right Price Identify the Right Customers Fulfil Orders Correctly and Satisfactorily Manage Customer Relationships

Outcomes You cannot force customers to buy more products and services

Sell More Products/ Services and More Profitably

Generate More Profit

Be Easy to Do Business With Be an Organisation Customers Want to Do Business With Generate and Maintain High Customer Satisfaction
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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
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Single Barrier to Taking an Effective CrossFunctional View
No Focus on Cross-Functional Processes

No Accountability for CrossFunctional Processes

Lack of Focus on Operations by Senior Management

No Measurement of Cross-Functional Process Metrics

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Single Barrier to Taking an Effective CrossFunctional 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

• •

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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

• •

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Cross-Functional Processes
“Horizontal” Cross Functional Processes – Externally Focussed Link Operational Processes Cross Organisation Boundaries “Vertical” Operational Processes – Internally Focussed
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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

• •

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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

• • • •

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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

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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

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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
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Closing the Information Gap

Closing the information gap is an essential prerequisite of implementing effective and usable business process management Responsibility of both the business and IT working collaboratively

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Data, Information and Action

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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

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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

• •

• •

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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

• •

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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

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High-Level View of Areas of Management Refocus and New Behaviours
Requirement Activities and Tasks
Define what is important for customers Define the set of enterprise, cross-functional processes Prioritise the critical enterprise, cross-functional processes and their constituent operational processes Develop plan to implement enterprise, cross-functional processes Define the organisation structure needed to operate the enterprise, crossfunctional processes Create plan for managing communications to articulate plan and its benefits Modify the critical enterprise, cross-functional processes and their constituent operational processes Identify organisational changes to create cross-functional alignment Update organisational structures to create roles and responsibilities to implement cross-functional alignment Identify IT investments that deliver in improved business performance and added value Implement IT systems Define cross-functional measurements that link overall customer-focussed performance to cost and expenditure Collect information that populate cross-functional measurements Define structures and processes to achieve continuous improvement Implement structures and processes to achieve continuous improvement Measure continuous improvement
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Organisation view that shows key 1. 2. cross-functional processes 3. 4. 5. 6. 1.

Design enterprise, crossfunctional processes to achieve business goals Define organisation structure 1. needed to operate the enterprise, 2. cross-functional processes IT systems that add value cross 1. functions 2. Cross-functional measurements 1. that link performance to costs and expenditure 2. Process for continuous 1. improvement 2. 3.
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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

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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.” 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

Attitudes that require change
− − − − −

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Tyranny of the Organisation Chart
Cross-Functional Processes

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
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Organisation Operational Functions
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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
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Organisation Value Chains
Value Chains

Value chains add value and confer competitive advantage when defined and linked
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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
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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, crossfunctional processes and operational processes means individual process measurements can be linked to overall performance Allows goals to be connected to operational processes
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Strategy Delivered By Cross-Functional Processes

Measure Achievement of Goals

Consisting Of Operational Processes Set Goals

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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

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Sample Enterprise Business Process Models - 1
Business Environment
Competitors, Governments Regulations and Requirements, Standards, Economics

Customer’s Process Needs
Business Controlling Process
Processes That Direct and Tune Other Processes
Customer Acquisition

Core Processes
Processes That Create Value for the Customer
Product Delivery Order Fulfilment Customer Support

Business Measurement Process
Processes That Monitor and Report the Results of Other Processes

Enabling Processes
Processes That Supply Resources to Other Processes
Channel Management Supply Management Human Resources Information Technology Business Acquisition

Supplier’s Processes
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Sample Enterprise Business Process Models - 2
Align

Supply Chain
Innovate Plan

Source Sell

Make

Fulfil

Customers

Build

People
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Finance

Information

Environment

Governance
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Sample Enterprise Business Process Models – Common Structure
• •

Sample business process models have a common structure Generic structure that forms a template for specific actualisations
Operational Processes With Cross Functional Linkages Vision, Strategy, Leadership, Business Management Management and Support Processes

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Sample Enterprise Business Process Models – Common Structure
Vision, Strategy, Business Management
Vision and Strategy

Operational Processes With Cross Functional Linkages
Develop and Manage Products and Services Market and Sell Products and Services Deliver Products and Services Manage Customer Service

Management and Support Processes
Business Planning, Merger, Acquisition Human Resource Management Information Technology Management Financial Management Facilities Management

Governance and Compliance

Legal, Regulatory, Environment, Health and Safety Management

External Relationship Management

Knowledge, Improvement and Change Management

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Define Measures Linked to Key Processes
Number of New Customers Profitability Per Customer Customer Turnover Inventory

Business Environment
Competitors, Governments Regulations and Requirements, Standards, Economics

Customer Acquisition Cost

Customer’s Process Needs
Business Controlling Process
Processes That Direct and Tune Other Processes
Customer Acquisition

Core Processes
Processes That Create Value for the Customer
Product Delivery Order Fulfilment Customer Support

Business Measurement Process
Processes That Monitor and Report the Results of Other Processes

Number of Customers Complaints

Time to Fulfil Order

Enabling Processes
Processes That Supply Resources to Other Processes
Channel Management Supply Management Human Resources Information Technology Business Acquisition

Time to Resolve Complaints

Forecast Accuracy Number of Returns
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Supplier’s Processes

Delivery Time Accuracy

Invoice Accuracy

Payment Times
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Actions to Achieve Enterprise Business Process Approach

Identify and understand the cross-functional, enterpriselevel business process that create and add value Understand and define the metrics that measure crossfunctional, 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
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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
Vision and Strategy

Operational Processes With Cross Functional Linkages
Develop and Manage Products and Services Market and Sell Products and Services Deliver Products and Services Manage Customer Service

Management and Support Processes
Business Planning, Merger, Acquisition Human Resource Management Information Technology Management Financial Management Facilities Management

Governance and Compliance

Legal, Regulatory, Environment, Health and Safety Management

External Relationship Management

Knowledge, Improvement and Change Management

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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

Leadership

Business Results

Customers and Markets

Process Management

Information, Measurement, Analysis and Knowledge Management
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Baldrige Criteria Framework

Baldrige criteria framework is a superset of the crossfunctional 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
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• •

Mapping Sample Business Process Model - 1
Vision, Strategy, Business Management
Vision and Strategy

Operational Processes With Cross Functional Linkages
Develop and Manage Products and Services Market and Sell Products and Services Deliver Products and Services Manage Customer Service

Management and Support Processes
Business Planning, Merger, Acquisition Human Resource Management Information Technology Management Financial Management Facilities Management

Governance and Compliance

Legal, Regulatory, Environment, Health and Safety Management

External Relationship Management

Knowledge, Improvement and Change Management

Business Environment
Competitors, Governments Regulations and Requirements, Standards, Economics

Customer’s Process Needs
Business Controlling Process
Processes That Direct and Tune Other Processes
Customer Acquisition

Core Processes
Processes That Create Value for the Customer
Product Delivery Order Fulfilment Customer Support

Business Measurement Process
Processes That Monitor and Report the Results of Other Processes

Enabling Processes
Processes That Supply Resources to Other Processes
Channel Management Supply Management Human Resources Information Technology Business Acquisition

Supplier’s Processes
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Mapping Sample Business Process Model - 2
Vision, Strategy, Business Management
Vision and Strategy

Operational Processes With Cross Functional Linkages
Develop and Manage Products and Services Market and Sell Products and Services Deliver Products and Services Manage Customer Service

Management and Support Processes
Business Planning, Merger, Acquisition Human Resource Management Information Technology Management Financial Management Facilities Management

Governance and Compliance

Legal, Regulatory, Environment, Health and Safety Management

External Relationship Management

Knowledge, Improvement and Change Management

Align

Supply Chain
Innovate Plan

Source Sell

Make

Fulfil

Customers

Build

People
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Finance

Information

Environment

Governance
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Challenges and Lessons Learned from CrossFunctional BPM Implementation
Aligned Processes Aligned Measures Resources, Skills and Enabling Technology Knowledge Sharing Credibility and Simplicity in Communication Process Improvement Tools
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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

• •

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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

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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

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Knowledge Sharing
• • • •

Acquire and share internal and external expert knowledge Implement knowledge sharing technology Learn from others’ mistakes Use appropriate external expertise

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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

• •

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Process Improvement Tools
• •

Process improvement is core to BPM Toolset is important

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Process Management Model
Business Strategy, Business Models, Business Plans, Change Management Process Leadership

Design and Implement Processes

Process Performance

Measure Actual vs. Target Performance

Process Design

Cause Analysis

Create and Implement Solutions

Process Redesign

Knowledge Management

Execution Improvement

Continuous Improvement

Process Improvement

Gap

Success

Share Best Practices

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Business Process Action Hierarchy

Cross-functional processes need to be aligned with actions Performance of actions rolls-up to performance of process
Consists of one or more of … Consists of one or more of …
Sub-Process

Business Process Hierarchy Cross Functional Process Cross Functional Process

Process

Process

Process

Process

Sub-Process

Consists of one or more of …
Activity Activity

Consists of one or more of …
Task Task

Consists of one or more of …
Step Step Step Step

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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
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Enter Customer Details
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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
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Achieving a Cross-Functional View
• • • •

There will be problems You are encroaching on peoples’ territories You are creating waves Understand and deal with

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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
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More Information
Alan McSweeney alan@alanmcsweeney.com

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