BPM CRM and Cross-Functional Enterprise-Level Customer-Focussed Busine

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

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

Objectives:

January 9, 2011 2 Objectives To describe an approach to integrating operational processes into cross-functional customer focussed view for improved customer relationship management

Scope:

January 9, 2011 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

Customer Service and Customer Satisfaction:

January 9, 2011 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

Illusion of Customer Relationship Management:

January 9, 2011 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

What Customers Really Want – More For Less:

January 9, 2011 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

What Organisations Try to Do – More With Less:

January 9, 2011 7 What Organisations Try to Do – More With Less More Of Work Customers Sales Revenue Margin Less Of Personnel Facilities Cost

Balance Between Internal and External:

January 9, 2011 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

Cross Functional Processes – Crossing “Vertical” Operational Organisational Units:

January 9, 2011 9 Cross Functional Processes – Crossing “Vertical” Operational Organisational Units

Core Cross Functional Processes:

January 9, 2011 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

Core Cross Functional Processes and Customer View:

January 9, 2011 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

Cross Functional View:

January 9, 2011 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

Illusion of Attempting to Manage Outcomes:

January 9, 2011 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

Illusion of Attempting to Manage Outcomes:

January 9, 2011 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

Illusion of Attempting to Manage Outcomes:

January 9, 2011 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

Barriers to Taking an Effective Cross-Functional View:

January 9, 2011 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

Single Barrier to Taking an Effective Cross-Functional View:

January 9, 2011 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

Single Barrier to Taking an Effective Cross-Functional View:

January 9, 2011 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

Reasons for Taking an Effective Cross-Functional View:

January 9, 2011 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

Cross-Functional Processes:

January 9, 2011 20 Cross-Functional Processes “Vertical” Operational Processes – Internally Focussed “Horizontal” Cross Functional Processes – Externally Focussed Link Operational Processes Cross Organisation Boundaries

Operational Processes:

January 9, 2011 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

Cross-Functional Approach:

January 9, 2011 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

Benefits of Cross-Functional Approach:

January 9, 2011 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

Data and Information Gap:

January 9, 2011 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

Data and Information Gap:

January 9, 2011 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

Closing the Information Gap:

January 9, 2011 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

Data, Information and Action:

January 9, 2011 27 Data, Information and Action Information Action Data

Data, Information and Action Cycle:

January 9, 2011 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

Key Measures:

January 9, 2011 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

Measure What Matters:

January 9, 2011 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

Achieving a Cross-Functional View:

January 9, 2011 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

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

January 9, 2011 32 High-Level View of Areas of Management Refocus and New Behaviours Requirement Activities and Tasks Organisation view that shows key cross-functional processes 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, cross-functional processes Create plan for managing communications to articulate plan and its benefits Design enterprise, cross-functional processes to achieve business goals Modify the critical enterprise, cross-functional processes and their constituent operational processes Define organisation structure needed to operate the enterprise, cross-functional processes Identify organisational changes to create cross-functional alignment Update organisational structures to create roles and responsibilities to implement cross-functional alignment IT systems that add value cross functions Identify IT investments that deliver in improved business performance and added value Implement IT systems Cross-functional measurements that link performance to costs and expenditure Define cross-functional measurements that link overall customer-focussed performance to cost and expenditure Collect information that populate cross-functional measurements Process for continuous improvement Define structures and processes to achieve continuous improvement Implement structures and processes to achieve continuous improvement Measure continuous improvement

Results of Management Refocus and New Behaviours :

January 9, 2011 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

Attitude Inhibitors to Customer Centricity:

January 9, 2011 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

Tyranny of the Organisation Chart:

January 9, 2011 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

Customer Centric Cross-Functional Measurements:

January 9, 2011 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

Organisation Value Chains:

January 9, 2011 37 Organisation Value Chains Value Chains Value chains add value and confer competitive advantage when defined and linked

Cross Functional Processes Link Operational Processes:

January 9, 2011 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

Cross Functional Processes and Strategy:

January 9, 2011 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

Sample Enterprise Business Process Models:

January 9, 2011 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

Sample Enterprise Business Process Models - 1:

January 9, 2011 41 Sample Enterprise Business Process Models - 1 Business Controlling Process Processes That Direct and Tune Other Processes Core Processes Processes That Create Value for the Customer Customer Acquisition Product Delivery Order Fulfilment Customer Support Enabling Processes Processes 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 Environment Competitors, Governments Regulations and Requirements, Standards, Economics

Sample Enterprise Business Process Models - 2:

January 9, 2011 42 Sample Enterprise Business Process Models - 2 Supply Chain Customers Innovate Sell Align Plan Make Source Fulfil Build Finance People Information Environment Governance

Sample Enterprise Business Process Models – Common Structure:

January 9, 2011 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

Sample Enterprise Business Process Models – Common Structure:

January 9, 2011 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

Define Measures Linked to Key Processes:

January 9, 2011 45 Define Measures Linked to Key Processes 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

Actions to Achieve Enterprise Business Process Approach:

January 9, 2011 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

Enterprise Business Process Models vs. Organisation Chart:

January 9, 2011 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

Baldrige Criteria Framework:

January 9, 2011 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 Leadership Business Results Information, Measurement, Analysis and Knowledge Management

Baldrige Criteria Framework:

January 9, 2011 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

Mapping Sample Business Process Model - 1:

January 9, 2011 50 Mapping Sample Business Process Model - 1

Mapping Sample Business Process Model - 2:

January 9, 2011 51 Mapping Sample Business Process Model - 2

Challenges and Lessons Learned from Cross-Functional BPM Implementation:

January 9, 2011 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

Aligned Processes:

January 9, 2011 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

Aligned Measures:

January 9, 2011 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

Resources, Skills and Enabling Technology:

January 9, 2011 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

Knowledge Sharing:

January 9, 2011 56 Knowledge Sharing Acquire and share internal and external expert knowledge Implement knowledge sharing technology Learn from others’ mistakes Use appropriate external expertise

Credibility and Simplicity in Communication:

January 9, 2011 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

Process Improvement Tools:

January 9, 2011 58 Process Improvement Tools Process improvement is core to BPM Toolset is important

Process Management Model:

January 9, 2011 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 Practices Gap Success Process Leadership Process Performance Process Design Process Improvement

Business Process Action Hierarchy:

January 9, 2011 60 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 …

Sample Business Process Action Hierarchy:

January 9, 2011 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

You Know You Are Achieving a Cross-Functional Customer View When …:

January 9, 2011 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

Achieving a Cross-Functional View:

January 9, 2011 63 Achieving a Cross-Functional View There will be problems You are encroaching on peoples’ territories You are creating waves Understand and deal with

Summary:

January 9, 2011 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

More Information:

January 9, 2011 65 More Information Alan McSweeney alan@alanmcsweeney.com