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| Chapter 7: Process Optimization |
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Continuous process optimization is the basis for existence in highly competitive markets. By continuous process improvements businesses can not only survive but they can thrive on change. Continuous process improvement is part of the culture of being a process managed enterprise. Process optimization is a journey, not a destination.
With every cycle of process optimization companies can come closer to developing innovative business processes. Companies like Dell and Wal-mart have developed innovative business processes, by continuous process optimization. These companies did not become process managed enterprises overnight with a big bang onetime process improvement project. That is the reason Compaq and Kmart have not been able to imitate the innovative process models. Process optimization is rewarding, yet painful. BPM makes it possible to determine process effectiveness and costs both before and after optimization in real-time. ... ... BPMS provides essential information for understanding and improving business processes. BPMS gives business managers access to real-time process metric data. By analyzing process metrics process owners and business managers can + Can take corrective action to realign process with strategy. + Can take proactive action to profit from new opportunities. + Can make timely decisions to avoid risk. ... Process managed enterprises are always in feedback loop as shown in Figure 7.1. Inputs and drivers of process optimization are + Business dynamics and change. + Inputs that come in as a result of exception management and process monitoring. + Continuous KPIs measurement and improvement. ... BPM and the Balanced Scorecard Business process management encapsulates several concepts from existing management techniques – the balance scorecard being one of them. Drs. Robert Kaplan (Harvard Business School) and David Norton created the 'balanced scorecard' system which has been used by several companies to improve performance. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." ... Process metric improvement Now that we have some idea of balanced scorecard and KPIs, I will describe a few common KPIs and how BPMS enables tracking and improving these KPIs. Again KPIs are process and industry dependent and it is not possible to cover all in this book. It must be understood that since BPMS capture process data, it will be possible to measure any KPIs you want to measure. |
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