Feature

posted 9 Apr 2009 in Volume 12 Issue 6

The perfect partnership

Imre Hegedus explores the relationship between business process management and process improvement methods and suggests that successful and sustainable business performance relies on having a holistic and phased approach that consciously includes both.

While many organisations have successfully introduced process improvement (PI) methodologies, a number of these struggle to integrate enterprise-wide business process management (BPM) as they continue to focus on initiatives for current and future financial years. These organisations often find that after a period of time they are having difficulty even sustaining their improvement programmes – most of the ‘low-hanging fruit’ has been picked, and the current ways of doing business have still not changed markedly

Alternatively, it can take significant time and effort to integrate BPM as ‘just the way we do business’ in an organisation. Maintaining focus and momentum often requires the ability to implement some ‘quick wins’ to maintain interest in the longer-term BPM investment.

BPM and PI – in contrast
There are many definitions and descriptions of what constitutes PI and process management.

Whatever your views and experiences, it is important to differentiate between them, as for every organisation investing in ‘process’ there seems to be two more that are offering their services to help, through consulting services, tools and methodologies. This can be confusing (and costly) for those about to embark on the journey, so having a clear view of their relationship up front can make the difference between success and failure.

Process improvement
PI is often deployed into an organisation as a set of methodologies and tools focused on the improvement of processes through disciplined projects. These are usually initiated as the result of existing business-lag indicators and, therefore, focus on the issues of the day. The improvement projects often involve the actual definition of the processes requiring improvement, as there are few processes defined as part of the way the business operates. Some deployments have the best intentions to change the more fundamental aspects of performance that touch on the cultural and structural aspects of the business, but are often brought back to the basics of delivering against the improvement projects for the current financial year. Such PI efforts will often compromise strategic goals and instead focus on fulfilling operational and tactical goals for the company. This dilemma is sometimes accentuated when the central deployment team is deployed back into the business. Each business unit PI team, whose purpose is to bring the corporate knowledge and approach to the business, can find itself doing the reverse and applying its skills towards optimising the business unit and potentially compromising the whole business.

BPM
BPM is often introduced as a totally different way of managing the business – through the definition, management and ongoing improvement of its processes. It is nearly always seen as requiring a cultural shift at all levels and, while process is a primary focus, BPM recognises the complex inter-relationships between the various components of an organisation. The establishment of enterprise-wide process models that describe the key aspects of the business (sometimes in terms of core, management and support processes) often characterises a BPM deployment. The introduction of the role of process owners, the need for corporate governance of the identified processes, and the matrix management of the business follow. The important link between the core business processes and the key customer requirements drives many of the strategic improvement projects that begin to emerge. All this good work tends to happen in parallel and is sometimes independent of, or even in competition with, the need to fix the operational issues of the day. An excellent strategic BPM deployment will fail if it does not deliver against some of the operational and tactical issues the business faces.

Both these scenarios sound quite pessimistic but they need not be. Interestingly, these scenarios are being played out in many organisations – some give up and move onto something else, some realise that to achieve long-term business performance they must add the one scenario to the other. Few organisations approach their performance management goals with an integrated PI and BPM strategy from the very start. So, what if they did?

BPM and PI
BPM and PI are closely linked and need to be managed tightly if the focus on processes is to have significant and sustained positive impact on business performance.

Put simply, BPM is the way in which an organisation manages its business through focusing on its processes, and PI is the way in which an organisation improves its business by focusing on its processes.

As no business environment is static, every business is required to continually improve the way it operates, while being able to manage the current operations.

Thus, for any organisation that is serious about ‘process’, the relationship between BPM and PI must be made clear and managed as part of business operations.

Figure 1 summarises some of the characteristics often found in process improvement and process management deployments. Note that while BPM is considered to be more holistic, neither is superior enough to be entirely successful when independent of the other. BPM will struggle to deliver, while PI will struggle to sustain improvements and transform the business.

While much of Figure 1 is self-explanatory, it is worth spending some time on the aspects of single-loop and double-loop learning, as well as mechanistic and organic views – both of which we can introduce through the concept of systems thinking. Systems thinking has its foundation in the field of system dynamics, founded in 1956 by MIT professor Jay Forrester. Popularised by Peter Senge in the 1990s, the basic concept is to view organisations as complex systems. Doing so helps in all aspects of management and leadership. BPM owes much of its genesis to the concepts of systems thinking and system dynamics.

Only by taking an organisation-wide (or wider) perspective can you begin to see such relationships. Double-loop learning1 is attributed to BPM in Figure 1 as it questions an organisation’s objectives, policies and underlying norms. On the other hand, PI projects often make improvements within the confines of a defined problem, and in themselves may do little to change the things that contributed to the problem in the first place (single-loop learning2). This can lead to PI encouraging us to view organisations quite ‘mechanistically’ – fixing parts of the machine when they require it. BPM, in contrast, encourages a more organic view of organisations where things are evolving and inter-related. These organisational metaphors can be the result of the approach taken, or indeed determine the approach taken, to process management or improvement.

Continuous improvement and management
We have all seen a version of the ‘continuous improvement cycle’, which incorporates a ‘plan, do, check/study, act’ (PDCA/PDSA) wheel making its way up the saw-tooth improvement curve and a standards wedge stopping it from falling back down It is worth considering for a moment what it is that makes the improvement cycle a continuous one.

Process improvements are projects that are started through the identification of some measure of poor performance. Implied in the undertaking of any process improvement endeavour are two key assumptions:

The organisation has the ability to continually measure, monitor and report on process and business performance (business-performance-monitoring capability); and
The organisation has the ability to sustain the process and business improvements once the projects have been completed (BPM capability).

Both these capabilities are more than just process-related – they are to do with the people (skills, training and development), the culture (decision-making practices, accepted, expected and actual behaviours), the technology (network and IT, tools and systems) and the alignment of operational and tactical activities with strategic intent. The systemic inter-relationships between these organisational dimensions are complex but need to be appreciated and managed as best they can if any improvement efforts are to be sustained.

There are numerous ways of analysing these dimensions and guiding our systems thinking, including business-performance frameworks – such as the Australian Business Excellence Framework (ABEF), European Foundation for Quality Management (EFQM) and the Baldridge Award Framework. More recently, the application of maturity models has provided the means by which organisations can evaluate their capability to both manage and improve their processes (and the business).

The key questions here relate to the current organisational capability to manage and improve the organisation’s processes. Some diagnostic research prior to embarking on your process initiative is a good place to start. Your organisation’s process ‘maturity’ should determine your deployment approach and focus. The continuity comes from the ability of your organisation to manage the integration of your chosen PI methods with your BPM strategy and implementation.

Six Sigma
Six Sigma or ‘6?’ has taken a number of forms over the past decade. Originally it was a basic statistical measure of variation derived from the spread of the normal distribution as measured by standard deviations (sigma levels).

From its beginnings as a statistical metric, Six Sigma has evolved to a methodology for process design and improvement using standard roadmaps and tools. More recently, it has been deployed in organisations as a management methodology or philosophy and is enjoying a high profile in the process arena.

Many organisations have embraced it as a way of changing how they manage their business, and Six Sigma has developed into a robust methodology with a standard deployment approach using ‘belts’ to attribute levels of competency in a set of statistical, project and stakeholder management skills, which have much of their origins in quality management. The goal is more often not about achieving Six Sigma capable processes but about institutionalising a management system that focuses on continual process improvement. Organisations often base their Six Sigma efforts around a few key concepts:

Customers – improving customer satisfaction by understanding the attributes most important to customers;
Defects – defining, measuring and reducing defects and opportunities for them to occur;
Variation – accepting that all processes exhibit variation and that there are different types of variation (common cause and special cause) that should be monitored and managed; and
Processes – understanding your processes, knowing what they can deliver (process capability), and implementing systems to ensure that they deliver predictable results over time (process stability).

Most organisations operate at far lower than Six Sigma standard, and many will never achieve its high levels of process performance. When deployed as a management methodology, the benefit of the statistical measure is in having a standard measure of process performance that can be used as a benchmark within and between organisations.

There are many tools used by Six Sigma practitioners that are mainly incorporated into two common methods. The methods are used to improve existing processes or design new ones.

DMAIC
This is an acronym for the Six Sigma process-improvement roadmap. It follows the PDSA cycle but is more rigorous and detailed:

Define and plan the project goals and customer deliverables;
Measure the process to determine current performance;
Analyse and determine the root cause(s) of the defects;
Improve the process;
Control future process performance.

DMADV
More commonly referred to as ‘design for Six Sigma’ (or DFSS), this is the Six Sigma roadmap for designing robust processes to meet customer needs:

Define and plan the project goals and customer deliverables;
Measure – determine customer needs, determine performance and specifications;
Analyse the process options to meet the customer needs;
Design the process to meet the customer needs;
Verify the design performance (pilot) and ability to meet customer needs.

You will notice that these are descriptions of project activities – the methods are based on process design or improvement as an intervention strategy. The sustainability of the outcomes of DMAIC or DMADV projects, however, is largely a function of the ability of an enterprise to manage its business processes – BPM maturity. While recognised by Six Sigma leaders, this is often not understood by organisations that embark on a Six Sigma deployment and can result in improvements not being realised.

The key to understanding the relationship between BPM and PI has been described as:

“a Process Improvement Project is not the end; it’s the beginning. If an infrastructure for the ongoing management of a process is not established, the process will fall into disrepair as quickly as a rebuilt car engine that is not kept tuned. [Business] Process Management is a set of techniques for ensuring that key processes are continuously monitored and improved.”3

BPM is about providing that infrastructure, which results in PI projects being part of an ongoing, strategic and proactive management practice, rather than a reactive and tactical intervention response to poor business performance.

Business process reengineering
Business process re-engineering (BPR) is a term used to describe major process change initiatives. The basic methods and tools used for business process improvement (BPI), which realise incremental improvements, are applicable to BPR. To achieve such dramatic performance improvements and sustain them, however, BPR places more emphasis on understanding the organisation’s key processes, leveraging technology as a key enabler for the change and having an effective change management strategy. Re-engineering shares a common focus on the customer and processes with total quality management (TQM), but differs in that it fundamentally questions the existing organisation’s framework for the key business processes in question.

It requires an in-depth understanding of major processes as a basic, early step. It is this end-to-end view that provides the backdrop against which breakthrough improvements can be made. Incremental process improvements (BPI) may succeed in solving a particular issue but will not provide the magnitude of process performance improvement of a successful BPR effort. Another factor distinguishing BPR from BPI is the reliance on technology as an enabler for the change.

BPM with limited scope – is it BPM?
Part of the reality of BPM being a ‘journey’ is that most organisations embarking on BPM have not yet reached their destination – and are actually carrying out PI on specific processes within or across functional departments. Few organisations are actually managing their processes at an enterprise-wide level as a part of ‘business as usual’. Many organisations would be managing some of their key processes, such as human resources, finance and product development, though the challenge remains to broaden such efforts to become enterprise-wide with an appropriate level of cross-process governance.

A recent survey by the University of Western Sydney4 asked about organisations’ plans to deploy BPM. 42 per cent of respondents indicated that they had already deployed BPM and yet the responses to some other questions challenge this notion. With very limited use of process standards, software tool importance focused predominantly on graphics tools rather than BPMS, repository, modelling or performance tools.This suggests that organisations are more likely to be applying BPM methods and technologies on a limited scope – whether that scope is process-based or department-based. They are improving specific processes, and seeking to sustain and manage those improvements through BPM. They are on a transition path from PI to enterprise-wide BPM.

So what does the transition from PI to BPM (and vice versa) look like? Is there an identifiable point when PI becomes BPM? Well, yes and no. Consider those organisations that have PI methods and tools but only focus on managing one or two key processes. This is PI ‘and then some’, but it is not really (enterprise-wide) BPM. To recognise that this is a real (and common) scenario, the cycle of process management (PM) is referred to here. The PM cycle focuses on a single process as distinct from BPM, which examines how the whole business manages and improves its processes.

The PM cycle recognises this ‘middle ground’ between BPM and PI. Process management is broader than PI and narrower than BPM. So they may be thought of as a hierarchy of cycles with PI being subordinate to PM which in turn is subordinate to BPM. Together, they are the continuous improvement cycles of BPM (see Figure 2).

There are two perspectives from which this middle ground of PM is encountered:

PI ‘growing’ into BPM. An organisation’s PI programme begins to identify the need to have some key processes managed in perpetuity; and
BPM ‘focusing’ on PI. An organisation’s BPM deployment starts to seek improvements in the key processes it has defined.

For the majority of enterprises that start their continuous improvement journey from the PI perspective (bottom-up), this question will be asked at some point: ‘How will our process improvements be sustained?’ These organisations will have had a period of success in addressing a number of disparate processes through the application of a PI methodology, rigorously enacted through disciplined project management practices. As the focus changes from programme-managing a series of projects to programme-managing a series of processes, elements that are characteristic of PM will start to be implemented.

For those that start their continuous improvement journey from the BPM perspective (top-down), the question is ‘Which processes should we be focused on improving?’ These enterprises have usually established a current view of their processes and established some of the elements to manage and monitor their performance. The focus on improving specific processes signals the transition from the current-state to some desired future-state and they too will start to implement some of those elements characteristic of PM.

Figure 2 illustrates this relationship, listing some of the key characteristics in each chevron (cycle) and the questions one might hear in relation to each ‘process cycle’ (BPM, PM, PI).

The vertical arrows between each chevron represent the inter-relationships between the cycles for continuous improvement to be genuinely continuous. The questions on the right with the arrow bullets are example questions that prompt the transition between the process cycles.

The following section will focus on the prompting questions from Figure 2 that link each of the cycles together. It is these that provide both the sustainability for process improvement projects (their ‘growth’), and the relevance to BPM (its ‘focus’). While these questions are not intended to be prescriptive or comprehensive, they should be enough to provide some prompts to consider when broadening and/or focusing your process efforts.

Process improvement (managing PI projects)
This cycle is characterised by a focus on improvement projects and PI methodologies and tools. Training in these methods and tools is often the initial focus, based on the premise that having a common language (methods and tools) applied across the business goes some way towards breaking down the silos and enabling a degree of predictability in project outcomes. The discipline of PM becomes a prime focus. Rudimentary measures of performance are introduced, including increasing the numbers of projects and reducing their duration, before effort is expended in focusing on the means by which projects are selected and prioritised. Effective programme management of PI projects begins to signal the shift to PM as some key processes being improved become the backdrop for the PI projects.

How will our process improvement efforts be sustained?
At some point in the deployment of PI methods, the focus begins to shift from projects to processes. While processes are always a focus, they often start off merely as a means to achieve project benefits; projects which are in the most part disparate and driven from existing business lag indicators.

The point at which context is sought for all projects and processes, in terms of the business processes rather than the organisation chart, marks the transition from PI to PM. This is the point when PI efforts become sustainable through the allocation of individuals accountable not only for the project outcomes but also for the ongoing management of the process(es) that deliver those outcomes. This question will prompt the need for owners of specific processes.

Process management (managing specific processes)
The ‘middle ground’ is characterised by the allocation of individuals (process owners) accountable for the performance of specific processes only. A process owner becomes accountable for process management and improvement projects. This may have been driven from a BPM strategy where certain key business processes are identified as critically short of where their performance needs to be to support the future strategy of the organisation. Alternatively, this PM focus on certain processes may have arisen from some of the larger PI projects. These projects would have highlighted that some ongoing focus on the processes was necessary to sustain the project or process improvements.

How does this process fit into the overall value-chain?
This question will prompt the definition of a high-level process model and associated governance framework for the entire business. This will provide the context for all processes and process improvements. Every PI project should be given a scope in the context of the other business processes. This process perspective will remove the duplication of multiple projects sponsored by different parts of the business to fix effectively the same process (which is usually also duplicated across the business). Projects become more cross-functional in their scope as process definitions become more ‘end-to-end’ – not limited to business unit boundaries or problem definition statements.

How will we go about improving the performance of this process?
Driven from a BPM deployment, the focus must then turn to the PI methods employed to improve the processes. Driven top-down, this has the benefit that all PI projects may be framed in relation to the key processes of the organisation.

An agreed set of methods and tools (a PI toolkit) that is used in a systematic way should be established early on, to ensure that the variety of issues are resolved using methods and tools appropriate to each. As part of the PI approach, the business should have a number of methods and tools available to it. The selection of which method or tool would be appropriate for any particular situation becomes part of the relationship between BPM and PI. PI methodology selection criteria will lead people to understand which tools and methods should be used for which situation. This helps determine the appropriate resources and effort that should be invested in a particular PI project.

BPM (managing the business as a system)
Characterised by organisation-wide (ideally wider) business and process models; describing the key value chains that constitute the business. These models represent the current state of the organisational processes. The need for process owners, some form of governance structure and performance reporting mechanisms often follows. In this cycle, all processes have someone who is ultimately accountable for them. The interaction with the external environment (market, competition, economy and especially customers) is what enables the enterprise to ultimately ensure successful customer outcomes.

How do our processes relate to key customer, business and market indicators?
A great starting point would be to identify the key indicators that determine business success. Then, knowing how your organisation’s processes deliver against them and are changed in response to them is the ultimate way in which an organisation can remain competitive. This macro BPM cycle should set the foundation and direction for all process improvement activities and measures of performance for the company. This interplay between an organisation and its external environment is driven by systems thinking and encourages a broader view than the traditional internal analysis that can occupy many BPM deployments.

Which processes should we focus on?
Ideally some sort of business excellence framework is used to determine action plans and identify areas to focus on. Alternatively, issues of the day will point to which processes are causing the business angst – whether it is in terms of high cost, customer complaints and/or rework of some form. This question prompts process management (and ultimately improvement) activities for specific processes.

Continuous improvement
The continuity (of continuous PI), at least in part, comes from the ability of your organisation to manage the integration of your chosen PI methods with your BPM strategy and implementation. This can be understood in terms of the continuous improvement cycles of BPM – PI, PM and BPM – and the questions that can prompt the dynamic interplay between them.

To demonstrate this interplay and to ensure that the relationship is understood and managed, anyone involved in either BPM or PI roles should consider asking the sorts of questions outlined in this article.

Key messages
The sustainability of any process improvement (project) is dependent on the capability of the business (strategy, people, process and tools) to manage its processes. It is no use improving something if we cannot manage to sustain the improvement.Conversely, the ongoing management of something must include the ability to improve it.

The difference between process improvement and process management is often unclear, but the difference is important and we must better integrate PI and BPM from the outset if either is to be successful.

With respect to BPM, systems thinking helps us to understand the real causes of problems and how to address those causes – looking at the end-to-end processes (not just the processes, behaviours and events directly attributed to specific problems) and considering the systems and structures that caused the issues in the first place.

BPM engages a number of methods to help an enterprise not only improve process performance but guide it in re-evaluating fundamental business practices, systems and structures through a process/systems culture. Some key points about BPM and PI:

BPM and PI are complementary disciplines;
PI is a sub-set of BPM;
Continuous improvement is a function of the capability of an organisation to both improve and manage its processes; and
Organisations usually begin their process journey by deploying methods associated with PI.

This article is adapted from a chapter in Ark Group’s Business Process Management – Insights and Practices for Sustained Transformation report, written by Imre Hegedus. For more information contact Adam Scrimshire at ascrimshire@ark-group.com

References

1. Argyris, C. and Schön, D, Theory in Practice: Increasing Professional Effectiveness, Jossey-Bank Inc., San Francisco, 1974
2. ibid
3. Rummler, G. A. and Brache, A. P., Improving Performance: How to Manage the White Space on the Organisation Chart, Jossey-Bass Inc., California, 1995
4. Forghani, D. and Khandelwal, V, Business Process Management Practice in Australian Organisations – Status and Potential 2007, University of Western Sydney, 2008