Business Process "Angioplasty"

Ross Mayfield's post The end of process last week has stirred quite a bit of commentary around process.  I had a book proposal last year with the title of this post and the outline is still gathering dust. Hopefully, I can more gradually express my thoughts over a series of blogs.

Business processes are arteries, highways, rivers. They keep corporations and cities running - but need to be kept clean of different types of "plaque". They periodically need dredging and angioplasty.

In 1990, Michael Hammer wrote a seminal Harvard Business Review article "Reengineering Work: Don't Automate, Obliterate". It was powerful - a look at business process from a customer's eyes. Hammer wrote what Ford Motor did after studying Mazda's accounts payable process. If a customer would not pay for a task in a process, consider eliminating it. To a customer, process is like spell checking software. He can tell when you did not utilize it, but he is unwilling to pay much for it. In that sense Ross is right. Process should be un-intrusive. But look what we have made it.

Somehow, Hammer's work got mixed up with ERP software (he himself did a series of seminars with SAP and Deloitte). The thinking was the emerging client/server ERP software reflected best practice processes. Did not matter that it mostly changed the user interface and the database from previous generation transaction engines - the check processing, the credit approval and other steps did not change much. Implement it and magically you became "world class" was the thinking. It would get you Toyota's Lean and GE's Six Sigma - without the discipline and the investment. It was a fad diet. After ERP, we moved to SCM, CRM and other business applications.  Technology is like cholesterol - the good kind and not so good kind. As I have written throughout my blog, "tiger teams" are showing huge payback from small, creative technology deployments. On the other hand, the payback from large enterprise applications in many cases has been questionable.  Not too many companies did what Ford did - obliterated the process, not just automate it. We allowed software vendors and consultants to define what process should be - not the customer.

Worse, the technology created a bubble of demand for a new category of worker who could speak SAP, Siebel and wanted to be paid for that special skill.

Then post 2001, we have been burdening our processes with security steps. Security is clearly important but you just have to see TSA at airports to know that some types just adds cost and time to processes. I do not feel any safer when driver's licenses and boarding passes are checked 3 times within a distance of 500 feet.  The ratio of hangers-on to screeners is way too high. Do you feel any better about security around financial records just because the credit card call center asks you 5 personal data points before they answer a basic account question? We are letting a different kind of consultant - the Giuliani kind - define process, not the customer. Much as I admired him as mayor, I am more cautious about him as a security consultant.

Then we have compliance. SOX across the board. By industry - HIPAA, FDA validation and others. Most reflect opportunistic laws from politicians.  OK, so Enron got clever. There were plenty of opportunities for politicians and auditors to lasso it not just enact SOX as a reaction. The laws then get converted in to half-baked guidelines from bureaucrats. They are interpreted by auditors who really do not understand the impact on supply chain and other non-financial business processes they are asked to opine on.  We are letting a different kind of consultant - the Big 5 audit kind - define process based on internal controls,  not the customer.

So between 1990 when Hammer wrote his classic and now, we have clogged various processes with 4 types of "plaque" - questionable technology, people costs tied to that technology, over-zealous security and opportunistic compliance.

And while we have been clogging our processes, we have been patting ourselves on the back. Many corporations benchmark themselves using data like that found in Hackett Group's databases. Hackett has some of the best process benchmarks around but till recently mostly had data on Western corporations and Western labor rates - not the new economics emerging from China and India. Even the first-quartile performers in Hackett's benchmarks look sluggish in this global race.

Some companies have seen the light and are looking at business process outsourcing (BPO) options to lighten their processes and lower transaction costs. But even there many tie the BPO provider's hands - make sure your transaction engines are of the Oracle 11i variety. The results are what should matter, not the brand of the technology.

Time to go back to the customer's POV. He/she will pay a premium for product innovation or customer intimacy, but not for the prettiness of your checks or your credit approval process.  When the Chinese and the Indians catch up with us on product innovation/customer intimacy over the next decade, we can only pray they will have learned bad process habits. Otherwise, we may have to obliterate our processes in a hurry.

Better to start now...with a "why" attitude. We should be asking that early and often of our software vendors, our systems integrators, our auditors and our politicians. Don't Accept. Obliterate.

Author's Note: a couple of readers  read my BPO comment as my "solution".  Actually, my preferred solution would not be BPO. I pointed it out as a path companies are choosing but even then not letting go of their technology platform.

Having seen IT outsourcing for 2 decades, I firmly believe in the adage  "make a process efficient before you outsource". With many business processes so broken just handing over to BPO provider will not magically fix them. Besides, the economics of many western BPO providers would burden the processes even more.

Comments

[Tom Foydel]

Vinnie,
Powerful ideas here and I concur. I saw the ERP business process morass personally and it was a mess. Not only were the 'best practices' of the software largely ignored by the client, but in many instances there were no best practice processes in the software for fairly basic and common business needs. In other words, you're right, the companies that put in Enterprise class software in the 90s did so without the effort and time required to understand their processes and take appropriate action. They left it up to the consulting team. We ended up in a constant false choice of changing the software to meet the business' requirements, or changing the business to meet the software requirements. In 8+ years of consulting I never had an in-depth conversation on the value of processes.

[vinnie mirchandani]

thanks...the sad thing is we have convoluted processes even more since with security and compliance. Many cliches come to mind - the enemy within, no free lunch etc. We can either do angiplasty now or pay for the double bypass later...spread the word...thanks!

[dahowlett]

Or we could think about frameworks that tie them together (another BIG issue) in the expectation that over time, they can become loosely coupled as organisations build out and refine business processes.

[Vinnie Mirchandani]

You are correct, Dennis but for a change we technologists all should step aside and really let the tech illiterate customer tell us what pisses him off about a process...he may actually give us some tech ideas or tell us to just radically lighten a process...we blame customers for process exceptions - often it is smart folks within companies who dream them up

[dahowlett]

aaah - which is where the framework idea makes sense. But I take your point and this, I think, is where skunkworks and the good ol' open source people come into the game. Unfortunately, I've not seen anyone talk yet about the potential for resulting chaos.

[Anil Kurnool]

I over heard this in a recent conversation and thought of sharing with you…

Unless someone knows business processes correctly, technical team can never implement them as desired by the customers. Say you go by the ‘reusability’ and ask a plumber to implement a state-of-art ‘infrastructure’ with SOA, reusability et al – you end up having the same set of pipelines for sewage and consumable water.

Processes should be customer driven – not IT driven…

[Bidyut]

I chanced into your "Business Process Angiolasty" blog as I was searching for the "The Wall Mart Way / Steering Wheel" which they use.

I am in the process of setting up the CRM/Loyalty process for my company.....and have been meeting with Siebel(Now Oracle) / Wipro / Mindtree others........

Somewhere I feel (especially in today's connected world )there is urge to use the technology more / to experiment to be part of the changing dynamics all with the good intention of providing an excellent experience.....on one side ....and on the other side maintain the hygiene level. Especially from an Indian perspective it's a real challenge - when I have store in Jammu where mobile doesn't get connected leave aside net to a store in Delhi wherin customers want to pay using their phone.....

Will visit again for sure. G'luck