Business Process Management - Costly and Vague?

I attended a seminar recently that talked about Business Process management. Some of the views of this is that projects to implement Business Process Management (BPM) were considered by many to be costly and vague.

While it's true that many projects undertaken by large business are exactly that, I question whether it has to be.

Firstly, they are costly because they are taken on as huge projects that are going to change the way a company does business. Like any major change, they are complex and require many changes in many people, if they are to work. This kind of change will never be taken on by small business. They can't afford the disruption and the failure. Because they are so large, it's like trying to boil the ocean. It may be possible, but it will take a lot of heat concentrated in many places in order for it to happen. It's much easier to boil water in a pot. In the same way, small projects that address a small part of the business are more effective. It's easier to focus on one process than a whole organization. Continuous process improvement (doing it in small chunks) also gets people comfortable with constant change, eliminating one of the barriers.

The second issue is the focus. In many cases, when organizations talk about BPM, they talk about the process and the activities of the process, they don't talk about the business value that will be delivered from improvements in the process. Try talking to the average business person about process and you will get a blank stare. If you don't, and you ask what is meant, you will get many different answers, none of which are helpful. Why are you taking on a process improvement project? If it is not to add business value, then why do it? So, if you are to be successful, you should focus on business value and measure business outcomes that provide business value. Real estate professionals will tell you there are three important things. They are: Location, location, location. For Business Process projects, the three important things are: Focus, Focus, Focus .....on business value. This focus brings the project down to a level where everybody understands it. It becomes real to them.

Do you want to improve the quality of your services? Do you want to improve productivity? Do you want to reduce costs? Then process improvement is the approach. But keep your focus on business results.

Cost Cutting or Software and Process Improvement?

With the state of the markets lately, many small businesses may be concerned and their ability to withstand the changes.

A recent survey by Harris Interactive has found that 63% of small business owners are extremely concerned about the future of the economy. Their second biggest concern is cash flow.

In these circumstances, many businesses go out and start cutting costs. In many cases, these cuts are across the board, cutting all costs equally, and stopping all investments.

During a slowdown, business owners have to take a close look at their costs, but they need to look at cutting costs from a return on investment perspective. In my experience, many businesses don't look at many of their ongoing expenses. They pay far more for non-essential services than they need to. They also don't gain as much as they should when they do invest in new technology.

When business slows, there is the opportunity to take time to re-evaluate what is happenning in your business. Are you getting the best deals on non-critical services? A colleague of mine reviews the non-primary services for clients and only charges when he finds savings. His skill and knowledge, as well as experience with dealing with suppliers allows him to get better deals for clients, often without changing suppliers. Every cent of the savings goes straight to the bottom line.

Another area of savings opportunity is with technology. Most businesses buy software and implement only small parts of the features. This is understandable as the complexity and variety of features available in most software are far too much for a business to reasonably grasp in a short period of time. However, most businesses never get beyond the initial implementation. Once the first stage is completed, they stop because they get too busy. The software supplier leaves, because their software is installed and they have their money.

There is a lot of function left on the table, and much of this function may add value to the bottom line, without further investments in technology. The key here is too look at your business problems, see how your processes could be improved and implement some of the new function.

There are a number of benefits to this:

1. You reduce costs during a period of slow growth.
2. You get the resources to make the improvements because of the slowdown.
3. You reduce your costs for the long term, putting you in a better position, when the economy recovers.
4. Your improved processes deliver improved customer service at a lower cost, allowing you to grow your business when others are cutting back.

Many of the projects that I have undertaken have been to deliver improved customer service. In every case, we reduced costs while delivering improved customer service. I believe that this will always be true. Poor customer service costs money. It loses sales. The source of the problem lies in your business process. If your process is bad, it takes extra effort to deliver good service.

What software is right for your business?

This question is asked by many business owners. Most software suppliers will tell you that they have the best solution. The answer depends very much on your business. More bells and whistles is not necessarily better. Just because a supplier specializes in your type of business doesn't mean that this is the best solution for you.

In a discussion with a colleague yesterday, he identified some of the problems. He is a lawyer in private practice and works by himself. He doesn't have the per minute charge that is common in most large practices. He charges rates that reflect the value that he delivers (what a novel idea!).

He bought financial management software that is specifically targetted to law practices. What he got was a product that is not intuitive, is complex, has far more features and functions than he needs. It has features that would work very well for large practices that charge by the hour and has all kinds of checks and balances to ensure that billing is completed effectively. The problem is that since he doesn't operate this way the controls go against him. It doesn't make sense for him to use the functionality that it provides since it would take more time So he struggles with the software and can't make use of its benefits.

This is similar to a client of mine in the construction business. They bought a software product that does an excellent job at helping a business estimate and manage large construction projects. The problem is that most of their projects are small and don't need these features. The original implementation failed because it took too much time and effort to do simple things. I was able to help them to use the flexibility of the product to do things more simply and they were able to achieve their goals. The capabilities of the software are not totally wasted as they are a growing business and will need these capabilities in the future.

However, a lot of time and effort was wasted trying to adapt to the functions that didn't suit their business.

The key to success in software installations is to:

1. Understand your business goal.
2. Identify how your business processes need to improve to meet that goal.
3. Identify how the software will help to improve.
4. Take small steps. The more sophistocated software may be required in the long term, but start with quick benefits first to get a return on your investment.

More on CRM software installations

Another article on CRM (Customer Relationship Management software) talks about problems with SaaS (Software as a Service). This term can be found all over the IT press and is being hyped as the solution to all your technology problems. SaaS is simply a service where your supplier hosts the software that manages some aspect of your business (This BLOG is an example. I don't install or maintain the software. It's provided to me and I use it).

The primary point of the article is that SaaS doesn't eliminate the need to plan for implementing new software for CRM (or any other business function). The installation, management and support of software is only one small aspect of any software that will run your business functions. The time and effort needs to be put on your business processes and how implementation of the software will improve your ability to deliver the business outcomes that you are looking for.

The key elements of getting results that you want are:
1) Have a business goal.
2) Walk through your business process and identify how technology can improve your ability to deliver.
3) Don't forget the people. Everybody listens to their own version of WII-FM (What's in it for me). If your people don't see the benefits, they will fight it.

The cost of software is only one small part of the project. Lost productivity (as your people learn), conversion, training, consulting support are others. In an article on my website, I outline the costs of buying software.

Click here if you want to see the original article on SaaS and CRM.

Problems with CRM software installations

Customer Relationship Management (CRM) software projects have been problematic. I found an article that mentions some of the reasons why. The list of problem areas is valid, but it doesn't go deep enough.

Here are the six problem areas identified:
1. Lack of strategic goals
2. Accurate and up-to-date data
3. Start slow. Have a staged approach.
4. Ensure the CRM system is actually used.
5. Hosted or on-premise solutions
6. Too much customization can be a problem.

Items 2-4 address major issues and are related. So is #6. In order to ensure that you have accurate and up-to-date data, people have to use the software and use it consistently. The causes of lack of use are primarily:

• Too much data being collected and too much customization

When CRM projects are initiated, there is usually a basic goal: to get more business. When requirements are defined, the potential for increased information is recognized, but not the problems in getting it.

Firstly, people need to change how they do business. They have to collect new data (some may be easily available) and they have to enter it in the system. When and how do they do this? For telephone sales and support, it is usually easy, since the salesperson is sitting in front of a PC with other data about the customer. The situation isn't the same for the salesperson on the road. They have to enter this data when they get back to the office or at home. This cuts into their personal time.

Secondly, the more data that you collect, the more you have to analyze. Since there will likely be a focus on certain goals and therefore certain data, much of the data will be ignored. People will know it is being ignored and will stop collecting. Then you lose out on item #2, accurate and up-to-date data. That causes your project to fail.

Thirdly, when you start the project you have certain ideas in mind. These can be articulated, but you will find that as you collect data, your understanding of your business will change and you will want to change what you collect. With the items that are less well defined, it will be even worse. It is likely that you will find the data has no value, at least in its initial form.

The final reason of too much customization falls into this category. Most software products give you the opportunity to customize to meet your specific needs. If you have a very specific need and know exactly what you are going to get from it, do it. If you don't, leave it for later. Remember that many people have had input into the development of the CRM software. With little or no experience and no specific goal except to collect information, you may find that it is not required. Something else may fill the bill.

Out of the six points mentioned above, two are critical:

1. Have a goal.
2. Ensure that the data you collect is accurate and upto-date and helps you achieve that goal.

If you do that, you are likely to succeed.

Here is the article that I referenced.

The search for perfection in software projects

When installing software to run your business, there is good news and bad news. The good news is that most software today is very flexible and offers a lot of options. The bad news is that the software is flexible and offers a lot of options.

These options offer the opportunity to collect a lot of data that may be useful for your business. This data can be the source of failure of your project.

In speaking to a colleague today, I was reminded of all of the projects that I have been associated with and many others that I have encountered after they failed to achieve their objectives. In many of these, the planning process is the source of the problem. Each project is considered to be a major event. Since it is such a major event, the planners want to "get it right", and they assume that they won't get a chance to do it again. So they attempt to collect all of the data that they can, and anything that might be useful in the future. Anyone associated with making software work is familiar with the term GIGO (Garbage In, Garbage Out). If the quality of the data is poor, then the system just won't do what you want it to do. This results in failure of the project, or failure to achieve the return on investment.

The problem with any data collection system (that's what the software is), is that when you collect new data, you are changing the way people do their jobs. The more that you change it, the more difficult that it is to do the job. People may not be receptive to that change. When the job is made more difficult by requiring that new data be collected, people become more reluctant to do the extra work, until they see value from that effort.

The more data that you try to collect, the longer the planning process takes, the more effort it takes to get the job done, the longer it takes to implement and the longer it will take to get a return on investment. This stretches people's patience and reduces their interest in doing the extra effort.

Many projects, such as CRM (Customer Relationship Management) suffer from this disease. The planners see all sorts of opportunity in collecting data about customers, the interaction with customers. They attempt to get salespeople to collect this information. The salespeople see no return on investment of their time, and they don't collect quality data. The result is a failure of the project on at least some level.

The solution is to narrow your focus. Define the business outcomes that you want, identify the data that is required to deliver those outcomes and implement those features as quickly as possible. Measure whether those outcomes are being achieved and show your salespeople the results. Remember that they will be looking at it from the WIIFM perspective (What's in it for me).

Once you have achieved your desired outcomes, look for the next step and the next desired outcome. Many project planners look at a project from a one time perspective, rather than an iterative perspective. They want to capture all of the data the first time, and that dooms their project to failure.

Technology can drive you crazy and lose you money

When I speak to small business owners and managers and tell them what I do, I find a common reaction. Technology is driving many people crazy. We are faced with so much of it, it provides us with a lot of functionality and yet most of us are frustrated by it.

there are many people who enjoy the toys and enjoy working with technology and solving the problems that they create. However, most of us want to get the value the technology provides, but are frustrated with what we have to put up with to get it.

Every website that we have to sign in to requires an ID and password. That makes sense from a security perspective/ But the format and structure of these ids and passwords is totally different, and in order to maintain security, we have to memorize them. Who can memorize an unstructured combination of letters, numbers and special characters? And they are different for every site and application. Talk about making life difficult.

Then we can go to the challenges that we have with the way software works. Significant improvements have been made with common functions in most windows applications, in that they mostly look the same and work the same, but what business value came from the restructuring with Vista? We have the same functionality and a totally different format! This forces us to learn all over again and makes us feel stupid!

Then we have the common problems that we encounter from time to time: software failure. Although software is much more reliable today than it was a few years ago (reboot was the most effective instruction), we still get failures. Most of the failures are introduced by the software that's added to your computer. Since we all have a different set of needs, our computers reflect this and we have a different set of software. In a past life, I was a software developer and supported large mainframe systems. We had a comprehensive set of tests that we ran to see how well this software worked together. No small business can aford this today, and even though some large businesses try, they are only partially effective.

So how do we cope? We have to work with computers. We do get some value from them. We have to learn how to manage computers, to minimize the frustrations and focus on the value that they provide.

There are four levels of managing computers:

1. At the foundation level, we want our computers to run effectively, be stable and not cost us lost productivity. Check out the articles at http://www.thevirtualcio.ca/ for some ideas on addressing this issue.
2. At the business level, we want to be sure that we are getting the value from the software that we buy. My article on business process can be a starting point.
3. The real value comes from the data that you collect about your business. This happens when you are getting effective use from your software and you analyze the content of what you have collected. This data is the first place I look when I start to work with a company, and also the one that is the least used.
4. Your technology mindset is the most important. How you approach technology, your frustrations and your actions will determine the value that you get. I found this blog entry on Don't Let Technology Psych You Out! that can help to address this last item.

More on software project failures

It's terrible to harp on this issue, but it is such a big issue. Software projects fail to deliver on return on investment. I had to raise this issue again because of another article that talked about it. The article is written from an IT point of view.

IT organizations in large businesses are a focal point for a lot of the work that gets done in a business. 70-90% of IT expenses are typically spent to keep the "lights on". This term is used by most people in IT for keeping the business running. Most businesses are lucky if they spend 30% on new projects. Even when they do, much of the staff's attention is placed on multi-tasking to keep the lights on.

When they do work on new business initiatives, they are focused on the mechanics of the projects: gathering requirements, implementing technology, managing the activities, trying to manage scope creep. Most IT organizations do a pretty good job of managing all of these activities. They are also focused on improving their abilities to get the job done. Project management, requirements gathering, managing scope have all improved over the last ten years, yet this has had little impact on the results.

The issue is not managing projects, it is not managing the steering committees and getting everybody to do a better job. It is a matter of focus!

Most IT projects take on a life of their own and lose sight of the original goals while they focus on the technical issues of the project. The goal may start out to improve productivity of staff in delivering service. A decision is made to implement new software to achieve that goal. From then on, the implementation takes over. The original goal is assumed to be met by the delivery of the original software. However, most projects take longer than expected. During that time, the business needs change; the business managers learn more about their business because of the project and change the requirements because they see a better way. All of the focus is on the development and implementation of the software, that is, to have a "successful project".

The result is that the "project" might be successful (i.e. it was implemented on time, within budget, meeting specifications), but the patient died (the business didn't get the results it needed).

While this article and other studies are focused on large organizations, the problem is the same with small ones. The projects aren't as large, the costs aren't as high, the failures aren't normally as detrimental, however they are still failures. Money is wasted and most small business cannot afford this waste.

We need to focus on the business value! What are we trying to make happen? How will the software help to make it happen? If changes are required because the business changes, then let's make sure the original goals (if still valid), will still be achieved.

The original article can be found here.

Golf teaching us about software installation?

I just ran across an article from AMR Research about the technology changes in golf and how it has not changed the handicap of most golfers by a single point. They compare it to software implementations and the lack of return provided by the constant upgrades in technology.

The article also references a study done by McKinsey that showed the return on investment from improvement efforts:

• Improving management practices (i.e. business processes) improved productivity by 8%.
• Increasing the intensity of IT deployment improved productivity by 2%.
• Doing both yielded an improvement of 20%.

Software is often seen as a silver bullet and is often sold that way by software suppliers. The net effect has been very small. In my experience, I have seen the productivity of many companies go down after a software installation, and sometimes they don't recover. The return on investment comes when you look at your business processes and see how they can be improved. Then apply technology at the bottlenecks.

Don't assume that implementing technology will improve your business, even if it did a great job for a similar business! We can't all be Tiger Woods, but we can always learn from Tiger Woods. Keep learning about your business. Keep working at improving your business processes. When technology comes along that can help in some area jump at it and use it.

If you want to see the original article by AMR Research.

Unlicensed software a source of system failure?

A recent study by The Harrison Group on behalf of Microsoft has found that mid-market companies that have unlicensed software are more succeptible to system failures than companies that acquire their software through legitimate means.

Their analysis simply reports that this is the case, not explaining why. It also references the growth rates and identifies that the companies buying legitimately tend to grow faster than the others.

In my experience, licensing is simply an element of how Information Technology is managed in a business. For many small businesses, computers are looked at as an expense to be reduced. There is little recognition of the value that it can bring to the company. Under these circumstances a number of things occur. They include:

• Acquiring unlicensed software.
• Using software that is no longer maintained.
• Reacting to software problems after they occur, thereby encountering outages.
• Minimizing the cost of support by attempting to fix it themselves.
• Not using the software as effectively as they could.

All of these issues are symptoms of treating technology as a cost of doing business. Typically, costs are minimized, but there is no recognition that outages can cost money. When systems are down, people are unproductive. This can lead to overtime, customer dissatisfaction and lost sales.

When I am asked to help a company, they often have difficulties that are affecting their business. One of the things that I always look for is how is technology being managed. I usually find a break/fix mentality with an emphasis on mimizing costs. I also usually find that too much money is being spent... on the wrong things. And this affects their business performance. Money is wasted in some areas and restricted in others. Two of the areas where costs are restricted is in the purchase of software and in software maintenance. The result is system failures and lost productivity,

While the study talks about the relationship between unlicensed software and system failure , the real source of the problem is the mindset towards technology. It is considered a necessary cost of doing business rather than a value to the business. In my experience, if the value is recognized, the value increases. The report identifies that this does not nessarily increase the costs.

To see the full report, see http://download.microsoft.com/download/D/C/5/DC503630-3EDD-455D-B155-4FCCA6FCCEA3/TCO%20Global%20Final%20Whitepaper.pdf

Marc Lachance, The Virtual CIO, nominated as a Notable Networker

I've just come back from a Mediterranean Cruise and found that it was a busy week. I thought I would start with the fact that I have been nominated by my BNI chapter as a "Notable Networker".

Having been a founding member of my chapter, its first President, and now an Ambassador for Coporate BNI Chapters, I know what an honour it is to have been nominated.

The best way to explain is to reference the letter I just received from the Executive Director of BNI.

"Congratulations!

You have been voted by your BNI chapter members as one of this year's nominees for the chapter Notable Networker Award.

On Thursday November 6th we will be recognizing each chapter award recipient. In being nominated you are clearly viewed by your referral partners in BNI as someone who practices the Givers Gain philosophy consistently. Making that kind of positive impression as a business person is indicative of your ongoing professionalism, contribution and willingness to help others, all of which are the traits of authentic givers.

The Awards Gala is held in celebration, and appreciation of those, like you, who give so much to the BNI referral program.

We look forward to celebrating with you."