In 1990 consultants Michael Hammer and Thomas Davenport introduced
a bold idea to the business community: managers were focusing on
the wrong issues.
In articles published in the Harvard Business Review and the Sloan
Management Review, respectively, they essentially charged managers
of using technology to simply automate “non-value adding work”
rather than making such work obsolete1. Most work, they asserted,
does not add any value for customers and therefore should be
eliminated, not merely accelerated through automation.
Companies, they proposed, should reassess their processes to
maximize customer value, while minimizing resources required for
delivering their product or service.
Business process re-design (BPR), or reengineering, became a widely
adopted management technique used to rethink how work got done in
order
to dramatically improve customer service, cut operational costs,
and increase competitive advantage. In 1993, 60% of the management
letters
appearing with Fortune 500 company annual reports explicitly
discussed reengineering efforts that were then under way2. Advances
in information
technology, acceptance by well-established management thinkers and
consulting firms, and an increasing focus on overcoming foreign
competition
fueled continued adoption of BPR. By the mid ’90s, however,
adoption slowed as the shortcomings of BPR’s emphasis on
technology automation
over people and failure to consistently produce its much-heralded
performance improvement became evident. In recent years, business
process
management (BPM) has become the apparent successor to BPR. As a
management discipline, BPM ostensibly emphasizes process
efficiency
supported by information technology. But like its predecessor BPR,
BPM is now subject to the same critique of shifting the focus to
technology and
discounting the “people” element.
Today, knowledge-worker centric organizations are still looking for
ways to do more with less. Some are in survival mode, trying to
ride out the current economic conditions until the storm clears;
others may be well-positioned to take advantage of competitors’
challenges and focus on growth. In either case, initiatives to
improve key business processes are often undertaken to root out
inefficiencies that can incur unnecessary cost and waste and
negatively impact competitive advantage. A current approach is
business process automation (BPA). While BPM is more of a broad
discipline that could be realized with or without technology, BPA
actually employs technology (typically software) to execute
business processes, in real-time, and achieve efficiencies as a
result of automating parts of that process. More importantly, BPA
is not solely reliant on technology, but instead is best suited for
people-centric processes. A recent IDG research study among IT
executives and managers cited that 87% of respondents considered
BPA to be a critical, very important, or somewhat important IT
priority3. The automation of manual or poorly automated processes
can offer significant opportunities for process improvement, with
benefits that can include improved customer service, reduced
processing time, improved quality of work, increased levels of
output, and improved audit/compliance support.
With the number and diversity of technology solutions for
automating, managing and improving business processes, it’s
natural to direct energies
into finding the right BPA technology solution. However, any
technology decision should be only one top consideration when
planning or proceeding
with a BPA initiative. Today’s successful BPA initiatives are
based largely on five key considerations as a whole.
1. Defining and aligning clear business objectives
2. Involving the right people
3. Automating the right processes
4. Using the right technology
5. Supporting “quick win” as well as continuous improvement
initiatives
1. Align with business objectives
It is not uncommon for organizations to go through an extensive
technology selection process before finalizing the goals they would
like (or need) to achieve with business process automation.
Ideally, however, any BPA initiative should be driven by
well-defined business objectives. High-level objectives may focus
exclusively on cost reduction or cost containment objectives, or,
under the right circumstances, on increasing revenue generating
potential. It’s worth noting that cost and revenue objectives may
not necessarily be mutually exclusive. For example: a given process
may gain efficiencies with BPA that support either 1) the same
output levels with fewer resources — cost reduction, or 2)
increased output with the same or fewer resources — incremental
revenue generation. In either case, the process efficiency
improvement should translate to quantifiable return on investment
(ROI). There may be many different ways to apply automation for
increased process efficiencies in any number of processes. But what
is the value of those efficiencies? (Are we automating simply
because we can, or is there quantifiable value?) Clear,
well-defined business objectives will help ensure that all other
key BPA considerations are in alignment, and that a BPA technology
solution delivers real ROI.
2. Get the right people involved
A successful path to BPA requires involving multiple internal
stakeholders, particularly where a process traverses multiple
departments. In many organizations, process improvement efforts
work best when they are “a business-driven initiative with IT
support,” according to Clay Richardson, a senior analyst at
Cambridge, Massachusetts-based Forrester Research. Having IT
management on board is critical to BPA’s technology
implementation aspects, and the business owner should provide the
equally critical process knowledge. Ideally, a business process
automation initiative will have an executive sponsor to provide
direction in situations where IT and the process business owner may
have different perspectives, or in situations where a process might
impact multiple departments and introduce elements of change
management. By its very nature, process automation will likely
change the business process, and subsequently the way people work.
With the growth of knowledge workers and peoplecentric processes,
it’s important to additionally involve the end-user for input on
the process details, and to consider their perspective for a
potential technology solution’s ease-of-use in order to
facilitate adoption.
Successful BPA initiatives will involve people with the best
practices expertise to execute the process discovery, analysis and
design efforts that are
absolutely critical, and that are best initiated in advance of
technology solution deployment. This process consulting expertise
should be offered by the BPA solution vendor or be made available
via an independent consulting organization. Process consultants
will use proven methodologies to assess and document a process as
it is today, identify the best opportunities for increased
efficiencies with automation, and create the process design to be
implemented in the BPA technology solution. Equally important,
process consultants can benchmark and validate process improvement
and ROI. The process consulting piece is essential, as it ensures
that BPA efforts are undertaken on the right process and will
deliver value to your business.
3. Identify the right process for automation
Hammer and Davenport weren’t entirely wrong: there are
significant benefits to removing non-value adding work from a
process. “One study of idle versus processing time for
work-in-process revealed that, for the average process, actual
working time comprises only .05% to 5% of total elapsed time.”4
“IBM Credit Corporation discovered, for example, that value-added
time for the financing-approval process amounted to only 90 minutes
out of a three- to four-day cycle time. [We have] seen several
insurance companies in which the time spent actively processing and
underwriting an insurance policy was only two or three hours, in an
overall process cycle of more than 20 days.”
In today’s business environment, the real challenge, and
corresponding opportunity, remains in improving processes that
involve people. With so many potential processes to automate, it
therefore is important to find a “good fit,” to ensure
identifiable efficiency gains that can generate quantifiable value.
Among processes ripe for BPA are “vertical” industry-specific
processes such as insurance claims processing, healthcare patient
scheduling, or financial services loan originations, as well as
“horizontal” processes in virtually any company, such as new
employee on-boarding, lead management, or IT equipment purchasing.
In general, BPA is well-suited for virtually any multi-step,
people-centric process, especially those processes that are:
• Highly manual
• Repetitive
• Based on defined steps
• Utilized across multiple departments or teams
• Dependent upon individuals who must handle work tasks and
communicate with one another and/or the customer
4. Start small and grow
Demonstrable results matter. Look for BPA opportunities that allow
you to start small, expand and continuously improve. (Or as is
commonly heard in such projects: “start small, think big, scale
fast.”) Because BPA can have such a significant impact on process
efficiencies, organizations may opt to initiate BPA implementations
that focus on a mission-critical business process in its entirety.
The trade-off is: the more complex the process, the more complex,
costly and time-consuming the implementation, and BPA becomes a
question of whether to realize ROI in one or two quarters… or
potentially two to three years. Achieving a relatively “quick
win” ROI might mean breaking down a larger process into smaller,
more manageable sub-processes. For example, instead of trying to
automate the entire life insurance policy process from the initial
lead contact to revenue recognition, an insurer might focus on the
policy application portion of the process. With a process that’s
a good fit for BPA, and the right technology solution, measurable
ROI is possible, even in a smaller sub-set of a business process.
So, keep the big picture in mind, but look for manageable
opportunities with containable scope.
BPA is best viewed as an iterative process versus a project. Again
ideally, organizations should be able to continually refine and
improve processes to create sustainability, where savings in one
area could potentially fund the next initiative. BPA can have a
“viral” aspect if done well — one successfully automated
process with demonstrable ROI can lead to another.
5. Select the right technology
Despite the high interest and tangible benefits from automating
core business processes, barriers remain that prevent many
companies from implementing business process automation. Reduced IT
budgets, along with the cost and complexity of traditional
solutions, make BPA a daunting prospect. In the current business
climate, taking several years to implement and realize return on
investment is simply not a viable option. There also are solutions
that position the benefits of bringing unified communications and
business processes together. This seems like a much more reasonable
proposition, although the practical application of these concepts
is a bit murky. Many of these “solutions” are actually a
collection of custom services and integrations that embed
communications capabilities and event-based triggers into existing
applications; unfortunately, they usually only result in the same
cost and complexity issues that plague their more traditional
counterparts, without the hard ROI.
To achieve the highest measure of success, a BPA technology
solution should support each of the other key considerations
discussed thus far, providing demonstrable ways to meet business
objectives, offering ease-of-use for business and IT collaborators
and end users participating in the process, and providing an
environment that supports the automation of people-centric
processes with near-term ROI. In all, BPA technology should offer
proven capabilities that make people more effective in the way they
perform work, entailing a range of other capabilities that include
but are not limited to:
• The ability to automate processes end-to-end and to seamlessly
incorporate communications associated with those processes
• Location independence that enables employees to participate in
a business process from any location
• The predictable, flexible distribution of work to an available
resource with the right skills, and with the necessary service
levels
• Visibility into the work pipeline by way of real-time
monitoring of process activity
• The ability to capture and track work, as well as customer
dialog, that are part of a business process
A BPA solution should additionally offer an intuitive design
environment so your IT resources can model, modify and manage the
process in the technology application, and then continue to improve
the process over time. Organizations should be able to easily
extend the same technology solution to support additional employees
as more processes are automated.
Conclusions
Business process automation done right can deliver process
efficiencies that result in measurable value to your organization.
BPA should focus equally on strategy, people, the process for
automation, and technology. Beginning with clear business
objectives, involving the right people, automating the right
processes, selecting the right technology, and supporting “quick
win” as well as continuous improvement initiatives will go a long
way toward enabling your organization to realize that value. While
the purpose of this document is certainly not to provide an
exhaustive list of considerations for a BPA initiative, keeping
these top five considerations in mind in the early stages can
greatly increase your chances for success.
