Different Metric Types Meet Different Needs

Enterprises should differentiate between different types of metrics and how they are used. Lagging, Leading and Diagnostic measures should be combined to ensure they are supporting long-term objectives while focusing on intermediate and daily activities that make a difference. As a quick reference consider the following table for getting the right mix:

Type	Definition	Review Freq	Examples	Baseball analogy
Lagging	Show results and attainment of goals. Typically take time to get outcome.	Quarterly, Yearly to Multi- Year	• Revenue • Profit	• Final Game Score • Win/Loss Record
Leading	Give early indication into trends.	Weekly to Monthly	• Average price • New Sales Booked	• Runs • Outs
Diagnostic	Show why results were achieved and how improvements can be made.	Real-time to Daily or Weekly	• Bookings by type, time, customer, region • Cohort conversion metrics	• Pitches thrown • Errors

Centers of Excellence Revisited

I first wrote about Centers of Excellence about 5 years ago and it remains one of the most popular topics here. This post summarizes and updates thoughts on Centers of Excellence (CoE) as a way to build a capability to deliver value when specialty skills are needed. It covers:

• The rationale for creation
• The qualities of a good CoE
• How to grow a CoE
• Getting started

What is Strategy?

I recently re-read Michael Porter’s excellent article from HBR by this title. His insights remain as relevant today as when they were penned 18 years ago. He explains strategy in a way that supports how I like to challenge customers to think about it. In this article, Porter eloquently address how a company can stake out competitive differentiation and align all it’s processes to deliver that differentiation.

Porter makes a clear distinction between

• Operational effectiveness: performing similar activities better than rivals, and
• Strategic positioning: performing different activities from a rivals’ or performing similar activities in different ways.

To me, strategy is about differentiating between these to allow focus on strategic positioning. As Porter states, operational effectiveness can be quickly copied through benchmarking and sharing of best practices. This encourages the opposite of differentiation and leads to hyper competition. Through strategic positioning however, an enterprise can stake out differences that, when implemented, are difficult for rivals to copy.

Strategy then must:

1. Identify and make explicit what will be different
2. Document and communicate those differences in a way that aligns the performance of all enterprise activities
3. Ensure progress toward implementing, sustaining and improving the strategy, and to ensure it is delivering results

Let’s look at each of these in a little more detail.

Driving Value with Time & Repeatability

Flash back: I wrote this white paper about 9 years ago when I was working in a start-up that was building a business activity management software. The company was later purchased by webMethods which became SoftwareAG. I recently met with an old colleague who tells me the software is still in use. Outdated acronyms aside, it is still a good explanation of Lean Six Sigma and an interesting look back in my business life.

Today’s best competitive weapon is time. A loan company demonstrated that rapid turnaround of auto dealer loan applications, doubled win rate while reducing costs by 20%. Dealer sales representatives almost always referred the first approval to their customers. An insurance company found that the best way to grow their customer base was by ensuring their broker representatives were paid commission checks on time. These brokers referred more business to the company that paid them quickly and accurately.

What do these two examples have in common? Both started with measuring the performance of their business processes in real time. Whether your goals are to produce top line growth or bottom line revenue savings, smart business executives are starting with real-time measurement. Called Business Process Optimization (BPO) this approach uses a new class of application called Business Activity Monitoring (BAM) to gain the visibility and analysis to measure, understand and control the variables that affect your business performance. The result is sustainable improved competitiveness. BPO delivers value by:

• Showing in real time how consistently your process is performing, and whether it needs adjustments.
• Identifying where to take action to ensure you meet your customer’s requirements and providing an ongoing, accurate direction for improvement.
• Quickly evaluating results from improvement and creating historical data for on-going improvements.

An Example

An insurance company has promised payment terms on commissions to independent brokers within 14 days after they submit a policy. Through sampling, they find that their average payment time is 10 days. While this seems good on the surface, further analysis found that, due largely to exceptions and delays, a full 25% of the commissions were paid after the 14 day terms. In extreme cases, took more than 35 days for payment to be mailed. A graph makes the case understandable.

Days to Pay at start

In order to fully meet the terms of payment, the company focused on understanding and removing the causes of variation. After applying improvements from a Business Process

BPM Studies

Thanks to the BPM course students at University of Colorado for an engaging class discussion this week. It is good to know that treating business processes as strategic assets and building agility into them will be ideas driving our future business  leaders. A link to my class materials is below. Let me know how else I can help.

Business Value of BPM++.pdf

It’s Time to Include Mobile in Process Improvement

The ability to take work on the go is becoming increasingly popular for big and small businesses. And for good reason. Employees are demanding it while at the same time businesses are seeing benefit. With mobile enterprise solutions, workers can speed up daily operations and boost workplace productivity, regardless of their locations. Mobile applications help business promote efficiency to employees around the world. Some recent reports indicate the trend is hear to stay and growing:

• VentureBeat reported that mobile app usage increased 35 percent between 2011 and 2012 and that they plan to invest more in the years to come.
• Morgan Stanley survey of CIOs showed that 72 percent of company leaders purchased tablets for their employees in 2012 – a 19 percent increase from the previous year. Additionally, the percentage of survey respondents who said they would buy tablets for their work​ teams in the next 12 months increased from 64 to 75 percent between 2011 and 2012.
• Gartner predicts that by 2015, mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a 4-to-1 ratio.
• Strategy Analytics’​ Global Mobile Enterprise Business Application Revenue Forecast 2011-2017 showed that revenue​ associated with mobile workers using enterprise business apps on smartphones and tablets is expected to nearly double between 2012 and 2017. The number of mobile employees using business apps and the number of programs available will also grow rapidly.

“The consumer mobile experience has taught mobile workers to expect, even demand, access to information and applications from anywhere using mobile devices,” Strategy Analytics spokesperson Mark Levitt said. “Mobile workers have moved beyond just mobile email and messaging to include other collaboration apps such as conferencing, productivity apps such as content authoring and business process apps.”

Mobile solutions are changing the way business operates. The trends clearly indicate it is more important than ever to add a mobile component to most business processes.

The Intelligent BPMS Magic Quadrant

Not to be outdone by Forrester’s Recent wave of Dynamic Case Management, last week Gartner released their own next-generation evaluation for Intelligent Business Process Management Suite vendors:

According to the new Magic Quadrant report,

Business managers and knowledge workers today … are being asked to make faster and better decisions and to “do more with less” in an ever-changing business context, but cannot do so without improved visibility into their operations and environments. To meet this challenge, leading organizations are seeking to make their business operations more intelligent by integrating analytics into their processes and the applications that enable them. Gartner has identified … a new usage scenario for a business process management suite (BPMS) — a scenario that Gartner calls “intelligent business operations” (IBO; see “The Trend Toward Intelligent Business Operations“). To meet the needs for IBO, a BPMS must be enhanced with new capabilities. Accordingly, Gartner has evolved its definition of the business process management (BPM) market to reflect the IBO usage scenario and to introduce the next generation of BPMSs, which we identify as intelligent business process management suites (iBPMSs).

This is part of a growing trend from multiple fronts to extend BPM technologies beyond their traditional uses. Integrating support for social, analytics, complex event processing, and mobile has allowed these tools to deliver a new level of value creation potential. Whether the trend is labeled “Dynamic,” “Adaptive,” “Intelligent,” or something else, organizations that have captured the majority of the benefits from traditional BPM technologies will see additional value from deploying this newer breed of integrated technologies into their business processes.

Gartner has identified 10 core capabilities of an iBPMS:

• A process orchestration engine to drive the progression of work in structured and
  unstructured processes or cases
• A model-driven composition environment for designing processes and their supporting
  activities and process artifacts
• Content interaction management to support the progression of work, especially cases, based
  on changes in the content itself (such as documents, images and audio)
• Human interaction management to enable people to naturally interact with the processes they are involved in
• Connectivity to link processes to the resources they control, such as people, systems, data,
  event streams, goals and key performance indicators (KPIs)
• Active analytics (sometimes called continuous intelligence) for monitoring activity progress, and analyzing activities and changes in and around processes
• On-demand analytics to provide decision support or decision automation using predictive
  analytics or optimization technology
• Business rule management to guide and implement process agility and ensure compliance
• Management and administration to monitor and adjust the technical aspects of the iBPMS
• A process component registry/repository for process component leverage and reuse

Or, for the more visually minded, iBPMS features are described in their November report, BPM Suites Evolve Into Intelligent BPM Suites with this figure:

You can find Gartner’s full report at Magic Quadrant for Intelligent Business Process Management Suites. (Login may be required to access reports linked in this post.)