5 Critical Success factors in Business Process Improvement

May 19, 2017

Critical success factors

“There are no secrets to success. It is the result of preparation, hard work and learning from failure”. – Colin Powell

Business process improvement is the practice of analysing business processes and making changes to these, with an aim to improve the way the business operates.  These changes may align with a variety of pre-set objectives.  For example, cost reduction, efficiency improvement, improved customer service etc.  However to make the improvement initiative a success, businesses need to be aware of the critical factors that need to be in place to make the entire improvement initiative a success.

So, what are those golden rules for success in Business Process Improvement?

  1. Methodology

First of all, most of the Business Process Improvement initiatives fail due to the lack of, or an undefined road map. An improvement initiative needs a team effort and without a well-defined road map, all team members will follow a different road.

A business process improvement methodology is a structured approach which alleviates this issue. A robust Business Process Improvement methodology has phases and comes equipped with templates, rules and guidelines.  One of the business improvement methodologies is PRIME – Processes in a Managed Environment.  PRIME has 5 phases:

  • Scoping: Scope the organisation or business area for a comprehensive list of all process names. Develop the process framework and prioritise processes to set the direction for detailed analysis
  • Reviewing: Create the current state process map and identify the existing gaps and issues
  • Improvement: Improve and optimise the current state process map and redesign it into the future state process map
  • Implementation: Implement the process changes and manage the change to ensure change adoption
  • Monitoring: Measure the performance of the improved processes, check their impact and monitor the adherence

This methodology transitions the business by way of a phased approach and delivers the desired result efficiently and effectively.

  1. Team

A business process improvement initiative is not a one person job.  Hence it needs a well-integrated team who reads off the same song sheet (methodology).  Organisations intend to do business improvement but to make this happen, identifying the right team members is crucial.

In addition, a well thought-out approach backed by proper knowledge and competencies can make the task of implementation easy and effective.

According to Gartner Business Process Management Summit 2014, all the skills needed for driving a successful BPM project fall into three categories:

  • Operational Skills – To detect issues and improve performance
  • Technical Skills – To develop solutions for holding up continuous business process improvement
  • Transformational Skills – To make change management successful

Typically such a team comprises of a leader, senior process analysts, expert process modellers and a quality assurance person.  Furthermore,  members need experience and ideally qualified with globally accepted standards and certifications. As a result, there is easy communication within the team, and an efficient team approach.

  1. Tool

The third critical success factor is an easy to use, business process management tool.  A tool which comes equipped with practical functionality to document, analyse, improve, and monitor business processes.  First of all, the tool is the team’s centralized repository for business processes and in addition, also helps in:

  • Facilitating the business process modelling standards, auto-analysis the processes, manages the improvement activities, thereby expediting the whole initiative.
  • Controlling the versions of the process information
  • Creating a collaborative environment for the organisation and improvement team members, to see, comment and interact real-time about process information
  • Providing simulation for identifying the problems, analyzing the scenarios and validating the improvements so that appropriate end-to-end solutions are generated

As a result, the whole process improvement initiative becomes simpler, consistent and risk free.  Click here to read about our state of the art business process improvement tool If you would prefer to discuss this with one of our team, simply click here and one of our consultants will contact you.

  1. Measure

If we do not have measurements from the outset, how are we going to measure the change later? Improvement is not a once off activity, hence it is important to build a reputation of results.

Therefore, define the measure at the start of the improvement initiative. The measure is typically quantifiable and called a Key Performance Indicator or KPI. Almost always these are financial or non-financial measurements which are generally applicable to the Line of Business (LOB) or a specific departmental process. Some commonly used success metrics for business process performance are:

  • Financial Metrics: Monthly profit or loss, cost, LOB expenses vs. budget, LOB revenue vs. target, Day Sales Outstanding or DSO, Return On Investment or ROI, , overhead costs, size of gross margin etc.
  • Customer Metrics: Customer Lifetime Value or CLV, Customer Acquisition Cost or CAC, customer satisfaction and retention, Net Promoter Score or NPS, number of customers, expectations vs. perception etc.
  • Process Metrics: Quality of products or services, percentage of product defects, customer support tickets, churn rate, LOB efficiency measure, etc.
  • People Metrics: Employee Turnover Rate or ETR, labour costs, recruitment and retention, productivity ratios, satisfaction, safety, etc.

The secret is to select the right KPIs for your organisation from thousands of industry-recognized KPI’s. Ensure that the KPIs selected align to the strategic goals of the company, as it makes business decision-making easier and eventually leads to sustaining business success. Once the relevant KPIs are identified for a process, measure these before and after the change.

  1. Management-Level Involvement

To make a business process improvement initiative successful, the buy-in and commitment to the initiative must be present.

Furthermore, depending if the initiative is organisation wide or only a business unit, it is the leader of the area that needs to be on board and express their commitment to subordinates. Depending on this, these may include:

  • Owner/Top Management: Creates strategic plans and sets the right direction for making the mission of the company true
  • Middle Management: Creates smaller, detailed tactical plans focused on a function or department in order to accomplish strategic goals
  • Operational Management: Interacts with the process doers and sets targets (daily / weekly / monthly) for them to achieve tactical goals

Finally, the right messaging from leadership influences the acceptance of change of their subordinates.  It is in the lower levels of the organisation where the most change will take place; hence it is important to get them on board and subsequently instil a culture of continuous improvement.

In conclusion, focusing on these 5 critical success factors ultimately enables the business to achieve its strategic goals in an effective and efficient manner.

Learn more about measurement, tool and methodology here www.primebpm.com

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