“The Only Thing That Is Constant Is Change” said Greek philosopher Heraclitus 2.500 years ago and I think the statement is still very true! All businesses need to be agile, flexible and react quickly to customer changes, and at the same time the business processes should be streamlined, standardized, and automated as much as possible.
In this blog post, I will give my view on how to master the change and deliver superior performance:
1. Make changes visible
Tom DeMarco said “You can't control what you can't measure “. Somehow we need to first understand the magnitude of changes in our business. The traditional approach for getting understanding was to find a person who knows something about the topic. While making questions may still work for getting a high level understanding, the nature of changes is more problematic since all kinds of changes are continuously taking place in our interdependent businesses. Today, it is not enough to ask from people, we need to ask from the data! Process mining and intelligence is a methodology to find out what is exactly happening in your processes. By loading the transactional low-level data from your ERP systems related to customer orders, projects, resources, customers, and metadata, you get a full picture of what is happening in your processes – including the big picture and all details. The outcome of this step is a visual process flow model showing the As-Is process diagram together with many intentional/accidential additional process steps marking possible changes. In a typical business process, there can easily be more than 100 different identified changes that may occur for any given process instance.
2. Identify the outcome of changes
Many accidental changes have negative impact on business processes. On the other hand some changes are intentional and they have positive impact on processes. In this step, our job is to analyze changes relative to the actual business outcome of the business processes. For example, in Order To Cash process one may choose OnTimeDelivery, FirstTimeRight and WithinBudget to be key process performance indicators. Now we should calculate these performance indicators separately for each process instance to get understanding of whether the case was delivered on time, whether the whole order was processes according to agreed processes and whether total customer order fulfillment was done within budgeted costs. Now our job is to use these two sets of information on case level and find which changes are correlating most with the desired case level key performance indicator. Our results could for example show:
This step can also be regarded as the first level of root cause analysis starting from the process KPI and investigating further the effect of each identified process change.
3. Identify the areas for business improvement
Now we want to get rid of the changes causing biggest negative effects on process KPIs by conducting some business improvement actions or projects. In practice, I suggest to continue the root cause analysis with the identified problematic changes and finding our areas where the changes are more common as well as possible process flow variations which may lead to unwanted changes. Using QPR ProcessAnalyzer’s Influence Analysis as the root cause analysis tool, we first run Influence Analysis for case attributes to find out areas where changes are common. Then, we use Influence Analysis for Flowchart to see the process variations and process steps that are likely to lead to changes.
4. Implement improvement and follow-up
With the analysis information gathered above, we are ready to implement improvement actions targeted to the actual sources causing the changes that have the biggest negative effect on business processes. As a follow-up of the analysis, steps 1-3 should be repeated periodically – for example, on a monthly or quarterly basis – to see the effect of our improvement projects and start new improvement based on updated results.
To learn more about reducing unwanted changes in Order to Cash process, check out our webinar below.