Building Responsive Organizations
The Internet is forcing companies to share more information quickly and be more responsive. This is not as easy as putting up a Web site or letting customers order online. Instead there must be a focus on end-to-end business processes. Within every business process that operates without the aid of automation and management, there exists significant opportunities for valuable improvements.
Years of research have shown that most business processes follow the 80/20 Rule. That is, 80% of the total time consumed to complete a typical business process is “lag time.” This is the time tasks are waiting in the in-baskets or queues of the performers, in transit, or consumed in tracking status. It is dead time that does not add any value to the business. Only 20% of the total process time is consumed by “task time,” the time performers actually spend working on the tasks.
Most software, in particular personal productivity applications, ERP, and CRM solutions focus on reducing task time. While this is important to improve quality and simplify task execution, it is often not enough to truly improve overall process efficiency. Even if task time is reduced by 50%, the overall impact on the process time is only 10%.
To get significant productivity gains, the focus must be not just on task time, but on reducing the lag time as processes flow across the organization. Workflow routing is designed to attack that lag time or dead time. If lag time is reduced by 50%, the overall process time is reduced by 40%!
Many companies have already seen these results with departmental workflow solutions or workflow capabilities that are embedded in their business applications. At the same time, these solutions have not been able to cost effectively drive the same type of results for processes that cross the organization, flowing in and out of a variety of user populations and applications.
As described earlier, most business applications, like CRM and ERP, continue to build on the functional silo approach to information technology that has been going on for years, albeit with newer technology that delivers better results for that department. Many of these applications now have workflow capabilities to automate routing of tasks to the different types of people within their primary user base. The introduction of these capabilities has helped these solutions drive some significant departmental productivity gains.
When business needs require access outside of the main user base or sharing information with other applications, costs and technical challenges increase. From a workflow perspective, this requires integrating new users and other applications into the environment. This is more than a technology challenge — it is a business challenge since the core application was not designed for this type of use. In most cases, these solutions have failed due to significantly higher than expected implementation costs or major user experience issues.
Another approach to tackle this problem is Enterprise Application Integration (EAI). Most EAI deployments provide a way to move data between various applications, but they don’t link these applications in a broader process context — other than having an internal process drive the timing of the data exchange. Once the data has been moved, the applications continue to run as functional silos. Additionally, the EAI approach is not suitable for handling exceptions that often require manual intervention.
Departmental applications simply were not designed to address processes that cross departments, applications, and users. The problems of these embedded solutions are magnified when the typical heterogeneous computing environment is considered. It is extremely rare, if it ever occurs at all, for a company to have all of its back office computing in one application system. If organizations try to leverage the workflow features of their functional applications, they may have two, three, four or more systems running automated processes that are specific to those applications.
As mentioned above, this may be fine for constrained processes, but presents real management challenges when the process needs to extend outside of that application. It is very easy to picture an IT environment that looks like an IT manager’s worst nightmare — multiple design environments, multiple management environments, multiple user interfaces, etc.
The experiences that organizations have seen from trying to implement embedded workflow solutions and the need for more responsive organizations is driving companies to look for a new type of solution. By considering the way technology use has evolved over the years, that new type of solution needs to drive organizational productivity. The good news is it exists now.
It is called business process management (BPM).