Identifying and Prioritizing BPM Projects Based on Quick Wins and Clear Financial Benefits

Editor's Notes

• #2: Thank you, Jenna, and let me also welcome our listening audience. Over the past several years, we’ve seen a surge in business process improvement efforts, throughout a wide variety of industries. We know that improvement projects can bring clear benefits to the company, such as less waste, decreased cycle and throughput time, and better quality products and services. But determining which projects to undertake for maximum return can be a challenge.  Over the next 30 minutes or so, we’re going to be discussing a framework and some practical techniques to help you indentify and prioritize your business process management projects. Identifying and Prioritizing BPM Projects Based on Quick Wins and Clear Financial Benefits Dr. Rick Hefner, Director, Process Management, Northrop Grumman Corporation We all know that process improvement projects bring clear benefits to the company: less waste, decreased cycle and throughput time, less defects – just to name a few. But determining which projects to undertake for maximum return can be a challenge.  Dr. Hefner will present several considerations for selecting which improvement projects to invest in. During this session you will learn: How to generate process improvement projects based on your business goals The importance of internal and external customers in identifying improvements How to prioritize projects with and without direct ROI How project selection matures over time
• #3: Business process management is about aligning organizations with the wants and needs of their clients. The problem is maintaining that alignment is a changing environment. Changes come from a variety of sources – First, the wants and needs of the client base may change, and what satisfied or delighted them in the past may no longer do so. Second, your competition is constantly changing, bringing new offerings to the market. Often customers wants are directly shaped by these new offerings – they didn’t know they needed it until your competitor showed it to them. Changes in the business environment may occur, such as changing in the financial markets, or travel costs, or regulatory changes, or the need to go green. And new technologies often bring new opportunities, and new challenges. Continuous process improvement is the response to these changes. The challenge is identifying projects, and determining which of projects are most likely to yield maximum returns.
• #4: There are a variety of ways to identify process improvement projects, and I want to talk about three classic approaches. These approaches vary both in the scope of the improvements and in the timeframe in which you would use them. For those of you just starting out, there is plenty of low-hanging fruit and you could probably sit with your employees or your customers and make a long list of needed improvements. However, if you’re going to prioritize your resources, you need to select projects with the greatest value to your key business goals. To find these, we’ve often found that a careful of analysis of your business goals, and the processes that support them, will yield the biggest pay-offs. We’ll talk more about that later. After you’ve capturing the low-hanging fruit, perhaps 6 months or a year into your improvement efforts, you’ll find it harder to locate projects with the same return on investment. That’s where Value Stream Mapping comes in. For those you unfamiliar with the technique, Value Stream Mapping involves drawing a process flow, and identifying the specific process steps that create value in the eyes of your customers or those that causes waste, either in time or resources. Because of the limited time we have today, I won’t be discussing the details, but there are a number of excellent references available. For our purposes, I simply want to point out that it is more technical challenging and time consuming that a straightforward examination of your business goals, and therefore something to use after you’ve exhausted the first step. Finally, there is what I would call the “Where’s the pain?” approach. As your improvement program matures, you may find it harder to find opportunities. But you should respond to expressed problems, such as customer or employee complaints. These projects seldom have the strategic or financial impact or your earlier efforts, but they are great ways of fine-tuning your processes.
• #5: The first approach we discussed, analysis of business goals, started by setting a vision of what you want your organization to be, or what it needs to be to stay in business. It may involve identifying your key customers, and their needs and wants, and the products and services you will offer to meet those. It sounds simple, but I’ve seldom seen a well-crafted vision statement. Most statements say something like “Maximize stakeholder value through the highest quality products and services, delivered quickly, at the lowest cost”. Most companies simply can’t be the best and the fastest and the cheapest. Instead, a more realistic set of business goals is needed by agreeing on how you will measure success. Your vision should be different that your competitor's vision, and should take advantage of your unique capabilities, or your anticipation of how your market is changing. With a vision and business goals defined, you should identify the primary and supporting processes that are most critical to achieving them. This will help you decide which areas to attach first, and which will have the biggest impact on your goals. You can analyze these processes for potential improvements. At this point, I’m not talking about sophisticated tools. I’ve had good luck using simple tools such as SIPOC process maps, or flowcharts. Initially, your goal is to communicate and to tap the your internal and external customer’s perceptions of where problems exist. Later, as informal methods don’t provide sufficient analysis or insight, you can bring in more sophisticated tools like value stream maps.
• #6: This slide illustrates the business goals analysis we used in the initial stages of a Lean Six Sigma program for the Northrop Grumman Mission Systems Sector. We were simply trying to gain staff buy-in on a simple feedback loop – the idea that a few core and enabling processes drove the answers to our key business questions. We also created a dashboard to measure these processes. From here, we dove down into the critical subprocesses and gaps between current capabilities and our business goals. This formed the basis for deciding on the ROI, the return of investment, for individual improvement projects.
• #7: Working with the process owners, we brainstormed a list of potential process improvement projects. At this point, we weren’t able to accurate predict potential cost savings due to these projects, and so it was difficult to prioritize. So instead, we used a simple matrix to help us better understand how the improvements would help in two dimensions – current process performance vs. criticality to business operations. Projects in the lower right quadrant offered the highest payoffs. As our program matured, we began to explore projects in the upper right hand quadrant, which involved opportunities to further optimize already well-performing processes. And we started to understand what kinds of improvements were possible, and to draw red arrows arrows to identify the potential improvements.
• #8: One of the most useful tools we found in these early stages was a simple cause-and-effect or fishbone diagram. It helped us retain a focus on the problems, as opposed to potential solutions. Early in an improvement program, there is often pent-up frustration in the process, and staff has already decided on what is needed to fix the problem. To gain the biggest benefit, the focus needs to be on finding ALL the problems, so that the solution addresses the widest and most critical set.
• #9: In summary, we’ve discussed several approaches for selecting and prioritizing improvement projects. Remember that your approaches will evolve over time. For capturing the low-hanging fruit, your focus should be on your vision and business goals, and the underlying core and enabling processes. As your program matures over time, you can bring in more sophisticated techniques such as Value Stream Mapping. And once you’ve optimized your business processes, use customer and employee perceptions of “pain” to respond to changes and further refine your processes. With that, I’ve left a few minutes for questions for the audience.