BPM Guide (Part 9): Special Situations Requiring Business Process Management
By Joanne Wortman Posted September 20, 2016
The entire BPM Guide is now available free at http://get.integrify.com/bpm-guide.
This is a guest series by Joanne Wortman, an independent business/technology consultant and freelance writer in the NY Metro area. She has almost two decades of experience providing business process optimization, organizational change management, M&A integration, and program management across many business sectors, with a concentration in manufacturing.
Throughout the earlier posts, the focus has been on business process management within an existing organization that initiates either a "bottom-up" or "top-down approach to improving business efficiency by streamlining business processes. This post will deal with four special situations that may become part of the strategic direction at some point in time. Let's take a look at them and highlight some of the unique challenges and BPM requirements for:
- Mergers and acquisitions
- Replacing outdated enterprise software
- Financial turnarounds
Mergers and Acquisitions
Every merger or acquisitions begins with an investment thesis that defines the goals and financial impacts of absorbing the new organization into the acquiring company's business model. While much effort is expended on the financial model, the business process and organizational implications of the thesis are often left unsettled until after the deal closes. When a deal fails to achieve the projected financial goals, poorly integrated business processes or misdirected process integration focus are often the root cause.
Integrating business processes is difficult, and it becomes chaotic if the effort lacks structure, leadership, and effective documentation. During the integration period, enterprise systems need to communicate across organizational boundaries. Those organizations that already have experience with BPM projects and tools will be able to integrate more quickly because they have the following advantages:
- They have defined an over-arching process structure and have flagged as priorities those areas that will directly support the financial goals of the deal
- They have experience using BPM tools to model processes and automate manual workflows - there will be many more manual workflows to required bridge the two organizations while the technology integration is underway.
- Within the parent organization, the workforce is already accustomed to training and absorbing managed process changes
- BPM tools give them the ability to quickly copy and configure existing workflows for the newly acquired organization before optimizing them - this also makes it easier to train and communicate the new workforce into how daily tasks are to be performed.
There are some caveats to remember when integrating a new company:
- Keep an open mind: the best mergers are transformative to the parent company as well as the newly acquired entity. Explore the acquisition's way of doing things, and you may benefit from unexpected process improvements.
- Start as early as possible: Your business process due diligence needs to start alongside your financial, legal, and technical due diligence.
- Plan for employee attrition. The brightest and best may be the ones who leave first. An early start will help you mitigate the chaos from lost process knowledge that results from too many key people leaving after the deal is announced. Honesty and transparency about plans are best for employee retention, but if your plans include the elimination of whole departments, you need to keep plans close to the vest.
Outsourcing, whether it is offshore, nearshore, or onshore, has proven its effectiveness in lowering costs, improving product and service quality, and driving business innovation. It poses special challenges in the process area. These challenges need to be addressed early, while the initial decision to outsource is under evaluation.
Most organizations do not move forward with business process outsourcing without carefully considering the upfront costs and ongoing costs of several outsourced service providers. These cost models are very difficult to build because it is rare that you will be able to make an apples-to-apples comparison of two competing service providers - the devil is in the details. Your cost model needs to include the savings that will result from reducing your internal staff, but you often need to drill down several levels in your process hierarchy to understand the workload and headcount requirements of a proposed outsourced operating model.
Clearly, if you already have well-documented, managed processes, and you understand your current and target transaction volumes, you will be better able to create a clear comparison of your options. Here is how you should approach it:
- Start with your process hierarchy, expanded to its lowest level of detail.
- Flag the processes and workflows that each provider includes in their proposed service offering.
- For cost comparison purposes, draw a boundary on your diagram that is big enough to include what each provider proposes to take on.
- In each case, you must factor in a different cost for retained staffing, estimating transaction volumes to the best of your ability.
Bear in mind that step 4 involves a considerable estimating insight because you are very likely to shift and consolidate responsibilities across existing roles and staff.
Replacing Outdated Enterprise Software
When replacing or implementing large enterprise systems like ERP, EMR, Policy/Claims processing software, it's best to take a process-centric, rather than software-centric approach. The success of the technical implementation is based on how quickly and easily the workforce can embrace the new software. Again, begin with your existing process hierarchy and scope the implementation by process, not by application module (although there is always some degree of alignment between the two).
Document new target processes, and drill down into new workflows and tasks that take place within the new software. If your employees are already fluent in your BPM lexicon, diagrams, and workflow documentation, they will be better able to understand and embrace the changes.
If a business is struggling, management needs to execute a financial turnaround as quickly as possible. Time is the biggest enemy of a successful turnaround. Organizations with existing BPM capability will be able to achieve a faster turnaround because they have the framework, tools and discipline to zero in on those process areas that are likely to provide the biggest financial relief.
At the outset, many turnarounds result in onboarding a new management team and possibly the engagement of specialized turnaround consultants. Well-documented business processes will speed the initial situation appraisal that this turnaround team must undertake before devising their turnaround plan.
The turnaround strategy may include outsourcing, abandonment of less profitable products and services, and deep staffing reductions. Drastic staffing cuts require that existing staff take on additional responsibilities, and they will be able to absorb the new work more easily if their new daily tasks are well documented.
In highlighting these special situations, I hope you can see that effective business process management provides lifetime benefits for your business. You will see near-term benefits as your workforce improves efficiency and develops the discipline to continuously improve the processes that make up their daily work. Effective BPM provides a single reusable framework for effective execution of special situations like M&A, outsourcing, and enterprise software implementations, but it can also save your business if you find yourself in an unexpected downturn.