A New Chance for Process Measures

Business process advocates have always been in favor of measurement. More to the point, CMMI, which defines the levels organizations go through as they incorporate business process awareness and practices into their organizational DNA, suggests that level 4 involves “managing using process data.”

Managing, using process data, requires, as a prerequisite that one have useful data about processes to use in making management decisions. Anyone who has studied a Six Sigma book has encountered numerous examples of measurements taken at various steps in a process. The problem with many of these measures, however, is that they are laborious to take. In the past, many organizations have gathered a wide variety of data during process redevelopment efforts — to document what’s wrong with the old process and to prove that they new process has made a difference – and then stopped gathering the data once the new process is installed and is operating – to save time and money.

One of the main things driving the initial interest in BPMS, when it burst upon the scene in 2003, was the hope that new software tools could not only model business process flows, but actively monitor the ongoing execution of the processes so modeled, and provide data to managers about the day-to-day execution of the processes. In some cases BPMS tools have provided that benefit, but, in general, they haven’t provided the data that was originally promised.

All this brings us to the current interest in “Digital Transformation.” Digital Transformation can mean many things – depending on whom you talk to. What it often means is that flows of work or activity will be initiated or executed as a result of flows of digital information – often coming from the Internet or from computer systems used by the organization. To be more specific, we might add sensors to note when things are added to or removed from a given inventory. Those sensors can then be linked to a software app that shows us our inventory, and notes when it is accumulating or declining. That, in turn, can let us know how many units a process is producing, by simply extrapolating from the parts being used.

Digital Transformation promises, among other things, to make our organizations more like organisms, with nerve endings constantly gathering information about the well being of the organization. More to the point, for this article, Digital Transformation promises to make data available to guide management decisions.

As in the past, most organizations focused on setting goals for and gathering data about functional silos. Sales got goals and reported on “sales measures.” Marketing got goals and reported on “marketing measures.” Production got goals and reported on “production measures.” Everyone understood that keeping track of cold calls, ads placed or labor utilization didn’t necessarily correlate with happy customers or units sold, but they helped functional managers make decisions about who to promote and it gave senior executives a way to rationalize the budget they provides for sales or marketing.

Most executives would agree that functional measures didn’t provide a really good way to monitor actual business success – but everyone would be quick to point out that it was a lot easier to measure the work of functional units than to track the overall effectiveness and efficiency of actual business processes.

Digital Transformation promises to change that assumption. As in the past, most organizations will continue to gather data about functional metrics, but, increasingly, if we plan for it, more data will be available to help us monitor our cross-functional business processes — to let us know which activities take how long, where quality problems arise, and where money is being spent.

Increased digital flows of information will lead to better process management. It will enable managerial decisions based on hard data and a clear understanding of how specific work is contributing to the ultimate value being produced for customers.

As already noted, some organizations will squander the opportunity by focusing on capturing data that only contributes to a functional understanding of the organization. There is, of course, some use for information about how sales people function as salespeople, or how efficient marketing people are, or if forms are filed on time. But the value of this information is less important than information about how activities lead to the efficient and effective production of products and services for employees. Every executive knows that sales can meet all its metrics, and still not produce the specific sales needed to keep production humming. When challenged, sales managers will be quick to say that they met their goals and its not their responsibility that… And, in a sense this would be true, because the goals and measurements were set without regard to the overall success of the business process – as a whole.

In the past, because it has often been easier to track functional events than to collect data on processes and flows, gathering good data on processes has been ignored. With the growing digitalization of an organization, data will be pervasively available, and there will be no excuse if managers fail to take advantage of the situation to gather and use process-focused measures for decision making. Those that don’t will find their managers focused on the wrong goals as they gradually fall behind.