Harmon on BPM: Service Processes

Systematic business process analysis and design began in the US at the beginning of the 20th century. Some of the best early work involved specifying the steps involved in assembling automobiles. Diagrams were created that showed how the work proceeded from one station to the next and what was done at each point. Criteria were developed to measure how well the work was done, but the key measure was always the final product. The finished automobile was either flawless, or it wasn't. If it needed rework, before it could be presented to a customer, then analysis could identify what manufacturing failure led to the flaw, and procedures could be modified to make future flaws less likely. For decades most process work was focused on observing work, standardizing it, and setting standards to assure that the final product would be as desired. In hindsight, this phase of process work was focused on manufacturing processes.

In recent decades, process theory has expanded to embrace two other kinds of business processes: process management work, and service processes. We'll consider the special features of analyzing and designing management processes at another time, and focus, here, on the analysis of designing service processes.

First, let's define a business service process in a rough kind of way. A service process delivers a service – which usually means that it helps a customer achieve his or her desired goals, often over the course of some period of time. In effect the service is, itself, a process, and the provider helps the customer experience the process.

Consider some examples:

The Hotel Value Chain Example. The hotel provides a customer with a place to stay, with additional space for a conference or for leisure activities, with restaurants and with other amenities for a period of time. Hotel employees are available to help the customer check in, enjoy a clean room, a restaurant meal, or swim, or attend meetings, or other activities. The ultimate criteria for success is the customer reporting, after a visit, that he or she accomplished goals and enjoyed the experience and that he or she looks forward to visiting that hotel, or others like it, in the future.

The Bank Account Example. Banks provide customers with financial services. They make it possible for the customer to establish a bank account, to deposit money that the bank will manage for the customer, to accept additional deposits, to disburse funds, to provide an accounting of the funds, to withdraw funds, and to move funds to other accounts. The customer might negotiate a loan, perhaps a mortgage, and handle payments and disbursements through his or her checking account. The services may be provided over the course of years.

The Rental Car Example. A car rental company provides a car for a customer for a limited period of time – for a few days or a few months. The customer may rent the car and bring it back, or they may rent it and drive it to a distant location and leave it there. If something happens to the car while it is being rented, most car rental companies will come retrieve the car and leave another in its place.

The Emergency Room Example. A hospital provides emergency service for customers with health problems. A customer may be hurt in a car crash, or suffering from lack of breath and a pain in his or her chest. In any case, the hospital diagnoses and offers treatment and follow-up care. Treatment may range from shots or a bandage to surgery or therapy. As with the other services, the criteria for success is a happy, well customer.

Sell Bank Loans. Many banks are in the business of making loans to small businesses. Such banks have loan officers, who are usually specialized in particular line of business, who “sell” loans to businesses in need of funds. It's a special kind of sale in the sense that the customer's need, and the bank's desire to make the loan must be balanced against the creditworthiness of the business seeking the loan. The bank competes with other banks to secure the business, and usually builds a package that includes not only the provision of funds, but agreements about checking and savings accounts, control of inventory and even staffing. In deciding on whether or not to extend a loan, the sales officer is often called upon to evaluate the management skills of the business management team and the future demand for the product or service the company offers. In one sense, success is judged by the repayment of the loan, but in a broader sense, success is judged by the ongoing relationship between the bank and the business.

Prepare a Will for a Customer. A lawyer, upon request, may provide a legal document for a customer. It would be easy to consider this a manufacturing process, and define the will as a product. The essence of the process, however, is the consultation that is involved in defining the nature of the specific will, and, thus, like a growing number of processes, the process is a kind of hybrid process that involves both the creation of a product and the service involved in defining and generating the product. Providing a customer with a meal at a restaurant falls in the same category. There is the meal, which is a product and can be judged for its own characteristics, but there is also all the service that goes into providing the meal and making the experience of ordering, and eating it pleasant.

All are examples of business process that provide services for customers. In all cases, we do not evaluate the product for its quality—at least that's not our primary focus—we examine whether or not the customer is satisfied with the service he or she received.

In all the examples, the actual process is, in fact, made up of many smaller processes that are not necessarily linked together in any definite sequence. The idea of a value chain, as it is used to describe large manufacturing processes does not apply to large scale service processes. Service processes are held together, not by a sequential flow toward some final product, but by the fact that they each provide services to a single customer during one service experience – which may last for minutes, or extend over a period of years. Each customer will choose a different path through the various smaller processes making up the overall service process. Customer paths will vary by time and occasion and often can't be anticipated. A bank teller (or ATM machine) needs to wait for the customer to initiate the interaction. The customer may want to deposit money, to withdraw money, to close his account, or simply to check how much money is in his account.

Although not as obvious in most cases, good service processes depend on underlying IT services – a database and various apps that customers or service providers can use in providing the service. The database and apps allows the service provider to build an understanding of specific customers that, in turn, facilitates better service in the future. Computers allow service providers to remember customer names and preferences and anticipate demands, and they facilitate more rapid responses to various requests.

Many of the same process change tools are used to change both service and manufacturing processes. In spite of that, services are different in major ways, and increasingly process change groups are required to change their approaches to deal with the changes. Even classic manufacturing processes are increasingly changing, becoming more tailored and dynamic, and are taking on more characteristics of service processes. We are all being forced to learn more about how to help customers have good experiences.

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Paul Harmon

Paul Harmon

Executive Editor and Founder, Business Process Trends In addition to his role as Executive Editor and Founder of Business Process Trends, Paul Harmon is Chief Consultant and Founder of BPTrends Associates, a professional services company providing educational and consulting services to managers interested in understanding and implementing business process change. Paul is a noted consultant, author and analyst concerned with applying new technologies to real-world business problems. He is the author of Business Process Change: A Manager's Guide to Improving, Redesigning, and Automating Processes (2003). He has previously co-authored Developing E-business Systems and Architectures (2001), Understanding UML (1998), and Intelligent Software Systems Development (1993). Mr. Harmon has served as a senior consultant and head of Cutter Consortium's Distributed Architecture practice. Between 1985 and 2000 Mr. Harmon wrote Cutter newsletters, including Expert Systems Strategies, CASE Strategies, and Component Development Strategies. Paul has worked on major process redesign projects with Bank of America, Wells Fargo, Security Pacific, Prudential, and Citibank, among others. He is a member of ISPI and a Certified Performance Technologist. Paul is a widely respected keynote speaker and has developed and delivered workshops and seminars on a wide variety of topics to conferences and major corporations through out the world. Paul lives in Las Vegas. Paul can be reached at pharmon@bptrends.com
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