On Designing Systems & Process

September 17, 2010

My thanks to Eric Brown, who graciously accepted a guest post of mine on his Technology, Strategy, People and Projects blog.

The post does a brief comparison of business processes with personal time management.

As individuals, things can fall through the cracks, ditto for business.

As individuals, rework and lost time can occur, again ditto for business.

Add Eric’s blog to your regular reading!

The Definition Of Insanity

November 19, 2009

Can be defined as doing the same thing, the same way every time, and expecting the results to change. (try W. Edwards Demings’ red bead experiment!)

Building a process oriented business is not a set it and forget it operation. It is defining and monitoring the desired outcomes. And identifying that if a desired outcome does not happen, that you have an opportunity for improvement.

In other words, if the desired outcome fails, what can we do to reduce the risk that it will fail next time?

In talking about process, you need to look specifically at what breaks. You need to look at the why, and the how of what went wrong. Is it a people problem? A process problem? or a system problem?

(within the context of ITIL I give some samples starting in this post titled; ITIL And The SMB Part 3; Incident Management)

Although please note that you do not need to go the ITIL route to become more process oriented.

It can be easy to overlook;

When something fails, there is an associated cost. That cost could be rework, lost time, maybe even lost business. Costs can be soft as well, for example, reduced customer satisfaction.

As an example of improving process efficiency, the large package delivery companies load their trucks in a first-in, last-out manner based on the drivers delivery route. This simple step reduces the amount of time finding the correct packages for offload at each stop, and reduces the risk of missing something. And of course missing packages can negatively affect customer satisfaction.

The More Things Stay The Same

When you start building a process oriented business (not just as an IT function) there are two critical pieces to start with;

1) Define the optimum outcomes. A process is nothing without a business outcome. This defined business outcome is also the measure that you can use to improve and monitor your processes.

2) Continually monitor and improve your processes. There are always opportunities for improvement. There is an old saying in music, that the spaces between the notes are just as important as the notes themselves.

The SMB Takeaway

Like the spaces between the notes, process optimization often comes hidden in the areas as work migrates from one individual or group to another.

Improving them, or identifying why something did not work, you need to understand – you need to look at the what the why and the how of what you are trying to perform.

Was it a person error? a process error? a system error?

You can get updates to this blog by clicking the RSS icon on the Home Page!

Don’t Automate Chaos

June 26, 2008

Julien Dionne on his Incentive, Compensation and Sales Performance Management blog has a good post called Don’t Automate Chaos

As I wrote in this Don’t Automate Broken Processes post, this bears repeating. The measures, metrics, and processes must be mapped out and identified first.

The “Way we always do thing’s around here” beast must be neutralized first. Failure in looking at how you perform these tasks can either make your software tool fail completely, or be so twisted out of shape that many of the benefits you hoped for will just never happen.

Learn to Dance

January 23, 2008

This is a reprise of a comment I wrote on a personal (now defunct) web site many years ago. I resurrected it because there was another article published in Baseline Magazine on a topic that just refuses to die. The Recording Industry Association of America finally won a lawsuit against an individual in 2007 for illegally downloading copyrighted music.

Plain and simple, the RIAA blew their digital music chance and are trying to close the gates after the horses have all left the barn. I am sure the RIAA will be the topic of business school courses for the next hundred years, but here is one more take on it.

Back when the digitization of audio (including music) became easy and simple there were interviews and articles with recording industry executives who said that the industry would be reviewing these technologies, and that when they found a way to get soup to nuts intellectual property security around the entire digitization process (read – how to keep the dollars in their own hands) they would determine how the business “model” would work. (to favour the RIAA of course)

At the time, I thought that it was not the brightest move to make. Sure enough fairly soon a kid named Shawn Fanning let the proverbial digital cat out of the copyright bag with Napster (now a trademark of Roxio). Napster allowed easy access to down loadable music – without much thought given to the copyright owner of that music.

Next, the Long Jump

Fast forward a few years and Apple Corporations iTunes is making buckets of money selling down loadable digital music for which the RIAA gets a small royalty payment.

The RIAA fell into what I call the Long Jump view of technological and business innovation; Namely, try to predict the future, then take a huge leap for that glimpse of future – hoping that you get every technological, legal, consumer, and other ducks all in the perfect row – then land on that perfect future track to a standing ovation and a new world record.

Sorry ladies and gentlemen – it doesn’t work that way any more. While you are in that long jump, the world turns beneath you and you miss every duck, and miss the track as well.

The result?

So, in this long jump for intellectual property perfection, what the RIAA actually got was alternative methods of free downloading, then paid methods of downloading owned by someone else! They may actually have become marginalized in their own industry. So much for the standing ovation and new world record.

Learn to dance

What the RIAA should have done was to learn how to dance. Rather than taking a huge leap with unknown (and unknowable) outcomes, take a small step, pause – review what has changed, the risks, and the next possible step, then step again.

There was no perfect technology for their problem (there may never be!) but other industries were already working their way through that. For example, there was already an existing digital play book available!  Companies like McAfee and Norton both made millions in that time frame allowing use of their commercial products through what was called “trial ware” (or more cynically “nag ware”). If you had a PC in the Mid to late ’90’s you probably had one of their Anti-Virus products on it. The premise was simple – let people download it, try it, the software would “nag” you regularly to pay for it, you pay for it and the nagging goes away.

These companies had already identified that the majority of consumers will pay for a product if there is a legal way to do so!

Apples iTunes of course has proven it again. Sure, a minority will continue to try and “hack” in and steal any product, but if legal alternatives exist, the majority of us will go the legal route.

So the RIAA dance could have looked like this;

The RIAA invents a music download tool – no Napster needed!. However when you download and play the song, the beginning, middle and end has cut outs that overlays the “Please Buy This Product” message. You pay for it, the nag goes away. You share it to someone else, and because they don’t have the license, the “nag” returns.

Then we pause and see the next steps, as the technology matures and evolves, maybe the next step is the RIAA A-Tunes rather than Apples iTunes, and Pause. And Step, maybe it is the RIAA’s streaming media subscription web site “personal radio station” that we are listening to, and Pause. And Step, how about the RIAA being the negotiator with Smart Phone manufacturers for those music clips being downloaded to every possible device.

None of which will happen now of course – that all happened without them as they were hurtling through their Long Jump.

Congratulations!

You have just reached the stage in your business where you are looking at an Enterprise class software tool for some portion of your organization. You have found that sticky notes, Microsoft Excel and plain old E-Mail are not cutting it any more.

You are looking for a tool that will reduce the amount of time that some piece of work or process takes, maybe you want to increase customer satisfaction, possibly even just track sales or service processes more efficiently because you have a huge mass of receivables greater than 90 days, most of which is because the invoice only went out 15 days ago. (It takes time to sort those shipping things out right?)

So you take the plunge looking for some tool that can help speed up the Call to Cash cycle and improve your cash flow, the bottom line, and hopefully make coffee in the morning. Maybe you really do not care if you have to run this program yourself, or pay a subscription fee and run it from someone else’s computer servers, in other words, Software as a Service (Saas)

However, while you are signing the cheque, consider this; When moving to a software tool designed to improve or support a part of your business, that software and its vendor makes the critical assumption that you have optimized your internal processes, or are planning to optimize them. Of course, your sales representative may have forgotten to mention it, or at least just tied it into a 15 minute long operational efficiency spiel that left your eyes glazed over.

In general it does not matter which process or which tool, this assumption can be the one thing that makes

Automation

Automation

or breaks what you are trying to do. Failure in looking at how you perform these tasks can either make your software tool fail completely, or be so twisted out of shape that many of the benefits you hoped for will just never happen.

The Old Process

Here is a real world example (this example will demonstrate a process as well, we can call it the Service Process). A number of years ago I assisted an organization that serviced a particular type of machinery. This machinery was located all over North America, some of it was under warranty, some under various levels of maintenance service contract, and some was just time and materials billing.

The organization had grown steadily and here was the service Process in the way we always do it around here.

1) A customer called for service, contact information and other details were captured by someone on a standard telephone message slip.

2) The message slip was then pinned to a cork message board and eventually taken by a second person who looked up billing and maintenance contract details – if details were missing or needed clarification, return phone calls would be made.

3) The message slip then went back to the cork message board to be picked up by a third person who looked up available service representatives in the customers region and then passed on the service call information.

4) The service representative performed the service, then on a weekly basis sent service slips back to head office via courier. These service slips included parts used, time spent etc.

5) The service slips would then be compared to the machines warranty, contract or billing status for an invoice to be sent, parts inventory updated, etc.

In this service process, at least 4 individuals have touched the service call for various lengths of time (time X salary) with no revenue. Invoicing and inventory control is not even possible until the slips are in and validated, affecting inventory costs, stock-outs, as well as the billing and receivables.

The New Process

Now, the software tool that this organization wanted to implement would do the following; (this would be the new service process)

1) A customer calls for service, the contact information automatically pulls all warranty, maintenance contracts or other billing material from a central database. The database presents all service representatives in that region and shows if they are already engaged on a job site or free for the service call. The free service representative gets assigned the call and is automatically notified electronically via e-mail to a cellular phone or PDA type device.

2) The service representative completes the service, and via any web browser updates the electronic service slip – including parts used, time worked etc. (backup old paper slips can still be sent weekly)

3) When the electronic service slip is completed, parts inventory is updated – invoice or warranty paperwork is generated automatically, and is ready to print and mail.

So this new process removed excess non-revenue generating touch points, improved customer satisfaction by getting service on site faster, alerted the organization of inventory issues, and has the invoice ready to go before the service representative is even out of the building!

The concept of this type of process improvement can seem simple, to see the benefit when written down like this seems to make sense. But unless you realize that this assumption is there – the “we always did it this way” beast will likely knock it off track.

The Broken Process

In the above example – need you ask?

The organization mentioned above wanted the new software tool, not to implement the “new service process” – only to automate the old service process! In other words the only tangible benefit that the software would provide would be to replace the standard telephone message slip with an electronic message slip! There would still be the same 4 individuals manually looking for contract information, or service representative availability, etc.

Trying to automate a broken process in this way will have a negative impact on cost justifying this type of tool purchase. The benefit of optimizing a process is taking the hard look at the “way we always do it around here” and seeing where that “way we do it” can be changed to reduce time, reduce non revenue generating work, and speed up results.

So before you sign that cheque, have you already looked at the “way we always do it around here” beast? Or are you willing and able to look at it? If not, you might be better off just buying more telephone message slips.

UPDATE: Another post and link on this topic is located in this Don’t Automate Chaos

Photo Credits: brent danley and Atlantic Archives

Mill Work

Mill Work

You can subscribe to this Blog by clicking the RSS feed icon on the home page!

January 10 2008

If you, or a key individual within your organization was hit by a beer truck on the way to work tomorrow – what would happen? or better yet, what would not happen?

Who else knows where that payroll or financial information is? Who else has any idea on your accounting system, or any other technology resources that you have?

This little note is not about “succession planning” or “bench strength”, but about the day to day operations tasks that keep your business running.

Plain and simple, what activities do your people “do” on a daily basis to keep the gears running?

If you do any activity within your organization, and you do it more than once – you have a possibility of getting a formalized, documented “process” to improve efficiency and reduce internal costs. This is something that I have seen lacking in the majority of small / medium business that I have been associated with, or have spoken to. A process can be defined as the broad sequence of events that make up a particular function. For example, “Payroll” could be one of these, with a Process of an input of completed time sheet, which outputs to a supervisor for validation, which outputs to payroll department, which outputs to a payment. You are not looking at one individual person or department is “doing” but the complete “flow” across all departments that generate the desired result.

There are many professional grade process management tools available, two of which are below. While I am an ITIL certified practitioner and have also implemented both IT Operations and Infrastructure planning to ISO 9000 Process Management standards, for many SMB’s these can be overkill.

The ISO 9000 standards are an international consensus on good quality management practices. In the risk of over simplifying, to be ISO 9000 compliant you need documented practices for your organization that are consistent and repeatable. You can think of it as “Tell me what you do, show me, and Prove it”. The required documentation for “what you do” and “Prove it” forces a consistent and repeatable process and records of those processes.

The ITIL,or IT Infrastructure Library, is a framework of best practices for applying IT management best practices to supplying IT services. Originally defined by the Office of Government Commerce in the UK. ITIL can reduce IT service and support cost through following its best practices in configuration management, service delivery, etc.

I have had great success in using both ISO and ITIL standards to reduce cost, and reduce IT related problems in my IT career, but fully implementing these frameworks can be expensive, and in smaller organizations they can be swatting a fly with a sledge hammer.

So you have identified a process, such as the “Payroll” mentioned above, now, write it down! Write down those steps and which function performs the step, with a brief comment of that functions duty with that step.

With these processes documented in these steps, there are several advantages;

1) Training. When new individuals are hired, there is less training required to bring them up to speed on their own process tasks, firstly because it is written, secondly, if a certain task is intermittent, unless someone remembers that it is to take place, you avoid re-inventing the wheel.

2) In more complex processes, if it took someone a day to figure out how to do it the first time, why do that again the second time?

3) Documenting the steps in a process, can also prevent more expensive options that were not intended – think purchasing for example, you have Net 30 with a Vendor and a corporate discount, but someone buys the same thing on the corporate credit card down the street.

As the Principle Owner, GM or Manager at a SMB organization many of the ideas of these frameworks should be pulled from your toolbox and used.

You can subscribe to this blog by clicking the RSS icon on the Home Page!