Big Data + Small Process Thinking = Disappointing Results

Big data is in the news this week.  In a recent Forbes article describing the hidden opportunities of big data, Albert Pimentel Chief Sales and Marketing officer at Seagate quoted Mark Dean, an IBM fellow and director of the Almaden Research Center as saying, “Computation is not the hard part anymore.”  As with most big technology transformations, one of the hardest parts is always getting the process and people part right.

Big data has the potential to position businesses to outperform their competitors, as described in a recent McKinsey article that dubs big data the next frontier for innovation, competition, and productivity.  As businesses race to implement big data technology, there are some serious business process transformations that need to take place to fully leverage the investment in any big data initiative.

In the Big Data-driven approach to business transformation, the most important business processes are those that relate to Customer Experience Management across all fronts:

  • Manage customer loyalty
  • Manage customer value
  • Manage customer relationships
  • Manage customer feedback

These processes cross the more  traditional high level process siloes of “Manage Sales, Manage Marketing, Manage Customer Service, ” which were usually organized along departmental lines.

What actions will be taken based on the actionable intelligence that big data provides? Initiatives across departmental siloes must be closely orchestrated or the customer experience will become chaotic and confusing. Marketing campaigns have to be coordinated with activities across all customer facing roles in the organization. Effective enterprise program management is critical to this successful coordination. Marketing has to be thought of less as a department and more as a shared business responsibility.

When trying to leverage big data, it’s important to step back and answer critical questions before moving forward on multiple fronts:

  • What strategies and processes do you use to influence customer behavior on your website, in your retail outlets, at virtual and real time events? Are they working synergistically, or are they are crossed purposes?
  • What change management principles do you apply to shift customer attitudes towards your company, your employees, your products? Are you fully leveraging the power of third party change agents, or only applying  traditional, direct influence measures?
  • Are our processes too rigid to allow us to be a world-class, big data-driven organization? Should we concentrate on defining broad strokes strategies instead?

At the end of the day, the most successful businesses will be those that harness the power of big data and big process thinking to outrun the competition. More food for thought on the intersection of big data and big process can be found at:

Does your Order-to-Cash Process Need a Check-up?

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The order-to-cash process is the circulatory system of every business. As with the human circulatory system, there are many ways this process can break down, and seriously erode the overall health of the business.

Diagnosing and fixing order-to-cash symptoms is not easy, because the order-to-cash process is complex from many perspectives. It involves:

  • Multiple technology systems or application modules
  • Multiple locations
  • Multiple departments and job roles
  • Multiple stakeholders

Much of the inefficiency we see in this core business process arises from an inappropriate approach to making decisions and changes concerning any of the technology or business processes involved in order-to-cash.

Without strict change control over the processes and technology, some companies are allowing decisions to be made on the fly, resulting in in an order-to-cash process that yields significantly less cash than it should!  Some real world examples from our project teams include:

Symptom: A CPG company that required a return merchandise authorization (RMA)  to match the quantities on a purchase order (PO).  Some of their customers returned products across multiple POs.When a customer service rep could not find these POs, they created a new PO just to process the return against. This workaround skews information inappropriately in any number of reports.

  • Diagnosis: It’s not just this process that’s broken. The company needs to devote more effort to process definition, with review of exception handling by all impacted stakeholders.

Symptom: High volume of billing errors, requiring significant effort in reviewing/correcting invoices and handling customer inquiries. Your staff might also be trying to review every order and every invoice because of the historically high rates of errors. You’ll start to see a drag on your Days Sales Outstanding (DSO) metric as well.

  • Diagnosis: There are many possible causes here: price lists and promotions being maintained offline, manual re-entry of orders from handwritten order forms, lack of automation in the order approval workflow, undue delays in entering orders, manual handoffs to fulfillment team, to name a few. While there are many causes,it’s easy to see that investments in automation here can have a significant effect on cash flow (especially important in the current economy), because even a small reduction in DSO can have huge returns.

Symptom: High volume of customer inquiries and high volume of customer complaints, coupled with long average call times, as well as repeated or escalated calls to follow up on the same issue.

  • Diagnosis: The CSRs may not have real-time access to the right information to address customer inquiries (order status, credit hold status, account balances). Tighter integration and better training can often address this.

Other organizations realize that an ounce of prevention is worth a pound of cure, and proactively monitor key performance indicators (KPIs) across the order-to-cash process. These include:

Contact to sales order: leads (number and cost), qualification (lead conversion ratio), quote (gross margin and average discount) and closing (win/loss ratio and time to close/sales cycle).

Order fulfillment: Order-to-delivery performance data includes metrics related to customer orders (number of new or open orders and number of orders with errors, number of orders delivered on the date promised to the customer

 Invoice to cash: Metrics include number and value of invoices created, sent and disputed as well as cash received or accounts receivable days outstanding.

In summary, to make sure your order-to-cash process is not leaking cash, adopt the following measures:

  1. Strict change control over all the processes and technology.
  2. Adopt and track key metrics to help you find and address inefficiencies.
  3. Take a look at the integrated operating platform between your customer relationship management (CRM), Order Entry, Finance and Supply Chain Management systems.  Too many manual interventions across the lifecycle of an order leave the doors wide open for errors on orders and invoices that could significantly impact your bottom line.

Maximizing BPM Benefit

When faced with the elusive question, “How do I maximize my long-term benefit?”, remember these two key principles:

  • BPM should be a continuous learning cycle.
  • New process improvement ideas can come from unexpected places.

As part of our recent research study on organizations across a dozen industries who have implemented a BPM solution in the past 3-5 years, the following quote from a Financial Services company representative highlights this point:

“You must know what BPM tools do best. Once you’ve catered your initial processes based on this core functionality, it is essential to then learn what else the tool can do for you. You must constantly be in a learning mode.”

With a BPM suite, by increasing its use, you increase its value. As users become more fluent in the concept of process management and broaden their understanding of the functionality and capabilities of the tool, they uncover more and more opportunities to increase productivity and quality in their daily activities.

Today’s BPM suites have so much functionality that you can actually create unnecessary risk if you try to do too much in the first few processes.  Let the concepts sink in, let the team get used to it. Before you know it, they will be bringing new suggestions on what else to improve/tweak/change.  Consider incentivizing the staff to generate new ideas.

Organizations that use their BPM for one or two processes can realize significant benefits and cost savings.  But the organizations who have realized the most benefit from their BPM implementation have truly embraced the concept of continuous improvement using BPM to improve traceability, visibility, accuracy and speed of their processes.

These days, saving money and improving processes is everyone’s responsibility. Gone are the days of “I-just-work-here”.  Everyone up and down the process chain will play a part in maximizing your organization’s benefit from BPM.  Keep the communication feedback channels (and your ears) open…

Doublin’ Down in Hard Times

Hard times are definitely here.  By this time everybody in IT-land has done the obvious: frozen maintenance where possible, put off hardware and software upgrades, outsourced where possible, trimmed heads (contractors, consultants, staff), pushed BI/CPM/EPM analytics projects forward, and tuned up data and web resources.

Now is the time to think outside the bunker!

IT needs to consider what will need to be done to nurture the green shoots poking through the nuclear fallout. All of the talking heads and pundits see them ( glowing with radiation or whatever) and  the utmost must be done to make sure they survive and grow or we shall all sink into the abyss!

This is the time to double down in IT (poker speak).  It is not about heavily hyped Cloud Computing or the latest must-have tech gadget, but about something much more mundane and boring: improving the business process.  There, I’ve said it, what could possibly be more boring?  It doesn’t even plug-in.  In fact (shudder!), it may be partially manual.

Business process is what gets the job done (feeding our paychecks!).  Recessions are historically the perfect time to revise and streamline (supercharge ’em!)  existing business processes because it allows the company to accelerate ahead of the pack coming out of the recession.  In addition, recession acts as something of a time-out for everybody (I only got beatings, no time-outs for me), like the yellow flag during a NASCAR race.  When the yellow flag is out, time to hit the pits for gas and tires.  Double down when it is slow to go faster when things speed up again, obviously the only thing to do.

How? is usually the question.  The best first step is to have existing business processes documented and reviewed.  Neither the staff involved driving the process at the moment nor the business analysts (internal or consultants) are that busy at the moment.  That means any economic or dollar cost of doubling will be minimized under the economic yellow flag.  The second step is to look for best practice, then glance ouside-the-box to maximize improvement.  The third step is to look for supporting technology to supercharge the newly streamlined business process (I knew I could get some IT in there to justify my miserable existance!).

Small and medium businesses get the biggest bang for the buck (just picture trying to gas and change the tires on the Exxon Valdez at Daytona) with this strategy.  This process allows SMBs to leapfrog the best practice and technology research the Global 2000 have done and cut to the chase without the pioneer’s cost (damn those arrows in the backside hurt!).  Plus implementation is cheaper during recession ( I love to be on the buy-side).  The hardware, software, and integration guys have to keep busy so they cut prices to the bone.

The way forward is clear, IT only needs to lead the way, following is kind of boring anyway.