Business of BPM

Management Frameworks

I have used this site a few times to look up concepts.  It is called Value Based Management.  It is a data dump of lots of theories.  One theory that I have been particularly interested in lately is called Blue Ocean Strategy.  I have not read all the press on it, but as one friend explained it to me, it is about collaborating with your clients to expand your market.  Rather than go out into new markets seeking new clients (which is the Red or Bloody Ocean), you focus on developing new growth through your client base.  This website above explains it a little different, but you can always go to the official website or read the book to get all the details.

Here is one of their tools called the Four Actions Framework:
To break the trade-off between differentiation and low cost and to create a new value curve, there are four key questions to challenge an industry's strategic logic and business model:              

• Which of the factors that the industry takes for granted should be eliminated?
• Which factors should be reduced well below the industry's standard?
• Which factors  should be raised well above the industry's standard?
• Which factors should be created that the industry has never offered?

Picture is worth a thousand words (at least)

As a former architect, I am a big believer that pictures have significant value in the business world.  I have been asked dozens of times to take complex ideas and simplify them down to a single-frame image that people can post in their cube or use in a meeting.  These images can be powerful. 

At Express Scripts, we choose to take on the battle of moving market share from Lipitor to Zocor a few years ago.  This was set up to save clients and patients billions of dollars as the Zocor patent expired.  We had a list of 50 ideas which we paired down to 30.  The challenge was how to get people to think about and rally around the 30.  I came up with what was initially called the "bubble chart" which showed the 30 ideas in swim lanes and then time-mapped horizontally against key milestones.  This became used everywhere and even presented to the street. 

This is important to BPM in several ways:

1. If BPM is to be transformational, you need a future state vision that can be captured and disseminated across the company.
2. If process mapping is part of your communication strategy, a simple to understand process map is critical.

I started thinking about this when I received an e-mail newsletter from BentonsEdge which is a company that helps you frame out your value proposition.  I have met with Dan Davison, the CEO, several times.  He seems to have a great process and good understanding of helping clients get to a simple story about their value proposition. 

One example is below.  It is a little busy, but it captures all the complexities of raising capital in a one-page slide which is amazing. 

http://www.tellingyourstory.com/content_library/files/whitepapers/RaisingCapital.pdf

BPM as "Topware"

I don't remember who first suggested the word "topware" to me, but it has stuck.  I now categorize BPM technology into two primary camps:

1. A process oriented application development solution.  Here, a company is trying to take a process that involves systems and people and automate it.  The benefits are reduced cycle times, greater quality (e.g., less data entry), more agility to make application changes, and process level data metrics and reporting.
2. An abstraction layer that sits on top of your existing environment to connect systems and people.  In this case, you don't have to hard code changes into your exiting environment.  You are able to minimize some of the change management aspects while gaining huge efficiencies in the white space that exists between applications and subprocesses.  A process owner can now manage an end-to-end process that uses multiple legacy systems and gain much better control.  Additionally, you get many of the same financial benefits (e.g., time to market, quality, customer service, lower costs).

Recently a company was asking about creating a procurement application.  They have three systems they use today.  One to create the request.  One to create the purchase order.  And a third to track the invoice.  Add to that the fact that they have a process for RFP distribution, a process for vendor management, and a budget approval process, and you have a picture of the end-to-end process.  All of these systems could be linked along with the subprocesses to create an automated solution and management tool for the request to payment process for hardware, software, professional services, and all other items that procurement manages.

BPM and Knowledge Management

Knowledge management is one of those terms that means different things to different people. In the 90s at Ernst & Young, I remember leading several efforts internally to create our knowledge management infrastructure. Our focus was on collecting lessons learned, key working papers, proposals, and deliverables. We would sanitize them (i.e., remove client specifics), review them with SMEs, and store them in Lotus Notes databases based on a taxonomy we had developed.

A few years ago, I led an effort at Express Scripts to select a document management tool to do much of the same. The idea was to get information off of people's desktops and from their file cabinets. We were going to load documents and scan documents. They would be approved by a central resource and categorized according to a metadata schema based on a taxonomy we developed. They then had role based security around the documents with a Google like search functionality.

But, knowledge management (at least in these forms) is difficult to embed into the daily processes. We ramp up efforts and get some initial push, but without continued focus, the databases become old and all you have done is spent money and effort to create a quickly outdated resource. That can be managed (of course). At E&Y, one of our performance metrics was what we had submitted for the shared repositories.

I haven't heard it explored much, but I see this institutionalization of knowledge management as a big value add for BPM. By capturing unstructured data (e.g., comments) along with documents in a process, you can create a shared repository for knowledge management. Additionally, you can begin to link outcomes data with those documents. Image at some point being able to analyze and say that project managers would used fishbone diagrams for analysis were 20% more successful than those that didn't. Imagine having the process prompt you based on previous experiences to say that if going down this exception path you should look at the following scenarios to understand what will be needed. Imagine that if you are working with a particular client that the technology could push information about that client to you at the right time of the process.

By simplifying and automating the knowledge, I think BPM could be a great enabler of knowledge management.

90-Day Fix

As many of us have done, imagine that you are doing your off-site planning for the year or some midyear review.  You likely produce a list of wishful fixes (e.g., I wish that our CRM system did Y; I wish that our forms were different).  At most companies, that list is prioritized, a business case is created, and the items are flushed through a project portfolio management process.

Now, imagine that by the time you finished prioritizing, capturing IT estimates, and building a business case, you actually had an application to fix your problem.  That is the beauty of today's BPM systems.  In 90-days, you can take a process from a Visio diagram to a production application. 

The challenges you face will likely be around the organization.

1. Does everybody agree to what the process is and should be?
2. Can people switch their approach to work in that timeframe?
3. Can procurement buy the software, hardware, and services fast enough to not miss the window?
4. Does business have IT involved so that there is an organization to support the environment, maintenance, and provide help desk support after go-live?
5. What happens when you go from a qualitative approach to a quantitative approach to management?

The good thing is that there is no other option that is this fast.  Custom development won't be able to fix your issue in 90-days.  It's not easy, but numerous companies have done it.

Lombardi's Blueprint

As a Lombardi partner, I have been asked numerous times what I think of Blueprint.  I hadn't gotten a chance to really play with it until last week.  The first release was a Beta so I have lots of expectations for the future versions, and so far, all the suggestions that I have made seem to have already been on the roadmap.

It is a very easy to use tool.  It didn't take any training to just jump in and get started.  The functionality is basic today, but it allows you to create a pictorial image of your processes simply by typing an outline.  The idea of having a shared, collaborative environment for process design that can be used by anyone is a good idea.  The fact that it then creates a Powerpoint presentation right from the tool is an unexpected benefit.

It is built upon a SIPOC framework which is a Six Sigma process framework which stands for Suppliers, Inputs, Process, Outputs, and Customers.  Capturing this information is a great first step for process analysis.  Once all the functionality is there, this tool would make a lot of sense for people to use in the initial stages of a project. 

You can go do a tour online which is where these images are from. 

So, where do you take it from here:

* Add more process mapping functionality (e.g., decision points) - this is a planned functionality that is already in the demo for the GA version

* Allow the process to be BPMN compliant (I believe this is in process)

* Allow the process to be imported right into TeamWorks (in process)

* Add process analysis to make the tool more like the BPA tools (e.g., Mega) - this is also in process and part of the original plan

I have heard and read lots of skeptical comments about this tool, but I think it is a nice front end tool for starting a process discussion and capturing the critical data points.  Yes, it doesn't execute today and isn't solving all your problems, but what is.

You do that on paper???

I was talking with a friend the other day and had one of those "Oh my Gosh" moments.  He was sharing with me a process that one university sells to government and architecture firms. 

When an architecture or engineering firm bids a contract, they include numerous references.  The entity buying the services faxes this list of references to this company.  The company then calls out to the references and documents the reference checks.  These are then captured in a word document and tracked in an Excel spreadsheet. 

The client finally gets a list of the completed references later in the process. 

I gave them some free advice...There is a better way. 

1. Create an external facing web form where the client (the buyer of the architectural / engineering services) can enter the list of references and their contact information.
2. Have this automatically trigger e-mails to the contacts letting them know that you will be contacting them and offering them a web form / questionaire to complete if they prefer to do it via self-service.
3. For people that you talk with live, use this same form / questionaire.
4. Create a dashboard that is visible internally and the client which shows the status of all the references.
5. Have the system create an automatic report that summarizes the data and creates a report aggregating the scores.

Now, wait.  I guess if we make it this easy then they go out of business.  Well...I guess that is life.  I was always taught to engineer yourself out of a job.  Here is a great example.

Case Studies

I decided to sort through some of the case studies I got at Gartner to highlight a few examples which had real numbers in them.  In doing that I talked with an individual that had worked at 3 of the BPM vendors and sold over 40 BPM projects.  He told me that none of them included an ROI.  That is amazing to me.  I only know how to sell based on building a business case and tracking back to a baseline metric (even if somewhat qualitative).

1. Freddie Mac implemented a BPM system from Pega Systems as a rules tool for its underwriting system.  This provides greater flexibility in changes rules rather than having them hard-coded into the application.  It is expected to cut the operating and maintenance costs of the system by 30%.
2. Samsung Heavy Industries used a BPM system from Handysoft to streamline international shipbuilding operations in areas of order placement and contract outsourcing to save $4.4M annually in management productivity, outsourcing production volume, and material selection.
3. Korea First Bank used a BPM system from Handysoft to streamline loan processing reducing cycle time by 41%, processing 55% more loans, cutting employee overhead by 16%, and saving 28% in overall operational costs.
4. School Employees Credit Union of Washington used a BPM system from Handysoft to reduce credit card and home loan application cycle time from two days to 30 minutes, improve customer service response times, and reduce manual data entry and errors saving over $50,000 the first year.
5. A REIT which does 7,000 invoices per month was able to cut staff from 24 to 8 saving $320K per year while handing the same number of invoices using the Handysoft BPM system.
6. An asset management firm was able to increase transactions by 100% in the first year and 70% in the second year without hiring additional staff using the Handysoft BPM system.
7. The US Marine Corps implemented an Appian solution for procurement that has reduced the competitive award of task orders to less than 28 days saving them almost $9M in a 12-month period.
8. The US Army implemented an Appian solution for knowledge management which allowed them to reduce complex content replication unnecessary eliminating almost 5,000 servers and savings almost $28M in hardware expenses.
9. Sprint implemented Lombardi for their billing disputes and adjustments process which reduced the time to resolve a billing dispute from 12 to 2.5 days; reduced the invalid and incorrectly processed adjustments by 10%; and increased call center productivity by 9%.
10. Pulte Mortgage used Lombardi for their mortgage lending process to increase customer satisfaction from 85% to 92% and reduce their costs by 10-20%.
11. Lee Memorial Hospital used Lombardi to reduce their on-boarding process for new hires resulting in a 50% reduction in recruiting time per new hire and a reduction from 9 hours to 10 minutes for creation of a new employee record.
12. A large pharmaceutical company with 12,000 sales people used Lombardi to reduce their sales incentive cycle from 30 days to 7 days.

Creating the automated coach

A typical struggle that a large company has is how to deal with mid-market companies or average customers.  Typically national clients or repeat customers get great attention, but it is hard to give this same customized attention to an average customer even if they might be your next big customer.

This challenge is exasperated by the difference between your average customer service or account management professionals and your top performers.  How do you embed the DNA of the top performers in that of the average employee.

When I was at Express Scripts, I used to half-kiddingly suggest creating an "automated pharmacist".  All of our clients from individual groups of 200 people to the Department of Defense with 9M members all wanted a pharmacist to provide them with personalized recommendations based on their member demographics and triggered by market events - e.g., Prilosec goes OTC (over-the-counter), Zocor loses patent, a new drug comes to market.  There was no easy way to do this.

Additionally, all of us who use the healthcare system want more personalized attention from our physicians, nurses, pharmacists, physical therapists, etc.  But, of course, we don't want to pay a retainer to have them on call.  We just want them to somehow manage to give us proactive advice.

Any professional services firm (e.g., accountants, lawyers) has this same challenge.  When something changes (e.g., long-distance excise tax), how and when do they communicate this change to all of their clients and help them assess the impact of this change on their business. 

Companies with distributors or retail branches have similar challenges from communicating downstream or upstream changes across the different constituents to help them prepare in advance.  For example, if your advertising company calls and tells you the ad copy will be 2 days late which means the collateral will be printed 3 days late which means that the supermarkets installing your new display have to shift schedules to have it set up 4 days later...

Well...it didn't hit me until this morning, but Business Process Management (BPM) technology could help here.  We could map these processes til the cows come home, but that won't do any good.  Streamlining these processes, capturing the rules, embedding logic into the process, codifying best practices, and integrating these human and system centric solutions can create this automated intelligence.  It is not artificial intelligence but it can help manage your clients and create real personalized value.

Let's stick with the pharmacy example:

• Image that Claritin announces it is going over-the-counter
• This trigger from the Pink Sheets kicks off an internal process
• The process queries the claims database to identify the number of patients with Claritin claims
• The internal process sends an e-mail to all the account teams within your PBM (pharmacy benefit manager - e.g., Express Scripts, Medco, Pharmacare, Caremark, Argus) or MCO (managed care company - e.g., Aetna, Cigna, Wellpoint, BCBS)
• Based on rules or election by the account teams a subsequent e-mail is sent to each of the clients
• The client can opt-in to a communication to their members
• This approval triggers a mail merge of a pre-approved letter which is sent to all the affected members (patients)

This is a service that every client wants.  They want the hand holding, but it is hard for large companies to give this to every client.  There is not time enough to have all these discussions, talk about customizing the letters, wait on customer approvals, or manage things through e-mail when people are busy and unavailable.  A BPM approach to this embeds the logic and creates a personalized flow triggered off key events that can initiate dormant processes that are waiting in the background. 

CVS / Pharmacare / MinuteClinic

What a perfect opportunity.  CVS (retail pharmacy chain) owns Pharmacare (pharmacy benefit management company) and owns MinuteClinic (onsite medical clinics).  Right now, if you went to a clinic or physician or hospital, you have created one customer record.  At your retail pharmacy, you have another customer record.  The PBM that processes your pharmacy claims has another customer record of you.  And, the health plan with which you are affiliated has a fourth customer record of you.

There has been talk for years about Personal Health Records (PHR) or Electronic Health Records (EHR).  Although some of the technology exists, the integration and adoption challenges are barriers.  That being said BPM offer some of the core benefits.  The patient can be viewed as having one customer record that follows their path of care.  Each constituent along the way adds information and can view information based on HIPAA guidelines and role based security.

If such a solution made sense, this would create a great opportunity for CVS.  They could capture patients at their clinics and learn about them.  This information could follow the prescription to the retail pharmacy where they could learn more about the patient.  Eventually, they could use the diagnosis data to help inform the treatment suggestions or pharmacy-patient dialog about side-effects.  This data could then be integrated at the PBM level to capture other data from mail pharmacy use and other retailers. 

CVS could see where people stop taking therapy.  MinuteClinic could see where people don't fill prescriptions.  Triggers could be created to generate automatic outbound calls or e-mails or care management calls for follow-up.  But, each event is part of a case management framework so they have history and information to build upon each other.

If you leverage some model like this from a CDHC (Consumer Driven Health Care) perspective, you enable the patient to manage their care by setting reminders for refills, electing to have information pushed to them based on diagnosis codes, seeing reports about costs versus payments, and having the ability to track status of open items - labs, payments, prior authorizations, etc.  In a competitive industry built around complexity, there is a way to simplify it for the patient.