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Clement Hurpin

Clement Hurpin has put his business process management knowledge into practice by working on projects involving process engineering and design, process modelling, gathering user requirements, process automation, data modelling, use case definition, workflow and report design.
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Make Process Ownership Happen in Financial Institutions

Clement Hurpin on May 31, 2017

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Process owners, process steward, process custodians—many words you may have heard thrown around over the past few years. As the concept of process ownership is slowly getting traction across the board, organisations are appointing process owners more frequently than ever, and process ownership is starting to get included in role descriptions.

Why is that? Why do you even need someone to manage a process when it is intrinsically the objective of a company to perform as best it can? Because each individual trying their best to make a company succeed is not sufficient anymore: there is a clear need to layout, measure, and improve processes systematically—and, for that, someone needs to be responsible for those processes.

A wide array of definitions

Let’s start with the necessary step of defining process ownership. Perusing the interwebs provides many definitions of the concept, some with important differences. Let’s take, as a starting point, 6 sigma’s definition, the broadest one identified: “Process owners are responsible for the management of processes within the organisation.”[1]

Process Owners (POs) are responsible to manage processes. What does manage mean? This definition does not say.

Then follows two definitions with conflicting elements, illustrating well the potentially confusing nature of the process owner. On the one hand, the business dictionary defines it as “[a] person who has the ultimate responsibility for the performance of a process in realising its objectives measured by key process indicators, and has the authority and ability to make necessary changes.”[2] On the other hand, we, at Leonardo, think of the role as more of a facilitator, where the process owner is accountable for responding when process performance is outside of the accepted range (or trending in that direction), and when a change of target is appropriate. A seemingly small difference at first, it is a crucial matter when it comes to practical applicability.

Toothless tigers?

As my colleague Roger Tregear wrote in his paper Thoughts on the Conflicted Use of Process Language,[3] “differences in the definition of basic concepts in and around BPM are not just of pedantic or pedagogic interest, they cause a lot of wasted time and create confusion, which handicaps development”. There is a fundamental difference between having ultimate responsibility for a process, and being accountable to respond when your process does not perform as expected.

It boils down to the following: for a PO to be responsible for the performance of the process, he/she would need to:

  • be responsible for the performance of something over which they don’t have complete control of (i.e. in the case of cross-functional processes, one specific person would be responsible for the performance across departments);
  • have ultimate design authority (e.g. change whatever they like), which can be impractical and conceptually hard to sustain at lower levels.

Most companies are not ready to let their POs have such power within the organisation. This is why many choose to define the role as an addition to influence (in this way becoming less of a process owner, but more of a process custodian or steward), not an additional responsibility managers need to be worried about. But such POs can be perceived as ‘toothless tigers’, unable to truly effect change—which is why some organisations can give full responsibility and accountability for process performance to their process owners, the tooth-y tigers, if you will.

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‘Owning’ processes in financial institutions

With banks expecting more mergers and acquisitions around the world, and in Australia,[4] we are starting to see the emergence of many organisations with standardised processes under the leadership of a single-point owner. One of the keys to such an operating model is having process ownership for end-to-end global standard processes, with variations only determined by tax and legal requirements.

Combined with mergers and acquisitions, technological changes have been an important driver of change in Australian banking. The different software solutions used to manage any bank are already being pressured for more agility and reduced costs. However, with an expectation for financial institutions to always deliver more to their clients (in the form of phone apps, and online credit cards or loan applications) legacy systems may have to be radically transformed to provide the expected customer experience. We are not talking about just reducing the cycle time of an application to X weeks, we are talking about reducing it to X clicks. Another big change in the Australian banking technology landscape is, at the time of this writing, the upcoming release of the New Payments Platform (NPP), which is due in the second half of 2017. The new infrastructure will provide Australian businesses and consumers with a fast, versatile, data-rich payments system for making their everyday payments. Payments will be made quickly between financial institutions and their customers’ accounts. The system will enable funds to be accessible almost as soon as payment is received—even when the payer and payee have accounts at different financial institutions.[5] Managing processes just became more complex!

This is why the process ownership concept is becoming very important, as many of main processes of financial institutions are inherently cross-functional. Let’s look at one of the main revenue source for a bank: loans. Loans (be they commercial, personal, home mortgage, or even a small credit card advance) involve all, or almost all, of the organisation. The creation of a new loan type is a strategic decision made with the analysis of the finance department; the promotion of that product is done by marketing, while operations would process applications—and so on. Loans, though, are just one example, as many other core financial sector processes could benefit from process owners: transactions (deposits, withdrawals), financial advisory, foreign exchange, or investments (trading, superannuation).

The separate contributions of those various departments to eventually provide a loan to a customer requires cross-functional oversight. Why? Because localised (meaning inner silo) management and improvement could be done at the expense of the global loans process: marketing will be driven by sales; operations might be driven by cycle time to fulfil a loan request needed to deliver; while finance would aim at cost reductions. To orchestrate such complex process, a process owner is required.

This is becoming more crucial as banking regulators take a lot more interest in end-to-end process views: with different business lines, departments, countries, etc. Providing the right level of transparency to comply with regulations has been getting harder, but managing the risks (and related controls) of such processes has become increasingly complex.

‘Owners’ of intangible processes

It is particularly important, and beneficial, for the financial sector to appoint process owners, as the sector is quite prone (due to a lot of immaterial/intellectual work) to outsource people and non-strategic processes (reconciliation, basic accounting) in functional areas to drive costs lower. This can go beyond the sole operating structure that banks now must manage on top of their subsidiaries. Some products can be designed at the ‘main’ company, but are then packaged and sold through a subsidiary. Who then owns that process? Who ensures that it runs smoothly? Someone needs to be responsible to ensure all the connection points—between departments, physical locations, etc.—are looked after. Through process ownership, appointed key individuals (often C-level executives) are held accountable for building, standardising, and maintaining processes throughout that business’ operating structure.

So how do you make process ownership happen? This is no trivial task, but it does not have to be complex. Here are some tips to make PO happen at high level in banks and other financial institutions:

  1. Establish an infrastructure to ensure top-down support—with an executive sponsor, a cross-functional steering committee, and process owners.
  2. Start by appointing process owners for the first two or three levels of your process architecture, so they can manage the process and respond to the process’ KPIs. You can (and probably should) start small, but always top-down.
  3. After a few cycles and readjustments, propagate the concept to lower levels of the organisation as required. We found that meetings of process owners contributing to same value chain from different departments to be very useful in making process ownership pervasive in any organisation.

Conclusion

Banks are now primed more than ever to undergo a global transformation of governance infrastructure to align processes, people, and technology. They can enable optimisation by eliminating ineffective methods across their business units’ operating models.

With processes—and their governance through process owners—banks and other financial organisations can manage critical processes across departments, service centres, entities, or physical locations—ensuring connections points, and overall performance, are managed and improved.


[1] https://www.isixsigma.com/implementation/change-management-implementation/process-ownership-vital-role-six-sigma-success/
[2] http://www.businessdictionary.com/definition/process-owner.html
[3] http://blog.leonardo.com.au/thoughts-on-the-conflicted-use-of-process-language
[4] https://www2.deloitte.com/au/en/pages/financial-services/articles/financial-services-ma-predictions-2017.html
[5] http://www.apca.com.au/about-payments/future-of-payments/new-payments-platform-phases-1-2

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Topics: BPM - Business Process Management

Critical processes: the outside-in perspective

Clement Hurpin on February 12, 2015

Critical Processes Outside In

We’re all familiar with the symptoms of organisational failure. Your luggage was lost during that never-ending stopover. Your order was mixed up with another at your favourite restaurant. Your internet still isn’t working after numerous phone calls to your telecommunications provider.

These various nuisances are all the result of poorly managed processes, but not just any processes, critical ones (i.e. they impact the customer directly). This post will explore critical processes; why any process that interacts with a customer could be seen as critical. I will then ask you to rate your organisation’s management of customer interactions. We’re interested in your thoughts, so feel free to offer your perspective at the end of this post.

What is a Critical Business Process and How to Identify One?

A literature review provides us with several definitions for a critical process. While some emphasise contribution to organisational performance or the unsustainable risk the company would undergo if the process were to fail, a topic-relevant one states that “critical processes are the visible activities or processes from a customer view”.[1]

So critical business processes are either:

  1. risky (potentially exposing the company to harmful effects),
  2. vital (their contribution to the business is too important) or
  3. in contact with the customer (affecting the delivery of value).

Identifying those seemingly abstract processes is not trivial (for instance, identifying certain risks and their impacts can be a program in itself), so for the sake of this post, let’s focus on the rather simpler ones to spot: those acting as an interaction platform with the customer.

If you are not customer-focused, your business processes won’t be either: yet customer-centrism is a paramount element to keep in mind on the BPM journey. Let’s find out why.

Be your own client

No matter what your business is all about, your organisation’s ‘bread-maker’, i.e. your customer, only sees the processes with which they interact. Do you know the technicalities behind the Amazon Cloud service? Most of their customers don’t -but it doesn’t stop them from enjoying the service: a credit card and a short amount of time will get them some servers running, and that is what the customer wants. The processes running in the background to deliver your product/service do not matter to your customers - only the output does. They matter to you (hopefully!), but not to them.

To deliver excellent products and services, we must sometimes look at our business from the customer’s perspective. In other words, we must look at our processes from the outside-in. By getting into our customers’ shoes, we can discover things from their perspective (which can lead to some humbling reality-checks).

Easy on paper, harder in reality: managing human-centric processes is complex. It often involves defining complex interactions between humans and machines. Is this a reason to stop managing them? Definitely not as they are critically important.

Complexity aside, customer-centric processes can be easier to manage than previously expected.  They often exhibit simpler patterns since many of the decisions are driven by human judgement (such as approval/rejection, information request etc.) rendering modelling simpler as there would be fewer activities compared to their purely technological counterparts. Furthermore, customer-centric processes can also be more agile as they are inherently and repeatedly exposed to the end users, and they are thoroughly “user tested”, resulting in issues identified faster and more often. Additionally, considering the potential impact of unhappy customers on bottom lines, change requests usually move up the priority list.[2]

Managing those processes with touch points with the customer is not easy, but it is necessary. In order to achieve this feat, it can be beneficial to shift perspective from the inside-out to the outside-in. So forget for a minute what you know about your organisation, put your customer hat on, and consider what you company looks like from the outside. Who knows?  You may be better off for it.

Download Critical BPM Discussion Paper

Blog’s question:

Considering the importance of any process interacting with the customer, how would you rate your organisation on the following statement? Please use the poll below or leave a comment - we would love to hear your thoughts. 

My organisation is consciously and systematically managing our interactions with our customers (which can include measuring and/or standardising the interactions, building scenarios…)


[1] Melnyk, S. A. (2000), Value‐Driven Process Management: Using Value to Improve Processes, Hospital Materiel Management Quarterly; Rockville 22(1).

[2] Gal Shachor, Yoav Rubin, Nili Guy (Ifergan), Yael Dubinsky, Maya Barnea, Samuel Kallner, Ariel Landau, What You See And Do Is What You Get: A Human-Centric Design Approach to Human-Centric Process, Lecture Notes in Business Information Processing Volume 66, 2011, pp 49-60

Topics: BPM - Business Process Management

Why Business Process Management (BPM) is Critical

Clement Hurpin on December 19, 2014

Critical Business Process Management

“We already know how we do what we do, why do I need BPM?”
John Doe, BPM sceptic

Before diving into an explanation about the criticality of BPM, let’s first go through the mandatory step of defining what these three letters are all about: “Business Process Management is a structured, coherent and consistent way of understanding, documenting, modelling, analysing, simulating, executing, measuring and continuously changing end-to-end business processes and all involved resources in light of their contribution to business improvement.”[1]

The definition deed being complete, let’s look at why it is critical.

Why is Business Process Management Critical?

BPM is critical because processes are how you make your money, deliver value, meet your targets, achieve your objectives, and much more. Processes are critical because they are the way an organisation realises its strategic intent. Is your business about selling cars? You sell cars through a process. Do you evaluate loan applications? You evaluate your loans through a process. Ad infinitum.

BPM is critical because it works: there is a common consensus that if business process management projects are implemented correctly, it stilts significant advancement of organisational performance.[2]

What are the Benefits of Business Process Management ?

If ‘bad’ processes can lead to a company’s downfall, managing them can put you on the path to success and help you stay on it. So, what is it that BPM brings to your organisation, you ask? BPM’s benefits make a long list, but a popular view is that it mostly comes down to efficiency saving. While this makes a big part of the benefits of BPM endeavours – such as Process Improvement Projects (PIPs) – operational efficiency is only one of many favourable outcomes that can arise from knowing your processes and acting on that knowledge. Other benefits include: increased scalability and customer satisfaction; increased business flexibility; quicker introduction of new products; and stronger competitive differentiation. BPM also has an undeniable strategic value – by mapping end-to-end processes, a holistic perspective of the organisation unfolds, facilitating endeavours like planning or accountability definition.

Automation and  Business Process Management

Notice that, so far, no word has been written about what some people automatically associate with the BPM discipline: automation. There is a common misconception that you need to automate processes to get benefits from BPM. Some BPMS (Business Process Management Suite) implementations help automate some process work and deliver significant benefits: but, as per the example on the left, there is no shortage of success stories about organisations achieving significant benefits from BPM work without automation.

Hopefully, now convinced of the importance of managing processes, you might wonder why BPM is not more engrained in management culture. One reason is that most organisations, even though participating in some BPM-related activities, do not seem to consider BPM a strategic tool. It is not seen as a tool or an enabler, but mostly as a project – and what is the main tool for project selection? Return on investment (ROI). Organisations evaluate the cost and benefits of their different projects, compute an ROI, and select the ones that score the highest on this indicator.

ROI on Business Process Management

In that paradigm, investment in BPM is often lacklustre because it has an unknown ROI. BPM is a discipline, not a project, and estimating the return on investment for tasks like process modelling can be difficult. In this respect, it is important to go beyond the pure percentage or dollar value associated with BPM: the intangible areas of an organisation affected by process changes can also indirectly contribute to the financial results of the organisation. (An intangible area such as customer satisfaction is linked through customer loyalty to repeat customers to greater revenue.)[3]

Download the discussion paper below to read more about: 

  • How to Make Business Process Management Critical
  • Which Processes You Should Manage
  • How to Search for Problems and Opportunities in Your Processes

Download Critical BPM Discussion Paper

 

 


 

[1] Definition by the Australian BPM Community of Practice (www.bpm-roundtable.com)

[2] Bandara, Wasana and Alibabaei, Ahmad and Aghdasi, Mohammad (2009), Means of achieving Business Process Management success factors, Proceedings of the 4th Mediterranean Conference on Information Systems, 25-27 September 2009 , Athens University of Economics and Business, Athens.

[3] Norton and Kaplan, 2001, The Strategy-Focussed Organisation, Harvard Business Press

Topics: BPM - Business Process Management