February 16, 2017
“What’s measured gets managed” Peter Drucker’s business management adage seems more relevant today than ever before. In a world drowning in data and key performance indicators, where technology and automation solutions have become more cost effective and easier to implement, the decision of WHAT to measure and how to best manage it is critical.
When it comes to business process improvement, the first two hurdles faced by most companies are 1) achieving a clear definition of existing processes and 2) defining clear goals that should be achieved as a result of process refinement or automation.
It’s easy enough to agree that a process should be faster, easier and cheaper. But how do you measure “faster?” And how cheap enough is “cheaper”? And who decides what is easier?
Start with What You Know
Often trying to envision and map out a process from scratch can be intimidating for process owners. At the same time, one of the biggest hurdles to initiating ANY business process automation project is understanding the existing process in clear enough detail that anyone outside of the process can grasp it.
With a fundamental understanding of the process as it works today, the next step should be quantifying that process in a way that allows you to establish goals for improvement that can be measured and optimized.
Let’s take accounts payable as an example. When looking at your existing AP process and benchmark automation improvements, here are some metrics to consider:
Establish goals that are SMART
While Business Process Automation projects have become more cost effective and easy to implement, they still require an investment and a commitment of time, money and attention to execute successfully. Measuring return on investment and demonstrating measurable success can not only ensure an ongoing commitment to the initiative, but it can impact how ready the company might be to continue to optimize other processes through automation.
With that in mind, establish clear, measurable, agreed upon goals is key. Ideally you want goals that are SMART:
S - specific, significant, stretching
M - measurable, meaningful, motivational
A - agreed upon, attainable, achievable, acceptable, action-oriented
R - realistic, relevant, reasonable, rewarding, results-oriented
T - time-based, time-bound, timely, tangible, trackable
Make Sure That BPA Goals Align with Company Objectives
Sometimes, when focusing on a departmental process and looking for meaningful metrics, teams lose sight of the greater goals of the company and how the BPA project aligns to it.
Again, let’s use accounts payable as an example. According to recent Ardent Partners cross-industry survey, the top 3 metrics AP & Procurement departments say are important include:
On the other hand, CFOs surveyed by Ardent, when looking at AP performance consider:
There is some overlap here in terms of metrics, though the perspective is clearly different. At the same time, CFOs look at other quantitative and qualitative data that does not align, including:
So, when looking for metrics, you may want to go BEYOND the process itself and make sure to examine its impact on the organization….including impacts to customers, partners and other stakeholders.
Goal Forth and Conquer
With clear goals in mind, your team can begin the process of mapping out the journey from the way things used to be to the way they should be, with confidence. Later in Q1, we’ll discuss how to analyze your business processes in detail, so you can go beyond simply automating a process as it exists to radically streamlining and improving the steps along the way.