Manifesto of The Process Revolution: #1 Measure for Profit

Process Revolution Book Layout 2.indd

The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Why measure when you know a process is broken?

Why measure when it’s already caused a catastrophe?

One day someone will come along and say, “How can we justify all this spend on process?” and if they haven’t measured anything they will have nothing to disprove them. They’ll pack up the little process shop and go back to counting their beans, happy in the knowledge that they’ve saved money – even though they’ve cost the organisation more money in the long run.

So here’s what your organisation must do – measure everything. Measure before the start, measure during and keep measuring when they’re done. After that, start measuring again. Organisations must always be constantly aware of where they are – that way when they make a change they can measure exactly how much they’ve achieved and thereby prove the power of process. Process is a compass, but if you’re in the dark you’ll never see where you’ve come from or where you need to go.

 

TALES FROM THE REVOLUTION

 

A contact centre wanted to improve their process around identification of customers. They were going through a manual process of asking security questions. By using pincode technology they discovered that they could cut 30 seconds off the process. That doesn’t sound much until you consider that they had over 1 million calls a year which resulted in a $1.2m saving per annum.

 

The number one reason for doing process improvement projects is still cost reduction* and there is still plenty of fat in most organisations to be able to extract great savings to boost profitability. But what are the key criteria you should look to measure to demonstrate the value process improvement is providing to your organisation?

 

START YOUR REVOLUTION

 

Firstly, let’s understand one thing: organisations are fascinated by pinning a percentage on each process so that they can show this to senior managers and say, “We’ve reduced the process time by 30%!” It’s impressive rhetoric but is ultimately meaningless unless provided in the context of other criteria …

Secondly, what time is being measured? Is it effort time or elapsed time?

Elapsed time refers to the total time from start to finish of the process from the customer’s point of view.

Effort time means the actual amount of time your staff take to do work in the process.

A classic example is that it may take 2 minutes for your staff to write an email (effort time), but if the email sits in an inbox for 2 hours it is adding to the time of the overall process (elapsed time).

Both types of timings are important depending on the goal: elapsed time has a greater customer impact (“Why is it taking so long!?”) whereas effort time is a more telling diagnostic for efficiency. Of course a reduction in effort time also decreases elapsed time, and it is still possible to have a process which is efficient in terms of effort time but a laggard in elapsed time (watch out for those sneaky ones). Thus, it’s vitally important to measure both for every process you analyse.

So what is a “good” level of improvement? Well it’s not quite that simple. A 0.5% elimination of effort time can be a fantastic improvement. It all depends upon one very crucial ingredient: volume.

A small time improvement on a high-volume process can result in huge savings. Conversely, if you can save 75% of effort time off a process that is only conducted 200 times a year, the costs of implementing the process change may outweigh the benefits.

Take the time to measure both effort and elapsed time, but remember that the most important measurement is the experience of your customers – so don’t reduce process time if there is likely to be any negative impact upon their experience.

* Source, PEX Network