BPM and Global Competitiveness
A global automotive components company (GACC), serving both original equipment manufacturers (OEM) and retail customers for aftermarket products, recognized the need to replace outdated legacy systems with a global single instance of an integrated Enterprise Resource Planning (ERP) system. At the outset, the plan appeared to be sound. The organization made a commitment to use a process-centric approach and implement a process enabling IT system to drive its business process management efforts.
There appeared to be a clear recognition of the complexity involved. The current business operating model was characterized by:
• Different business process operating models • Multiple major system backbones with separate code bases • Significant internal and external interfaces • Fragmented processes • Limited visibility • Suboptimal performance.
The overarching objective was to implement a world-class enterprise system and business processes that would transform GACC's ability to grow global market share, ensure qualityand cost leadership.
GACC had developed a successful program of continuous improvement (CI), focusing on projects of small scope, largely at the plant level, within the operations group.
Approach
The ERP program was launched with significant fanfare. An all-day meeting was held with the top three levels of management. The CEO and several senior vice presidents presented their views as to why this transformational effort was essential to GACC's future. The overall program was planned on a three-year timeframe, structured in phases, with a roll-out by geographic region, and details were outlined and reviewed.
In order to assure the tight integration between the new IT systems and a process focus, the former VP of the BPM Center of Excellence for US Operations was named to a new global staff position as the global VP of BPM. He was tasked to focus on the integration of process management principles and process-enabling IT systems and to emphasize:
Process governance and process ownership • Process metrics • Process models.
The focus on governance, metrics and process models was planned to occur concurrently with the implementation of the ERP system roll-out to deeply embed a process orientation into the organization.
There was a clear intent to move towards process management. The VP BPM defined BPM as "the ongoing management and optimization of GACC's end-to-end business processes." He had a plan to build a small team of BPM experts, comprised of staff positions aligned with the ERP scope and focused on the end-to-end processes such as order to cash (OTC), procure to pay (PTP) and record to report (RTR).
Both global and regional process owners were to be appointed, again aligned with the ERP roll-out, for the key processes such as OTC, PTP and RTR. The importance of alignment with the group responsible for continuous improvement was recognized, as was the need to develop process models and metrics.
While the plan was sound on the surface, significant challenges occurred in execution.
The principal challenges were organizational and cultural. The VP BPM reported to the global VP Operations, and the VP IT who was accountable for the ERP implementation reported directly to the CEO at GACC. While the CEO was a vocal advocate of BPM, the VP IT had the advantage in terms of visibility and clout at the senior leadership team (SLT) level.
GACC's culture was dominated by a traditional focus on producing high quality products at the lowest possible cost. Regional VPs had significant clout, as did the Operations group. While lip service was paid to the importance of managing the firm's end-to-end processes, when push came to shove, regional and profit and loss (P&L) issues took priority.
The risk areas shown in Table 28.1 were recognized by both the VP IT and VP BPM. The impact of these challenges and risk areas became clear as the program rolled out.
The VP BPM had a clear idea of what he wanted to accomplish and took two concurrent actions to launch the program. He tasked human resources with recruiting a small group of business process specialists to support key areas such as OTC, PTP and RTR and he engaged a small consulting company (SCC) to develop a roadmap for BPM at GACC and provide leadership education on BPM to GACC's senior leadership team.
The SCC outlined the key elements of a roadmap to take GACC from managing individual processes to organization-wide process management. However, the VP BPM challenged some of the key concepts. For example he believed that many of the foundational elements such as creating an advocacy group, focusing on the right processes and establishing the right governance structure were already in place. Future events would reveal that the VP
Executive risk
Key executives must support the overall program
Resource risk
Proper definition of resources needed for optimum performance
Project risk
Project must be properly planned, scope managed and decisions made
Functional risk
User requirements must remain closely aligned with project goals
BPM overestimated the extent to which these foundational elements were in place. Nevertheless, the SCC was directed to focus more on developing swim lane version maps of selected key processes such as OTC, PTP and RTR and deliver the planned educational session on BPM to the SLT.
These sessions were generally well received by the members of the SLT and the VP BPM was trained on delivering additional sessions to the management teams in the GACC regions. However, the global VP Operations was conspicuous by his absence and other cracks in the overall BPM program were beginning to appear. The recruitment of process specialists to support key areas such as OTC, PTP and RTR was well behind schedule, with only one of four positions filled in six months. Also, there were early signs of delays and budget overruns for the ERP system implementation, and changes to RICEFs (Reports, Interfaces, Conversions, Enhancements and Forms) began to take out the many meaningful customer- facing metrics.
SCC submitted its final report to the VP BPM and recommended that he:
• Develop the messaging and communication needed to differentiate BPM from the ERP roll-out.
• Champion the continued development and use of end-to-end swim lane process view.
• Provide near-term measurable value, 30-35 percent of BPM's efforts should focus.