Sourcing Shangri-La

The ROI on Process Visualization

Two more client examples since my post last week on the power of process visualization.  But first, some astounding data on the potential ROI of making collaboration more productive.

The MITSloan Management Review just re-published the winning essay of the 2012 Richard Beckhard Memorial Prize on The Collaborative Organization. It summarises a six-year research study covering all major industries. And it includes some astonishing data on the everyday collaboration inefficiencies that we've come to think of as normal. Two examples: 

"We were struck by the sheer volume of the collaborative demands on people's time: Many individuals spent 25 to 35 hours per week preparing for and engaging in collaborations with others."

"If the collaborative efficiency of only 20 of the less efficient project managers and organizational leaders improved from below-average to average, it would save the roughly 400 individuals who interacted regularly with them up to 1,500 hours per week."

Clearly, there is a huge latent ROI in making collaboration more productive. So how do you achieve it? 

Well, creating a simple common language, and a single source of truth, must surely be a critical enabler.  And the only serious candidate as the universal language for collaboration must be end-to-end process. But it has to be presented in way that is visual, intuitive and engaging.

This week's two client examples powerfully illustrate this:

In the first case, a wholesale distribution business, the client adopted Nimbus Control to remedy a failing ERP implementation.  Visualization of the end-to-end processes revealed more than a thousand specific business requirements. Even more dramatically, it exposed the fact that inventory management had been overlooked - the Supply Chain team thought the CRM team was handling it, and the CRM team thought the Procurement team had it in scope. 

In the other case, a business services provider, the client adopted Nimbus Control to breathe life into its Operating Framework, transforming it from a sleepy and neglected 200-page Word document into process content that is of equal rigor but visual, engaging and helpful. That visualization is creating a collaborative framework that can drive standardization, performance improvement and assured compliance across its European operations.

There's plenty of similar case studies - including the client with a failing ERP program where process visualization engaged even the CEO and the CIO.   

In today's complex and real-time world, there are enormous benefits in making collaboration more productive. And effective process visualization has to be central to achieving it.

Related Posts

20 Jun 2012    Process: The Emerging Global Business Language

28 Nov 2011    Cracking Complexity in Novartis

 

How To Simplify Global Shared Services

Most multinationals are almost ridiculously complex. It's a barrier to innovation, compliance and sustainable improvement - and increasingly a C-Level issue. Simplification has been one of three strategic priorities at GSK, for instance, since 2008. 

So Deloitte's report on reducing complexity in global shared services organizations is well-timed. Unfortunately though it misses the point. 

Deloitte sets out survey results which illustrate the prize.  Tackling complexity effectively, says Deloitte, can reduce the costs of delivering Finance, HR and IT by up to 20%, even in already 'rationalised' global shared services organizations.  And yet only 30% of CFOs believe that their efforts in tackling complexity are successful.

The low-hanging fruit of labour arbitrage and automation were harvested long ago. 'Getting a grip on complexity is', in Deloitte's words, 'the next frontier in reducing costs [of Finance, HR, IT and other non-core support activities]'.

Which is great. But, alas, Deloitte's report on how to get a grip on complexity is - frankly - very complicated. It could do with a complexity reduction program of the sort that it proposes. It presents interesting ideas but doesn't join the dots. Its definitions of an operating model and a business model don't quite work. Its attempt to define four different types of complexity - portfolio, organizational, process and information infrastructure - don't hang together well. It's light on governance and controls. It recognises the significance of master data management but doesn't link it with process management. To its credit, the report clearly advises a focus on end-to-end process. But it dismisses 'process flow diagrams' in favour of an exotic visual value stream approach, the benefits of which would be incidental at best.

More fundamentally, it overlooks what must be the 72pt headline to the complexity-slayer story: the power of process visualisation. 

End-to-end perspectives, expressed in the language of the business, with design principles that make it intuitive and easy on the eye. All managed within a methodology that blends compliance rigour with support for people doing real work, and ensures IT alignment.  This is what drives engagement in sustainable improvement and therefore, ultimately, in business simplification.

And it's not just effective in untangling process spaghetti, or bringing coherence to process fragments.  I've seen it to be equally effective in enabling organisations to escape the deadweight of enormous SOP document libraries and migrate to a far more agile world where end-to-end process provides the overarching narrative, supported where necessary by far fewer, and far slimmer, SOP documents. 

A picture being worth a thousand words etc, we shouldn't be surprised that once people can see what's going on, they are far better equipped to identify unnecessary complexity and collaborate to safely 'make things as simple as possible but not simpler' (to paraphrase Einstein, who never wrote on shared services, as far as I know, but knew a bit about complexity..). 

Related Posts

28 Nov 2011    Cracking Complexity in Novartis

30 Sep 2011    Optimize 15,000 Business Controls? No Problem.

26 Apr 2011    Process As Science And Art 

Enabling The Global-Local Enterprise

In Winning the $30 Trillion Decathlon, a McKinsey team sets out why emerging markets hold the key to the future for most large multinational firms - and ten essential disciplines for success.

The transformation of the global economy in our times compares, says McKinsey, with the impact of the Industrial Revolution in Britain from the mid 18th century:

"By many measures, the significance of [the Industrial Revolution] pales in comparison with the defining megatrend of our age: the advent of a new consuming class in emerging countries long relegated to the periphery of the global economy... The two leading emerging economies [China and India] are experiencing roughly ten times the economic acceleration of the Industrial Revolution, on 100 times the scale—resulting in an economic force that is over 1,000 times as big."

Underlying the ten essential disciplines for organizations that want to win in this new world, one theme stands out: the capability to be both global and local.

Being Local drives innovation and responsiveness.  McKinsey quotes, for instance, the case of South Korea's LG Electronics, which set up in India and realised that many Indians used their TVs to listen to music. So LG swapped out flat-panel displays for less costly conventional cathode tubes to introduce new models with better speakers at the right price point. LG went on to become market leaders. 

But being Global can deliver enormous benefits as well, in standardization and procurement, for example.

There's no right global-local mix.  It will vary by region, by product, by route to market, by market maturity - by a hundred and one factors.

So the real challenge is to blend Global and Local, and to be able to continually re-optimize the blend at every level.

Yet around 40% of global companies don't even have the most basic means to effectively manage these global-local trade-offs, according to McKinsey research published last year.

In a world forging a second Industrial Revolution, and so creating a $30tn opportunity, it's difficult to see how any multinational can optimise its global-local mix without a world-class business process management platform . It's surely the essential infrastructure, the collaborative framework, that best enables global-local optimization.  

Related Posts

20 Jun 2012    Process: The Emerging Global Business Language

10 Jul 2011    Managing The Downside of Global Processes 

Death of Outsourcing 'Greatly Exaggerated'

Oh dear. Things are looking a bit terminal for outsourcing.  The market-leading HfS blog, whose 80k subscribers are mostly sourcing professionals, sounded a death knell.  And now KMPG has published The Death of Outsourcing.

Mark Twain's celebrated remark on his premature obituary comes to mind. You don't have to look at IBM and Accenture for long to realise that this 'corpse' has rather a lot of vital signs.  Indeed, in many industries and activities - in clinicals trial and manufacturing in Life Sciences, for instance - outsourcing appears to be in the rudest of health.

So what's happening? Why this apparent gloom?

If you ask me, it's because things are changing fast. We're in an accelerating transformation towards the the virtual enterprise of the future.

And this sea change is most obvious in how the non-core activities of the enterprise - like procurement, accounting, HR and IT - are delivered. In KPMG's words:

"There is a revolution taking shape in the business services industry, one that disregards the traditional shared services and outsourcing paradigms.."   

It's not difficult to see why. The lion's share of the benefits of labor arbitrage and automation have been harvested. A recent Deloitte report, for example, concluded that the organizations which have been leaders in shared services and outsourcing 'are now struggling to capture the next generation of value... after picking the low-hanging fruit.'

So it may be the end of 'outsourcing as we know it'. But we can see the new paradigm rapidly emerging in the rise of 'global business services' (GBS) organizations - and they have flexible sourcing at their core.  Again, in KPMG's words [my italics]:

"Many of these new business services organizations share common traits. They are centrally managed, and usually have an integrated portfolio of capabilities - typically a combination of external service providers and internal shared services... [They] leverage a global pool of internal and outsourced resources to deliver a service that is nimble, aligned to the business, and connected with customers, employees and suppliers."

So reports of the death of outsourcing seem 'greatly exaggerated'.  In GBS and beyond, it's set to continue to grow. But it's going to be different - more complex, more dynamic, more multisourced - and will require new capabilities.

It's difficult to see how any GBS organization can deliver effectively without a world class business process management platform at its heart. It's the key to business alignment; to effective collaboration across organizational silos; to managing risk effectively; to delivering superior customer experience; and to sustainable improvement. 

Related Posts

20 Jun 2012    Process - The Emerging Global Business Language

29 Feb 2012    Why Process Improvement Projects Fail