Business process is end-to-end work that produces something of value. More formally it is an organized group of related activities that together create customer value. The focus in a process is not on individual units of work, which by themselves accomplish nothing for a customer, but rather on an entire group of activities that, when effectively brought together, create a result that customers value. A customer does not care that we have allocated inventory or planned a delivery; the customer only cares that he receives the goods he has ordered in a timely manner. The difference between process and task is the difference between whole and part, between ends and means.
As more and more enterprises strive to harness the power of their end-to-end enterprise business processes, the need for a process implementation roadmap has become vital. It is now beyond dispute that redesigning and managing end-to-end processes delivers dramatic improvements in speed, cost, quality, and service; and that these improvements can, in turn, yield overwhelming strategic advantage. In cross-functional processes ranging from order fulfillment to human resource management to product development, an integrated approach to process improvement, redesign, ownership, and governance has demonstrably saved corporations billions of dollars and enhanced customer satisfaction by factors exceeding 90 percent.
Process redesign does not just change processes – it changes everything. Redesigning processes entails driving out the non-value-adding work that is the root cause of contemporary performance problems by rethinking the fundamental assumptions that underlie how work is performed. As a rule, jobs in high-performance processes are more broadly scoped, more complex, more team-based, and more autonomous than conventional jobs. These people will therefore need to be managed in new ways: through new metrics, new reward systems, new career paths, and the like. The emergent role of the cross-functional process owner, responsible for the design and performance, but not the people, assumes enormous significance. The end result of all these changes is a different kind of enterprise, which we call a process enterprise.
The Payoffs of Process: Process work has yielded spectacular benefits for companies in a wide variety of industries. A few contemporary illustrations:
- By managing service installation as a process, creating a precise and uniform design for it, and measuring its performance, Duke Energy increased the percentage of situations in which it hooked up electrical service by the date promised to over 98 percent; in some service territories, that figure had been as low as 30 percent.
- IBM reduced the time needed to bring new products to market by as much as 75 percent, by managing and measuring the entirety of product development as an integrated process.
- Hanover Insurance Group, a diversified insurance company, applied process discipline to most of its operating processes. As a result, the company reduced operating costs by hundreds of millions of dollars as volume increased, and simultaneously vaulted from 37th to 4th place in an independent rating of customer satisfaction.
- Air Products and Chemicals incorporated its customer interactions in a process called Customer Engagement. By systematically rethinking its design, the company has simultaneously increased the productivity of its delivery vehicles while achieving a major reduction in customer out-of-stock situations. In consequence, accounts receivable have declined while the percentage of business lost to competitors has fallen 80 percent.
Similar results have been reported in dozens of other leading corporations, including 3M, UPS, Conectiv, Merck, and Progressive Insurance, to name just a few.