20 February 2014

What Happens in Business Functions Focused Projects?

After looking at the purpose of business function in the previous post and types of organisational structure, in this article I will share some cases of process improvement or BPM projects focusing only within the boundary of business function or functional silo and its potential consequences.



Introduction

There are almost endless examples of functional focused projects in both process improvement and BPM where there is lack of an overarching
view of the end-to-end business processes. I will present some examples and the outcomes of these projects. It is up to you the reader to make a judgement of whether the outcomes are what the business anticipated. In other words, "Is the project successful?" Although they are presented as individual cases, they are inter-related to each other.

Cases on Business Function Focused Projects

Case 1: Automation of Functional Processes

All too often, you heard about implementation of process automation, either with the use of workflow engine or process engine within a business division and the argument on the benefits realization. From the IT or automation perspective, this type of project does achieve what it was meant to achieve – automating the functional processes.

However, the focus on functional process raised several issues mentioned earlier. Firstly, a business function focused application would reinforce the functional silo mentality. It is no different to the case of building a business application for specific business unit, unless it is part and parcel of a bigger program to serve an end-to-end business process management effort. Secondly, not only the concept of “garbage in, garbage out” applies here, with the automation its magnitude would be multi folded, particularly for the subsequent functional process over the fence.

Case 2: Fragmented Functional Processes – Out of Sight Out of Mind

Another common shortcoming of process improvement project with functional focus is pushing the issue over the fence, either upstream or downstream, to other business functions (team). For example Team 1, Team 2 and Team 3 are three teams that participate in the end-to-end business process. However, in a functional process improvement project for Function 2, Team 2 identified some of its activities as a non-value adding and decided to remove them. It was only later that those activities became a burden to Team 3, requiring more resource to deal with them. An end-to-end business process approach would potentially identify the best BU to handle those activities is Team 1. However this better solution would never be discovered in the silo approach of most projects.

Case 3: Fixing the Wrong Problem

Another interesting case where a customer support function is overwhelmed by customer complaints about overcharging on the monthly bills. A quick patch focusing on the functional silo was proposed – putting in place more resources to handle the increased demand. The logic seemed right – increase supply to meet higher demand. Interestingly the proposed solution did not go ahead as the business was running out of physical space for the additional resources.

On further investigation across the end-to-end business process, it was reviewed that the source of the increased demand in customer support was some data entry errors during the recording of the periodic customers’ usage of the service provided. Had it not due to the fact of the limited physical space, the customer support unit would have been growing indefinitely to meet continuous increasing in customer complaints.

Case 4: Who is the Business Process Owner?

Another drawback to a project that focuses on functional process is that the process owners identified are the managers of the functional units. Hence it does not have any motivation for these process owners to meet the performance expectation of the overall end-to-end business process. Consequently the challenge lies in the ability of identifying and appointing a process owner for the end-to-end business process – not only during the project life span but in business-as-usual operation – to be responsible and accountable for meeting customer needs and expectation.

End-to-End Business Process

A business at its highest level when viewed as a whole – a value chain – is always a market focus organization which is driven by its strategy to meet customer expectation. In other words, the success of customer fulfilment of an organization relies on the interdependencies and interactions between the various business functions in response to the market conditions. From technology perspective, an enterprise business process encompasses seamless combinations of the different types of processes – processes that sit in business applications; systems integration processes; and human centric processes – across the business functions.



Figure 1: Example of End-to-End Business Process

An understanding of the end-to-end business process is critical not only to provide coordination but also the motivation for workers to integrate better across functions. From the project perspective, the top-down approach is critical to ensure that improvement is done at the right place and implication to other parts of the business is thoroughly investigated. Opportunity cost or missed opportunity cost or even side effect cost to upstream or downstream functions should not be neglected in the Cost and Benefit Analysis or Investment Analysis.

Lastly, the aim of managing the end-to-end business process from both the business operation and the technology levels is to achieve an agile enterprise – an organization that is responsive to the market and at the same time enabling specialization on its activities.

Reference
Harmon, P. (2007). Business Process Change: A Guide for Business Managers and BPM and Six Sigma Professionals, 2nd Edn. USA: Morgan Kaufmann