UltraAlbatross3748
Case 1: GACC Case 1 describes a global automotive component…
Case 1: GACC
Case 1 describes a global automotive component company. There were issues that limited the company’s ability to be more competitive in the global marketplace, and they were able to address these through a BPM project.
What were the issues they were trying to improve? What were the expected benefits from BPM to help them become more competitive globally?
What were some of the risks that could result in the failure of this project?
Which of the phases you have learned about do you think would be most critical in ensuring success in this project? Why? Describe 3-5 of the steps in the phase you selected and explain how those steps would mitigate the potential risks for failure.
Case Study 1: USAWhen BPM Is Lost In Transformation
A robust program of BPM combined with a global enterprise resource planning (ERP) implementation can be a powerful coalition. However, finding the right balance between an enduring focus on the improvement and management of an organization’s value creating business processes and implementing the ERP system on time and on budget can be challenging as this case study illustrates.
Background
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original equipment manufacturers (OEM) and retail customers for aftermarket products, recognized the need to replace outdated legacy systems with a global single instance of an integrated ERP system.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 an 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 its global market share, ensure quality and 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 (VPs) 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 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 its execution.
Challenges
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 first six months
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 (HR) 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
Table 28.1 Executive risks and project risks
Executive risk Project risk
Key executives must support the overall program Project must be properly planned, scope managed and decisions made
Resource risk Functional risk
Proper definition of resources needed for optimum performance User requirements must remain closely aligned with project goals
the VP 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.
The SCC recognized that the existing process maps were linear and had a significant IT bias and so it proceeded to develop swim lane version maps of selected key processes such as OTC, PTP and RTR. These swim lane maps showed the key activities, the departments involved, key performance measures and high-level issues in each core process, thereby enabling the organization to ask and answer questions such as:
What immediate opportunities might exist to capture “quick wins”?
What performance measures will the ERP system provide and what metrics may need to be captured via other means?
Which key activities require cross-departmental collaboration?
Concurrently with the development of these process maps in swim lane format, the SCC conducted interviews with members of the SLT to assist in preparing the educational sessions on BPM at the enterprise level.
The key messages delivered in the hour and a half session to three groups of executives stressed that GACC needed to emphasize:
The development and use of simple, visually compelling models for key processes such as OTC, PTP and RTR. SLT members need to become comfortable with using these models to shift management mindset and link major performance issues to the need for cross-departmental collaboration.
The monitoring of critical to customer metrics in terms of quality and time and make these part of the SLT scorecard.
Aligning the BPM program with strategy.
The increasing use of process-based governance for key decisions.
The alignment of recognition and reward systems to visibly distinguish the people and teams who succeed in improving process performance.
These sessions were generally well received by the members of the SLT and the VP BPM was trained in 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% of BPM’s efforts should focus on end-to-end process improvement;
Place a greater emphasis on collaborating with the continuous improvement group;
Continue to work with process owners to define the critical three or four metrics for each end-to-end process.
The VP BPM thanked SCC for their work, but it was clear that he was more concerned with taking immediate action on delays and budget concerns than the longer term, high-level recommendations.
One year into the program
The ERP roll-out was by now known to be six months behind schedule and more than 30% over budget. Although the recruitment of process specialists to support key areas such as OTC, PTP and RTR had been completed and the communication plan to differentiate BPM from the ERP system had been delivered, the overall BPM program was struggling.
Process owners were in place, but in name only, and these executives continued to focus predominantly on their functional responsibilities.
The anticipated collaboration between the BPM group and the CI group had not taken place as the CI group took pride in its success on projects of small scope, within functional boundaries, and its track record in producing measurable results and it was reluctant to address projects of much larger scope with the attendant challenges that cross-departmental issues held. Also, there were political issues that could not easily be overcome as the CI group did not report to the VP BPM and instead reported to the VP Operations in each region.
The program to develop the use of critical to customer metrics in terms of quality and time and make these part of the SLT scorecard stalled and it was not even possible to get agreement on a common definition of what “perfect order delivery” meant, with some regions defining this as “on-time and complete,” while others defined it simply as “on-time” (e.g., when promised).
What could and might have been simply wasn’t happeningor at least, not quickly enough. BPM risked getting lost in the ERP lead transformational effort.
Author’s comments
Success with BPM at the enterprise level relies on a clear and compelling case for change, cross-departmental collaboration, attention to pacing and an enduring focus on value creation. The VP BPM in this case seriously underestimated the impact of GACC’s traditional culture and his reporting line was such that he did not have the needed clout to drive change.
Further, he made a number of classical errors in the three key areas of getting ready, taking action and sustaining gains as outlined in Table 28.2.
GACC never truly understood that BPM is a management discipline focused on using process-based thinking to improve and manage its end-to-end business processes, and the BPM program was lost in the ERP led transformational effort.
Getting ready Taking action Sustaining gains
Fragile case for change. Failure to capture the heads and hearts of people who do the work. Pacing is too slow. Bogged down in measurement, modeling and/or analysis. The new, recommended performance measures are not incorporated into the senior leadership team’s scorecard.
Failing to align BPM with strategy. HR involvement is late or inconsistent, and the recommended training is low on the HR project priority list. The recommended alignment of recognition and rewards is delayed or ignored.
Placing methods or tools before results. Too much fervor and zeal around the method or “system” (e.g., ERP). Insufficient effort invested in establishing the infrastructure and governance for continuous improvement.
Resource:
Jeston, J. (2018). Business Process Management (4th ed.). Taylor & Francis. https://purdueuniversityglobal.vitalsource.com/books/9781351732116
