Measure to improve
Visionary management thinker Peter Drucker told us ‘you cannot manage what you cannot measure’. This applies as much to business process as it does to any other field of endeavour. If you do not define what success looks like and use a clearly established set of metrics to measure your progress, then you will be left in a constant state of guesswork, trying to decide whether or not you are meeting your objectives.
The current business landscape is highly competitive; this makes the efficiency of business processes a key to business success. The quality of business process management (BPM) is going to be a major factor in creating and maintaining a competitive position. When businesses face growing customer churn and increased pressures on costs, BPM becomes a critical weapon in the search for efficient and effective processes that cost the business less.
Effective business processes can allow for evolution into customer-centric organizations which are able to respond in an agile manner to business challenges and opportunities.
A strategic capability
BPM is now accepted as a strategic business capability, this makes measurement of process efficiency increasingly important. In order to manage a process, you must have information on the current and past performance of that process. This means that each process needs to have relevant indicators to measure its performance.
Selecting these process performance indicators is not always easy – if you select the the wrong indicators this can have unexpected consequences and could lead to ‘gaming’ of the performance statistics. Careful selection can reduce this issue. There are a number of different categories of process measurement:
- Environmental – these are factors that can impact the process success, but they may not be under the control of BPM
- Output – related to the end results or the products that are created
- Quality – expands on the output category and looks at the quality of what is produced
- Efficiency – this looks at the output and quality versus the costs
- Impact – this looks at the impact that the process has on business performance
Seven key factors
Here are seven factors that I believe are critical to the value of your metrics.
- Strategic – Use business strategy to define performance measures
- Ease of understanding – ensure that your performance measures are simple to understand
- Timely – your performance measures must be timely and accurate
- Goals and targets – performance measures need to relate to specific goals and targets
- Improvement – make sure that your performance measures focus on improvement opportunities
- Trending – base your performance measures on trends rather than on snapshots
- Objectivity – make your measures objective, not based on opinion