AP: I promise I'll do better next year

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Many people start to wind down a little at this time of year. Calls to customers start to tail off, marketing spend for business-to-business companies slows down, and everybody starts to save their energy for buying a wrapping stuff for the kids. For the poor souls in finance and accounting, this is just the calm before the storm. Financial years come to an end with a flurry of activity, and worse yet, tax season in the US starts to cause pangs of remorse. "Why did I not keep my paperwork more organized through the year?". "What are all these travel expense receipts?". "Can I hide on a small Caribbean island?".

Well, 2010 is almost done. Feel free to spend much of the end of December and all of January running around, finding what you need for your annual reports and IRS filings. But ask yourself, "do I want to be doing this again in twelve months time?". Especially as the new health care reform bill has an impact on the tax reporting of transactions (in the same way that the housing assistance support bill did several years ago), making the accounts payable team miserable. Yes, filing 1099 forms for every vendor that you spend more than $600 with (not just the unincorporated ones)  in the course of the year sounds like running a report or two, then filling in the paperwork - not fun, but not world ending. But wouldn't it be better if you could kill two birds with one stone, fixing your messed up paper and Excel accounts payable and travel expenses processes, and ensure you can meet the 1099 reporting needs more easily?

It seems to be true that despite the hype of the burden on small business, a big chunk of the responsibility for patching up the leaky tax collection problem goes back to big business. The merchant banks, credit card companies, whichever organization handles an electronic transaction, becomes responsible for reporting these transactions. The tax code already demands this, and the requirement appears to have been extended. So, I've been complaining this week that electronic transactions are too costly for small business. Maybe that cost starts to be put into context when I consider the reporting costs in the future if I write a lot of large checks.

Its time to get ahead and start streamlining those accounts payable processes. Its really not going to be that hard, compared with the year end chaos that ensues anyway. And it could make 2011 a more restful and peaceful year, for accounts payable at least.

Remember: I know nothing about tax law or any other regulations affecting your business. So check with a professional before doing, or not doing anything.

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Related articles

• Wanting to learn why an AP process exists at all? Explaining the Accounts Payable Process (brighthub.com)

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Yesterday I discussed why electronic payments are great for customers and banks, but terrible for small businesses dealing in high value, low volume transactions. This morning, Finextra relays the press release announcing the partnership of S1 and PayPal. S1 provides integration with online banking, so that person-to-person payments can be made directly from an individual's bank account. The actual payment is made through the PayPal infrastructure, giving the security and support that is needed for this to actually fly.

This news is interesting, since it is giving smaller institutions such as credit unions the opportunity to offer competitively priced money transfer capabilities. It starts to put in place a real competitor to the legacy fund automated clearing house (ACH) and wire transfer systems used by the banks for Electronic Funds Transfer. EFT is perceived as being highly complex and may be considered one reason why electronic payments are going to be such an expensive proposition for small businesses. If you make a payment to a small business electronically through an online banking site such as Bank of America, its likely that the bank prints and mails a check. The small business owner has the inconvenience of the paper check still. This is not an end to end electronic solution, it just suits the customer, and the bank gets to hold your money for longer.

If PayPal and S1, or similar propositions start to really compete in the marketplace, I hope this could put pressure on the big banks to start providing better and cheaper check-free approaches for business to business payments, completely integrated with real small business online banking. This is what small businesses want, direct integration, not another service that they have to transfer funds to so they can pay a third-party. The rather hefty charges, and complexity of funds transfers to the PayPal account before making the payment need to be reduced, and competition is the only way it will happen.  

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Electronic payments - a cost of doing business for SMBs

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Electronic payments such as credit cards, debit cards and PayPal are outnumbering check payments in the US. Debit cards, counted the highest non-cash transactions, at 37.9 billion payments, while checks dropped significantly to 27.5 billion written in 2009. This is according to a short article in Financial Services Technology. 

This all sounds great for businesses, since electronic payments are so much easier to handle, receive and reconcile than checks. But electronic payments come at a cost. 2.9% of the transaction is what a small vendor will pay for merchant processing. Despite the efficiencies involved, this is a big chunk of change, especially if you are dealing in a small number of high value transactions. 

As check usage continues to plummet, and customers start to demand electronic payments from even small vendors, it seems that all the benefits sit with the consumer and the middle man processing the electronic payments. Eeking every efficiency possible out of the use of the electronic payment system is perhaps the only way that small vendors will be able to make up the gap. Process improvement in Accounts Receivable and Accounts Payable become essential areas to focus, especially as the paperwork burden to manage a 1099 for every vendor receiving over $600 in transactions in a year could come into effect.

If small businesses have recommendations of how they receive and pay for large transaction goods and services electronically, please leave a comment.

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Related articles

• New Study Finds Consumers Won't Tolerate Debit Card Fees Resulting from Finance Reform Legislation; Merchants at Risk If Consumers Revert to Cash (eon.businesswire.com)

You can't build BPM

The BPM forum on ebizQ today asks:

A question from this blog, What's Better - Building a BPM Solution or Buying One? and an important question for companies looking to take the BPM leap. And what metrics should they use to make the decision?

Build or buy will be driven ultimately by the preferences of the organization. 



1) completely tailored, business wide processes
2) solving specific business problems


If you need #1, then almost certainly you'll be buying an enterprise BPM suite, and building a lot of integration into your environment. BPM software is really a set of repeatable building blocks, made general enough to match common requirements for many business processes, not just those of one business. Therefore it seems hard to envisage building a BPM internally. Really what a business should be doing if it is looking at building software is using BPM methodologies alongside other requirements analysis approaches, and building just what is needed to make the solutions work in practice and make them maintainable in the future.

Smaller companies can do a lot more, since they are less likely to be driven by technological ego. There are many SaaS solutions that solve #2, common business problems, without building anything or even designing and 'configuring' new business processes. For example, why bother creating a travel expenses process from scratch, when there are many SaaS solutions available off the shelf? 


When custom processes are absolutely necessary for SMBs, an enterprise BPMS is not going to be a good fit. Even the software vendors don't use their own software, due to its complexity and cost to implement ( see my blog post about a dirty little secret )


Finally, a guarantee of success should be something you can measure. Building anything adds risk to this equation. If the solution is the right size for the problem, there should be an ROI up front, which you can balance against the risk of build-or-buy. Soft benefits alone, like customer service improvements, does not make an investment invalid, just harder to justify ( see a quick animation that explains this from the perspective of the value chain ).


Build or buy of BPM is not the question. Companies should be asking themselves where their problems are and the fastest and best ROI for fixing them.

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Enough is the best

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Is 'Enough' the new 'Best'? That is the question asked by Idris Mootee on Blogging Innovation this morning. I have long been a proponent of "good enough" for business processes, which would be probably taken out of context in a sound bite, so don't quote me quite yet.

Mootee discusses the Muji stores in Japan, the non-brand brand that espouses the idea that as consumers there is stuff we need and want to buy, but why do we have to be forced into believing that one label makes a product better than another? Brands are there to do this, without adding any value to the actual thing that is being bought. 


Unfortunately business improvement strategies have taken the branded non-value add approach. We have branded our business improvement methodologies, Lean and Six-Sigma are two common examples, to add caché. Hell, we even retained the Japanese-named concepts that came out of the manufacturing philosophies that don't always translate well into western thinking, because it makes the approach sound cool. What, after all, is wrong with translating concepts into plain English to make them accessible to a wider audience, rather than forcing people to buy expensive training and textbooks?


Strangely enough, despite maintaining a significant amount of branding to make its concepts sound bigger than sometimes they are, Lean really does follow the concept of 'enough is enough'. Maybe not 'enough is best', but knowing when to stop to avoid wasting effort in removing wasteful activities from your business processes. So, going back to my likely to be quoted out of context quote, "good enough" really has some value. The question is, do you want to spend money making one process that is performed close to perfect when the rest of your business needs some serious fixing? It is like seeing a house with a beautiful kitchen complete with granite and stainless steel, but the stairs leading up to the bedrooms are collapsing. 


Small and medium-sized businesses should be especially sensitive to this pursuit of perfection in their processes. There is typically not spare cash to be invested in business improvement. Surprisingly, sometimes the best way to get bang for the buck is to do several things at once. Make sure you reach a milestone where the work done on a project is useful, but have enough measurable objectives in place to understand which of the simultaneous projects is really going to achieve what you want. Your understanding of what is important changes as your processes improve. 


Like branding, sometimes a single laser-like focus on one project ends up dragging you into a endless cycle of polishing and perfection. Mootee may be right, at least in my view: "Enough" is the new "Best". You can quote me on that.

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A world without people is not a fun place

Image via WikipediaBusiness process improvement is fundamental to the best performing companies, although we rarely hear or talk about it. Instead we focus on how great the employees are, how they are trained to deliver great customer service, and how well their leaders inspire their people work better. Maybe it is because consumers of services are human-beings that we focus on the people part so much. Or maybe it is because so much of the focus of business process improvement has been in the mechanization, automation and general dehumanization of business processes that we have become immune to its benefits. Business processes are seen as tools that should just work, when we should be looking at them as better systems that involve talented people. 

The thing is that business processes, unless you are talking about straight-through processing (STP) and ultimate automation, include people. This isn't about the marketing that we are seeing from business process management (BPM) vendors, classifying themselves as "leader in human-centric BPM for Java platforms", or some other ridiculous classification that allows somebody to be the leader in a niche that is unimportant to real business users. This is about helping people do their jobs better within processes, and helping people understand the processes that they work within so that they can make them better.

Linus Fernandes on his blog, Rubber Tyres -> Smooth Ride looks at it this way:

Most new software system implementations require people to be trained or re-trained; they have to understand why the new way of doing things is better, how it will make them more productive, how it affects the bottom-line. [...]

Yes, BPM can work, it does work, but it’s necessary to recognise the other associated costs especially with human capital.

The more fundamentally you try and change your processes, the more likely it is that you will need to train or employ specialists to understand and run them. Whereas, if you can keep your processes more natural, rather than something-centric, the more likely it is that you'll be able to benefit from the skills and experience your employees already have. Allow people to do the things that require intelligence and human-interaction. Feel free to automate other parts, but don't feel bullied into it by software marketing. If there is no value in automation, just help people work better by providing them the information and tools they need to produce a quality product or serve customers better. 

For more thoughts on how customer service and efficiency fit together, see this short video.

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Why bother with DIY BPM?

Companies that have tried improving their business processes, either through manual improvements or software BPM solutions, know that the DIY approach can be a big time-suck. So why bother? Everybody looks at the return on investment in projects based on hard costs, and the costs with in-house software are never small. But few people look at the costs on your time, the business person who desperately wants things to change, but can not spare the time to think about things deeply enough to make the changes useful rather than plain damaging.

I've been chatting with Ian Lever at Forward Look about alternatives to IT-centric BPM tools for business improvement. To steal one of his thoughts: why would you invest in building a leave/vacation request process, a travel expense process or a time sheet system using internal IT and business users, when there are a hundred low cost, ready made alternatives out there already? For many large companies, it seems easier to call the ERP vendor and have them enable the module and customize it to your needs (for tens of thousands of consulting and licensing costs), rather than suffer the indignity of going online and signing up for an easy to use system that doesn't really integrate  (but doesn't need to) to your ERP. Burn some IT budget and get something in six months, that's the only way to go for many locked in by their IT department. For the rest of us, where that one project spend like this would exceed the annual IT budget, build versus buy becomes a big question. Doing it yourself is not always the cheapest way to achieve the goals, and unless you are really handy with the tools it is rarely going to achieve the highest quality result.

For this reason, software as a service (SaaS) vendors exist to deliver solutions for what you need. This isn't like the BPM vendors and their 'templates'. This is real running solutions, ready to go. For this reason, Consected will be announcing some new Instant Apps. Look out for these new, free and low-cost apps at Consected Instant Apps.

"Great!", you say, "but nobody does what I want, my way". Well, if you really have faced that problem with the lack of appropriate SaaS solutions for you specific business need, add a comment below or contact me (select 'customer service', since I'm not in sales mode), and share your ideas, wishes or gripes with me. A problem shared... 

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Saucepan in a saucepan

According to Joe Shepley on his blog, Cereal in the Saucepan:

If we wanted to organize our kitchen to maximize space, we would never do things like store empty pots and pans or glasses in one place and disposable boxes of dry goods in another…we’d dump the dry goods into those empty pots, pans, and glasses and toss the disposable boxes they came in–et voila: maximized space!

Put in simple terms, Joe says that we should organize the filing of our documents on the processes behind information as much as the storage of those documents. If we have masses of information and documents, how useful is the traditional Windows file system approach to document storage? Who really cares that a document is on the C: drive? The C: drive is like the mechanics of the filing cabinet drawers that allow them to slide in and out easily despite being full to overflowing. It doesn't tell us anything about the information we have stored on it.

It gets slightly better, as savvy computer users (not my mother-in-law) start to put things into folders for each type of work they do. Now in an office, we end up with the F: drive being the place where people throw all the junk, with a folder of "Accounts Receivable", one for "Travel and Entertainment", etc. Careful filenames keep the documents in order. But frankly that offers us little better options than knowing that an expense claim is in the bucket, and got dumped there around 3 months ago.

Why is it so hard to classify our documents by business process, and the meaningful business information that generated them? You know, keep them in context, rather than make them an issue of searching for them? Because the good-ol' PC doesn't let us do that, and we don't want to spend time naming documents and hundreds of folders in a way that lets us find them.

I have always been a great proponent of keeping documents in the context of the processes that created them. Not in the old workflow / document automation way of "it arrived in the workflow, and its stuck there", but a meaningful classification that let's us use the fact that an employee travel expense claim has meaningful attributes (or metadata) for the employee, for the accounting group, and for the auditor. Keep the information (expense form, scanned receipts, manager approval) organized in a meaningful structure, and the attributes used to identify the processes information belongs to just takes care of itself. Yes, just have an information management app that is meaningful while documents are in the process and when we are finally done with them, without having to waste time filing after the face.

Me, file documents? The documents were filed in Consected almost before they were used. Put another way, my saucepan is already in the dishwasher. My cereal is in me. And its time for another coffee...

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The value chain doesn't have to be linear

Porter Value Chain (from Wikipedia)

Working with clients face-to-face is always interesting and enlightening. However much a company may need help from a consultant in a specific area of their business, the consultant always learns a new way of looking at business problems. For me, a recent trip to a client led to many discussions about strategies for improving the business, both the little things and the big things. The big things, such as M&A and moving to a new headquarters, often have the greatest payback, but in terms of looking at the day to day operations of the business, looking at how a firm can improve its customer service quality while reducing wasteful activities can also pay back big.

During my visit, we started discussions about the value chain. We envisioned a long paper chart, pinned to the office wall, showing everything from prior to attracting a new prospective customer to the business, through serving them successfully and profitably, to finally ending the relationship and eventually dissolving that closed account completely. Its a compelling visual, since it touches so many pieces of the business, and can help business people who have become so entrenched in their piece of the puzzle to look around and see how their work impacts others, both positively and negatively. This long value chain / enterprise business process will make a great project for somebody, one day.

The issue I have whenever I look at the value chain, is that it is often viewed as a fairly linear and blocky thing, showing a flow of activities leading to value at the far end. Maybe this is just because many examples focus on manufacturing and the success of production lines. Of course outside of a production line, we all know that this linear view is just not the case. Activities go on in all areas of the business that deliver value, and different departments aren't always as remote from the action as the Porter Value Chain diagram (above) would suggest. Especially in services industries, I would suggest that we would end up with a series of segments of an orange all pointing in to value generation in the center. After all, it is hard to say whether a client will be more upset about a screw up in one group or another, when the financial outcome is about the same. In financial services, if a firm delays a wire transfer for $100k, or a rep delays placing a securities trade that increases the individual's risk, the actual cost may be small, but the perception from the client may be huge. Finance was responsible for one error, sales for the other, and only an orange slice view of the value chain puts them on equal footing. Reversing the view and delivering top quality service in both areas of the business may also deliver equal financial and value to the customer and then back to the business.

The issue with all of this is that the orange slice view of value does not help people understand the business processes that are being performed. It highlights that we are all one "big happy team", but in terms of understanding, it shows little else that is tangible to a business person. So the value chain can not replace business process definitions, which show the way work related specific transactions flow through the organization. And business processes rarely show where the valuable work is done in the organization, just showing where work gets done in an overall timeline. So my reminder to myself as a consultant is this: "just because I can make a business process work better, I must look at the value chain to understand where to focus my efforts". Nothing new, but a good reminder to all of us to get out out the weeds and look at the orange. And when things start getting a little too high-level-strategic with little focus, I can alway dive back to fixing specific business processes that I've now shown will deliver value to the business, and importantly its customers.

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Advertise all you want, but what happens to the leads?

Advertising a small business's products is great, but the leads you get from your advertising investment are what matter. I spent a morning at the Javits Center in New York City last week, thankful to be out of the rain for a little while. One side of the building was taken over by the super-fit marathon runners preparing for a grueling 26 mile Sunday with some retail therapy buying fitness clothing. The other side was largely taken over by ad:tech, a chance for media channels, technology and ad buyers to uncomfortably mingle in one place. It is interesting that LinkedIn ads occupied a booth maybe 8 times the size of Microsoft advertising.

For me, where the rubber meets the road for advertising is when all that spending pays back and you get solid leads. The ad:tech presenters I heard were so overcome with excitement that you could count and measure these leads, slicing and dicing them in every way, that nobody seemed interested that you might actually want to follow up on those leads. You know, see if the leads are real, what the potential customer's need are, start building a rapport with the buyer. Nope, the most exciting thing apparently is drawing a pretty chart so you can optimize your advertising messages the next time.

So, you all shout, "just put the leads into Salesforce". Yeah, well how many small businesses have got through the learning curve of Salesforce to actually make it a useful system? In a quick poll I made, only one had finally invested the resources needed to get it to work. Even then, the leads coming in end up being entered laboriously by hand from the website. But hey, they can now get fancy reports to see how many leads are in the funnel. And it only costs $25 per user unless your are considered 'professional', in which case start considering how it will impact the kids' college funds.

Along the same lines, I have to relay the little chuckle I had when I walked past an expensive ad:tech expo stand (I won't name the company). The rep was talking to some interested people about the service he was touting. They asked for a copy of a case study, which he didn't have to hand. So what did he do? Scribble the person's email address on the back of one of his own business cards and promise to follow up. "But if you don't hear from me, do drop me an email to remind me", I heard him say. Yeah, lost cause I thought to myself - I wonder how many leads like that were wasted?

So, Salesforce takes some effort to get start on. If you already have it and are advertising to get some real leads, bite the bullet and work out if it really will work for you. I use my own software to capture lead information received face to face and on the web, through a simple contact web page powered by Consected. It gets the information directly into a lead workflow, helping us follow-up and track the responses. Fancy analytics, not so much, but to be honest I wouldn't know what to do with them even if they were there. It takes a company investing way more in marketing than we do to be able to really make use of that information.

If your company would like to improve how it captures and tracks its all important customer leads, contact us and I can help you get up and running in about an hour.

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Fix the little things, and get big results

Workflows are just not big enough for us to pay attention to any more. Why bother fixing things that just involve a handful of people working to get a job done?!

Most business process practitioners experienced the days when a business process was represented in reality by a paper workflow. The movement of work from one person to another represented the process for specific work to get done, so we called it 'workflow'. The word workflow seems dated. Despite this, the paper workflow still exists, although in many cases the workflow has become email based, with just a piece of paper to be signed by the customer. 

Business process management, both methodology and technology decided along the way that it needed a bigger piece of the pie. If you just transfer work from one place to another, surely that's not very exciting. Every professional needs more than that. Let's make sure we can measure the process in a way that was never needed before, analyzing it to a level of detail that could be considered obsessive. Let's model a new improved process and simulate its inside workings so there are no surprises. Let's step it up another notch and implement the new process with tools that could run real-time stock trading.

None of this stuff is bad, just for many organizations (okay, all organizations), there are simple workflows that are run on paper or email. They don't need much analysis and they don't need simulation. They certainly don't need a 6-digit piece of software to run them. These workflows are common: accounts payable, check/cheque requisitions, complaints handling. Business process management wants to think big and be big. So nobody ever focuses on the fact that some of these processes have an impact through the value chain on customer satisfaction. 

So while we are trying to fix business processes at an enterprise level, don't forget fixing business processes, oh hell, call them what they are, WORKFLOWS, at the departmental and team level. Its amazing (although it shouldn't be) how picking off some of these smaller items can help a company be significantly more profitable through better customer service.

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What? Not Collaboration?

Anybody who has read my posts for a while will know that I have big stretches where I post nothing. Looking back,you can see my blogging rate follows a pattern: it starts solidly, maintains itself well, before building a crescendo (of quantity or quality) and then fizzles out pretty fast to a long period of silence. Since I'm not communicating with the outside world through my blog, nobody will really know why this is. Well, its two word that don't really fit together neatly: "relationships" and "process".

Social networking and everything "Web" has tried to teach us that you can maintain meaningful relationships online, with people you've never met and are never likely to meet. That's fine, and I won't deny that there are names I recognize on screen that I have discussed matters with that I would never have known in a past life. I work from a home office, so I understand completely the importance of online communications. Hey, I even can enjoy chatting to people on the phone if its somebody I genuinely like. But its never quite the same as "face time".

This is why my blogging pattern is erratic. I work hard for clients because I like them, or grow to like them. But its like having a new best friend, it tends to exclude others for a while. Now with a client, the relationship is kinda weird - its a big love-fest with multiple people AND a project, all in a big boardroom. I suppose I'm a geek at heart. I enjoy technology and I enjoy seeing how businesses work. But I have come to realize what I enjoy from it is seeing how people respond to the technology and how they interact with each other to achieve their daily work. I genuinely want to make it better for everybody. That is why I like business process management. What? Not collaboration?

Business process management is great, as it addresses the fact that in business processes you are trying to force people to do what comes naturally to only a few: work together smoothly, efficiently and consistently in a fairly alien set of activities (if you are telling me that most of the work we do in offices is natural evolved behavior I'd probably not believe you, therefore its alien). If you can help people work in a structured way for work needing that structure, the end result can be quite impressive. I've seen customers' employees just glowing with excitement and happiness that so many of the stupid annoyance of their working lives have been removed. This isn't collaboration. Collaboration let's people do something that is natural (work together in unstructured interactions), doing it better when it comes to information sharing. Its great and useful, but its a different animal.

My reason for not blogging and chatting with some of you recently? I've been helping a client deliver three business improvement projects simultaneously. One is a big catalyst for many other business changes going forward. I have a relationship with the people around the project and the project itself. And when a just bit more process improvement is eeked out of it, I'll be very happy and blogging again with great gusto! My new best friend will have a great process. And great processes make everybody happy.

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Processes need more than 2-D maps

Just in case you wondered why business process mapping fails us, here is a very short presentation (well, Prezi) to help me get my point across.
(If it doesn't start automatically after clicking, click More then Autoplay)

Business processes - control with creativity on Prezi

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Business processes and the rear-view mirror

I have a growing appreciation of why certain financial institutions have got themselves into so much trouble. Attempting to manage a business, supervise minute-by-minute trading and review brokers' activities is hard enough, but its made even more challenging by the fact that many firms still attempt to do this by the human study of exception reports. I say 'study', because that's what it looks like: some very talented people picking through printed reports line by line, looking for patterns or anomalies. In some cases this is essential - a necessary step in what is being done is to review the past. But as the recent TV ad from IBM shows, and a range of software companies have hinted at in the past, running your business looking in the rear-view mirror is not only tricky, its downright dangerous.

So what do you do? Well, one approach is to take the printed exception reports and re-make them electronic. Keep them in a format where some clever software can supplement the clever people and look for the obvious patterns, based on predefined business rules, and the less obvious patterns, based on some seriously smart heuristics. But the rear-view mirror is still your issue. You are catching errors after its too late to do much about them - much beyond making a correction, apologizing heavily and reprimanding the employee that messed up. 

The second approach is to revert to the old days of decision making: a person makes the decision, but there is an approval process before any decision is actually executed. Great - its hard to screw up - and harder still to get anything done. For financial services that depend on the trading of smart, bullish individuals, running in near real-time, that just doesn't fly. But as the business rules management guys will tell us, even for less challenging environments than securities trading, automated business rules management is still not widespread enough in business. Why? Because for them to work as part of the whole, they need to be part of the overall business process. Not just tacked on the side where they can be bypassed easily, but fully embedded and completely enforced. And for that you need a system in place for managing the business processes in which the rules are enforced. A system for doing this is not email, its a real system that guides the correct flow of work, its delivery (between human beings, business rules and other systems). It doesn't have to be a multi-hundred thousand dollar BPMS / SOA / software vendor's ticket to paradise. But it does need to exist and start to become part of the workings of the business.

For now, making the rear-view mirror work better, while giving intelligent people more time to lift their heads and look ahead is my goal for clients. I will help them get to the next step when they have time to see the value of doing things differently.

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Old approaches to business process management are failing companies

We all know that companies of all sizes are facing tough economic challenges at the moment. These challenges are coming from one of the toughest directions possible: customers are not spending money, making it more important than ever to convert the few available prospects into profitable customers. Improving business processes is a powerful way for companies to work better, but the old business process management (BPM) approaches companies often rely on just don't fit the current challenges.

Companies invest in business process management from two direction:

• methodology - the way a company can fix its problems
• technology - applications helping people work in a more structured way

The reasons for doing this were all reasonable in an economy with plenty customers with cash in their pockets:

• reduce headcount
• do more work with the same resources
• improve the quality of a product or service

In the current economy, these types of improvement are not enough. Whether a company is a bank, a manufacturer or a law firm, the challenges facing the business is that the economy is making it harder to attract new customers and retain them.

This is where modern business process management solutions kick in. First, they offer a faster startup time with more focused analysis of problems, which means less money is spent on teams of expensive consultants trying to build strategies for things that don't matter. Second, the solutions offered already include a range of business templates, helping companies to build to a tried and trusted plan rather than always reinventing the wheel. Finally, and possibly most importantly, the methodology focuses on iterative improvement, rather than trying to get every little thing right first time. When the tools are designed to adapt to this types of constant change, the company can improve based on experience rather than luck.

With this lightweight approach to business process improvement, the flexibility to change processes based on experience and best-practices allows companies to do something that in the past was really difficult: 

• treat each customer as an individual rather than force fitting them into a standard model of a customer
• allow the processes that serve customers to extend and adapt based on circumstances
• help the business owners introduce new improved processes rapidly and with minimal cost

Business process management can help companies meet the challenges of the current economy. Companies that adopt new methodologies and technologies can become known for great customer service at a good price. In these times when social media is the marketing machine, and word of mouth spreads corporate reputation like wildfire, companies can attract and retain more customers than ever before.

A post from the Improving It blog

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Rescuing struggling business processes from the back office

I have a short article just published on ITBusinessEdge talking about how business processes in offices can be so much harder to rein in and control than manufacturing work with a production line:

So much has been written about efficiency in manufacturing that its is time for the masses of us office-bound companies to get a look in. A production line in a manufacturing company works so well to improve efficiency of building widgets because it constrains the way the half-completed widgets move, who gets them next and what they do with them. In the back offices of companies, things aren't so easy, so it can be hard to see why there is lots of activity with minimal productivity.

Take a read of the rest of the article to find out how I think that simpler online / SaaS solutions may often be better than complex and expensive enterprise software, even for the big enterprises that can afford it. This is just part of my white paper for rapid process improvement: Seven Steps to Escaping Process Chaos.

A post from the Improving It blog

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When documents and processes come together

I'll admit that the coming-together of processes and documents (BPM+ECM) has been a common theme of this blog for the four years that I've been spouting-off here. My background was imaging and workflow, then I got trapped along the way in understanding records management and even more trapped when process improvement became BPM suites, and more about the process than the stuff in it. I can not avoid feeling that I've heard this all before, but still wasn't satisfied.

Yesterday, a forum on ebizQ brought together some of the opinions about the question "Is it inevitable that BPM and ECM will be integrated into one system in the future?". For companies running both of these technologies in house, the answer is probably a no-brainer. ECM and BPM are already integrated, because the customer did it themselves. For vendors, nobody has worked out really if they can make money from it.

I've included some quotes from the forum that I think sum up the range of opinions, though its worth reading through the whole thing if this topic interests you:

Ian Gotts of Nimus: "The two are inextricably linked already. If I want to perform some task such as sign off a PO then I probably need to access the Purchase Policy document which will be part of ECM."

Malcolm Ross of Appian: "There's a definite need to unite the features of these two worlds to create more powerful content and process systems."

Doug Mow of Virtusa: "From the customer, patient, subscriber or end user perspective I want a seamless UI that doesn't distinguish between any class of functions. "

Brian Reale of ProcessMaker: "It is one thing to route a document or a PO, add a signature, and then store it in a DMS. It is another thing to start a process in a rich contextual environment and have that environment intelligently populate with the pertinent information based on attributes like user, place, time, and company policies. "

Peter Evans-Greenwood: What's a document/record anyway? A page in a wiki? An email? SMS? A tweet? Defining the scope of BPM and ECM as processes and documents ignores the ongoing erosion of boundaries between organisations and communications channels, and existing solutions are too intrusive to push into these new channels. 

I'll quote my own response in full:

The short answer is this: in any business that uses BPM in critical applications, BPM is already integrated with ECM. I think it unlikely that we'll see anyone but IBM and maybe EMC really producing a credible E-BP-CM suite. 

Why do I believe this? Well, its important to ask why ECM is so important to businesses... Its not the collaborative-Sharepoint-less, "let's be happy and work together" stuff. Its the fact that in real business, at the end of everything we do in a business process there needs to a record of the transaction, the decisions or whatever that formed the outcome. Of course, that does not need ECM if the data we were work with at every step was fully structured (an online form producing structured database records). But for the real world, documents do exist, and ECM provides a way to handle them. 

As Doug says we must interact with documents, and as the vendors hinted, document management ain't that hard for BPM vendors. The problem is that throughout a process, documents will form part of the final business record. BPM vendors rarely manage to focus on understanding the complexities of electronic document and records management, therefore they rarely do much more than routing documents -- plain old-fashioned 'imaging and workflow'. 

What is really needed from BPM is a final step: registering the records and the decisions of the process in the corporate records management system, keeping the context of everything that was done. Working with documents and process context appears in some of the marketing around case management. Though more often than not people get more excited about how processes can change dynamically, than how they can be recorded permanently. So I expect adaptive case management (ACM) to be another missed opportunity. 

It really is a shame that records management has such a 'stodgy' appearance, since it is such an important part of business processes.

This is one of those tough areas where the integration of technology for vendor gain often eclipses the needs of the end customer. Careful consideration is required on what is needed for any particular business, and navigating the options depends largely on experience.

A post from the Improving It blog

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Cases crystallize out of chaos

Coming via the bp3 blog by Scott Francis, Frank Micheal Kraft talks about Patterns of Knowledge Work. His discussion hits the point that many activities performed that are not 'production line' processes are really based on the activities of a knowledge worker: a person who is knowledgeable about what they do, and builds up structures around their work to keep stuff organized.

This ties into my discussion a week or two back that in my own client work, I've started to see how I can examine the records of business activities, the documents and paper reports, and track back through them. In doing so I build up a view of where the major business processes in an organization live, who does them, and at a high level at least, what the activities performed are. Amazingly, the often overlooked org chart helps me in seeing order in the chaos. It is interesting to me to see that there is a natural order to processes and information in business.

For Kraft, he talks about the three ideas he has come across:

1. 
   

   Managing my own knowledge work. As I wrote my own Adaptive Case Management system for my own knowledge work, I was able to organize my own work. As the number of cases increase – 3000 now including sub-cases – I become aware of patterns.

2. 
   

   Feedback from my first pilot. This was very interesting, because the main focus for my pilot is usability. Usability is strongly interwoven with these patterns of knowledge work.

3. 
   

   The things I always wanted to model, but never was able to. I governed the modeling of thousands of models of structured processes from all areas of business processes. But because the modeling language was only able to model predictable processes, I never was able to model unpredictable processes.

In my view, he has done with these three points what many business people have had to do -- build a mechanism for structuring his own work in a way that allows him to be productive and get value out of work he has done before. For many people, this is a matter of building a filing system, putting together checklists and tasklists, maybe even putting together an Access database recording people or indexing their files. Oh that, and never going on vacation, as nobody else can quickly pick up the structure and work with it.

Kraft has written his own Adaptive Case Management system, probably because he felt he could put some structure around the work he was doing, and that structure was adaptable enough to help others in their own work. With my own consulting and software work I have done a similar thing. And as Kraft says: "As with all knowledge work the result of my effort is not completely predictable. But I am making good progress.". 

I couldn't agree more. And with every new client or process I hit, more structure and flexibility crystallizes into something that benefits the next client down the line.

A post from the Improving It blog

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BPM taking off should not be about software vendor profit

If you have ever followed a Group on LinkedIn, you'll recognize that most of the discussions fail to pick up steam. A few people drop by, lob in their short comment to try and get noticed, then step away again. The discussion Why do you think BPM could not take off like ERP or CRM? apparently caught some attention. Its up at 80 comments, the vast majority well thought out and directed from individual opinions that are not just shameless plugs selling a product. Beyond its size, the discussion is interesting since it highlights the follow points:

• There is little agreement on whether BPM is a management methodology, a class of software, or just a bunch of marketing garbage
• The methodology people and software people can not accept that the other side has a right to exist
• BPM as a software is too complex, expensive, and lacking in appeal to CxOs to ever be as successful as ERP or CRM
• Success seems to be measured by the amount of profit the software vendors make, rather than the positive impact on a business

For most businesses, there is room to organize information, processes and people better. There is a need to keep client files electronically, relying less on paper and making savings on printing, copying,filing and offsite storage. There is a need to be able to simplify and control repeatable business processes, so that they take less time and less brain-power to complete, reducing the cost and number of errors. And there is a need to make it easier to track work that is not necessarily repeatable, but is easy to lose inside email inboxes. In short, with well thought out BPM, businesses can do more work, more accurately, with fewer errors, happier customers at a lower total cost.

This is what my kind of business process management would solve. Either the guy holding the purse strings gets the value of what is offered, or he moves on. No need for constant bickering between vendors that their spin on a product is better. The software and methodology says what it will do, without a vast education of needs. I like that form of business process management.

A post from the Improving It blog

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Another natural order to processes and records

Just a couple of weeks back I talked about how you can work backwards from corporate records to get a clearer view of the high-level business processes being run in an organization. The approach here basically was saying that if you can identify the records of business transactions in an organization (and in any fairly mature organization this should be relatively easy), you can step backwards through the processes that created them, avoiding all the rat-holes and exceptions that muddy the picture. This is great, but what happens when you don't have a clear view of where records are created? Well, this is where I'm going to aim for a quick win and get "two for one". And, yes there is a reason for the incredible animated image.

As you are reading this, bear in mind that I have the benefit of working with a financial services firm as my client of the moment. This tends to make things easier for me, since the regulators have always insisted on a decent structure for record keeping that means I'm not working from a completely blank page when trying to identify records. But still it is true that many firms don't have a corporate file structure that shows a heat-map of where records are produced and what they contain. So I can walk around the building talking to the owners of the business functions, or I can consider an alternative starting point. As much as I love talking to people, many of them have real jobs to do.

This is where the org chart kicks in. Yes, many employees wonder why it is so important for companies to build that 'tree' of people, beyond inflating the managerial ego. In my case, the org chart is an incredible tool to help me get started understanding not only where business functions are performed, but it gives me therefore the starting place to look for filed records and the business processes that created them. Its like the computer generated fractal pictures (the crazy animation) that follows natural effects. You jump to the major focal points, then drill down in a never ending fashion into the details of the business and the records that are produced. If I was really detailed-oriented, this type of work could keep me occupied for years. Even though I'm not, there is a certain natural order to things that yet another holistic view of the organization can provide. Perhaps the organizational studies will not result in a beautiful image, but there should be a nice structure that helps keep things organized.

A post from the Improving It blog

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Fractal image found on Wikipedia at Phoenix(Julia).gif

'I hate working with documents on-screen', and other issues we reinforce

You've heard the phrase "Knowledge is Power". There seems to be a human character trait that says by keeping documents close at hand, preferably within steps of my office chair, I am more powerful. Filing cabinets for individuals, and "working copies" of client files are everywhere in offices. Take that easy access to information away and people fight back. You are removing some of their ability to hoard information, all of which is a duplicate of something available elsewhere, but it exposes a frailty that leaves them uncomfortable. "What if somebody else has the file the one time in a million I actually need it?", or, "What if I'm caught off-guard, a client calls and I don't have their information to hand?". This is just one of the ways employees resist the introduction of enterprise content management (ECM), case management and business process management (BPM) solutions that try to limit the amount of paper moving and filed in the organization.

I have had the 'exciting' opportunity to spend some time working with lawyers over the last couple of years. From helping smooth immigration paperwork to cleaning up company contracts, it doesn't seem to matter who I work with I experience the same thing: paper. When it comes to the workings of a law office, I am frustrated by the apparent waste of paper (and the subsequent charges for photocopying applied to my account). When I think about it though, the issue is obvious with a lawyer because the multiple copies of documents happens typically right in front of you, while you're sitting there in the office. Although not so obvious, regular offices experience the same issue. Most of us I'm sure have seen the pervasive footer on emails, "Do you really need to print this email?". There is no way to know how much paper is wasted on unnecessary printing and copying in offices, because it is not charged per page.

For the 14 years I've been working with electronic imaging technologies, I've always encountered the concern that it is hard to work with text on a screen, but early on companies worked hard to limit the concerns of employees. In the UK at least, as a user of a screen and keyboard, an employer was required to ensure your working area was set up to avoid discomfort and to improve your posture. Companies investing in document imaging put in place minimum specifications for screens, and usability requirements for applications to make it easier and more productive for people to work without paper. These lucky people of the 90's working with electronic documents had it good.

Now when I visit clients, it is not unusual to see LCD monitors in every cube. Screen technology has progressed to a level where great quality should be available on every desk, but we have instilled the concept in the heads of employees that it is hard to work with documents on screen.  Why, beyond an aversion to change, does this persist?

I think that the problem comes not from the screen, but from the documents. Many regular people think of Word documents when reading on screen. Word is an editor, not a document viewer, and it does a terrible job of making documents easy to read. People remember this. Adobe Viewer for PDFs presents nicely prepared documents beautifully. But so often we end up reading marketing brochures prepared in multiple columns for glossy printing, needing to scroll around with every paragraph read, that we learn to hate it. The same with the trend to scan documents to PDF. The viewer does a generally poor job of making scanned documents appear attractive and clean.

My feeling is that companies wanting to become more paperless need to concentrate on the underlying issues of the documents they try and have people use. If your scanned documents look ugly on screen, people won't want to use them. If you force people to use daily reports by scrolling around left, right, up and down, they complain of RSI and general reduced performance. If you archive Word documents for constant reference and record-keeping you're asking for trouble in so many ways. As an aside, I saw a Word document archived in a large government agency that was unreadable, because the pretty font used by individuals was no longer available. This applied to thousands of documents.

Maybe it is time for companies to focus on how they can make the information that gives people the power to make good decisions not only available, but easy to use. This isn't just document scanning. Good application design and recognizing that people want to organize information their way will help people work better. Companies need to focus their investments in document management, business process management, and case management on making users actually want to use the new applications, since this desire to use the application is so important to getting paper off everybody's desk.

A post from the Improving It blog

Pigeon-holes are for the successful

Unfortunately this 'fun' discussion wasn't as a result of something I blogged, but its worth a look. According to Adam Deane:

My view is that Case Management should be implemented by ECM vendors, not BPM vendors.
Case Management revolves around data, documents and data therefore should be dealt by ECM professionals.
ECM requires a different set of skills than BPM.
It would be in the customer’s best interests to have separate systems for BPM and ECM.

I personally believe that it doesn't matter where Case Management sits. Its the business value that this type of solution can bring to businesses that is important. And until my business, or somebody else's is as synonymous with the that specific category of solution as SAP is with ERP, we all need to just accept that the industry is a bunch of pigeon-holes.

Follow along with the comments on Adam Deane's blog. Its getting fun...

A post from the Improving It blog

Avoiding rat-holes by working backwards

I'm working on business process improvement with a client in a way that some people would consider to be 'backwards'. I'm not starting by obsessively picking at a business process being performed and constantly refining it so that it works better. I'm actually looking at all the records of transactions generated by the company, which are filed and stored off-site, and I'm working my way backwards into the business processes that created them. For me at least, this is a great way to approach things.

So many times, in business process improvement, especially when selling or implementing BPM software, we already have been told which business process we are working on. A client contact has already made a business case to fix up a specific part of a business process, as she owns the particular department affected by that piece of the puzzle. As much as BPM'ers love to believe they think holistically with end-to-end business processes, the reality of the situation is that they really are just rubbing ointment on a sore spot to take the pain away in that area. Less pain for their primary stakeholder signifies success for the BPM solution, and everybody is happy - except for the fact that the organization as a whole is suffering.

My current backwards view of an organization is turning out to show a stunning landscape of interrelated business processes and information. At this point I'm not talking about 'enterprise architecture'. Oh no, nothing that technical yet. From looking at all the printed reports, paper forms, photocopied documents, Excel spreadsheet and printed then scanned emails, I'm seeing an amazing interconnectedness of activities that is hard to get at when you look at a process as just a series of tasks to be performed.

Now that I've convinced myself that the organization is like one living organism and Mother Nature has overtaken my client, how does that help me actually make things better? Well, there are two approaches to mapping out the way to take process improvement: I can ignore this new view and select a business process that appeals, starting to fix it up, digging in from the 'request' in my diagram; or I can follow the paper trail backwards, from the final result of all the work that is going on (the record), back through all the high-level activities that produced the result.

What I'm finding is that by working backwards, I'm getting a clearer picture of the best-practice straight-line business processes I'm hoping to nurture than working start-to-finish. By working from the absolute end result of the process, which is the records to be kept that are evidence of a successful transaction, I can track back through all the activities that were performed to get there. For a start this allows me to discard the waste output that is often filed because nobody really knows if they can throw it away. More importantly, working backwards tends to hide the rat-holes, exceptions and distractions that typically appear from working the other direction (the benefit of hindsight?), allowing me to see what I really need: what a successful, streamlined business process is supposed to look like within the context of the whole organization. I can then use that information to select the most valuable business processes to focus on fixing, while already having a great view of how they should work.

I like this approach to starting a business process improvement project, although I know I'm going to have to avoid confusing my client with what appears to them to be an ass-backwards view of the world.

A post from the Improving It blog

The cloud is not so fuzzy after all

In technology many of us are comfortable voicing opinions about what is good, and what is not, without any practical experience. I'm as guilty as anybody. After all, you just can't touch and play with everything that exists (some of its just way beyond the prod and play level of trial and error attempted my mere mortals). But the cloud is a different matter. It is a whole mass of technology and unconventional (for software) business models that us mere mortals can touch and hopefully understand. So why was I still talking about it without truly experiencing it?

Last week, I kicked off a new program for developers who wanted a nice platform on which to build those killer business applications that they had been struggling with for so long. The Consected API was born -- or at least conceived, since its still a way from being much more than a glint in a developer's eye. So what better opportunity did I have than to put together a new environment for my little developer community than in the cloud? None really, so I bit the bullet, pulled out my credit card, and signed up for the Rackspace Cloud. Yes, the kings of server hosting, with the tag line for their level of customer service service being 'Fanatical Support' have a cloud offering. I'm pretty sure they bought the technology from somewhere, but if the hardware is supported according to Rackspace doctrine, then I'm sure I'll be in good hands.

So why Rackspace and not Amazon with its elastic compute cloud (EC2)? Because the name, the presentation of the service and some of the feedback I've been reading suggests that Amazon EC2 is way more techy than I want to be prodding and playing with while I have better things to be focusing on. Hell, it sounds like your servers can disappear at a moment's notice, reappearing elsewhere in the cloud without data or anything intact (OK, so I oversimplify), so you have to build your solution around the complexity of an underlying server that is so elastic it just rebounds to nothing, but can stretch to enormous if your processing demands. Nope, for me Rackspace offered a cloud solution I could get my head around. Its just like renting a space for a virtual machine, but the business model doesn't tie you to that space. You can shrink it to nothing, or grow it to, well frankly larger than I'm going to need.

The nicest thing for me is that I don't need to rebuild my applications to benefit from the flexibility of the cloud. I don't need specialized developer toolkits. I don't need the cloud API. There is a real operating system (of my choice) under the covers. I get full permissions to install the software I need on my virtual machine while its running, then generate an image of it online, redeploying if I screw something up, or making copies if I need new instances of that server. All from a simple web page in my private control panel. I own the spot I'm running my image on, until I choose to shrink it or grow it. Then the machine will be stored as a snapshot and moved to its new (larger or smaller) home in the cloud. No data lost. No difficult architectures. Just like clicking a button and having a virtual tech come and install more CPU, memory and hard-disk in your server. In under 10 minutes.

So, what is the Rackspace cloud? In my opinion its a different way of charging for a nice, large, well put together virtual machine environment, backed up with Rackspace's 'Fanatical Support'. I like it when some technology is as easy as you hoped it would be. In this case, it really seems to be.

A post from the Improving It blog