CEMM™

The Business Process Management Methodology for creating Enterprise-Wide Transformational Change

The Challenge

There are more pressures on business today than ever before. Cost-based competition presses margins down, which in-turn increases the size of the customer base required in sustaining profit levels.

Businesses are generally bigger than ever before, have become more complicated, have more demands placed upon them (by customers, partners, regulatory agencies, and themselves) and are being pressed to incorporate change at what seems to be an ever-accelerating rate.

Existing strategies, tools and techniques have proven woefully inadequate in addressing these challenges with key issues identified as…

Agility - the ability to rapidly adapt the organization - its methods, work, goods, channels, value proposition, skills and focus - to changes of unknown character, cause or condition…

and…

Efficiency - the ability to accomplish goals with a minimum expenditure of time and effort where goals include; the products and services offered, the master set of interactions with the customer, the indirect work of the organization, the interactions with partners, and the meeting of regulatory and compliance requirements.

The areas of investment that are the current focus of most organizations in respect to this challenge are BPM and SOA however, closer scrutiny of these approaches finds that they hold little long-term benefit in the areas of Agility and Efficiency – that they are, in reality, another tactical move that perpetuates the problem rather than a long-term solution to the challenge of market change.

Business Process Management

Business Process Management (BPM) is now the favored “bucket” organizations are looking to as their means to address the challenge stated above. There is a belief that BPM offers the answer to the pressure-cooker we now find ourselves in. More than anything else, BPM (due to the extensive interest and coverage of the subject) is perceived as being an actionable answer to this dilemma where before BPM there didn’t seem to be any worthwhile answer at all.

However, BPM has blown-out into a C3 spider web of Conflicting, Competing and Confusing directions. The BPM story has become much like the story of the six blind wise men that went to see an elephant. Each approached the elephant from a different point of view, and each captured a small fraction of the elephant totality available to them in their context. However, the resulting conclusions, though contextually accurate (they were each partly right), were all dramatically different and for the totality (the elephant) they were all wrong. This is what has happened with Business Process Management.

From one place you can hear the story of BPM as a management practice, from another you can hear the story as a modeling science, another offers BPM up as a new business technology, while another claims it’s an evolution of IT componentization and service creation.

Some might tell you it’s a new way of thinking about the work you do in your business while others explain how processes are Lego blocks you build, buy or rent to plug-in best practice processing into your business. The vast majority will piggyback on the call of Nike and tell you regardless of what you do or why, Just Do It (or Just Do IT if they are a software vendor). This is the essence of the hot blast of wind we are all besieged by on a daily basis in respect to Business Process Management.

Devastating Effects Loom in Most BPM Practices

Unfortunately, these well-meaning (and not so well-meaning) BPM proponents are taking us somewhere we do not want to go. They are taking us into a place where the common elements of BPM being preached produce short-term and long-term effects that are neither desirable nor prudent in respect to business success. The effects are as follows:

1 – You can’t buy shrink-wrapped discipline

We are being guided to do exactly what we already do better – but under a more manageable and effective approach using BPM technology. Taking processes that are in complete shambles and placing them under computer-controlled workflow or structured analysis and review often realizes huge improvements due to the enforced discipline that has been applied to these processes. This is where the technology big hits have primarily risen from.

The problem here is that the lack of discipline and focus is the real problem – the root cause. Slapping software into place to achieve a degree of discipline is nothing but a band-aid. It fixes an effect, not a cause – and it is not scalable nor does it create agility and efficiency as organizational characteristics. Empirical results from technology-based BPM propagated out in organizations shows that most BPM investment fails to produce any net benefit to the organization the further we get from initial quick wins.

So why is this still growing in popularity so strongly? It’s simple. The structured activities encapsulated within these BPM directions make people feel like they are being successful. For those tasked with creating processes (business people and development people) the result is a quantifiable work of creation. Look at what we did, it’s neat, clean, well-structured, provides new “command and control” capabilities and there is a whole new bevy of management consoles and datasets for mining information.

Regardless of whether or not (and the answer is primarily not) this creates organizational value - against the established measures of success inherent in the thinking (behavior/mental) patterns we have developed over the last several decades – we are conditioned to view the result as successful. This conditioning also directs us away from challenging whether success really has occurred or not, leaving activities as “validated” with supporting justification and measures (such as KPIs) that have no direct correlation to actual business success.

Because we are using the exact same management measures we used that got us here in the first place the results are predictable. Against KPIs we look great but the bottom-line of the business shows little change and no sustained improvement over time. The connections are not explicit.

2 – No Benefit to the Complexity Issue

Though not yet fully recognized, one of the big issues that organizations face is that of complexity. Complexity is actually a known issue though described with a different term that unfortunately moves us away from the real issues complexity imposes upon us. The complexity term we are familiar with is “legacy stagnation” though this is actually one effect of complexity rather than complexity itself.

For many organizations, the complex array of technology AND business structure that forms the basis by which they do work is the limiting factor in their ability to adapt to market changes and to action market opportunities. This is where the limits exist on both agility and efficiency.

The belief is that by using BPM and related technologies, organizations can structure this complexity in new ways that radically improve the ability of the organization to change rapidly in the face of market pressures and to capitalize on business opportunities. This is also witnessed by the fact that leading authorities in the analytical and consulting domains are now proposing that organizations must super-impose complex methods and structures on top of existing complexity in order to successfully manage that existing complexity. This guidance flirts dangerously close to being malfeasance as it not only promotes activities that will cause financial damage to organizations but it has not been subjected to reasonable diligence and validation in order to prove that there is indeed merit behind such an approach. Because this approach does not address the fundamental issues placing pressure on organizations – in fact, it adds new pressures – the practice cannot produce business success and organizations are sharply warned to avoid these types of untested (misguided?) ideas.

The limiting factor for agility (the ability to change how the organization does work, what work the organizations does, and what goods the organization offers to its customers) is the degree of complexity. Reorganizing complexity cannot achieve agility. Instead, reorganization creates initial gains against specific known issues (this is part of the initial “Greenfield Effect” mentioned earlier). As the reorganization moves forward, it creates nothing more than a newly organized complexity that reinstitutes the same barriers to change when the world moves on to a new place. This is the Achilles Heel of BPM and SOA technologies, just as in all of the preceding “new technologies”. They do not provide the tools and techniques required to support and promote the reduction of complexity. The issue of complexity is left to people using said technologies to apply rigor and discipline on top of the technology (governance) to address the complexity issue. Even with this rigor and discipline these technologies are more apt to create (or perpetuate) an environment that is far too complex for change to occur in any reasonable manner.

Most organizations embarking on this path, the great BPM and SOA journey, will find themselves in exactly the same legacy stagnation and complexity paralysis they are in today when the nature of business, markets, and customers changes to something not encapsulated in current day thinking. This is not the place we want to be.

3 – Limited Reduction in Points of Failure (POF) and Causes of Work (COW)

Most variations of BPM fail to address the critical process characteristics of “Points of Failure” and “Causes of Work”. These are the source of Customer Dissatisfaction and non-value add work that occurs on a daily basis and may constitute in excess of 70% of the work people do.

Yet it’s obvious that this aspect of BPM fails to make it into the vast majority of BPM directions espoused by pundits, analysts and vendors. All we need to do is look at the number of interactions we, as customers, have that are fraught with redundancy, hand-offs, extra steps, ridiculous business rules and wanton failure to provide what we (the customer) would deem as success to know this is true.

This issue eclipses all other aspects of BPM. Though empirical evidence has not yet reached the stage where the hypothesis can be tested sufficiently to validate the relationship as a bona fide theory, early evidence suggests that 70% to 90% of the work that people in an organization do is directly or indirectly a result of these Points of Failure and Causes of Work.

Think about that for a minute. How much of your day is spent in dealing with exceptions, failed hand-offs, crises, follow-ups, redundant activities, incorrect data, validation, misunderstandings, escalations, checks, balances, explanations, approvals, waiting, requesting, responding, business requirements attached to activities (not the activities themselves), etc? Now consider how much of your day is spent on the actual activity of your role in the organization? Based on the current hypothesis, you spend 70% to 90% of your time on the former and only 10% to 30% on the latter!

BPM does little to address this problem and where it does, the primary goal is to minimize the obvious failure points of current processes by over-engineering them with additional “command and control” structures. In most cases, even where these approaches reduce the actual failures for at least a period of time (until something changes) the new work created (though it often falls to different people – i.e. management and IT) is often equal to – or even greater than – the work that has been eliminated.

But if that is the case, then why are there great case studies where organizations reduced the amount of work in a process by hundreds of thousands of dollars or even millions of dollars?

Again, the Greenfield Effect does have an impact on those glaring places where organizations are really in a mess. Using BPM to draw attention (and action) to these areas can create benefit, but there is a significant concern that real benefits are, at best, only a fraction of claimed benefits. How benefits are calculated and measured remains a dubious practice while the ability to “paint a glowing picture” from same is an art people are highly skilled at because we (traditional business practices) have trained people to do just that.

This issue is for all practical purposes completely missed in most BPM directions. It simply isn’t on the radar screen in the methods and guidance given and it isn’t part of the activities of people engaged in BPM. Yet this activity – more than any other – can create significant benefits quickly that also improve the overall agility and efficiency of the entire organization.

4 – Limited Improvement in Customer Success

In no place does this come crashing to our attention more than with the subject of Customer Success. A lot of people do not like the fact that customers’ know what they want (generically), and what they (we) want is for our lives to be simpler, easier and more successful. This means that BPM, in whatever form it takes, must make the customer’s life simpler, easier and more successful or the BPM investment has produced no real value to the organization.

That is a big leap for many. But why? Why is it such a big leap? Why isn’t it part of our fundamental understanding of business, business success, and the driving force behind every action and decision we take or make?

It’s because we get so hung-up on our “inside-out” perspective that most of us completely lose track of why we are doing the things that we do. A critical aspect of BPM is the challenging of actions and decisions against the backdrop of customer success. Does what we are doing have direct alignment with making our customers’ lives simpler, easier and more successful? Well, does it?

Behind the 21st Century Value Chain are concepts so simple and intuitively correct that we often don’t even bother to apply them to our work. The business success domain is set by the number of customers we have and the length of the lifecycle we have with them (get customers, retain customers). Margin is a secondary issue that capitalizes on the number of customers we have and the length of the customer lifecycle - but does not drive either. The customer value proposition determines the scope of our customer market and the number of competitors we go head-to-head with. The higher the value proposition to the customer, the larger the market scope and the lower the number of competitors. It’s obvious, right?

Yet even when we state these facts that we all know are correct, the step forward to include these truths into our BPM activities remains virtually unsupported in the products, training and consulting being offered to us. Everything focuses inside the organization and that precludes the inclusion of the customer in BPM activities except as an object to be tossed about in our abstract architectural constructs.

So the many BPM directions fail to include the customer as the focus of everything we do, specifically with the notion of Successful Customer Outcomes. Even with BPM we are still making the same mistakes with customers, which is exactly the thing that got us here in the first place!

Can’t you easily validate this from your own experience as a customer? Think about it. How many times do the businesses you engage with screw things up? How often do they require you to understand details of their processes? How often do they fail to deliver on the promise presented? And how often do they fail to make your life simpler, easier and more successful? How often do they apply business rules to your interaction with them that make no sense to you – their customer? How many hoops do you have to jump through, how many times must you repeat the same information, how many times are you transferred to someone else, how many times is your called dropped, your email unanswered, the information provided to you contradictory or incorrect…

… and how many times are you told; “its the system”?

If you’re like the rest of us, you will find that most of the organizations you engage with are infested with these issues – and the infection is spreading. One thing is for certain; the BPM activities generally being followed aren’t helping solve this problem. From the customer view, businesses of every size and in every market are completely losing it and most popular BPM practices have done nothing to stop the landslide of customer dissatisfaction.

5 – Limited Competitive Differentiation

There is a lot of “stuff” out there regarding how BPM (and SOA) will create real competitive differentiation for businesses but there are no reasonable examples that actually validate this benefit of technology-based BPM and service orientation.

There are examples of competitive differentiation in respect to the management practice of BPM (the thing that started this whole market in the first place) but few that withstand scrutiny for the current rave of techno-BPM from all of the usual suspects (along with lots of new kids on the block). Why isn’t there? Because it isn’t supported by the methods, techniques and approaches within the software product world, within the products these companies are creating and selling.

Just like there is no pot of gold at the end of the rainbow (there is no “end” to the rainbow that is a physical place, you know) there is nowhere to go for this competitive differentiation with current technology approaches.

Why is this the case? It’s simple. Competitive differentiation primarily derives from 1) a value proposition to the customer that is greater than that of competitors and 2) making customers’ lives simpler, easier and more successful on every customer-business interaction. Sustained competitive differentiation comes from serially raising the value proposition to the customer while making customers’ lives simpler, easier and more successful.

Now the only way this can be done is by simplifying the complexity of the organization down into the form that is totally aligned against delivering the “goods” to the customer. This is an area where most business people really get hung up because when you’re sitting inside complexity it is very difficult to ask those critical challenging questions that are the basis for real transformation. Empirical evidence gives us clues to the nature of how transformation occurs with the realization that it must follow a repetitive cycle to actually drive complexity down to the far more simplistic case it should be.

Coupling the strategic orientation of the organization with Successful Customer Outcomes backed by removal of Points of Failure and Causes of Work forces a reduction in that complexity. This approach takes organizations to a place where change becomes opportunity and radical change is constantly being tested for the potential to reset market expectations (what customers expect from the market).

Meanwhile, bringing processes under command and control structures aligns us extremely well against the current context – much as packaged applications have in the past. This is the faux pas of current technology trends. We are taking process out of packaged applications and putting them into something that is easier for us to change yet the basic process paradigm remains the same. We have not changed how we understand, design and optimize processes and that is where the opportunity for value actually exists. Just as with packaged applications, the more configuration and development we put into these technologies the more difficult it becomes to ever change them. This, again, denotes the fact that in the majority of approaches to BPM we are being guided right back into the same complexity mess with which we started.

6 – No Alignment with Value Creation (business and customer)

It is interesting to observe the many ways in which organizations attempt to monitor and assess organizational health. From KPIs to Balanced Scorecards, ABC Costing, Digital Dashboards, BI, BAM, data mining, ad nauseam a tremendous amount of time and effort is spent attempting to ascertain the current health of many an organization.

So then why is it so easy for the casual observer to instinctively know if a company is successful or not? We can spend 15 minutes taking a quick glance at the organization’s financials, the number and types of comments and complaints about the organization on the net and a couple of phone calls to get snapshot impressions from people we know are customers and create an organizational heath assessment that is likely to be far more accurate than that created through intense work (and cost).

What is missing is, once again, incredibly simple yet rarely applied. Focusing on the customer (value proposition, meeting expectations, making their lives simpler, easier, more successful) will create business value.

This paradox – that business success is what the business wants but to get it the business must focus on the success of the customer, not the business – really fouls up most folks. It feels like we are taking control of our destiny out of our own hands and placing it in the hands of the customer. But isn’t that where it already is? Aren’t we fooling ourselves when we refuse to acknowledge this and focus instead on business as our goal?

It is very disconcerting for many business people to accept the fact that business success is an effect, not a cause – that it can only be managed indirectly through goals oriented on the customer. It’s a byproduct that comes from achieving goals that are by the customer, for the customer and delivered to the customer.

Most existing BPM directions miss this altogether as do the supporting technologies of BPM, SOA, etc. Now certainly most of these technologies can be used in a way that supports this value creation relationship between the customer and the business but the products do not include within their design specific support for this relationship.

CEMM™ - The Methodology for Advanced Business Process Management

Considering the many issues that abound within current guidance and technology there is obviously a need for something organizations can use to actually achieve true long-term agility and efficiency. The CEM Methodology has evolved as a means to do just this, and it contains within it a structured set of actions that directly address the identification and elimination of Points of Failure and Causes of Work. When adopted as an ongoing practice this creates a continual evolution towards the ideal case for agility and efficiency.

The methodology is a simple eight (8) step process that directly aligns processes against strategic objectives, identification and reduction of the number of Points of Failure in processes, improvement in the customer’s experience and elimination of existing Causes of Work.

The eight steps of the CEM Methodology are:

1) Identify/define the outcome of the process – the SCO.
2) Model the process Current State
3) Identify Moments of Truth
4) Identify Break Points
5) Identify Business Rules
6) Populate the Impact-Severity Matrix
7) Define the Process Rationalization Action Plan
8) Deliver/Execute Process Improvements

CEMM is surprisingly a radical departure from the norm in the approach to practicing BPM. With CEMM, the fundamental tenets of BPM have been subjected to extensive challenge that has not occurred elsewhere in attempting to determine what we really should be doing with BPM – or if BPM is really the right thing to do in the first place.

Interestingly enough, this challenge process presented its own unique challenges on a scale that we hardly would have suspected prior to engaging in the activity. During this process we found that much of the understanding and belief we had previously taken for granted (i.e. incorporated into our “world view” as factual) presented significant barriers for us when we came to challenge these views.

Though some characteristics of the “norm” were quite easy to challenge, others assaulted our ingrained sensibilities in such a way as to make the process lengthy and even painful. The process was fraught with numerous discussions when reviewing collected data that became loud, heated and even required the use of “tabling” so that we could each grapple with these issues in our on individual way to reach a point where the challenges could be addressed without barriers in place. Perhaps this is similar to the distress created when the “flat versus round” world discussion arose. Certainly in many respects the process felt that way for us.

Yet it was only through this process that the fundamental truths behind CEMM were uncovered. Contrary to our ingrained beliefs we found that there is a formal methodology for BPM that will produce the desired results of improvement in organizational agility and efficiency.

We discovered that the methodology is far simpler than previously believed and that it can be practiced with only limited understanding and still produce significant results as a generic BPM method. We found, much to our surprise, that many of the accoutrements normally associated with BPM are not required, do not need to be understood (or managed) and that in most cases they actually get in the way of reaping the fruits of our labors.

We found (through empirical results via direct observation) that there are predictable and repeatable modes and ranges for most of the objects and their properties that stem from the way we (people) perceive and organize our understanding of work expressed as processes – and that these modes and ranges are consistent regardless of industry, geography, organization size, process, the people creating the process models, or any other factor.

We have accumulated sufficient supporting test data to draw certain conclusions about the nature of processes that qualify as theories. Several other conclusions are at the stage of being partially-validated hypotheses while several more hypotheses exist that have yet to undergo any formal testing.

The importance of the theory behind CEMM is that the methodology is based on scientific method with validation. Though in looking back it seems obvious that this is the approach that would naturally be applied to something as important as Business Process Management we find that except in a handful of leading academic institutions few of the principles of Business Process Management have actually been subjected to testing for validation - and that even in these cases, testing is primarily limited to “results quantification” of general BPM practice for measures available in organizations willing to support academic research. Within the commercial sector the story is far grimmer as the primary means of “validation” comes from conducting surveys.

Conclusions

Most of the current methods, practices and technologies that support Business Process Management do not provide a reasonable mechanism to produce long-term benefits in organizational agility and performance improvement. Most existing BPM methods and practices are not based on scientific principles and have not been scientifically tested.

Most technologies do not directly support methods or techniques that directly assist organizations in achieving long-term agility and performance improvement. This component of BPM in the use of technology remains the forte and responsibility of those configuring, applying and developing the technologies.

To create long-term agility and performance improvement, the BPM method used must include direct mechanisms that reduce complexity, reduce the number of Points of Failure, and reduce the Causes of Work.

To be successful as an organizational practice, the BPM method must be simple and reusable as an iterative practice. The practice must also have direct measures that are either ends unto themselves or enable calculations that are not subject to interpretive error.

The CEM Methodology meets these requirements at the foundational level while further testing is still required to validate additional elements of the expanded method.

A BPM method, like CEMM, that actively engages people in the organization at all levels in reducing complexity, reducing process Points of Failure, eliminating the Causes of Work and directly aligning the organization with strategic objectives will produce long-term agility and performance improvements that will enable organizations to turn future change forces (markets, competition, technological-advances, etc.) into opportunities instead of threats – regardless of the nature of that change.

A BPM method like CEMM, that can be used with limited understanding yet still create significant results in agility and performance improvement and that can be expanded to further benefit the organization as understanding expands, is the critical factor in the adoption curve (in converse, the more complicated the method the lower the adoption curve) of the method.

Technologies used to support the activities of the organization must evolve over time to include support for the objects and properties within CEMM in order for organizations to push this information into the CEMM object model while the CEMM object model pushes the goals and requirements for same down into these technologies.

The BPM method (like CEMM) that can effect the transformational change possible in reaching towards an ideal state of agility and performance efficiency must be a simple and direct model where no new complexity is imposed on the organization.

Closing Summation

In closing, it is our observation that organizations investing in education, activities and software in respect to Business Process Management and Service-Orientation will fail to achieve long-term value from these investments under most of the current approaches available. We are agreed that in many cases, short-term benefits will be realized by many organizations but certainly not all organizations.

Through our research, observation and testing we have engineered a method that can be used by any organization of any size and in any industry that will help the organization to dramatically reduce the Points of Failure in their processes, eliminate Causes of Work, reduce complexity and thereby improve agility and performance.

It is precisely this type of method, one that acts as a weeding mechanism to remove non-value add process characteristics under a scientific method, that is needed for organizations to regain control over the forward direction of the organization. By necessity, this method must be simple, capable of allowing organizations to “start where they are” and to grow with the organization through iterative application.

This issue is one of critical importance. Certainly it is reasonable to say that the vast majority of commercial organizations sincerely desire to increase the revenue and profit of the business. It is also reasonable to say that the vast majority of public service organizations desire to improve their service levels and capabilities they provide to their constituencies.

The only way this can occur is through the reduction of complexity and process Points of failure, by elimination of Causes of Work.

All that is needed to validate the need of this type of approach is our own observations of the interactions we have as customers when we touch businesses in the activities of our lives. When we observe the endemic occurrence of failure, excessive consumption of time, frustration, and general dissatisfaction experienced in our own lives the message is clear – something has to change.

Are we willing to think about the work we do in a different way? Are we willing to challenge our existing perceptions and assumptions? Are we willing to admit that what we are doing now isn’t working, that it is what got us here in the first place?

If we accept the current hypothesis that 70% to 90% of the work we do stems from our current understanding of process then how much more do we need to know, to know that we need to change?

Long-term agility and performance is achievable. It is directly measurable and it is directly manageable. It doesn’t take a rocket scientist to do it (even if it’s a rocket company). It’s actually far simpler than previously believed. They only question left to answer now is:

If we don’t do it, who will?

(Editor’s note: Because of the length of this article, it is available in pdf format in our new “Grand Buffet” resource page - http://bennugroup.net/grand-buffet/. Resources on the buffet are available for free to all registered members)