Webinar Process Transformation Depends On A Strong Business-IT Partnership

1. WebinarProcess Transformation Depends On A Strong Business-IT Partnership Connie Moore, Vice President, Principal Analyst December 19, 2012. Call in at 12:55 p.m. Eastern time

2. Five accelerators will drive process transformation

3. Transformed processes are cross-functional and customer driven Source: April 16, 2012, “The Process-Driven Business Of 2020” Forrester report

4. Process transformation requires a strong partnership C-suite Functional execs LOB execs CMO COO Chief process officer Business architect VP of process excellence VP of process transformation CIO Chief architect CTO

5. Signs of a weak partnership No business process transformation champion in senior exec ranks Business strategy is disconnected from IT strategy. Confusion about transformation versus continuous improvement Focus on functional instead of end-to-end process transformation No collaboration between CMO and CIO Inside-out thinking instead of outside-in

6. Signs of a weak partnership (cont.) Technology phobic Too much emphasis on methodologies instead of business solutions Ineffectual because of small size and/or lack of collaboration outside the team Process jargon gets in the way of transformation discussions.

7. Signs of a weak partnership (cont.) IT strategy is not closely coordinated with business strategy. IT modernization is not linked to transformation. Views BPM software as a silver bullet No process methodology expertise Limited business analyst skills

8. Without partnership, IT modernization misses the boat Business optimization is usually not on IT’s radar; BPR is largely done by business operations. IT has not fully embraced BPM suites; will change significantly over the next 24 months. As orgs pursue transformation, tension may surface between business architects (exec level) in the business and aspiring business architects in EA. = IT responsibilities but not yet fully embraced or understood = Responsibility currently outside most IT orgs’ domain or shared with the business

9. Partnership roles and responsibilities Sets the vision, need, and urgency for transformation Identifies 5 to 7 core end-to-end processes and supporting processes Solicits expertise from IT and process teams Determines the business outcomes and metrics for each process Drives change management Establishes governance

10. Partnership roles and responsibilities (cont.) Oversees business architecture Provides process expertise Provides ongoing continuous improvement Guides the organization on which methodologies to use and when Embeds process expertise within the business and IT

11. Partnership roles and responsibilities (cont.) Drives technology breakthroughs for transformation Renews IT in concert with business transformation strategy Adopts agile, SCRUM, or other transformative approaches Embeds technology expertise within business and process teams Provides project and program management

12. The CIO’s role will shift from cost containment to business outcomes IT will become an intrinsic part of the business. The CIO’s primary concern should be driving business and customer value. The CIO must work hard to demonstrate and communicate the business value of IT. IT will not — and does not need to — control and own all things technology.

13. The three archetypes of business process transformation partnerships Pop soloist Classical trio Jazz orchestra Maturity

14. Business goals change with process maturity levels “What are the primary goals of your business improvement program?” Maturity level 1 to 2 (N = 77) Maturity level 2 to 3 (N = 136) Waste elimination 35% 43% Waste elimination Cost reduction 60% 74% Cost reduction Customer experience improvement 68% Customer experience improvement 39% Value innovation 36% 42% Value innovation Maturity level 3 to 4 (N = 88) Maturity level 4 to 5 (N = 24) 46% 32% Waste elimination Waste elimination 46% 45% Cost reduction Cost reduction 50% Customer experience improvement Customer experience improvement 59% 58% 60% Value innovation Value innovation Base: 325 business process professionals; Source: Q2 2011 Global Forrester/IQPC Business Process Maturity Online Survey

15. Hallmarks of pop soloist organizations Pop soloist Process teams and IT serve business functions independently. IT and business functions typically lack process methodologies. Process teams usually focus on continuous improvement.

16. Hallmarks of classical trio organizations Classical trio IT and process teams work together but in a constrained way. Collaboration is limited to joint meetings, joint interaction on governance, and limited cross-training.

17. Hallmarks of jazz orchestra organizations Jazz orchestra Business functions and merged process team/IT partner on cross-functional processes, governance, CoEs, transformation road map, methodologies, and BPMS. CMO helps merged process team/IT align processes with customer experience.

18. Pop soloist: A retailer makes early moves toward process transformation The CIO has a business background and is raising the urgency of single-user experience across channels and platforms. IT created a program office with BPM practitioners, business analysts, a project lead, and project management. Hired Six Sigma expert Brought in BPMS Engineers in logistics, warehousing, and shipping understand process flows and process improvement. Our analysis: It’s not possible to drive process transformation without active senior exec sponsorship and a true partner on the business side.

19. Pop soloist: A pharma’s process team is close to the business but not IT Process team headed by VP of operations excellence with dotted line to business functions Lean and Six Sigma for the business functions (green and black belts) Group of 12 provides process controls, program project management Distributed teams of ~20 people A process excellence leader is dedicated to each business function. IT considered a business function, just like HR and marketing. Process team does not partner with IT to serve the business. Minimal cross-training: Master black belt left IT to join the process team and recently returned to IT, planting early seeds for more cross-training. Recently shifted from continuous improvement to business process transformation, led by the CEO and COO

20. Classical trio: A publishing outsourcer links IT and marketing but not process CIO took the job two years ago during transformation, including markets served, business culture, and business processes. “Our business model has fundamentally changed and will forever continue to change. We are going to have to live with it.” Use agile, embrace BPM. Under new CIO, and with CMO’s inputs, IT is more customer-driven — developed a technology road map centered on customers. Embraced incremental process changes rather than big bang Process team reporting to Sr. VP of operations does Kaizen and lean; IT is not involved in these processes. CIO does not want to bring business process methodologies into IT.

21. Classical trio: Financial services goals shift from process improvement to strategic transformation by 2018 A year ago, pursuing process improvement path led by the process team and IT Six Sigma in place; BPM under consideration; focus on inefficiencies Senior business execs intervened, morphing the initiative from process improvement and re-engineering to strategic transformation centered on new business models. The shift from process re-engineering was major. “We have morphed our organization to fit the needs of the business. This is definitely changing how we serve customers.” Process team folded into a new business group with focus on transformation of business processes with the evolving business strategy. Staffed by businesspeople with skills in: 1) process optimization; 2) business architecture; and 3) process modeling

22. Jazz orchestra: A financial services firm orchestrates across business, IT, and process team Customer service is the business driver for continuous improvement and business transformation. Process team headed by a senior VP focuses on BPM and training technology architecture group headed by the chief architect. Both groups have COEs. Both execs report through a level into the head of operations and technology. IT reorganization included: Staff with business and process knowledge moved into the process COE. Staff with deep IT skills moved into the technical COE. Remaining developers moved into the business functions. Many process owners know Six Sigma and Lean; have a BPMS, business rules, BI, and an ESB; and view BPM as the new paradigm for app dev.

23. This manufacturer created four strategic processes: corporate, R&D, space and logistics, and manufacturing Source: September 11, 2012, “Process-Driven Transformation Will Depend On Stronger Business-IT Partnerships” Forrester report

24. Recommendations Get active engagement from the business function execs and C-suite execs. Find ways to bring marketing into process transformation efforts. Go beyond process mantras about outside-in. Don’t lead business process initiatives from a service organization like IT or process teams. Reach out to get all three groups — business functions, IT, and process teams.

25. Recommendations (cont.) Infuse process transformation into IT modernization programs. Recommend that your process teams consider BPM suites. Get clarity and understanding about how to use process methodologies. Force process transformation teams to get out of their silos. Don’t forget the importance of change management.

26. Connie Moore +1 540.882.4040 cmoore@forrester.com http://community.forrester.com/community/cio http://blogs.forrester.com/connie_moore Twitter: @cmooreforrester Engage with Connie and other Forrester analysts