BPM Without Busting the Budget Business process management requires BPM tools, right? Not always. In some cases, there are other process management tools that can do the job for less. Managing a global transportation network featuring shipments by truck, plane and ship is difficult enough. But managing the sea of data that surrounds that network can be even tougher, and that was becoming a challenge for YRC Worldwide.
Many shipments the $9.6 billion company moved were accompanied with corresponding paper documents, including purchase orders, bills of lading, tracking stickers, proof of delivery and, ultimately, an invoice. What's more, much of that paperwork was exactly that—paper, says Michael Rapken, YRC's CIO and executive vice president. (For more on YRC, see "Investing for the Long Haul.") "The [order-entry] process was manually intensive. Customers could make mistakes on forms. So could our order-entry people," he says. Mistakes were one issue, productivity was another. It was simply taking too long to complete each transaction.
YRC didn't look at the problem in isolation. Rapken and his team realized that the order-entry issue was an opportunity to rationalize key parts of YRC's business process and IT structure, parts of which run on mainframes. But the company was not about to rip up and replace its existing systems. Instead, it undertook a carefully modulated deployment of business process management (BPM) and document management software. The result: "A huge success. We saw an average increase in productivity of 50 percent for order-entry people," says Rapken. And the bill was not enormous; it was approximately $500,000 for the heart of the project.
Business process management can be a very scary phrase. It conjures up visions of a years-long project and multimillion-dollar consulting bills. But it doesn't have to be that way. Companies like YRC and others are discovering that you don't always need a traditional BPM tool when it comes to solving a specific business problem. While some situations absolutely require them, companies are finding that putting other process management tools to work can yield significant ROI without busting the budget.
First, Define Your Project
If there were a top 10 list of confusing IT buzzwords, BPM would be right up there. It's like the old story of the blindfolded men touching an elephant and trying to figure out what it is, says Forrester Research senior analyst Craig Le Clair. "Some BPM vendors feel like integration tools, others feel like rich human tools for participating in processes and others feel a lot like document management systems or packaged business apps," he says.
Before getting serious about BPM, suggests Le Clair, ask yourself and others in the organization (not just IT): Do your processes involve mainly people, documents and decisions? Or is most of the action behind the scenes and system to system? The answers can help you decide whether you need a classic BPM solution.
Document-intensive processes, such as order entry, billing or tracking, can create major headaches when not integrated with the overall flow of a company's business process. Yet the potential to solve these problems through the use of business process management software—or tools that are closely related—is often overlooked, says Le Clair. In some cases, a solution that looks a lot like enterprise content management will do the trick, while full-bore BPM would be overkill.
Case in point: Under Armour, a $675 million seller of performance-oriented apparel and footwear for athletes. Like many clothing manufacturers, the Baltimore company has sharp spikes in order and supply chain data as it gears up for seasonal product shifts or promotional pushes, says Steve Walker, UA's manager of supply chain systems.
Much of UA's seasonal product information is developed in an external product development system, then manually created in the SAP Business Suite. That was a problem. Pricing data, for example, changes radically every spring and fall; keying in that information could take up to two weeks. Not only was it slow, but the process led to errors and irritated high-level employees who were forced to spend time entering data. "SAP is great for automatic processes, but we needed to push the data through and we had to do it manually," says Walker.
UA's IT team first attempted to solve the problem with a data conversion program, but it turned out to need too much maintenance. SAP offers a built-in testing tool that might have been a workaround, but it was too difficult for end users, says Walker.
For an initial cost of about $25,000, in early 2008 UA deployed an add-on system from Winshuttle to automate the product creation process by importing data from an Excel format into SAP. Administrators write scripts in transactionShuttle that are somewhat analogous to macros; they then push them to users, who can run them in a related application called runShuttle. Little or no programming is needed, says Walker.
The payoff was substantial. One step in the product-creation process consumed roughly 560 person-hours when done manually; when automated, the same task drops to 112 hours, an improvement of about 80 percent, says Walker. "That's just material creation. Do that 12 times a year and it really adds up," he adds.
Good ROI, to be sure, yet Winshuttle doesn't even bill itself as a BPM vendor. Big ERP apps like SAP's often have areas that need to be complemented in order to manage a process, and that's where Winshuttle and similar products play a role.
Complexity Determines Tool Choices
Conceptually, at least, Under Armour's deployment was fairly straightforward. But other document- or system-intensive processes are more complex, requiring careful process mapping, which companies often find difficult. Indeed, many still resort to mapping by pencil and paper, says Neil Ward-Dutton, research director of Macehiter Ward-Dutton, a U.K.-based analyst and advisory firm.
Level 3 Communications, an international provider of fiber-based communications services, faced a huge mapping challenge as it developed the Unity Program. Unity is a three-year effort to overhaul the company's overgrown infrastructure, which had swelled to some 1,200 applications as it digested eight newly acquired companies, says Rob Smallwood, Level 3's senior vice president for IT. The plan included efforts to inventory and integrate disparate systems from the acquired companies and refresh the process and application architecture to provide a single, consolidated platform for sales, service delivery and billing.
The company had been documenting its business processes via Visio and Powerpoint, although Smallwood jokes that "you might have found something on a napkin at a branch office or two as well." Napkins or not, the process was too cumbersome and lacked flexibility.
Given the complexity of the task, it was clear Level 3 needed full-blown BPM tools, including one enabling it to map its new set of processes.
In 2006 the company introduced Savvion BusinessManager, which gave the business process managers and IT the ability to handle processes from modeling and simulation through execution and monitoring. The deployment was successful; instead of taking a quarter or so to implement a new process, IT can handle the job in two to four weeks, says Smallwood, and the application count is down to about 400.
The BPM software was an important part of the transformation, but the IT exec emphasizes that the company underwent a cultural shift as well. "We did not have the business process team aligned with IT from day one," he says.
That changed. High-level executive sign-off on major IT projects is always important, of course, but Level 3 CEO Jim Crowe went further, becoming an advocate for the project, both internally and externally. Crowe's support, says Smallwood, made it easier to convince line-of-business staffers that changing some ingrained habits was vital.
A Cost-Effective Approach
As YRC's IT team worked to streamline the company's order-entry process, it looked at data relating to eight months of shipping history, or approximately 8 million shipments. It became clear that customers consistently ship to the same sites; in fact, half of shipments reviewed fell into predictable patterns, or pairs composed of shippers and consignees. As a result, YRC employees repeatedly entered the same billing information.
It also became clear that entering the same billing information again and again was unproductive and expensive. To solve this, the company built a proprietary application on top of its mainframe systems. Called CABE, for computer assisted bill entry, the software analyzes prior entries. When it detects a repetitive series of transactions between a shipper and a destination, it automatically populates a bill. An incorrect prediction can easily be changed by the order-entry personnel. CABE went live in 2006 at the company's Roadway subsidiary, with immediate benefits, says Rapken, adding that the company is now deploying the system in other divisions as well.
The CABE deployment was made easier, and the ROI even greater than it might have been, because YRC had earlier deployed an image-scanning and content management system called OnBase, developed by Hyland Software. As a result, paper invoices, of which there were many, were quickly loaded into the system, and even more important, all order-related documents could be tracked and managed.
Baseline productivity for the order-entry personnel quickly increased by nearly 50 percent. A year later, some team members have upped their hourly production another 130 percent. Errors have dropped as well, and that means receivables are collected that much faster.
Lessons learned? There are two, says Rapken. Be sure that business management and IT are closely aligned before you undertake a BPM project. And giving a nod to the company's venerable mainframes, he adds: "Not everything has to be done with new technology. Sometimes it makes sense to teach an old system new tricks."
Bill Snyder is a freelance writer based in California.