BPM Success: How a Travel Giant Turned Its Ship Around

When Rich Phillips became COO of Maritz Travel about two and-a-half years ago, he sat down and took a hard look at the big industry picture.

It wasn’t pretty.

“We had some serious systemic issues,” says Phillips.

Post 9/11, bookings had declined in every area of the travel industry but travel for corporate meetings and group travel—which is Maritz Travel’s specialty—had been hit especially hard. For many companies, holding meetings in far-flung locations, flying employees around the globe to convention cities and warm-weather resorts is a matter of choice, not a business necessity, and thus a highly controllable expense. If a company was going to spend travel money, it was going to want more, a better return on its investment. Consequently, Maritz had to find ways to innovate and grow in an environment in which its customers were acutely cost-conscious. Plus, Maritz’s customers wanted new levels of service and they wanted them now, not later.

Phillips knew Maritz had to change, and change fast.

Turning the Ship Around

It’s no small matter to change business processes, let alone change them quickly. The challenge becomes even greater when you’re big and complex. Known as the global leader in its category, Maritz Travel represents the biggest business unit in the $1 billion-plus privately-held Maritz. Every year it helps send hundreds of thousands of people on trips including conferences and incentive travel vacations (used to reward employees in fields such as sales) on every continent.

Phillips, who started his professional career with a 10-year stint in IT at Citigroup Mortgage and several divisions within Maritz, began his makeover effort with a value-stream analysis in order to map the business and identify what was working and what wasn’t. “We had some process issues that we needed to address,” he says. The first big one? “I had process integrity issues,” he says. “There was no linkage from one phase to the next”—for example, between the sales and the delivery organizations. And he needed to speed everything up. “The market was shifting. Our customers were demanding that our cycle time improve,” he says.

Phillips first turned to a data repository initiative to tackle the disconnects in the company and to address new Sarbox-related compliance demands. This work led him to a business process management (BPM) revamp beginning in July 2006.

Today, BPM isn’t just a project at Maritz; it’s an ongoing way of life, with a continuous improvement team staffed by IT and business-side execs churning out process-related changes on a monthly basis. “From selling to billing, everything we do is now touched by BPM,” Phillips says.

To date, the process revamp has helped reduce Maritz’s SG&A (selling, general and administrative expenses, better known as overhead) by more than 10 percent. “This has allowed us to improve profitability while simultaneously increasing client-facing resources as a percent of our total expenses,” Phillips says. Maritz has also used these productivity gains to accelerate investment in product innovation around areas important to clients, including data management and compliance.

His keys to BPM success? For starters, ensure a tight IT and business relationship. And think big.

“I’ve observed many BPM projects that dealt with a subprocess, like recruiting candidates or billing,” he says. “We went wide. For example, we looked at how our organization delivers to clients. Then we went deep.”

If you get bogged down in subprocesses too quickly, he warns, you’ll miss your overall goals.

Five Tips for BPM Success

Maritz Travel COO Rich Philips shares keys for BPM makeovers:

1. Think big. “It’s critical that people think about the big picture,” says Phillips. Don’t start with a narrow problem like ‘Our contracts need to be written faster.’ Start with ‘How do we sell?’

2. Get business sponsorship. And get it at a high level. “It’s just imperative,” Phillips says. “You will run into bumps along the way.”

3. Don’t forget the change factor. That’s especially true if your company has a culture that praises people for solving problems in idiosyncratic ways. “Shifting to process management as a methodology for defining how a business operates involves subtle but important business shifts,” says Phillips. “People doing things uniquely may not be better. We’re now taking capacity that used to be consumed fighting fires and focusing on customer issues.”

4. Plan to communicate and communicate the plan. Stress what the process changes will mean to customers. “I really encourage business leaders to talk about how they are going to communicate the new culture…and how it’s beneficial to clients,” Phillips says.

5. Focus on the end user. IT should pay more attention to customer services than the systems involved in the BPM revamp. “Once we had a common purpose, a common strategy, we had a sense of team and kinship,” Phillips says. He advises IT execs to think through the challenges and applications for the business and align the BPM effort with that.

BPM in an ERP Environment

If Maritz’s need to change business process quickly strikes a resonant chord with you, you’re not alone. BPM has become one of the most important decisions for CIOs and their C-level peers right now, says Sharyn Leaver, VP and Research Director at Forrester Research. Now that companies have invested millions in ERP implementations, upgrades and overhauls with software vendors such as Oracle and SAP—and in many cases have built their core business processes around those products—they’ve learned that this kind of software cannot be customized easily or quickly.

But business will no longer sit still for long development cycles. Business-side execs simply demand that IT provide them with the ability to change quickly in order to respond to markets and customers that also demand speedy change and delivery.

This is not a matter of one-off fixes. “It’s not even just a question of how customizable the software can be,” Leaver says. “It’s about how flexible it can be for eternity.” That’s why more and more businesses, like Maritz, are using BPM software to put a “wrapper” around key processes.

What kinds of business processes merit this approach?

“Firms are using BPM to wrapper existing apps for processes that require a high degree of flexibility and really differentiate them from the competition,” Leaver says. Some examples include proposal generation, customer service, order management, claims and dispute processing, and new account opening. In other words, key processes that directly touch customers.

Companies may be able to wait for their big-package vendors to “get” BPM within the next few years; according to Leaver, those vendors are working on it now. But to truly deliver on the flexibility promise of BPM, the big package vendors must undertake pretty massive architectural shifts, which will take years, she says. Not all processes require great flexibility. “Accounting is the perfect example where there are no points for creativity,” she says.

“But for processes where differentiation can make or break the success of a company, like customer service or order management, best practices just aren’t good enough and therefore, static packaged apps alone aren’t good enough,” Leaver says. “When it comes to those differentiating processes, companies could easily get leapfrogged by the competition if they wait for the app vendors to ‘get’ BPM.”

Or as Maritz’s Phillips puts it, “A lot of vendors dabble on the side with [BPM]. We looked at the massive package vendors but they weren’t even close to what we wanted to do.”

Maritz couldn’t wait. One of the company’s keys to success is customer loyalty. Some customers have been using Maritz for 30 years, and the company’s annual renewal rate tops 90 percent. Those loyal troops were demanding that Maritz get more nimble and how loyal they’d remain if Maritz didn’t was an open question.

It’s All About Alignment—Again

The initial push to revamp business process at Maritz started with the business side, Phillips says, “but we did it in partnership with sales, operations and IT.” (Phillips emphasizes the importance of getting sales to the table from the very beginning. Remember, he says, it’s all about the customer.)

But at the start of the BPM effort, Phillips, like so many before him, had to confront the seemingly ubiquitous and frustrating disconnect between the business and IT. “IT wasn’t siloed, but it was parallel,” he says. “We didn’t have a tight coupling between business and IT.” It wasn’t a simple vocabulary problem: the business just had stopped communicating well with IT.

To begin fixing the disconnect, Phillips “spent a lot of time telling the story of what challenges we faced and, more importantly, what opportunities we had. We really got to where we had shared forums with business leaders, process leaders and IT leaders. Along the way, we learned about the talent of the IT organization that we could capitalize on.

“We established an organization called continuous improvement,” Phillips says. “We put one of our best business leaders in charge of that, one I knew had organizational credibility and respect and had demonstrated an ability to collaborate with IT.” This group established regular meetings to discuss governance and key projects.

“Having the right person in the right place…it’s amazing how things can progress from there,” he says.

Phillips signed a deal with Lombardi Software, choosing its TeamWorks platform for the BPM revamp. Ninety days later, his team started rolling out process changes.

After Strategy, Tactics

Remember: Phillips believes that thinking big is a key to successful BPM. Maritz starts with a macro process, such as selling, then tackles subphases, such as quick turnarounds on projects, contract building and dealing with outside suppliers. Phillips and his team do major releases every quarter, minor releases every month.

A major release might address an entire subphase, “say, how we link in the participant management function,” Phillips says. Martitz’s participant management staffers book the air and hotel travel, handle questions from the people attending the trip and so on. “A minor release might deal with a portion of our contract process or pricing process,” he says.

The net for the company? “We certainly get faster, but more importantly, we get better,” he says. “We get repeatability. It’s the integrity of our delivery process.”

“We’re also identifying softer benefits,” Phillips says. “It used to be harder to bring in employees to use our new systems. Now it’s much more intuitive, and people have crisper access to the right information at the right time to do their jobs.

The process revamp has helped Maritz staffers not only find the right information faster, but also, spend more time on activities that add value for clients, Phillips says. For example, Maritz historically has used numerous forms throughout its travel program planning operation. “Our people needed to find the right forms, retype information into these forms, distribute these forms [via e-mail], then ensure that form updates made their way to all of the right people [internally, external partners, clients],” he says. Now the company prepopulates those forms. “We also serve up those forms to people at the right time to ensure process integrity and timely information distribution,” he adds. “In addition to delivering better service, our people are freed up to focus on incremental value delivery,” such as, he says, creative thinking, information analysis and supplier negotiations.

“BPM also drives down end user workarounds,” he says, noting that part of his initial pitch to other business leaders on the need for the BPM effort was that the company had a lot of useful data hiding in spreadsheets and e-mail because people were working around existing enterprise processes. “It was a real issue for us.”

A final deployment strategy that Phillips recommends is to establish what he calls “distributed ownership teams” for a BPM revamp. That means having business people reporting up from the trenches, helping shape what needs to happen in those major and minor releases and then helping communicate the benefits of the proposed changes for customers back to the work groups.

This arrangement can be thought of as a change management best practice, eliminating some of the “us vs. them” tension endemic to any transformation, large or small. “We all know people in the trenches know the most about what’s working, where the opportunities are,” he says. “They’ve already established credibility with their peers, as opposed to having people pointing to a central group and saying, ‘Hey, they don’t understand us; they don’t understand our problems.’”

How to Pick Your BPM Vendor

If you’re wondering why Maritz Travel chose Lombardi Software’s TeamWorks platform for its BPM revamp, rest assured it wasn’t the technology. According to Maritz COO Rich Phillips, it was because Lombardi showed a firm grasp of the business strategy issues.

The bad news for IT execs is that being a software selection pro won’t help you much with your BPM projects. A BPM effort, as Motorola CIO Patty Morrison says, is not about tools, it’s about process. You can pick the most technically sound BPM tool in the world but what really makes BPM go, according to Morrison, is a combined effort by IT and business to examine process, then reshape process and culture.

Phillips agrees, saying, “It’s important to pick a provider that really understands process and transformation and has an aligned road map.

“I know the [software] giants will eventually figure this out, but this requires a different way of thinking,” he adds. “The Phase 1 implementation is really irrelevant. It’s what you learn from Phase 1 to make Phase 2 and Phase 3 better.”

In addition to Lombardi, vendors like Savvion and Pegasystems are helping companies wrap key business processes in software outside of the core ERP suite, says Forrester Research’s Sharyn Leaver.

Some IT execs may wonder why they should trust a smaller vendor when addressing their company’s most critical processes but the reality, Leaver says, is that SAP and Oracle may be a couple of years away from being able to help you with BPM.

SAP’s new hosted ERP suite for mid-market customers, Business ByDesign, has a business process engine, she notes, but that’s a brand-new product. Consequently, you’re not going to get feedback from peers on how it’s working so far. (In the end, Oracle and/or SAP may choose to acquire one of the BPM expert companies in order to boost its prowess in that arena, she says.)

There’s a comforting reality right now for IT departments charged with wrapping key business process using a BPM platform, Leaver notes: Virtualization can help.

Virtualization, already high on the list of most companies’ technology priorities, lets IT simplify and speed up development and testing of the BPM releases, safely.

The BPM ROI

How is the process revamp paying off? According to Phillips, since the BPM effort began, Maritz has improved its customer quality indicators while reducing overhead. “Some of our cost ratios have improved between 8 and 24 percent,” he says. “That’s important since our industry is becoming increasingly cost-competitive.”

Overall, he notes, Maritz’s process is now “keyed more to where parts are in the pipeline than to people.” This helps him spot trouble more quickly. “I can see cycle time issues and reduce time to clients,” says Phillips.

Measurement Is Everything

The BPM work at Maritz won’t be finished anytime soon; this is a project without an end date.

“We continue to add subprocesses and refine subprocesses. I’m a believer in iterative improvement. We get a payoff from every phase.”

As for measuring and evaluating those improvements, that’s an area where Phillips advises CIOs and COOs to be careful. Phillips now says he wishes he had established key metrics and ways to capture the information earlier in the project.

“We plowed ahead lightning fast on the process side,” he says. “I should have created ways to grab crisper benchmarks.

“Now we’re already on the slope of improving. We didn’t have clear metrics that captured baseline performance. I’m thinking through linking process results to business results. If you can do that, then you get the visibility to prioritize your next investment.” Also on Phillips’s current to-do list, Maritz has implemented measures to improve cash flow and will look to BPM to strengthen that effort. “What we’re planning to do in BPM is to make people more aware of the major cash events within a cycle. That just saves the running around that can occur,” Phillips says. “We deal with some pretty big checks.” Ultimately, he says, Maritz wants to complete what he calls the holy grail of BPM: “We’d like to link our processes to supplier and customer processes.”

According to Forrester’s Leaver, that’s exactly what many customers are demanding—another reason BPM is rising higher on CIOs’ agendas.

Did Maritz’s customers demand process links? Not in so many words. Customers may be unhappy without realizing that their unhappiness stems from the fact that their processes don’t match up with a business partner’s processes. “What we saw was pain,” Phillips says. “As we tested the story with our clients, they were resoundingly supportive. This is a wave BPM can and must address,” he says.