by Kevin McCormack

One of the most important directions in organizations today is the adoption of process-oriented approaches to measuring and managing costs. However, as firms move further through the life-cycle of these change programs, they will need to begin measuring processes and their outputs, and to continually refine their designs. Customers will not be satisfied unless performance is good on all of these dimensions (cost, time, quality, variability).

Activity-based cost management tools did not generate process maps, had no customer focus, and did not lead to bottom-up ideas for generating continuous process improvement. This has resulted in the “lack of context” for these measures and therefore, ineffective usage and actions. They were developed for reporting to management not as a feedback loop for action to be taken by the process teams and individuals.

The challenge is to extrude the slender filament of germane information from the piles of the trivial and irrelevant.

The process of constructing the process map and identifying the measures then becomes the sorting and filtering process for the relevant measures. The analysis done by consultants in measuring the cost, time, variability or output quality of a broad, cross-functional process is frequently the first time any process performance information was generated. Such ad hoc measurement, however, is expensive and infrequent; it cannot be the basis for ongoing process management.

The best approach to institutionalizing the collection of process information is to use information technology to gather it. Therefore, companies must typically build new information systems expressly for the purpose of capturing process performance information. The cloud is ideally suited for this. It makes data connected, broadly available and infinitely configurable. Not to mention affordable. If you add block chain technology, it makes it very secure due to block chain’s internal encryption. 

The best information will be wasted if it is not routed to the people in the organization who need it to perform their jobs. Those who actually execute a process should have information on their own performance (and its relationship to overall process performance), and enough information on problems to address and resolve causes.

In order for process information to be of any value, it must be systematically analyzed and interpreted, and acted upon.

This is the challenge for today. Building broadly available process information that is affordable. It can now be done.

Dr. Kevin McCormack
Northwood University
Midland, Michigan USA
mccormac@northwood.edu