IT spending Featured

11:12am EDT December 21, 2004
What do these three client cases have in common?

* A large Midwest law firm improved its cash flow and liquidity position by millions of dollars with a simple three-sentence policy change.

* An auto insurer dramatically improved customer service response time while cutting personnel by quantifying service objectives and defining an incentive system surrounding objective measurement.

* A health care provider reduced staffing costs and improved patient care by hanging a $300 white board over the front desk to display open rooms and nursing shifts.

In all three cases, the organizations made significant improvements in their operations without a large investment in information technology.

A 1997 study by the Gartner Group said more than 70 percent of IT projects fail to deliver the expected benefits, but that is probably understated, as the trend toward rising failure rates is accelerating. While there are dozens of reasons IT project outcomes are often disappointing, two root causes are common to nearly every failure -- there is inadequate planning and resource commitment, and even the best systems cannot cure broken and ineffective underlying business processes.

Truly great operational improvements are almost always the result of truly great process improvements, which may or may not be driven by breakthrough technologies. Here are two distinct, non-IT techniques that you can use right now to identify improvement opportunities without the risk, disruption and expense involved in major IT investments.

Workflow reviews

Implementing a new ERP system? Complying with Sarbanes-Oxley? These are just a couple of the drivers that spur an organization to begin documenting its workflow, some for the first time. The problem with these efforts is that they are not geared toward improvement. They're geared for compliance, ensuring processes comply with system requirements or regulations.

This is in stark contrast to business process optimization, which is the discipline of reviewing your workflow for the express purpose of improving one or more aspects of operations (quality, costs, customer response, efficiency, management information, etc).

If you haven't documented your organization's basic business processes or fully harvested a return on the processes you have documented, a workflow review is an excellent springboard to target improvements. For a minimal amount of effort, a professional process analysis will identify bottlenecks, performance benchmarks, critical resources, redundancies, unnecessary hand-offs, error rates and rework loops, and myriad other processing inefficiencies.

Furthermore, a workflow evaluation can provide the basis for a good continuous improvement program, in which leaders can assign teams to regularly monitor and make ongoing improvements in business processes.

Performance management reviews

Are you paying for performance or paying employees to just show up? What gets measured gets done. If your organization's measurements are weak or misaligned relative to your corporate strategy, you may have a substantial opportunity to effect immediate, high-impact change with very little cost.

An inexpensive technique to ratchet up performance is to evaluate the effectiveness of your performance management approach. Performance management is the collection of benchmarks and incentives your organization uses to shape employee behavior.

If your management team doesn't have the performance information it needs to pay for performance, chances are you're losing some great performers.

Without an effective performance management system, organizations allow managers at any level to guess what might be the most important goals, how their function relates to overall corporate objectives and subjectively evaluate each employee's contribution.

When your entire organization is aligned, measured and rewarded for achieving the most important goals, the ROI on the resulting performance gains might represent the best investment you can make.

There are lots of valid reasons to invest in technology, and many systems do lead directly to operational improvement. There are many powerful tools that businesses of all sizes can use to improve quality, cash flow, margins or customer satisfaction without an army of technologists.

So plan before you spend. A solid review of workflow, coupled with a well-designed performance management approach, can often lead to breakthrough results at a fraction of the cost.

Steve Shoemake is the national practice leader of business process optimization for Xperianz, a unique professional services firm specializing in real-world financial, operational and strategic technology solutions. Xperianz is one of the fastest growing firms in North America, with offices throughout the Midwest and Southeast. Reach Shoemake at (513) 576-1970, ext. 113.