StageIII Article-2: ACEing it

With road-map in place it’s time to crank up the engines and race ahead and crash - Kabooom! Well, a more prudent approach could be to rev up the engine gradually until you are familiar with the landscape of scope of work ahead of you and gather speed as you get comfortable.

As indicated in Stage III Article-1 the area that I am concentrating the most is on procurement strategy and its support elements IT and project management.

ACE Model:

 

I designed the Assess-Consolidate-Expand model to act as a compass and a odometer to guide my journey of BPCI.

The Assess phase sets the coordinates and reference point; it tells you where you stand today and how the scene around looks likes. The audits & AS-IS (refer: Stage III Article-1) captures the current procurement & purchase (P&P) procedures and practices along with its IT systems that are in place at the three companies operating within the group. The P&P itself is driven by customers’ M&E service or install needs. By knowing where you are now and the amount of fuel (resources – hard and soft) that you carry and are willing & capable of expending, you set yourself the objective of traveling to where you want to be.

The Consolidate phase will then endeavor to pull together those parts of the car that have utility & life left in them so as to get cannibalized in to the ‘yet-to-be-designed’ sparkling new process. Process workflows will give the pictorial representation of the AS-IS of the procurement process today. These will then be valued and ranked against the benefits they are offering or have the potential to offer. The MD and the executive team at X will take the final call on what will be retained. Based on the management decision the design of the new procurement process will begin.

The Expand phase will finally deliver the value stream giving X an optimized inventory & demand management solution, centralized coordinated program management with integrated information flow across the value stream and therefore across the company using ICT.

A quick note here, the company’s culture and mind-set is ingrained in divide and rule and I am not exaggerating here. The HO of the three companies operate out of same building and has been doing so for last 10 years, but they do not work with each other although they have complementary skills to offer each other. And on the contrary these companies use each other’s competitors to undermine their sister companies most of the times.

Data to Information:

To give you a picture of scope and complexity of task ahead, I will give you an example. The company has around 500+ customers and it uses 600+ suppliers to serve them. Average value of turnover per customer is £ 21500. Average value of purchase per customer is £ 11110, add to these the cost of sales, depreciation of capital goods that are indispensible for servicing these customers, overheads etc and you can gauge the value addition happing at X. Average spend per supplier is £ 9500, not a big number; combine to this that top 10 suppliers take away 40% of business from X and you see where we are heading. It is really difficult to leverage on the scale and scope of purchases for any individual company within the group.

The group, all companies put together, purchases over 1500+ unique items, purchasing across the wide geographies nationally. A supplier with strong presence in Midlands might have no presence in North, and supplier holding bastion in North might have skeletal presence in South-East or East Anglia. A purchasing officers’ (a whole lot of them) convenience freely contributes to the complexity. One of the companies within the group that contributes to nearly 20% of turnover sources just one item - subcontractors.

How do you design an optimal supply-chain solution for the consolidated group without compromising on Quality, speed, dependability, flexibility & Cost factors?

Do you now, get the picture of what I am up against?

Between all these confusion it is important here that we don’t forget the real purpose of the current Business Process Change Initiative (BPCI) viz developing sustainable competitive advantage.  Michael Porter, god of modern management, comes to rescue again.

The above figure is the Omni present generic value chain model from Michael Porter. This is a simplistic view of flow of value addition in an organisation. The blocks having ‘S’ within parenthesis are indicative of support function that enable value addition to primary activities indicated with an arrow-head flowing through them.

Ideally a business process cuts across traditional departments to combine activities in to a single process flow. Any value streams that will be designed will at all costs align with this value chain. More on value streams in future articles.

Capturing the AS-IS: 

The above model helps identify levels of view from within an organisation that’s required to capture the goals and concerns of a process flow.

And how do I capture the goals and concerns?  - Rummler and Barache’s Performance framework.

I love Rummler and Brache’s framework. You can see for yourself how it accommodates the concerns at different level with in an organisation with three unique dimensions of goals, design and management of processes. The performance matrix identifies nine different concerns that anyone trying to change processes in an organisation must consider and not just focus only on process or process measures or process management.  I have used the performance matrix to come up with sets of questionnaire that I will be using in my company wide semi-structured interviews. Each of these questionnaire set fits in to each individual block thus helping me capture the AS-IS as comprehensively as possible.

Stage I Article-2: The Foundation

Expectation setting is a very critical part of any deal making. It is important that stakeholders clearly understand what to expect out of each other during and at the end of an ongoing engagement. I have seen time and again people fumbling during expectations setting exercise. In our initial discussion we (The client X, Third party Consulting Company and Me) agreed to use project management approch towards the change management tasks ahead of us. The project scoping activity which captures and formalizes expectations thus became the most critical part of project initiation. I believe so should it be.

The UK market development strategy that I agreed to develop for X still had a few finer details that needed some attention before I could dive in to the sea of market research for them. One major point that I insisted and ensured was included in the scope document was that we, all stakeholders, revisit and review the project scope at the time of delivery of first milestone. This was to ensure that we were on track and to check we are carrying enough fuel to reach our set goal/s. The fine print that I had to phrase read “There will be a revisit to the scope of the project on 31 July 2009 as gathering primary data from suppliers & customer will present some challenges due to limited time frame, this in turn will shape the course of research.”

As you can see I had some serious concerns about the way my data gathering activity would carry forward. In anticipation of issues mentioned and given that only limited resources were available at my disposal and also at client’s disposal the above clause would have been the all important SOS button. However I would like to add here that the need to revoke the above clause never occurred as I was able to gather enough relevant data to carry out the required analysis.

Failing to articulate concisely what one expects from the other party in a well structured agreement is a sure road to disaster. Each party must ensure that they articulate issues and challenges that they anticipate during the course of project delivery. It is important all stakeholders carry out due diligence and chalk out risk mitigation plan before they start to work with each other. A poorly written and loosely held agreement apart from pushing up the transaction costs and lowering ROI for the client will also result in undermining working relationship between the parties involved. Clear objective setting will act as a guard against any whims that may tempt the party/ies involved from shifting the goal post midway during the course of project execution.

Stage I Article-1: In the beginning

February 09 through March 09 was a very exciting time for me. I was interviewing with P&G for the role of Business Transformation Associate with its IDS department. The interview process itself took about a month-and-a-half with 5 rounds of screening, with couple of visits to P&G’s Head office in Weybridge, UK. In the end I was happy with my performance and my efforts.

The results that came in an email on 28th March 09 from a member of P&G’s Financial Solutions BA, Procter & Gamble Technical Centres Ltd, Newcastle brought with it a welcome delight. The email read “We can confirm that you have now completed our interview process and have met our hiring criteria…. We expect to make job offer decision at end of April.”

Between end of March 09 to end of April 09 I was a happy lark, but then came the twist in the epic saga on 30th April. I received an email from P&G’s Corporate Recruitment Team and it read “Unfortunately we are no longer looking to recruit candidates into this particular role, and as such will not be able to forward your application further in our recruitment process……Please do refer back to our website at www.pgcareers.com in order to search for another role that you feel is suited to your strengths. The website is updated frequently, so checking it regularly will ensure you are kept informed of the latest developments. Depending on your selection, we may be able to move you to the stage you had reached during your initial application. ”.

Being who I am I pursued P&G to understand the root cause of this new decision. The first impression in my mind, however was that it was due to sever economic downturn that UK was experiencing at the time. I reached out to the SVP IT of P&G UK at the time, with whom I had my final discussions, and the response from her read “The competition for our summer internship programme was very tough this year as we had a large number of very strong candidates… I’m very sorry we’ve not been able to offer you something at this time, and hope you’ll keep a look out for other opportunities in the future..”

Clearly, I saw two different versions being played out here. I suspect somewhere between SVP and the recruitment team a decision to sideline my application was made. For all the vindictive feelings that were simmering in me at the time, I decided to channel my energy in to positive affirmation. And finally in mid June 09 came the opportunity that was carved for me and it read:

“UK Market Development Strategy……….. This is an opportunity to undertake and present new information for this large and important market sector. Most current market information, even relatively recent market research reports, has suddenly become invalid due to the unexpected and sudden nature of the economic crisis.
Key tasks:
Key areas for research and analysis include:
- regional output across the UK construction sector
- economic forecasts and drivers of business activity in each region
- changing customer needs and expectations within the supply chain
- innovation requirements to meet emerging customer demands
- key competitor activity and responses to market changes
The output from this research activity will feed directly into the development of a region by region sales and marketing strategy for the X group of companies. This will be designed to re-position the company to exploit opportunities emerging from the changes within the market. In turn, the new sales & marketing strategy will drive group operating strategy across the UK. Significant change management activity will result from the overall business strategy that is developed.

Key outputs/deliverables:
A report covering market summary analysis and scenario forecasts for the relevant UK Construction sectors over the next five years.
Opportunities for presenting the output within and across the industry will result for the successful candidate, supported by the sponsor. This could create a high profile for the applicant within this sector."

And thus my journey with my current client X began; a lot has changed between July 09, when I started working with X, and now. As I bring this journey to you, I promise it will get as interesting as it can.

StageIII Article-1:Business Process Change & Management

About 5 months ago, in June 2009, I decided to work on a project, in partnership with a Birmingham based business consulting company, to drive a major multi-million pound enterprise change for a client based in Leicester. The change was envisaged to unfold over a period of 12 months and in a series of excogitated stages. 

In the first stage of this massive change management exercise I developed marketing strategy for the client. The MS analyzed and gave scenario forecasts for the relevant UK Construction sectors over the next five years to the client. Other outcome of the MS included:

• Macro-economic review of the construction industry and M&E subsector

• Analysis of regional output across the UK construction sector

• Buyer behaviour analysis & Competition analysis

• Service-Pricing strategy and Regional sales projections

• Market development recommendations that will feed national sales strategy.

Findings from the marketing strategy are currently being used to put in place a region-by-region sales strategy. My colleague is currently undertaking an account management workshop with key sales personnel and account managers to gain the required buy-in and set the ball rolling for the sales force. MS has set off the domino of change at X. I will, in my next few articles, try to give you a glimpse of the path that I traveled through in developing this marketing strategy.

I have, in the mean while, embarked on yet another new journey called Business Process Change and Management. And the focus of this article is on Business Process Change.

What is business process and why do you need to change them?

Process is a series of activities that translate in to an outcome. It’s another matter that these activities are designed to be, but usually evolve, related and structured to produce the desired outcome. In this case the outcome of the processes should be in line with the objectives a business sets for itself. Why change? To stay competitive! The business process change at X has been initiated as a result of organisational restructuring that came due to sustained inconsistent performance. X’s retained profit was just above the zero line in the year 2005, and then in 2006 it went down, I mean they went all the way down, and then bounced back in 2007, recovering not just the lost ground but shot way above any previous record, and back in red in 2008. Wooh, X is consistently inconsistent.

So here we are today, letting the bygones be bygones the only thing that can be done now is to look at the path that’s ahead of us and start adopting change. Had this change been guided by past experiences then it would have made a world of difference to X but then again, how many companies actually claim to be a true ‘learning organisation’ in the market?

The Organisation structure of X before and after restructuring is shown below:

The Road Map:

The business process change initiative at X is being driven by the Business Services (BS) division. A quick meeting with the Managing Director of Business Services division kick started the business process change initiative. I presented a broad road map to get his buy-in and also to cross check if I am thinking exactly the same thing that the Managing Director is thinking. The first slide was about the boundary demarcation of the BS division.

• Nerve center for all non-finance related support activity within X

• Plays key role in shaping processes and re-engineering work-flow for X

• Contributes to cost reduction & restructuring, thereby increasing margin

on and profit potential of services delivered

• Source of competitive advantage in market place

He agreed to all of the above and had nothing to add. That’s because he is as sure (read unsure) of his role and functions as a managing director of this newly setup division BS within X or I have got them the way he wants me to get them. I presume the later given that he was part of efforts that went in to the over-all organisational restructuring.

Next, I put forth the anticipated challenges for BS.

1. New and unchartered territory within X, there by rising the risk of failure

2. Perceived as cost center, this could expose the Business services as non-value adding function within X

3. Processes developed should remain current and retain its validity

4. Lack of in-house skills

No disagreements here either. He just makes a self assertion that he cannot be bullied; this was in response to doubts raised in point # 2.

The next slide then brings out the opportunities that these changes bring with them.

1. Current situation an opportunity to streamline process to derive better cost benefits

2. Procurement strategy will be the biggest money saver, contributing to cash-flow

3. Program & Project management to be streamlined to avoid duplication of efforts

4. Information & Communication Technology capabilities to match the scale of processes and scale of operations.

Although the BS, as mentioned earlier, is responsible for most non-financial support within X including but not limited to HR, business continuity, risk planning, IIP, property management, transport logistics, stores etc, I am working to refine and redefine procurement strategy & policies, program & project management methodologies and ICT strategy. The ‘Heavy hitters’ as he (the MD) calls it.   

As has been pointed out in the white paper published by Datamonitor and commissioned by Oracle Corporation (my alma mater) “10 steps strategy for SME success – July 2004” it is really difficult to put your finger on problem when it comes to fluid, ever changing business landscape and say this is where I will start my repair work. I have tried to adopt some broad guidelines specified in this paper to put my roadmap in place, but of course I have adapted them to suit my environment. The next slide of my presentation brought out the roadmap.

1. Assess – Benchmark, important to treat the underlying causes of ailment rather than just the symptoms

– Carry out audits to capture the as-is snap shot

– Define a realistic and achievable objective for process shape and cost savings

2. Consolidate – Get a grip on situation

– Map processes and communication pathways

– Valuing and rating value components

– Process Improvement planning – Internal and External (advancing this step leads to the danger of developing business critical processes based just on assumptions)

3. Expand – Implement, put plans to action

– Real Time solution to Inventory and Demand management

– Integrated Information flow across the business network using effective ICT

– Centralised and coordinated Program management

Benefits? Its all about benefits, isn’t it?!? The chart below shows some of the dimensions against which the value-adds will be measured.

Benefits: Quantified, Tangible and Sustainable results. 

And when will I see results?

When the business process change initiatives are completed and the processes are integrated with in the X’s organisation. That would mean X has to wait for at least 6-9 months (most optimistic view) after the adopting the proposed changes to see tangible benefits. And I hope the economy will not go insane again.

Any questions??? -- Not many from the MD at least!