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Examining The Future of Business Process Performance: Today's Approaches
Examining The Future of Business Process Performance: Today's Approaches
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Examining the Future of
Business Process Performance
There may come a time when “good enough” simply isn’t.
—Richard N. Kat
so far, this study has examined the ways in
which colleges and universities approach
ad-ministrative business processes and how
they use technology to support those
processes. This chapter examines the
administrative processes as at risk. Only 16
approaches and technologies institutions
have adopted to improve business process percent of respondents indicated diminishing
performance, and then discusses some returns, meaning that processes work well
emerging cross-industry trends and how enough and efforts at improvement were not
these may impact future efforts to improve worth the expenditure. This suggests further
process performance in higher education. that institutions still have significant room for
improvement.
Today’s Approaches This doesn’t mean that colleges and uni-
An organization can undertake business versities have ignored process performance.
process improvement to achieve a number of Many institutions have been through one or more
different results. These include, but are not waves of business process reengineer-ing; total
limited to, the results described in Table 8-1. quality management, Six Sigma, or other process
In this study, we learned that on the whole, improvement initiative. Others have taken a
higher education organizations have not technology-driven approach, choosing to use the
optimized their administrative business implementation of a new technology, such as an
processes. Most institutions that responded to ERP system, to instigate process change. These
our survey indicated an acceptable, but not initiatives have yielded mixed results. Process
exemplary, level of performance. In many improvement programs can render encouraging
cases, the decision to settle on good enough is results, but when im-plemented without
a rational decision, as some processes do not, accompanying technology improvements, these
by their nature, require above-average results can be difficult to sustain. A technology-
performance. However, many institutions have based approach can introduce an overwhelming
not optimized important processes, and degree of change to the organization, and it can
numerous institutions ranked some of their be expensive and time-consuming. As we learned
in ECAR’s study of ERP implementations, (Kvavik
et al., 2002) many organizations experienced a
loss of productivity for up to a year after the sys-
tem was introduced, as staff slowly adapted
to the change introduced. Even when Another common target of shared services,
such an approach succeeds, it can be both internally and externally, is the IT func-
difficult to introduce additional change tion. A case study written in conjunction with
later without significant time and expense. the ECAR ERP study profiled several shared
Some institutions have implemented al- approaches to implementing ERP. (Caruso and
ternative organizational models with good King, 2002) One case study investigated the
result. One such model is shared services, in well-known common management systems
which a single center is established to service project run by the California State Univer-sity
multiple customers. Shared services can be system for its 23 campuses, an internal
deployed internally in a large, com-plex shared-service function that provides hosting
organization, or they can be set up to cross and shared management of the university’s
organizational boundaries, allowing multiple PeopleSoft applications. (Caruso and King,
organizations to share resources, costs, and 2002) Another ECAR case study written in
benefits. Examples of internal shared services conjunction with the outsourcing study, profiled
organizations include one-stop student the Associated Colleges of Central Kansas
services centers, which colocate and cross- (ACCK), a consortium created by six small
train student services departments (such as colleges in 1966 (Hassett and Kancheva,
the offices of the bursar, registrar, and financial 2002) to share the cost of developing IT ser-
aid) to provide high-quality customer service, vices. IT shared services functions, whether
often with improved ef-ficiency. Such centers internal or external, provide a number of
are in place at many institutions today, and are benefits to their member organizations, in-
often supported by self-service, ERP, and cluding reduced costs, introduction of new
customer relation-ship management (CRM) capabilities, risk avoidance, and increased
technologies. effectiveness. As a part of this study, specific
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IT Investment and Business Process Performance ECAR Research Study 4, 2005
process improvement endeavors at Iowa tion) continue to manage their own payroll
State University and The City University of functions. If higher education chooses to fol-
New York have been written about in low the trends begun in other industries, func-
depth in separate case studies. tions such as call center management, benefits
Shared services can be one effective way to administration, and financial aid processing
reduce costs, lessen risk, and provide services may be turned over to outside providers. The
that might be unattainable by an individual University of California, for example, recently
department or institution. This approach is not hired a private firm to manage retirement plan
without challenges. First and foremost is that in account administration. But this approach is
order to implement a shared services model, not without risk. In today’s environment, it is
consensus must be reached on the business difficult to seamlessly incorporate such external
model and processes that will be used, as well as services into an institution’s opera-tions, and
the financial model, the supporting technologies, difficulties resulting from systems integration
and the staffing. And once the shared service has and unaligned processes can degrade
been implemented, strong governance is customer service.
necessary to keep it operating effectively. The Higher education has also introduced a
consensus nature of shared services does not number of administrative technologies in an
lend itself to agile business performance, because effort to improve the performance of business
it is difficult for one member to request changes processes. The most significant of these is
without impacting—perhaps negatively—the utility ERP systems. Implementing ERP sys-tems
of the service for other members. As this study provided significant benefits to many, although
reveals, business processes that invoke broad not all, colleges and universities. ERP systems,
political engagement and low strategic impact provide a common repository for administrative
tend to not be great candidates for reform. data; speed the process-ing of transactions;
allow the distribution of tasks to individual
Another strategy available to institutions employees, and allow in-tegration of data
is business process outsourcing (BPO). In across multiple parts of the organization. ERP
this approach, selected business functions systems (or homegrown systems with similar
are turned over to an external provider to functionality) serve as the foundation of today’s
man-age, either to provide a cost advantage administrative organizations in higher
or because the provider has greater education. However, ERP systems are in some
expertise in managing that function than the ways limiting. At installation, they allow
institution. Higher education has traditionally flexibility in configura-tion, but once in place,
used BPO in selected areas such as food making changes is a difficult and expensive
services, facili-ties management, and proposition. Similarly, customizing ERP
bookstores, areas in which such companies systems to conform to an institution’s business
as Aramark, UNICCO, and Barnes & Noble processes generates significant expense both
have been enlisted to manage these during the imple-mentation and over the
processes on campuses around the country. ongoing life cycle of the product, causing many
However, higher education has tradition-ally organizations to conform their processes to the
been reluctant to outsource its administra-tive way the software works. Also, ERP systems
processes. Even in areas like payroll, where many are, at their core, transaction processing
businesses have outsourced to providers like systems, and higher education, for the most
ADP, many colleges and universities (partly due part, is not a transaction-driven business.
to the complexity of faculty compensa-
Many institutions have realized that while less pressure to change faced by
ERP systems are a useful foundation, the organizations in other sectors. That
value is not in the transaction itself, but in situation, however, is beginning to change.
the information provided by the transaction. First, many segments of higher education
These institutions have deployed a variety of have—despite very challenging times—been
analytical environments, including data protected from revenue pressure by favor-able
warehouses; reporting packages; and online demographics (the pipeline) and the
analytical processing (OLAP) tools to preeminence of U.S. colleges and universities
provide their users with the ability to better as “exporters” of higher education. By 2013,
under-stand their business. These tools can demographers forecast the high school gradu-
provide valuable information, and can be ation of the last class of “echo boomers” and it
used for a range of purposes from better is evident that declining demand and rising visa
transactional reporting, to analytics, to restrictions are diminishing the number of
identification of at-risk students. But they too foreign students wishing to study in the U.S.
have issues. Many reporting, modeling, and The changing enrollment dynamics will
decision-support tools are difficult for non-IT increase competition to enroll students intelli-
staff to use. And, there is often a time lag gent enough to complete postsecondary edu-
before information from the institution’s cation, and wealthy enough to pay for it.
transactional systems makes it into the data Another factor driving institutional change
warehouse or OLAP environment, limiting since 2001 is cost pressure. Institutions often
the usefulness and capabilities of these tools react to short-term cost pressures with tools
for real-time man-agement of the institution. like hiring freezes and budget reductions, but
Higher education has been moving for-ward such fixes are not sustainable over the long-
with process and technology changes that term. Some institutions require real, systemic
have resulted in increased efficiency, en- redesign to emerge intact from this sustained
hanced effectiveness, better customer service, downturn. Even once the economy improves,
and other benefits to institutions. However, as cost pressures may persist. Tuition growth has
reported by our respondents, these efforts outpaced inflation for a number of years, and if
have not resulted in optimized processes at prospective students balk at fees, institu-tions
most institutions. And the target continues to may be forced to further reduce costs. What’s
move, even as these efforts continue. needed is for institutions to find ways to sustain
growth and implement necessary changes
The Changing while keeping costs down.
Environment Further exacerbating the situation are two
Historically, higher education has operated relatively new factors driving change: customer
in a slowly changing environment. The core demands and increased competi-tion.
pillars of teaching and research upon which the Incoming students at many institutions are no
institutions were built have not departed far longer the traditional 18-year-old, full time
from their foundation, even as over the years learner. They may be older, have full time jobs
other industries have undergone rapid and and families to juggle, and have different
considerable change. Because of its relatively motivations and needs for their education. Ad-
stable and insulated nature, higher education ditionally, student expectations for the level of
has been able to make steady, incremental service provided by an institution is influenced
improvements in administrative processes, but by what other businesses like banks and on-
it has been spared the relent- line retailers provide, such as 24x7, location-
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IT Investment and Business Process Performance ECAR Research Study 4, 2005
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IT Investment and Business Process Performance ECAR Research Study 4, 2005
be changed, both in systems and in practice up or down as needed. If desired, the out-
without requiring large IT initiatives, organi- sourcer’s own systems could be
zations can rapidly modify their processes to incorporated into the process, allowing the
meet shifting business conditions and improve organization to leverage their provider’s
process performance. One BPMS customer best practices into their own process.
“has deployed seven major end-to-end pro- The BPMS can also enhance the delivery
cesses with over 500 subprocesses. They of shared services. It could be used to allow
release new processes every quarter, and organizations to come together and leverage
continue to evolve their existing deployments expensive components such as ERP systems,
every six to eight weeks.”(Lombardi Software) while retaining ownership and execution of
This flexibility would not be possible with their own unique business processes. Con-
traditional applications. versely, the BPMS could be used to allow
Another important way that BPMS helps orga-nizations with disparate information
improve process performance is by providing systems to create shared functional service
real-time monitoring of key performance indi- centers that execute a common business
cators (KPIs). KPIs can be built into the process while continuing to use each
process models created in the BPMS, and then organization’s own back-end systems.
they can be tracked as processes are As the BPMS market evolves, the ben-efits
executed. By monitoring these KPIs, and shortcomings of BPM systems will become
management gets an accurate view of how more apparent, and their role in the overall
processes are perform-ing, and is able to architecture of the enterprise will become
reallocate resources as needed to optimize clearer. For organizations that are early
performance. Since pro-cesses can easily be adopters of such systems, success will be
changed, this approach allows organizations to dependent upon the same factors critical in any
quickly “sense and respond,” another key tenet systems implementation: having strong
of the adaptive organization. sponsorship; having a clear idea of the busi-
Also important to the adaptive organiza-tion ness problem being solved; addressing the
is the ability to plug-and-play different people, process, and technology aspects of the
organizational, process, and technology implementation; and performing effective
components as needed to scale operations to project and change management.
meet demand. One example is the use of
outsourced call center representatives to BPM and Higher
supplement internal staff at peak times. As Education
discussed earlier in this chapter, in a traditional While BPM systems offer tremendous
model one pitfall of this approach is that the promise, they have not, to the best of our
lack of integration between the organization knowledge, yet been deployed in a higher
and the outsourcer will become apparent to the education environment. However, the new
customer, resulting in poor customer paradigm they represent does have the poten-
satisfaction. The BPMS has the capability to tial to address some of the key issues raised in
overcome this barrier. By providing the this and other ECAR studies. These include:
outsourcer’s employees direct access to the ◆ Improved ability to react to change. The
organization’s customer service processes, BPMS gives the organization the ability
both procedures and systems, the outsourcer to quickly and cost-effectively react to
is seamlessly integrated into the organization’s change, whether instigated by govern-
process, which means they can easily ramp ment regulation, changing business
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IT Investment and Business Process Performance ECAR Research Study 4, 2005
improvement for them, in ways not easily ferentiate the institution—the focus will
possible before. likely be on satisficing or providing good
As institutions look to the future and enough rather than exemplary levels of
evaluate how to approach business process service, efficiency, or effectiveness.
performance, the lessons learned from this 3) For processes that can differentiate the
study suggest a three-pronged approach: institution, especially in student-centric
1) Identify and remediate processes that areas, institutions will be more likely to
are at risk. These processes do not push to create high-performing pro-
need to move to an exemplary level, cesses. The BPMS tools discussed
but they do need to reach a above could help institutions interested
satisfactory level of performance. in op-timizing their performance
2) For commodity processes—those that achieve new levels of efficiency,
need to be performed but do not dif- effectiveness, and customer service.
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