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Back to basics: A toolset to simplify business processes

Simplifying the complex by asking straightforward questions and using a solution diagram can enable informed decisions to be taken with confidence.
Back to basics: A toolset to simplify business processes

Have you sat in a meeting that is getting bogged down in detail and wanted to ask the question, "How does this actually work?"

I worked with a large utility whose managers could easily describe their end-to-end processes not only in terms of the specific activities performed but also in terms of the practical impact when an activity failed. They monitored their process performance regularly because they understood that costs increased, customers complained, the regulator took interest, revenue fell, and staff became dissatisfied if problems were not picked up and resolved quickly.

A good example of this was its daily monitoring in a dashboard of the value and expiry date of call-off or blanket order contracts with suppliers. Where the value or date reached predefined tolerances, action was taken to mitigate the risk. The company understood the impact when field engineers couldn't source the materials and equipment they needed.

As with other companies, it also measured off-catalogue spend and invoices without purchase orders, which are common historic measures. Unlike some businesses, however, it understood that identifying risks before they became issues reduced the need to question or sanction staff who used an exception process to do their job.

In contrast to the utility, I recently worked with a company that had a relatively small turnover, or annual sales, of around £50 million with fewer than 40 active customers. I didn't expect the answer I received when I asked how it took and delivered orders. The answer took me some time to understand and to describe (see the graphic "Visual Description of Complex Order Processing"). This rather complex process prompted me to ask if the business had a problem billing customers and collecting cash? The response was, "Yes, but that's finance's problem."

This demonstrated a lack of end-to-end process ownership, with each function concentrating on its own outcomes with little knowledge of the impact they had on other parts of the business.


Visual description of complex order processing

Visual description of complex order processing


The value of the visual

The approach I use to answer the "How does this work?" question is to build a solution diagram (for an example see the graphic "Solution Diagram for Order Processing"). I do this using one slide that is large enough to read, consume, and understand with ease. The skill is to reduce the complex to something simple enough to enable people to comprehend the answer quickly and then ask the question, "Why do we do it that way?"


Solution diagram for order processing

Solution diagram for order processing


There are three easy steps to building your solution diagram. Think of it as a jigsaw puzzle:

1. Understand what the result or picture should look like.

2. Identify the pieces.

3. Work out how the pieces fit together.

The solution diagram is very similar to a high-level process flow with some additional attributes such as systems and roles that provide greater clarity for the audience. The most important point is that the diagram accurately reflects how a business function operates from start to finish, highlighting the key activities and hand-offs, but is simple enough to engage the audience.

Designing something new

When looking to design a new process, for example, the question is, "How should this work?" This approach visualises the future rather than justifying the present. When designing a solution, the picture should identify the key components and options, eg, data sources in a reporting solution and how they work together. The key is that the stakeholders can easily understand what each solution component is, what it does, and its contribution to the desired result. People armed with this knowledge are able to debate the merits of each option and make an informed decision. Viewing the solution components and alternatives in a spaghetti diagram, or, worse still, describing them in a document, results in less comprehension, engagement, and discussion. The result is usually a solution that lacks understanding and is unlikely to stand up to operational rigour.

A good way to solve a problem is by breaking it down into its constituent parts. First, identify the key components in the operation, the activities that are performed in each, and finally how they are connected, ie, what transfers between each one. When you find it difficult to explain how something works, that's usually a good indication of where the problem lies.

Typically, any exception activity or process provides a wealth of useful information. My favourite is the lowly credit note or credit memo. Analysing the reasons and activities required to raise a credit note can provide a window through your business and put a spotlight on what doesn't work as well as it should.

The process/role matrix

I was introduced to the process/role matrix tool (see the graphic "Process/Role Matrix for Order Processing") by a change management consultant. I use this technique regularly when I need to specify the solution diagram in greater detail. By identifying the process activities and who performs them, I am able to understand how staff do their job, who will be affected by change, the support and training requirements, and most importantly the engagement needed to identify change in the first place. It's difficult getting to this level of detail without first being able to answer the question, "How does this work?"


Process/role matrix for order processing

Process/role matrix for order processing


Be simple, be agile

A process/role matrix is a very useful tool when exposing unnecessary complexity. This complexity may have evolved over time to support specific functional silos or fiefdoms in the organisation. If these are allowed to persist, they will have a detrimental impact on business value. Complex processes are commonly enabled by legacy technologies that have in the past given rise to untouchable specialisms or "sacred cows". These practices, if not addressed properly, will result in an increasingly sluggish, stale organisation. A good example of this is the current banking sector. Old established companies are pitting their wares against agile upstarts. The new entrants are not hindered by the past. They use simple straight-through processing, employing blockchain techniques with universal journals from source transactions that provide the information they need to make informed decisions quickly and with greater certainty.

So, what is business simplification? It's being able to answer the question "How does this work?" with ease and with clarity. This ability comes from a clear understanding of your business processes and ownership of their operation. An organisation with this knowledge has the ability to respond and adapt to change quickly. If you can't answer the "how" question, it's unlikely that your business operations will be successful, especially in the current economic climate.


Mark Gault, ACMA, CGMA, is a UK-based business architect at Gault & Co. Ltd. To comment on this article or to suggest an idea for another article, contact Oliver Rowe, an FM magazine senior editor, at Oliver.Rowe@aicpa-cima.com.