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Forrester: Senior executives want to improve customer experience and cut costs

Derek Miers and Alexander Peters

Over the past decade senior executives across all industries invested heavily in a broad range of business process transformation and continuous improvement initiatives. To gain insight into the maturity level of these change initiatives, which are typically based on methodologies and tools such as Business Process Management (BPM), Six Sigma, Lean, and total quality management (TQM), Forrester has recently surveyed more than 400 business process pros in conjunction with the Process Excellence Network run by the International Quality & Productivity Center (IQPC).

The results? Close to 60% of respondents said that improving the customer experience and reducing costs are their two most important goals. The top three challenges respondents identified are related to creating and assessing the transformation road map, ensuring customer centricity, and evangelizing and engaging executives.

Forrester also used the IQPC survey data to establish the average maturity of each participating company on a scale of 1 to 5, where 1 means "ad hoc" or immature, 3 means "defined" or aspiring and 5 means "optimised" or mature. The survey revealed that more than fifty percent of the respondents organisations use immature management practices and have not moved from tactical projects focused on cost reduction toward a more holistic, strategically defined and aligned program. We found that:

• Large organisations struggle to mature. The difficulty of improving organisational maturity increases with the size of the organisation. Despite their greater resources, larger organisations struggle to get above level 3.

• Firms are shifting their focus from cost reduction to improving the customer experience. At the beginning of the BPM journey, organisations quite rightly focus on reducing costs. As they transition from level 2 to level 3, they put more emphasis on the customer experience, before moving on to innovate their value proposition - what they offer customers.

• Business process pros' challenges are also evolving. Immature process organisations struggle to set up the governance and chartering of the initiative, which then evolves into best practices for running business process COE higher levels of maturity. By the time the organisation reaches level 4, everyone gets it, yet they still need a firm grip on the road map and metrics.

• Business architecture plays a critical role in long-term success. Perhaps the most critical finding is the role business architecture plays in defining the organisation's target operating model (TOM). While on average, the target operating model (TOM) concept was in the sights of half of all respondents, that figure rises to 75% in organisations with mature business architecture functions.

The Forrester/IQPC survey was based on four underlying assumptions. Mature organisations: 1) articulate business process change strategies in terms of business outcomes, not IT efficiencies; 2) execute process changes through consistent governance and performance management practices; 3) support the execution of the process change strategy through a simple, effective structure; and 4) develop a culture of continuous improvement. As organisations mature, the challenges, strategies, and tactics associated with business process change also evolve.

To move forward, organisations need to get past their endless fascination with cost reduction to embrace customer innovation. Reducing costs remains the easiest way to justify process change, but mature organisations move on to focus on the customer experience and value innovation. While doing so they overcome the resistance from silo structures, which still persist in most organisations.

Business architecture is a critical capability required to develop holistic processes and operating models, which bridge between structural silos. But many process change programs have only immature business architecture capabilities. Therefore it was no surprise that half of the organisations in our survey have yet to embrace the notion of a TOM to guide process improvement initiatives.

As a result, many programs struggle to define an effective process change road map. And without clear business process improvement plans, making the case for business process change can be tricky. The Forrester survey has shown that there's a clear link between business architecture, the existence of a TOM and high levels of organisational maturity. Hence, it's especially important for larger organisations to develop a robust idea of the value they need to provide, the capabilities required to deliver this value, and the typical processes that deliver customer experience.

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Derek Miers and Alexander Peters are Principal Analysts at Forrester Research where they contribute to Forrester's offerings for Business Process professionals. Both Derek and Alex will be speaking at Forrester's Business Process Summit EMEA 2011 (November 30, 2011) at The Grove (Herts, UK).


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