Process Warehouse: The Missing Link in Business Performance Management

Figure 2: The Balanced Scorecard and Process Warehouse

What is a Process Warehouse?

Bill Inmon coined the term "data warehouse" in 1990. His definition is: "A (data) warehouse is a subject-oriented, integrated, time-variant and non-volatile collection of data in support of management's decision making process."

• Subject-oriented - Data that gives information about a particular subject instead of about a company's ongoing operations.
• Integrated - Data that is gathered into the data warehouse from a variety of sources and merged into a coherent whole.
• Time-variant - All data in the data warehouse is identified with a particular time period.
• Non-volatile - Data is stable in a data warehouse. More data is added, but data is never removed. This enables management to gain a consistent picture of the business.

This definition could not be more appropriate in the context of processes in an organization (see Figure 2). The process warehouse is a process-oriented, integrated, time-variant and non-volatile collection of data that helps management get a handle on its internal processes. Given the enormous amounts of its money it spends on processes, the first step toward improving them is to create and utilize the data that can support it in its efforts.

What would a useful process warehouse contain? See Figure 3.

Figure 3: Components of a Process Warehouse

• Process Catalog - This is an inventory of the processes that an organization uses in its business. This is a central place where all data about the processes is stored and retrieved as necessary. In a typical telecom company, in customer service alone, there are hundreds of business processes that are in operation at any time, just for one line of business such as Landline or Mobile services. Consider additional value - added services and additional businesses, and pretty soon you have many hundreds of business processes that are in operation. Names of processes, who designed them, dates they went into operation, location of the stored process documents, the names of the process owners, their e-mail addresses and phone numbers, the measures used on these processes, the calculations for the measurements are all natural parts of a process catalog. Typically, for each process you may have a few hundred attributes and values you need to store and retrieve. Many companies formalize their processes with ISO 9000 standards, but the information is scattered throughout the company, quite often on the desktops of individual process owners. A process catalog centralizes all this information and enables anyone to access details of any one process or run reports across processes.
• Process Models - In order for measures and targets to be instituted for a process, you need a model of the process and the different process steps involved. You also need a multidimensional cube to be associated with the process model for fine-grained process analysis. If a process does not meet its target measures, you need more information to analyze the problems. If a process does not meet turnaround times (TAT), you may need to see what steps contributed more than others to the TAT not being met. More importantly, are there specific kinds of customers, specific kinds of products or services that cause the slips in TAT? The Pareto Principle (80:20 rule) applies very much to processes. In order to track down the 20 percent of the cases that cause 80 percent of the slip-ups in your process, you need a multidimensional cube to give you insights into where you need to concentrate your process improvement efforts on. Process models need not capture only quantitative information such as TAT, accuracy and error counts. Qualitative factors such as customer satisfaction also form natural process measures.
• Process Execution Information - You may need to collect process execution information to see how a process is doing today, this week, this month, this quarter, etc. Process execution information may be available in real time or, in many cases, in the form of batch reports or spreadsheets. This data needs to find its way back to the process warehouse to be useful. Process execution information could also be sampled instead of being collected in an exhaustive manner as long as the samples are representative.
• Process Analysis Information - Once you have a process model and process execution information, you are ready to create and use process analysis information. You have actual process execution information of TATs, accuracy and error rates to compare against targets for each process step. Now daily, weekly, monthly reports can be generated for appropriate decision making. Incorporation of multidimensional modeling in the process model can help you drill down targets that have not been met, down to a customer type or product type or service type that you have included as dimensions in your process model. Statistical process control charts generated from the information collected can help you see if the processes are in statistical control; and if not, you can take appropriate action.
• Process Capability Information - Once you undertake process improvement efforts, you should be able to go back and compare "before" and "after" snapshots of process performance to see how you have improved. More importantly, you may need to keep monitoring to see if the processes are still under control or not. Some standards bodies such as ISO-9000 or COPC (Customer Operations Performance Center) Certification require well-documented processes for basic certification. However, they require well-documented evidence of performance improvement for higher levels of certifications.

This article outlined a set of possible components for a process warehouse. The process warehouse provides the internal process key performance indicators (KPIs) for any organization, the missing link in business performance management.

Escalating operating expenses and competition will force organizations to take a hard look at internal business processes since they are the keys to the company's survival and competitiveness. A process warehouse consolidates all information about a company's processes in an integrated database and makes available valuable information for decision making. A process warehouse facilitates continuous improvement. The potential payback is increased sales and lowered costs because of more competitive, efficient and effective processes.

References:

1. BizStats.com
2. Almanac of Business and Industrial Financial Ratios - 2002 Edition. Prentice-Hall.
3. Kaplan, Robert S., Norton, David P. The Balanced Scorecard: Translating Strategy into Action. Harvard Business School Press. 1996.