Business Process Standardization

Coming - ready or not!

Businesses around the world are slowly, but surely, beginning to standardize (and in some cases commoditize) their processes. This special Dr. ITIL article examines some of the issues for IT Service Providers in how to provide quality and cost effective services into a standardized business processes.

The inspiration and initial research for this new post stems from a Harvard Business School article entitled, "The Benefits of Business Process Standards" and further more in-depth research on the Supply Chain Operations Reference (SCOR) model. Further links can be found at the end of this post.

If you think about it - standardizing processes is something that IT Service People have been working on for some time now through our ITIL implementations. But what about our business colleagues?

Most companies take a “do-it-yourself” approach to carrying out their business activities whether it’s how they take an order or deliver the end good to their customers. Since each company does it ‘in house’ there’s no easy way of telling whether anyone else, such as an outsourcer, can do it more effectively or cheaper.

This lack of standardization hinders benchmarking and comparisons. Such a lack of standards has led up to 50% of companies who do outsource elements of their business processes reporting that they are ‘dissatisfied’ with the service they receive.

However, according to HBS, we are at the foot of a new paradigm that will lead to “dramatic changes in the shape and structure of corporations”.

HBS reports that, “A broad set of process standards will soon make it easy to determine whether a business capability can be improved by outsourcing it. Such standards will also make it easier to compare service providers and evaluate the costs versus the benefits of outsourcing.

Eventually these costs and benefits will be so visible to buyers that outsourced processes will become a commodity, and prices will fall dramatically. The low costs and low risk of outsourcing will accelerate the flow of jobs offshore, force companies to look differently at their strategies, and change the basis of competition. These changes are already happening in some process domains, and there are many indications that they will spread across virtually all commonly performed processes.”

There are many benefits in process standardization:-

- Improved handoffs
- Improved communication
- Enables performance comparisons and benchmarking

- Allows uniform Global IT and Communications systems
- Easier outsourcing (cost and capability comparisons)

In addition, there are three underpinning essential requirements for effective process standardization:-

- Process Activity and Flow Standards
- Process Performance Standards
- Process Measurement Standards

Such efforts are already beginning to take root in certain Industries. One great example is in the “Supply Chain” with the Supply Chain Council taking the lead with its 800+ members shaping, developing and utilizing the
Supply Chain Operations Reference (SCOR) Model.

SCOR is enhanced regularly by teams of dedicated volunteers who work within Steering Committees on topics like making metrics easier to use (for members in measuring their supply chain processes), benchmarking and to refresh and update best practices that are included in the Model.

[SIDE BAR:- Within the SCOR reference model they have developed a definition of “Best Practice” that would be really useful in the ITIL world:-

“A current, structured, proven and repeatable method for making a positive impact on desired operational results.

This definition will continue to be used to identify "new" best practices (best practices not currently documented in the Model) and to validate best practices that are currently in the Model.” Nice ;>]

Where Standards Meet Standards.

So, this brings me to a central theme of this article. Are IT Service Providers (and Outsourcers) well placed to align, integrate and embrace standard business process models like SCOR when delivering quality and cost effective IT Serrvices into these business lines?

If you think your ready, then the delivery of required IT services to desired standards using Service Level Agreements (underpinned by the ITIL framework and standards such as ISO20000) should be much easier, more cost effective and ultimately provide a "clear line of sight" from your core Infrastructure, to Business Process, to the end Customer who keeps you in a job.

If you are not, then you better get ready, because standardized business processes will happen. Coming ready or not.

As HBS states, “It's better to help shape a standard than to be put out of business by it.”

So, what can we (in IT Service Delivery) do about it?

Dr. ITIL recommends a number of “on ramps” to assist towards delivering IT Service into Standardised Business Processes:-

Begin enhancing your own level of Business communication
- Find out who’s driving standardization in the business
- Join steering groups
- Build relationships with ‘movers and shakers’

Begin Influencing
- Have a voice at the table
- Sell the benefits of standardisation in IT Service (ITIL)
- Advise on lesson’s learnt

Share and Learn with other organizations
- Build relationships with others who are mixing the ITIL/business process journey
- Present at business conferences e.g. Supply Chain Council

We'll be revisiting the SCOR model next week - in particularly we are very interested to learn much more about how the model is developed, revised and integrated into Supply Chain Council's members organizations.

Are there are lessons learnt in this space that would assist us in the ITIL space with enhancing ITIL further?

HBS Article here...

Learn more about SCOR here... and here...