Most of the time, people in your organization are improvising and modifying existing processes and even inventing new processes to meet the changing needs of the business and its ever changing environment. This is no matter how thick your procedure manual, how well thought out your business guidelines are or how comprehensive your IT support is for business processes. Once people get involved, ad-hoc, unstructured processes become the norm, rather than the exception. Organizations that see this as the norm are not alone. Even though unstructured, ad-hoc processes sound a bit like an oxymoron, most business process experts agree that between 60 percent and 80 percent of all processes in an organization are exactly that. These processes are the human side of business processes – they consist of gathering information, collaborating and negotiating with others, and making decisions—all which are fundamentally human activities.
The good news is that by using basic office tools (e.g. email, documents) people are executing these unstructured processes and the work is getting done. The bad news is that the business has no visibility into these processes–either during execution or upon completion; no IT support for control, management and tracking of these process; and no way to measure the effectiveness of these processes. This is becoming a critical business issue since these human processes are not just on the periphery of the business, but are the heart of the business and run the gamut from strategic planning processes to compliance tracking to audits. For many companies, the way they handle unstructured processes is the key differentiator between their execution capabilities, and those of their competitors.
Until now, most companies have focused their process management efforts on the larger, structured processes like Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP). As the system for managing these structured processed have been implemented, both companies and analysts are coming to the realization that focusing on their structured processes isn’t enough; they need to start paying attention to their unstructured processes. Ignoring these unstructured processes is expensive and risky. For example, an overlooked email causing a missed government regulation deadline that leads to fines and sanctions; an inefficient investigation of a customer fraud report causing unneeded additional expense and an unhappy customer; and an incomplete audit because of missed communication or an audit with unimplemented findings that fell between the cracks.
It is no mystery why this happens. Email and documents are the preferred tools for running such processes – just take a look at your own email inbox. For most of us it contains some spam, personal items, one-off correspondence and a number of ongoing business processes that you actively participate in, or need to know about. The email chain of these “long running” business processes are scattered throughout your inbox and the inboxes of other participants, making them easy to overlook, hard to manage and almost impossible to audit. Some may have critical actions that you need to take, while others are on hold while some aspect is being handled by others. Some of the processes you own, while in others you are just a participant. Multiply your own experience by the number of “knowledge workers” in your organization and you get a feel for the scope of the problem.
Until your business has visibility into these unstructured processes, you really aren’t managing most of your business processes. If these processes should be tracked for compliance reasons, or are part of some larger compliance process, then this lack of visibility and auditability can cause real issues. For example, think of your businesses regulatory and compliance processes. These are people intensive processes which are kicked off as a result of an external regulation. Think of how many emails and documents are generated by these processes–does your business really know how compliance procedures are being executed? Or, where each of the currently running compliance processes stand? Since these processes tend to be ad-hoc and changing on a case-by-case basis, people tend to use ad-hoc methods (e.g. documents and email) to deal with them. But, since they entail some type of penalty, if not completed on time, the business needs the ability to track and monitor the process. Enabling the monitoring and tracking of unstructured processes also enables a system-of-record for these processes and their execution–an invaluable asset if issues arise and an audit trail is needed. Sarbanes Oxley compliance and Health, Safety, Environment processes are examples of unstructured processes that fall into this category.
Managing unstructured processes related to compliance, can be a valuable way to lower your company’s risk. As opposed to structured solutions to compliance which require new applications for each regulatory requirement, managing unstructured processes is a good catch-all solution for compliance requirements. Managing unstructured processes brings with it visibility and accountability which didn’t exist before, and allows management the ability to take charge of all processes that have compliance requirements, without the need for a specific tool for every regulation, or additional compliance related staffing. It can also provide a system of record for process execution, which can be used for compliance or performance optimization purposes.
Another type of related process is internal audits. Internal audits of various organizational processes and the adherence to corporate guidelines generate a lot of back-and-forth and negotiations before findings are published. In most cases, email and spreadsheets are the preferred tools for handling internal audit processes–making tracking and control very difficult, if not impossible, and provide no visibility into the process. The ability to track and monitor these negotiations can ensure that the audit process stays on track and on target. Once the findings are accepted and published, tracking related processes that were kicked-off to address the findings ensures that nothing falls between the cracks. This type of visibility and tracking can be especially valuable to board committees such as the audit committee, enabling them to track the status of various audit-related activities company wide.
A completely different type of unstructured process is decision tracking. For example, take the minutes of a board of directors meeting. High-level decisions are taken which need to be translated to execution. These decisions should kick off a set of unstructured processes with the goal of implementing those decisions. The problem is that there is no real way to track how the implementation is progressing, since each decision can generate tens of related human processes. How many times has your company made decisions that dissipate and never get implemented since there was no way to track and monitor the progress made? Being able to track and monitor the human processes surrounding decision implementation allows monitoring and follow up to ensure decisions are implemented.
Managing unstructured processes can have another benefit–they can be an “early warning system” of changes in the business and customer environment. Most companies have structured processes management tools for basic process like CRM and ERP. These tools handle the standard process flows very well, but they all have a mechanism (usually email) for initiating an unstructured, human process to handle exceptions to the structured process, or to handle escalations outside the scope of the normal process flow. Tracking these “exception” processes can be very valuable since they can provide an “early warning systems” of changes in the business and customer environment–that isn’t visible through any other system.
Let’s say you are convinced that managing your businesses ad-hoc, unstructured processes is beneficial both from a bottom line perspective and risk mitigation perspective. So how do you get started? What can you do tomorrow?
The first step is to start paying attention to the unstructured processes in your organization. Once you start looking, you will see them everywhere. The next step is to get management and IT on board. Choose a domain that will have quick benefit from managing their unstructured processes. Audits can be a good place to start, for example. Together with IT, have them start looking into tools for managing these unstructured processes. Vendors are starting to provide tools to support unstructured, human processes and companies need to start adopting these tools. The process tools that are fastest to implement allow workers to continue to use the work environment they know and are familiar with (i.e. email and documents), but enhance those tools so that they have a process focus, provide a process execution system of record and allow for the tracking and management of unstructured processes.
In short, every business runs on unstructured, human processes. These processes are the human side of business processes. They consist of gathering information, collaborating and negotiating with others, and making decisions, all which are fundamentally human activities. These processes are pervasive, including about 60 percent to 80 percent of all businesses processes – ignoring these processes is costing you money, and increasing your risk. The time has come for directors and executive management to be proactive at getting their companies to manage their unstructured processes as way towards operational excellence and lowered risk.
Jacob Ukelson is CTO of ActionBase, a company that provides Human Process Management Solutions that enable businesses to manage their business critical processes.