Consultants' Corner

Will "Process" Trump "Project" in PMO?

Scot McConkey
Insurance Experts' Forum, December 27, 2011

I don’t actually expect “process” to replace “project” in “PMO,” but using the degree of change happening in the healthcare industry as an example, I do believe that the concept of a process management office is becoming essential. The healthcare industry is undergoing change of a scope and pace unlike anything we’ve seen. And although it isn’t exactly clear what all of the operational changes in the industry will be, change is a certainty—current capabilities will be modified and new ones will be added. In order to prepare for and execute the change programs that are underway or approaching, organizations should not only have solid project management offices in place but also process management offices. A process management office should ensure that process architectures are defined across the organization in a consistent manner to provide a solid base for making the changes that will occur over the next several years. Process architectures should encompass four key dimensions:

1) Process Maps

2) Process Definition

3) Process Maturity

4) Process Measurement

Process Maps: All of the major processes should be documented on a schematic in a way that allows the interactions between each of the processes to be understood. When changes must be implemented to support a new requirement, process maps will help to identify: 1) where changes must be implemented, 2) all of the processes that will be affected by a specific change, and 3) where to integrate new capabilities into the current processing environment.

Process Definition: Each major process in the organization should have a documented Process Plan that, among other things, outlines the goals of the process, defines its inputs and outputs, describes error-handling procedures, identifies the process owner, and provides tools for estimating the resource requirements needed to execute the process. Having comprehensive and consistent process plans will help ensure that any change programs are appropriately integrated into the current processing organization.

Process Maturity: There should be a means by which processes can be assessed to determine how well they have been constructed. Nolan uses a process maturity model as a standard by which processes can be assessed, using criteria such as: “Is the process scheduled?” “Is it officially resourced?” “Is it documented?” “Is it measured?” “Is it part of a continuous improvement program?” A process maturity model allows an organization to understand how solid their processing base is (as well as how to improve it) as they prepare for the inevitable changes.

Process Measurement: It is always important to measure how well processes are performing. However, with the mounting costs and regulatory pressures, it is going to be critical that organizations adopt standard analytics and definitions to support process measurement. As there will be significant stress on the processing environments over the next several years, it will be important to closely measure processes to ensure that changes do not adversely affect performance in a way that causes significant customer service, regulatory, or cost issues for the organization. A standardized process measurement approach also allows the impacts of changes to be understood and incorporated into performance expectations of the organization.

My experiences in process engineering and management have made it clear time and again that a standard process architecture helps an organization prepare for the inevitable changes it will face.  This is particularly true in financial services and the healthcare industry, both of which face unprecedented and somewhat unpredictable change in the coming few years.

To go along with process standards, there should be central accountability for managing process architecture, and that accountability should reside within a process management office. And although structure is needed to ensure the successful implementation of process architecture, take care to avoid process architecture becoming an academic exercise. Don't over-engineer the process architecture—make sure it is easy to understand and broadly accepted in the organization, and verify that the tools are actually useful to people responsible for implementing change and operating the ongoing environment.

Scot McConkey is SVP of the Healthcare practice for the Robert E. Nolan Company, a management consulting firm specializing in the insurance industry. He can be reached at smcconkey@renolan.com.

 

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