While Lean Six Sigma techniques reliably contribute to operational excellence, they do not necessarily identify the full impact of business process improvement programs. Specifically for Six Sigma, there has been reason for much criticism in the past. This article uses a real-life case related to the enhancement of a Capital Markets global business service delivery operation, and describes how to engage “client” and “delivery” executives in order to tightly align technical project execution with business strategy. A parallel process brings together delivery and service line managers, to create and execute a continuous improvement road map. This results in both better alignment with business priorities and a deeper understanding of the full business impacts by key client decision-makers. Better, more holistic decisions are hence taken - resulting in stronger business impact. These aspects are essential for the “industrialization of business processes” to become a reality.
Missing a true north
Business enterprises routinely partner with offshore IT providers with the goal of reducing operating costs for specific components of the business infrastructure. This tends to obscure the broader benefits of advanced delivery models such as business process outsourcing. For example, the business value of more responsive customer service or streamlined regulatory compliance may not be properly measured in a setting where cost-cutting is the stated objective. This is most likely to happen an improvement project is limited to process owners - as opposed to business owners or senior management of the “client” organization.
Inclusion of client executives and aligning project execution with broader business priorities has the - often unused - potential to bring to light the indirect benefits and provide visibility to invest in areas that create significant competitive advantages. At the same time, this increased visibility provides a powerful vehicle for the provider to demonstrate business value. These considerations hold true regardless of whether the service provider is an external entity, or internal shared services and captives. In our experience however, internal shared services may lack the program management rigor to perform this alignment, and leave value “on the table”.
Genpact had the opportunity to carry out a rigorous assessment of this issue when it established a business group called CMITS (Capital Markets - IT Services) built from a capital markets IT solutions provider it acquired in 2012. The CMITS team had a good track record of process improvement for its business clients, but it lacked Genpact’s ingrained Lean and Six Sigma DNA. The process of integrating the Genpact service model into CMITS set the stage for detailed assessment and documentation of techniques for simultaneously achieving operational excellence and articulating outcomes to key client decision-makers.
Structuring the solution: A better approach to program governance when “industrializing” business processes
Genpact quality leaders supported the CMITS integration process with a series of brainstorming sessions with account and delivery managers to articulate the principles underlying the company’s leading-edge quality processes. Three key insights were central to the resulting strategy for building these capabilities within CMITS. First, Lean Six Sigma on its own will reliably yield operational results but not necessarily communicate outcomes to C-suite executives or CXOs. Second, engagement of CXOs in the governance process both improves alignment with customer priorities and communicates results. And third, it is necessary to assess the broader business impact of process improvements beyond the operational measures specified in the Service Level Agreement (SLA). All three principles should be integrated into project governance processes.
Getting it to work
The project began in the second quarter of 2013, with the identification of 12 target client accounts, definition of a two-tier governance framework, and provision of education and support to delivery and account leaders.
The governance framework – called Business Review – involves all relevant stakeholders in the process of identifying customer priorities, establishing a Continuous Improvement (CI) road map, launching initiatives, and measuring outcomes. The first tier, the Quarterly Business Review (QBR) engages the client CXO as well as the Genpact operating and engagement leaders to establish customer priorities and oversee program governance. This group monitors the execution of the roadmap and assesses overall business impacts of the program. The second tier, the Monthly Business Review (MBR) engages delivery and service line managers in the task of achieving operational excellence. This team is responsible for creating and executing the roadmap and ensuring that service levels are met, that process compliance is achieved, and that program risks are identified and mitigated.
In some cases, a third tier called the Business Quality Council (BQC), may also be established, involving the Genpact Quality Leader or Master Black Belt, and the CXO. This is relevant mainly for customers with a very strong quality focus.
Two Master Black Belts were assigned to assist the delivery and account leaders in their work.
Education/training sessions were provided to convey a deep understanding of the strategy, policy and framework of the Genpact service model. Ongoing support was provided using a Genpact tool called Xcelerate, which is designed to support structured execution of customer projects, and a dashboard was created to track progress and outcomes for all 12 accounts.
Measuring outcomes. Outcomes were monitored along two dimensions. The roll-out of the governance process was tracked to record the establishment of MBRs and QBRs, and the implementation of the CI road map for each account was monitored to determine whether key stakeholders had been engaged. Business impact was also measured in dollar terms both for actualized and ‘line of sight’ gains. By October 2013, the governance structure had been institutionalized, with all accounts reporting established MBRs and 8 of the 12 with QBRs. For all but one account, customers had been engaged in tracking the CI roadmap. Delivered business impacts were assessed at more than $100 million and additional line-of-sight impacts had begun to be identified by using Xcelerate.
Our experience shows that there is no one-size-fits-all solution for measuring and communicating the business impacts of a process improvement program. Much depends on the customer’s own quality focus and degree of maturity. Some may not be ready to act on the information that the Business Review can provide. On the other hand, most customers are interested in achieving greater visibility into the business impacts of process improvements even if only as an intellectual exercise. Similarly, some CXOs are more interested than others in demonstrating their own performance through the documentation of the full range of business impacts.
Another challenge is the reluctance of some customers to assign a dollar value to indirect business impacts, making improvements harder to demonstrate. To some extent this can be addressed by agreeing on quantification methods in advance. Still, it is not always necessary or even useful to do this precisely as long as it is possible to establish a mindset where alignment of process improvements with broader business priorities is both perceived and valued by senior decision-makers in the customer’s organization.
Finally, although both the client and the service provider benefit from a stronger focus on business impacts, clients are not generally interested in bearing any part of the cost of an enhanced governance process. The effort involved therefore must be embedded in the process improvement operating model. Sustained support from the quality team, the Black Belts and the Master Black Belt is critical to achieving this.
In the current volatile, uncertain and fast-changing business environment, enterprises will increasingly expect business process providers – be they external firms or internal centers - to demonstrate a deep understanding of how improvements drive competitive advantage through advanced operations. Being able to estimate and communicate a holistic picture of the benefits accrued, and relentlessly aim at it during the “heat of the battle” of the respective projects, is critical to achieving strategically material outcomes. The Genpact experience described in this paper shows how the linkages between operational excellence and client strategic priorities can be strengthened, for the benefit of both parties.
For more information, contact, firstname.lastname@example.org and visit, genpact.com/what-we-do/industries/banking-financial-services