How Does Speed Deliver Business Benefit?

Speeding up a business process will often deliver significant business benefits. It is easy to see why. A business consists of many different processes. Increase the speed of any one of these, even in a small way, and you either end up delivering a service to someone faster (another department, a business partner or a customer) or you increase capacity. Either way you win something.

Information technology has delivered the benefit of speed in many ways over many decades as the speed of technology itself has increased. The statistics are impressive. Computer CPUs double in speed roughly every 18 months and other component technologies; memory chips, switches, disk – indeed just about everything – now do the same. Sometimes businesses find dramatically successful ways of putting this extra power and speed to use, but often it makes less difference – everything goes a little faster, but no radical advantage is obtained by anyone.

Why?

To understand, we need to examine how business processes are supported by automation.

Business Cycles and People Cycles

Almost all business processes proceed in repeating cycles. Some time cycles are short, such as the taking of an order from a customer and some are long, such as completing an R&D project. A few cycles are fixed by external forces, such as the legal requirement to file financial results on an annual basis. However most business process cycles are not fixed at all and businesses can gain competitive advantage by speeding up such cycles.

If we analyze business process cycles we can categorize them according to their periodicity. The illustration below shows a scheme for doing this:

Fig 1. Business Process Periodicity

The scheme draws a simple distinction between business processes according to cycle time, with each classification labeled to distinguish its nature.

• Planning: the cycle time for strategic planning activities, is usually measured in years. Recent and historic business activity is analyzed and market intelligence is gathered over time. At some point, perhaps at an annual meeting, organizational plans are created and then implemented over time. The process repeats when it becomes clear that a significant change in business strategy is necessary.
• Scheduled: The next classification, scheduled, refers to the normal management activity in the various departments of a company. Departments are usually organized and work to a regular schedule, hopefully with clear performance goals. Such scheduling normally has cycles that vary from months to days. There are many examples from sales activity to manufacturing cycles.
• Responsive: Responsive is a faster classification than scheduled. The cycles here usually involve a high level of human activity and thought. Examples would include sales calls, vetting of insurance claims or customer complaints, writing business reports and so on. Such activity often involves the considered analysis of information and its application to some well defined task. Cycle times may vary from a few days to hours or minutes. The hallmark of such activity is that it is responding to expected or predictable events, so business intelligence software is often involved.
• Interactive: The Interactive classification is about man/machine interaction. On a production line, for example, an interactive process might involve an employee adding a circuit board to a PC. In an office it is typified by adding or changing computer information, for example, taking an order, making an account posting or adding customer information. It is all about “transactions”. Cycle times range from minutes down to seconds.
• Immediate: The next classification, Immediate, has a much faster cycle. It refers to the situation where an individual is not so much interacting with an automated system, as immersed in a kind of partnership with the system – the two interact in an immediate way. A simple mechanical example is a driver and a vehicle. The driver needs to react to the activity of the vehicle on an immediate basis. The same is true of many computer activities; from CAD to word processing. At an event level the computer user reacts to the computer (hits a key, moves the mouse, etc.) and the computer responds almost instantly.
• Real Time: The final classification, Real Time, doesn’t involve man/machine interaction at all. The computer does everything, as for example in process control systems where the computer runs a fully automated manufacturing facility.

The first three classifications may involve important elements of automation, but they are rarely highly dependent on automation. However, the last three classifications depend critically on automation.

Making A Difference With Automation

You may have noticed as we moved through the description of these classifications that we moved across a spectrum from least automated (Planning) to fully automated (Real Time). At the same time we should note that each classification probably includes tasks and activities from the adjacent faster classification.

Thus the activity of planning feeds from information gathered in Scheduled management activities such as financial reviews and sales reviews which normally involve Scheduled reporting systems. Scheduled activities are made up of Responsive activities, which may include Interactive activities, and so on. In other words longer cycles naturally include tasks with shorter cycles.

So, if we speed up an activity that has a short cycle it can speed up a longer cycle activity that it is part of. We can see this is if we consider the simple activity of order taking. When it was first automated it involved customers filling in paper forms which were received in the mail. Then they were transferred onto punch cards, then processed in a daily batch run. Later a batch printing run would be done to print the confirmations, which were mechanically decollated, stuffed in envelopes and posted to the customer. The process could take many days as all of these activities were Scheduled or Responsive activities.

We can compare this to filling in a form on a web site and receiving a confirmation by email. Filling in the form is an Interactive activity (it may take minutes, but the web site responds in seconds) and receiving the confirmation is almost Interactive (it usually takes seconds). Everything else is happening at Immediate or even Real Time speeds. Every single part of the process has become dramatically faster, and so has the whole process.

The really important point to note is that:

Moving an activity from one time cycle classification to a faster classification will always deliver a big business pay-off.

I will be returning to this set of classifications in my next posting.