An Intelligent Blueprint for Managing Document Workflow

The Dow tells you how stocks are performing this very minute. Your dashboard tells you how your car is performing this very second. An electrocardiogram tells you how your heart is performing beat by beat. Yet when it comes to measuring the performance of document management activities (such as mail/shipping and print/copy center operations), many businesses rely on quarterly results in spreadsheets and PowerPoint presentations. By most standards, monthly is very aggressive.

Unfortunately, real-time or near-real- time performance management is elusive in business and nearly nonexistent outside of one’s core competencies. Although a manufacturing company, for example, may use a dashboard to monitor the production line in real time, it can rarely monitor the supply chain so closely, much less operations like document processes. But support operations cost money and affect results almost as directly as the core business.

There is a fresh approach to meeting these challenges; one that I will explore in this article. This approach leverages the potential of applying business performance management (BPM) principles to advance document performance management (DPM) workflow in a way that enables organizations to reduce costs; better manage documents as vital strategic, financial and information assets; and secure positive returns on investments from outsourcing.

A New Blueprint

DPM can be seen as a subset of business performance management. BPM itself is a business and technology approach for setting strategic objectives, identifying the activities to reach them, quantifying performance of those activities, measuring success (or failure) in near real time and systematically improving deficiencies until the strategic objectives are met.

BPM is most prevalent in industries with performance metrics that are easy to define, quantify and collect. One such industry is manufacturing, where automated devices churn out quantifiable production data. BPM, however, offers a relatively new blueprint for managing and measuring such document processes as mail distribution, copy, print, imaging, records management and eDiscovery.

One reason BPM is new to these areas is that companies tend to see document processes as a fixed cost of doing business—a monolith of red tape. And unlike a production line, document processes don’t overtly and obviously generate data that is plainly measurable against strategic business objectives. Whatever mail comes in just gets processed. Whatever time it takes to manage records archives is the amount of time it takes. The number of printers you own is how many you probably need, and how many copies they pump out is driven by one thing: somebody’s need for a copy.

That view is evolving as forward-looking companies find ways to translate document processes into hard numbers that inform a “balanced scorecard.” And to address deficiencies, more organizations are beginning to use systematic quality initiatives like Six Sigma®, Lean and 5S.

The Balanced Scorecard

Let’s take a closer look at the balanced scorecard, which provides a framework for measuring business performance that transcends short-sighted financial considerations. As its name implies, the balanced scorecard envisions organizations balancing today’s financial performance with perspectives like the voice of the customer, human resources (HR) and operations. A company might want to know whether customers are satisfied, employees are continuously learning and improving, and operations reflect best practices.

Each of these four perspectives encompasses strategic objectives as well as the set of activities required to reach the objectives. Each activity is discretely quantified, measured and monitored in near real time in terms of volume, accuracy and timeliness. These activities roll back up into the four perspectives of the balanced scorecard—financial, HR, operations and voice of the customer—enabling any organization to instantly and objectively assess performance from the macro to the micro levels.

It’s important that the BPM system encompass all document processes across all divisions and geographies, whether activities are insourced, outsourced or a combination of both. Otherwise, the organization is simply building new silos that will eventually need to be integrated with the rest of the enterprise.

Defining Objective Metrics

Since there are many ways to talk about document performance management, let me spotlight a few terms for clarification:

• A service level agreement (SLA) is the contract an organization has with a service partner requiring the partner to perform certain functions at a pre-determined proficiency level, e.g., process all incoming mail within four hours of receipt, ensure 98 percent uptime on all print/copy/fax machines or produce any archived record within 30 minutes of a request. Very often incentives are included in an SLA if the service provider meets or exceeds certain excellence benchmarks. Conversely, there are penalties for underperformance. These provisions equate to a performance guarantee.
• A metric is typically a percentage or ratio, such as on-time performance percentage or accuracy percentage.
• A measure is a data point, e.g., 1,000 mail pieces.
• A key performance indicator (KPI) is a metric that an organization monitors through a DPM system to gauge compliance with an SLA and to make progress against a balanced scorecard. KPIs should be specific, measurable and results-oriented.

Which KPIs Do You Use?

Although the terminology is easy enough, several challenges arise with KPIs. One is deconstructing a KPI into the right set of metrics, or truly relevant SLAs, to clearly chart progress toward strategic objectives. A second challenge is finding indicators that can be “rolled up” into a DPM dashboard that enables a senior manager to view, at a glance, current overall performance against strategic objectives. The wrong KPIs can steer an organization off course.

Whichever KPIs you choose, you can’t etch them in stone. KPIs must be dynamic. Years ago, a bank, for example, might have set as a key performance indicator the percentage of paper statements mailed on time. Technology has made that KPI virtually obsolete. A better metric for today might be the percentage of accurate electronic statements posted.

It also makes sense to rank KPIs in terms of importance. The same bank during an economic crisis might place a special focus on three or four critical KPIs in addition to the metrics it monitors during stable business conditions.

In general, you should have only as many KPIs as you need for a clear and effective view of your performance that leads to actionable results. By definition, a few KPIs tell the story of the rest. Just as a person driving a car can read only so many gauges—speed, RPMs, engine temperature and fuel level—a business can only monitor so many performance indicators before they are no longer key but superfluous. Cost per mail piece, for example, has implications for financial performance and volume management, so additional KPIs on these counts may be redundant.

Once you understand the building blocks of DPM, the trick is putting them to good use. Following is a brief case history illustrating how an insurance company examined its processes, developed KPIs and a balanced scorecard, and improved performance.

A DPM Case Study

A life insurance company receives 40,000 claims per month on individual life, group life and annuities. It scans the claims into images, making them easy to process. Quick claims processing is a critical differentiator for the highly competitive, word-of-mouth- driven insurance industry. Processing claims in hours instead of weeks makes a big impact on customer satisfaction, market share and profit.

Despite suspected overstaffing, the insurance company was reporting sub-standard turnaround for receiving mail and scanning it into the database. Poor grades were based on anecdotal feedback from internal departments, which had no view into the scanning process. No metrics were in place to judge scanning timeliness or accuracy against service level agreements.

The insurance company engaged to Canon Business Process Services to manage the scanning process and deploy a best practices team. Led by a Six Sigma® master black belt, the team applied BPM principles to the problem and documented all processes, implemented performance tracking and reporting, helped the client define an objective scorecard and associated metrics, analyzed true cycle time performance, recommended changes and kept the client apprised of progress.

Objective measurement of KPIs indicated that work was in fact occurring within deadline, but that there were more efficiencies to be gained. Productivity could increase without redesigning workflow. Rather, the organization could better align staff with mail volume and eliminate interruptions.

Better staffing saved the insurance company more than $150,000 annually in labor expenses. Staffing was reduced from 28 to 21 full-time equivalents. Cycle times were reduced from four hours to two hours. The client is now able to manage using an objective and balanced scorecard and has decided to outsource all of its document processes.