When 80% of process related projects fail to meet their objectives, you should start asking questions. While “Who’s to blame” is the usual one, “Could it have been avoided” makes a lot more sense.
Our analysis at the Process TestLab show that there’s certainly a lot you can do a) to avoid process errors and b) (maybe even more important) to reduce the impact and consequences.
The logic is irresistible: The later you discover process design errors, the more costly it becomes to correct them. Putting in a wrong beam can be easily rectified when your still in the preliminary building works phase, it’s only when you notice the mistake after work has been completed and you’re all ready to move in that the consequences will really hit you. Now it’s become not only an issue of changing the beam, you might have to take off the roof and take out a few walls just to get to the beam.
The obvious conclusion? Conduct mandatory quality checks along the way. From the architects design – your business process design, to the builders plans – the IT design, to the actual building process itself until you can sign off on the actual building itself.
So why isn’t this commonly applied to business processes? Maybe it’s because we’re simply unaware of the sheer scale of the problem. So let’s look at a few numbers:
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With an annual investment of around euros 6bn into process projects in Europe alone, a success rate of 20% means that you’re not getting your moneys worth on 5 bn euros.
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Of the remaining 80% a large percentage of projects can be salvaged – but at a cost. The cost of correcting a process design error during the operations phase against during the design phase is on average 75 times higher.
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All through last year, we published our process quality barometer on a monthly basis. The annual average revealed that 90% of all processes checked at the Process TestLab contained design errors ranging from ‘simple’ to ‘can’t be implemented’
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Bent Flyvbbjerg and Alexander Budzier analysis of more than 1.400 projects report in a new study in the Harvard Business Review that “Graphing the projects’ budget overruns reveals a “fat tail”—a large number of gigantic overages. Fully one in six of the projects we studied was a black swan, with a cost overrun of 200%, on average, and a schedule overrun of almost 70%.”
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Gartner Group also rang the alarm bells earlier this year by stating that “Overlooked but Easily Detectable Business Process Defects Will Topple 10 Global 2000 Companies Between Now and Year-End 2014”.
Many customers we talk to will at first refuse to accept the extent of the problem. One reason may be that costs for change request are usually not charged to the project budget – indeed, if the errors resulting in change requests only come to light during operations, there’s no project left. In that case costs will be regarded as operational expenses and get lost in the day to day business.
Another possible reason was mentioned by Mike Gammage on his blog when he said: “But maybe there’s an even deeper reason for clinging on to things as they are and rejecting the wider perspective. Projects – even big ones – are quite comfortable places to be. There’s a seductive sense of certainty and control.”
Errors and mistakes get made. Even with the benefit of hindsight we have to accept this as a fact. But there’s a world of difference between “Making Mistakes” and “Detecting Mistakes”. That is why the Process TestLab has developed a range of services to test, validate and simulate processes for all phases of your process lifecycle. Check first, it’s cheaper in the long run.
