Process Intelligence and Activity Based Management (ABM)
Activity-Based Management (ABM) establishes relationships between activities and their impact on costs and revenue so that activities have clear attribution allocated to organizational processes and process flows.
Automated process mining and mapping provides process analytics, analysis, and insights for process intelligence, which is needed for process and activity optimization.
The establishment of an ABM Program that leverages process intelligence allows stakeholders across the organization to better understand the impact of business processes to the value chain and how to improve those processes.
ABM objectives typically include qualification and quantification of value-added activities, reduction of low-value-added activities, and redesign of processes to improve efficiency and financial health.
Identification of processes and activities that most impact the operations and financial health of an organization is an important first step in activity-based management.
This provides clarity and understanding about the financial impact based on the costs incurred or revenue generated during processes and activities.
Superior sales organizations use this best practice to evaluate the contribution of sales activities across the sales lifecycle. For example, evaluation of the execution of a second meeting with a prospective customer, a requirement to transition from stage 1 to stage 2 within the sales process, based on the number of resources and time required to secure and execute that meeting.
Evaluation and Analysis
Benchmarking execution of processes and activities makes it possible to calculate the financial impact of process non-compliance and deviations. This also ensures adequate evaluation of critical processes according to actual activities based on execution during the process.
Product demos that are conducted routinely for prospects early in a sales process activity may be considered critical. An analysis of the cost and financial impact of that process will help determine if conducting demos early in the sales process should continue or possibly be considered a sales best practice if the value-add is high.
With an activity-based analysis the value generated by each process and related activities can be quantified and compared to the expected financial impact. For example, the value generated by routinely conducting sales demos can be measured by the impact to sales motion, sales cycle time, and the close rate generated over a certain period. Benefits realized by conducting the demos can be weighed against the cost of executing the demos and can help to determine whether the process and activities are profitable or problematic.
Identifying Opportunities to Improve
The processes analyzed and collected through Activity-Based Management (ABM) and value-chain analysis can be used to identify and implement the processes that most improve the organization’s operations and strategies.
Classifying sales processes and activities based on their level of impact on value engagement and sales motion ensures validation of priorities. Process intelligence can be used to improve sales motion and reduce non-selling time across the entire sales lifecycle.
Operational ABM includes an evaluation of the contribution of activities that increase operational efficiency. Activities that do not generate adequate value can be discontinued and resources can be allocated to other activities that will result in realization of higher efficiency. Ongoing review of best practices by stakeholders enables continuous enhancement of value-generating activities and elimination of unnecessary costs and non-value-generating activities. It ensures process anomalies are identified and investigated accordingly.
Performance can be improved in many functional areas when the right individuals have access to the right information. This visibility results in better collaboration that can deliver a compounded impact to operational performance.
An assessment that utilizes ABM to project the financial impact and benefit of activities allows the organization to develop strategies that will adequately inform planning and forecasting.
Using process intelligence to inform an ABM program can drive better decisions by functional managers and stakeholders. The increased visibility and understanding of processes and activities via value attribution and process intelligence results in better accountability that maximizes performance across the organization even in highly matrixed organizations.
Establishing an ABM Program that is informed by an agile process intelligence solution can ensure that performance and value are measured by comparing actual outcomes with standards. Adoption can then be driven by making a clear connection across all areas and functions of the business in ways that help departments achieve their performance initiatives and goals. The ABM Program can become part of the organization’s operational culture, include continual improvement and innovation objectives, and change the way the organization views and approaches its total operations.