Opportunity: an embarrassment of riches.

• Author: Heitman, William
• Position: Improvement Opportunities

The wide scope of operations improvement benefits available without technology is neither widely recognized, nor well understood. Perhaps this is because most organizations are reluctant to consider their non-technology (such as people-related) aspects as candidates for break-through levels of improvement. Consequently, when the substantial benefits of Class I improvement are first introduced (productivity gains up to 30 percent or more), the response is often swift and skeptical--particularly from operations managers, internal improvement teams and IT specialists.

However, more-seasoned executives will correctly sense opportunity behind an organization's initial reluctance to look inward for major improvement benefits. These executives use fact-based, activity-level analysis to guide their improvement efforts, achieving breathtaking productivity gains.

Consider the monthly financial close and management reporting process. A typical large company can identify two hundred or more distinct activities within this process. At a general level, these can be classified into three categories: data gathering, analysis and reporting. On average, data gathering (including collection, entry and scrubbing of data) accounts for three-quarters of the staff time expended, whereas analyzing and reporting each constitute only 10 percent to 15 percent of the time spent.

Why is this significant? It provides a clear indication of where to look for improvement opportunities. Even modest improvement in data-gathering activities can significantly boost the finance group's overall performance.

The Improvement Blind Spot: A Lack of Facts

When looking at a process map depicting two hundred closing activities, managing the process of Class I improvement may appear complex and mired in arcane, operational detail. And, after being informed by operations staff and technology vendors that few non-technology improvement opportunities are available, many executives might be tempted to delegate sponsorship of these seemingly low-payback projects to others. This is a costly mistake.

The managerial challenges of Class I improvement are no more difficult, nor time-consuming, than those routinely addressed by executives in other parts of their businesses, such as product/service delivery or distribution channel management. Rather, it is the virtually complete lack of objective, fact-based information that makes Class I opportunities so difficult to evaluate and to manage in a...