Section 1.2. Business Process Improvement Systems

1.2. Business Process Improvement Systems

Business process improvement (BPI) has been around in different "flavors" for decades. Companies continually look for ways to become more efficient, and with efficiency often comes competitive advantage. If a company can create a computer program or a part for a car at a lower cost than another company, it has a distinct advantage. It can sell the part for less than its competitors, which often leads to greater market share. That company also has the option of selling the product for the same as its competitors, but making a larger profit on each unit. With more profit comes the ability to pick and choose markets, pricing, profit margins, etc. So, it makes sense that companies are constantly looking for ways to improve their business processes to gain that advantage. In a moment, we'll take a look at some of the more popular business process improvement methods being used by companies today. To tie it all in, we'll begin with project management since project management is, essentially, one aspect of improving business processes. Project management is a structured methodology for evaluating, defining, and managing projects, so it clearly fits into the business process improvement arena.

1.2.1. The Project Management Institute

As with other BPI systems, project management (PM) also has many different flavors, but essentially, project management is project management. Numerous companies develop and sell proprietary systems and approaches to PM, but ultimately those systems all use the same fundamentals. That's not to say that some companies haven't developed extremely effective systems. It's just that the fundamentals are the same, regardless of which system you use. Projects are projects: small, large, simple, complex, short, long, economical, expensive, and everything in between. All projects, regardless of size, complexity, or cost can benefit from using PM principles, but there are other quality programs that companies use as wellsometimes in conjunction with PM and sometimes in place of PM. Regardless of the approach you take, implementing a consistent, quality-focused process will improve your results.

The Project Management Institute (PMI) is widely recognized in the United States as a leader in the project management field and an organization that sets forth project management standards. PMI states they have over 150,000 members in 150 countries. PMI provides two certifications in project management, both of which are currently considered the gold standards in project management. PMI also publishes the Project Management Body of Knowledge. PMI sponsors seminars, events, and training related to project management. There are other international organizations such as the International Project Management Association, which is based in the Netherlands. There are many other reputable PM training and certification programs on the market today including those from leading universities and colleges around the country. Some programs and certifications are more accepted than others. PMI certifications are the accepted standard, but remember that in many cases PM certification is not required for the job. If you want to get a job as a project manager, a PMI certification can help, but experience and knowledge in PM will often suffice. After reading this book, you'll have a better understanding of what's involved in PM, and if you're interested in pursuing a career as a project manager you can look into formal training and certification. You can find out more about PMI on their website at www.pmi.org.

1.2.2. CMM and CMMI

The Capability Maturity Model (CMM) and the Capability Maturity Model Integration (CMMI) are not project management systems but process improvement methodologies. Carnegie Mellon University's Software Engineering Institute (SEI) developed these models as approaches to process improvement in software development. Currently, CMM is being phased out in favor of CMMI. The CMMI system focuses on various disciplines such as software engineering, system engineering, integrated product and process development, and supplier sourcing. For example, according to the SEI website, the CMMI process in software engineering focuses on "applying systematic, disciplined, and quantifiable approaches to the development, operation, and maintenance of software." Applying a systematic, disciplined, and quantifiable approach sounds a lot like project management. There is clearly overlap and both PM and CMMI processes can co-exist synergistically in an organization. For more information on CMMI, visit the Software Engineering Institute website at www.sei.cmu.edu.

1.2.3. Six Sigma

Six Sigma is another process improvement system that seems to have taken corporate America by storm. Six Sigma is defined as a highly disciplined process that helps companies focus on developing and delivering near-perfect products and services. The term six sigma is a statistical term that measures how far a given process deviates from perfection. From a mathematical standpoint, six sigma specifies fewer than 3.4 defects per million. Stated the other way, it means that 99.99966% of all output meets quality standards. The idea behind Six Sigma is that if you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get as close to zero defects as possible. This quality improvement process can be traced back to Motorola in the 1970's when it was facing serious quality problems. The project was developed by Mikel Harry, a senior staff engineer at Motorola's Government Electronic Group and he named the process Six Sigma. Motorola states it saved $250 million the first year it implemented Six Sigma practices. Later, Jack Welch, CEO of General Electric, evangelized Six Sigma within his organization and Six Sigma gained momentum quickly after that. GE claims it saved $750 million in 1995 alone and Allied Signal claims $165 million in savings through implementing Six Sigma practices.

There are those who think that Six Sigma is just another management or business improvement "flavor of the month." Indeed, Six Sigma builds upon a lot of previous quality work including that of Edwards Deming, the architect of post-World War II industrial revival in Japan. Another consideration is the cost to organizations. Individuals in the organization must be trained in the system and these individuals, depending on their skill levels are dubbed "white belts," "green belts," "black belts," "master black belts," and "champions." GE reportedly spent over $465 million to have over 10,000 employees trained and certified in this system.

To complicate matters, there is no one single governing body as there is with CMMI. Instead, Six Sigma was driven by industry and is therefore defined by various companies. While there are defined best practices, Six Sigma certifications and business processes vary from company to company. For instance, if you achieve "black belt" certification at one company and then go to another company, you may have to undergo recertification or retraining. Another implementation, Lean Six Sigma, is also gaining popularity in the market. For more information, you can query "Six Sigma" on your favorite Internet search engine and come up with many companies offering Six Sigma information and certification.

While formal Six Sigma may not be for every company or every person, significant process improvement gains can and have been made by implementing Six Sigma processes.Business or management improvement programs typically only become "flavor of the month" when corporate executives fail to fully support, fund, and implement the chosen process.

1.2.4. ISO 9000

The International Standards Organization (ISO) is a non-profit organization dedicated to developing and maintaining standards in a wide variety of areas. One well-known standard is ISO 9000, which has become an international reference for quality requirements in business-to-business dealings. Another emerging "generic standard" (meaning it is not industry or business-specific) is ISO 14000, which is trying to achieve at least as much recognition and acceptance as ISO 9000 (if not more) in helping organizations to meet environmental challenges. Recent changes to the ISO 9000 standard have resulted in the merging of the ISO 9001, ISO 9002, and ISO 9003 standards into the new ISO 9001:2000, which is the sole certification standard in the ISO 9000 family. ISO 9001:2000 is now the only standard in the ISO 9000 family against whose requirements a company's quality system can be certified by an external agency. The standard recognizes that the word "product" applies to services, processed material, hardware, and software intended for, or required by, your customer.

Like CMM, CMMI, or Six Sigma, the ISO standards are focused on developing consistent, defined, and repeatable processes to improve quality. For more information on ISO, you can visit their website at www.iso.org.