When Business Processes Don’t Mature

By | November 27, 2010

Have you ever dealt with a mid- to large-sized organization and come away from the interaction wondering how an organization of this size could seem so disorganized and chaotic in their dealings with customers?  After all, in order to reach the size they did, they had to have garnered a certain amount of revenue in spite of the disorganization and chaos that’s visible to an outsider.  One can only imagine how much disorganization actually exists if one were to view it from the inside.   And, therein lies the rub; from the inside one does not often see the chaos when they are entangled with it.

I had a recent event that got me thinking about how business processes actually mature.  My credit card was used fraudulently.  The credit card company, which worked diligently on developing powerful algorithms for determining potential fraud, correctly detected the fraud and contacted me via email.  However, the email contained a phone number to call immediately, but did not contain hours of operation.  I received this email at 10:30pm EST on a Sunday night.  After spending close to 40 minutes on hold, my call was finally answered by a foreign call center that informed me that the group that handles this issue was closed for the evening.

Don’t worry; this is not a complaint blog entry.  If it were, I’d have listed the credit card company’s name.  However, the rest of the story is where it gets real interesting from a business process management standpoint.

The next day, I reached the fraud department and explained what occurred the prior evening.  The US representative I reached apologized—of course—and also explained that their fraud group is available 24/7.  Okay, issue #1 for the business process, lack of appropriate communication mechanisms between departments seems to cause business processes to break easily.  To me, in this day and age of unified communications, this seems ridiculous.  However, having followed and written on the need for incorporating real-time presence and chat into BPM, this comes as no surprise.

Having worked for a credit card approval center in high school I was well aware of what the business process used to be for handling fraudulent cards.  In those days, when cashiers had to call for approval, we would get a specific code on our screens and alert the cashier that they had to take the card and cut it up.  Needless to say, we relished these calls, as it was the 80’s version of COPS or some other reality show where people freak out and need to be restrained by security.  Unfortunately, we only got the audio portion.

Sorry, necessary tangent, to help explain where the process falls apart today.  What I’ve noticed is that the incorporation of technology into the process and the movement to more automated checkout systems as well as the removal of human intervention in the approval process means there’s no one to notify at the point of sale to retain and destroy the card when the card is used fraudulently.  Moreover, there’s no one to also possibly assist in the apprehension of the criminals causing millions of dollars in loss for credit card companies due to fraud, which is then tacked back onto the costs of everything else in the retail domain.

Thus, issue #2 with the business process there’s no immediate response mechanism for the person receiving the fraud alert to notify the credit card company that they are correct in their assertion that the card was used fraudulently.  By the time I reached the credit card company to acknowledge fraudulent use, the person using the card was long gone and the only recourse for me was to have to be issued a new card.  This is tied to issue #3, the credit card company has no means to communicate with the store to retrieve the card and have it destroyed as well as possibly detain the card holder until the police arrive.

So, how could a credit card company that’s been in existence for over 100 years and been in the credit card business for over 30 years still have immaturity in one of their business processes?

Clearly, as an observer without insight into their business model, I can only perceive what I believe to be a broken or immature business process.  Perhaps, the business recognizes this as an acceptable loss that is actually less cost than the necessary steps required to put an end to fraudulent use of their cards.  However, to the representative to the fraud department, when I expressed my concern stated, “I was singing to the choir!”  Is this just another instance where management believes it knows more than it’s workers who are closer to the actual issues?  Clearly, this is one major reason for the lack of maturity of business processes.

When management doesn’t perceive it’s broken, it won’t get fixed.

Interestingly, I have found that employees are very good at identifying faults with the current business processes and, sometimes, have solid input on how to change them.  During the major transformation of the auto industry in the 80’s and 90’s, there was a major shift to including the line workers in the discussions on how to improve assembly operations and the results were phenomenal.  In this case, desperation to compete with the Japanese car manufacturers forced management to face the fact that they didn’t know how to fix the quality problems and instituting untried approaches only infuriated the workers and led to lower quality output as well as increased the dangers to the workers on the lines.

It would seem that desperation is one factor that leads a business to mature their processes.

One could hope that businesses would want to optimize their business processes simply for the cost savings or revenue generating opportunities they might offer.  However, it seems that large organizations are reticent to change and not very proactive to implementing business process management practices.  This leads me to my last and final observation on why business processes don’t often mature as expected in mid- to large-sized businesses:

At the size and scale of mid- to large-sized businesses, it becomes a departmental issue to optimize and manage the business processes and departmental leadership is most often tactically focused versus strategically focused.

Ultimately, BPM needs executive sponsorship from the strategic leadership pushed down into the divisional and departmental levels or it will never see the light of day.  In the case of my credit card incident, I’m likely to believe the Senior Vice President levels and above would be very interested in solutions that limit losses and lower institutional risk for their cardholders at the right price.  However, the individuals responsible for instituting those business processes are more focused on handling the onslaught of fraud calls that is rising daily.  The leader of this group is more concerned with the metric they will most likely be measured on “number of fraud events handled” versus the less tangible “number of fraud events halted.”

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