Introduction to Enterprise Procurement Projects Part 2 – Establishing Goals and Objectives

archery-472932_1920By Jeffrey Morgan


Establishing Goals, Objectives, and Criteria for Success may be the most the most important component of your project. How will you determine whether or not the project is successful if you don’t clearly plan for and enumerate your goals? Your Enterprise Project may be an undertaking that requires several years from inception to completion. Management and staff have often lost sight of the original goals by the time they reach the finish line, so document and update goals clearly throughout the project.

We want the goals to be clear and measurable. Some popular goals include “improving efficiency” and “reducing operational costs.” These sound good but you must be more specific. What does improving efficiency mean to you? Do you plan to process more work with the same staff? Do you plan to eliminate FTE’s as part of the project? By attrition or not? Does this project represent a completely new undertaking or are you just re-engineering current processes?

There are many ways to approach the establishment of goals and objectives and I will discuss two possible methods here. Only one of these methods actually delivers consistent results. Before discussing these two methods, I first want to discuss the way some (many?) managers and organizations approach enterprise projects.

The Shotgun Approach

The most commonly used approach to Enterprise Projects I have observed in organizations is what I call the Shotgun Approach – shooting software and technology at a problem in the hope that the software will solve whatever business problems the organization is experiencing. In these cases, software is purchased without much thought and without any significant goal setting, analysis, change management, or input from end users and stakeholders. Sometimes, the goals are vague, such as “implement a new payroll system.” With the Shotgun Approach, the management often purchases a solution without consulting the staff and without studying and documenting the current business processes in order to understand the root cause of problems, errors, poor quality, and excessive costs. Sometimes these decisions are based on price or product reputation alone without consideration of other essential factors.

If you get lucky, the Shotgun Approach might create some improvements, but I have also seen it backfire completely. I worked for one organization where the management tried this approach to implementing a new payroll system and it turned out to be an utter disaster. This was a case where the management didn’t consult any appropriate and available resources about the wisdom of their plan. A few meetings with the appropriate stakeholders and Subject Matter Experts would have prevented a year-long, painful and expensive implementation that was ultimately scrapped. The six-figure loss to the organization was relatively inexpensive as far as failed software projects are concerned. However, the damage to morale and the management’s total loss of face were more damaging than the monetary loss.

Setting Specific Numeric Targets

Some managers would take an approach based on reaching specific targets such as: “20% reduction in FTE’s” or “a 10% reduction in in operational costs.” These are laudable, measurable, and specific goals, so they seem on the surface to be what we want. While this type of approach has many merits, it is not optimal and I will explain why.

If you are building a new system, or are replacing an old one, some aspects of the new system will be unknown and unknowable (W.E. Deming, Out of the Crisis). It is possible you have some methodology for calculating some of the business variables, like staffing or maybe you are creating arbitrary targets. An infamous piece of Federal legislation is currently taking the Arbitrary Target approach by creating the goal of a 25% reduction in Medicaid hospital admissions. Tens of billions of dollars will be spent pursuing this dubious target with no credible evidence that the proposed processes will work. The likely result of this program will be perverse incentives that exacerbate the current problem and will create new problems in the future.

In some cases, numeric targets are possible and desirable. For instance, if your organization has homegrown software supported by an in-house programming staff, the purchase of Commercial-off-the-Shelf (COTS) software may entirely eliminate the need for the programming staff. In this case, it would be reasonable to set a numeric target for the elimination of the staff members in question or they could alternately be reassigned to other critical organizational tasks. The unknowable portion of this example might be the resources required to support the new system, if any.

I am not implying that just because something is unknown that you shouldn’t make a plan – just write the plan in pencil. There are other knowable elements as well.

In one organization I worked with, the payroll department was spending two days per payroll period (over a period of decades!) making manual calculations in spreadsheets. They weren’t using their ERP fully because it was not performing the calculations correctly. Rather than insisting that the software vendor correct the problem, the staff permanently enshrined the workaround as part of their business process wasting at least 20% of an FTE. So, this is another case where a numeric target is knowable and therefore acceptable. Using a fully automated system with correct deduction tables and time and attendance entry at the department level, it might be realistic to expect a 30%+ increase in productivity surrounding payroll production.

In this case, another goal to strive for should be error-free payroll production. Redoing work as a result of mistakes is expensive. In order to achieve this goal, all of the processes must be examined carefully in order to identify the root cause of errors.

Other goals might include the elimination of duplicate data entry and spreadsheets by distributing time and attendance entry to individual departments if your system is currently centralized.

Improving Quality of Processes, Products or Services

In my experience, Enterprise or Departmental projects with the most successful outcomes have been those undertaken by management whose primary objective was improving quality. Generally, if you focus on improving quality, many problems like duplicate data entry and excessive personnel costs will automatically sort themselves out. Solution for other problems will become apparent during this undertaking, especially if you are committed to a cycle of continuous improvement.

One of the best real-world examples I can think of as evidence for quality improvement as the primary objective is a manager I worked with a few years ago. She was completely committed to implementation of processes, policies, and procedures that improved the quality of services in her organization. New software was part of the equation and many of the processes, policies and procedures were built into the new software system. No specific numeric targets were set in advance, but there was a general understanding that the number of FTE’s for processing of data and transactions would go down. As a result, she realized a significant increase in revenue along with a 36% reduction in staff as well as a measurable increase in productivity. Focusing on quality works fantastically well.

Summary

When developing goals and objectives, focus first on Quality Improvement and use a cycle of continuous improvement. Let’s take a look at what your goals and objectives might look like using the examples previously discussed.

Objective: Improve the quality and efficiency of Payroll Production.

Goals:

  1. Identify and correct processes and procedures that create errors and hinder productivity.
  2. Fully document best practices, processes and procedures going forward.
  3. Eliminate the use of Spreadsheets in payroll production.
  4. Achieve error free payroll runs.
  5. Distribute Time and Attendance entry to the department level.
  6. Improve the productivity of payroll staff by 30%.
  7. Eliminate or reassign programming staff involved with payroll production.

As you are following subsequent steps in the procurement process, the details of your goals and objectives are likely to change but the overarching objective of improving quality should remain the same. The process of discovery that you undertake next will reveal many details about your operations that you will want to change.

If you would like to discuss setting appropriate goals and objectives for your enterprise project, e-mail me at jmorgan@e-volvellc.com and I will be happy to discuss your specific case.

Copyright © Jeffrey Morgan 2015

 

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