BPM's Leading Lights and Guiding Stars

Perhaps the oft-repeated advice of consulting firms and veteran practitioners has taken hold, or perhaps it's just that scrutiny of software investments has increased, but more companies seem to be adopting a truly strategic approach to their business performance management initiatives these days. We hear less often about BPM systems introduced as a kind of isolated tech fix, of measurement for its own sake and companies throwing rather expensive software at their performance challenges in the hope that something will stick. Principled, aligned implementations are the order of the day.

The winners of the Business Finance 2008 Vision Awards — Presbyterian Healthcare Services, Seattle City Light, and the South Dakota Department of Transportation — amply illustrate why this is important. But they go a step further. Each of these standout programs demonstrates how a carefully selected external reference point — a kind of strategic North Star — can help to orient the project and channel its energies. The touchstones for our winners were, respectively: a comprehensive quality improvement framework; a customer-focused management methodology; and a rigorous costing model.

Category: LARGE ORGANIZATIONS
Name: Presbyterian Healthcare Services
Home office: Albuquerque, N.M.
Number of employees: 9,500
Annual revenue: $4.6 billion
Third-party technologies: Lawson ERP; Oracle, Business Objects, and Premier data warehouse tools; Actuate Performancesoft Views; Actuate e.Spreadsheet

One of the hallmarks of a vibrant business performance management program is its ability to evolve and expand over time, and you couldn't ask for a better example than Presbyterian Healthcare Services' BPM initiative.

Presbyterian — an Albuquerque-based, not-for-profit system of hospitals, health plan, and medical group that serves one in three residents of New Mexico — purchased Performancesoft Views back in 2002 and scored some early successes in standardizing data analysis across its various groups as well as providing enhanced performance reports for its board, committee, and council members.

But it wasn't content to stop there. About three years ago, Presbyterian's leaders saw an opportunity to leverage the BPM system to support the organization's pursuit of the Malcolm Baldrige National Quality Award. “As part of that, we identified a need to look carefully at our processes for performance improvement and strategic planning,” says David R. Scrase, executive vice president and COO. The Baldrige process challenged Presbyterian to answer questions such as, “How do you decide what's important to measure? How do you follow up when you're not hitting targets? How do you monitor competitor performance?” According to Scrase, “As we measured ourselves against best practices, we realized that we came up short.”

The next stage in the project's evolution was a drive to extend the use of the tool by managers and physicians across all of Presbyterian's operating units. Molly Payne, performance management analyst, found a receptive audience as she talked with potential users. She noticed that some managers who didn't have access to the BPM software were producing documents that imitated the distinctive format of reports created in the BPM system. “We would approach these people and say, ‘It looks like you're trying to create this kind of report; let us help you!’ And most of the time people were extremely receptive because we were able to pull the data from various sources throughout the organization, so it reduced the manual effort that was required to enter the numbers,” she reports. During the past year, Presbyterian has rolled out the BPM tool to nearly all of the departments in its health plan, all of its hospitals, and 65 primary and specialty healthcare clinics.

Presbyterian now holds quarterly, systemwide, management meetings to discuss key performance results. The process was a challenge at first for the organization's six regional facilities in rural areas of New Mexico, Scrase reports. “We would ask those folks to explain their turnover, their financial performance, or why their care of pneumonia patients was falling short, and it was not something they could do really well.” Nowadays, though, the regional operations “really shine,” he says, adding that in the most recent meeting they were “all over the data.”

The BPM software plays a central role in these meetings (it's now Actuate Performancesoft Views; Actuate acquired Performancesoft in 2006). “We use the Actuate tool to bring the data to the top of their computer screens and click on it to see where performance is low and where it's high. And then we click on the places where it's low and have people talk,” says Scrase. It's easy to imagine how the process might become confrontational, but the opposite is the case; the atmosphere in the meetings is one of learning, understanding, and support. “People are feeling really comfortable talking about their results and getting help from others. And this is the kind of environment you need to create to really learn enough to achieve excellence.”

Presbyterian Healthcare Systems is closing in on its goal of winning a Baldrige Award. In 2006, it was one of only 15 organizations to receive a site visit from the award committee.

The organization estimates that the BPM system saves 500,000 manual labor hours per year across all locations. It's used by about 200 managers and 9,000 operational-level employees.

Presbyterian posts some of its key performance indicators, including turnover and operating margin, on its Web site. Check out the scorecards at www.phs.org (click on About Us and then Performance Scores).