Home Insights & Advice Why PPIs are the new KPIs and three signs processes might tank

Why PPIs are the new KPIs and three signs processes might tank

by John Saunders
26th Nov 21 4:51 pm

You’ve heard of KPIs, the thing every boss rattles on about hitting each month. But we’re talking PPIs, the thing every process owner should be measuring using process mining software. Process performance indicators are automated measurements which evaluate the operational success of process-oriented organisations.

If you work within a process — be it procure to pay, order to cash, or an industry-specific process like a mortgage loan — you need process data to make better business decisions.

Where’s the bottleneck?

Consider the mortgage loan process. Your advertisements and media placement are on point. You even have a well placed A4 spread in a prominent real estate magazine that is driving a ton of leads. But you close a smaller percentage of mortgage applications than you did last year. Why?

Is it a compliance problem? Is there a bottleneck in the approval stage? Is there too much variation in the way different teams work

If you’re measuring the top 5 process performance indicators then you’ll have an answer in seconds. Process mining software gives leaders unbiased answers to process performance questions. So whether it’s an underperforming team who needs retraining or a flaw in process design, you’ll be able to pinpoint and fix the problem fast.

When should KPIs take a back seat?

We’re not advocating to throw KPIs out the window. Every well-managed business needs KPIs to guide them towards defined targets. But we are saying to let PPIs steal the show when the time is right.

For process-oriented companies, PPIs are essential in understanding how things actually work.

PPIs offer a drilled-down perspective focused on individual processes. PPIs are not a replacement for KPIs, but rather a supplement for organisations whose competitive advantage lies within processes excellence.

How can PPIs reveal a failing process?

If you use process mining software like minit.io, then signs of a failing process will show themselves in your PPI dashboards. Process failure doesn’t come out of nowhere. It’s often an accumulation of something gone wrong over and over again.

Process mining finds the outliers as well, data points which lie far off the happy path. Outliers may indicate data quality problems, such as forgotten cases – open for months instead of hours, skipped activities or very rare variants, logging issues – same timestamp for all activities, timestamps shifted by years, or reveal a process deviation that warrants investigation.

Both situations, a process slowly changing or unsuspected outlier alerts, could be indicators of process problems. The key is to measure the process regularly. That’s what PPIs are all about — a regular assessment of how things are really going.

Three PPIs that may show a process in distress

1. Process effectiveness. Without known change inputs, process effectiveness declines. Effectiveness is an essential element of a process. It’s the reason businesses use processes — to make a desired business outcome a success. A decline in process effectiveness will show itself through a change in time, cost and quality.

How long does the process take? How much money and people power is used to complete the process? What is the percentage of non-confirming output to total output

2. Process efficiency. It takes longer to achieve the same or worse process outcome. The goal of many processes is to make a desired outcome occur with as little input as possible. This doesn’t mean skimp on inputs, but rather to define quality levels and meet those quality goals without waste.

Is there rework in my process? How can I eliminate waste to increase efficiency? Are my quality standards correctly established

3. Process compliance. Compliance issues are on the rise. This is a big red flag for a process on the decline. Not only are there legal implications for process compliance, but also internal standards in breach.

Are we noncompliant with internal rules, external rules, or both? What are the risks of noncompliance? How may noncompliance impact output quality

Monitor PPIs on a regular basis to pinpoint signs of process failure at the beginning of decline. Early detection will make the process flaw easier to fix and stop leakage faster.

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