Business Velocity

For this blog post, I want to talk about business velocity, which has been defined in one manner as a company's ability to generate operational speed while heading in the right direction (ebizQ, n.d.). I believe, just like previous posts on complexity and hidden costs, business velocity is one of those hard to see and measure business factors that EA needs to better understand.

The Business Case

This past Friday, I spent some time working on a business case with two representatives from the operations side of the business.  We are looking at automating the submission of invoices for one of our largest clients.  The business folks already had their numbers for how long it takes and how much it costs to prepare and submit an invoice for this client, they just needed some costs from IT for software development, for which I obliged.  The resulting reaction from the Ops folks was basically “eh, not very compelling” followed by “darn, we’re probably not going to do this”.  

The Backstory

The company I currently work for is struggling.  We’re a default management law firm, which means we handle foreclosures, bankruptcies, and evictions for lenders.  As cases proceed, the lenders require us to update their systems so they will always know the status of their loans.  This is very onerous, but it is a requirement for our business.  The default management firms that are thriving today invested heavily in integration and automation many years ago.  They have higher quality, much higher margins, more capital for investment, and the ability to grab market share from us.  We’re playing catch-up.

A Push to Automate

The invoice transaction we were assessing is but one transaction out of hundreds for which we need to update the lender systems, all of them with some kind of measurable average duration.  For the aforementioned invoice transaction, the time duration per submission is three minutes.  Almost all transactions will be in the two-to-three minute range.  Let’s say that, on the whole, we have three hundred unique transactions for updating lender systems, on the average, each transaction takes three minutes, and we have, on average 1000 such transaction each day.  What if by investing in IT automation and integration, we shaved two minutes off each transaction? That would be 2,000 minutes, or 33.3 hours, or 4 FTEs of savings each day.

What struck me about our business case exercise, is that it was based strictly on the transaction time and nothing else.  However, since our objective as a company is to automate several hundred transactions, I started wondering if the productivity impact starts to accelerate as we progress with our automation initiative.  I don’t believe the operating improvements remain constant.  As we automate more transactions, the productivity of the enterprise, I believe, will improve beyond the measured minutes, and will actually start to accelerate beyond the original measurements, however, not in a way that is easily predicted or measured.

My point is simple - the work being automated becomes less tedious, turnover is reduced, which positively impacts HR and managers, training is easier, quality improves, which reduces the hidden factory, talented resources can be better utilized, so forth and so on.  The impact permeates the entire enterprise.  However, I also believe that the remaining one minute of labor per transaction is reduced further from what was originally measured because of the lower turnover, better training, improved quality, and the ability to better utilize talented resources.  Basically, the business velocity is picking up and it’s tough to measure that in a business base.  Hopefully, the initial “eh” reaction doesn’t win the debate.

Conclusion

I’ve blogged about complexity, hidden costs, and now business velocity, which are all very difficult to identify and quantify, yet extremely important to selling the projects that need to be sold.  If EA teams cannot measure these factors, we need to, at the very least, understand them so we can articulate messages that are compelling and influential, rather than mere hyperbole.  For a good metaphor, I suggest reading “How to Break the Log Jam Slowing Your Small Business Velocity” (Nagel, Jackie. n.d.).

References

Ebizq (n.d.). Ebizq Roundtables. Retrieved from www.ebizq.net/series/19.html

Nagel, Jackie. (n.d.). How to Break the Log Jam Slowing Your Small Business Velocity. Retrieved from http://www.synnovatia.com/business-coaching-blog/bid/183334/How-to-Break-the-Log-Jam-Slowing-Your-Small-Business-Velocity