--III

IBM's Quality Focus

on the Business Process
._~.

A management approach to assure

that major cross-functional
processes remain competitive
r

by
Edward J. Kane

N1982, IBM began to put together

a mechanism to continuously improve all work; prQcesses. The prime
motivation' for this action was the
realization
that the company's
environment was changing faster than its
processes could adapt. Customers had
higher expectations, competitors were
delivering increasingly better products,
and it was becoming prohibitively expensive to fix problems.
IBM has an objective to grow faster
than its industry segments. Success in
reaching this objective, while satisfying, has created stress in both processes
and people. Therefore, the long-term
health and competitiveness of the com-

24

Quality Progress April 1986

pany depended not only on the effectiveness

and efficiency
of work
activities but also on IBM's ability to
regulate and adapt those activities to
changing needs.
The process management approach
stemmed from IBM's early work in
quality activities. The company identified five elements of a total quality
improvement system. (See box on page
28-29.) One of these brought attention
to viewing all work activity as process and ultimately became known as
"quality focus on' the business process." Before looking further at that subject, however, let us briefly review some
principles of process management.
There are several observations we
have made about work processes involving people. First, the processes
adapt, if left unregulated; over time, the
usual result is an adaptation for comfort rather than competitiveness. The individuals
who
work
in these
processes-and
particularly those who
manage them-seek
self-control
in
place of environmental
control. Second, everyone works within a process,

Figure 1

ProcessMal'lCigem~nt
(Analogy to People Maf')agernent)
People

Process

Manager

Owner

~valuation

~easurements

perlorma"",(
Planning
"-

)"
Counseling

Aequ:,e.~ents

()

~.Corrective
Action,

Tools
Development Plan
Evaluation Review
Education
Training
Coaching

and someone should be responsible for

every process. Finally, the elements
that the manager of any process
controls-people,
materials, information, and techniques-are applied with
great variability. In fact, there is no correct way to organize these elements.
There are, however, good process
management principles which we can
derive.
Since the essential job of a manager
is to make resources productive, these
principles relate to a knowledge of the
work activity, and analysis should aim
at the following.
Specifically how input becomes output (value added).
How defects are caused.
How defects are removed.
How well the output conforms to existing requirements.
Procedural simplification and improvement of process efficiency.
Changes necessary to meet future reo ements.
e prime objective of this analysis
focus on continuous improvement
o make all work processes in the

Tools
Statistical Quality Control
Activity Analysis
Process Analysis
Defect Removal Cycle

company healthy (under control),

ONCE
REQUIREMENTS
are undercompetitive (best of breed in terms of
stood, measurements can be eseffectiveness and efficiency), and adaptablished to test conformance and cortive (resilient to change).
rective actions taken. This is the
In describing focus on the processshorter cycle, analogous to evaluation
or process management-the
analogy
and counseling of people. It, in turn,
is drawn to people management. (See
gives rise to a revised requirements
Figure 1.) Management of human
cycle.
resources requires periodic joint planThe analogy is a simple one, butning of the performance expected of ~obecause
managers are comfortable
the employe (long cycle). This is folwith people management-it
has been
lowed by continuous communication,
useful in gaining acceptance of procevaluation, and counseling (short cyess management.1
cle). As expectations become accomWith that background, let us look at
plishments, performance plans are
"quality focus on the business procupdated by manager and employe.
ess." By "business process," we mean
Process management
employs a
the closely related decisions and activisimilar cycle but deals with the
ties required to manage and administer
manager's (or employe's) relationship
the resources of the business. "Qualwith his or her work activity. There is
ity focus on the business process" refers
an identified process owner (analogous
to the quality effort to improve the efto manager) who has responsibility to
fectiveness, efficiency, and adaptability
make the work activity productive.
of those business processes-complex,
Next the owner must understand the
cross-functional processes typified by
customer requirements to which he or
few measurements and unknown limits.
she must conform (analogous
to
Such processes include order entry,
performance planning). This is the
billing, centralized accounts receivable,
longer cycle.
personnel data systems, inventory and

Quality Progress April 1986

2S

Relationships

Figure 2
Among Process Elements
Measurements

Figure 3
B\Jsiness Process Analysis Methodology
Steps
1 .' Assign Ownership
--;Charge ~ey Managers To Imt~rO\/e Process
2. Perform Act!vity Analxsis At Ta~k Level
-Establish

Measurernents.

True Cost of Quality

3. Document Current Procedures

-Iterate

With K~y Employes UntiLAccuracy

Is Achieved

4. Document l"~e Proces~

-Functional/Cross-Functional
Determine

Relationships

Process Requirement$' & Secure Customer Concurrence

6. AssElsslmpact

Of AJ'!y Mi.smatch
___
Prioritize Pr9blems Based On Requi[&m~nts vs.ExistingProc~ss

7. Analyze. Potential Solu!ions To Bring Process IntoConform~nce

-Eliminat~ ~?i1ure Cost & Imprqye;;c:;ontrol Thrqugh:
a) Process Simplification By.Elimination Of Redundant Tasks,
Com,~ining LikeTa~~s, Adding Missing Tasks
bY Restructure &fl-utomate Wpere ARpropriate
-~~,~\~~:n~~~~~~al

R1~so~rc~~.Retraining Require~i:nt,

-Pilot TestProcess Changes VYithSpecificiPasslFail

Fix Is ..Perrnanent & Complete

New ~a~it?1

Criteria To;;Ensure

8. Select Af1(:FlmplementBest.Alternatives

9. Update Target And Measurement Criteria For New Process

10. Establish Regular Next LevelMl:lnagement Review PI.an vs. Actual

N~r

11. Feedback
Man~~~!"ent Co~troIAc~i~ity Requirements
12. Update Managers' Performance plan To Be Quality Specific;;for
The New Process

materials management, distribution,

production control, and procurement.
These processes are logically related
but physically and organizationally
dispersed.
We concluded that if we could better understand
these processes,
simplify them, and make them adaptable to the needs of the business, we
could improve our competitive position'in the marketplace and achieve
immense productivity gains.
We began by defining a process as
"a group of logically related tasks (de-6

QuaIit)" Progress April 1986

cisions and activities)"that, when performed, utilize the resources of the

business to produce definitive results."
Processes are independent of organization and have the following characteristics:
Measurable inputs
Value added
Measurable outputs
Repeatable activity
Figure 2 shows the relationships
among these elements
in crossfunctional processes. Anyone's work
activity may be part of one or more

processes. The organizational structure

of most companies, including IBM,
causes work to be managed vertically,
that is, through organizations and
functions. Therefore, the more sharply
we focus on specific objectives and
measurements exclusively within a
function or organization, the more we
tend to encourage exactly what we are
trying to avoid-suboptimization.
In analyzing
complex
crossfunctional business processes, it became clear that there are some fundamental requirements of good process
management.
Ownership.
Definition and documentation.
Control measurements.
Process control function.
.
Process methodology (continuous
removal and simplification).
Certification.
Let us look at each of these areas.
Ownership.
Since the processes
described
are by nature
crossfunctional, the organizational structure
does not neatly accommodate process
optimization. An owner for each process is, therefore, appointed and has the
responsibility to ensure the health and
competitiveness of the process even
though some of the performing elements are outside his or her organizational jurisdiction.
The owner of the process must interpret environmental change and its
effect on the needs of the business. The
strain this change puts on the process
and the practical limitations of the
process must be thoroughly understood and documented.
The owner must be at a level high
enough in the organization to identify
the impact on the process of new business direction, to influence change in
practices/procedures
affecting the
process, to make a commitment to a
plan and implement change for process
improvement, and to monitor business
process efficiency and effectiveness.
In IBM's case, to accomplish these
things, the process owner becomes the
focal point of a new and permanent integrating structure. It introduces a type
of matrix management (but one driven
and controlled by line management)
for the functions that operate within
the process. The owner may require a
"do" function (e.g., project office)
which has representation
from the
functions/units in the process. These
individuals are assigned by owners of
the critical subprocesses. They provide
functional expertise to the process owner

department managers modify their acand are the iinplementers of change

ment in four critical grass-roots meastivities in tune with the changing needs
and simplification within their suburements over a two-year period.
process. The owner is the voice of
In addition to achieving impressive
of the business.
process capability to the business (up)
results in improving
the process
Thus, at the top, the essential factor in managing the business process
and for implementation
of change
through root-cause analysis and coris the interpretation of new business
(down) within
the existing line
rection, the group also cut its expensedirection, risk analysis, and identificamanagement structure. The owner's
to-revenue ratio in half during this
tion of process requirements. In the
responsibility then is to ensure opti. period. The group recently received
middle, implementation
of change
mum relevance and competitiveness of
the first "no reply required" corporate
necessary to meet the requirements bethe process he manages.
audit, which commended management
gins, and it cascades down to subDefinition/Documentation. The procon the accomplishment.
ess must be defined and documented.
processes and then through activities
and tasks. (See Figure 5.)
Often, the work done just to redefine
IS IMPORTANT TO remember that the
At the grass-roots level, two imporand document the existing process will
work to improve efficiency at the
tant functions are performed. As stated
expose process deficiencies and lead to . department leveL (first-line managers
above, work to remove error causes
simplification and improvement.
. - and employes) is important and must
and to improve processes continues. In
Measurements/Process
Control.
be ongoing: education, defect-cause
addition, it is essential that those who
Appropriate
measurements
and a
removal, use of improvement tools,
best understand the detail and have the
process control function are needed to
etc. But, although defect removal
. best contact with the customer and the
bring focus across the entire process.
makes things run more efficiently, it
customer's environment continue to
Continuous quality improvement is
does not address
environmental
feed back changes to requirements and
the objective rather than single-event
change and long-term direction. Upper
modifications to procedures. (See Figproblem solving; the steady improvemanagement
must, therefore, deal
ure 6.) This is usually initiated at
ment of the efficiency of every procwith different information and help
ess should be the end result.
Process Methodology. The task of
embedding the fundamentals of quality management into the business procFigure 4.
ess requires dedication by management
Software Distribution
and a willingness to apply discipline in
(
implementation.
It is helpful to
Four Selected <PID Measurements
develop a methodology to ensure consistency. This methodology should
15
30
then be interpreted and molded to the
Incompletes
ASM/Orders
specific need and language of the im12.5
25
plementing functions. The generic
methodology used by IBM includes the
Ul
20
fundamentals discussed above and is
Ci
shown in Figure 3.
E
0
The business process analysis meth15
5
odology has evolved by reviewing the

10
experience of quality improvement ef5
forts in real environments. A prime
reference was a 600-person group in5
2.5
volved in software distribution. The
function had a previous history of high
o
0
1981 1982 1983 1984
1981 1982 1983 1984
error rates and audit control problems.
Management first became committed
2
15
to long-term improvement of the procDefective
.Late
ess, then began the disciplined effort to
1.75
Mach. Read
understand the existing process. They
1.5
utilized a particular analytical tool
(structured analysis2) to understand
Q)
1.25
>
'';:::;
the existing process, designated a few
measurements that reflected confor0
mance to customer requirements, and
0.75

developed a model for the process to

0.5
meet those requirements.
The actions taken were many, but
0.25
critical to success was the understando
ing management gained by defining
0
1981 1982 1983 1984
1981 1982
and documenting the cross-functional
relationships required to execute the
processes. Figure 4 shows the improve-

IT

*
()

()

'*
0

Quality Progress April 1986

27

.A

The Basic Quality Concepts

FiveI?asic concepts are embodied in the qucility improvement
6fIBM*units .
Quality improvement results from management a<:tion.
Everyone must be involved.
Focus for improvement must be on the. job proces~ .
No level of. defect is acceptable .
Quality improvement reduces total costs.
The third point is the subject ofthe accompanyirgarticle.
Let us'briefly revt(:?wthe otherfour

1.

Quality Improvement

Results from Management

pqints.

Action.

Executive management (ultimately,. the CEO) must lead, inspire, and involve itselfin the quality
effort an? confirm that involvement through personal communications or that.efforfwill beshort-lived.
What did IBM senior management do? A list ofthe worldwide actions taken does not tell the ertire
story, but it gives an important indication of top management act.ion. The company introdUf:eq or
developed: a for~quality
policy; several qu~lity-specific corporate instructions; a corporate-wide
quality organization; a management review structure from the top down; top-to-bottom quality education; supplier qualit)l programs; the use of. the reward structure to recognize quality achievement;
communications pli:lnSfor quality; quality improvement plans in all areas; and quality-specific items
ir individual performance plans, as. well as in operating, business area, ~nd strategic plans.
The cortinuous review, testing, and assessment of results by management~~ILdemon~tratethe
seriousness and permanence of the quality movement. Most importa~t!y, ininvolving themselves, top
management adds value to tQe concept and contributes t~. its implementation.
Before moving to the second concept, additional emphasis must be givencto theimp()rtance of education, a fundamental building block for understanding and comIlJ..itmentthroughout the organization. The IBM Quality Institutes were established to achieve these e?ucationaLobjectives. The initial
objectives were two-fold: first, provide executive awareness to gain commitm(:?nt and involvement
at the top of the organization; second, train trainers to cascad(:?the education as quickly as possible
to all locations and sites.
The long-term approach calls for the Quality Institutes to extend their offerings in tools an? techrical support. Management courses will be transferred to themainline.IBM edu~ation andmanageIlJ.ent
development organIzation as appropriate; this is to ensure that quality improvement..is embedded
in the management system, poving it away from a "special program" status.

2.

Everyon~ Must Be Involved.

The reason for getting everyone involved is simplemathematics.Jf

direcfmanufacturingemployes
are the only ones involved, the potential is limited to 10% of the people ard 10% of the benefit.
In IBM, there are currently over 400,000 employes; if each~ne removes defects from his or her work
product that save just $1,000 a year, the.company would sav(:?over $400 IlJ.illion.By contrast, it would
take $2.66 billion. of additional revenue to generate $40q million in profit.
We start by making sure that everyone Is clea~ about th~ objectiv~s ...lBM.definesquality as "meetfng the requirements of our customers, both internal and (:?xternal, for defect-fr(:?~products and services." The most important customer will alwa~~ be tht; user of products, 1:>.ptthe most important
customer to any individual employe will be the person v.;ho receives his or ~E1{w;?rkproduct.
The
objective is to neither pass on defective work nor accept it. Once an individual accepts defective work,
he or she then owns it and has the responsibility to fix it. This customer/supplier
relationship has
been a powerful tool in changing the way<people ..think <\bo~ftheir work ,,1Cti.vities.
Quality improvement teams (including quality circles) are used wid(:?lyinJBtvL Managepent directs
the activity of the team and provides training and su.pport.Generallymanagefr~nt
selectsparticiparits,
but there is also voluntary involvement.

3.

Focus for Improvement Must Be on the Job .Process.

See accompanying article.

4.

No Level of Defect Is Acceptable.

The IBM philosophy allow~ for people fraking mistake~-whichjs

acceptable, pro~iding'th~t'we
are unrelenting in finding and removing the cause of the error. This must beaccomplisned ina measured and disciplined manner;

28

Quality Progress April 1986

Figure A1
Tools and Techniques
Defect
Identification
Checklists
Run charts
Tally sheets
Pareto
Control charts
Failure analysis
Particip. mgmt.
Department
act. analysis
Cost of quality

Cause
Analysis

Corrective
Action

Particip. mgmt.
Cause effect diag.
Statistical tools
Scatter diag.
Mgmt. skills
Frequency distrib.
Consultants
Vintage analysis
Pareto/histograms
Regression anal. . "
Control charts
Consultants
Particip. mgmt.
Figure analysis
Process analysis technique
Information logistics
Critical success factors identification

Test
Evaluate
Measurements
Trend charts
Control chart
Cost of quality
Simulation
Pilot programs

The IBM approach is to use a four-step defect-removal cycle. The first step is to identify and establish grass-roots measurements which are defect-oriented and, therefore, will be meaningful at the work
activity level. Once the measurements have been established, any deviation identifies a defect or an
error for analysis. The defects are then categorized using statistical methods and can be used to set
priorities.
Second, a determination is made as to the root cause of the defect.
Third, alternative ways to eliminate the causes of the defect are generated.
Finally, before a solution is implemented, the alternatives must be tested and evaluated against the
specific pass/fail criteria established in the original measurements. If it works and is not a suboptimized solution, it is introduced into the process, and new targets are establis~ed for the process.
Specific tools used in each step of this cycle are listed in Figure AI. In this example, specific actions
(under "how") are identified which typically take place step by step.
It is important to note the importance of measurements in this model. Brainstorming may be used
to identify the problem initially, but on the next cycle, measurements must trigger the action.

S.

Quality Improvement Reduces Total Costs.

Estimates are made of all quality costs-the dollars IBM spends to ensure that its services and products
meet customers' requirements. It includes the dollars spent to rework things that do not meet requirements or to fix things that break. These expenditures are classified into two broad categories, cost
of conformance and cost of nonconformance.
The cost of conformance includes the prevention and the appraisal measures. Toge..tB~rthese add
up to about 25 % of total quality costs. The cost of nonconformance or failure is the major portion
of quality costs, amounting to about 75 % . Total quality costs range between 15-40 % of the revenue
stream. Our comparisons show that other companies have similar costs.
Spending more on prevention to improve the capabilities of processes and utilizing the defect-removal
cycle dramatically reduce failure cost, which in turn reduces overall quality cost and funds the increased prevention. The leverage in finding an error at its source versus waiting until it occurs in
the field can be over 100-to-1 in many cases.
After a good deal of study and experience, we believe that it is reasonable to reduce quality costs
as a percent of revenue by half, providing a significant productivity gain as well as increased customer satisfaction. This will manifest itself in improved profitability, return to the customer in terms
of reduced prices, and increased competitiveness. For IBM, the opportunity is measured in billions
of dollars a year as the quality benefits materialize. This, however, will only come as a by-product
of disciplined and continuous quality improvement efforts. These efforts are being aggressively pursued, and although significant benefit has resulted, we believe that we are closer to the beginning
than the end.

-Edward

/. Kane

Quality Progress

April 1986

29

F.igUf'~5
Business Process Integration

'/\

Corporate

,Polic9,
Business Dir"ection

Group

pl~ns/Opportu nl!jes
,Impact AnalysIs

Process
Owner

/~rocess
Definitio~
Requirements, Changes

Project
Office

Division/Unit

Dir.lExec.

~Ian Strategic Change ~

f:ssess Tactical Implementation
/ Review Quality Plans/Results \

Functional

Sybprpcess
Owner

1y1anages Process, Implements Change

Quality Improvement, Realtime Feedbac~

1st

Employes

Ongoing D"a"y Impcovemenl

Process
User

DefJartment Activity Analysis, Quality Improvement Te!ms,

Defect Removal Cycle, Ongoing Education
\

______

Quality ...Di~erentiation
processes

higher levels. In this way processes can

be kept vital and comp~titive.
Two examples will illustrate the
different lines of action required by the
overall quality focus on the business
process.
The first case concerns the IBM billing process. This process consists of 14
major cross-functional activities which
are logically related but physically.dispersed among 255 marketing branches
and 25 regional offices, a similar num-

ber of field service locations, and several

headquarters operations and manufacturing sites. The work is cross-functional
and nonsequential
within any function. (See Figure 7.) It is tied together
by a complex information
system.
Overall, 96% of the invoices are accurate at initial preparation,
but because of the high cost of adjusting
those that are incorrect, 54 % of the total resource was devoted to cost of
quality. Some of that cost is for

Figure 6
Customer/Supplier Relationship
Requirements
Supplier

Value Add
Work Activity

Requirements
Customer
Output

Feedback

30

Quality Progress April 1986

prevention and appraisal (98.5 % of the

invoices delivered to customers are
correct), but much of it can be attributed to failure of some kind. This is testimony
to the efficiencies
of
information systems and points to the
great need to prevent errors rather
than fix them after the fact. This example also highlights the opportunity
for improvement with attendant savings in just one "white collar" process.
The first step in in:tproving the billing process-or
any other process-is
to designate
an owner,
someone
responsible for optimization across the
entire work process. The owner is typically the manager most responsible for
the results of the process. The owner
of the billing process, for example, is
the vice president of business systems,
an executive directly responsible for
most of the activities shown under
"Headquarters"
in Figure 7. This vice
president holds a very high-level position; however,. he does not have
responsibility for areas such as field
marketing or manufacturing, as can be
seen in Figure 7. Nevertheless, as process owner, the vice president is in a

7. Billing Header

1Db. Installation
Record

11. Lease. Purchase

Maintenance

14. Discontinue

good position to cause changes to be

made in these other areas. If a disagreement would arise about a change in
one of the billing areas not reporting
directly to the vice president, an escalation procedure would carry the matter to the next higher level of the
corporation. At this point, the owner
is the advocate for change in the process. The nonconcurring area presents
the 'case for maintaining the status quo;
as a result of this proceeding, a decision is made. Because of the responsibility and authority given to the
process owner, IBM does not anticipate that this escalation procedure will
be used often.
Work is well under way within IBM

to improve the billing process andthough work remains to be done in this

very
widespread
and complex
process-important
changes have already been seen in key billing quality
measurements. By comparison, a relatively complex process that is largely
confined to one unit can be improved
more directly and expeditiously. In the
billing example, changes wen~ implemented at the functional and firstlevel management as well as employe
levels (and eventually provided additional requirements for changes in the
central billing process).

N1980, the National Service Division, responsible for service on cus-

tomer systems, adopted a policy of

"error-free service" and began to focus
on improving the service delivery
process; the <?wnerof this process was
the vice president of service support,
who reports directly to the president
of the division. The earliest result was
a singular finding: We were perceiving
quality in a different manner than were
many of our customers.
As a result of this analysis, a set of
critical success factors-essential
to
error-free service from the customer's
viewpoint-was
developed. These included service dispatch response, total
time from incident to fix, hardware repair time, software support,
the
preventive
maintenance
program,

Qua1ity Progress

April

1986

31

:rrt~~

5:"T~~pro,
~)(pegitious

pla~,t

'., Y"il'~;j

~,iJ!;1~
p~ocess'':s

rll;.+j~;.. ". ,,;';,;;:

some

2~rr~.ptly praptiCed, ~y 6aye

ope[a~onBt,~r control ';'feak. 'Jl3s~eSl~Di<::hresyir~c~r[YFtiv~ ac:,tismi;but the, resylting,,~)(posures are.:.containable, and,~rewea~g~Ss~s can' beT90rre9ted' in ethe,near future. The basics
?,f q.~aIIty,ma~ag~,rr~ptj~reinPlac~:'
"'v .' ;.
3. The prOsess as cUl"ren~ly,practiced i~ eff,ective(rrle~ts the customer's requirement;) an9~o~i~~ific:nt
operatioQal in~~jpiencixs ~[control(;lxposures
exist.
2.ln adaition toeategory 3 requir~rI)ents, majOriIllP[9Ve~~ntshave
been made
to the process with tangipleand,me~surable
results realized. Environmental
change is assessepwith resuJt\ng process changes anticipated and committed (to meeting customer's future requirements).
10'ln addition to catl3gory2 reguirements,,;!heoLJt8uts 0f}heprocl3ss are assessed
by the. owner and the auditor from the customer viewpoint as.being substantially defect-free (i.e., to the level the process can reasonably deliver).

Notes
1. These d~scriptions are b8:sed on an IBM internal document; the author has
made changes in that document for purposes of clarification.
2. The certification model refers to the "basi<::~of;gualitymanag~ment."
For IBM,
this refers to key factors which must be presentilJ the process owner's quality
plan. They are:
OwnE:)rship assigned..
!'
Process/subprocess defined and documented:
Supplier/customer relationships and requirements identified.
Quality measurements and pontrolpoints established.
erocess simplific:8:tion applied.,
Defect prevention methodol6gy ancf'statistical'methods 'utilized.

I.

I
J

II
I

32

Quality Progress April 1986

availability of a trained field engineer,

spare parts availability, telephone diagnostic capability,
and technical
back-up.
A measurement system incorporating the above factors-the
system for
service quality (SSQ)-was developed.
The service "inhibitors," once identified, provide information on the nature of the root causes of problems and
lead to the root cause removal. These
solutions are implemented at the process level to change and improve it and
are, therefore, permanent.
The process orientation provided by
SSQ has allowed IBM to improve the
quality of service as seen by the customer (the true measure of quality). At
the same time, costs have been positively affected. Studies have indicated
that error-free service calls take only
half the parts and one-third of the
time, compared to those with errors.
Error-free service calls affect the customer as well. The length of service incident decreases, thereby increasing
systems availability. The message has
become very clear: when the service
process is properly designed and carefully implemented, everyone benefits.
The changes made as a result of SSQ
data are numerous and significant. Automated reporting methods, for example, provide real-time feedback on
customer problems and reduce the cost
of that feedback. The resulting improved service data analysis permits
the removal of many of the causes of
service inhibitors. These were achieved
by improved dispatching methods,
more precise training requirements, reorganization and assignment of service calls, increased investment in spare
parts testing, and improved failure
analysis methodologies. The net result
is an increase in the percentage of
error-free calls taken every month. The
measured progress is often slow, but
the changes are significant because of
their permanent nature.
The lessons to be learned in improving critical business processes are:
Management commitment is essential.
Success is long-term.
A disciplined
methodology
is
needed.
Experimentation is beneficial.
Error-oriented measurements at the
task level must be employed.
Focus must be on improving the
process itself.
We are convinced that if this kind of
participative and experimental environ-

ment is provided for all employes, the

critical
processes
by which the
resources of the business are managed
will remain not only healthy but, more
importantly, competitive and vitally
relevant to their purpose.
Process Certification. It is important
that the owner certify in some formal
way the health and competitiveness of
the process he or she manages. (This
is conceptually analogous to certification by quality engineering that a tool
or process will produce a desired result.) Processes do not naturally stay
lean and competitive. Wh~n meetiI).g.
customer requirements is not the first
consideration, attention turns to defensive protection of headcount, and budget preservation becomes more prevalent
than creativity, experimentation, and
investment in change. Improving the
process by initiating change and supporting it with education and training,
new tools, and better information and
procedures h~lps overcome the tendencies of a process to grow fat and the
management to become complacent. By
requiring a process owner to certify the
competitiveness of the process and
holding that owner accountable for the
output of the process, we bring the
needed visibility to the true state of the
process.
A strong belief in self-assessment
plus outside audit has motivated IBM
to institute the certification model illustrated in Figure 8. The process owner has the responsibility to rate process
quality. In addition, the corporate
audit function will selectively perform
independent assessments on a similar
basis, since self-inspection can never
replace management inspection.

general is real~ed by virtue of three factorsone, capital investment; two, improved

job design; and three, superior people
management. The concentration in this
paper has been primarily on irri.provement in job design and achieving higher
levels of participation by all employes.
It should be noted that, while often taken as a given in IBM, there has also been
great emphasis on both capital investment and research and development in
the late '70s and early '80s. To remain
an industry leader, IBM invests heavily
in these areas.
It should also be restated that the IBM
objective is not defect-free at any cost,
but that the quality focus is applied consistently to reach the level of defect-free
y removing failure cost and moving
D"ODUCTIVITY

GAINin

cl0ser to the objective of being the most

cost-effective in everything we do. The
objectives of improving effectiveness, efficiency, and adaptability are pursued
concurrently as the process is simplified
and made more competitive. (See Figure 9.) The objective of adaptabilitythat is, the timely changing of process
to meet business needs-must constantly
be kept in mind, since this is critical to
remaining the industry leader for the
long term. This might mean that a process on its way to becoming defect-free
is deliberately set back because the technologyor process is altered significantly to achieve a major change or
capability breakthrough. But here the
philosophy of continuous improvement
takes hold once again, and efficiency is
steadily raised.
It is clear that the responsibility for
improving the business process in IBM
rests with line management: In the end,
the line must take leadership and embed
the quality focus into the management
system so that it matures and becomes
a way of life. The quality staff responsibility is in the ownership of the methodology.
Specifically, the quality
community must be certain that the
proper tools and techniques are utilized (
effectively to help the process owner
simplify, control, make more efficient,
and meet the needs of the business.
If all can do their jobs in this.way, "
business processes will be well on the
way to meeting defect-free criteria.

STATISTICAL

PROCESS
CONTROL
Low Cost
Software
Cuts Cost,
Saves Time,
Eliminates
Mistakes.
If you are faced with starting a Statistical Process
Control program, or if your
present SPC activity takes
up too much time, you
should look into using
David C. Crosby's
/SPC System@ Software.

No expensive training, no
math errors, clean charts
and reports.

References
1. See these articleS from June 1985 Quality Progress: "Process Management in Service and Administrative Operations" by
E.H. Melan; "Quality Improvement in a
Marketing Organization" by Warren L.
Nickell; and "Improving Quality and Cutting Costs in a Service Organization" by
W.J. McCabe.
~.
2. For more about this technique, see
Tom DeMarco's Structured Analysis in
System Specification (Englewood Cliffs,
New Jersey: Prentice Hall, 1979).
3. Fig. 7 uses the PAT flow-diagram developed by Jan Nordstrom of IBM Sweden.
Also see J. Carlisano, "Process Row Analysis," Quality, December 1984, p. 72.
About the Author

Edward]. Kane is director of qualitymarketing service and support systems on

the corporate quality staff at IBM in Purchase, N.Y.

This article has been adapted from a

chapter of an upcoming book titled The
Quest for Quality: Quality as the Decision
Makers See It, edited by H. lames Harrington, to be published this summer by Qual-

ity Press.

-----

Now shipping Version 8.0

I
I
I
I
I
I
I
ID

For a FREE Information kit,

packed with actual
printouts of charts and
reports . . .

Attach your business card

to this ad, and mail it to:

David C. Crosby, President

The Crosby Company
P.O. Box 2433, Dept. 614
Glen Ellyn, IL 60138

Check here to receive

our free newsletter too.

I
I
I
I
I
I
I
I
I

-----_ ..
I

Quality Progress April 1986

33