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Processes Don't Start and Stop With IT

Oct 16, 2005

ITSM Watch Staff

By Guta Basner

We always did it this way - how healthy are your processes?
"Jim" bought a franchise. He went through training, received a business package that, among other things, contained a price list, and completed all the required prerequisites. Finally he was in business, ready to make money.

After some time, a call came in from Jim who stated that his store has a steady flow of customers, but does not produce a stable net profit, how could we help? After observing and analyzing his processes a decision was made to perform a cost analysis. The discovery was shocking. The supplied price list had not been updated in 17 years!

Property and labor costs, insurance and equipment prices all were outdated. Jim was losing money on more than half of the products that his store offered. No wonder he couldn't realize a profit, he was selling products at a 40% loss.

Recommended plan:

  1. Outsource some of the offerings (list was provided)
  2. Eliminate some offerings (list provided)
  3. Adjust prices (formulas provided)
  4. Establish prices for new offerings by utilizing provided formulas
  5. Contact the franchise management and address the problem with them. (Negotiate for partial compensation for unrealized profit.)
Jim's business is now doing so well that he is looking into expanding his store and possibly acquiring a second location.

In lean times processes can help you save resources, when economic conditions are more favorable; they can make your business agile.
Selecting a framework and building processes is like building a foundation for a house. If the foundation is not solid you can spend millions on what is above the ground, but it won't matter because your house will not be stable. But, if your foundation is rock-solid the house will withstand the storms of ever changing conditions.

Every business has processes, but only the exceptional have the ability to measure how effective and efficient they are. Many times business owners and executives put the processes on the back burner. Their reasons vary, but the theme is the same;

  • We don't have the time, resources, and/or budget
  • Our processes are working
  • Processes are not essential to our business
  • We already have documentation, and, my favorite response
  • Processes don't add value
In the last couple of years a number of major companies stumbled or toppled because of inefficient processes and lack of documentation control. It makes good business sense to know where your company stands at any given moment and to control your business environment, but it took the demise of several major companies and an act of government to enforce the use of measurable processes and to make the processes and documentation control a legal requirement (for example: Sarbanes Oxley Act).

Processes place you in charge of your life and in control of your business stability. The old cliche "time is money" can be applied to your business, where solid framework and good measurable processes affect progress and the ever-important, bottom line.

Chief Executive Officer and President of Process Service Management Corporation (PSMC), Guta Basner holds a Master degree in Business Administration and various licenses in management, economics, human behavior, ISO, and ITIL. California resident for 22 years, she is multilingual, and has the understanding of the international business systems.

Guta Basner started her working career while still in high school. In evenings, after classes she worked at a shoe factory to supplement family's income. Guta was compensated by the amount of product she could produce. She wanted to increase her productivity and at the same time shorten the working hours. Guta analyzed the process and found a way to improve it, increasing her productivity by more than 30%. Six month after the start of her employment she was assigned to analyze other processes, she was 15 years old. From that moment on, Guta became Process and Quality oriented.

Guta Basner, for over three years was supporting NMCI, the biggest contract ever outsourced by the DoD to the civilian sector. She performed Current State Analysis, outlined improvement areas, and facilitated implementation of various processes.