MASTER'S DEGREE IN ADMINISTRATION - MBA 43

BUSINESS PROCESS MANAGEMENT

Case Study Baria Planning Solutions Inc.

GROUP

Professor:
 I. BPS BACKGROUND. GENERAL DESCRIPTION OF THE COMPANY.
COMPETITIVE LANDSCAPE.

Baria Planning Solutions (BPS), a publicly traded company founded in 1997

with current annual sales of USD 95 million. BPS specializes in spend
analysis or spend management using software, data analysis, project
management and consulting; BPS examines by consolidating suppliers,
standardizing purchasing, and implementing procurement and change
management projects in order to achieve those savings.

It is worth noting that BPS was considered one of the main competitors in the
sector, but in recent years several large consulting and software firms such as
SAP and Accenture have entered the market.

BPS started its operations serving exclusively the energy sector in the United
States, surviving thanks to its capacity and expanding its sector coverage
through a policy of acquiring other niche and focused suppliers.

Although BPS served customers on a global scale, its direct sales force
focused on North American companies, it had formed several alliances that
allowed it to penetrate overseas markets, and many of its North American
customers used its solutions outside the geographic region.

In 2007, BPS acquired a firm that served the government sector, including
federal and state agencies, as well as some large municipalities and non-
profit organizations. In 2008, it acquired two more companies, one serving
manufacturing companies and the other focused on retail trade. By 2009, BPS
had completed most of the integration work of all acquired companies, but
continued with certain technology migration projects. As of 2010, the company
had an 18% market share (Forecast).

II. ORGANIZATIONAL STRUCTURE

Figure 1: Organizational structure of the Sales Area in North America
The North American sales organization was structured in three groups:

1. Sales
2. Sales Operations
3. Sales Support

The sales area was headed by Chuck Dee, who had four units organized
according to the four main sectors that BPS served:

a) Energy: which included oil, gas and utility companies.

b) Government: which included all government agencies, whether
federal, state or local, as well as a handful of large non-profit
organizations.
c) Manufacturing: comprising chemical, construction, diversified
manufacturing, electronics, high-tech and transportation
companies.
d) Retail and others: although this division was primarily responsible
for large retail and wholesale operations, it was also used as a
 catch-all to take advantage of any sales opportunities that did not
fit neatly into the other divisions.

The sales operations area, headed by Jane Albright, did not intervene
directly with any sales opportunities as its primary focus was:

 Providing Competitive Intelligence

 Conduct success and failure analysis
 Training Analysis
 Staffing
 Manage sales force remuneration

The sales support area is divided into four groups that have the following
responsibilities:

a. Data engineering: gathering data about potential customers, putting

it into a standard format, checking its consistency and quality, and
resolving any irregularities in it.
b. Data analysis: process data using BPS software to analyze
expenses and identify opportunities for cost reduction and supplier
performance improvement.
c. Proposal support: validate, quantify and prioritize cost-performance
opportunities; develop software configuration, project management
and consulting to take advantage of identified opportunities; and
assist the vendor in developing and presenting sales proposals.
d. Pricing: develop a pricing proposal in accordance with the sales
strategy, including options for price risk sharing that linked the
payments BPS received from the client to the results the company
delivered.

BPS has a hybrid structure that allows it to maintain a sectorial approach,

which enables it to better understand the needs of each sector and
differentiate it from the competition.
III. DIAGNOSIS OF THE CURRENT SITUATION

BPS's performance in 2010 was disappointing, both in terms of new client

acquisition and contract renewals of old clients. The following table shows
the original and final forecasts of qualified sales opportunities in 2010:

Of 271 new qualified sales opportunities in 2010, it is estimated that the

achievement rate will only reach 15.5%. It was initially forecast to be 17.5%.
On the other hand, the contract renewal rate, which had normally been
between 91% and 92% in recent years, only reached 84% in 2010.
In addition, sales managers complain that sales agents do not receive timely
assistance from sales support. Although this area is partially organized
according to the same divisions as the sales area, there are doubts as to the
best way to organize both areas to make them more effective.
Finally, sales support staff complains of being overworked and working with
time limits that are too short. In some cases there is also an imbalance in the
work-family balance of some employees.

IV. CHARACTERISTICS OF THE SALES PROCESS

It is currently directed by Christy Connor but maintains a structure developed

by Albright. This structure is divided into 4 function teams of which only
Proposal Support remains sectorized (staff dedicated to each sector), while
the Data Engineering, Data Analysis and Pricing teams serve all sectors.
 Solution selling is a fundamentally consultative process, which shifts a
considerable amount of effort from the post-contract phase to the pre-contract
phase.
Clients provided BPS with detailed data and the company devoted significant
resources to collect and analyze it properly.
Generally, prior to pooling data, both parties signed confidentiality agreements
and often letters of intent.
The end result was a very detailed and ready-to-execute proposal that spelled
out the services BPS would provide, the specific projects it would develop, the
timing of essential aspects of the projects, the resources required by the client,
and any price risk sharing and performance guarantees BPS would provide.
Assuming that the client agrees to move towards signing the contract, the
process also benefits both parties by eliminating the need for lengthy contract
negotiations altogether.

V. CURRENT STATUS OF THE SALES SUPPORT PROCESS

The sales support area is divided into four groups with the following
responsibilities.

a. Data engineering: gathering data about potential customers, putting

it into a standard format, checking its consistency and quality, and
resolving any irregularities in it.
b. Data analysis: process data using BPS software to analyze
expenses and identify opportunities for cost reduction and supplier
performance improvement.
c. Proposal support: validate, quantify and prioritize cost-performance
opportunities; develop software configuration, project management
and consulting to take advantage of identified opportunities; and
assist the vendor in developing and presenting sales proposals.
 d. Pricing: develop a pricing proposal in accordance with the sales
strategy, including options for price risk sharing that linked the
payments BPS received from the client to the results the company
delivered.

Figure 2: Process flow

BPS has a hybrid structure that allows it to maintain a sectorial approach,
which enables it to better understand the needs of each sector and
differentiate it from the competition.

VI. PROBLEM DEFINITION

The problem is generated in the delays of solution deliveries for proposals

and opportunities for new clients and renewals.

Consequences:

 Reduction of contract renewals. In recent years it has remained

between 91% and 92%, while in 2010 it dropped to 84%.
 Reduction in the company's income. According to the first 2010
forecast, total revenues were estimated at $124,934.500 but the final
forecast indicated that total revenues would be $113,037.875.
  Loss of trust with customers due to failure to meet deadlines.
 Workload peaks that generate discomfort among team members.

VII. PROCESS ANALYSIS

1. Income Forecast:
Based on the analysis of new revenue forecasts, the BPS project
success rate for new sales, renovations and pilot projects has been
reduced by 2%, 6.20% and 3%, respectively, compared to the
projected success rates. This negative impact on the company's
performance is attributed to the delays suffered by the company's sales
support group.

2. Sales support time:

According to the analysis of the waiting time table, the average time for
new sales, renovation, expansion and pilot is 25, 11.5, 18.25 and 12
hours respectively.
The calculated lead times per process for data engineering, data
analysis, proposal support and pricing are 18.50, 15.50, 26.75 and 6.00
hours respectively.
The total average time for the entire flow is 16.69 hours. However, it
can be observed in the analysis that the Proposals Support area has
an average response time of 26.75 hours, with a deviation of
approximately 13.45 hours. This means that this area concentrates the
most attention time compared to the others.
 He also highlights that for the Nueva Venta product, the average
response time is 25 hours. This time deviates from the mean by
approximately 14.74, which is interpreted to mean that the critical point
of delay is in the attention to new sales.

3. Capacity utilization in each of the support functions:

The level of risk is defined according to capacity utilization which is as

follows:

 Low Risk: <70%.

 Medium Risk: > 70% and <85%.
 High Risk: > 85% and <100%.
 Overcapacity: > 100%.

According to the analysis, it is observed that we have variability of

capacity utilization by area, sector and in quarterly periods.

 The First Quarter

 Maximum
 Area: Proposal support

Sector: Retail and others (retail)

Workload: 39 applications

Risk level: 141.82% overburdening

Average time: 8 hours

Resources: 0.50

 Minimal

Area: Proposal support

Sector: government

Workload: 15 applications

Risk level: low 36.36%.

Average time: 8 hours

Resources: 0.75

 The Second Quarter

 Maximum

Area: Proposal support

Sector: Energy

Workload: 37 applications

Risk level: high of 89.70%.

Average time: 8 hours

Resources: 0.75

 Minimal

Area: Proposal support

 Sector: manufacturing

Workload: 45 applications

Risk level: low 65.45%.

Average time: 8 hours

Resources: 1.25

 The Third Quarter

 Maximum

Area: Proposal support

Sector: government

Workload: 42 applications

Risk level: overload of 101.82%.

Average time: 8 hours

Resources: 0.75

 Minimal

Area: Proposal support

Sector: retail and other

Workload: 16 applications

Risk level: low 58.18%.

Average time: 8 hours

Resources: 0.50

 The Fourth Quarter

 Maximum

Area: Proposal support

 Sector: manufacturing

Workload: 83 applications

Risk level: overload of 120.73%.

Average time: 8 hours

Resources: 1.25

 Minimal

Area: Proposal support

Sector: government

Workload: 18 applications

Risk level: low 43.64%.

Average time: 8 hours

Resources: 0.75

It is observed that there is overcapacity in the retail, energy,

government and manufacturing sectors due to the workload. It is
interpreted that we have variability due to the seasonal workload and
the resources assigned to each sector, while in the other sectors there
is a medium and low workload.

4. Behavior of sales support requests:

The following graph shows the behavior of the number of requests

made to the sales support area in each quarter and by business sector
in 2010.

The business sector. which has an almost similar behavior in the

number of requests during each quarter of 2010, is the energy business
sector.

It is also observed that the government business sector has an

increase in the number of applications during the first three quarters
 and then there is a sharp drop in the number of applications for the
fourth quarter; going from 42 applications to 18 applications.

The manufacturing sector has a similar behavior during the first three
quarters and for the fourth quarter has a sharp increase from 45
applications to 83 applications, this behavior is totally opposite to the
behavior of the government business sector during the fourth quarter.

On the other hand, the manufacturing business sector presented a low

number of requests for support during the first three quarters of 2010.

90

80 Solicitudes de apoyo a ventas por Trimestre83

70

60

50
45 45
40 42
39
38 37
35
30 31 32
29
23
20 18
15 16 16
10

0
1 trimestre 2 trimestre 3 trimestre 4 trimestre

Sector de energía Sector del gobierno

Sector de manufactura Menudeo y otros

The above graph will help us to analyze the allocation of human resources in
order to avoid the overcapacity that occurs in some quarters.

5. BPS process measurements:

Some estimates have been made based on indicators to measure the

process under analysis.

The lowest rate of return is found to be in the area of sales support,

which has a value of 1.25 applications per week.

Also, the cycle time is 32 hours per application. With these two
indicators we observe that the bottleneck activity is proposal support.
 For the calculation we took as a reference the average number of hours
per application provided in annex 4, in this sense, for Data Engineering
there are 20 hours, for Data Analysis there are 18 hours, for Proposal
Support there are 32 hours and for Pricing there are 7 hours. When we
indicate week, we refer to a workweek of 40 forty hours, in line with the
workweek, we take as the basis for our rate of return calculation the
number of hours in a workweek. The following graph shows the rate of
return for the proposal support process.

VIII. DETERMINATION OF THE CAUSES OF THE PROBLEM

The decrease in the company's performance is the loss of customers. This is

due to the following causes:

a. Failure of sales support to meet deadlines: The sales team was

unable to obtain timely assistance from the sales support team
(proposal support) due to this, the sales staff failed to meet proposal
deadlines. This caused customers to switch to other competitors,
generating a negative impact on the organization's revenues.
b. Bottleneck in the sales support area: This is due to the fact that
internal operations were carried out in a single department, and this
department is responsible for the support of all the other teams, which
makes it difficult and slows down processes and increases operating
costs.

c. Training Difficulty: The sales support team has four functions: Data
Analysis, Data Engineering, Proposal Support, and Pricing. Personnel
from the data analysis and data engineering team may not be trained
to work on the proposal support team. This difficulty in training has
created difficulties in sharing the workload within the sales support
area. Experts are needed to work for the proposal support team; this
has also made it impossible for other units (data analysis, data
engineering, pricing) to share their workload in case the number of
requests is very high.

d. Lack of synergy between the sales area and the sales support
area: The sales director has indicated the need to change the sales
support division as a sector structure. These drawbacks had led to a
lack of synergy between the sales area and the sales support team.
Falling renewal rates have generated pressures to control costs.
Failure to meet deadlines and sales targets has had a negative impact
on the company. One impact is the unrealistic expectations of the sales
support group. The sales support area has a heavy operational burden,
as most of the sales team depends on it.
BPS, expects the department to function and the different employee
profiles for sales to present new dynamics, however, this has led the
sales support team to experience difficulties that are difficult to resolve
and the impact is evident in performance.

e. Variability of work overload in the proposal support area:

The level of utilization indicates that we have an overload of work in
some sectors (retail, energy, government and manufacturing) in the
sales support area, due to the seasonal demands of the business, a
 constant presence of the number of resources assigned to these
sectors was identified, suggesting that there is no uniformity in the
intensification of work in some sectors,

IX. PROPOSED SOLUTIONS

a. Constant training and coaching to keep the sales support team up to

date, reinforce skills and speed up the time it takes to respond to
requests. Also, improve communication between the different divisions
to improve workflow.
b. To have a tracking platform for each request in order to have the status
of each request and easily identify bottlenecks and distribute the
workload more efficiently.
c. Given the capacity shown in the workload utilization table, the proposal
support area is overloaded for quarters 1, 3 and 4. Being more specific,
we have that the retail sector has 41.82% additional overhead in the
first quarter, the government sector has 1.82% additional overhead for
the third quarter and the manufacturing sector has 20.73% additional
overhead for the fourth quarter. Based on these additional workloads in
the proposal support area and taking into account the workload in the
data engineering area, we see that we can assign one person, from the
sales engineering team, permanently to the proposal support area in
order to balance and reduce the workload in the sales support area.
The advantage of assigning a person from another team is that he/she
does not have a bias towards a certain BPS business sector and could
learn from various business sectors, in this case, retail, manufacturing
and energy, without leaving aside the government sector. This
assignment does not affect the current BPS process, does not increase
the cost of HR and increases the capacity of the proposal support area.
d. Request in advance the participation of the sales support area in
renewal opportunities.
X. CONCLUSIONS
BPS is a powerful player in the consulting and expense management industry.
According to the analysis of the data presented, it has been observed that
there are more sales opportunities (new sales, renovations and expansion)
coming mostly from the manufacturing sector, followed by the energy sector.
On the other hand, the commercial sector has the least opportunities.
It has been identified that the longest average attention time is in the proposal
support area and although the company seeks to distribute the workload
equally, within the proposal support area there are more requests received in
the manufacturing, retail and energy sectors, being the commercial sector the
one that generates less profitability and is more expensive in man-hours.
Therefore, it is recommended to consider the solutions proposed in point IX in
order to improve the work flow, reduce the time for attending to requests and
a better distribution of the workload.
Annex