In business, as in life, the best-laid plans often go awry. We all know the way we would like things to work, but often one of the variables goes off track. Call it business process entropy. When something unexpected happens the process comes to a halt, jeopardizing business performance both locally and potentially throughout the business and broader supply chain.

Forward-thinking companies are protecting against the inevitable snafus by arming their employees with a variety of rich information sources so they can be innovative in their approach to handling exceptions and solving problems. This goes beyond traditional business process optimization to enabling fresh, repeatable strategies for problem-solving.

Traditional business process re-engineering (BPR) and business process optimization (BPO) involve using technology to fine-tune processes based on deep data analysis. Exception management is the human side of the equation—it concerns employees’ efforts to pick up where a process has broken down, to mitigate any damage and capture the lesson learned to be used the next time.

Bob Anderson of Microsoft views it this way: "On one side is the orchestra. That’s the highly structured process with very distinct rules," says Anderson, managing director of information worker business strategy consulting for Microsoft. “On the other side is a bunch of cool cats in a jam session. Their talents are based on improvisation, adapting to changes in condition. All of a sudden they have to work outside the process."

This is where technology comes into play and people go to work. Different systems can be set up to send automatic alerts when things don’t go as planned (on the factory floor, a temperature is too high; in purchasing, a supplier runs short of a needed item; in financial services, the market drops). “As soon as something happens, the process comes to a halt. Then the onus is on the employee to figure out who should respond, and how,” says Anderson. “Companies need to give the right tools to the right employees at the right time to be able to handle the exceptional cases.”

For example, the best response in one case may be for the employee to consult a repository of best practice data. In another case, the old-fashioned telephone is the most expedient route. More complicated situations might demand creation of ad hoc teams of individuals from different groups or even companies. “It’s about finding the right people and the right content in a window of time that may be very short,” says Anderson.

Companies in all industries have woken up to the potential of lightweight business intelligence (BI) tools that provide key performance indicator (KPI) information to a variety of different employee types. This is a great first step toward furnishing people with the information they need for exception management, says Steve Banker, service director for ARC Advisory Group. Typically, this sort of alert is an after-the-fact announcement that a process variable has gone off-course.

The next step is to set up the IT infrastructure to deliver real-time (or close to real-time) visibility inside business processes—a technically complex task, says Banker. Here, the goal is to be proactive rather than reactive. A manufacturer’s purchasing agent, for example, might want to have a page or e-mail message sent if he or she did not receive an advanced shipping notice that critical goods left the dock when they were supposed to. “I don’t want my factory to be starved of goods that it needs,” says Banker. “I can make arrangements with another supplier if necessary.”

When it comes to exception management, there is one potential danger to guard against: information overload. When a company first uses a tool that offers the ability to send automatic alerts, it is customary for an operational manager to set the alarm parameters too widely. That can drive people crazy and seriously jeopardize productivity. “They turn on their computer and they have alerts all over the place so they typically start to ignore them,” says Banker. The solution is to set them more narrowly or clean up the data so that redundant warnings are rare.

“Your goal is to make useful, actionable information available quickly,” says Banker. “Beware of information overload. You have to think, what am I going to do with this information? You might go into different applications, make phone calls, etc.”

Though exception management relies to a great degree on human intervention (and ingenuity in problem-solving), there are still opportunities to automate further. Software tools like Microsoft BizTalk Server can be used to create automatic workflows based on predefined events and rules. For example, “If this happens, send an e-mail message to an alternate supplier. If that happens, alert the customer the order will be late. You can arrange to be copied on these messages to be sure they happen,” says Banker. “You can use workflow to automate exception resolution,” at least for many types of exceptions.

Every business has exceptions that wreak havoc every day on established processes. When employees are empowered to use different information sources to solve problems, they use their creativity to come up with innovative new solutions. Most companies are far from having instant visibility into processes as they are happening, though that is a goal.

Fundamentally, exception management is about helping people come closer to meeting their individual, departmental, group, enterprise, and supply chain objectives. Says Banker, “This is about narrowing the gap between what people expected to happen and what actually happened.”

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