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Business Process Management

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  • 1. Business Process Management (BPM) How to get beyond ERP and move into the 21 st Century Kewal Dhariwal, PhD, CCP, I.S.P. Manager, ICCP & Supply Chain Research Athabasca University
  • 2. What is ICCP creating for a BPM Exam?
    • 1.0. BPM Concepts and Roles
    • 1.1 Definitions
    • 1.2 Organizational Roles & Responsibilities
    • 2.0. Business Management Perspective
    • 2.1. Business Concepts, Principles and Guidelines
    • 2.2. Performance Management
    • 2.3. Ongoing Monitoring and Controlling Execution
    • 3.0. BPM Methodology Approaches and Techniques
    • 3.1. Enterprise Process Planning
    • 3.2. Process Analysis and Design
    • 3.3. Process Management Improvement
    • 4.0. BPM Technology
    • 4.1. BPMS Implementation
    • 4.2. BPMS Technology Types
  • 3. Why BPM?
    • “ BPM is going to be the dominant management discipline in the 21 st Century and is already the way that leading companies manage their businesses as a management discipline.”
    • “ The convergence of BPM and the continually increasing capabilities of BPM software enable organizations to manage and execute change in an increasingly hypercompetitive environment – to adapt, thrive and survive.”
      • Brett Champlin, CCP, CDMP, President - ABPMP
  • 4. Why BPM?
    • “ Enterprises are seeking to transform themselves into customer-focused, process-centric organizations and consider this transformation critical to their business success.”
    • “ A key part of that transformation is to reorganize information resources as substantially independent reusable services.”
    • “ A service oriented architecture (SOA) embraces this concept of reusable services and represents the next major step in the evolution of IT strategies.”
      • Tom Dwyer, V.P. Research, Brainstorm Group
      • Mike Rosen, Editor SOA Magazine, Brainstorm Group
  • 5. What is happening in BPM? Results from a survey of 1200 companies (2007) Carilu Deitrich, BEA BPM Product Manager
    • Market consolidation and technical convergence
        • 150 vendors providing small to large enterprise-class vendors with powerful solutions and modeling tools. Consolidation occurring to reduce that number to 25 for enterprise wide solutions.
    • Spanning multiple packages
        • BPM increasingly being used to manage processes that bridge multiple packaged applications.
  • 6. What is happening in BPM?
    • People process problems
        • Organizational challenges such as internal politics and change management outweigh technical challenges in deploying BPM.
        • Continuous process improvement is the key to fostering BPM as an imperative business strategy
    • BPM, Collaboration with Competitors
        • Companies are seeking ways to better support ad-hoc, collaboration
        • BPM today does not support this well enough, but BPM companies are moving towards this direction.
  • 7. What is happening in BPM?
    • BPM adoption mostly departmental
        • Some leading-edge companies are tackling enterprise-wide processes (more the exception than the rule).
        • 1200 companies surveyed – 18% currently employing enterprise wide BPM
        • 50% of surveyed group are focusing on departmental process problems
        • BPM rapid growth attributable to bringing business strategists and technologists together to solve process problems
  • 8. What is BPM? Let’s explore it in detail
    • BPM goals are to efficiently align the organization with the customers’ wants and needs
    • BPM attempts to continuously improve processes – seeking process optimization by
      • Defining
      • Measuring
      • Improving your process
  • 9. What is BPM?
    • “ Executives need to organize and manage, not only the cost chain, but also everything else – including strategy and product planning – as one economic whole, regardless of the legal boundaries of individual companies.”
    • “ This is a shift from cost-led pricing to pricing-led costing .”
      • Peter Drucker – Management Challenges of the 21st Century.
    • This change is from forecast-driven inventory style systems to responsive, flexible and demand-driven mass customization, globally.
  • 10. What is BPM?
    • People
        • Customer facing staff are best suited to understand customer needs and must be empowered to make improvements.
        • Many improvements can be done without involving technology
    • Business –Technology Divide
        • Business processes are managed by business people.
        • Information moves between software packages with requires a service oriented architecture (SOA) often driven or governed by IT.
  • 11. What is BPM?
    • Modeling
        • Modeling a business process is a business domain
        • Perfecting a business process is a staff domain.
        • Business modeling is Business Process Management (BPM).
    • Business –Technology Connection
        • The size and complexity of tasks often requires the use of technology to model efficiently.
        • Business people, especially customer facing staff must control and do the modeling.
  • 12. What is BPM?
    • Bridging IT and Business
        • Bringing the power of technology to business staff and reducing their work should be the BPM group credo.
        • BPM is the bridge between Business and IT.
        • BPM systems will develop to be industry specific.
        • A cyclical BPM life-cycle exists:
          • Design
          • Modeling
          • Execution
          • Monitoring
          • Optimization
  • 13. What is BPM?
    • Process Design
        • Identify existing processes
        • Design the “to-be” processes
        • Key Terms
            • Representations of process flow
            • Actors within a process
            • Alerts & Notifications
            • Escalations
            • Standard Operating Procedures
            • Service Level Agreements
            • Task hand-over mechanisms
  • 14. What is BPM?
    • Process Design
      • Techniques & notations
          • IDEF0 – IDEF nn (U.S. Air Force- public domain)
          • IDEF0 – Function Modeling
          • IDEF1 – Information Modeling
          • IDEF1X – Data Modeling
          • IDEF3 – Process Description Capture
      • Event Driven Process Chains (originally inside SAP/R3), now also through IDS Scheer, MS Visio, other tools.
      • BPMN (simple diagrams with a small set of graphical elements) – developed by BPM Institute handed over to Object Management Group (OMG – maintained).
          • Flow Objects
          • Connecting Objects
          • Swimlanes
          • Artifacts
  • 15. What is Business Process Modeling Notation (BPMN)?
    • BPMN simple diagram ( www.wikipedia.org )
  • 16. What is BPMN?
    • BPMN larger example ( www.wikipedia.org )
  • 17. What is BPM?
    • Modeling
      • Starting with the Design (theoretical) introduce variables – such as cost of materials, introduction of more people, etc. to determine how the processes might operate differently.
      • What if analysis
        • What if only 90% of the people had to do the work?
        • What if only 50% were available (baby-boomers retiring)
  • 18. What is BPM?
    • Execution
        • Off-the-shelf BPM tools are available:
          • http://bpm-directory.omg.org/vendor/list.htm
            • BEA, ID Scheer, Borland, etc.
        • Enterprise-wide tools include all of the following and more:
          • Graphical tools
          • Text language based modeling tools
          • Visual programming using metaphors
          • Business Rules – definitions governing system behavior- leading to a business rule engine
  • 19. What is BPM?
    • Monitoring
        • Individual process tracking (state and statistics)
          • State of a customer order, state of a delivery, how many delivered on-time, right-quantity, right-place, etc.
          • Identify problems and correct
          • Work with customers…once the problem is identified, fix the connectivity issues (information rollups, data exchange, people communications, etc.)
        • Measures: Cycle time, defect rate, productivity
        • Business Activity Monitoring (BAM)
          • Real –time or Ad-hoc
        • Process Mining
          • Compare event logs with “a-priori model” to analyze bottlenecks, breakdowns in process, etc.
  • 20. What is BPM?
    • Optimizing
        • Identifying process failures, bottlenecks, under performance issues
          • Cause-effect analysis
          • Redesign or modification of process to
            • Reduce Cost
            • Improve Quality
            • Increase Responsiveness
  • 21. Where does SOA fit in?
    • Service Oriented Architecture (SOA) is a way of executing BPM more efficienty and effectively
    • SOA provides the architecture to provision how processes exchange data in a flexible manner across business processes, both in the company and between collaborating companies (supply chains)…following the value chain more closely.
    • SOA unifies business processes by structuring large applications as an ad-hoc collection of smaller modules called services.
  • 22. Where does SOA fit in?
    • XML has been used extensively in SOA to create data which is wrapped in neat descriptive containers.
    • The services are described by Web Service Description Language (WSDL) and SOAP a protocol for exchanging XML based messages over the internet using HTTP/HTTPS.
    • The goal of SOA is to allow programs or applications to be strung together to form new ad-hoc applications which are built almost entirely from existing software services.
    • WS-BEL – Web Services Business Execution Language (serialized XML) – processes in WS-BEL exclusively import and export functionality by using web interfaces.
    • Software reuse is one goal without reconfiguring the existing application – So this is systems integration in a totally different manner than the 1980s and 1990s ERP methods which often required the company to change its processes to fit in with the ERP environments.
  • 23. New Rules for the Process-Managed Enterprise Howard Smith and Peter Fingar (BPM-the Third Wave) 2003 Processes can monitor themselves Process metrics and process lifecycle Processes have to be changed in order to reduce the manual checking required of accountants, auditors and supervisors 7 Processes can be as complex as they need to be, yet still be manageable Process participants Process must be kept simple in order to be manageable 6 Companies build on and transform what exists Process discovery, introspection and projection combined with application componentization Companies have to start over 5 Firms are free to innovate because collaboration rests on a standard representation for processes, not on standard processes Business process modeling languages Collaboration requires standard approaches 4 Processes can be as easily managed in a federated environment as a centralized one Distributed process execution and end-to-end processes Executing a process means locating it in one place and under centralized control 3 Processes are fluid, dynamic, amoebic and adaptable Process Calculus Processes are rigid scripts, focused mainly on the inputs and outputs of discrete steps 2 All forms of work can be described and managed by a single system Process Desktop Process-based clerical work and practice-based skilled work are different 1 New Rule Disruption Old Rule Item
  • 24. New Rules for the Process-Managed Enterprise Howard Smith and Peter Fingar (BPM-the Third Wave) 2003 Continuous process improvement across many processes Process management system No team can reengineer more than one process at once 14 Not all radical changes require radical changes to IT systems or organization Process deployment and execution Radical change takes a long time to implement 13 Process management is a precise science Process calculus Process innovation is an art form, with uncertainties and ambiguities 12 Process management vanishes becoming a part of everybody’s job Process portal Companies need a large, dedicated, long-standing reengineering team 11 Replacement of organizational change with technological implementation Computer-aided process engineering Radical change is painful and disruptive 10 Processes evolve in fits and starts, sometimes incrementally and sometimes radically, but always non-disruptively Process analysis and transformation Incremental process improvements produce minor gains 9 There are no discontinuities Lifetime process lifecycle management A choice must be made between incremental process improvement, and radical engineering 8 NEW RULE DISRUPTION OLD RULE ITEM
  • 25. New Rules for the Process-Managed Enterprise Howard Smith and Peter Fingar (BPM-the Third Wave) 2003 Processes as coaches Process training built into process designs Every process team needs a human coach 21 Processes measure themselves and tell you where they are Process metrics It takes work to have to find out where you are in a given process 20 As many designers as required can be involved, deep within the business Shared process repository Processes can be designed only by the process team 19 Everyone that needs to be involved in the process improvement can be involved Collaborative process analysis There must be a single process owner 18 Change-making is part of everyone’s job Collaborative process design and closed loop process optimization Managers make all process design changes 17 Insights for process streamlining and process re-design arise naturally in the business, and are readily accepted by those affected Process intranet Reengineering never happens from the bottom-up 16 There is no distinction – circumstances govern the approach you take. Process models developed quite independently can be easily combined. Integrated process model Radical change is top-down and continuous changes is bottom-up 15
  • 26. New Rules for the Process-Managed Enterprise Howard Smith and Peter Fingar (BPM-the Third Wave) 2003 Organizations are more complex than they think Process discovery A company has no more than ten to twenty processes of interest to process engineers 28 Any process can be reused to construct or constrain the design of hundreds, even thousands of variants Process customization and process patterns Design processes so that only a small number of variants are needed 27 Tradition is everything, and must be built upon. Those who fail to learn from the past are condemned to repeat it Process discovery Tradition counts for nothing 26 Value analysis, process analysis, quality management and costing are combined into one analysis Process modeling methodology Don’t bury reengineering in the middle of the corporate agenda 25 Everyone and every system can be involved without degradation of automation or efficiency through manual hand-offs End-to-end processes, process data correlation, distributed process execution As few people as possible should be involved in the execution of a process 24 Any process can be modeled and executed; it may have nothing to do with IT Process virtual machine The only feasible processes are those supported by the existing IT systems 23 Plans are processes, guiding the enterprise in real time Process modeling language Plans get revised only periodically 22 NEW RULE DISRUPTION OLD RULE ITEM
  • 27. New Rules for the Process-Managed Enterprise Howard Smith and Peter Fingar (BPM-the Third Wave) 2003 Processes can change themselves within limits set by process design Capability passing, external process participants, business rules Processes change only when people change them 34 Technology implements the process (drives the pistons; orchestrates the cogs) Third wave Technology only participates in the process (as cogs in an engine) 33 Manage processes as intellectual property and derive what is required for execution automatically Enterprise process model Divide overly complex processes into smaller number of simpler processes 32 Coordination of independent activities is built into new processes Collaborative processes Work must be structured so that suppliers and customers can plan and schedule their respective activities independently 31 Strong processes are those that include all required participants who can freely and efficiently exchange and re-process all required information Process data Processes must be designed to eliminate excessive information exchange and data redundancy 30 Process improvement is built into the methodology; pain points emerge naturally Process optimization, analysis and transformation The processes to be improved must be carefully selected and prioritized 29
  • 28. New Rules for the Process-Managed Enterprise Howard Smith and Peter Fingar (BPM-the Third Wave) 2003 Process owners design and deploy their own processes, obliterating, not bridging, the business IT divide Third wave BPM There is a divide between “business” and “IT” 37 Process management knows no organizational boundaries Process interface definition language and end-to-end processes Changing processes across organizational boundaries is virtually impossible 36 Just-in-time, single-purpose, throw-away processes are all possible and useful and reflect the way business is really done – experimentally and systematically Real-time process manufacturing; the real-time enterprise Processes take a long time to design 35
  • 29. Future for BPM?
    • Move from mechanistic systems to more complex environments where Human Intuition and Judgment are allowed for in the work flow.
    • Better capture and adhere to business rules – Business Rules driven systems.
    • Intelligent software agents will be used to replicate business rules behavior and model optimizing responses.