From Business Process Management
to Business Process Innovation
Michael zur Muehlen, Ph.D.
Director, Center of Excellence for Business Process Innovation
Stevens Institute of Technology
Hoboken NJ
Michael.zurMuehlen@stevens.edu
www.sungard.com/energy
Wednesday, January 14, 2009

Motivation
Drivers for
Business Process Management (BPM)
Compliance
Performance
Mandated compliance (e.g. SOX)
Business Process Improvement
Desired compliance (e.g. ISO, ITIL)
Engineering of Process-aware IS
Wednesday, January 14, 2009

How do you make a Cup of Coffee?
Wednesday, January 14, 2009

The Nescafé Process
Wednesday, January 14, 2009

The Espresso Machine Process
Wednesday, January 14, 2009

The Starbucks Process
Wednesday, January 14, 2009

BPM Questions
Wednesday, January 14, 2009

BPM Questions
 How do we design and communicate this process?
Wednesday, January 14, 2009

BPM Questions
 How do we design and communicate this process?
 How do we know that we perform this process well?
Wednesday, January 14, 2009

BPM Questions
 How do we design and communicate this process?
 How do we know that we perform this process well?
 How do we know that we manage this process well?
Wednesday, January 14, 2009

BPM Questions
How do we design and communicate this process?

How do we know that we perform this process well?

How do we know that we manage this process well?

How do we know that we maintain compliance?

Wednesday, January 14, 2009

BPM Questions
How do we design and communicate this process?

How do we know that we perform this process well?

How do we know that we manage this process well?

How do we know that we maintain compliance?

How should we organize and govern process

improvement efforts?
Wednesday, January 14, 2009

BPM Questions
How do we design and communicate this process?

How do we know that we perform this process well?

How do we know that we manage this process well?

How do we know that we maintain compliance?

How should we organize and govern process

improvement efforts?
 Which standards and technology are relevant?
Wednesday, January 14, 2009

Process Life Cycle
Business Process Business Process
Innovation Management
Business Process Business Process
Monitoring Automation
Wednesday, January 14, 2009

“Innovation is about
imposing a discipline of
value creation
in an organization”
Tom Koulopoulos
Wednesday, January 14, 2009

Wednesday, January 14, 2009

BPM and Business Value
Information Business
Technology Value
Wednesday, January 14, 2009

BPM and Business Value
X
Information Business
Technology Value
Wednesday, January 14, 2009

BPM and Business Value
X
Information Business
Technology Value
en
ab
les
s
te
ea
cr
Process
Change
Wednesday, January 14, 2009

Wednesday, January 14, 2009

Great!
Now What Do We
Do With It?
Wednesday, January 14, 2009

Process Innovation
Project Autograph
Usage-based Insurance
Billing
New Process
New Technology
New Value Proposition
Wednesday, January 14, 2009

Process Innovation
Project Failed
Lack of Standard Process
Expensive Technology
Customers not ready
Wednesday, January 14, 2009

Learn from Outside
Telecom Billing Process
Free GPS
Rate depends on mileage driven
Industry-strength Billing Process
Wednesday, January 14, 2009

Relationship between BPM and Strategy
Financial FINANCIAL
Objectives are Primary Objectives
Paramount
Wednesday, January 14, 2009

Relationship between BPM and Strategy
Financial FINANCIAL
Objectives are Primary Objectives
Paramount
CUSTOMER
Customers
Seek Value Value Proposition
and Pay for it
Wednesday, January 14, 2009

Relationship between BPM and Strategy
Financial FINANCIAL
Objectives are Primary Objectives
Paramount
CUSTOMER
Customers
Seek Value Value Proposition
and Pay for it
PROCESS
Processes
Enable Value Regulatory /
Innovation
Operations Customer
Social
Creation
Wednesday, January 14, 2009

Relationship between BPM and Strategy
Financial FINANCIAL
Objectives are Primary Objectives
Paramount
CUSTOMER
Customers
Seek Value Value Proposition
and Pay for it
PROCESS
Processes
Enable Value Regulatory /
Innovation
Operations Customer
Social
Creation
Strategic
Change
Strategic
Job
Agenda
IT
Families
LEARNING & GROWTH
Processes shape
and are shaped Human Information Organization
Capital Capital Capital
by maturity
Wednesday, January 14, 2009

The BPM Maturity Model
Business Process Management
Maturity
Strategic Governance Method IT People Culture
Alignment
Process Process Roles and Process Design & Process Design & Process Skills & Process Values &
Improvement Plan Responsibilities Modeling Modeling Expertise Beliefs
Process Process
Strategy & Process Decision Making Process Education & Process Attitudes &
Implementation & Implementation &
Capability Linkage Processes Learning Behaviors
Executions Executions
Process Metrics & Process
Process Control & Process Control & Responsiveness to
Performance Collaboration &
Process Architecture Measurement Measurement Process Change
Linkage Communication
Process Process Process
Process Output Leadership
Management Improvement & Improvement & Process Knowledge
Measurement Attention to Process
Standards Innovation Innovation
Process Process Project & Process Project & Process
Process Customers Process Social
Management Program Program Management
& Stakeholders Networks
Controls Management Management Leaders
Source: Rosemann & DeBruin 2006
Wednesday, January 14, 2009

Customers don’t care about
processes per se, but about
their value proposition
Wednesday, January 14, 2009

Is This Value?
Wednesday, January 14, 2009

Is This Value?
Wednesday, January 14, 2009

This is Value!
Wednesday, January 14, 2009

Underwriting On Demand
Text2Insure
Provide Travel and Car Insurance via SMS
Provides Quote within 60 seconds
Reply “BUY”
Call from agent within 10 min for payment
details
Cover2go
Accidental Death Insurance
Fees taken from cell phone bill
Wednesday, January 14, 2009

Process and Risk Management
Process-oriented
Risk Management
Process Risk
Risk-oriented
Process Management
Wednesday, January 14, 2009

Risk Management and BPM
Compare Frew (2006)
Wednesday, January 14, 2009

Risk Management and BPM
BPM Risk Management
Focus on providing value for Focus on ensuring value for
stakeholders stakeholders
Performance depends on effectiveness Risk is an inherent property of
of business processes business processes
Performance is influenced by process Risk is mitigated by process design
design
Feedback is obtained through Feedback is obtained through Risk
Performance Indicators assigned to Indicators assigned to systems and
systems and processes processes
Performance objectives are achieved Risk is mitigated through optimized
through optimized processes processes
Compare Frew (2006)
Wednesday, January 14, 2009

Risk Management and BPM
BPM Risk Management
Focus on providing value for Focus on ensuring value for
stakeholders stakeholders
Performance depends on effectiveness Risk is an inherent property of
of business processes business processes
Performance is influenced by process Risk is mitigated by process design
design
Feedback is obtained through Feedback is obtained through Risk
Performance Indicators assigned to Indicators assigned to systems and
systems and processes processes
Performance objectives are achieved Risk is mitigated through optimized
through optimized processes processes
Compare Frew (2006)
Wednesday, January 14, 2009

From Core to Commodity: Recipe
 Treat the Process as a Service
 Define a Standard Interface
 Create Value at the Front-End
 BPM enables OpRisk Management
 Compliance can be an Asset
Wednesday, January 14, 2009

Takeaways
BPM means two things:
Performance and Compliance
 Processes define services
 Processes are services
 Core processes can become commodities
 Process management creates problem solvers
 Industrialized processes enable innovation
Wednesday, January 14, 2009

From Business Process Management
to Business Process Innovation
Michael zur Muehlen, Ph.D.
Center of Excellence in Business Process Innovation
Howe School of Technology Management
Stevens Institute of Technology
Castle Point on the Hudson
Hoboken, NJ 07030
Phone:
+1 (201) 216-8293
Fax:
+1 (201) 216-5385
E-mail:
Michael.zurMuehlen@stevens.edu
Web:
http://www.cebpi.org www.sungard.com/energy
Wednesday, January 14, 2009