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Process Innovation for 2012

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This presentation was given by James Jameson, Business Unit Executive, Business Process & Decision Management, Growth Markets, at Impact 2012 in Mumbai on the 1st of June.

This presentation was given by James Jameson, Business Unit Executive, Business Process & Decision Management, Growth Markets, at Impact 2012 in Mumbai on the 1st of June.

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  • First let’s think about the context of our business environment today Think about this – - 90% of CIOs expect significant change to their business - 82% of CEOs expect high or very high levels of complexity in their businesses. - Only half of CEOs felt prepared to handle expected change. Change, complexity, and uncertainty are the new normal. And the pace of change and complexity is accelerating.
  • This creates a multitude of business challenges and opportunities for you. Think about these companies. Netflix and Amazon changed their business model to continually adjust to the market and it fueled their success. They recognized their business was a network of customers, partners and suppliers that they needed to leverage and transform. Some others did not transform themselves If you are forward thinking, you will embrace constant change and escalating complexity, seizing the opportunity to exceed customer expectations and harness new areas for growth This requires business agility - so you can make change happen instead of change happening to you. BACKGROUND DETAIL: Blockbuster Failed to compete with itself – Netflix could have easily been a service of Blockbuster. By the time they did, it was too late. Netflix: Served latent need and huge void left by video giants Borders: Too much investment in physical expansion (especially overseas), too little investment on digital presence. Overburdened with Debt. Article: http://on.wsj.com/ihQ1oD Amazon: 2010 Net sales increased 40% to $34.20 billion, compared with $24.51 billion in 2009. Operating income increased 25% to $1.41 billion, compared with $1.13 billion in 2009. Net income increased 28% to $1.15 billion in 2010. Start from retail now to online application
  • Main Point: Amid constant change and complexity, today’s business leaders must find new ways to drive growth and outmaneuver competitors. Speaker Notes: The previous questions help uncover the fact that growth is not achieved in a vacuum. As stated earlier, today’s business leaders must grow in an ever-growing complex environment. 81% of today’s business leaders realize that innovation is a key part to bridging the gap to the customer and 70% are focusing on new channels to get their products or services to these customers. The line between business and customer is fading and customers are becoming a part of the business solution to achieve growth in the complex and challenging marketplace.
  • WebSphere technology innovations have been at the heart of your organization's critical business inflection points over the last decade to leverage the web standards to reach new customers, to adopt new business models, and to drive growth. Let’s just spend a few minutes on the portfolio. A little over a decade ago, we started with the WebSphere Application Server. It’s the core of our application platform, providing cost effective delivery and scalable management of your critical applications. It is now used by 100,000 clients and drives 80% of all business transactions. On this platform and using a service-oriented architecture (SOA) approach you can break down the barriers of siloed applications - unlocking your business logic and workflow. The power is not in the applications themselves. No single application can support any of your key business processes. The power is in the combining functions that come from parts of many applications into something that truly differentiates you. Today, 84% of global 2000 companies are using SOA to do exactly that by removing application boundaries. In a connected world, quick and sure integration is essential to your success. Our MQ and ESB products establish the foundation to integrate the enterprise, and to link the digital and physical world to truly connect a smarter planet. These connections bring business and IT closer, creating the opportunity to transform business processes. Our Business Process Management software helps over 5,000 of you do this today. And we’ve continued to add new ways to interact with your clients and partners with portal, smarter commerce, and dozens of other products built on WebSphere. We’ve captured industry specific expertise in solutions on this platform to speed time to value. Organic growth and innovation are reflected in the 700+ patents we’ve earned across the WebSphere family... and we’ve added new functionality from acquisitions like ILOG, Lombardi, and Sterling as well. Simply put, IBM WebSphere is the most complete set of capabilities in the industry and has helped you create business agility and drive growth. And we’re just getting started. We’re continuing to extend our leading capabilities in each of these areas. We are also providing support for new delivery models like mobile, cloud, and appliances that are transforming the way you reach your customers and partners, and the way you consume IT capabilities.
  • MAIN POINT: In a complex world, driving faster innovation, more collaboration, and getting closer to your customers requires seamless integration across your dynamic business network. The challenge of simplifying complex integration cannot be solved with a piecemeal approach. You need a comprehensive integration approach that is powerful, flexible, intelligent, and reliable. So are you adding new services…. Integrating new suppliers or partners and giving them access to all the appropriate services without adding security or compliance risks. Are you trying to deliver a flawless customer experience in the midst of a major merger or acquisition. Highly complex business requests like these are the new normal. Your clients ability to quickly integrate technology and information across the “business network” is now a mission-critical requirement. IBM and our partners can help our clients make the transition from a rigid enterprise to an interconnected one – one that informs decisions with new information, embraces new channels, and leverages rich partnerships to capture new market opportunities. <<This transition is powered by comprehensive connectivity and integration capabilities that are: Powerfully simple – built on best practices to ensure success Faster than change – able to scale and change as fast as your business Extended to the edge – able to incorporate new channels, data, and devices Effective everywhere – with consistent security, reliability, and visibility >>
  • Main Point: The top 500 tech companies as evaluated by Information Week based on company performance and the impact IT had on that performance were surveyed. The overwhelming result shows Process as the leading priority for CIOs to focus on. This data builds on years of Gartner saying that Process is #1 (five years in a row) Data: Sep 2010, InformationWeek
  • Main Point: IBM’s approach to BPM addresses the full spectrum of processes from small, departmental workflows to large end-to-end processes that span the business network. With IBM’s approach you can start anywhere and leverage tools that can easily scale with your implementation Speaker Notes All processes are not the same and to help you be successful with BPM, IBM must be able to address to full spectrum of business processes that our customers are faced with. There are any number of processes that vary depending on the amount of structure in the process, the use cases you see here are: Straight Through, Coordinated/Scheduled, Content Intensive, Compliance, Event-Driven, and Collaborative / Artful. Each of these processes to varying degrees involve systems (integration) business people, and content. In addition to their being a spectrum of business processes; how these processes are changed over time also is different – some changes require business and IT to work together while other changes are purely done by the business. In both cases, strong process governance is required in order to maintain the integrity of the business system. Spectrum of Processes Straight-Through Processes – These processes are linear and deterministic in that they have known start and end points as well as known paths through the process. This is where AIM has been very strong historically – things like Payments, Trade Settlement. Coordinated Scheduled Processes – The main function of these types of processes is to coordinate or schedule the work. The processes are usually still linear with known start and end points but the paths can sometime be non-deterministic (i.e. they don’t happen the same way each time). ERPs and Industry-specific apps have a stronghold in this space. This is also an area that both WebSphere and FileNet BPM can play a role depending on the process. Content Intensive – These processes require a significant amount of unstructured information (images, emails, documents, etc) that initiate a process or used by a process. Typically this information is not simply waiting in another system to be accessed, instead, it is requested of people or of systems that are not a core part of your process infrastructure. Paper intensive projects such as claims or new account opening where you may need an application, referenced documentation and approvals intertwined are good examples of content intensive processes. Non-Deterministic / Event-Driven Processes – Processes that are non-deterministic and non-linear have no specified start or end point. Instead, the processes are defined by event patterns that when matched trigger specific sets of actions. An example of this type of process is Fraud Detection. This is where the AptSoft acquisition play in. Compliance processes – automate your ability to declare information used by or within your process as a record for compliance purposes. This is critical in terms of meeting both regulatory compliance requirements for your industry and governance rules of your company. The declaration of records within a process and storage of those records in a secure repository reduces the opportunity for error over requiring people to manually declare records. It is also a more reliable, auditable way to manage your important records. Collaborative / Artful Processes – These business processes do not have any predefined structure to the work – for example the process of innovation, or creating collateral. Instead, these processes evolve on an ad-hoc basis as they are being executed. In a default process workflow, all documents in a workflow folder follow the same process definition. In an ad hoc workflow process, the user decides how a document should be routed for review when the user saves the document. Ad-hoc amendments to the workflow process, such as those initiated by the persons who collaborate in the work process, can be easily incorporated into a new work process.
  • Main Point: BPM provides a way for business and IT to collaborate and continuously optimize business processes across the process lifecycle. Speaker notes: BPM is a discipline consisting of software and expertise to improve the performance, visibility, and agility of business processes by enabling customers to discover, model, execute, rapidly change, govern, and gain end-to-end visibility on their business processes. The Key to remember is that “BPM” has to be more than just software… whether it’s your expertise, that of an industry partner working with you, that of integrators and consultants such as IBM Global Services – most likely a combination of more than one of these – successful business outcomes come only with the involvement of the business expertise with IT expertise. At its heart, business process management is about continuously optimizing business processes. This continuous optimization means working to improve business processes throughout the process lifecycle. The process lifecycle spans three steps: Documentation and Compliance where business process improvements are documented, and tested prior to Deployment & Execution where new or improved processes are deployed in an automated, repeatable fashion with flexibility for rapid change, and Analysis & Optimization where deployed processes are closely monitored and measured in real-time to enable rapid response to emerging business situations as well as identify new process improvement opportunities. Underpinning this cycle of continuous process improvement is the need for robust Governance to ensure that business processes are operating consistently and are complying with internal policies as well as external regulations and controls. Processes are also most effective and efficient when they are enabled with broad reuse of service-enabled IT assets. Optimizing end-to-end business processes across the lifecycle requires participation and collaboration between business and IT. Business and IT leaders must work together to develop the flexibility processes and underlying systems that allow the organization to embrace change and achieve a dynamic business network. Business process management provides the means and the tools to facilitate this collaboration, creating the visibility, engagement and efficiency expected from your solution.
  • Main Point: So what is a dynamic business process? What is it that makes a process dynamic? Here are some of the characteristics of dynamic business processes they are explicit, visible, interconnected, easily changed, and above all – driven by the business. Speaker Notes: We’ve discussed dynamic business processes, as one of the key enablers of agility, but what exactly are dynamic business processes and what is it that makes them dynamic? First of all, dynamic business processes are explicit—they’re documented, understood and agreed upon. They are also visible, with process performance available in real time, measurable and actionable. Dynamic business processes are easily changed, with tasks, activities and end points that are flexible and quickly adjusted. And above all, they are driven by the business, with contextual process management that is governed and extended to all stakeholders. Explicit: Processes are documented, understood, and agreed upon Visible: Process performance is available in real-time, measurable, and actionable Interconnected: Processes are network-aware and well-connected to the right services at the right time Easily Changed: Process tasks, activities, and end-points are flexible and quickly adjusted Driven by the Business: Process management is contextual, governed, and extended to all stakeholders
  • So let me turn the tables and ask you some questions. What’s at the core of changes you need to make in your business? Is it growth? Speed to market? Cost reduction? All of the above? You’ve told us time and time again how important it is to be able to drive down the total cost of ownership while speeding new services. The proverbial “Do more with less.” Companies are able to do that. Think about it. Ford stood on the Impact stage last year at a time of tremendous turmoil for their business and their industry. They set in place a clear strategy to integrate and optimize their business. They took the risk and it paid off. It’s time for you to set a roadmap for agility.
  • Process Complexity – tells us which technologies should be used to automate Process Value – tells us which processes to select for automation and putting under BPM Control Process Maturity – tells us how to gauge remaining opportunity Process Pervasiveness – helps us decide breadth of effect any improvements will have Process Redundancy – gauge opportunity in the ‘consistent processes across the organization’ quest Process Agility – helps us predict cost of maintenance Process Shape – can help us decide on next logical steps for process evolution Main Point: The IBM BPM Suite & IBM Blueworks Live approach the market from different perspectives. IBM BPM suite allows companies to achieve value in the high transaction, high complexity processes that typically don’t involve much human interaction. IBM Blueworks Live approaches the market from the other side – targeting processes that are in the long tail of the distribution- “barely repeatable,” ad hoc processes involving knowledge workers that most companies (large and small) run over email with spreadsheets . BlueWorks Live helps turn unstructured series of activities conducted over email into automated processes, giving users more control and improved productivity via a social, collaborative approach. Targeted at Business Roles for BPM authoring, Blueworks Live provides a tool that IT can hand to the business to help address their daily needs. Blueworks Live augments the IBM portfolio, and provides an on ramp to IBM BPM Suite. IBM Blueworks Live modeling and governance complement & seamlessly integrate with IBM BPMS. For all processes requiring integration, with 21st century agility, the IBM BPM Suite provide an end to end BPMS. Speaker Notes : Let’s take a look at that processes exist across the spectrum of the Global 3000 companies. A company is made up of a collection of individual processes, which take different forms and we’re starting to get data about what the processes look like inside a company. Each one of these bars in the chart shows an individual process where productive work is done and value is added. Traditional IT investments in BPM has been in the red bars on the left hand side of this distribution, in high volume / high transaction processes such as the automated processing of millions of checks a day for a banking institution. Next, there are a lot more processes that are somewhat complex (represented by the green bars), with perhaps less than 200 steps in a BPMN diagram, ones with a few integrations, and these are present in the large multinationals as well as midmarket companies. For these processes IT has also made investments in end-to-end BPM solutions. When we’ve looked at the distribution of processes across our client companies, however, we’ve seen the majority of their processes are in the large “ long tail” - ad hoc processes involving knowledge workers where most of the company’s work gets done through “Excel over email” . Blueworks Live offers business the opportunity to self service to automate these processes, to gain the benefits of visibility, understanding, insight and control. We’ve been working with Banco Espirito Santo (BES), the 3rd largest financial institution in Portugal, for a number of years, providing BPM software suite to support numerous front- and back-office business processes throughout the organization, and we’ve studied over 200 processes deployed over last 2 years. We’ve found that 2.5% are the hugely valuable, highly complex straight through processes running tens of millions of transactions a day, where BES is getting lots of scale and value on a day to day basis. Because these are so successful these involve zero business people to run and maintain 22.5 % of the processes are the somewhat complex processes, the green “core” processes. These involve about 2,000 people in a quarter, who will uniquely log in. We’re seeing about 1 to 2 of these “core” processes being deployed in each quarter. 75% of the blue processes in the “long tail” distribution, the processes that where spreadsheets and documents are sent over email to get work done in a process. These involved 8,000 people a quarter logging in. We’re seeing about 10 to 20 processes being deployed in a quarter. BES is building a framework where business users are 100% empowered to automate a process that is in the blue. The fact that BPM is a cultural issue, not a technical one, underscores the impact that a tool can have that allows business users to self service process needs in the long tail. BPM needs to be pervasive – on every screen and browser for every knowledge worker. This creates a shared infrastructure, a new social with a BPM center of excellence that is a social network with the visibility, control, and velocity of communication needed to address and respond to the business challenges of today’s global marketplace. This is an opportunity for the first time, to bring business people much closer to the structured explicit model-based conversations technical people have been having for many years in the BPM space.
  • Main Point: IBM provides industry-specific business process management expertise and assets in the form of Industry Content Packs that can help accelerate your BPM projects Speaker Notes: As we noted in the beginning – BPM is more than software – it’s a discipline that requires business expertise. Naturally, that business expertise must often be specific to an industry or at least to a specific type of business process. IBM delivers this expertise, and helps to accelerate your BPM projects with Industry Content Packs that provide a rich set of pre-built, industry-specific assets. IBM provides Content Packs for Banking, Insurance, Healthcare, Telecom, and Industrial Product Lifecycle Management. These assets are based on industry standards and help ensure consistency and reuse across the enterprises and their ecosystems. The content pack assets can be modified and extended to meet an organization's unique business needs. Industry Content Packs include following two components- A library of industry assets for key lines of business and business processes Out-of-box BPM solution templates that serve as a starting point for Proof of Concepts (POCs) and solution BPM implementations Industry Content Packs: Are based on industry standards and IBM best practices procured through over 5,000 IBM BPM engagements Provide a common reference architecture that governs these prebuilt assets to ensure consistency and reuse across multiple lines of business, geographies, and processes Are pretested and precertified on the WebSphere BPM offering, the most widely used platform in the industry
  • Main Point: You must meet customers where they are, and on their terms. Doing so requires not only a smarter approach to how you engage your customers (and your employees), but also to extend those capabilities to new platforms like cloud and mobile. File Name Here.ppt
  • Main Point: This is an excellent dynamic BPM and BRMS story in a top industry. It also brings an excellent opportunity to highlight GBS. And, finally, it is a great business value story. Speaker notes: Victoria Worksafe, an Australian state social service agency dedicated to employee worker safety and compensation, has deployed a BPM and BRMS claims processing application to ensure timely workplace claims processing for their citizens. The project is estimated to have payback of 6 months and hundreds of millions in savings from improved fraud detection. Victoria Worksafe is a relatively new BRMS customer who has deployed the first phase of this project and has many plans to expand the project scope with other IBM products. In fact, they are so happy with business outcomes, that they are already sharing their success in Australia
  • Main Point: To improve their processes, Lincoln Trust took a more “pragmatic” approach than they had in the past. They first formed a team that identified the most important projects, and developed a clear strategy for process improvement. Then they implemented an initial project to address their most pressing business problem. They leveraged their initial success to begin improving other processes across the organization. Speaker Notes: The first example that we’ll take a look at is Lincoln Trust company. Lincoln Trust Company is a leading independent providers of self-directed IRAs, in addition to providing recordkeeping, administrative, and custodial services to 401(k) plans and other defined contribution plans. Lincoln Trust was struggling with manual, paper driven processes. They were handling incoming retirement account service and transaction requests from more than 100,000 documents they received from the mailroom every month. The various business units of the company attempted to create their own “shadow applications” in Excel spreadsheets and Access databases and then manually file the immense amount of paperwork. Needless to say the process was getting in the way of them effectively serving their customers. Lincoln Trust knew that they needed to improve the process, but several previous efforts had not succeeded. A Process Improvement Team had existed several years prior, but was decommissioned due to lack of meaningful automation solutions, no partnership with IT and was viewed as being locked into “analysis paralysis.” In addition, early attempts to automate workflows through their content management system, had proven too complex, and been overwhelmed by the scope of the project. As a result of these failures, the relationship between business and IT was very poor, and neither side was able to credibly address the process problems. Lincoln Trust knew that they needed to take a different approach to improving their processes – a more “pragmatic” approach. Rather than attempting to address all of the process problems in a single solution, They first created an cross-functional executive steering committee and a small BPM team comprised of one project manager, one developer and one business analyst. These teams analyzed the issues, identified the most critical project areas, and developed a 2-part strategy for their process improvement. The first project focused on the most pressing issue – managing the physical paper that was accompanying the processes. The BPM team then developed “common shared process” model that could be rolled out quickly across the enterprise using the workflow features of their ECM system. This model would deliver imaged documents in a basic business process workflow and discontinue paper delivery. The common paper management process was implemented, and rolled out over the course of a year – eventually removing the paper from 145 of the company’s processes. After the success of their initial project, the BPM team then moved towards automating complete “first order” processes. For each process, the process analysis was carried out by LOB teams. Using IBM BPM Blueprint they created “as-is” and “to-be” models of the process, and presented their improvement recommendations to the IT teams that were ultimately implementing the processes. This approach has proven tremendously successful, and to date, Lincoln Trust has automated 15 key end-to-end processes including client service requests, plan establishment (essentially creating a new account) and distributions (when a client liquidates a portion of their holdings). Lincoln Trust has seen some amazing business results from their process improvement projects, but there are important lessons to be learned from the initial failure and subsequent success of their efforts. Lincoln Trust’s approach to process improvement led to some remarkable business outcomes. The automated processes have saved them over 2 million dollars to date. This represents a 120% return on their investment in the project. It’s increased their employee productivity, and most importantly it’s allowed them to better serve their customers. Since the new processes have been implemented, customer complains due to lost or mis-handled documents have decreased by 90%. There are also some important lessons we can take away from Lincoln Trust’s project. First, process improvement projects have to be a collaboration between business and IT. The first attempts that Lincoln Trust failed, because they didn’t strongly partner between business and IT. The lack of partnership and communication was at the heart of the over-analysis, and poor scoping of the original projects. The second key learning is around that initial project. To get buy-in from all the stakeholders and sponsors, process improvement projects often have to deliver a fairly quick initial success. Early projects failed because they were too complex and ambitious. Lincoln realized success when they identified the right initial project that wasn’t too large in scope. This project was able to deliver immediate business value, and convince all of the stakeholders to invest more time and resources in additional projects. Along with the issue of scope is that of analysis. Process analysis is a critical component of improvement projects, but organizations need to be cautious against spending too much time and resources on the analysis phase. Once the right initial project is identified, it’s important to move quickly to an implementation phase.
  • Main Point: O ne of the U.S.'s largest wireless voice and network provider implements IBM WebSphere ILOG JRules business management tool that automates its order system, eliminates invalid orders, shortens the fulfillment cycle, while saving the company manpower costs and reduces operational costs to comply with regulatory changes Speaker notes: Verizon Wireless has the largest number of retail customers in the industry and is the most profitable wireless company in the U.S. Its order validation process previously was done manually and was a costly, time-consuming process. In addition, Verizon had a high number of invalid orders -- over 30% of orders (which is over 2 million per month in full production) were found to be invalid. Verizon Wireless used IBM WebSphere ILOG JRules business management tool to automate its order validation process. ILOG JRules automated the verification of incoming orders and diagnosed errors. From this, Verizon has been able to eliminate invalid orders out of its system, reduce human resources, operational costs and shortened fulfillment cycle time. The benefits of the solution included: Keep invalid orders off the system; Shorten fulfillment cycle; Human resource savings; Reduced operational costs to comply with regulatory changes File Name Here.ppt
  • Main Point: HealthNow leverages IBM BPM & Rules technology to increase its speed, clarity, accuracy and consistency to market - with increased collaboration between its business and IT, and increased productivity gains with fewer man hours spent in development, testing and deployment Speaker notes: Headquartered in Buffalo, New York, HealthNow New York Inc., provides a variety of healthcare insurance plans, benefits and services to companies and individuals in the region in the western NY territory. HealthNow had multiple legacy systems and disjointed processes in place, which impacted their ability to respond quickly to changing regulatory, internal and external mandates. The enrollment process was predominantly paper-intensive with several manual touch-points thus elevating the risk of errors and delays, increasing administrative costs and limiting integration capabilities with external systems. HealthNow built an agile BPM and BRMS-based member enrollment system in a service-oriented-architecture (SOA) to automate, optimize and monitor key business decisions throughout the enrollment process determining eligibility and applicable coverage, easily identifying pending enrollment and exception cases, processing new member application and current member policy changes, enforcing regulatory compliance, disseminating tasks and triggering notifications as required. The IBM WebSphere solution yielded speed to market gains of more than 50%. It provided HealthNow with the ability to introduce new behaviors into systems in days rather than weeks or months, and enabled end-to-end visibility into the enrollment process - resulting in greater clarity, accuracy and consistency “ We chose to partner with IBM as their suite of technologies met our business and IT objectives at an enterprise-wide level.” — John Walsh, Chief Enterprise Architect, HealthNow New York Inc.
  • Main Point: J.B. Hunt leverages BPM to create a new process management systems and adds US$1.03 million in annual return to its bottom line! Speaker notes: J.B. Hunt Transport Services, Inc. (J.B. Hunt) is one of the nation's largest publicly-held transportation providers and a key supplier of total transportation solutions to thousands of companies. They realized that they needed to implement a new business process management solution to support its "Perfect Invoice" initiative, in which the company aimed to bill the correct amount the first time for all services provided and to receive full payment in accordance with the customer's terms. To accomplish this, the company needed an innovative way to identify and properly apply accessorial charges for driver delays at shipping facilities, known as power detention. In an industry where driver turnover can top 300 percent, power detention-related delays can result in increased driver frustration and a significant loss of potential revenue. The project, which the company calls the HAWK Power Detention project (HAWK), involved implementing a proprietary IT system designed to streamline the electronic capture of charges associated with driver delays. The HAWK system enables the company to capture missed revenue, eliminate non-value added work and encourage faster throughput at shipping facilities. The project focuses not on small quantitative gains but on a complete transformation in the way power detention – driver delays – events are captured, administered and invoiced. The new solution eliminates the need for specialists to execute 38 different manual steps and navigate through a dizzying maze of 13 existing mainframe screens, e-mail documents and printed customer requirements to process a delay charge. J.B. Hunt anticipates that the new solution will add US$1.03 million in annual return to the bottom line, including US$870,000 in previously uncaptured revenue for valid charges and US$160,000 in staffing reductions due to removal of process waste. The new solution has an internal rate of return of 124 percent and a payback period of less than 12 months.. Client background: J.B. Hunt Transport Services, Inc. (J.B. Hunt) is one of the nation's largest publicly-held transportation providers and a key supplier of total transportation solutions to thousands of companies. Its mission is to forge long-term partnerships with key customers that include supply-chain management as an integral part of their strategy. J.B. Hunt has four business units: truckload services, intermodal rail service, dedicated contract services and integrated capacity solutions. Business Need: J.B. Hunt needed to implement a new business process management solution to support its "Perfect Invoice" initiative, in which the company aimed to bill the correct amount the first time for all services provided and to receive full payment in accordance with the customer's terms. To accomplish this, the company needed an innovative way to identify and properly apply accessorial charges for driver delays at shipping facilities, known as power detention. In an industry where driver turnover can top 300 percent, power detention-related delays can result in increased driver frustration and a significant loss of potential revenue. By implementing a new business process management solution, J.B. Hunt hoped to accomplish the following: - Streamline highly manual, labor-intensive processes - Overcome resistance to change - Improve data issues, such as unstructured format, complexity, accuracy and integrity - Establish central data storage and improve process visibility. Solution: J.B. Hunt teamed with IBM to develop a business process management system based on IBM FileNet software. The project, which the company calls the HAWK Power Detention project (HAWK), involved implementing a proprietary IT system designed to streamline the electronic capture of charges associated with driver delays. The HAWK system enables the company to capture missed revenue, eliminate non-value added work and encourage faster throughput at shipping facilities. The project focuses not on small quantitative gains but on a complete transformation in the way power detention – driver delays – events are captured, administered and invoiced. Benefits: In the past, identifying and charging power detention delays was a highly manual process. The new solution eliminates the need for specialists to execute 38 different manual steps and navigate through a dizzying maze of 13 existing mainframe screens, e-mail documents and printed customer requirements to process a delay charge. J.B. Hunt anticipates that the new solution will add US$1.03 million in annual return to the bottom line, including US$870,000 in previously uncaptured revenue for valid charges and US$160,000 in staffing reductions due to removal of process waste. The new solution has an internal rate of return of 124 percent and a payback period of less than 12 months. Based on IBM FileNet technology, the new solution pushes information to the right person at the right time, thereby shortening the decision-making process and increasing process efficiencies. Plus the solution has helped the company: - Eliminate manual data entry. Because the solution leverages IBM FileNet eForms, J.B. Hunt can push charge authorization data directly to its customers through a FileNet eForms interface. This methodology will be leveraged for both internal and external customer processes as J.B. Hunt works to drive out process waste in other areas. - Improve business processes. The new solution gives J.B. Hunt the ability to automatically send e-mail notifications to customers when driver delays occur. This same methodology will be leveraged to enhance and improve other business processes within the corporation.
  • Main Point: Process improvement can seem challenging in the face of a complex and dynamic business network, but the right approach can get you there. Today we’ll take a look at how you can get started improving processes . Speaker Notes: With all the complexity of a dynamic business network, starting down the road of process improvement can seem challenging. The key to success is to use the right approach, and approach that starts with careful analysis that is focused on business value, and then expands slowly leveraging incremental successes along the way. Start with business value Successful process improvement initiatives all start with and are driven by business value. This means that organizations must understand the business goals and strategy that are driving the process improvement initiative, and analyze their current processes to identify the “low-hanging fruit”, the processes that when improved will deliver the greatest return on investment. Only after the processes projects have been identified and prioritized should organizations begin working on an initial project. Begin with a short-term, initial project Business analysis is an important first step on the road to process improvement, but organizations should also caution against over analysis. Process improvement initiatives, like all IT projects must be able to deliver some quantifiable successes or stakeholder commitment and, most importantly, funding for the initiative can dry up. The best approach is to begin with an initial project that can be implemented quickly. By starting with a manageable project you can development process improvement skills, and deliver value to the business quickly, ensuring commitment, funding, and success of subsequent projects. Extend process improvements across the business Once you have successfully completed an initial project, then you can start expanding to additional projects, leveraging and sharing your expertise along the way to truly build a process improvement program within your business. IBM is here to help you with your roadmap to process improvement. We have assisted 1000s of clients with their process improvement projects. Today we’ll take a look the process improvement journeys of a couple of these clients – one that focused on process automation, and another that focused on improving operational decisions. We’ll also take a look at some new products and service offerings that can help you along the way. What do you need for successful BPM? How can you get this kind of success? You need the right technology You need the right expertise (training, approach) Services / Education Start out with your first project (S Curve) As you go up the curve, you need more technology / capabilities As you go up the curve, you will become more self-sufficient (On-Demand consulting) As you go up the curve, you need a platform that can scale After project 1, you need services Last phase, you just need on-demand services Project (turn-key services), Program (solution mentoring), Transformation (On-Demand)
  • Main Point: Now l et’s look at an example of a client that implemented BPM and SOA. The City of Madrid – following the tragic 2004 Madrid train bombings, the city sought to radically improve its emergency response capability. Speaker notes: Centro Integrado de Seguridad y Emergencias de Madrid (CISEM) is the emergency response center for the city of Madrid, Spain. Emergency response from the police, the fire department, Servicio de Asistencia Municipal de Urgencia y Rescate (SAMUR) ambulances, the army and the mobile police was not coordinated. To make things worse, each entity was equipped with its own communication system and associated technology, rendering any kind of joint approach virtually impossible. CISEM needed an IT solution that would enable it to seamlessly coordinate and deploy all the individual emergency response units in Madrid, including police, the ambulance service and the fire brigade. Because CISEM had to remain open at all times, avoiding downtime and facilitating the highest possible availability was a top priority for its staff. Madrid teamed with IBM and IBM Business Partner Indra to create the CISEM command center, which combines information from many sources including video feeds, field reports and mobile computers. The project included the construction of an entirely new emergency response headquarters and the design and implementation of an IT system that would support the center's response capabilities. The CISEM IT project consisted of three projects: (1) Mobility: Every police patrol car, ambulance and fire engine needed to be equipped with a personal digital assistant (PDA) in order to communicate with the CISEM central command center. (2) IT infrastructure: CISEM needed to integrate all internal applications used by the different entities and external applications used by organizations such as the city's emergency hotline, the video surveillance center and the M30 Highway Control Center. CISEM also required a central application to manage events in Madrid, including large public gatherings such as football matches. (3) Data Integration: CISEM needed to integrate information into one central Oracle database. CISEM now has the flexibility to innovate without interrupting its day-to-day operations. It is better equipped to meet major challenges that the future may have in store. A Unified view of incident data has enabled faster, better decision making with the ability to handle multiple, complex situations simultaneously. CISEM realized improved mobilization and coordination of resources for rapid, effective response to emergencies and efficient support of events; emergency response times were reduced by 25%. The new system enables end-to-end coordination of emergency and municipal assets so resources are correctly assigned according to requirements communicated from the ground.
  • Transcript

    • 1. Process Innovation for 2012Jason JamesonBusiness Unit Executive, Business Process &Decision Management, Growth Markets
    • 2. Process Innovation for 2012• Innovate, Transform, Grow – The Business Drivers• The Role Of Technology – Business Agility and Flexibility – Business Automation• Getting Started
    • 3. Process Innovation for 2012• Innovate, Transform, Grow – The Business Drivers• The Role Of Technology – Business Agility and Flexibility – Business Automation• Getting Started3
    • 4. The New Normal: Change, Complexity, Uncertainty $488 billion $534 billion Lost in process inefficiencies In mobile in Fortune 500 companies transactions by 2015 85% 50% Of enterprises use Of businesses plan to adopt more external cloud services collaborative sourcing models 70% 50 billion Of businesses outsource one Devices connected to or more strategic activities the Internet by 20204
    • 5. Presents Both Challenges and Opportunities 2011 net sales Stock Grows increase 41% 350% since 2009 Filed for Filed bankruptcy bankruptcy in September protection 2010
    • 6. Business leaders must drive growth amidst complexity Capitalize on complexity and Outmaneuver competitorsInnovation  81% believe innovation is key to getting closer to their customers New Channels  70% are focusing on new channels to deliver services to their customers Collaboration  69% are collaborating with customers to deliver better products and services Source: IBM CEO Study, 2010
    • 7. CIO mandates come with distinct characteristics thatline up with the organization’s goals & strategy Expand Mandate Leverage Mandate Streamline operations and Refine business processes increase organizational and enhance collaboration effectiveness Transform Mandate Pioneer Mandate Change the industry value Radically innovate chain through improved products, markets, relationships business models Source: 2011 CIO Study7
    • 8. Yesterday’s best in class is not good enough• To fuel new growth while optimizing costs organizations must leverage: – Greater business understanding and measurement – Rich, integrated information, transactions, and decisions – Flexibility-enabling technologies – New social and collaboration capabilities – Efficiency in IT and capital expenditures• To increase awareness and control over their business processes for Greater Business Agility
    • 9. Key Capabilities for Transformation are: • Agile processes Appliances and decisions • Rapid, adaptable integration • Unbounded applications Mobile • Flexible and intelligent infrastructure Cloud
    • 10. Process Innovation for 2012• Innovate, Transform, Grow – The Business Drivers• The Role Of Technology – Business Agility and Flexibility – Business Automation• Getting Started 10
    • 11. Complexity exists internally and externallyCapitalize on complexity and thrive in an interconnected world Organisations are challenged to deliver fast, flexible and reliable access to information across applications, enterprises, and the cloud to: • Inform decisions with new information • Embrace new channels Partners, Suppliers, & • Leverage rich partnerships Customers Internal Enterprise Cloud Applications Companies need end-to-end process management
    • 12. Business Process is Still a Priority The Market is Clearly Telling Us …  Process improvement is critical  BPM delivers value to clients  Companies continue to invest Information Week: September 2010
    • 13. Types of Business Processes A business process is a collection of interrelated tasks, which accomplish a particular goal, usually decomposed into several sub-processes. Automated, Straight Coordinated, Scheduled Content Through Processing Intensive (Integrated Supply-Chain, (Payments, Trade Case Management) (Paper processes, Settlement) Account Origination, Claims) Structured Unstructured People Systems Information Processes Compliance Non-Deterministic, Collaborative, Event-Driven Artful, Ad-hoc (Automated Records & (Fraud Detection, (Contract Negotiation, Process Management ) Merchandising) Collateral Creation)13 13
    • 14. What is Business Process Management ? Through robust and flexible software capabilities and industry expertise, BPM enables customers to discover, model, execute, rapidly change, govern, and gain end-to-end visibility on their business processes Documentation & Compliance Deployment & Execution Visibility & Collaboration Software Continuous Business User Engagement Expertise Process Efficiency & Productivity Improvement Analysis & Optimization14
    • 15. Typical process problems Customer Service Account Finance Administration and Ops 1. 1 Unstructured Tasks and Executive 6 Communication (ex Management Paper or email) 1 3 2 2. Inefficient Working Environment Spans Systems Invoice Reconciliation 3. Inconsistent Teams 3 Prioritization 2 4. 4 Incomplete or Inaccurate Data Flow Between Systems 4 5 6. 5 Lack of Control Over System and Business Events (Exceptions) 7. 6 Poor Visibility Into Process Performance
    • 16. BPM brings order to the chaos 1. 1 Automate workflow & Finance decision making and Ops Executive Management Account 2. Reduce errors and improve Administration 2 Risk Management consistency Teams Customer 3 3. Standardize resolution Service across geographies 4 4. Leverage existing systems and data 5 5. Monitor for business events and initiate actions 6 6. Real-time visibility and process control Organisational Benefits: • Huge Reduction in Manual Work, Errors • Faster, More Consistent Issue Resolution • Easier to Manage the Business • Consistent Case Handling
    • 17. Accelerate process improvement and businessagility with decision automation Make operational decisions an enterprise asset with Business Rules Management and Business Event Processing • Rapidly implement changes to meet market needs and competitive threats • Increase straight-through processing • Reuse decision logic across processes and systems • Ensure compliance with business policies and external regulations
    • 18. What do organizations expect from BPM? Improved Reduced Ability to Company Time-to-Value Risk Change Rapidly Success Criteria Fast deploy (60-90 days) Agile solution delivery Standardized definitions Quick POCs (< week) Ease of interoperability Reuse across processes Optimized Business Modeling & Simulation Processes Human Tasks & Collaboration using BPM Process Execution & Integration Business Activity Monitoring Existing Processes Existing IT Legacy Packaged 3rd Party Ecosystem Applications Applications Services
    • 19. Enhance business agility with a stepped approach mapped tokey starting points with strong value to line of business Business Level 5 Highly predictive, Innovative, and Agile Business Agility Agile capable of handling unpredicted market changes Level 4 Responsive, Dynamic and continuously optimizing Dynamic Business leveraging business insight Level 3 Efficient and Effective Business focusing on end-to- Standardized end automation and trusted information delivery Level 2 Efficient Business focusing on cost reduction Awareness Business Level 1 Siloed, Reactive and Rigid Business Value Initial
    • 20. Agile Business Processes are….Explicit: Documented, understood & agreedVisible: Performance is available in real-time, measurable, and actionableInterconnected: Network-aware and well-connected to the right services atthe right timeEasily Changed: Process tasks, activities, and end-points are flexible andquickly adjustedDriven by the Business: Process management is contextual, governed andextended to all stakeholders20
    • 21. Process Innovation for 2012• Innovate, Transform, Grow – The Business Drivers• The Role Of Technology – Business Agility and Flexibility – Business Automation• Getting Started 21
    • 22. Set A Roadmap To Business AgilityExecute a Strategy ForBetter Business Outcomes:• Fuel New Growth• Speed Time to Value• Reduce Total Cost of Ownership
    • 23. 23 Characterizing Processes is Critical for BPM Success Factors that affect BPM approach: Process Complexity • Process Complexity Process Maturity • Process Value • Process Maturity • Process Pervasiveness • Process Governance Relative Number of Processes All processes are not the same: • Identify the type of processes you are looking to improve. • Tailor the solution to meet your objectives • Ensuring success on initial project will lead to further successes 23
    • 24. Key insight: Accelerate BPM successStart quickly, deploy faster, and reduce costs and risk Speed deployment with pre-built industry assets, and new Industry Solution ScenariosThink big Start small Supply chain Healthcare Retail Scale fast Industrial PLM Government Telecom Reduce risk, increase consistency and reuse across departments with industry- standards based assets Insurance Banking24
    • 25. BPM benefits every major industryInsurance: End-to-end claims processing Healthcare: Track patients through fromvisibility to reduce fraud and payouts to enrollment through discharge using eventineligible claims processing to optimize care and reduce waiting timesBanking: Rapidly deploy new online,mobile, and ATM banking features to Financial Services: Rapidly process orders andincrease customer satisfaction and reduce reduce risk of non-compliance with corporate anddevelopment costs regulatory policiesTelecom: Integrate voice, data, andcontent from multiple systems to speed the Retail: Automate order and supply chaindelivery of new high-value services processes to reduce lead time and increase order accuracyTransportation: Real-time visibility intoresources and location information to Government: Increase effectiveness byimprove forecasts and meet 95% on-time automating and coordinating emergency servicesdelivery goals across departmentsUtilities: Integrate billing applications withsmart meters for flexible pricing, andimproved billing accuracy
    • 26. Examples of industry-specific business use cases Banking Healthcare Cross-sell / Up sell Fraud Detection & Management Mortgage Origination Claims Processing Payments - Least Cost Routing Retail Payments - Pricing / Charge Calculation Promotion Management Accounting Promotion Execution Trade Order Management Trade Fund Management Insurance Travel & Transportation Quoting & Underwriting Notifications & Irregular Operations Claims Processing Solvency II Government Screening & Targeting Telecom Integrated Fare Management Promotion Management …
    • 27. IBM Industry Content Packs Industry Solution Assets for IBM BPM Configurable & extensible BPM solution assets for Banking, Insurance, Telecom, Healthcare, Manufacturing. Based on prevalent industry standards in each of the selected industries Capability Models Process Models Service Models Capability Maps & Process Maps Process Flows & Business Service Interface & Schemas align business strategy with Measures simulate human facilitate creation & assembly of process execution workflows & automate processes process implementations Based on APQC & Based on APQC & Based on Industry IBM’s Best Practices IBM’s Best Practices Standards Common Components Business Vocabulary Business Object Models Common Services & Utilities Repository of Business Conceptual Data Models to enable interoperability with the Concepts, Terms & provide a foundation for application ecosystem Relationships to ensure information management consistency Based on Industry Based on Industry Based Industry Standards Standards Standards BPM Solution Scenarios Pre-built solution that combine the above assets into an end-to-end working solution27
    • 28. In 2011 … IBM BPM and Process Center unified the tools for process teams to build, deploy, govern, and scale process applications …• Simplicity for business & IT collaboration• Power to scale from a project to a program• Visibility to improve business outcomes• Governance across BPM projects and programs
    • 29. In 2012 … IBM BPM delivers innovative user interface tools for business users to collaborate in getting work done …Social On-the-go Collaborative
    • 30. What’s New inIBM Business Process Manager v8? Social Collaboration Content Mobile Access Access zOS EnhancedGovernance
    • 31. IBM Business Process Manager v8 • Express Social • Standard • Advanced Mobile Coaches Portal Business Space Optional Microsoft Add-onsProcess Server Core BPM Advanced Automation & Integration Performance BPMN Process Rules BPEL ESB Adaptors Data Warehouse Deploy Measure Governance / Visibility WAS ND 8 Define Improve Shared Assets Server RegistryProcess Center Versioned Assets Network Multiple Process Centers Process Designer / Process Center Integration Optimizer Console Designer
    • 32. Reference: Hospitals Contribution Fund (HCF) -Overview• Established 76 years ago• Largest Not-for-profit Health insurer in Australia  1,000,000+ lives covered  $1,400,000,000+ dollars in revenue• HCF national market share 11.9 %• We partner several industry leaders in information technology to support a wide range of applications.• The health insurance market in Australia is very heavily regulated by the federal government and therefore business rules are frequently changing to reflect the new government regulatory changes
    • 33. Reference: HCF implemented a StraightThrough Processing StrategyA flexible approach was required IBM Business IBM Business Rules• Integrate with Technology Architecture Process Management Management• Handle the regulatory environment (changing rules)• Handle the non- automated providers – paper claims Capture Claim Process Decide Form with with with• Track and manage the workflow (claim READSOFT IBM BPM IBM WODM lifecycle) Identify Orchestrate Validate• Automate assessment & processing of Classify Simulate Calculate health claims, including medical, hospital Extract Monitor Detect (Fraud) and ancillary Verify Route Test Output Optimize Comply Report
    • 34. Reference: HCF - Business Outcomes Customer satisfaction  All claims reach loss adjusters the same day  Settlement time reduced by 60% Greater efficiency  % of Health Claims processed automatically (straight through with no human touch) increased from 30% to 88% with new solution from IBM  Average staff member now captures over 1000 claims per day  Claims processing team reduced by over 65% Business outcome  Within 3 months, branch sales increased by 25%  Have realised direct cost savings of over $1.2M per year
    • 35. WorkSafe Victoria used IBM’s SOA and BPMTo operate more efficiently and save more than $100M Client Pains  Australian state social service agency dedicated to employee worker safety and compensation  Ensure timely workplace claims processing for citizens  Identified a specific project that would benefit from automated workflows and decision points Business Outcomes  Improved efficiencies, higher levels of customer service and worker safety  Significant improvement in fraud detection  Estimated payback of 6 months  Save more than $100 million dollars Delivering outstanding workplace safety together with quality insurance protection to workers and employers Process automation and business rules software to increase efficiencies and cut costs while helping Victorian workers35 return home safe every day
    • 36. Lincoln Trust achieves rich teaming between businessand IT by leveraging IBM BPM Challenge Paper overload  100,000+ client requests per month each generating a paper- based process instance Poor IT-business relationship  Knew paper problem was a process problem but limited IT/Business collaboration prevented improvement Results  $2.2 million in savings to date  120% ROI in one year  25% increase in employee productivity  50% - 75% reduction in cycle times Lincoln Trust developed an aligned process focus across the company, removing physical paper from 145 company processes IT teams implemented automated workflows for 15 processes including service requests, plan establishment, and distributions36
    • 37. Verizon Wireless increased customer serviceAnd achieved business agility with BPM and BRMS Client Pains  The nations most reliable and largest wireless voice and 3G data network, serving more than 93 million customers  Needed to increase self service, improve customer experience and be quickly adapt to meet pressures of the market Business Outcomes  Keep invalid orders off the system  Shorten fulfillment cycle  Human resource savings  Reduced operational costs to comply with regulatory changes Verizon Wireless used the WebSphere ILOG JRules business rule management system (BRMS) to automate its order validation process. The JRules BRMS automates the verification of incoming orders and diagnoses errors. Verizon has been able to reduce invalid orders out of its systems, reduce operational costs and shorten fulfillment cycle time37
    • 38. HealthNow reduces enrollment time and costBy Leveraging BPM and BRMS Challenge  Hard-coded legacy systems  Paper-intensive  Manual and disjointed processes Results  Speed to market gains of over 50%  Reduction in enrollment time and administrative costs  End-to-end process visibility resulting in greater clarity, accuracy and consistency  Increased collaboration between business and IT “…enabled us to automate, optimize and monitor critical business decisions within core processes” John Walsh, Chief Enterprise Architect, HealthNow New York Inc38
    • 39. J.B. Hunt streamlines billing and paymentsBy Leveraging BPM Challenge  Bill the correct amount the first time for all services provided  Receive full payment in accordance with the customers terms Results  Added $1.03 million in annual return to the bottom line  Internal rate of return of 124%  Payback period of less than 12 months  Streamline highly manual, labor-intensive processes • J.B. Hunt implemented a proprietary IT system designed to streamline the electronic capture of charges associated with driver delays. • The system enables the company to capture missed revenue, eliminate non-value added work and encourage faster throughput at shipping facilities.39
    • 40. Ensure success with a proven approach forbusiness agility Project Program Transformation Technology Rapid time Simplicity to engage Power to scale Visibility Governance to value business users as business requires Expertise Turnkey Solution Training On-Demand Consulting Assistance Services Mentoring Establish a Program Transform across the enterprise Succeed with an  Increase skills Initial Project  Establish CoE  Infuse a culture of Identify Business  Optimize Maturity Challenges  Target high return process across the Challenge & Value projects established projects organization  Understand and document  Extend to new projects  Leverage proven existing processes methodologies to  Identify key improvement ensure success opportunities Realize fast value, foster adoption and create transformational impact40
    • 41. Process Innovation for 2012Jason JamesonBusiness Unit Executive, Business Process & DecisionManagement, Growth Markets
    • 42. City of Madrid realizes faster emergency responseBy leveraging BPM Powered by SOA Challenge  Built an advanced emergency command center that integrates information, systems and people  Needed to improve emergency response times and ability to assess needs, prioritize actions and deploy assets to potentially complex incidents Results  Reduced emergency response times by 25%  Integrated information, systems, data and people internally and externally  Unified view of incident data enabled better decision making  Increased ability to respond to unpredictable situations with greater agility Delivered integrated system for faster emergency response Service Oriented Architecture enabled management and governance of essential business processes42

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