Dev biz process management strategy

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Business Process Management (BPM) has received increased attention recently, as many organizations view automation as a quick way to reduce costs. In fact, the principal benefits of BPM come from its improvement of process effectiveness, not through reduced headcount. To achieve these benefits, the organization must adopt a staged approach to BPM, proceeding through five steps:

•Identify key target processes for BPM implementation.
•Document processes using standard process notation.
•Refine by reshaping processes to improve effectiveness.
•Automate processes to increase effectiveness, consistency, and efficiency.
•Control processes by monitoring to avoid business issues.
While the stages remain the same from company to company, Info-Tech encourages organizations to choose from three implementation plans that reflect an increasing scale of investment. Use the tools that accompany the set to choose the plan that best matches your organizational and process characteristics.

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Dev biz process management strategy

  1. 1. Develop a Business Process Management (BPM) Strategy Practical IT Research that Drives Measurable Results
  2. 2. Introduction Info-Tech Research Group Business Process Management (BPM) is a nebulous term fraught with vague descriptions, blurry technology definitions, and very REAL benefits. People often associate BPM with only one of five key activities, which is confusing enough. But when they meet with colleagues who think of BPM solely as a different key activity, the confusion multiplies. BPM manages the entire lifecycle of a process, with technology merely supporting that lifecycle and ONLY where it makes sense. This solution set is ideal for: IT Leaders looking for guidance on how to implement technology to improve processes. Business Leaders looking to improve process effectiveness. Organizations that have not formally adopted a BPM solution. Understand what BPM is, what it’s not, and build a BPM strategy. This solution set will help you: Learn how to get BPM benefits regardless of technology investment. Discover the BPM activities that deliver the biggest benefits. I still get a little confused sometimes. - Consultant with over 20 years of BPM experience “ ”
  3. 3. Executive Summary <ul><li>BPM is more than automation : automating a bad process will not produce results. In fact, survey data shows that automation brings the least benefit of the BPM steps. </li></ul><ul><li>You need to follow the five stages of BPM in sequence to achieve results. </li></ul>Info-Tech Research Group Nearly all organizations can benefit from some form of BPM adoption. <ul><li>Efficiency is not the best driver of success, but rather how effective the process is. </li></ul><ul><li>Don’t focus on BPM as a cost-reduction tool, use it to improve capabilities . </li></ul><ul><li>BPM improves defect rates , delay rates , cycle time , and process customizability . Choose an implementation that fits your organization’s scale so that benefits outweigh costs. </li></ul><ul><li>IT cannot drive a BPM project. The business must own this process – or don’t continue. </li></ul><ul><li>The most important phase of the BPM project comes at the end: change management and monitoring lay the groundwork for continuous improvement. </li></ul><ul><li>You can achieve BPM success without buying a big BPM suite. There are tools available at each stage of the BPM maturity spectrum . </li></ul>BPM 101 Is BPM for You? Getting to Action BPM Technology Overview
  4. 4. Table of Contents Is BPM for You? BPM 101: Introduction Getting to Action BPM Technology Overview Info-Tech Research Group <ul><ul><li>What is BPM? </li></ul></ul><ul><ul><li>Efficiency vs. effectiveness </li></ul></ul><ul><ul><li>The five stages of BPM </li></ul></ul><ul><ul><li>A world without BPM </li></ul></ul>Background information about BPM, what it involves, and why people care. <ul><ul><li>Achieve business buy-in </li></ul></ul><ul><ul><li>Calculate benefits and costs in dollars </li></ul></ul><ul><ul><li>Manage expectations for timing & cost </li></ul></ul><ul><ul><li>Goals that make sense </li></ul></ul>Criteria you can use to decide whether an implementation will work for your organization. <ul><ul><li>Involve the business early </li></ul></ul><ul><ul><li>Know how to use consultants </li></ul></ul><ul><ul><li>Orient towards SOA </li></ul></ul><ul><ul><li>Simulate to build process effectiveness </li></ul></ul>Steps you will need to take to succeed in your BPM implementation. <ul><ul><li>The three tool paths </li></ul></ul><ul><ul><li>Consider a cloud implementation </li></ul></ul><ul><ul><li>Evaluate outsourced process </li></ul></ul>An overview of the available tool packages you should consider. 1 2 3 4
  5. 5. BPM 101: It’s probably not what you think it is. Info-Tech Research Group Organizations will fail if they don’t take the time to learn BPM first. Consider BPM if your business processes have the potential to be consistent, even if they’re not right now. Check your understanding: don’t risk missing opportunities with BPM because of faulty assumptions. <ul><li>Business Process Management (BPM) is a collection of methods and tools that document, improve, and monitor business processes . </li></ul><ul><li>It has evolved over the years to include re-engineering, modeling, simulating, and automating. </li></ul><ul><li>BPM delivers value to the organization by: </li></ul><ul><ul><li>Streamlining business processes. </li></ul></ul><ul><ul><li>Reducing inconsistency in business process. </li></ul></ul><ul><ul><li>Increasing both the visibility of processes and the state of an instance. </li></ul></ul><ul><ul><li>Highlighting opportunities to improve processes. </li></ul></ul>Process: A series of steps needed to turn inputs into outputs, such as manufacturing a good. Instance: A single occurrence of a process (e.g. a specific customer order). State: The current step and status of a process instance. BAM: Business Activity Monitoring, the overall state of all process instances through reporting or a dashboard. BPM: Sometimes also means Business Process Modeling, now thought of as just one component of Business Process Management. BPA: Business Process Automation is the use of technologies to reduce manual processing. BPMS: Business Process Management System, software suites that support the key stages of process management. TQM: Total Quality Management, a program of continuous improvement in output quality. Other Need-to-Know Definitions
  6. 6. BPM is not synonymous with automation: if you’re focused on automation only, you are paving the cow-path. Info-Tech Research Group Understand the difference between efficiency and effectiveness: <ul><li>To achieve success, your organization needs effective processes, not just efficient ones. </li></ul><ul><li>That is why automation comes late in the BPM process, and why Info-Tech recommends that every organization proceed through all the steps of process management in sequence. </li></ul>Automation only makes sense as part of a program of process improvement. In fact, Info-Tech research shows that the automation step contributes the least to project success. Many organizations focus on automation, wrongly thinking of it as a shortcut to BPM success. In fact, automation alone has no benefit for three out of four success factors. Automating a bad process just makes it harder to change and does not answer the question: does the process actually achieve its goal, i.e., is it effective? BPM improves the effectiveness of processes more than their efficiency. <ul><li>Heavily automated </li></ul><ul><li>Minimum of moving parts </li></ul><ul><li>Low-cost </li></ul><ul><li>Optimal cycle times for individual process steps </li></ul><ul><li>Bottom Line focus </li></ul><ul><li>Consistent, predictable output </li></ul><ul><li>High-quality product </li></ul><ul><li>Optimal cycle time for entire end-to-end process by minimizing process steps </li></ul><ul><li>Top Line focus </li></ul>Efficient processes Effective processes
  7. 7. Anticipate lasting benefits in the medium-term. BPM delivers effectiveness-related benefits, not quick cost reductions. Info-Tech Research Group Business is clamoring for BPM, often without knowing what it is. <ul><li>Info-Tech and its clients have found an upsurge in BPM interest in the past few months. </li></ul><ul><li>Despite the high level of interest, many clients only have a vague idea of what BPM is. </li></ul>BPM can cut costs, but not instantly: <ul><li>The new-found interest in BPM largely stems from a desire to cut costs in the face of difficult economic conditions. </li></ul><ul><li>Accordingly, interest in BPM tends to rise with interest in outsourcing. </li></ul><ul><li>BPM can cut costs, but if the organization pushes these changes through too quickly, the cost savings will be short-lived. </li></ul><ul><li>Focus on the effectiveness benefits in the chart at right. </li></ul>N=103 If you don’t put the effort in, you’re not gonna be successful. - BPM Consultant “ ” Whenever the economy kind of goes a little bit south, outsourcing , out-tasking , BPM tend to go up or the interest in it tends to go up. “ ”
  8. 8. Understand BPM by referring to Info-Tech Research Group’s BPM Reference Framework. Process Library Info-Tech Research Group BPM Activity BPM Components BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Identify Document Refine Automate Control Reporting/Analytics BPM Stage BPM Platform Modeling Tool Workflow Automation Use the Info-Tech BPM framework to understand the variety of tools and terminology that BPM professionals use. This solution set will discuss each layer of the framework, demonstrating how the components map to either low investment tools or BPMS suites. Info-Tech BPM Reference Framework BPM supports the continuous improvement of processes, by repeating the key stages as needs change or issues occur.
  9. 9. Learn the five key stages of Business Process Management. Info-Tech Research Group List the current business processes that exist in the organization and determine which provide the most opportunity for improvement. Describe the processes using a graphical model. This may be through a diagram or by using consultants to capture processes. Find improvements in the existing processes, by simulating process changes, aka business process reengineering. Replace manual processes with technology-enabled steps. For example, updating data in another system, or escalating an issue to a manager. Monitor the state of process instances, both individually and as a whole to detect issues, which may trigger continuous improvement activities. Following the sequence leads to the greatest benefits in process improvement. But BPM doesn’t always end at the control stage. Those tasked with continuous improvement in the organization will repeat these stages when needs change or issues are identified through control mechanisms. Document Refine Automate Control Identify
  10. 10. Identify: The first step to getting started. A business analyst or team managers who have a high-level view of the processes that take place under their domain. Consultants are sometimes used here. Info-Tech Research Group Who does it? An inventory of processes makes it much easier to streamline and consolidate processes across the enterprise. For example, the best practice of a team may end up replacing the process department- or enterprise-wide. Why do it? Involve line managers. Identify the time frame for a single process cycle and isolate the discrete processes under each managers purview. See the Getting to Action section for a detailed explanation of the steps. How do it? Document Refine Automate Control Identify Before you can re-engineer, model, or automate a process, the first thing you have to do is identify team, department, and enterprise-wide processes so that standards can be established.
  11. 11. Document: Formally lay out the current processes. Business analysts and process participants should lead the charge. Subject matter experts will be able to provide the best content. Consultants can provide help with documentation as needed. Info-Tech Research Group Once there is a visual representation of the processes , it becomes much easier to see opportunities to improve them through streamlining, and to adopt best practices from teams or departments. Train business users to take the lead in modeling. Use a modeling tool, either a dedicated one like Microsoft Visio or a modeling tool in a BPMS suite. Document Refine Automate Control Identify The document stage diagrams a specific process as a visual or textual model that explains how the components of the process all fit together. Who does it? Why do it? How do it?
  12. 12. Refine: Improve before automating. Some refinements will be obvious to the process participants who put the process down on paper. Consultants can recommend additional refinements. Info-Tech Research Group Organizations can take the opportunity to see the effects of process changes with real data and avoid simply paving the cow-path. The refinement stage allows participants to pick the best process before bringing in automation. Some improvements will become obvious as soon as you model the processes. High-level refinements can come with the assistance of consultants. Document Refine Automate Control Identify In this stage, discover and test how processes might be improved to become more effective, through use of simulation tools. Who does it? Why do it? How do it?
  13. 13. Automate: Replace manual with software-driven processes. As we discuss in the Tools Overview, your approach to automation will depend heavily on how much you want to invest in your BPM implementation. At the high end, BPM suites will generate automated components for you, directly out of your refined process models. Automation is usually done with the perceived benefit of gaining efficiency. But that is actually a side benefit. The true benefit is effective, consistent process that doesn’t change with the person doing the task. Find processes where human-driven workflow can be replaced with software-driven workflow. Info-Tech Research Group Include business analysts and IT in designing automated processes to replace the current ones, even if the tool is user-friendly enough for a non-IT person to execute. Document Refine Automate Control Identify Automation is a solution that enables activity-based and data driven process steps to be executed by software , or even by a mix of human and software steps. Who does it? Why do it? How do it?
  14. 14. Control: Know the state of business processes. Senior managers must monitor dashboard or survey information to find areas for improvement. They should involve business analysts or consultants in finding ways to improve. Info-Tech Research Group The control stage establishes the basis for ongoing improvement of processes . Without proper change management and monitoring, it will be difficult to make changes stick. Have your project sponsor manage the change to the organization. Select 5-10 Key Performance Indicators (KPIs) that reflect your business priorities and monitor process results, to set the foundation for ongoing improvement. Document Refine Automate Control Identify The control stage allows organizations to scrutinize the state of all instances of processes to ensure business activities can be monitored and adjustments made when issues occur. Who does it? Why do it? How do it?
  15. 15. Overcome the two key challenges facing newcomers to BPM. Info-Tech Research Group In the absence of BPM, processes grow organically and in isolation. <ul><li>Line managers and workers are managed by performance metrics, which specify objectives but not a particular way of achieving those objectives. </li></ul><ul><li>Line managers will learn processes from predecessor managers and develop them as they see fit to meet new challenges and opportunities, leading to inconsistency. </li></ul><ul><li>Processes that ultimately achieve similar aims will vary from department to department, with no single best practice that unites the organization. </li></ul><ul><li>Line managers will streamline their own processes as best they can, but each one will lack the big picture. Processes that are locally optimal likely won’t add up to a process that achieves optimal effectiveness for the organization as a whole. </li></ul>Effective streamlining of processes requires technology. <ul><li>Intuitive process improvements will only capture the extreme low-hanging fruit. Since the stopwatch and clipboard of Frederick Taylor, the father of industrial efficiency, effective management of processes has required the use of tools. </li></ul><ul><li>Today’s software-based tools require an investment of time, dollars, and training to yield benefits, necessitating an organization-wide strategy for BPM. </li></ul>
  16. 16. Is BPM for You? Is BPM for You? BPM 101: Introduction Getting to Action BPM Technology Overview Info-Tech Research Group <ul><ul><li>What is BPM? </li></ul></ul><ul><ul><li>Efficiency vs. effectiveness </li></ul></ul><ul><ul><li>The five stages of BPM </li></ul></ul><ul><ul><li>A world without BPM </li></ul></ul>Background information about BPM, what it involves, and why people care. <ul><ul><li>Achieve business buy-in </li></ul></ul><ul><ul><li>Calculate benefits and costs in dollars </li></ul></ul><ul><ul><li>Manage expectations for timing & cost </li></ul></ul><ul><ul><li>Goals that make sense </li></ul></ul>Criteria you can use to decide whether an implementation will work for your organization. <ul><ul><li>Involve the business early </li></ul></ul><ul><ul><li>Know how to use consultants </li></ul></ul><ul><ul><li>Orient towards SOA </li></ul></ul><ul><ul><li>Simulate to build process effectiveness </li></ul></ul>Steps you will need to take to succeed in your BPM implementation. <ul><ul><li>The three tool paths </li></ul></ul><ul><ul><li>Consider a cloud implementation </li></ul></ul><ul><ul><li>Evaluate outsourced process </li></ul></ul>An overview of the available tool packages you should consider. 1 2 3 4
  17. 17. Evaluate whether a BPM implementation makes sense for your organization. Let’s take a break from the framework to assess whether BPM will work for your organization. To do so, we need to answer a few questions. Info-Tech Research Group While BPM can help many organizations, you still need to make sure you meet the necessary conditions to get started. <ul><li>Do you have the managerial support you will need to succeed? </li></ul><ul><li>Do your objectives for the project match the benefits of a BPM program? </li></ul><ul><li>Does your budget measure up against the likely cost of a BPM project? </li></ul>Identify Document Refine Automate Control BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Reporting/Analytics Process Library Modeling Tool Workflow Automation
  18. 18. Business buy-in is not enough: don’t do BPM if the business isn’t in the driver’s seat. Info-Tech Research Group If support is growing, but the case is not yet firm for enterprise-wide process management, start with IT processes as a pilot project or look for opportunities to make team best practices into departmental standards. You must have business buy-in at a scale that matches the scale of your implementation. Remember that receiving funding from the business does not equate to actual business involvement. Don’t take the business out of business process management! Enterprise-wide buy-in Departmental buy-in Team buy-in The impact of BPM spans the entire enterprise, so enterprise-wide buy-in is crucial to achieve project success. [I]t’s advanced to the point now where the business units can develop their own processes with minor assistance…they’re the ones that know the processes, right? - BPM Consultant “ ”
  19. 19. Anticipate the substantial resource costs of a BPM implementation before you start planning. Info-Tech Research Group BPM is not cheap <ul><li>BPM projects can take more than a year to deliver results. </li></ul><ul><li>BPM involves a multi-stage process, extensive coordination between different parts of the business, and careful execution: it really cannot be hurried. </li></ul>BPM takes time <ul><li>Without locked-up funding, you will experience pressure to deliver results ahead of schedule. This will lead to cow-path paving, i.e. delivering automated technology ahead of schedule. </li></ul><ul><li>Ensure you have room to breathe. </li></ul><ul><li>Evaluate the costs of your BPM program using Info-Tech’s BPM Benefits and Costs Analysis Tool . </li></ul><ul><li>Plan for a one-year project with budget allocated according to the projection. </li></ul><ul><li>Fund additional BPM activity beyond this date with BPM cost-savings. </li></ul>Ensure you have time and funding <ul><li>Even the most inexpensive implementation plan will cost tens of thousands of dollars in change management, developer time, and managerial distraction. </li></ul><ul><li>Use this as a guideline to assess whether you have the funding you need to proceed. </li></ul>
  20. 20. Make the case for BPM, even if you don’t have much cash. Info-Tech Research Group Inputs <ul><li>Scope of the BPM implementation. </li></ul>Outputs <ul><li>Expected profit for each path. </li></ul><ul><li>Recommended BPM path for your organization. </li></ul>Benefit results in the tool are based on survey data. Cost results are based on scenario analysis. Use Info-Tech’s BPM Benefits and Costs Analysis Tool to assess the business case for BPM . BPM is not a suite-or-nothing proposition. The cost of a BPM implementation will depend on the path you pursue. Cheaper solutions can produce real benefits, but more work is required to move between stages of process improvement. BPMS software is expensive, but integrates the activities from each stage of process improvement. The real cost of BPM is the time that the business and IT must commit.
  21. 21. Evaluate net benefit in dollar terms to find the best implementation. 0 Info-Tech Research Group Low High Medium Increasing BPM investment Benefits Value Cost Net Benefit Optimal This is a sample BPM outcome for a particular scenario. Benefits and costs will vary. Benefits based on survey data. Defect rate Delays Cycle time Customizability
  22. 22. Understand the impact on businesses stakeholders and budget for each BPM option. Info-Tech Research Group IT resources are typically only half of a BPM project team, the other half is non-IT resources. So it bears repeating: do not take the business out of business process management! High-investment software tools require less integration and custom coding than medium-investment tools, so they impose less on the IT department. (High-investment data based on Lombardi) Cost Low investment Medium investment High investment Software investment $10-15,000 $40-60,000 $100,000+ Management time 1-2 managers per 100 users affected 4-5 managers 2-3 managers IT time 1-2 IT staff per 100 users affected 4-5 IT staff per 100 users affected 1-2 IT staff per 100 users affected BA time 1-2 BA staff per 100 users affected 1-2 BA staff per 100 users affected 1-2 BA staff per 100 users affected Change management inconvenience 1 week per user affected 1 week per user affected 2 weeks per user affected
  23. 23. Do not implement solely to reduce resource costs. Design BPM around achievable goals. Info-Tech Research Group High demand for BPM reflects widespread misunderstanding of what it can actually do. BPM likely will not improve resource costs. BPM can reduce project resources, but organizations are much more likely to redeploy these resources, rather than reduce headcount. *BPM improvement numbers are based on Info-Tech survey data, N=73 . Methodology described in the appendix. BPM can improve... Why? Average BPM improvement Defect rates BPM improves the predictability of processes by helping organizations understand how they really function. 10% Frequency of service or product delays BPM minimizes the likelihood of surprises that can delay product or service delivery. 10% Cycle time Process evaluation can reduce the number of steps in processes. 15% Customization and flexibility By providing a window into organizational processes, BPM facilitates mixing and matching components to produce new products and services. 15%
  24. 24. Not all benefits are created equal: plan for differing benefits at each step of the BPM project. Info-Tech Research Group While process streamlining and process simulation often get the most BPM attention, organizations that have implemented BPM experienced the greatest incremental success through the modeling and monitoring steps. Simulation improves customizability by providing the ability to quickly adopt new processes without the need for trial and error. Modeling provides the gateway to process improvement but does not make customization any easier on its own. Monitoring solidifies BPM gains by facilitating the process of ongoing improvement. Streamlining process with technology produces only limited benefit on its own. 1 2 3 4 Correlation of BPM stages to success factors amongst those who have completed a BPM project. Source: Info-Tech Research Group N = 73
  25. 25. Case scenario: Medium-sized manufacturer Info-Tech Research Group A medium-sized manufacturer uses low-cost software to automate task routing . Situation Challenge Action Impact <ul><li>A medium-sized manufacturer of ball bearings relies heavily on manual labor. </li></ul><ul><li>Management relies on line-managers who have been with the business for decades to keep the process moving. </li></ul><ul><li>The manufacturer finds it increasingly difficult to compete on price with foreign competitors. </li></ul><ul><li>The manufacturer cannot produce ball bearings at a custom size and weight without lengthy discussion with floor managers. </li></ul><ul><li>In the course of modeling, BAs notice a number of key inefficiencies. Removing them allows the company to increase production volume and reduce cost. </li></ul><ul><li>With modeled processes, management can reorganize for product changes in much less time, and implement the changes using the workflow system. </li></ul><ul><li>Management purchases Visio modeling software and a 3-day training course for key BAs to learn modeling best practices. </li></ul><ul><li>Business analysts work with operations staff to model processes. </li></ul><ul><li>The company acquires a SharePoint workflow management system to route tasks to the different work departments. </li></ul>
  26. 26. Getting to Action Is BPM for You? BPM 101: Introduction Getting to Action BPM Technology Overview Info-Tech Research Group <ul><ul><li>What is BPM? </li></ul></ul><ul><ul><li>Efficiency vs. effectiveness </li></ul></ul><ul><ul><li>The five stages of BPM </li></ul></ul><ul><ul><li>A world without BPM </li></ul></ul>Background information about BPM, what it involves, and why people care. Criteria you can use to decide whether an implementation will work for your organization. <ul><ul><li>Involve the business early </li></ul></ul><ul><ul><li>Know how to use consultants </li></ul></ul><ul><ul><li>Orient towards SOA </li></ul></ul><ul><ul><li>Simulate to build process effectiveness </li></ul></ul>Steps you will need to take to succeed in your BPM implementation. <ul><ul><li>The three tool paths </li></ul></ul><ul><ul><li>Consider a cloud implementation </li></ul></ul><ul><ul><li>Evaluate outsourced process </li></ul></ul>An overview of the available tool packages you should consider. 1 2 3 4 <ul><ul><li>Achieve business buy-in </li></ul></ul><ul><ul><li>Calculate benefits and costs in dollars </li></ul></ul><ul><ul><li>Manage expectations for timing & cost </li></ul></ul><ul><ul><li>Goals that make sense </li></ul></ul>
  27. 27. The activities of each stage of BPM will enable the benefits, regardless of the tools used. Info-Tech Research Group Info-Tech research shows that monitoring provides the biggest benefits to process effectiveness gains. Of course, you can’t monitor until you’ve completed all the other steps. The emphasis in this section is on the activities layer of Info-Tech’s BPM Framework. Follow all the activities in sequence to enable process improvement. BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Identify Document Refine Automate Control Reporting/Analytics Process Library Modeling Tool Workflow Automation
  28. 28. Document the key processes that your organization uses and needs to use. Info-Tech Research Group <ul><li>Ensure you have all of the relevant processes within the project scope. The scope will likely be the processes that belong to a particular organization, department, or team. </li></ul><ul><li>Engage line managers to make sure you understand process nuances, and create a detailed list of all relevant processes. Line managers can provide a high-level view of processes while still being aware of process detail. </li></ul><ul><li>Have line managers identify the time frame or frames over which their repeated processes complete one cycle. Then, ask line managers to identify the separate processes within each cycle that do not impact one another through shared inputs or outputs. </li></ul><ul><li>Isolate the processes that lie within your scope. Record the individuals who take part in each process so that you can follow up with these people for the modeling phase. </li></ul>Documentation defines the scope for the BPM implementation: Documentation Streamline Monitor Process Library Modeling Simulation
  29. 29. Develop business-side expertise to lead the modeling process. Info-Tech Research Group <ul><li>Business staff must take an active part in the modeling process since they have the in-depth knowledge of how the processes work. </li></ul><ul><li>Use line managers only for the identification phase. Use line workers for modeling. </li></ul><ul><li>The complexity of a line worker’s task often exceeds what managers assume. Give line workers a chance to explain precisely why they do things the way they do. </li></ul><ul><li>Modeling is a technical skill that requires some training. It usually involves drawing a symbolic representation of how the inputs and outputs of separate tasks line up to produce the overall process deliverable. </li></ul><ul><li>Early in the process, identify business users who show a high level of engagement with the BPM initiative. Preferably, they should be individuals from departments that are affected by the initiative. </li></ul><ul><li>Provide modeling training to these individuals so that they can become go-to people in their department for any modeling questions. </li></ul><ul><li>Choose modelers on the basis of familiarity with process. Modeling is a learnable skill. </li></ul>Get the business involved early. Develop business-side experts to teach the modeling process. Documentation Streamline Monitor Process Library Modeling Simulation
  30. 30. Users should drive the modeling process, but consultants provide invaluable documentation advice and a fresh prospective. Info-Tech Research Group Business process modeling is a significant step for the organization. If either IT or the business perceives that consultants are taking the lead, it will slow adoption. Your in-company resources will resist changing their work habits to follow the advice of outside consultants whose understanding of their processes they will question. Your business users should lead process modeling, not consultants. However, use consultants if help is needed in the following areas: Documentation Streamline Monitor Process Library Modeling Simulation Use Info-Tech’s Consultant Evaluation Matrix to evaluate candidates for the job. Fostering a philosophy of improvement Consultants can help move people away from a “how things are” mindset towards a “how things can be” mindset. Stopping silo thinking Consultants can help orchestrate efforts across departments. Providing formal documentation Consultants help put together formal documentation that line workers or business analysts do not have the skills to construct.
  31. 31. Orient towards Service Oriented Architecture (SOA) to build an internal library of business processes. Info-Tech Research Group <ul><li>Instead of thinking of the BPM implementation as a project with a limited duration, orient the organization towards planning the development of processes as internal services. (Source: Ubiquity) </li></ul><ul><li>Organize the relevant process elements into discrete services. Define these services using the service-definition method defined in ITIL. In particular, define the inputs, outputs, and service parameters of the service. </li></ul><ul><li>These services can be reused down the road in future implementations. </li></ul>Where possible, implement your processes as discrete services. Documentation Streamline Monitor Process Library Modeling Simulation We...looked at just what that automation process entails...we saw that it dovetailed nicely with our efforts at service management…[a] truer way of looking at it from an organizational perspective. - Technical Manager at large sales and marketing firm “ ”
  32. 32. Use simulation to optimize processes and to manage expectations. Info-Tech Research Group <ul><li>Perform sensitivity analysis around your assumptions to assess service performance under varying conditions. </li></ul><ul><li>Even if your implementation does not have a simulation capability, evaluate the numeric impact of process changes on specific performance metrics by running through scenarios in a spreadsheet. </li></ul><ul><li>Run process designs through simulated scenarios to evaluate the system’s ability to continue functioning under adverse conditions. </li></ul><ul><li>Simulation is based on assumptions about the behavior of resources in the systems. It is likely to be more accurate in more heavily automated systems. </li></ul>Orient simulation towards an SOA approach. <ul><li>Divide the process into services to help assess the performance of each service as a discrete unit. </li></ul><ul><li>Each service will have its own internal service level agreement (SLA) to determine the expected performance level. This will help isolate potential problems to a particular part of your overall process. </li></ul>Perform sensitivity analysis to test your assumptions. Documentation Streamline Monitor Process Library Modeling Simulation
  33. 33. Real life case study: a medium-sized manufacturer uses simulation to improve process customizability. Info-Tech Research Group Documentation Streamline Process Library Modeling Simulation Monitor Situation Challenge Action Impact <ul><li>A medium-sized manufacturer of household goods sells primarily into US and European markets. </li></ul><ul><li>The manufacturer needs to adapt its automated process to sell new products into a Middle Eastern market. </li></ul><ul><li>New products require a new production process, but having to develop a new process through painstaking trial-and-error will threaten the profitability of the project. </li></ul><ul><li>The manufacturer purchases an entire manufacturing system based around a BPMS suite. </li></ul><ul><li>The system includes automated manufacturing components that are highly predictable in their behavior. </li></ul><ul><li>As the company develops process models, it runs simulations to assess which combinations of products it can simultaneously produce. </li></ul><ul><li>The company feeds the hypothetical product mixes into a marketing model to assess the marketability of each mix. </li></ul><ul><li>With this data, the company chooses the optimal process and product mix. </li></ul><ul><li>The project is a resounding success. </li></ul><ul><li>In the final outcome, the simulations of process behavior lie within 1% of actual, while the simulations of marketability come within 10% of actual. </li></ul>
  34. 34. Leverage third-party process using pre-built models. Info-Tech Research Group Purchased process libraries can save on cost and provide a superior product. However, purchased models can make change management more difficult. <ul><li>Many vendors provide pre-built process-models for specific processes (e.g. IBM Rational Process Library, Appian ShareBase, Colosa ProcessMaker). Having these models saves organizations from having to refine and redesign models on their own. </li></ul><ul><li>These libraries are often industry-specific. </li></ul><ul><li>Use available pre-built libraries of process models to more easily implement your organization’s BPM. </li></ul><ul><li>Since you cannot design the pre-built model to match your current implementation, you will have to do more work to adapt the organization to the change. </li></ul><ul><li>Avoid customization of pre-built process-models. Highly customized solutions are hard to upgrade down the road, since customizations need to be re-implemented with every upgrade. </li></ul><ul><li>Weigh the increased cost of change management against the benefits of process libraries. </li></ul>Documentation Streamline Process Library Modeling Simulation Monitor Any packaged software makes for an expensive custom solution. - Consultant with over 20 years of BPM experience “ ” [I]t was a big win because we were able to knock something together and put it out in three weeks. Where custom development with this sort of thing would have been four to six. - Technical Manager at large sales and marketing company “ ”
  35. 35. Do not rush to automate: automation is only of value when used in the context of a TQM program. Info-Tech Research Group Improved predictability of automated processes. Automated processes are inherently more predictable than manual ones. While machines do make mistakes, those mistakes are not generally as idiosyncratic and undetectable as those made by people. Improved monitoring and tracking. This makes BPMS a key part of the Six Sigma process. Tracking and monitoring functions are built into most BPMS tools, making it easy to extract information needed from automated systems for the Six Sigma analyses, such as analysis of variance. (Source: Chang) <ul><li>Automation on its own produces limited additional benefit for organizations. Automation is not identified with improvement in any success category. </li></ul><ul><li>The key benefit of automating within the context of a BPM system comes not from improved efficiency but from the fact that BPMS-designed automated processes are improved – for example, through a Six Sigma TQM program. </li></ul>Automation benefits TQM in two ways: Documentation Streamline Monitor Process Library Modeling Simulation
  36. 36. Use your project sponsor to manage the change to the organization that BPM will bring about. Info-Tech Research Group <ul><li>The need for change management discipline drives the need for strong business sponsorship and involvement. If everyone keeps working according to the old paradigm, the value of the work will be lost. </li></ul><ul><li>Encourage the business sponsor to be clear that the process changes the project envisions are not optional. </li></ul><ul><li>Create a change adoption schedule with specific milestones for conversion to the new system. </li></ul><ul><li>Escalate failures to comply through the project sponsor. </li></ul>Improvement means managing the change to the organization. Implement a change management discipline. Documentation Streamline Monitor Process Library Modeling Simulation [T]he biggest problem is the scope of the project has to go beyond the … startup date and continue for the duration of your ROI so that the project has proper support, and we get that all the time. - Management Consultant for BPM vendor “ ”
  37. 37. Monitor processes to spot opportunities for continuous improvement. Info-Tech Research Group KPIs need to be: <ul><li>Meaningful for the role of the process in the organization. For example, turnaround time is only relevant for bottleneck processes. </li></ul><ul><li>Industry-specific and reflective of industry standards. </li></ul><ul><li>5-10 in number per process. </li></ul><ul><li>Reflective of the business strategic focus. </li></ul><ul><li>To effectively improve processes, get a handle on how processes function: institute a metrics dashboard with key performance indicators (KPIs) for senior business staff to monitor. </li></ul><ul><li>KPIs provide visibility into the business process and organizational effectiveness. </li></ul><ul><li>Start with industry-standard metrics, then add organizational metrics to reflect your company’s unique strategy and objectives. </li></ul><ul><li>For guidance on developing metrics for IT in particular, see Info-Tech’s solution set, Leverage Application Metrics to Gauge Progress & Increase Success . </li></ul>Documentation Streamline Monitor Process Library Modeling Simulation Visibility of metrics ... Eighty or 90 percent of firms have not done a good job on that or haven’t done anything. Of if they have, they’re producing reports that no one’s looking at because of metrics [that] aren’t reflective of what the business objectives are. - BPM Consultant “ ”
  38. 38. BPM Technology Overview Is BPM for You? BPM 101: Introduction Getting to Action BPM Technology Overview Info-Tech Research Group <ul><ul><li>What is BPM? </li></ul></ul><ul><ul><li>Efficiency vs. effectiveness </li></ul></ul><ul><ul><li>The five stages of BPM </li></ul></ul><ul><ul><li>A world without BPM </li></ul></ul>Background information about BPM, what it involves, and why people care. Criteria you can use to decide whether an implementation will work for your organization. <ul><ul><li>Involve the business early </li></ul></ul><ul><ul><li>Know how to use consultants </li></ul></ul><ul><ul><li>Orient towards SOA </li></ul></ul><ul><ul><li>Simulate to build process effectiveness </li></ul></ul>Steps you will need to take to succeed in your BPM implementation. <ul><ul><li>The three tool paths </li></ul></ul><ul><ul><li>Consider a cloud implementation </li></ul></ul><ul><ul><li>Evaluate outsourced process </li></ul></ul>An overview of the available tool packages you should consider. 1 2 3 4 <ul><ul><li>Achieve business buy-in </li></ul></ul><ul><ul><li>Calculate benefits and costs in dollars </li></ul></ul><ul><ul><li>Manage expectations for timing & cost </li></ul></ul><ul><ul><li>Goals that make sense </li></ul></ul>
  39. 39. Find the implementation path that nets the greatest ROI. Info-Tech Research Group The cost of a BPM implementation will depend on the path you pursue. Almost every organization can benefit from some form of BPM adoption, but the optimal path will vary. Use Info-Tech’s BPM Benefits and Costs Analysis Tool to evaluate whether your organization can benefit from BPM. You may already have the tools needed to get your organization where you want it to be. Understand the components of BPM, and what tools can be used to create a BPM platform. BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Identify Document Refine Automate Control Reporting/Analytics Process Library Modeling Tool Workflow Automation
  40. 40. Choose a path for BPM adoption that matches the scale of your processes. Inventory Tool Info-Tech Research Group Info-Tech Opportunity Assessment tool Modeling tool (e.g. Visio) Forms automation Low Manual Info-Tech Opportunity Assessment tool Modeling tool (e.g. Visio) Workflow system BI tool BPMS Inventory BPMS Modeling BPMS simulation BPMS automation BPMS dashboards High Mid The wide variety of BPM-related tools available makes it possible for organizations to pick a BPM investment level that works for them. Forms Automation Modeling Tool Workflow Automation Reporting /Analytics Investment levels for BPM tools
  41. 41. Use Info-Tech’s BPM Maturity Roadmap Tool for quick insight into the optimal BPM maturity path. Info-Tech Research Group Inputs <ul><li>Company demographics </li></ul><ul><li>People questions </li></ul><ul><li>Process questions </li></ul><ul><li>Technology questions </li></ul>Outputs <ul><li>Target maturity state </li></ul><ul><li>Specific steps your organization must take to get there </li></ul>You Are Here Forms Automat-ion Workflow Manage-ment BPM Suite BPM Maturity Roadmap Tool
  42. 42. Use Info-Tech’s BPM Opportunity Assessment Tool to inventory a low or medium-level investment implementation. Low or medium investment Info-Tech Research Group High investment List processes and answer questions about each process. The tool will prioritize those processes for your implementation. List processes in a nested format showing interrelationships. True to the integrated nature of a BPMS system, process relationships described in the inventory phase will carry over to the modeling phase. Info-Tech’s BPM Opportunity Assessment Tool BPMS Process Inventory Module Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics For higher investment implementations, a BPMS inventory module located within a suite will save re-work at later stages of the implementation.
  43. 43. Use models to record process flow. Info-Tech Research Group Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics Low or medium investment High investment A modeling tool like Visio allows you to plot the process participants and actions using dedicated symbols and connectors that indicate causality. Models can use a stick-figure format, a cross-functional workflow format, or BPMN notation (in Visio 2010, for example). BPMS suites integrate modeling with process identification. IBM Lombardi, for example, will generate a cross-functional process map directly out of the nested process listing. The user can then update the process model specifics and Lombardi will update the nested process listing in turn. Modeling tool (e.g. Visio) BPMS Process Modeling Module A process model shows the series of actions and participants that constitutes the process. Sample cross-functional flowchart
  44. 44. For a low- or medium-level investment, evaluate a workflow management system as a low-cost alternative to a BPM suite. Info-Tech Research Group (Source: Chang) In terms of the automation function itself, workflow automation is as effective as the automation available in a BPMS suite. The key difference lies in the level of integration with the other tools in the tool stack. Low investment Medium investment Forms automation E-forms with automated routing provide cheap automation of human-initiated processes. For example, entry of an automated form on a Website could lead to the creation of a new customer account. Workflow automation Automated workflow allows multiple processes to communicate via a variety of methods, usually through a form of middleware. Processes can be initiated by human interaction or automatically. Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics
  45. 45. At a medium investment level, use BI tools for reporting & analytics. Info-Tech Research Group Business Intelligence (BI) tools allow for the storage, analysis, and presentation of data that will influence business decisions. Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics Data visualization Tools such as JMP and Corda allow you to view your process KPIs in an intuitive and immediately helpful display. Alert and notification Major BI suites will notify business decision makers when process metrics go outside of an expected range. Key functionality that you will want in a BPM-focused BI tool includes: Data mining and prediction BI suites offer analytical tools of varying complexity for evaluating why your processes behave as they do and predicting future performance. BI vendors *Not a complete list of vendors. Info-Tech does not endorse any vendor listed.
  46. 46. On the high-investment path, leverage the integrated capabilities of a BPM system. BPMS suites improve performance in every phase of BPM The key strength of a BPM system is the integration of the BPM components used to support each stage and activity. Automated code generation reduces the burden on IT. Those who use a BPMS tool show a higher rate of improvement (Source: Info-Tech Research Group) Modeling tools designed for process will speed adoption, due to ease of use. Design processes knowing probable outcomes, using the simulation capability. Forms Automation Avoid hand-coding: BPM systems will generate workflow automation for you. BPM systems will generate a real-time monitoring dashboard for you! Modeling (% improved) Simulation (% improved) Streamlining (% improved) Monitoring (% improved) 100% 100% 100% 100% N=57 N=27 N=45 N=42 Inventory Tool Modeling Tool Workflow Automation Reporting /Analytics
  47. 47. Dedicated vendors hold sway in the BPMS market. Stay tuned on future research for each category of vendor. An e-forms solution may be available in your existing productivity applications, potentially eliminating software licensing charges from your BPM implementation. <ul><li>E-form offerings frequently grow out of other productivity applications, so productivity vendors such as Microsoft, Adobe, and IBM have strong positions in this market. </li></ul><ul><li>Most of the major workflow automation vendors specialize in a particular industry. They leverage industry expertise to provide workflow components of particular use for that industry. </li></ul><ul><li>BPMS vendors tend to sell their BPMS systems as their flagship product. Many of them specialize in this field exclusively. Despite IBM’s acquisition of Lombardi, the market remains largely under the control of firms without notoriety outside of the BPM domain. </li></ul>*Not a complete list of vendors. Info-Tech does not endorse any vendor listed. Info-Tech Research Group Workflow vendors BPMS vendors E-forms vendors
  48. 48. Measure the increasing cost of integrating BPMS tools from departmental systems. <ul><li>These tools offer the advantage of seamless integration into systems and department-specific automation and monitoring components. </li></ul><ul><li>Some examples are: </li></ul>Info-Tech Research Group <ul><li>Using a BPMS solution built into a departmental tool will provide access to industry-specific processes and best practices. </li></ul><ul><li>However, it limits the possibility for seamless cross-departmental integration, which integrated workflow or BPM systems offer. </li></ul><ul><li>The complexity of the integration grows as the number of systems increases. </li></ul>Use department-specific BPMS solutions for mission-critical operations, but generic workflow or BPM suites for all other departments. *Not a complete list of vendors. Info-Tech does not endorse any vendor listed. Many vendors of departmental systems include BPMS tools in their software. Department Example of tool Finance Oracle BPM tools Sales Salesforce.com BPM tools Help desk CaseComplete by Zendesk
  49. 49. What about the cloud? Info-Tech Research Group <ul><li>The cloud is also increasingly important for business process outsourcing (BPO). </li></ul><ul><li>In BPO (unlike BPM), the organization sub-contracts responsibility for business process to another organization. </li></ul><ul><li>An SLA guides the quality of service, and you have the option of switching vendors if you experience repeated failures. </li></ul><ul><li>Cloud process procured through BPO can integrate with in-house process developed through BPM. </li></ul><ul><li>(Source: BPTrends.com) </li></ul>Use SaaS BPM tools to lower upfront investment. Consider outsourced process in the cloud. Reduce the pressure to deliver results early… <ul><li>As leader of a BPM project, you will experience considerable pressure to deliver results quickly. </li></ul><ul><li>Since many the business associates “automation” with “efficiency,” the pressure will likely be to automate as quickly as possible, which leads to paving of the cow-path. </li></ul>… through a cloud-based BPM deployment <ul><li>Cloud-based deployments have smaller upfront costs. </li></ul><ul><li>Lead with the cloud-based BPM deployment to reduce pressure. </li></ul><ul><li>Then consider acquiring an on-premise solution once you have established a track-record of success. </li></ul>Earlier in the process if you’re talking to customers cost is always one of their key drivers, and then if you go back and revisit six, eight, ten months later, cost tends to drop down because they’re searching for the other benefits. - BPM Consultant “ ”
  50. 50. Conclusions & Recommendations Info-Tech Research Group BPMS is a powerful set of tools for increasing organizational effectiveness. Know the benefits Despite widespread excitement surrounding cost reduction, BPMS primarily supports improvements in organizational effectiveness. Effectiveness means improving product quality, reducing delay rates, and reducing cycle times. These changes can lead to cost reductions, but do not directly reduce human resource expense. Choose your path Choose the BPM path that matches the scale of your processes. Use Info-Tech’s BPM Benefits and Costs Analysis Tool and the BPM Maturity Roadmap Tool to find the optimal path to success. A full BPMS suite investment will not make sense for everyone. Manage change and implement KPIs The single most important activity for producing BPM results comes in the final phase: monitoring. Institute meaningful KPIs that will allow for continual learning and improvement of processes.
  51. 51. Need Additional Support? Info-Tech goes beyond research: Speak directly to an analyst and/or engage on-site consulting services to help your team achieve results. Email our Advisory Team to find out how we have helped other clients and get your BPM initiative started today! Trigger Point: Understanding BPM Defining BPM Documenting and Modeling the Existing Business Processes Our Advisory & Consulting Services Establishment of a common understanding of BPM across the organization Listing of current business processes; identification and capture of processes that provide the most opportunity for improvement with a graphical model Trigger Point: Developing a Strategy for BPM Selection Reengineering of Existing Business Processes Streamlining of Business Processes and BPM Functional and Technology Requirements Gathering Our Advisory & Consulting Services Discovery of improvements in existing business processes by simulation of process changes or reengineering of processes Introduction of technology-enabled changes to manual processes; BPM technology and functional requirements gathering and documentation Trigger Point: Comparing BPM Vendor Offerings Reviewing the Vendor Landscape for Targeted BPM Solutions Developing the Business Case, Selecting and Procuring the BPM Solution Our Advisory & Consulting Services Preliminary vendor short-listing of targeted solutions (i.e., low, medium, or high investment options), based on established functional and technology requirements Business case development, Request for Proposal (RFP) development and vendor response evaluation
  52. 52. Appendix
  53. 53. Incremental benefits of a BPM implementation are calculated as follows. Info-Tech Research Group 7 – Significantly improved 6 5 4 – Had no impact 3 2 1 – Significantly worsened Defect rate Delay rate Cycle time Customization Q4. Which of the following best … Respondents indicated which answer best described the impact of BPM on each of four success categories. Success categories 7 6 5 4 3 2 1 +30% 20% 10% 0% -10% -20% -30% Info-Tech interprets significant improvement or worsening to indicate a change of +/- 30%. Intermediate values are interpolated. “ Significantly improved” “ Had no impact” “ Significantly worsened” Averages are calculated based on answer frequencies in each success category.
  54. 54. The tool uses the following calculations to assess the dollar value of increments to the success factors. Info-Tech Research Group Benefit Dollar value Example Defect rates Increment to defect rate × cost of defects Reducing the defect rate on PCs from 99% to 98% is worth $1 if each defect costs the company $100. Frequency of service or product delays Increment to time to frequency of delays × cost of delays Reducing frequency of delays by 1% is worth $1 if each delay costs $100. Cycle time Value of product or service × increment to cycle time × time value of money Reducing cycle time for TPS reports is worth $1 if the time to produce the reports falls by 180 days, each report is worth $2, and the TVOM is 1%. Customization and flexibility Increment to time to rollout new product × profit from new product × time value of money + Impact to sales and brand value Reducing the time to roll out a new sneaker model by 10 days is worth $1 if the sneakers will generate $365 in profit and the time value of money is 1%. Plus there’s the additional sales that are gained due to early introduction.
  55. 55. References Info-Tech Research Group <ul><li>Chang, James F. “Business Process Management Systems.” Auerbach Publications. 2006. </li></ul><ul><li>Fingar, Peter. “Process on Demand and Cloud Services.” Business Process Trends . November 2010. < http://www.bptrends.com/publicationfiles/SEVEN%2011-02-10-EXT%20Comp-BPM%20on%20Demand-Fingar.pdf> </li></ul><ul><li>Kamoun, Faouzi. “A roadmap towards the convergence of business process management and service oriented architecture.” Ubiquity. April 2007. </li></ul><ul><li>“ Making the Case for BPM.” IBM Lombardi BPM . 2008. <http://www.lombardisoftware.com/bpm-resource-center.php> </li></ul>

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