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  1. 1. Business Process Management: Closing The Gap Between Rigor And Relevance By Steve Tieman Estee Lauder Companies
  2. 2. Overview <ul><li>Background </li></ul><ul><ul><li>Est ée Lauder Companies (ELC) </li></ul></ul><ul><li>Early BPM Implementation Of Product Lifecycle Management </li></ul><ul><ul><li>SOA Before The Term Was Known At ELC </li></ul></ul><ul><li>Enterprise Wide BPM And SOA </li></ul><ul><ul><li>Strategic Modernization Initiative (SMI) </li></ul></ul><ul><li>Leveraging BPM Throughout ELC </li></ul><ul><li>Selling BPM And SOA To Senior Management </li></ul><ul><li>Conclusion </li></ul>
  3. 3. Background On Estee Lauder Companies (ELC) <ul><li>One of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products </li></ul><ul><li>Formed in 1946 by Mrs. Estee Lauder in Queens, NY </li></ul><ul><li>Annual sales of over $7.04 billion (FY 2007) </li></ul><ul><li>Products sold in over 130 countries and territories </li></ul><ul><li>Over 25,000 products in the brand portfolio </li></ul>
  4. 4. Background On Estee Lauder Companies (ELC): Brands
  5. 5. Part 1 Early BPM Implementation Of Product Lifecycle Management At Estee Lauder Companies
  6. 6. Part 1─Early BPM Implementation Of Product Lifecycle Management: Scope
  7. 7. Part 1: Organization Scope <ul><li>50 Organizations </li></ul><ul><li>25 Brands </li></ul><ul><li>36 Affiliates </li></ul><ul><li>Over 5600 Concurrent Projects </li></ul><ul><li>20 SKUs Launched Each Day </li></ul>
  8. 8. Part 1: High Level Event Network
  9. 9. Part 1: Benefits & Enablers <ul><li>Service-Oriented Architecture: Major Cost Of Goods Improvement </li></ul><ul><ul><li>Item Master </li></ul></ul><ul><ul><li>Bills Of Materials </li></ul></ul><ul><ul><li>Recipes </li></ul></ul><ul><ul><li>Component Specifications </li></ul></ul><ul><ul><li>Artwork Mechanicals </li></ul></ul><ul><ul><li>Direct Material Sourcing/Contracts </li></ul></ul><ul><li>Business Process Management: Major Speed To Market Improvement </li></ul><ul><ul><li>38 Workflow Driven Major Sub-Processes </li></ul></ul><ul><ul><li>Common KPIs </li></ul></ul><ul><ul><li>Common Back-Office Organizations </li></ul></ul><ul><ul><li>Common Measurement And Reporting Platform </li></ul></ul><ul><li>Automation: Major Productivity And Accuracy Improvement </li></ul>
  10. 10. Part 1: Challenges To Further Leverage BPM And SOA <ul><li>Key Improvement Opportunity Is In The Upfront Planning Process </li></ul><ul><ul><li>Current process is documented and understood to be sub-optimal </li></ul></ul><ul><ul><li>ARIS/SOA platform can be leveraged as enablers </li></ul></ul><ul><li>Challenge Is To Implement BPM Within The Creative Organizations </li></ul><ul><ul><li>Significant cultural challenge </li></ul></ul><ul><ul><li>Concern that creativity may be compromised </li></ul></ul><ul><ul><li>Difficult to fault current practice based on 50 years of continuous success </li></ul></ul><ul><li>Collaborative approach is promising, but . . . </li></ul><ul><ul><li>Too slow based on the current organization structure : ”hand offs” </li></ul></ul><ul><ul><li>Very difficult to execute as the brand grows larger </li></ul></ul><ul><li>Can BPM Be Used To Drive Changes To Organization Structures? </li></ul><ul><ul><li>How? </li></ul></ul><ul><ul><li>Suggestions? </li></ul></ul><ul><ul><li>Success Stories? </li></ul></ul>
  11. 11. Part 2 Strategic Modernization Initiative (SMI): Enterprise Wide BPM & SOA At Estee Lauder Companies
  12. 12. What Is SMI? <ul><li>The Strategic Modernization Initiative (SMI) is Estee Lauder’s first implementation of SAP </li></ul><ul><li>Key enabler to support sales growth to $10 billion and beyond </li></ul><ul><li>Five major business processes are being standardized under SMI: </li></ul><ul><ul><li>Master Data Management </li></ul></ul><ul><ul><li>Budget To Report </li></ul></ul><ul><ul><li>Procure To Pay </li></ul></ul><ul><ul><li>Demand To Build </li></ul></ul><ul><ul><li>Order To Cash </li></ul></ul><ul><li>Pilot (Aveda) Went Live In May 2007 </li></ul>
  13. 13. Business Objectives For SMI <ul><li>Improve Efficiency (SOA And BPM) </li></ul><ul><ul><li>Reduce the number of hand-offs </li></ul></ul><ul><ul><li>Minimize the time spent on compliance activities </li></ul></ul><ul><ul><li>Shorten time and effort by reusing “libraries” and standardized templates </li></ul></ul><ul><ul><li>Implement automated work flow processes </li></ul></ul><ul><ul><li>Reduce waste and rework by implementing clear roles, responsibilities, and processes </li></ul></ul><ul><ul><li>Minimize tactical tasks and focus on higher value strategic activities </li></ul></ul><ul><li>Improve Effectiveness (SOA) </li></ul><ul><ul><li>Real time availability of accurate information through one global source </li></ul></ul><ul><ul><li>Leverage benchmark analyses </li></ul></ul><ul><li>Improve Operations (SAP Platform) </li></ul><ul><ul><li>Better customer service </li></ul></ul><ul><ul><li>Better forecasting </li></ul></ul><ul><ul><li>Better collaboration with Suppliers and Customers </li></ul></ul>
  14. 14. SMI Application Landscape
  15. 15. ELC Approach To BPM And ARIS As The Entrance Point To SOA <ul><li>Identify All Processes </li></ul><ul><ul><li>Start with existing leading practice models, e.g., SCOR </li></ul></ul><ul><ul><li>Adapt these models to your company using ARIS </li></ul></ul><ul><ul><li>Integrate the adapted models to SAP using ARIS EPC (Event Process Chain) methodology integrated with Solution Manager </li></ul></ul><ul><li>Subdivide Processes Into Sub-Processes </li></ul><ul><ul><li>Identify process strings based on valid business practices </li></ul></ul><ul><li>Normalize Sub-Processes To Become Services </li></ul><ul><ul><li>Identification of all the process steps is a product of the EPC development process in ARIS </li></ul></ul><ul><ul><li>Process steps are linked to transactions in Solution Manager </li></ul></ul><ul><ul><li>Ensure that a transaction is limited to a single process step </li></ul></ul>
  16. 16. Scope Of The Business Processes Standardized Within SMI <ul><li>6 process groupings: </li></ul><ul><ul><li>Master Data Governance </li></ul></ul><ul><ul><li>Budget To Report </li></ul></ul><ul><ul><li>Procure To Pay </li></ul></ul><ul><ul><li>Demand To Build </li></ul></ul><ul><ul><li>Demand Planning </li></ul></ul><ul><ul><li>Order To Cash </li></ul></ul><ul><li>114 major primary processes </li></ul><ul><ul><li>E.g. Manage Procurement Contracts And Requests For Quotations </li></ul></ul><ul><li>680 fundamental integrated processes ─Process Strings </li></ul>
  17. 17. Benchmarking Experiences During Past Two Years <ul><li>Benchmarked BPM With 13 Major Corporations </li></ul><ul><ul><li>All have implemented SAP </li></ul></ul><ul><ul><li>All have established BPM organizations </li></ul></ul><ul><ul><li>All are anticipating SAP upgrades in next 1-2 years </li></ul></ul><ul><li>Broad Conclusions </li></ul><ul><ul><li>Existing SAP implementations are poorly documented </li></ul></ul><ul><ul><li>Increased BPM rigor is anticipated as a requirement for success </li></ul></ul><ul><ul><li>Difficult to get senior management “buy-in” for longer than a “one time” effort </li></ul></ul><ul><li>Can rigorous BPM be implemented without another “Y2K or SOX”? </li></ul>
  18. 18. Part 3: Vision For The Next Steps Leveraging BPM Throughout ELC
  19. 19. Vision For The ELC Business Process Management Landscape
  20. 20. Conventional Business View Of The Aveda Call Center Process
  21. 21. Conventional Technical View Of The Aveda Call Center Application
  22. 22. Conventional Management View Of The Aveda Call Center Key Performance Indicators
  23. 23. Conventional View Of The Aveda Call Center Infrastructure Monitoring Metrics
  24. 24. Changing Conventional BPM Practice For Application Management <ul><li>Challenge: No Effective Common Language Among Technical And Business Team Members </li></ul><ul><ul><li>Business Process Procedures are in words. Words that are misinterpreted, not kept current with changes, and at too high a level to be actionable by technicians </li></ul></ul><ul><ul><li>Many specialists must be assembled and “socialized” in order to solve a performance or functional issue within a single process string. They have to have visibility of the entire process to be able to merge these technical “silos” </li></ul></ul><ul><li>Result: Agility is limited, cross training is cumbersome so personal growth is compromised, and development costs are higher because there is very limited transparency between the process and infrastructure </li></ul>
  25. 25. Changing Conventional BPM Practice For Business Team Members <ul><li>Challenge: Measurements Of KPI Actual Performance Are Not Available On A Real Time Basis And Do Not Effectively Support Root Cause Analysis </li></ul><ul><ul><li>Consist of periodic reports that require significant manual work to generate </li></ul></ul><ul><ul><li>Not linked to actual transactions and individual end users </li></ul></ul><ul><li>Result: Cannot effectively determine why the KPIs are not met or analyze reasons for differences between end user performance because there is very limited transparency between the process and the KPIs . </li></ul>
  26. 26. Changing Conventional BPM Practice For Infrastructure Operations <ul><li>Challenge: Availability And Performance Metrics Do Not Relate To The Business KPIs </li></ul><ul><ul><li>Based on infrastructure, not business process </li></ul></ul><ul><ul><li>Based on averages, not maximums </li></ul></ul><ul><ul><li>Based on synthetic transactions, not end user reality </li></ul></ul><ul><ul><li>Existing diagnostic tools do not support BPM </li></ul></ul><ul><li>Result: Proactive monitoring of the environment is not optimal because there is very limited transparency between the infrastructure performance metrics and the KPIs . </li></ul>
  27. 27. Conventional Business And Technical Views Of The Call Center Business Process: How Can This Be Mapped ?
  28. 28. Answer: Enhance The EPC To Support All Stakeholders, i.e., Implement Business Process Monitoring
  29. 29. Part 4: Selling BPM & SOA To Senior Management Driving A Stand Alone ROI
  30. 30. Driving A Stand Alone ROI <ul><li>BPM And SOA Are Direct Enablers For 50% Of The SMI Business Case </li></ul><ul><ul><li>Current BPM/SOA is focused in Sourcing And Financial organizations </li></ul></ul><ul><li>Incremental Benefits Within The IT Organization </li></ul><ul><ul><li>IT Employee efficiency </li></ul></ul><ul><ul><li>Improved service to the user community </li></ul></ul><ul><li>Incremental Benefits Within The ELC User Community </li></ul><ul><ul><li>Continuous process improvement can drive productivity increases of 200%-300% for system intensive tasks based on PLM experiences </li></ul></ul><ul><ul><li>SOA enables leveraging the work products from the ELC Suppliers </li></ul></ul><ul><li>Current State Of Business Process Monitoring Technology May Now Support The Vision </li></ul><ul><ul><li>Exploring ARIS PPM/E2E Bridge Platform </li></ul></ul><ul><ul><li>Exploring HP/Mercury Platform </li></ul></ul><ul><ul><li>Exploring Computer Associates Platform </li></ul></ul><ul><ul><li>Others To Be Discovered </li></ul></ul>
  31. 31. Conclusion <ul><li>Thanks to: </li></ul><ul><li>Estee Lauder Companies </li></ul><ul><li>IDS Scheer </li></ul><ul><li>5th International Conference on Business Process Management </li></ul><ul><ul><li>Dr. Michael Rosemann </li></ul></ul><ul><ul><li>Conference Attendees </li></ul></ul>