From Process Management to Process Innovation

From Business Process Management
to Business Process Innovation
Michael zur Muehlen, Ph.D.
Director, Center of Excellence for Business Process Innovation
Stevens Institute of Technology
Hoboken NJ
Michael.zurMuehlen@stevens.edu

www.sungard.com/energy

Wednesday, January 14, 2009

Motivation

Drivers for
Business Process Management (BPM)

Compliance
Performance

Mandated compliance (e.g. SOX)
Business Process Improvement
Desired compliance (e.g. ISO, ITIL)
Engineering of Process-aware IS


How do you make a Cup of Coffee?


The Nescafé Process


The Espresso Machine Process


The Starbucks Process


BPM Questions


BPM Questions

 How do we design and communicate this process?


BPM Questions

 How do we know that we perform this process well?


BPM Questions

 How do we know that we perform this process well?
 How do we know that we manage this process well?


BPM Questions

How do we design and communicate this process?

How do we know that we perform this process well?

How do we know that we manage this process well?

How do we know that we maintain compliance?



BPM Questions





How should we organize and govern process

improvement efforts?


BPM Questions





How should we organize and govern process

improvement efforts?
 Which standards and technology are relevant?


Process Life Cycle

Business Process Business Process
Innovation Management

Business Process Business Process
Monitoring Automation


“Innovation is about
imposing a discipline of
value creation
in an organization”
Tom Koulopoulos


BPM and Business Value

Information Business
Technology Value



X
Technology Value



X
Technology Value
en
ab
les

s
te
ea
cr
Process
Change


Great!
Now What Do We
Do With It?


Process Innovation

Project Autograph
Usage-based Insurance
Billing
New Process
New Technology
New Value Proposition


Process Innovation

Project Failed
Lack of Standard Process
Expensive Technology
Customers not ready


Learn from Outside

Telecom Billing Process
Free GPS
Rate depends on mileage driven
Industry-strength Billing Process


Relationship between BPM and Strategy

Financial FINANCIAL

Objectives are Primary Objectives
Paramount



Financial FINANCIAL

Paramount
CUSTOMER
Customers
Seek Value Value Proposition

and Pay for it



Financial FINANCIAL

Paramount
CUSTOMER
Customers

and Pay for it
PROCESS
Processes
Enable Value Regulatory /
Innovation
Operations Customer
Social
Creation



Financial FINANCIAL

Paramount
CUSTOMER
Customers

and Pay for it
PROCESS
Processes
Enable Value Regulatory /
Innovation
Operations Customer
Social
Creation

Strategic
Change
Strategic
Job
Agenda
IT
Families

LEARNING & GROWTH

Processes shape
and are shaped Human Information Organization
Capital Capital Capital
by maturity


The BPM Maturity Model

Business Process Management
Maturity

Strategic Governance Method IT People Culture
Alignment

Process Process Roles and Process Design & Process Design & Process Skills & Process Values &
Improvement Plan Responsibilities Modeling Modeling Expertise Beliefs

Process Process
Strategy & Process Decision Making Process Education & Process Attitudes &
Implementation & Implementation &
Capability Linkage Processes Learning Behaviors
Executions Executions

Process Metrics & Process
Process Control & Process Control & Responsiveness to
Performance Collaboration &
Process Architecture Measurement Measurement Process Change
Linkage Communication

Process Process Process
Process Output Leadership
Management Improvement & Improvement & Process Knowledge
Measurement Attention to Process
Standards Innovation Innovation

Process Process Project & Process Project & Process
Process Customers Process Social
Management Program Program Management
& Stakeholders Networks
Controls Management Management Leaders

Source: Rosemann & DeBruin 2006


Customers don’t care about
processes per se, but about
their value proposition


Is This Value?


This is Value!


Underwriting On Demand

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


Process and Risk Management

Process-oriented
Risk Management

Process Risk

Risk-oriented
Process Management


Risk Management and BPM

Compare Frew (2006)


Risk Management and BPM

BPM Risk Management
Focus on providing value for Focus on ensuring value for
stakeholders stakeholders
Performance depends on effectiveness Risk is an inherent property of
of business processes business processes
Performance is inﬂuenced by process Risk is mitigated by process design
design
Feedback is obtained through Feedback is obtained through Risk
Performance Indicators assigned to Indicators assigned to systems and
systems and processes processes
Performance objectives are achieved Risk is mitigated through optimized
through optimized processes processes

Compare Frew (2006)


From Core to Commodity: Recipe

 Treat the Process as a Service
 Define a Standard Interface
 Create Value at the Front-End
 BPM enables OpRisk Management
 Compliance can be an Asset


Takeaways

BPM means two things:
Performance and Compliance

 Processes define services
 Processes are services
 Core processes can become commodities
 Process management creates problem solvers
 Industrialized processes enable innovation


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


From Process Management to Process Innovation

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