Introduction to business process management

Introduction to Business
Process Management

Alan McSweeney

Objectives

• To provide an introduction to Business Process
Management

• Based on the Association of Business Process Management
Professionals (ABPMP) Business Process Management
Common Body of Knowledge (CBOK)

July 3, 2010 2

Topics

1. Introduction and Context of BPM
2. Business Process Management Overview
3. Process Modelling
4. Process Analysis
5. Process Design
6. Process Performance Management
7. Process Transformation
8. Process Management Organisation
9. Enterprise Process Management
10. Business Process Management Technologies
July 3, 2010 3

Course Schedule

• Day 1 • Day 3
− Morning − Morning
• Introductions • Enterprise Process Management
• Introduction and Context of BPM • Business Process Management
• Business Process Management Technologies
Overview − Afternoon
− Afternoon • Business Process Management and
• Process Modelling Business Analysis
• Process Analysis • Business Process Management
Technology Review and Software
• Day 2 Demonstration
− Morning • Course Review and Feedback
• Process Design
• Process Performance Management
− Afternoon
• Process Transformation
• Process Management Organisation

July 3, 2010 4

Course Handouts

• Printout of handouts
• CD containing
− BPM articles and whitepapers
− Sample BPM software

July 3, 2010 5

Introduction and Context of BPM

July 3, 2010 6

Lessons Learned From Large Systems
Implementation
80 % More attention on process optimisation
65 % Align systematically to company goals
60 % Pay more attention to understanding the subject area spanned
55 % Implementation of a management information system as part of scope
50 % Outsource project management of the project to a third party
45 % Increase investment in training
35 % Greater employees involvement
35 % Enforce changes more courageously
30 % Identify and capture proof of benefits and saving as part of scope
20 % Avoid big-bang implementations
July 3, 2010 7

Key Business Drivers for BPM

• Save money – Do things better with optimised processes
− Build better new processes faster
− Know what you are doing (right or wrong) through current
process understanding
− Get control of parallel processes by consolidating to core
processes
− Get non-value added work through automation of manual
processes
− Business process outsourcing
• Implement large software systems better
• Stay ahead of compliance
• Move faster through scenario building for agility and policy
management
July 3, 2010 8

Benefits of Business Process Management
Reduced process costs 10 - 15 %

Increased quality / reduced number of errors 20 - 30 %

Reduced process throughput times 10 - 30 %

Reduced training time / expenses 10 - 30 %

Reduced number of (internal) support requests 15- 30 %

Reduced number of customer complaints 20 - 30 %

Increased forecast accuracy 15 - 30 %

• Real benefits from BPM
• Intangible benefits also: better information quality
July 3, 2010 9

How do Organisations Improve?

• Major changes must start at the top
• Ultimately, everyone must be involved
• Effective change requires a goal and knowledge of the
current process
• Change is continuous
• Change will not be retained without effort and periodic
reinforcement
• Improvement is continuous

July 3, 2010 10

Why Business Process Management?

• Symptoms of Poor Business Process Management and
Design
− No standard process/method for addressing how to define
business requirements and when to improve business processes
− When automation of processes is commissioned, “Business” says
that they do not always get what they think they have asked for
− The processes used to document and communicate business
processes and requirements are neither easy nor documented
− Our business programs frequently exist in a culture of reacting to
cross-functional problems/emergencies
− IT has responsibility for creating and maintaining business process
flows, business requirements and business rules

July 3, 2010 11

Why Business Process Management and Design - Common
Problems

1. Lack of an integrated process for capturing the business
domain
2. Techniques that are used are not consistently applied
3. We cannot/do not differentiate key stakeholders’ views
and different business views
4. We are working without a common language across
business, IT and our other partners/vendors
5. Inadequate root cause level business process analysis
yields inadequate business requirements and rules to
facilitate process optimisation/automation
July 3, 2010 12

Why Business Modelling - The Problems

1. Lack of an integrated process for capturing the business domain

2. Techniques that are used are not consistently applied

3. We cannot/do not differentiate key stakeholders’ views and
different business views

4. We are working without a common language across business, IT
and our other partners/vendors

5. Inadequate root cause level business process analysis yields
inadequate business requirements and rules to facilitate process
optimisation/automation

July 3, 2010 13

Finding the Right Project

• Key characteristics of right project
− The process or project is related to a key business issue
− You have/can get customer input on the issue
− Management assigns this project a high priority
− Process owner and key stakeholders are defined
− The problem is stated as a target or need and NOT a solution
− The sponsor of this project can commit time and resources to this project
− The business process(es) will not be changed by another initiative at any time
in the near future
− Focus on:
• Which process is the most critical
• Which process contributes the most
− Ensure the benefits of an improvement project do not degrade over time

July 3, 2010 14

Critical Success Factors

• Linked to business strategies and goals
• Linked to customer value
• Ability to implement incremental value added change
• Ability to track results and measure success
• Ability to be aligned with the business

July 3, 2010 15

Successful Business Process Analysis, Design and
Implementation Projects Have

• Understood the Business Architecture – Business Process,
Metrics, Strategy and Goals
• Engaged stakeholders and defined process ownership
• Taken an iterative and incremental approach
• Tackled the right project at the right time
• Implemented internal and external standards and the right
level of governance
• Understood the role of information
• Incorporated process improvement
• Achieve business results with a series of small successes
July 3, 2010 16

Do Not Ignore Organisational Change

• The failure to manage the human side of business changes
is a major contributor to the reasons programme, projects
and initiatives fail
• Organisations may not have the experience necessary to
manage the speed and complexity of the large-scale
changes
• Managers are all too frequently concerned with tactical,
operational issues and have not had the time to consider
organisational changes

July 3, 2010 17

Process Analysis within Service Orientation

• Process Driven Integration
− Services Based Integration
− Cut integration costs and reduce development
• New Business Initiatives
− Agility, Growth – New Products and Services
− Increased Delivery Channels
• Process Improvement
− Optimising business processes
− Straight Through Processing
• IT Regeneration
− Enterprise IT Architecture – Aligning more with Business
− Legacy Replacement
• Extending the Enterprise
− Partnering, B2B

July 3, 2010 18

Intelligent Use of BPM

• Help prioritising intelligent cuts: via a business process
architecture and a good process measurement system
• Process Optimisation: BPM teams can quickly examine
processes and suggest changes to eliminate waste
− Good BPM teams can almost always identify some quick changes
that will save 10-30%

July 3, 2010 19

Intelligent Use of BPM

• Reorganisations
− Changes in status also require that new processes and business
rules be implemented throughout the organisation
• Additional Regulation
− New regulations require new practices and new business rules

July 3, 2010 20

Business Process Management Common Body of
Knowledge (CBOK) Knowledge Areas

Business Process Management (1)

Process
Process
Process Process Process Design Performance
Transformation
Modelling (2) Analysis (3) (4) Management
(6)
(5)

Process Management Organisation (7)

Enterprise Process Management (8)

Business Process Management Technologies (9)

July 3, 2010 21

Business Process Management Common Body of
Knowledge (CBOK) Knowledge Areas
• Nine knowledge areas
− Business Process Management (1) - core BPM concepts
− Process Modelling (2), Process Analysis (3), Process Design (4),
Process Performance Management (5) and Process
Transformation (6) - BPM activities and skill sets
− Process Management Organisation (7) and Enterprise Process
Management (8) - how the practice of BPM relates to other
organisational dimensions, such as governance and strategic
planning
− Business Process Management Technologies (9) – support and
enable BPM practices

July 3, 2010 22

Business Process Management (1) Knowledge Area

• Defines BPM and provides the foundation for exploring the
remaining Knowledge Areas
• Focuses on the core concepts of BPM
− Key definitions
− End-to-end process
− Customer value
− Nature of cross-functional work
− Process types
− Process components
− BPM lifecycle
− Critical skills
− Success factors

July 3, 2010 23

Process Modelling (2) Knowledge Area

• Includes the set of skills and processes which enable
people to understand, communicate, measure and
manage the primary components of business processes
• Covers
− Skills, activities and key definitions
− An understanding of the purpose and
− Benefits of process modelling
− Discussion of the types and uses of process models
− Tools, techniques and modelling standards

July 3, 2010 24

Process Analysis (3) Knowledge Area

• Involves an understanding of business processes including
the efficiency and effectiveness of business processes
• Covers
− Purpose and activities for process analysis
− Decomposition of process components and attributes, analytical
techniques and process patterns
− Use of process models and other process documentation to
validate and understand both current and future state processes
− Process analysis types, tools and techniques

July 3, 2010 25

Process Design (4) Knowledge Area

• Intentional and thoughtful planning for how business processes
function and are measured, governed and managed
• Involves creating the specifications for business processes within the
context of business goals and process performance objectives
• Covers
− Plans and guidelines for how work flows
− How rules are applied
− How business applications, technology platforms, data resources, financial and
operational controls interact with other internal and external processes
− Process design roles
− Techniques and principles of good design
− Common process design patterns
− Compliance, executive leadership and strategic alignment

July 3, 2010 26

Process Performance Measurement (5) Knowledge
Area
• Formal, planned monitoring of process execution and the tracking of
results to determine the effectiveness and efficiency of the process
• Used to make decisions for improving or retiring existing processes
and/or introducing new processes in order to meet the strategic
objectives of the organisation
• Covers
− Key process performance definitions
− Importance and benefits of performance measurement
− Monitoring and controlling operations
− Alignment of business process and enterprise performance
− What to measure
− Measurement methods
− Modelling and simulation
− Decision support for process owners and managers
− Considerations for success

July 3, 2010 27

Process Transformation (6) Knowledge Area

• Addresses process change in the context of a business
process lifecycle
• Covers
− Process improvement
− Redesign and reengineering methodologies
− Tasks associated with implementing process
− Organisational change management methodologies, techniques
and best practices

July 3, 2010 28

Process Organisation (7) Knowledge Area

• Addresses the roles, responsibilities and reporting
structure to support process-driven organisations
• Covers
− What defines a process driven enterprise
− Cultural considerations
− Cross-functional, team-based performance
− Business process governance
− Governance structures
− BPM Centre of Expertise/Excellence (COE)

July 3, 2010 29

Enterprise Process Management (8) Knowledge Area

• Driven by the need to maximise the results of business processes
consistent with well-defined business strategies and functional goals
based on these strategies
• Process portfolio management ensures that the process portfolio
supports corporate or business unit strategies and provides a
method to manage and evaluate initiatives
• Covers
− Tools and methods to assess process management maturity levels
− Required BPM practice areas which can improve their BPM organisation state
− Business Process Frameworks
− Process integration - interaction of various processes with each other
− Models which tie performance, goals, technologies, people and controls (both
financial and operational) to business strategy and performance objectives
− Process architecture and enterprise process management best practices
July 3, 2010 30

BPM Technology (9) Knowledge Area

• BPM is a technology enabled and supported management
discipline
• Covers
− Wide range of technologies available to support the planning,
design, analysis, operation and monitoring of business processes
− Set of application packages, development tools, infrastructure
technologies and data and information stores that provide
support to BPM professionals and workers in BPM related
activities
− BPM standards, methodologies and emerging trends

July 3, 2010 31

Business Process Management Overview

July 3, 2010 32

Business Process Management Topic Scope
Business Process
Management

BPM Role
Core Concepts of
Business Process BPM Critical Operating
Business Process BPM Lifecycle Types of Processes Types of Activities
Management Success Factors Environment and
Management
Influences

Management Alignment of
Discipline and Planning and Strategy, Value
Primary Processes Value Added
Enabling Strategy Chain and Business
Technologies Process

Process vs.
Analysis Support Processes Handoff Goals
Function

Ongoing Executive
Management Controls and
Management of Design Sponsorship/
Processes Control Activities
Process Governance

Process
Performance and Modelling Process Ownership
Measurement

Organisational Measuring and Metrics, Measures
Commitment Monitoring and Monitoring

Institution
Transformation
Practices

July 3, 2010 33

Business Process Management - Scope

• Concepts and strategies required to successfully manage
business processes from a holistic end-to-end perspective
• Foundation for exploring the remaining knowledge areas

July 3, 2010 34

Hierarchy of Business, Processes and BPM

Business
Implements
and Uses

That Can Be
Business Process Managed
Using

Business Process Management

July 3, 2010 35


• Business
− Refers to individuals, interacting together, to perform a set of
activities to deliver value to customers and a return on
investment to the stakeholders
• Business Process
− Process is a defined set of activities or behaviours performed by
humans or machines to achieve one or more goal
− Triggered by specific events and have one or more outcome that
may result in the termination of the process or a handoff to
another process
− Composed of a collection of interrelated tasks or activities which
solve a particular issue
− End-to-end work which delivers value to customers - end-to-end
involves crossing any functional boundaries

July 3, 2010 36


• Business Process Management
− Disciplined approach to identify, design, execute, document,
measure, monitor and control both automated and non-
automated business processes to achieve consistent, targeted
results aligned with an organisation’s strategic goals
− Involves the deliberate, collaborative and increasingly technology-
aided definition, improvement, innovation and management of
end-to-end business processes that drive business results, create
value and enable an organisation to meet its business objectives
with more agility
− Enables an enterprise to align its business processes to its
business strategy, leading to effective overall company
performance through improvements of specific work activities
either within a specific department, across the enterprise or
between organisations

July 3, 2010 37

BPM Core Concepts
Management
Discipline And A
Set Of Enabling
Technologies

Technology Addresses End-
Enabled To-End Work

Requires A Continuous, Ongoing
Significant Set Of Processes Focused
Organisational On Managing
Commitment End-To-End Processes
Includes The
Modelling, Analysis,
Design And
Measurement
Of Processes
July 3, 2010 38

BPM Core Concepts

• BPM is a management discipline and a set of enabling technologies
• BPM addresses end-to-end work and distinguishes between sets of
subprocesses, tasks, activities and functions
• BPM is a continuous, ongoing set of processes focused on managing
an organisations end-to-end business processes
• BPM includes the modelling, analysis, design and measurement of
an organisation’s business processes
• BPM requires a significant organisational commitment, often
introducing new roles, responsibilities and structures to traditional
functionally oriented organisations
• BPM is technology enabled with tools for visual modelling,
simulation, automation, integration, control and monitoring of
business processes and the information systems which support
these processes
July 3, 2010 39

Management Discipline and Enabling Technologies

• BPM acronym used loosely and its meaning varies depending upon
the context
− Software companies often refer to BPM to describe the capabilities of a
particular product or technology
− Practitioners, management consultants and academics typically discuss the
process and management discipline of BPM
• Firstly BPM is a management discipline and process for managing an
organisation’s business processes
− Enabling technology is meaningless without the management disciplines and
processes for exploiting the technology
• BPM involves managing the end-to-end work organisations perform
to create value for their customers
− Performance of this work is essentially how organisations fulfill their mission

July 3, 2010 40

Management Discipline and Enabling Technologies

• Vendors have created application suites which help enable organisations to better
manage their business processes
− Tools to visually design and model business processes
− Simulate and test business processes, automate, control and measure business
processes
− Provide feedback and reporting on process performance
− Some vendors have combined these into integrated business process management
suites
• Most large organisations have a significant investment into a number of legacy
systems
− Designed to support specific functions
− In order to manage the end-to-end work involved in business processes, a BPMS must
be able to integrate with legacy systems in order to control work, get information or
measure performance
− Common framework for how these technologies are deployed is most often referred to
as a Service Oriented Architecture (SOA)
− Standardising on a specific set of open technologies commonly referred to as web
services
− By leveraging web services in a SOA, organisations can build and manage end-to-end
business processes across organisational silos and their legacy systems

July 3, 2010 41

Addresses End-To-End Work

• Process vs. function
− Business functions are typically defined by a group of activities
related by a particular skill or goal such as sales, finance or
manufacturing
− Functions focus on these individual tasks while business processes
focus on the end-to-end work, i.e., tasks and activities, across
functional boundaries to deliver customer value
− Functions are ongoing where business processes have defined
inputs and outputs
− Business processes, however, focus on end-to-end transactions
that deliver value

July 3, 2010 42

Ongoing Management of Processes

BPI (Business Process BPM (Business Process
Improvement) Management)

One-time exercise Ongoing and continuous
Fix or design process Vs.

July 3, 2010 43

Ongoing Management of Processes

• BPM involves a permanent ongoing organisational
commitment to managing the organisations processes
• Includes
− Modelling
• Analysis
• Process design
• Performance measurement
− Process transformation
− Continuous feedback loop to ensure the organisation’s business
processes are aligned to its strategy and performing to
expectations
July 3, 2010 44

Modelling, Analysis, Design And Measurement Of
Processes
• Practice of BPM requires the measurement and
supervision of process performance
− Setting process performance goals
− Measuring actual performance
− Reviewing the effectiveness of business processes
− Providing information, insight and feedback to other primary
activities such as process analysis, design and transformation
• Define and measure business process performance across
two primary dimensions
− Extent to which process goals are attained
− Efficiency and effectiveness of process activities

July 3, 2010 45

Modelling, Analysis, Design And Measurement Of
Processes
• Gather information at key points in the process to support
decisions
− Cost
− Time to completion of tasks

July 3, 2010 46

Organisational Commitment

• Practice of BPM requires a significant organisational
commitment
• Management of end-to-end business process crosses
organisational boundaries
• New roles and responsibilities are introduced, such as
process owners, designers and architects
• Individuals responsible for end-to-end process design must
interact with traditional functionally based managers
• New governance structures need to be introduced which
may change the way organisations make decisions and
allocate resources
July 3, 2010 47


“Horizontal”
Cross
Functional
Processes –
Externally
Focussed

Link
Operational
Processes

Cross
Organisation
Boundaries

“Vertical” Operational Processes – Internally Focussed
July 3, 2010 48


• Without organisational commitment, the practice and
benefits of BPM is unlikely to mature within an
organisation
• Without supporting leadership, values, beliefs and culture,
BPM is unlikely to successfully take hold within an
organisation

July 3, 2010 49

BPM Technology

• BPM is a technology enabled and supported management discipline
• Wide range of technologies available to support the planning,
design, analysis, operation and monitoring of business processes
• Application suites available which help enable organisations to
better manage their business processes
• BPMS must be able to integrate with legacy systems in order to
control work and get information or measure performance
• Common framework for how these technologies are deployed is
most often referred to as a Service Oriented Architecture (SOA)

July 3, 2010 50

BPM Lifecycle

BPM Activities Affected BPM Activities
by Leadership, Values, Design and
Process Analysis of Process
Culture and Beliefs Planning and Business
Modelling of Process
Monitoring and
Process
Business Implementation Refinement
Factors Strategy Processes
Processes
Controlling
Culture and
Strategy
Methodology
Information
Technology
Process
Alignment
Process
BPM Awareness
Factors Process
Measures
Process
Sponsorship
Process
Responsibility
Process
Definition
Organisation

July 3, 2010 51

BPM Lifecycle
BPM Factors – cross all BPM phases

BPM Phases

July 3, 2010 52

BPM Lifecycle
Culture and Strategy
Process
Process
Methodology Refinement
Planning and
Strategy
Information Technology

Process Alignment
Process
Process Awareness Monitoring
Analysis of
Business
and
Process Measures Processes
Controlling

Process Sponsorship

Process Responsibility
Process Design and
Process Definition Implementation Modelling of
Business
Organisation Processes

July 3, 2010 53

BPM Lifecycle Monitor

• Iterative, Refinement
phased set of
Refinement Monitor
activities
Implementation

Planning
Planning Analysis

Implementation
Design

Design
Analysis

July 3, 2010 54

Process Planning and Strategy

• BPM lifecycle begins with developing a process driven strategy and
plan for the organisation
• Sets the strategy and direction for the BPM process
• Plan starts with an understanding of organisational strategies and
goals
• Designed to ensure a compelling value proposition for customers
• Plan provides structure and direction for continued customer centric
process management
• Provides a foundation for a holistic BPM approach to ensure the
alignment with organisational strategy and the integration of
strategy, people, processes and systems across functional
boundaries
• Identifies appropriate BPM organisational roles and responsibilities,
executive sponsorship, goals and expected performances measures
and methodologies

July 3, 2010 55

Analysis of Business Processes

• Analysis incorporates methodologies with the goal of
understanding the current organisational processes in the
context of the desired goals and objectives
• Takes information from strategic plans, process models,
performance measurements, changes in the environment
and other factors in order to fully understand the business
processes in the context of the overall organisation

July 3, 2010 56

Design and Modelling of Business Processes

• Focus on the intentional, thoughtful design of how end-to-end work
occurs in order to deliver value
• Document the sequence of activities, including the design of what
work is performed, at what time, in what location, by what process
actors using what methodology
• Defines what the organisation wants the process to be and answers
the what, when, where, who and how questions of how end-to-end
work is executed
• Ensures that the proper management controls and metrics are in
place for compliance and performance measurement
• Understanding the process typically involves process modelling and
an assessment of the environmental factors which enable and
constrain the process
− May be the first time the entire end-to-end business process has been
documented

July 3, 2010 57

Process Monitoring and Controlling

• Continuous measuring and monitoring of business
processes provides the information necessary to adjust
resources in order to meet process objectives
• Measuring and monitoring also provides critical process
performance information through key measurements
related to goals and value to the organisation
• Analysis of process performance information can result in
improvement, redesign or reengineering activates

July 3, 2010 58

Process Refinement

• Implements the output of the iterative analysis and design
cycle
• Addresses organisational change management challenges
• Aimed at continuous improvement and process
optimisation

July 3, 2010 59

Types of Processes

Management Primary (Core) Processes
Processes

Support Processes

July 3, 2010 60

Primary Processes

• Primary processes are end-to-end, cross-functional
processes which directly deliver value
• Represent the essential activities an organisation performs
to fulfill its mission
• Make up the value chain where each step adds value to
the preceding step as measured by its contribution to the
creation or delivery of a product or service, ultimately
delivering value
• Primary processes can move across functional
organisations, across departments or even between
enterprises and provide a complete end-to-end view of
value creation

July 3, 2010 61

Support Processes

• Support primary processes, often by managing resources
and/or infrastructure required by primary processes
• Differentiator is that support processes do not directly
deliver value
− Does not mean that they are unimportant to an organisation
• Examples of support processes include information
technology management, facilities or capacity
management and human resource management
• Support processes are generally associated with functional
areas
− Can and often do cross functional boundaries
July 3, 2010 62

Management Processes

• Used to measure, monitor and control business activities
• Ensure that a primary or supporting process meets
operational, financial, regulatory and legal goals
• Do not directly add value
• Necessary in order to ensure the organisation operates
effectively and efficiently

July 3, 2010 63

Process Activities

• Value Added - contribute to the process output in a
positive way
• Handoff - pass control of the process to another
department or organisation
• Control - assure that the processes behave within desired
tolerances or specify a validity checkpoint

July 3, 2010 64

BPM Critical Success Factors

Business Strategy

Define Organisation-Wide
Business Process Value
Chains

Executive Sponsorship/
Governance and
Institutionalise Practices

Standardise Business
Processes

Measure Process Chain
Performance

July 3, 2010 65

BPM Critical Success Factors

• Standardise Business Processes
− Adopt common design/re-engineering methodology
− Document processes
− Manage process diversity
• Executive Sponsorship/Governance and Institutionalise Practices
− Provide continuous improvement
− Manage process governance
− Enable change management
− Leverage BPM tools
• Define Organisation-Wide Business Process Value Chains
− Map the organisation’s core activities
− Assign executive responsibility for/sponsorship of process chains
• Measure Process Chain Performance
− Manage to process measures and chains of accountability

July 3, 2010 66

Alignment of Strategy, Value Chain and Business
Process
• Most successful organisations implementing BPM pay
attention to the alignment of business strategy, value-
chain definitions and business processes
• BPM relies on key business strategies that set the primary
direction of the enterprise
− Value propositions for goods and services delivered
• Business strategy leads to enterprise and business unit
goals as the basis for action plans and business tactics

July 3, 2010 67

Goals

• Business goals are most often an output of an
organisations strategic planning efforts
− Typically decomposed to include functional goals which align an
organisations functional areas to overall strategy
• Process goals align business processes with overall
organisation strategy

July 3, 2010 68

Executive Sponsorship/Governance

• Assigning executive leadership responsibility to oversee the
performance of key processes is an indicator of maturity and
seriousness
• Performance of a process is measured with accountability falling
under the executive leadership and reported throughout the
enterprise
• Important to have organisational discipline to utilise methodologies
to document, store, manage and continuously improve the business
processes, particularly those that make up the value chains
• Includes governance mechanisms to support BPM and associated
tools
• Institutionalised across all functional areas in order to optimise the
impact on value chain performance
July 3, 2010 69

Process Ownership

• Successful BPM implementations recognise that the role of
a process owner is critical
• Process owner is responsible for the entire end-to-end
process across functional departments
• Success of this role depends on the authority the individual
has to control the budget and make decisions that effect
the development, maintenance and improvement of the
business process

July 3, 2010 70

Metrics, Measures and Monitoring

• Management requires measurement
• Business process measurement and monitoring provides
critical feedback on process design, performance and
compliance
• Necessary to measure process performance in terms of a
variety of possible metrics related to how well the process
meets its stated goals

July 3, 2010 71

Institution Practices

• Effective attainment of BPM success factors to create
value for an organisation depends on
− Organisational practices
− Mastery of concepts and skills by individuals with accountability
for managing business processes

July 3, 2010 72

BPM Role Operating Environment and Influences
BPM Role and Influences

Outside But Linked to
Within Organisation External BPM Environment
Organisation

Business Strategy and Organsation’s Operating
Partners
Governance Environment

BPM Professional Practices
Outsourced Business BPM Practice
and Management of
Processes Influencers
Business Processes

BPM Professional
Business Processes
Development Programs

Applications,
Data and IT Platform

Values, Beliefs, Leadership
and Culture
July 3, 2010 73

Process Modelling

July 3, 2010 74

Process Modelling Topic Scope
Process
Modelling

Modelling
Business Process Modelling
Purpose of Benefits of Standards Modelling Levels of Modelling Capturing Modelling Process
Process Modelling Techniques
Modelling Modelling and Perspectives Models Approaches Information Participants Simulation
Modelling Quality and Tools
Notations

Process Model
Diagrams, Validation Enterprise Direct
Enterprise
Maps and and Domain Observation
Models Simulation

Process
Business Business
Attributes and Interviews
Domain Models
Characteristics

Operations Survey/
Operations
and Work Written
Domain
Flow Feedback

Systems Structured
System
Domain workshops

Measureme
Builder and Web-Based
nt and
Operator Conferences
Control

July 3, 2010 75

Business Process Modelling

• Set of activities involved in creating representations of an
existing (as-is) or proposed (to-be) business process
• Provides an end-to-end perspective of an organisations
primary, supporting and management processes
• Modelling is a means to an end and not an end in itself
− You model to get results and reach conclusions

July 3, 2010 76

Process Diagrams, Maps and Models

• Diagrams
− Process diagram often depicts simple notation of the basic workflow of a
process
− Depicts the major elements of a process flow, but omits the minor details
which are not necessary for understanding the overall flow of work
• Maps
− More precision than a diagram
− More detail about process and important relationships to other elements such
as performers (actors), events, results
− Provide a comprehensive view of all of the major components of the process
• Models
− Represents the performance of what is being modelled
− Needs greater precision, data about the process and about the factors that
affect its performance
− Often done using tools that provide simulation and reporting capability to
analyse and understand the process
July 3, 2010 77

Process Attributes and Characteristics

• Attributes and characteristics that describe the properties, behaviour, purpose
and other elements of the process
• Process attributes are captured in a tool in order to organise, analyse and manage
an organisation’s portfolio of processes

• Inputs/Outputs • Arrival Patterns/Distributions
• Events/Results) • Costs (indirect and direct
• Value Add • Entry Rules
• Roles/Organisations • Exit Rules
• Data/Information • Branching Rules
• Probabilities • Join Rules
• Queuing • Work/Handling Time
• Transmission Time • Batching
• Wait Time • Servers (number of people
• available to perform tasks)

July 3, 2010 78

Purpose of Process Modelling

• A model is rarely a complete and full representation of the actual
process
− Focus on representing those attributes of the process that support continued
analysis from one or more perspectives
• Objective is to create a representation of the process that describes
it accurately and sufficiently for the task at hand
− Understanding the business process through the creation of the model
− Creating a visible representation and establishing a commonly shared
perspective
− Analysing process performance and defining and validating changes
• To be model is an expression of the target process state and
specifies the requirements for the supporting resources that enable
effective business operations

July 3, 2010 79

Purpose of Process Modelling

• Models are simplified representations that facilitate
understanding of that which is being studied and making
decisions about it
• Mechanism for understanding, documenting, analysing,
designing, automating and measuring business activity as
well as measuring the resources that support the activity
and the interactions between the business activity and its
environment
• For process managed business, process models are the
primary means for
− Measuring performance against standards
− Determining opportunities for change
− Expressing the desired end state preceding a change effort
July 3, 2010 80

Reasons for Process Modelling

• To document an existing process clearly
• To use as a training aide
• To use as an assessment against standards and compliance
requirements
• To understand how a process will perform under varying loads or in
response to some anticipated change
• As the basis for analysis in identifying opportunities for improvement
• To design a new process or new approach for an existing process
• To provide a basis for communication and discussion
• To describe requirements for a new business operation

July 3, 2010 81

Benefits of Modelling

• Models are relatively fast, easy and inexpensive to
complete
• Models are easy to understand (when compared to other
forms of documentation)
• Models provide a baseline for measurement
• Models facilitate process simulation and impact analysis
• Models leverage various standards and a common set of
techniques

July 3, 2010 82

Modelling Standards and Notations

• Range of number of modelling and notational standards and
techniques
• Models provide a language for describing and communicating as-is
and to-be process information
− Like all new languages must be learned
• Benefits of using a standards based approach
− A common symbology, language and technique which facilitate communication
and understanding
− Standards-based models provide common and consistently defined processes
definitions which eases the process of design, analysis and measurement and
facilitates model reuse
− An ability to leverage modelling tools based on common standards and
notations
− An ability to import and export models created in various tools for reuse in
other tools
− Some tool vendors are leveraging standards and notations for developing the
ability to be exported from a modelling notation to an execution language (for
example BPMN to BPEL)

July 3, 2010 83

Modelling Standards and Notations

• Commonly used standards (not complete)
− Business Process Modelling Notation (BPMN)
− Flow Charting
− Swim Lanes
− Event Process Chain (EPC)
− Value Chain
− Unified Modelling Language (UML)
− IDEF-0
− LOVEM-E
− SIPOC
− Systems Dynamics
− Value Stream Mapping
July 3, 2010 84

Business Process Modelling Notation (BPMN)

• Widely used and supported standard for business process
modelling
• Provides a graphical notation for specifying business
processes in a Business Process Diagram (BPD)
• Uses a flowcharting technique similar to activity diagrams
from Unified Modelling Language (UML)
• Can output BPMN to Business Process Execution Language
(BPEL)
− Standard executable language for specifying interactions with
Web Services
• Emerging standard
July 3, 2010 85

Business Process Modelling Notation (BPMN) –
Simplified Structure
BPMN
Overview

Connecting
Flow Objects Swimlanes Artefacts
Objects

Events Activities Gateways Sequences Messages Associations Pool Lane Data Object Group Annotation

Start Event Task

End Event Sub-Process

Intermediate
Transaction
Event

July 3, 2010 86

BPMN - Events

• Event denotes something that happens
• Classifications
− Catching – triggered by external event
− Throwing – generating an output
• Types
− Start Event - acts as a trigger for the process
− End Event - represents the result of a process
− Intermediate Event - represents something that happens
between the start and end events

July 3, 2010 87

BPMN - Activities

• Activity describes the kind of work that must be done
• Types
− Task - represents a single unit of work that is not or cannot be
broken down to a further level of business process detail
− Sub-Process - used to hide or reveal additional levels of business
process detail
− Transaction - a form of sub-process in which all contained
activities must be treated as a whole

July 3, 2010 88

BPMN - Gateway

• A Gateway determines forking and merging of paths
depending on the conditions expressed

July 3, 2010 89

BPMN - Connecting Objects

• Flow objects are connected to each other using connecting
objects
• Types
− Sequence Flow - shows in which order the activities will be
performed
− Message Flow - shows what messages flow across organisational
boundaries
− Association - associate an Artefact to a Flow Object and can
indicate directionality

July 3, 2010 90

BPMN - Swim Lanes

• Visual mechanism of organising and categorising activities,
based on cross functional flowcharting
• Types
− Pool - represents major participants in a process and contains one
or more lanes
− Lane - used to organise and categorise activities within a pool
according to function or role

July 3, 2010 91

BPMN - Artefacts

• Used to bring some more information into the
model/diagram
• Types
− Data Objects - show the data is required or produced in an
activity
− Group - used to group different activities but does not affect the
flow in the diagram
− Annotation - used to provide the model/diagram with
understandable details

July 3, 2010 92

Flow Charting

• Simple type of diagram that represents a process, showing
the steps as boxes of various kinds and their order by
connecting these with arrows
• Widely used

July 3, 2010 93

Swim Lanes

• Swim lanes are an addition to the boxes and arrows
process flow view of flow-charting that show how the
work flows across organisational units or is handed-off
from one role to another
• Overall process is divided into lanes, with one lane for
each person, group or subprocess
• Processes and decisions are grouped by placing them in
lanes
• Arranged horizontally or vertically and are used for
grouping the sub-processes according to the
responsibilities of those swim lanes
July 3, 2010 94

Event Process Chain (EPC)

• An EPC is an ordered graph of events and functions
• Provides various connectors that allow alternative and parallel execution of processes
• Tasks (activities) are followed by outcomes (events) of the task, developing a process model
• EPC method was developed within the framework of ARIS (BPM toolset)
• EPC elements
− Event - describe under what circumstances a function or a process works or which state a function
or a process results in
− Function - model the tasks or activities
− Organisation Unit - determine which person or organisation within the structure of an enterprise is
responsible for a specific function
− Information, Material or Resource Object - portray objects in the real world
− Logical Connector - logical relationships between elements in the control flow
− Logical Relationships - Branch/Merge, Fork/Join and OR
− Control Flow - connects events with functions, process paths or logical connectors creating
chronological sequence and logical interdependencies between them
− Information Flow - show the connection between functions and input or output data
− Organisation Unit Assignment - show the connection between an organisation unit and the
function it is responsible for
− Process Path - show the connection from or to other processes

July 3, 2010 95

Value Chain

• Value chain notation is used to demonstrate a single
continuous flow from left to right of the sub-processes
that directly contribute to producing value for the
organisation’s customers (clients/constituents)
• Value chain is a chain of activities for a firm operating in a
specific industry
• Chain of activities gives the products more added value
than the sum of added values of all activities

July 3, 2010 96

Unified Modelling Language (UML)

• UML provides a standard set of 14 diagramming
techniques and notations primarily for describing
information systems requirements
• Primarily used for systems analysis and design
• Can use UML activity diagrams for business process
modelling
• UML can be very verbose

July 3, 2010 97

IDEF-0 (Integration Definition for Function
Modelling)
• Function modelling methodology for describing
manufacturing functions
• Federal Information Processing Standard (FIPS) that was
developed by the US Air Force for documenting
manufacturing processes
• Part of the IDEF family of modelling languages in software
engineering
− IDEF0 produces a function model that is structured
representation of the functions, activities or processes
− IDEF1 produces an information model that represents structure
and semantics of information
− IDEF2 produces a dynamics model that represents time-varying
behavioural characteristics

July 3, 2010 98

LOVEM-E (Line of Visibility Engineering Method -
Enhanced)
• Notation set and a modelling technique that was
developed as part of IBM’s Business Process Reengineering
Methodology
• Based on the process path management concept
• Introduces concepts of the customer encounter and the
collaborative nature of work between external and
internal parties and the supporting information systems
• Not widely used

July 3, 2010 99

SIPOC (Supplier, Input, Process, Output and
Customer)
• Style of process documentation used in Six Sigma

July 3, 2010 100

Systems Dynamics

• Approach to understanding the behaviour of complex
systems over time
• Deals with internal feedback loops and time delays that
affect the behaviour of the entire system
• Systems Dynamics models are “activity on arrow”
diagrams rather than “activity on node” diagrams
• Useful in developing dynamic lifecycle type models that
focus on the overall business system’s performance and
the impact of changing the key variables that affect overall
performance

July 3, 2010 101

Value Stream Mapping

• Technique used in Lean Manufacturing
• Expresses the physical environment and flow of materials
and products in a manufacturing environment
• Used to analyse the flow of materials and information
currently required to bring a product or service

July 3, 2010 102

Process Modelling Quality

• Most process analysis and design efforts require the use of models
to describe what is happening during the process
• Useful to have some standards and measures of quality as it relates
to process modelling
• Quality of model defined by its accuracy, amount of detail and
completeness
• Can have multiple versions or iterations of models are created over
time to capture more detail and improve the quality of the model
• During the modelling of a process, several disconnections,
restrictions and/or barriers may become apparent
• Items should also be noted on the model as well as any other
information discovered that will help create a common
understanding of the current state

July 3, 2010 103

Requirements of a Process Model

• The business environment including the customers, suppliers,
external events or market pressures that effect or interact with the
process
• The organisational structure which includes the hierarchical or
functional view of the organisation and how the people work
together (this information helps understand who the key decision
makers are within the process)
• The functional or departmental structure of the organisation which
explains how the functions or departments work together in the
process
• The business rules which control the decisions that are made during
the process and workflow
• The activities or actions that take place within the process and who
does those actions

July 3, 2010 104

Model Validation and Simulation

• Useful or necessary to validate the model through
simulation before finalising the analysis
• Validate the model through simulation is to compare
simulated outputs to real-world results
• Significant differences should be understood and
corrected before the model is used for detailed analysis
• Assemble a group of people who work in the process and
simulate the process by having one person in the group
describe each activity and its product(s)
− Real-world participants should be able to tell if the model is
accurate

July 3, 2010 105

Modelling Perspectives

• Processes can be modelled from many perspectives
• In a BPM environment an organisation’s strategy is
enacted through process performance, which is linked to
the operations model that must be supported by the
information technology platform
• To keep these aligned, there needs to be a line of visibility
from one perspective to the other in a coherent
framework, typically maintained in a process repository

July 3, 2010 106

Systems
Operations Enterprise
Business
Technology
Domain
Domain

System Build Business

System Design Operations

Operations
Domain
July 3, 2010 107


• Enterprise Perspective
− See how the enterprise operates overall and that the primary processes are
arranged in some category that gives a sense of their interaction
− View supports those who must align overall enterprise strategy with
aggregated process performance
• Business Perspective
− Supports each of the process owners who is accountable for and has the
authority to address overall process performance
− Required as the business context that describes each major business process
and defines the scope and reach of major transformation efforts
• Operations Perspective
− More detailed models support the perspectives of those managers who are
responsible for monitoring performance and look for ways to continuously
improve operational performance

July 3, 2010 108


• System Design Perspective
− Identifies how work gets done and how the systems support that
work is the systems perspective
− Describes requirements for systems support and performance in
support of tasks and procedures
• System Build Perspective
− Support the individuals who have to build the system
• Systems Operations Perspective
− Support the individuals who have to build all of the support
systems to enable work and to operate the systems that are
required to continue to perform that work

July 3, 2010 109

Levels of Models
Enterprise
Model

Business Model

Operational Model

Workflow Model

Systems Model

Measurement and Control

July 3, 2010 110

Enterprise Models

• Typically a highly abstracted business classification model that is
used to describe the focus of the organisation and to organise the
business processes in an overall business architecture
• Each of the high level business processes are then described in more
detail by their major components (sub-processes)
• An enterprise model will typically have two or more levels of detail
and serve as a high level business blueprint or business architecture
− May or may not include support and management processes
• Processes may be mapped to Key Performance Indicators (KPIs) and
strategic goals in a process portfolio and used to prioritise resources
and project efforts
• Can be mapped to formulate strategies for alternate future
scenarios or to develop high level estimates and forecasts
July 3, 2010 111

Business Models

• Business models depict the major events, activities and
results that describe each of the major end-to-end
processes, their sub-processes and their interactions with
their environment
• Business models also typically describe the support and
management processes as well and how they interact with
or support the primary processes

July 3, 2010 112

Operations and Work Flow Models

• Describe how the business model is carried out
• Detailed models mapped down to activity, task and
procedural level details
• Describe the physical implementation details of the
operating processes

July 3, 2010 113

Systems Models

• Depict the triggering events, software processes, data
flows and system outputs required to support business
operations

July 3, 2010 114

Measurement and Control Models

• Indicate points in the operation where key performance
measure and control points are monitored

July 3, 2010 115

Modelling Approaches

• Approaches to process modelling: top-down, middle-out and
bottom-up
• Iterative process approach where several successive passes are used
to develop the model
• Approach used varies depending on the purpose and the scope of
the effort
• Bottom-up approaches, centered on very detailed activity and task
oriented work flows, work best for projects aimed at improving
narrowly focused functions within a single department or operation
• Top-down methods work well for projects aimed at improving and
innovating large scale, end-to-end, cross-functional business
processes and as a means to manage performance of these business
processes
− Develop a new business model first and then determine what needs to be
done to be capable of its implementation
− Align business processes with business strategies

July 3, 2010 116

Capturing Information

• Techniques for capturing information for process
modelling
− Direct Observation
− Interviews
− Survey/Written Feedback
− Structured Workshops
− Web-Based Conferencing

July 3, 2010 117

Direct Observation

• Good way to document current procedural detail
• May uncover activities and tasks that might not be
otherwise recognised
• Can be effective in identifying variations and deviations
that occur in day-to-day work
• However limited to a relatively small sample size
− May not capture the range of variations across groups and
locations
• Direct observation also entails the risk of the performers
doing what they think you want to see rather than what
they normally do (Hawthorne effect)
July 3, 2010 118

Interviews

• Can create a sense of ownership and participation in the
process of modelling and documenting business processes
• Requires minimal time and disruption of normal duties
from the participants
• May take more overall elapsed time to schedule and
conduct the interviews than other methods
• May be difficult afterward to build a cohesive process flow
and to map the different views into a single view
− Generally requires follow up
• Sometimes does not uncover all of the activities to
completely describe the process
July 3, 2010 119

Survey/Written Feedback

• Written feedback requires minimal time and disruption of
duties
• Liable to the same problems as are encountered with one-
on-one interviews such as
− Taking more time
− Missing some information
− Time spent reconciling differences of opinion
− Where the same work has just been described differently by
different people, it may require follow up

July 3, 2010 120

Structured Workshops

• Focused, facilitated meetings where enough subject
matter experts and stakeholders are brought together to
create the model interactively
• Offers the advantage of shortening the elapsed calendar
time required to develop the models and gives a stronger
sense of ownership to the workshop participants than
other techniques
• Workshops may be more costly than other methods
• Models produced in workshops require less follow up and
generate a commonly agreed upon description of a
process faster and with higher quality than other
techniques

July 3, 2010 121

Web-Based Conferencing

• Gain similar benefits to face-to-face workshops, but work
best with smaller groups
• Workshops done this way can be more difficult to monitor
and manage individual participation in the group work

July 3, 2010 122

Modelling Participants

• Number of roles involved in developing process models due to the wide range of
applicability
• Models can be created by individuals expressing their personal knowledge
• Models can be created by groups outlining the scope and depth of the business
they are addressing
− Development of process models may involve many people to create a set of models
that fully represent the process
• Business strategists
• Business managers
• Financial analysts
• Auditors
• Compliance analysts
• Process performance analysts
• Requirements analysts
• Systems analysts
• Business analysts
• Subject matter experts depend on modelling approach
− Executives expressing high level business dynamics
− Mid-level managers defining monitoring and control mechanisms
− Workers who actually perform the work being modelled

July 3, 2010 123

Modelling Techniques and Tools

• Many modelling tools and techniques available from paper
to specialised BPM tools
− White Boarding and Flip Charts
− Paper and Post-Its
− Drawing Tools and Reports
− Electronic Modelling and Projection
• Process analysis can be done effectively and efficiently
using any type of tool
− Focus of the analysis or design should be on the process and not
on the tool itself

July 3, 2010 124

White Boarding and Flip Charts

• Draw the process flows and flip charts to capture other
information
• Later transcribe the results into drawing or modelling and
reporting tools
• Common method used in workshops, interviews or
structured/facilitated modelling sessions

July 3, 2010 125

Paper and Post-Its

• Cover the walls of a room with taped up paper
• Have workshop participants put removable sticky-notes on
the paper until they have arranged the activities into the
sequence on which they agree
• Done either the participants directing the facilitator in the
placement of these activities or the participants place the
notes depicting activities
• Resulting model must then be transcribed into a drawing
or modelling and reporting tool later

July 3, 2010 126

Drawing Tools and Reports

• During or after interviews and workshops, participants
capture the process flows and notes using inexpensive
drawing tools, such as Visio, PowerPoint or any other
electronic drawing tool

July 3, 2010 127

Electronic Modelling and Projection

• Use electronic drawing or modelling tools and projecting
the images to large screens to capture and view the
developing models
• Model is visible and can be modified during the workshop
• No transfer to another toolset required
• Repository-based tools allow the reuse of objects or
patterns that have already been defined in previous efforts

July 3, 2010 128

Capturing Information and Modelling Techniques
and Tools
Modelling Techniques and Tools

Electronic
White Boarding Paper and Post- Drawing Tools
Modelling and
and Flip Charts Its and Reports
Projection
Direct
Observation

Interviews
Techniques for
Capturing Survey/Written
Information Feedback
Structured
Workshops
Web-Based
Conferencing

July 3, 2010 129

Process Simulation

• Form of models which provide valuable insight to process dynamics
• Simulations require sufficient data which typically allows the process
to be mathematically simulated under various scenarios, loads, etc.
• Simulations can be manual or electronic using process simulation
tools
• Identify exceptions and handoffs while providing important insights
on existing and required communication between tasks, functional
areas, teams and systems
• Benefits
− Validate a model by demonstrating that real transaction sets, when run
through the model exhibit, produce the same performance characteristics as
those in the actual process
− Predict the process design’s performance under differing scenarios (vary the
number of transactions over time, the number of workers, etc.)
− Determine which variables have the greatest affect on process performance
− Compare performance of different process designs under the same sets of
circumstances
July 3, 2010 130

Modelling Summary

• Process models are simplified representations of some business
activity
• A process model serves as a means to communicate several different
aspects of a business process
• Process models are used to document, analyse or design a business
model
• Process models are useful as documentation, a means for
communication and alignment, design and requirements or a means
to analyse aspects of the process, training and explanation
• Different levels or perspectives of business processes are expressed
by models showing different scopes and levels of detail for different
audiences and purposes
• There are many different styles of process modelling notation and
ways to develop process models
July 3, 2010 131

Process Analysis

July 3, 2010 132

Process Analysis Topic Scope
Process Analysis

Preparing to Analysis Issues
Overview of Purpose of When to Perform Process Analysis Performing the Document the
Analyse and
Process Analysis Process Analysis Process Analysis Roles Analysis Analysis
Processes Considerations

Continuous Choose the Understanding Business
Monitoring Process the Unknown Environment

Event-Triggered Scope the Depth Organisational Performance
Analysis of Analysis Culture/Context Metrics

Choose Analytical Customer
Handoffs#
Frameworks Interactions

Business Rules Capacity

Bottlenecks Variation

Human
Cost
Involvement

Process Controls Other Factors

Analysing the
Gathering
Business
Information
Environment
Analysing
Analysing the
Information
Process
Systems

Analysing Human
Interactions
July 3, 2010 133

Process Analysis

• Process analysis is the first step in establishing a new process or
updating an existing process is creating a common understanding of
the current state of the process and its alignment with the business
objectives
− Process is a defined set of sequential or parallel activities or behaviours to
achieve a goal
− Process analysis is creating an understanding of the activities of the process
and measures the success of those activities in meeting the goals
• Accomplished through various techniques including mapping,
interviewing, simulations and various other analytical techniques
and methodologies
• May include a study of the business environment and factors that
contribute to or interact with the environment such as government
or industry regulations, market pressures and competition
July 3, 2010 134

Process Analysis

• Other factors to be considered
− The context of the business
− Business strategy
− Supply chain (the inputs and outputs of the process),
− Customer needs
− Organisational culture
− Business values
− How the process will perform to achieve business goals
• Information gained through the analysis should be agreed upon by
all those that interact with the process
• Should represent what is actually happening and not what is thought
or wished to be happening
• Unbiased view without placing blame for existing inefficiencies
July 3, 2010 135

Purpose of Process Analysis

• Analysis generates the information necessary for the
organisation to make informed decisions assessing the
activities of the business
− Without it, decisions are made based on opinion or intuition
rather than documented, validated facts
• Due to business change the processes of an organisation
can quickly become inconsistent to their original design
and no longer meet the needs of the business
• Process analysis is an essential tool to show how well the
business is meeting its objectives
• Creates an understanding of how work (the transformation
of inputs to outputs) happens in the organisation

July 3, 2010 136


• Analysis generates an understanding and measurement of process
effectiveness and its efficiency
− Effectiveness of a process is a measurement of achieving the purpose or need
for the process whether the process
• Meets the needs of the customer
• Satisfies the objectives of the business
• Is the right process for the current business environment or context
• Measuring the efficiency of the process indicates the degree of
resources utilised in performing the activities of the process
• Measures whether the process is costly, slow, wasteful or has other
deficiencies and is a measurement of the performance of the
process
− Uncovers important facts about how work flows in the organisation
− Helps in the design and/or redesign of processes to better meet the goals of
the business

July 3, 2010 137


• Information generated from analysis includes
− Strategy, culture and environment of the organisation that uses the process (why the process
exists)
− Inputs and outputs of the process
− Stakeholders, both internal and external, including suppliers, customers and their needs and
expectations
− Inefficiencies within the current process
− Scalability of the process to meet customer demands
− Business rules that control the process and why they must exist
− What performance metrics should monitor the process, who is interested in those metrics and
what they mean
− What activities make up the process and their dependencies across departments and business
functions
− Improved resource utilisation
− Opportunities to reduce constraints and increase capacity
• Information becomes a valuable resource to management and leadership to understand
how the business is functioning
• Help them to make informed decisions on how to adapt to a changing environment
• Ensure that the processes running the business are optimal for attaining business objectives

July 3, 2010 138

When to Perform Process Analysis

• Can be the result of continuous monitoring of processes or
can be triggered by specific events
− Continuous Monitoring
− Event-Triggered Analysis
• Strategic Planning
• Performance Issues
• New Technologies
• Startup Venture
• Merger/Acquisition
• Regulatory Requirements

July 3, 2010 139

Continuous Monitoring

• Business Process Management is a long-term commitment
as part of the business strategy rather than a single activity
that is completed and then forgotten
• Managing the business by process implies that there are
regular and consistent performance metrics that monitor
the processes of the organisation
• These metrics are routinely reviewed and steps are taken
to ensure process performance meets the predetermined
goals of the organisation
• Eventual goal should be the ability to continuously analyse
processes as they are performed through the use of
monitoring tools and techniques

July 3, 2010 140

Continuous Monitoring

• Benefits of continuous analysis
− Alerts management to potential poor performance of the process
− Help point to the cause of the poor performance such as system
deviations, competition, environmental factors, etc.
− If the process is not performing, immediate action can be taken to
resolve the cause
− Real-time feedback through continuous analysis provides a
measurement for the human performance and reward systems
− Reduces the number of process improvement projects
performed, thus saving time and cost associated with those
efforts

July 3, 2010 141

Event-Triggered Analysis

• Strategic Planning
− Regular review and update of strategic plans
− Survey the market and competitive landscape for new opportunities and
establish new goals
− Process analysis may need to occur following an update to the strategic plan to
re-align the processes to meet the new organisation’s objectives
• Performance Issues
− Current performance may be declared inadequate for a variety of reasons
− Process analysis can assist in determining the reasons for the inadequacies and
identify changes that may improve performance
• New Technologies
− Advancing technologies can improve process performance
− Analysis will help create an understanding of how they should be adopted
− Process analysis will help the organisation understand how and where new
technologies should be applied to gain the maximum benefit to the
organisation
July 3, 2010 142

Event-Triggered Analysis

• Startup Venture
− When new ventures or businesses are anticipated need to identify the
processes that will be required to successfully deliver the new products and
services
• Merger/Acquisition
− Mergers and acquisitions result in the joining of production and service
processes
− Process analysis should be performed before the merging of processes to
ensure that the combined outcome meets the combined business objectives
• Regulatory Requirements
− New or changes to existing regulations require the business to modify its
processes
− Process analysis as part of meeting these requirements will ensure the
business is able to meet the requirement change with as little impact to the
business as possible
July 3, 2010 143

Process Analysis Roles

• Process analysis can be performed by a single individual
• For larger organisations may require a cross-functional team
− Provide a variety of experiences and views of the current state of the process
− Result in a better understanding of both the process and the organisation
• Important to make sure that enough time has been allocation for the
analysis resources to function properly in the assignment
• Communicate to the team their responsibilities according to the role
that each will play in the process
• Have a thorough understanding of the expectations of each member
• Agree to commit the time and effort required to make the project a
success

July 3, 2010 144

Process Analysis Roles

• Analyst
− Decide the depth and scope of the analysis
− How it is analysed
− Perform the analysis
− Provide documentation and final reports to the stakeholders and executive
leadership
• Facilitator
− Lead process analysis teams with an unbiased view
− Objectivity is important to ensure the analysis truly represents the current
state
− Let the group discover the path through the analytical techniques chosen and
through proper management of group dynamics
• Subject Matter Experts
− Individuals closest to the process with knowledge and expertise
− Familiar with both the business and technical infrastructure that supports the
process
July 3, 2010 145

Preparing to Analyse Processes

• Steps
− Choose the process
− Determine the scope of the depth of analysis
− Choose analytical frameworks

July 3, 2010 146

Choose the Process

• May be competing priorities and several processes that
need to be analysed
• Agree priority through examining the critical business goals
of the organisation
− A critical business goal defines why the organisation exists and
what controls the success of the organisation
− An organisation may have one or more critical business goals
• Identify critical business goals
• Identify processes supporting those goals
• Process performance metrics

July 3, 2010 147

Choose the Process
Organisation

Critical Critical Critical
Business Goal Business Goal Business Goal

Supporting Supporting Supporting Supporting Supporting Supporting Supporting Supporting Supporting
Process Process Process Process Process Process Process Process Process

Performance Performance Performance Performance Performance Performance Performance Performance Performance
Metrics Metrics Metrics Metrics Metrics Metrics Metrics Metrics Metrics

July 3, 2010 148

Choose the Process

• Process performance can then be analysed and ranked to
understand where the effort for process analysis should be
placed
• Processes that scored high in both importance to the
organisation and severity of current issues are the
processes that need the most attention first

July 3, 2010 149

Choose the Process

Process A Process B
Impact on the Organisation
Process D
High Process E
Analyse First
Process F Process C

Process J Process G Process H
Low

Process K Process L Process I

Severity of Issues With Business Process
Low High
July 3, 2010 150

Determine the Scope of the Depth of Analysis

• Scoping the depth of the process that is to be analysed is one of the
first actions of the analyst or analysis team
• Scoping is critical to
− Decide how far the project will reach
− How much of the organisation it will involve
− The impact any changes will have upstream and downstream of the process
analysed
• May be necessary to interview a variety of individuals in various
business functions before making scoping decision
• The more business functions and activities included in the analysis
project, the more complicated the analysis and the longer it is likely
to take
• Could break down larger processes and analyse sub-processes in
order to optimise time but before doing so must consider the impact
of future process improvement projects

July 3, 2010 151

Choose Analytical Frameworks

• No single right way to perform a business process analysis
• Topics to be studied, methods for studying them, tools to be used,
etc. are all dependent on the nature of the process and the
information available at the time the analysis begins
− Some projects may start with a completed, verified model that can be used for
analysis
• Review and decide which of the methodologies, frameworks or tools
should be used
• Decide what techniques and tools to use in addition to or as part of
the framework
• Too much analysis can also hinder the process of creating or re-
designing a new process

July 3, 2010 152

Performing the Analysis
• Understanding the Unknown • Analysing the Business Environment
• Business Environment − Value Chain Analysis
− S.W.O.T.
• Organisational Culture/Context
• Analysing Information Systems
• Performance Metrics − Information Flow Analysis
• Customer Interactions − Discrete Event Simulation
• Handoffs • Analysing the Process
− Creating Models
• Business Rules − Cost Analysis
• Capacity − Transaction Cost Analysis
• Bottlenecks − Cycle-Time Analysis
− Pattern Analysis
• Variation − Decision Analysis
• Cost − Distribution Analysis
− Root-cause Analysis
• Human Involvement − Sensitivity Analysis
• Process Controls − Risk Analysis
• Other Factors • Analysing Human Interactions
• Gathering Information − Direct Observation
− Interviewing − Apprentice Learning
− Observing − Participatory Video Analysis
− Researching − Activity Simulation
− Workplace Layout Analysis
− Resource Allocation Analysis
− Motivation and Reward Analysis

July 3, 2010 153

Understanding the Unknown

• Process of analysis is a process of discovery involving
finding answers to a series of questions about the process
• Generate data to ensure that any conclusions are based on
facts extrapolated from the data and not on hearsay or
generalisations

July 3, 2010 154

Business Environment

• Obtain general understanding of the reason for the process to exist
within the business environment
− What is the process trying to accomplish?
− Why has it been created?
− What triggered the analysis?
− What are the systems required to support or enable the process and how
sustainable are those systems?
− Where does it fit into the value chain of the organisation?
− Is the process in alignment with the strategic objectives of the organisation?
− Does it provide value to the organisation and how critical is it?
− How well does it function in the current business environment and how well
could it adapt if the environment were to change?
− What are the risks to the process (external, environmental or internal) and can
the process adapt to survive those risks?

July 3, 2010 155

Organisational Culture/Context

• Every organisation has a culture that impacts and is
impacted by the internal and external processes of that
organisation
− How work is performed
− What motivates the members of the organisation to do the work
− By changing the process by which they work, the culture may also
change
− May lead to unintended consequences as new processes are put
into place
• Part of the analysis process is to ask questions that will
help understand the culture of the organisation and those
unwritten rules that determine how and by who work is
really accomplished

July 3, 2010 156


• Leadership
− Who in the organisation are the influencers and leaders?
− Are they in positions of authority?
− If they do not agree with the process improvements, will the improvement be
successful?
• Social Networks
− What kind of social networks exist in the organisation?
− How will any changes affect those social networks?
− If individuals will be displaced as a result of a process change, what would be
the anticipated result of these networks?
• Personnel Change
− Will individuals voluntarily leave the company as a result of the process
change?
− If so, how will this disrupt the process?

July 3, 2010 157


• Motivation
− What is the motivating factor for production?
− If the workers are not self-motivated
− how does work get done?
− What are the incentives that reward work output?
− If the success of a process has been measured on quantity as opposed to
quality, what will happen if the measurement is shifted to quality?
− Will the organisation stop producing to ensure quality?
• Change
− How will the change affect the leadership training in the organisation?
− What is the motivating factor for promotion?
− Will the goals for measuring leadership change?
− How will the reason for the process change be interpreted by the individuals
− effected or responsible for the process?
− Is it a sign of weakness in the organisation or strategy?

July 3, 2010 158

Performance Metrics

• Performance issues can be defined as gaps between how a
process is currently performing in relation to how it should
be performing
• A methodical analysis can help to understand the nature of
the gaps, why they exist and how the situation can be
rectified
• Key element of this understanding is the identification of
actionable and auditable metrics that accurately indicate
process performance
− Metrics will provide indicators as to where and how a process
should be adjusted

July 3, 2010 159

Performance Metrics

• Is the process meeting its performance goals?
• Does the process take too long and if so, why and what is the
measurement of “too long”?
• What could happen to make it worse?
• How would we know if the process has improved, i.e., if time is the
measurement of the process, can cost be ignored or if cost is the
measurement of the process, can time be ignored?
• How is data reported about the process, who views this data and
what do they do with it?
• Where should performance points be recorded so the process is
accurately measured and monitored?
• Would entering these performance points affect the performance of
the process?

July 3, 2010 160

Customer Interactions

• Understanding the customer interactions with the process
is critical to understanding whether the process is a
positive factor in the success of the organisation’s value
chain
• The fewer the number of required interactions between
the customer and a given service, the more satisfied the
customer

July 3, 2010 161

Customer Interactions

• Who is the customer, what is his need, why does he choose to
participate in the process and could he go elsewhere instead of using
this process?
• Do customers complain about the process?
• How many times does a customer interact with the process? Is it too
many? Are there redundancies in the interactions?
• How do we know if they are satisfied?
• What is the customer's expectation or objective with the process
and why does he need the process?
• How does the customer want to interact with the process?
• If the process supports internal activities, what is the impact or
indirect effects to the customer?
July 3, 2010 162

Handoffs

• Any point in a process where work or information passes from one
system, person or group to another is a handoff for that process
• Handoffs are very vulnerable to process disconnections and should
be analysed closely
• Typically, the fewer number of handoffs, the more successful the
process
• Which of the handoffs are most likely to break down the process?
• Questions to ask of each handoff:
− Are there any bottlenecks of information or services as a result of handoffs
happening too quickly?
− Can any handoff be eliminated?
− Where do streams of information come together and is the timing accurate?

July 3, 2010 163

Business Rules

• Business rules create constraints that impact the nature
and performance of the process
• Help define the performance expectations
• Create clear guidelines around these expectations
• Often business rules are created without an understanding
of why they exist or are so outdated that they no longer
apply but because of organisational culture they still are
being followed

July 3, 2010 164

Business Rules

• Do the current business rules cause obstacles by requiring
unnecessary approvals, steps or other constraints that
should be eliminated?
• Are the business rules in alignment with the objectives of
the organisation?
• Who created the business rules and upon what were they
based?
• When were the rules created and does their need exist?
• If the rules were eliminated, what would be the result?
• How flexible is the process to accommodate changes in the
business rules?

July 3, 2010 165

Capacity

• Analysing the capacity of the process tests upper and
lower limits and determines whether the resources
(machine or human) can appropriately scale to meet the
demands
− Is the process scalable and if inputs were increased, at what point
will the process break down?
− What would happen if the process slowed down and what is the
cost of the idle time of the process? If idle, can those resources be
put to work on other processes?
− What happens when the process cannot get supplies and
materials quickly enough to meet demand?
− If the process speeds up can the consumer of the process handle
the increase in production?
July 3, 2010 166

Bottlenecks

• A bottleneck is a constraint in the process that creates a backlog of
work to be done
− What is being constrained: information, product, service?
− Why does the bottleneck exist, what are the factors contributing to the
bottleneck and are these factors people, systems or organisational?
− Is it the bottleneck the result of handoffs or lack of information?
− Is the bottleneck the result of a resource constraint and what type of resource:
human, system or machinery?
− Are there unnecessary check points that create the bottleneck that can be
eliminated?
− If multiple streams are processing information in parallel, do the streams come
together at the same time or is one waiting for the other?
− Does the process create a backlog upstream or downstream from the process?

July 3, 2010 167

Variation

• Variation in the process may not be good
• Variation slows down the process and requires more
resources to properly scale
• If the nature of the business requires variation as its core
business strategy then look for places where some of the
variation can be reduced which could save on the overall
cycle time of the process
• How much variation is tolerable for the process?
− Is variation necessary or desirable?
− Where are the points where variation is most likely to occur? Can
they be eliminated and if so, what are some recommendations?
− Can automation help eliminate variation

July 3, 2010 168

Cost

• Understanding the cost of the process helps the team
understand the value of the process in real money to the
organisation
− What is the total cost of the process?
− Can the process be broken up into small cost allocations?
− Is the cost in line with industry best practices?
− Is the cost absorbed by the customer directly or is it a cost of
business?
− Can the cost be reduced through automation or technology
improvements? If so, how and by what extent?

July 3, 2010 169

Human Involvement

• Processes involve either automated activities or activities
performed by people
• Automated activities generally run consistently and when
they do not it is possible to find and correct the situation
that is causing the problem
• Activities performed by people are more complex as they
involve judgment and skill that cannot be automated
− People do not always do the same task in the same way

July 3, 2010 170

Human Involvement

• How much variability is introduced by the human element? Is the variability
• tolerable?
• Can the action be automated? What would be the result to the process? What
would be the result to the human element and to the culture of the organisation?
• How complex is the task? What are the skill sets required? How are performers
trained for the task?
• How do the performers of the task respond to external events during the task?
• How does the performer know when the task is done well? What feedback
systems are in place to guide the performer? What can the performer do with this
feed back – what can he or she change with this knowledge?
• Does the performer know where the task lies in the process and what the results
of the actions are downstream? Does he /she know what happens before the
task? What does the performer do with variations in the inputs for the task?
• Can the performer identify variations before the task is completed?
• What is the motivation for performing the task or performing the task well?
• How much knowledge is available to the performer to accomplish this task? Is it
sufficient?

July 3, 2010 171

Process Controls

• Process controls are put in place to ensure adherence to
legal, regulatory or financial constraints or obligations
• Process controls are different from control processes
− Process controls defines the control
− Control processes defines the steps to achieve that control
• Questions to assist in understanding what process controls
are in place
− What are the environmental impacts of the process and do those
impacts need to be controlled?
− Who are the regulatory or governing agencies that will regulate
the process and do they need to be informed of the process
change?
July 3, 2010 172

Other Factors

• Purpose of the discussion topics is to initiate and
encourage discussion about the process
• Other discussion topics not mentioned will naturally arise
during the process analysis and should be explored
• Some of the topics noted above might not apply to the
process being analysed
• The analysis must encompass a variety of techniques and
topics to achieve a complete and well rounded
understanding of the process

July 3, 2010 173

Gathering Information

• Next step in the analysis is for the analyst or team to gather as much
relevant information about the process and business environment as
possible
• Types of information gathered depend on the business and process
being analysed
− The strategic information about the company such as long term strategy,
markets, threats, opportunities, etc.
− A company's performance in comparison to its peers or benchmarked to other
related industries
− The rationale for the process analysis and at who's request
− The fit of the process into the organisation
− The people who should be involved in the process analysis project
• Sources of information
− Interviews with individuals involved in the process
− Performance records/transaction reviews on the process and walkthroughs of
the process
− Audit reports

July 3, 2010 174

Interviewing

• Interviews those who are involved in or are associated
with the process are an important method of gathering
information and preparing for the process analysis
− Process owners, internal or external stakeholders (vendors,
customers or partners), those who work the process and those
who pass inputs to or receive outputs from the process
• Face-to-face setting is more productive as they allow for
greater dialog and discussion about what is or was actually
happening
• Group interview performed by a facilitator can also be
effective in generating discussion about processes

July 3, 2010 175

Observing

• Direct observation of the process is an important method
of gathering information
− Directly observing the systems or observing the human
interactions with the process, observing the process will help
create an understanding of what the process is actually doing
• During an analytical observation of a process, further
questions and interviews need to be conducted to better
understand a certain point
• Interviews and fact finding should take place throughout
the analysis process

July 3, 2010 176

Researching

• Research any documentation or notes regarding the
existing process
− Written documentation created when the process was created,
transaction or audit logs, process diagrams, etc.

July 3, 2010 177

Analysing the Business Environment

• Before understanding a business process, must also understand how
the business and the business environment interact
− Includes understanding the market, the external factors affecting that market,
the customer's demographics and needs, business strategy, the suppliers and
how work transforms to meet the needs of the customers
• As the business environment changes over time, so must the
organisation's processes
• The business analysis helps understand those environmental
changes that took place since the process was first created and can
help explain the reasons for poor performance of a process
− Understanding these relationships is important to understand how processes
might need to change
• Business environment analysis methods
− Value Chain Analysis
− SWOT

July 3, 2010 178

Value Chain Analysis

• Generic value chain model that introduced a sequence of
five primary and several support activities that are fairly
common through most organisations
• Easy to see the relationship of the value chain to standard
process management principles:
− Inbound logistics (inputs)
− Operations (acting on inputs to create value)
− Output and distribution logistics (outputs)
− Sales, marketing, etc.
− Service and support

July 3, 2010 179


Operational Processes With Cross Functional Linkages

Output and
Inbound Marketing and Service and
Operations Distribution
Logistics Sales Support
Logistics

Management and Support Processes

Human Information
Financial Facilities
Resource Technology
Management Management

Legal,
Regulatory, Knowledge,
External
Environment, Improvement
Relationship
Health and and Change
Management
Safety Management
Management

July 3, 2010 180


• A value chain analysis enables the process analyst to look
at the process from a macro view that includes suppliers,
vendors, customers, etc.
• Identify weaknesses in the process that might occur
upstream or downstream from the actual process itself

July 3, 2010 181

SWOT (Strengths, Weaknesses, Opportunities and
Threats) Analysis
• SWOT analysis can assist the analyst in understanding the
customer or their target market and what tolerances for
process inefficiencies exist for the customer within their
market
• Most markets, however, do not have a high degree of
tolerance for process inefficiency and, therefore, should be
considered volatile and highly effected by the process of
the organisation
• SWOT analysis headings provide a good framework for
reviewing strategy, position and direction of a company or
business proposition or any idea

July 3, 2010 182

Analysing Information Systems

• Information systems analysis is possibly the easiest type of
analysis to perform as it requires fewer individuals and is
easier to base upon fact and not opinion
− Information Flow Analysis
− Discrete Event Simulation

July 3, 2010 183

Information Flow Analysis

• Information flow analysis/data flow analysis) seeks to understand
how data flows through a system and to understand how those
points interact with that data through the process
• Data or information followed can be from any number of sources
• Interactions with that data, be it system or human, are charted from
the beginning point to the end point
• Helps uncover bottlenecks, unneeded queues or batches and non-
value-added interactions to the data
• Assists in uncovering business rules that should or should not be
applied based on the data
− Include how long the data should be in a valid state before it is archived or
destroyed, who is able to see the data, how secure data should be or the
reporting processes that need to interact with the data

July 3, 2010 184

Discrete Event Simulation

• Used to record the time of an event or a change in the
state of an event
• Event can include the time a customer order was received
and when the order was actually shipped
• Data derived from this analysis can assist the analyst in
discovering bottlenecks and isolating event or activity
specific breakdowns
• Discrete event simulation can be used when simulating
new processes during the design stage of the process
improvement project

July 3, 2010 185

Analysing the Process

• Various analytical tools/approaches are often used to extract
information about a process such as how long the process takes, the
quantity of product through the process, the cost of the process, etc.
• Select and use the most appropriate tools/approaches
− Creating Models
− Cost Analysis
− Transaction Cost Analysis
− Cycle-Time Analysis
− Pattern Analysis
− Decision Analysis
− Distribution Analysis
− Root-Cause Analysis
− Sensitivity Analysis
− Risk Analysis

July 3, 2010 186


• Creating Models
− Process models are often used to show processes and the various interactions with the
process
• Cost Analysis
− Also known as activity based costing
− Analysis is a list of the cost per activity totaled to comprise the cost of the process
− Used to gain an understanding and appreciation of the true cost associated with a
product or service
− Understand the real cost spent on the process so it can be compared to the value in the
new process, the goal being decreased costs or if increased efficiency, than the value of
the increase in production compared against the cost
• Transaction Cost Analysis
− Analyse how much time and resources are used for each transaction processed by the
application
− Can quickly uncover bottlenecks in the application as well as bottlenecks in business
processes as they interact with the system
• As most processes are dependent on some sort of automated system, the interaction and cost
per transaction of the system is critical to understanding the system

July 3, 2010 187


• Cycle-Time Analysis
− Looks at the time each activity takes within the process
− Each activity is measured from the time the input begins the activity until the activity
creates the desired output including the time any subsequent activity begins
− Analyse the process in terms of the time the process takes to complete with the goal of
reducing that time
− Uncover bottlenecks and potential bottlenecks within the process that prevent the
process from performing correctly
− Assists in discovering non value added activities that do not contribute to the process
output
• Pattern Analysis
− Looks for patterns within the process that can be streamlined into a single sub-process
to obtain efficiencies
− Systems and activities within organisations tend to mimic themselves within the same
organisation
− By recognising these patterns in the organisation it is possible to find duplications
• Decision Analysis
− Examine the relationship between a decision and its outcome
− Discover why a process has taken shape over time and assist in creating a new
− process

July 3, 2010 188


• Distribution Analysis
− Comparison of attribute-based data
− Plotted on a chart to show the comparisons of the data points
− shape of the distribution curve helps to identify the biggest population of data
affected by a particular attribute in the data
− Assist in predicting the probability of an outcome
− Assist in understanding the degree of variation that exists within the data
• Root-Cause Analysis
− After the event analysis used to discover what truly caused a given outcome
− Finding the root cause for an outcome is not always as easy as it may seem as
there may be many contributing factors
− Process of finding the root cause includes data gathering, investigation and
cause and effect relationship diagramming to eliminate outcomes

July 3, 2010 189


• Sensitivity Analysis
− A “what if” analysis that tries to determine the outcome of changes to the
parameters or to the activities in a process
− Helps understand the quality of the process
• Responsiveness
− Measurement of how well the process will handle changes to the various
parameters of the process such as an increase or decrease of certain inputs,
increasing or decreasing the arrival time of certain inputs
− Know how quickly the process will flow
− How much work the process can handle
− Where the bottlenecks will occur given any set of parameters
• Variability
− Measurement of how the output of the process changes through the varying of
parameters in the process
− Often, one of the goals in performance improvement is to eliminate variability in
the outcome
− Knowing how variability in the parameters affects the outcome is an important
− step to understanding the process

July 3, 2010 190


• Risk Analysis
− Examines the effects of the process under external pressures such
as factors affecting the supply chain, thereby having an adverse
effect
− Aims to consider what would happen to the process should any of
these scenarios happen and ultimately what the outcome would
be

July 3, 2010 191

Analysing Human Interactions

• Many processes require some type of direct human involvement to
ensure progression of the process
• These processes that usually require the most analysis to attain an
understanding of the process
• Various techniques can be used to assist in creating that
understanding
− Direct Observation
− Apprentice Learning
− Participatory Video Analysis
− Activity Simulation
− Workplace Layout Analysis
− Resource Allocation Analysis
− Motivation and Reward Analysis

July 3, 2010 192


• Direct Observation
− Much can be learned by just watching process performers in action
− They are the experts and generally have found efficient ways to do what they
have been asked to do within the constraints that have been imposed on them
− Primary advantage of direct observation is that the analyst can see the current
process firsthand
− As a worker may work seamlessly from “transactional based” to “knowledge
based” work it may be difficult to observe and document all of the actions and
knowledge required for the human interaction
− Observation can be a disadvantage causing a slightly altered behaviour by the
performer
• Does the performer know how what he does impacts the results of the overall
process and customer of that process?
• Does the performer know what happens in the overall process or is he simply
working in a black box
• What criteria does he use to know whether at the end of each performance cycle he
has done a good job? Could he change anything with that knowledge? Would he
want to?

July 3, 2010 193


• Apprentice Learning
− The performer teaches the analyst the job which can yield
additional detail about the process
− By teaching, the performer has cause to think about aspects of
the process that might occur subconsciously
− By performing the process, the analyst has a greater appreciation
for the physical aspects of the activity and can better assess the
details of the operation
• Participatory Video Analysis
− Record with video the actions of the performer
− Note that there may be liability and personal intrusion issues with
− taping the actions of anyone
− Performer can be asked at a later time to narrate the recording,
providing additional information about the actions
July 3, 2010 194


• Activity Simulation
− Simulation of the activities involved in a process
− Step through each activity, observing its inputs, outputs and the business rules
that govern its behaviour
− Group of process participants each take the role of a process participant and
talk through the process
− Handoffs from one performer to the next can be observed to ensure all needed
inputs are available for the next activity and from what source
• Workplace Layout Analysis
− Physical analysis of a work place, assembly line or manufacturing floor space
− Quickly uncover queuing or batch related bottlenecks, disconnections and
duplicated efforts as work items are transferred from one physical location to
another
− Useful for any process that involves a physical space where activities are
performed and handed off between individuals, groups, machines, etc.

July 3, 2010 195


• Resource Allocation Analysis
− Study of the resources required to complete each task
− Takes into perspective the skills of the resources and abilities of tools or other
automated systems in meeting the needs that a process demands
− Aims to discover if it is not the process but the resources that are inefficient in working
through the process
− Seeks to determine why an activity takes a given amount of time
− Consider what the resource is capable of accomplishing and asks whether the skills and
training are sufficient to perform the activity adequately
− Examines whether the resource is constrained
− Can uncover bottlenecks that can be improved with little cost or change in
infrastructure given the organisation's ability to manage human resource issues
• Motivation and Reward Analysis
− Examination of the human motivational and reward systems in place for the process
− Understanding those motivations and rewards as a process is analysed will help uncover
unseen disconnects and bottlenecks in the process
− Motivation and reward analysis should also consider what rewards should be in place to
positively affect any new process or activity that is introduced

July 3, 2010 196

Document the Analysis

• Final step in an analysis is the generation of the reports and other documentation
• Should clearly present an understanding of the current state but does not and
should not need to do more than that
• Acts as a formal agreement among those that participated as to the accuracy of
the analysis
• Forms the basis to present the results of the analysis to management
• Contents
− Overview of the business environment wherein the process lives
− Purpose of the process (why it exists)
− Process model (what it does) including inputs to the process and outputs
− Gaps in performance of the process (why it needs to be re-engineered)
− Reasons and causes for the gaps in the process performance
− Redundancies in the process that could be eliminated and the expected savings as a
result
− Recommended solutions

July 3, 2010 197

Analysis Issues and Considerations

• Analysis critical success factors, possible practices and some of the
pitfalls that should be avoided during a process analysis
− Executive Leadership
− Organisational Process Maturity
− Avoid Designing Solutions
− Paralysis from Analysis
− Analyse with Metrics
− Proper Time and Resource Allocation
− Customer Interaction
− Benchmarking
− Understanding Organisation Culture
− Avoiding Blame
− Potential Threat
− Threat of Obsolescence

July 3, 2010 198


• Executive Leadership
− Important factor to ensure success during any stage in a process improvement project is
the support and direct encouragement of the executive leadership team
− Otherwise getting proper funding and necessary resources for the duration of the
project will be difficult
− Ideally should be the primary driver behind the process improvement project
− Should be made aware of and provide full support to the process engineering or
improvement project
− May be necessary to convince the leadership team of the benefits of a process
improvement project through the completion of a few small projects that show the
gains in real money to the organisation through effective process reengineering
• Organisational Process Maturity
− Important to understand the business process maturity of the organisation
− Helps define the level of analysis preparation needed
− An organisation that is relatively new to the idea of process management will need,
first, to be briefed on the concepts of process management
− Need to understand the purpose of process management and the benefits it will
provide the organisation

July 3, 2010 199


• Avoid Designing Solutions
− During the analysis process possible solutions to process problems will arise
− Members of the analysis team will want to explore these solutions and
sometimes begin work immediately on designing that solution
− Unwise to create a solution design before completing the analysis
− Do not discourage suggestions for solving process problems that are uncovered
during the analysis process but park them for later review
• Paralysis from Analysis
− Possible to do too much analysis
− May be a tendency to want to document each minor detail about each activity
that happens in a process
− Detail can quickly become tedious and those involved in the process
improvement team can lose interest
− If the analysis is prolonged, members assigned to the project may not have the
time necessary to remain dedicated to the project due to other commitments
− If it happens it is time for the team to step back and take another look at the
goals of the project and to simplify the analysis

July 3, 2010 200


• Analyse with Metrics
− Use of metrics throughout the analysis is critical to receiving the validation of
the analysis from the leadership or sponsors of the analysis
− Validate the results of the analysis with appropriate metrics, such as cost, time,
etc, related back to the objective of the process
• Proper Time and Resource Allocation
− Resources assigned to improvement projects may also have mission-critical
responsibilities in the organisation
− Wise to get the most knowledgeable individuals on the process improvement
team but it is usually those same individuals who are critical to running the
business
− Important that those who are assigning the resources allow those resources
appropriate time away from daily responsibilities to complete the project

July 3, 2010 201


• Customer Interaction
− Important factors leading to a successful analysis is the consideration of the customer
within the process
− If a process appears to work within the context of the organisation it may not
necessarily work for the customer
− Without considering the customer in the process, customer satisfaction will be
sacrificed and the process will not result in the increased performance as expected
• Benchmarking
• Good practice to compare the performance of a process to similar processes in the
same or similar industries or even different industries
− Investigate direct competitors and analyse how processes compare to competitor
processes and considers competitive advantages
− Analyse organisations in the same industry that are not direct competitors – may be
willing to assist in providing detailed information and in discussing design features of
their processes
− Identify processes that are similar to the process being analysed but exist as best
practices in other industries - escape the “group think” syndrome that often exists when
organisations only look within their own company or industry
• Understanding and analysing these benchmarks in relation to the processes being
analysed will help the analyst team understand the performance potential of the
process and its weaknesses in achieving that performance
July 3, 2010 202


• Understanding Organisation Culture
− Understanding the culture of an organisation is important to the
success of the analysis and ultimately the design and
implementation of the new process
− Ensure that the analysis presented not only represents the true
organisation but is accepted by the organisation as such
• Avoiding Blame
− If any change to a new process is to be successful, it is vital that
the analysis avoids any accusation of problems that exist in
processes toward any individual or group
− By simply stating the facts, the analysis will more likely be
accepted as a correct understanding of the current state and
avoid any finger pointing that can result
July 3, 2010 203


• Potential Threat
− Process analysis could be considered as a threat by the owner of that process
− Process owner can potentially misinterpret the analysis as a criticism about the
way the process has been managed
− Important for the leadership team to negotiate the situation and insist that the
project is not a threat but a necessary part of doing business
• Threat of Obsolescence
− Mistrust of terms like process improvement
− Employees who are interviewed could resent the fact that a process
improvement project is beginning as they could associate that with a pending
layoff as their job disappears through outsourcing, technology or any number
of different reasons
− Critical for the executive leadership and the analyst to manage this situation
and any rumors that may result to prevent any explosive situation from
occurring

July 3, 2010 204

Analysis Summary

• Process analysis serves to create a common understanding of the current state of a process and
whether it is meeting the goals of the organisation within the current business environment
• Process analysis can occur at any time the organisation considers it necessary but the
organisation should have a goal to continuously monitor processes as opposed to waiting for
single events to trigger a process analysis
• The various individuals that assist with process analysis include executive leadership and a cross-
functional team including stakeholders and subject matter experts and process analysis
professionals
• The analysis should find an explanation of the interaction of the process within the business and find
any of the following disconnections:
− Performance goals not being reached
− Failing customer interactions
− Handoffs that create disconnections
− Process variations
− Bottlenecks
• Many analysis techniques can be used during the process analysis to obtain the type of information
necessary for the process being analysed
− Techniques used should consider human performance systems, technology, modelling tools, business
environment and strategy assessments
• Process methodologies and frameworks help guide the process analysis down a commonly
accepted path to achieve best results
• Critical success factors for a successful process analysis include: executive leadership, considering
metrics, benchmarks, customer interactions and cultural considerations as they relate to the process

July 3, 2010 205

Process Design

July 3, 2010 206

Process Design Topic Scope
Process Design

Purpose of Process Design Preparing for Process Design Process
Process Rules Considerations
Process Design Roles Process Design Principles Compliance

Key Activities/ Design Around Design Around
Executive Executive
Roadmap for Customer Value-Adding
Leadership Leadership
Design Interactions Activities

Work is
Process Design Designing the Minimise Performed Where Process
Team New Process Handoffs it Makes the Most Ownership
Sense

Defining Activities Create a Separate
Subject Matter Provide a Single Incentive and
Within the New Process for Each
Experts Point of Contact Rewards
Process Cluster

Participants/ Comparison to Ensure a Cross-Functional
Reduce Batch Size
Stakeholders Existing Process Continuous Flow Teams

Bring Capture
Creating a Downstream Information Once Continuous
Customer
Physical Design Information at the Source and Improvement
Needs Upstream Share It

IT Infrastructure
Involve as Few as Redesign, then Commitment to
Project Manager Analysis and
Possible Automate Investment
Design

Creating an
Ensure Quality at Standardise Alignment with
Facilitator Implementation
the Beginning Processes Strategy
Plan

Use Co-located or Consider
Model Simulation Networked Teams Outsourcing
Process Owners
and Testing for Complex Business
Issues Processes
July 3, 2010 207

Process Design

• Creation of specifications for new and modified business
processes within the context of:
− Business goals
− Process performance objectives
− Workflows
− Business applications
− Technology platforms
− Data resources
− Financial and operational controls
− Integration with other internal and external processes
• Should include both:
− Logical design - what activities are performed
− Physical design - how the activities are performed
July 3, 2010 208

Purpose of Process Design

• The purpose of business process management is to ensure
that an organisation’s processes are effective, agile and
efficient
• Develop plan for the desired state whether it is for a
process redesign or the development of a new process
• Bypassing process design and moving directly into
implementation with preconceived assumptions will
inevitably lead to problems with the process and force
future re-design efforts
• Building a process must likewise start by creating a design
blueprint
July 3, 2010 209

Process Design Roles

• Roles that play an important part in the definition of process design
− Process Design Team
− Subject Matter Experts
− Participants/Stakeholders
− Customer
− Project Manager
− Facilitator
− Process Owners
• Level of involvement of each depends on the scope of the process and the degree
of the change
• Transformational process changes that affect the entire enterprise must have a
top-down approach involving everyone within the company and be led by the
executive management team
• Departmental or process specific improvements require more of a bottom-up
approach to process improvement and involve only those individuals and groups
necessary to effect the change within the scope of that process

July 3, 2010 210

− Support and agree to the design changes before they are implemented
− Ensure that the process designed will correctly meet the needs of the
organisation
• Process Design Team
− Cross-functional team of individuals that represent the stakeholders,
participants, subject matter experts and (possibly) customers that interact
within the process
− Validate the design with stakeholders, participants and customers
− Individuals that are closest to the process and have the expertise necessary to
ensure the process is a success
− Individuals from every business function that touches the process should be
part of the design team
− Since technology is used most often to manage the processes and interact with
existing systems, the IT organisation must also be engaged early in the
initiative to ensure that any processes (or systems to monitor and control
those processes) can be achieved through the available technology in the
organisation

July 3, 2010 211


• Participants/Stakeholders
− Anyone who participates in or has activities that affect the process
− Play a critical role in defining the business process through outlining the activities that
comprise the new process
− Play a critical part in the design process and they work closely with the process owner
to ensure their interests in the performance of the new process are sufficiently met
• Customer
− Process improvement revolves around customer expectations
− Customer should be allowed to test the process and comment on its effectiveness
− Involving the customer during the design stage increases the chances that the goals of
the process and the customer's expected outcome are properly addressed
• Project Manager
− Assign a project manager to manage the process improvement initiative
− Responsible for the schedule and steps involved in achieving the stated goals of the
initiative
− Manages project plan, communication plan, managing scope and mitigating risk

July 3, 2010 212


• Facilitator
− Leads the team through the development of the future design of
the processes
− Should be a process professional with knowledge in both business
processes and the needs of the organisation
• Process Owners
− Help ensure that the new design meets the required objectives
while remaining within the assigned budget

July 3, 2010 213

Preparing for Process Design

• Before beginning any process design review those deliverables from
the analysis stage
− Processes in the organisation are listed, weighted and prioritised
− Reveals a clear picture of the weaknesses of the current process or processes
− Helps decide which are to be redesigned and in what order
• Should include current state documentation, a clear scope
statement for the design and a list of constraints
• Select the methodology and modelling tools that best fit the
organisation and the desired goal in the process design
• Degree of the change can be assessed to make either incremental or
large scale systemic changes
• Making frequent, small changes can have an equally significant
effect on process performance as large radical changes, provided
there is a clear and accepted vision of the future state

July 3, 2010 214

Preparing for Process Design

• Key Activities/Roadmap for Design
− Designing the New Process
− Defining Activities within the New Process
• Defining rules that control the activities
• Defining handoffs of process between functional groups
• Defining desired metrics in the new process
− Comparison to Existing Process
− Creating a Physical Design
− IT Infrastructure Analysis and Design
− Model Simulation and Testing
− Creating an Implementation Plan
• General set of activities
− Do not necessarily always occur in that order
− Activities can occur simultaneously

July 3, 2010 215

Designing the New Process

• Many ways to design the new process from using simple white
boards through sophisticated software modelling tools that allow
the storage and retrieval of processes
• Many different informational gathering activities that can be used to
facilitate the creation of the model
• Process modelling provides a discipline to ensure that the model
created matches the expected outcome
• Serves as written documentation of the process and detailed activity
descriptions, customer interactions, business rules and outputs
• Important to involve as many people from the different functions
that interact with the process as possible, thus utilising the breadth
of experience and knowledge of those closest to the process
• Ensures that the process truly reflects what the organisation can
accomplish
• Simplest designs are most often the best designs

July 3, 2010 216

Defining Activities within the New Process

• Activities are a series of steps that are performed to execute a process
− Order fulfillment process
• Entering the order
• Packing the order
• Shipping the order
• Billing for the order
− Each one must be performed for the order process to be complete and often the steps
depend on one another and so must be completed in sequence
• Any method the organisation chooses is valid as long as the activities can be
placed in order and can represent the final process design when completed
• Key to a successful outcome is to focus on the activities, not the actors
• Keep the process as simple as possible
− More simple a process the more likely it will be completed without error
• Activities that can be completed in parallel with other activities help move a
process along faster

July 3, 2010 217

Comparison to Existing Process

• New process should also be compared to the existing state
• Comparison allows a gap analysis to be performed which will show the level and scope of
the change
− Provides information that can demonstrate the savings that can be generated by the new process
once the process is implemented
− Helps build the case for the new process which will assist in managing resistance to change
− Also allows the process design team to revisit the existing state and ensures that the new design
does, in fact, meet the expected goals and resolve the issues discovered in the analysis stage
• Existing process analysis event or transaction history provides information about conditions
that created variation in process execution and performance
• Evaluation of this history may suggest critical factors, e.g., event frequency, event workload
or event complexity that, in turn, could offer a set of event-action scenarios that the
proposed process must accommodate
− Scenarios must be tested to assess the robustness of the proposed design
• Through the documentation of the gap between the old and new process, the information
provides weight to the need for the organisation to manage by process
− Can also show the degree of the savings that can be achieved via process improvements in other
areas of the organisation

July 3, 2010 218

Creating a Physical Design

• Previous steps focussed on generating a logical design containing a
coherent description of WHAT activities are to be included and their
order of execution
− Expected business value
− Relevant performance metrics
− Delineation of the appropriate activities and tasks
− Linkages to other internal and external business processes
• Physical design determines HOW each activity or task is to be
performed, manual or automated, means or a combination of each
• Degree of detail to be planned, documented and evaluated for a
physical design is dependent upon the magnitude of the business
process change
• Contains
− Indicative budget that includes more detailed development and operating
costs is evaluated for financial feasibility
− Acceptance by organisational stakeholders
− Timeline for implementation
July 3, 2010 219

IT Infrastructure Analysis and Design

• IT generally plays a key roles throughout the process design stage
− Most processes involve a degree of automation in information flow
− Technology can be the vehicle to enhance process performance
• Involving IT in the design stage ensures that the process can be
automated and that data can flow seamlessly between systems and
activities within the process
− What software or systems best match the needs of the process?
− Are there limitations in the current infrastructure that limit the design?
− Can the design be implemented quickly?
− What will be the impact to the organisation?
− Can a staged approach be employed?
− What will the new implementation cost (including training, technology, etc.)?
− Are there vendors that can assist in the implementation?

July 3, 2010 220

Creating an Implementation Plan

• Create an understanding of implementation concerns at all
stages of the process improvement initiative, especially
during the design stage
• Documented and referenced concerns as they are
discovered
− Define change management techniques that ensure employee
support of the new process
− Identifying which existing systems will be affected including how
change to these systems should be accomplished (incremental
shift or immediate change)
− Whether the new process will be piloted or tested
• Create implementation plan to appropriately address
these concerns
July 3, 2010 221

Model Simulation and Testing

• New process should be tested to ensure that it will work as intended
and that the expected results are achieved
• Number of approaches to test a new process: role-play, practice run
or run a simulation of the new design
• Role-playing
− Assigning relevant process roles to people
− Walk through process
• Practice run
− Real inputs are used and the people who will actually be working in the process
participate
• Simulation
• Use software new to test process flow and key performance metrics
under various scenarios to find bottlenecks and other problems

July 3, 2010 222


• Always a good to try and break the new design during these test
runs
• New process can be debugged without any negative consequences
• Increase the volume that goes through the process or add
complexity to the inputs thereby challenging the process to identify
weak spots, bottlenecks, quality and coordination issues
• Problems can be addressed and solved safely without harming
customer relationships or creating negative consequences
associated with actual process operation
• Can demonstrate the dependability of the new design
• See the new process working and have questions and concerns
addressed

July 3, 2010 223


• Test the design in a pilot - new design is run for real but
the scope of the process is constrained
• Involves real products, customers and services so
problems can have negative consequences
− Risk is constrained
− Closely monitored so if a problem does occur, it can be fixed
immediately
− People working in the pilot can become trainers as it is introduced
to the rest of the organisation
− Provides information as to the effectiveness of the process
− Creates organisational acceptance and enthusiasm for the change

July 3, 2010 224

Process Design Principles

• Process design principles represent the major concepts involved in most process redesign
projects
− Design around Customer Interactions
− Design around Value-Adding Activities
− Minimise Handoffs
− Work is Performed Where it Makes the Most Sense
− Provide a Single Point of Contact
− Create a Separate Process for Each Cluster
− Ensure a Continuous Flow
− Reduce Batch Size
− Bring Downstream Information Needs Upstream
− Capture Information Once at the Source and Share It
− Involve as Few as Possible
− Redesign, then Automate
− Ensure Quality at the Beginning
− Standardise Processes
− Use Co-located or Networked Teams for Complex Issues
− Consider Outsourcing Business Processes
• Not every design principle applies to every process
• Use as a checklist when reviewing a process design
• Always use common sense when applying them

July 3, 2010 225

Design around Customer Interactions

• Customer interactions represent a point of contact into the
organisation
− Represent opportunities to show the success or failure in meeting the needs of
the customer
− Opportunity to enhance the reputation of the organisation
− Customer experience is the sum of the quality of each customer contact point
• When considering customer interactions during the design stage of
process improvement, consider all the different opportunities where
the customer could contact the organisation
• Customer experience is dependent on
− The primary business processes that directly interact with the customer
− The internal support processes that indirectly influence customer experience
quality

July 3, 2010 226

Design around Value-Adding Activities

• Requires a clear understanding of what the customer of the process
needs
• Transforming information or material to meet customer
requirements creates value-adding activities
• Any step the customer is willing to pay for, such as a service, is also
value-adding
• Study the as-is process and determine exactly where the value-
adding activities are performed
• Extract the activities from the as-is process and explore a means to
enable the value-adding activities efficiently and effectively
• Seeking to eliminate non-value-adding activities can create hostile
relationships with people involved in the work

July 3, 2010 227

Minimise Handoffs

• When ownership of an activity or information is passed
from one individual to another
• Handoffs between individuals or functional groups present
an opportunity for a breakdown in the process
− Data can be lost or misinterpreted
• Simplify and limit handoffs when possible
• Automating handoffs through technology will also assist in
reducing errors and speed up the activity between
individuals and groups

July 3, 2010 228

Work is Performed Where it Makes the Most Sense

• Task assignment occurs after an effective process flow is
designed
• Create the roles necessary to enable the process flow to
operate with the greatest efficiency and effectiveness
• Application of this design principle may negate some
existing work, create new work and/or may move work
from one location to another

July 3, 2010 229

Provide a Single Point of Contact

• A common symptom of not having a single point of contact
is multiple transfers of customers’ contact
• A single point of contact can be a person such as a project
manager, process consultant, customer service
representative or a data repository

July 3, 2010 230

Create a Separate Process for Each Cluster

• Frequently a single process attempts to handle every
variation
• Process inputs and outputs can often vary by complexity,
type, size and so on
• If inputs naturally cluster from significant differences then
create a sub-process that is most appropriate for this
cluster
• Additional resources and costs could be introduced, but
efficiency of throughput and greater client satisfaction
should occur
• Input cluster is then routed to the appropriate process
July 3, 2010 231

Ensure a Continuous Flow

• Steps that directly add value to the customer such as
delivering supplies, building the product and shipping it,
represent the main sequence or value stream
• Customer receives/pays for the output of the value stream
• Nothing should impede or slow down the value stream

July 3, 2010 232

Reduce Batch Size

• Batching causes wait time for items at the end of the batch
• Batching causes work to build as it moves through your
process
• Cutting batch sizes creates a smoother flow through the
process
• A batch size of one or processing transactions in real-time
is ideal

July 3, 2010 233

Bring Downstream Information Needs Upstream

• Explore, at each step of the process, what may cause
frustration/problems/issues
• Two ways of implementing
− If the process is routine and not complex, the upstream person
should be trained or given a template or check sheet to capture
what the downstream person needs
− For complex processes, the downstream person must be brought
upstream during a redesign to receive information directly from
the source

July 3, 2010 234

Capture Information Once at the Source and Share It

• Identify and eliminate data redundancy, re-keying and
reconciliation

July 3, 2010 235

Involve as Few as Possible

• Handoff of work or information offers the potential for error
• Eliminating handoffs removes this potential
• Accomplished by expanding the job scope upstream and
downstream so that a person “runs” with the work longer
• Requires cross training and often a change in compensation to
reward knowledge or pay for new skills
• Work often does not arrive at an organisation in a steady, even flow
- spikes and bottlenecks in the workload
− With more cross-trained workers, bottlenecks can be broken as more workers
are qualified to manage them
− Person can see his or her major contribution to the whole – can increases the
desire to produce a quality product or service

July 3, 2010 236

Redesign, then Automate

• Taking the as-is process design and lay information
technology on top of it
− Despite the investment, the problem might not be solved and
automating it could magnify the issue
− A faster but much more expensive and still ineffective process
may result
• First employ process design principles, benchmarking, best
practices and lean thinking before automating an as-
is”process
• Process improvement envisions a new process after
benchmarking best practices and using design principles

July 3, 2010 237

Ensure Quality at the Beginning

• Quality problems encountered in the first several steps of
a process will create exponentially negative effects
downstream
− Time spent to fix inefficiencies by the downstream people can be
excessive
• Effort spent initially to ensure quality pays for itself in
preventing reviews and rework later

July 3, 2010 238

Standardise Processes

• When there is no standardisation there cannot be process
control
− Significant variation in process output can be caused by
performing the process different ways
• Easier to find the root cause of a problem when people
standardise their work
• Less structured processes might be decomposed into more
and less structured components that could be
standardised

July 3, 2010 239

Use Co-located or Networked Teams for Complex
Issues
• Complex problems require people to review information in
real time
• If complex problems occur regularly, consider co-locating
team members
• If co-location does not make sense, then network the team
so information can smoothly flow

July 3, 2010 240

Consider Outsourcing Business Processes

• Best course of action may be to outsource one or more
processes to companies that specialise in the performance
of that process
• Outsourcing certain processes can free to focus on other
more strategic processes that add greater value to the
organisation
• Compare to the costs of designing the process in-house as
well as compared to the risks associated with outsourcing
• Many organisations find that outsourcing some business
processes is a viable strategic model and helps the
business become more agile and focus on those key
activities that add the greatest value

July 3, 2010 241

Process Rules

• Business rules define how or when a particular activity can be
performed and help control the flow of the activity
− As activities are defined, the need for certain business rules will become
apparent
• When defining business rules, the tendency for most organisations is
to make them complex in order to eliminate confusion and
emphasise control
− Complexity in a set of business rules that govern an activity creates complexity
in the process
− The more complex the process is, the more opportunities for the process to fail
• As a best practice, business rules should be applied when necessary,
e.g., to enforce organisation policies or external regulations, reduce
process errors and expedite process execution

July 3, 2010 242

Process Compliance

• Most industries have standards and guidelines relating to
the execution of their business processes
• Ensure compliance

July 3, 2010 243

Process Design Considerations

• Factors to consider when creating a successful process
design
• Attention to the details of these success factors should be
observed throughout the design stage
− Process Ownership
− Incentive and Rewards
− Cross-Functional Teams
− Continuous Improvement
− Commitment to Investment
− Alignment with Strategy

July 3, 2010 244


− Direct involvement and leadership of the executive team
− BPM initiative can have far reaching and lasting effects throughout the organisation
− Vital that the executive leadership not only agree to the change but is visibly seen as
the promoter, leader and champion of such change
• Process Ownership
− All too often organisations assign ownership of the process change initiative to an
individual such as a project manager who has little or no authority over the actual
process
− Process ownership can take the form of a single individual responsible for the process, a
cross-functional team of department directors or other type of management
• Incentive and Rewards
− Successful process management system will have incentive programs built into place
and encourage the adoption of the new process and changed roles and behaviours
− Incentives should be based on the goals established in the analysis
− Most effective when aligned with the customer's expectations and corporate strategy

July 3, 2010 245


• Cross-Functional Teams
− Success in BPM lies in the ability to tie together seamlessly all of the functions
to meet the needs of the customer
− Success depends on the degree of participation from all the functional groups
that touch the process
− During the design stage, key decisions makers must be present and agree on
the new design
• Continuous Improvement
− Continuous improvement implies that small changes that happen frequently
can have a powerful cumulative effect
− Necessary to act quickly in the process initiative
− Benefits of a BPM system is the agility it brings to the organisation and that
agility should be demonstrated within the BPM change process itself
− Longer the initiative takes, the more likely those involved could be siphoned
off to run other projects, lose interest or focus or leave the organisation all
together
− By quickly implementing a few small changes, the positive effects of those
changes can be communicated to the organisation and will serve as a catalyst
for the larger organisational changes

July 3, 2010 246


• Commitment to Investment
− Although one of the goals of business process management is to reduce cost,
there are often initial financial investments that must be made before that
reduction is realised
− The organisation's leadership must be committed to make the necessary
investment to ensure the process improvement is successful before the return
on the investment is achieved
• Alignment with Strategy
− Understanding the business strategy and its relationship to the customer is key
in the design of the new process
− A successful business strategy is one that is designed around the needs of the
customer
− Careful design considerations should be made to ensure that all activities in
the process work toward the end goal of meeting that customer need and
realising the business strategy
− Any activity that does not meet the needs of the customer should be
considered extraneous and should be seriously considered before being
included in the process

July 3, 2010 247

Process Design Summary

• Process design is the creation of a new process that aligns the business around the business
strategy
• Process design involves the executive leadership, process owners and stakeholders in the
creation of the new process
• The process design team should include subject matter experts, stakeholders, participants
and customers
• While designing a new process, consideration should include the following best practices:
− Design around value-added activities
− Perform work where it makes the most sense
− Create a single point of contact for the customer
− Combine processes around clusters
− Reduce handoffs
− Reduce batch sizes
− Put access to information where it is needed the most
− Capture information once and share it with everyone
− Redesign the process before considering automation
− Design for desired performance metrics
− Standardise processes
− Consider co-located networked teams and outsourcing

July 3, 2010 248

Process Design Summary

• The activities associated with process design include the following:
− Design the process with modelling and other tools
− Define the activities of the new process
− Define the rules of the new process
− Define the handoffs between activities
− Define the metrics
− Perform comparisons and benchmarking
− Perform simulation and testing
− Create the implementation plan
• Critical success factors include the involvement of executive leadership, process
owners and cross-functional teams
• Process design must be for continuous improvement as opposed to a one time
event
• Businesses must commit to invest in process management to benefit from process
efficiency
• All processes should be aligned to the business strategy and customer needs

July 3, 2010 249

Process Performance Measurement

July 3, 2010 250

Process Performance Measurement Topic Scope

Process
Performance
Measurement

Alignment of Decision
Importance Monitoring
Key Process Business Support for
and Benefits of and What to Measurement Modelling and Considerations
Performance Process and Process
Performance Controlling Measure Methods Simulation for Success
Definitions Enterprise Owners and
Measurement Operations
Performance Managers

July 3, 2010 251

Importance and Benefits of Performance
Measurement
• Aligning process performance to organisational goals is the primary
reason for undertaking process management practices
• If you cannot measure it, you cannot manage it
• No business should invest time and resources to improve a process if
they do not know what they had to measure to improve
• Many process improvement efforts tend to focus on one functional
area without consideration for the enterprise context
− Nothing wrong with focusing efforts on functional process improvement and
management provided that it can be linked to the overall cross functional
process performance that drives enterprise level performance metrics

July 3, 2010 252

Cross Functional Processes Link Operational
Processes
• Need a clear
understanding
of the
organisation’s
operational
processes
• Need to ensure
that the
operational
processes are
optimised
• Cross-functional
processes
involve
collaboration
between
operational
processes

July 3, 2010 253

Cross Functional Processes and Strategy

• Effective cross-functional Measure
processes deliver on the Achievement
organisation’s strategy of Goals
• Cannot divorce the Strategy
organisation’s strategy from
operational processes and their
execution Delivered By
• Collecting information on the
performance of cross-functional Cross-Functional
processes will allow the Processes
execution of strategy to be
effectively measured
• Linkage between strategy, cross- Consisting Of
functional processes and
operational processes means
individual process Operational Processes
measurements can be linked to
overall performance Set Goals
• Allows goals to be connected to
operational processes

July 3, 2010 254

Business Process Action Hierarchy

• Cross-functional Business Process
Hierarchy
processes need to be
aligned with actions Cross Functional Cross Functional
Process Process
Consists of one or
• Performance of more of …
actions rolls-up to Process Process Process Process
performance of Consists of one or
more of …
process Sub-Process Sub-Process
Consists of one or
more of …

Activity Activity
Consists of one or
more of …

Task Task
Consists of one or
more of …

Step Step Step Step

July 3, 2010 255

Process Hierarchy Example
Enterprise Issue
Desired Results
Market Share: 80+% Process Issue
Current Results Order Fulfilment Process
Market Share 58%
Drop in Customer Satisfaction

Desired Results
Order Cycle Time of 1 Day Activity Issues
Current Results
Order Cycle Time of 9 Days Order Fulfilment Process

Inaccurate and Later Order
Forms

Desired Results
Zero Incomplete Order Forms
100% Accurate Forms

Current Results
Between 1-10% Incomplete
Order Forms
83% Orders Accurate
Orders Submitted Weekly
July 3, 2010 256

Process Hierarchy Example

• Not everyone has the complete picture of what is happening
− Marketing - views issue as a market share problem
− Supply Chain - views issue as an order cycle time problem
− Sales - views issue with the accuracy and timeliness of the sales order forms
• No one understands the others’ perspectives
• Each unit may or may not have a metric that they are accountable
to, but more importantly, they more than likely do not have an
understanding of the extent of the cross functional process that links
them all together from a process performance perspective
• Process focused means that they will attack the symptoms
independently and most likely make things worse

July 3, 2010 257

Key Process Performance Definitions

• First review the definitions of
process performance
− All processes have a metric or Time
measurement associated with the work
or output of the process that is
performed
− Metrics are based on the following
fundamental metric dimensions
Quality Cost
• Time - is a measurement of process
duration
• Cost - is a measurement of the
monetary value associated with a
process
• Capacity - this is an amount or volume Capacity
of a feasible output associated with a
process
• Quality - is usually expressed as a
percentage of actual to optimal or
maximum in process terms

July 3, 2010 258


• Time - is a measurement of process duration
− Cycle Time – measures the time it takes from the start of a
process to the completion of that process in terms of the output

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• Cost - is a measurement of the monetary value associated
with a process
− Resource Cost - is a measurement of the monetary value
associated with the resources (human or non-human) required to
complete a process
− Opportunity Cost - It is the value that is lost from the process by
not getting the resultant output of the process

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• Capacity - this is an amount or volume of a feasible output
associated with a process
− Number of Transactions - transactions performed by process
− Rate of Transactions - yield of process
− Capacity – number of transactions the process is capable of

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• Quality - is usually expressed as a percentage of actual to
optimal or maximum in process terms
− Satisfaction - is a measurement of customer satisfaction, which is
usually associated with a service level expectation on the part of
the customer
− Variation - this is a measurement of the amount, extent, rate or
degree of change and is generally expressed as the difference
between the actual and target or expected result
− Error or Defect Rate - is an example of variation in the
measurement of errors associated with the output of a process

July 3, 2010 262


• Other measures exist such as efficiency and effectiveness
• Functions of one or more of the four fundamental metrics
• The overall purpose of understanding process metrics is so
that a manager can attribute a value to improving or
changing a process as part of process performance
management

July 3, 2010 263


• Value added versus non-value added
• Process is value added
− When it is required to generate the output required by the customer of the
process
− When the customer is willing to pay for the process (or activity) that generates
the output
− When it is required to maintain quality and consistency of the component
resources or output
− When it provides continuity
− When it enhances customer experience even when it does not contribute
directly to the specific service
• Does something that is perceived as having added value to the
customer
• Understanding whether a process is value added or non-value added
is important when it comes time to decide whether to eliminate a
step or activity of a process when doing improvements

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Key Process Performance Definitions - Key
Performance Indicators (KPIs)

Metric Characteristic
Alignment Key performance indicators (KPIs) are always aligned with organisation strategies and objectives
Accountability Every KPI is owned by an individual or group on the business side who is accountable for its outcome

Predictive KPIs measure drivers of business value and are leading indicators of desired performance
Actionable KPIs are populated with timely, actionable data so users can intervene to improve performance before it
is too late
Few in Number KPIs should focus users on a few high value activities or on the overall effectiveness of the process

Easy to KPIs should be straightforward, not based on complex indexes that managers don’t know how to
Understand influence directly

Balanced and KPIs should balance and reinforce each other, not compete and confuse. Otherwise, you will degrade
Linked process performance

Transformative A KPI should trigger a chain reaction of positive changes in the organisation, especially when it is
monitored by the process manager or officer
Standardised KPIs are generally more effective when based on standard definitions, rules and calculations so they can
be integrated across dashboards, throughout the organisation and used for benchmarking within and
across industries
Context-Driven KPIs put performance in context by applying targets and thresholds so users can gauge their progress
over time
Reinforced The impact of KPIs may be enhanced by attaching compensation or incentives to them
Relevant KPIs gradually lose their impact over time, so they must be reviewed and refreshed periodically
July 3, 2010 265

Monitoring and Controlling Operations

• Important to continually measure, monitor and control the process
in order to achieve the desired results
• Performance management is more of a journey and not a
destination
• Importance of understanding the process cannot be emphasised
enough
• Monitoring and controlling performance of the process is what
makes the difference
• As circumstances changes, so will the desired performance of the
process
− Process itself will have to change in order to achieve the new desired
performance
− This cannot be determined unless the process and the performance of the
process are monitored and controlled to the needs to the customer
requirements
July 3, 2010 266

Alignment of Business Process and Enterprise
Performance
• Enterprise performance and corresponding metrics are best expressed with
respect to satisfying the needs of the customer
• Extrapolations of the Time, Cost, Capacity and Quality foundations
− Time
• Delivery Performance, Request Date
• Order Fulfillment Lead Time
• Product Development Lead Time
− Quality
• Product Launch Variance
• Forecast Accuracy
− Cost
• Sales Cost
• Manufacturing Cost
• Logistics Cost
• Inventory Days of Supply
− Capacity
• Customer Amount per Order (Wallet Share)
• Customer Growth Rate
• Market Share

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Performance
• Enterprise level metrics have cross functional processes
associated with them
• Examples of cross functional processes that drive
enterprise level metrics
− Order to Cash
− Procure to Pay
− Campaign to Quote
− Plan to Fulfill
− Manufacture to Distribution
− Issue to Resolution

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Define Measures Linked to Key Processes
Number of Profitability
Customer
New Per Inventory
Turnover
Customers Customer

Competitors, Governments Regulations and Requirements, Standards, Economics

Customer Customer’s Process Needs
Acquisition
Cost Core Processes
Business Business
Processes That Create Value for the Customer
Controlling Measurement Number of
Process Process
Customer Product Order Customer Customers
Acquisition Delivery Fulfilment Support
Processes That Processes That Complaints
Direct and Tune Monitor and
Other Processes Report the
Time to Fulfil Results of Other
Order Enabling Processes Processes
Processes That Supply Resources to Other Processes
Time to
Channel Supply Human Information Business
Management Management Resources Technology Acquisition Resolve
Complaints

Forecast
Accuracy Supplier’s Processes

Number of Delivery Payment
Time Invoice
Returns Accuracy Times
Accuracy
July 3, 2010 269

Performance
• Cross-functional processes will impact more than just one
enterprise level metric
• For example Plan to Fulfill will impact Delivery
Performance, Request Date and Order Fulfillment Lead
Time
− Lots of process transformation methods
• Important to understand whether that methodology will address the cross
functional process or just a sub process within the cross functional process
or even an activity within a sub process

July 3, 2010 270

Linking the Process to the Enterprise Level Desired
Performance Metric
Modest Improvement Goals Significant

Enterprise Business Essential
Wide Process Value
Reengineering Stream
(BPR)

Process Role of
Scope Information
Business Technology
Process Unit
Improvement
(BPI)
Activity

Task
Local Incidental

Symbolic Intense
Management Involvement
July 3, 2010 271

What to Measure

• Best way to understand what to measure in a process is to first
understand the desired result
• Information required for measuring the quality dimensions of a
process can be obtained at
− The input and output of the process
− The overall process when it comes to service level satisfaction
• Four fundamental metric dimensions
− Quality - Metrics such as error and defect rates are examples of quality based
metrics based on input and output information garnered from a process
− Cost - Information required for measuring the cost dimension is usually based
on the resources needed to perform the process itself, although the
opportunity cost can also come from the output information
− Capacity - Capacity information comes from the output information of the
process
− Time - Time based dimensional metric information is obtained from the entire
process, from supplier to customer, but can also be broken down between
supplier and input and output and customer

July 3, 2010 272

Measurement Methods

• Two methods for measuring a process
− Manual, that is collecting data by hand and either drawing it on
paper or entering it into a spreadsheet or modelling tool
− Automated method enabled by sophisticated software such as
business process management suites or enterprise software
modelling tools
• Several common measurement methodologies used in
BPM implementations
− Value Stream Mapping
− Activity Based Costing
− Statistical Methods

July 3, 2010 273


• Value Stream Definition
− By locating the value creating processes next to one another and
by processing one unit at a time, work flows smoothly from one
step to another and finally to the customer
− Chain of value-creating processes is called a value stream
− Value stream is simply all the things done to create value for the
customer
• Value Stream Mapping
− Planning tool used to visualise the value stream of a process,
department or organisation
− Follow a product’s production path from beginning to end and
draw a visual representation of every process in the material and
information flows
− Draw a future state map of how value should flow
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• Value Adding Activity - Those activities that, in the eyes of the end
customer, make a product more valuable. A value adding activity is
simple to define; it results in something the customer would pay for
• Non-Value Adding Activity -Those activities that, in the eyes of the
end customer, do not make a product more valuable and are not
necessary, even under present circumstances. These activities are
clearly waste and should therefore be the target of immediate or
short-term removal
• Necessary Non-Value Adding Activity -Those activities that, in the
eyes of the end customer, do not make a product more valuable, but
are necessary unless the existing supply process is radically changed.
This type of waste is more difficult to remove in the short term and
should be a target for longer term radical change

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• Seven types of waste
in a process Waiting
Defects

Processing
Motion

Overproduction
Inventory

Transportation

July 3, 2010 276


• Defects - Repair and rework
• Motion - Any time wasted to gather resources such as documents or
requirements in multiple systems
• Overproduction - Producing more than is needed before it is
needed, working on non-priority items early
• Transportation - Wasted time to more resources between processes
• Inventory - Maintaining excess output
• Processing - Doing more work than is necessary, work not in scope
• Waiting - Any non-work time waiting for approval, resources,
information, queueing time

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Activity Based Costing

• An accounting methodology that assigns costs to activities rather
than products or services
• ABC does not eliminate or change costs
• It provides data about how costs are actually consumed in a process
− Activities consume resources
− This consumption is what drives cost or inefficiency
− Understanding this is relationship is critical to managing overhead
• Used to discover opportunities for cost or efficiency improvement
• Focuses on overhead, traces rather than allocates each expense to a
particular cost object
• Makes indirect expenses direct

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Direct Labour and
Overhead

Output
Activities Cost

Direct Materials

July 3, 2010 279


• Establishing a cross-functional view of your organisation and
understanding what drives your costs
• Pulling apart indirect or hidden costs and attributing them correctly
to products and services

Resources

Cost Drivers Activities Performance
Measures

Products and
Customers
July 3, 2010 280


• An ABC approach will account for
− Activities / processes (comparing before and after the re-
engineering project)
− The frequency and cost of the activity/process (comparing before
and after the re-engineering project)
− The do-nothing scenario (what would happen if we do not do the
project)
− Which processes provide value (i.e. are needed to attract and
retain customers, result in operational savings)

July 3, 2010 281


• Use ABC when
− Overheads are high
− Cost of errors is high
− Inefficiency
− Competition is stiff

July 3, 2010 282

Statistical Methods

• Science of collecting, analysing, presenting and
interpreting data
− All work occurs in a system of interconnected processes
− Variation exists in all processes
− Variation may occur in at least two forms:
• Random—natural variation due to the nature of the process; may be
reduced, bit not eliminated
• Systemic—variation due to some consistent cause that can be addressed
and eliminated
− Variability is what drives error rates or inefficiency
− Understanding what reduces the variability will help improve the
process

July 3, 2010 283

Statistical Methods

• Used to understand and then reduce or eliminate
variability in processes for improvement
• Focuses on data (the X’s [inputs] which drive the Y
[output])
• Determines which processes are primarily responsible for
driving the X’s, then focus on those processes for
improvement
• Use when:
− High rate of errors
− Inconsistency of outputs

July 3, 2010 284

Modelling and Simulation

• After measurement, modelling and simulation are the next step in
terms
• Measuring the current state process performance
• Developing desired future states of process performance
• Identifying the gaps in the current process preventing transition to
the desired future state
• Simulation is the enactment or representation of the behaviour or
characteristics of one system through the use of another system
• For business processes, simulation is enacting the behaviour of a
process
• Process is modelled in the software with parameters associated with
a process entered
July 3, 2010 285


• Cycle time parameters for each activity
− In-queue time (before work begins)
− Work delay time (from start of resource involvement until start of work)
− Work time (from beginning of work to production of output)
− Out-queue time (from output production to release of output)
• Cost parameters
− Labour (total staffing costs allocated by headcount)
• The resources associated with each activity
• The cost of each resource
− Material
• Direct costs - material consumed each time an activity is performed
− Overhead (administrative costs allocated as a percent of labor)
• Indirect costs - allocated to activities requiring resources that are incurred over an
interval of time
• Other parameters
− How many times the process runs per interval time (N times/hour/day)
− Decision points in process (for example - 60/40 split between path A and path
B)
July 3, 2010 286


• Simulation output typically show each activity with all of the time metric
dimensions summarised per activity along with the cost metric dimensions
summarised by activity
• Allows for quick identification of process performance problem areas that are
supported by extensive data from the simulation
• Once the current state performance is analysed and validated the desired future
state process can then be modelled
• Saves time because it is all done using software before it is implemented in the
organisation
• Provide an experimental lab to do the process reengineering efforts before actual
implementation
• Not a substitute for the actual field work, nor is it a perfect method for
determining the future state process
• Calculates the benefits of the process improvement via the Time, Cost, Capacity
and Quality dimensions to help build a data driven business case for process
improvement/reengineering

July 3, 2010 287

Decision Support for Process Owners and Managers

• Decision support for process owners and managers is essential for
continuously monitoring the actual process performance
• Poor information about business processes can lead to poor
decisions about where to invest in and how to improve company
performance
• Many organisations use a Balanced Scorecard framework
− Strategic planning and management system used to
• Align business activities to the vision and strategy of the organisation
• Improve internal and external communications
• Monitor organisational performance against strategic goals
− Dashboard to measure performance of the organisation
• Dashboards are a form of decision support and have been referred
to as business intelligence and analytics

July 3, 2010 288


• Business intelligence generally deals with addressing process
performance management and control within an enterprise context
• When business intelligence is instituted at an enterprise level, it
mines information about specific cross functional processes and the
performance of those processes in real-time, displaying the
information in a dashboard format
• Decision support actually begins with the planning of the when,
what and how process performance will be measured, managed and
controlled
• Process performance management begins with a plan for
− What processes will be measured
− How often the processes will be measured
− How decisions about process performance will be addressed when
encountered
• Decision support frameworks, like a balanced scorecard, are useful
in the planning for monitoring and controlling of business processes

July 3, 2010 289


• Once a process performance plan is in place business
intelligence and analytics technology will provide the
insights into the performance of the business processes
− Business intelligence technology is an enabler and powerful
mechanism in the hands of a process manager
− Effective decision support can save the process manager a lot of
time in detecting process performance issues

July 3, 2010 290

Considerations for Success

• Important part of any BPM effort is the skills needed to
manage the people impacted by the business process
change
• Always underestimated and is usually in the top three
culprits when the effort fails
• Process designs which change organisational culture and
human behaviour need to be aligned to the desired
outcomes and working methods of the future business
process
• Not as easy as it sounds

July 3, 2010 291


• Competency Matching - making sure that the people who will be performing the
actual work in the new process actually have the competencies and skill sets to do
the work effectively to achieve the desired outcomes
• Roles and Responsibilities - making sure that these are clear to people, otherwise
there will be tremendous confusion accompanied by process deterioration
• Organisational Structure - structure the new organisation to take advantage of
the new process, but also to manage it effectively
• Empowerment with Accountability - this goes double for the process managers
who will own the enterprise level process performance
• Performance Measures and Objectives -– these should be tied to roles along with
the corresponding compensation and incentives to drive the desired behaviours
• Personal Growth Opportunities - people don’t want to feel like they’ve been
pigeon-holed into one role with the new process but want to see how they can
grow within the new roles

July 3, 2010 292


• Some critical success factors
− Focus on people as much as the process
− Education – make sure everyone knows the entire process and
not just their part of it
− Everyone has the same understanding of what a process is
− Everyone understands why process is important – tie it to
operational performance metrics for the company and align
compensation to it
− People who design and approve the activities are the same
people who do the activities
− Attempt to over communicate the goals and objectives
(performance metrics) of the process

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• Important to assign a Process Manager who
− Manages process performance
− Ensures the process is documented and reflects actual practice
− Defines performance measures and targets
− Monitors process performance
− Takes action to address process performance
• Process Manager is an individual with accountability and
authority for the end-to-end performance of a process
• Never-ending responsibility and the Process Manager
helps create the new process and lives with the results

July 3, 2010 294

Process Transformation

July 3, 2010 295

Process Transformation Topic Scope
Process
Transformation

Process Improvement Implementation Sustaining the
Redesign Reengineering Implementation
Transformation Methodologies Roles BPM Lifecycle

Implementation
Six Sigma
Phase

Implementation
Lean
Activities

TQM (Total
Quality Evaluation
Management)

ABC (Activity
Quality Control
Based Costing)

Performance
Improvement
Model

July 3, 2010 296

Process Transformation

• Planned evolution of a business process using a clearly defined
methodology and disciplined approach to ensure that the business
process continues to meet business objectives
• Business processes are affected by many factors both in and out of
the organisation’s control
• Process transformation is enabled by Business Process Management
principles and governances adopted by the organisation
• Depending on the process maturity level of the organisation, it will
adopt various methods to monitor and respond to these factors in
the appropriate manner and timeline to meet each individual
situation
• May be achieved through a strategy of continuous improvement or
by initiating projects as needed
July 3, 2010 297

Process Transformation - Improvement
Methodologies
• Improvement Methodologies
− Six Sigma
− Lean
− TQM (Total Quality Management)
− ABC (Activity Based Costing)
− Performance Improvement Model

July 3, 2010 298

Six Sigma

• Originated in Motorola in the mid-1980’s
• Popularised by GE in the mid-1990’s when Jack Welch praised the
cost savings that the company was able to achieve
• Measure of quality that strives for near perfection
• Disciplined, data-driven approach and methodology for eliminating
defects based on statistical data in any process from manufacturing
to transactional and from product to service
• To achieve Six Sigma, a process must not produce more than 3.4
defects per million opportunities - six standard deviations between
the mean
• Six Sigma does not represent a means of realigning enterprise
processes for market differentiation as much as a proven means of
driving out costs from existing processes

July 3, 2010 299

Lean

• Originated by Toyota - Toyota Production System
• Popularised by Daniel Jones and James Womack
• Management philosophy focusing on reduction of seven wastes
− Over-production
− Waiting time
− Transportation
− Processing
− Inventory
− Motion
− Scrap
• Set of disciplines which can be very powerful in the realm of operations analysis
• More an operations process improvement instrument rather than a means of
reengineering or designing new processes
• Develop and review checklists to review product designs
• About getting the right things, to the right place, at the right time, in the right
quantity while minimising waste and being flexible and open to change
July 3, 2010 300

Lean

• Lean principles
− Perfect first-time quality - quest for zero defects, revealing & solving problems
at the source
− Waste minimisation - eliminating all activities that do not add value and safety
nets, maximise use of scarce resources (capital, people and land)
− Continuous improvement - reducing costs, improving quality, increasing
productivity and information sharing
− Pull processing - products/services are pulled from the consumer end, not
pushed from the production end
− Flexibility - producing different mixes or greater diversity of products quickly,
without sacrificing efficiency at lower volumes of production
− Building and maintaining a long term relationship with suppliers through
collaborative risk sharing, cost sharing and information sharing arrangements

July 3, 2010 301

TQM (Total Quality Management)

• Set of management practices throughout the organisation
geared to ensure the organisation consistently meets or
exceeds customer requirements
• Focus on process measurement and controls as a means of
continuous improvement
• Statistical analysis is used to monitor process behaviour
and identify defects and opportunities for improvement
• Forerunner of Six Sigma

July 3, 2010 302

ABC (Activity Based Costing)

• Methodology that measures the cost and performance of
cost objects, activities and resources
• Cost objects consume activities and activities consume
resources
• Resource costs are assigned to activities based on their use
of those resources
• Activity costs are reassigned to cost objects (outputs)
based on the cost objects proportional use of those
activities
• Incorporates causal relationships between cost objects
and activities and between activities and resources
July 3, 2010 303

Performance Improvement Model

• Developed by Geary Rummler and Alan Brache in the early
1990s
• Framework aligns processes at three distinct three levels
of performance:
− Organisational level
− Process level
− Job or performer level
• Seeks to align the processes behind the strategy of the
organisation and the customer's requirements
• Can be used to understand the alignment of the human
resources central to the performance of one or more value
chains
July 3, 2010 304

Performance Improvement Model

• Matrix to provide the means of alignment within the enterprise
• Matrix addresses the nine concerns that anyone trying to change
processes in an organisation must consider

Goals and Design and Management
Measures Implementation
Organisational Organisational goals Organisational design Organisational
Level and measures of and implementation management
organisational
success
Process Level Process goals and Process design and Process management
measures of process implementation
success
Activity or Activity goals and Activity design and Activity management
Performance Level measures of activity implementation
success
July 3, 2010 305

Redesign

• End-to-end rethinking of what the process is currently
doing
• Different from process improvement because it takes a
holistic approach to the process rather than identifying
and implementing incremental changes
• Although it may lead to significant changes, these changes
continue to be based on the fundamental concepts of the
existing process
• Different from process reengineering which begins with a
“blank slate” and is based on radical change to the process

July 3, 2010 306

Reengineering

• Mike Hammer’s 1993 book Reengineering the Corporation
• Premise is one of radical change of process throughout the
organisation to bring about performance improvements
− Fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality,
service and speed

July 3, 2010 307

Reengineering

• Seven rules or principles of reengineering
− Organise around outcomes not tasks - helps eliminate the need for handoffs
and provides a single point of contact for the customer
− Have those who use the output of the process perform the process - those
who are closest to the work should do the work
− Merge information - processing work into the real work that produces the
information - People collecting the work should be responsible for processing
the work instead of handing over to some other individual or system
− Treat geographically dispersed resources as though they were centralised -
technology advancements make this a reality through combining dispersed
systems and teams as though they were a single team
− Link parallel activities instead of integration their results - helps reduce errors
at the end of the process
− Put the decision point where the work is performed and build control into
the process - empowers the performer of the work to get the resources he
needs to get the job done most efficiently
− Capture information once - at the source - eliminates costly mistakes of
information not being passed effectively from one handoff to another
July 3, 2010 308

Implementation

• Realisation of an approved business process design into
documented, tested and operational procedures and workflows
• Includes new and revised business process policies and procedures
• Assumed that the analysis, modelling and design stages have created
an approved, comprehensive set of specifications so only minor
adjustments should occur during implementation
• Scope of implementation activities
− Executable primary and support processes
− Oversight management processes
− Business rules related to all three types of processes
− Relevant and controllable Business Process Management components in the
organisation’s internal environment, e.g., policies, incentives, governance and
leadership style

July 3, 2010 309

Scale of Change in Implementation

• Scale of implementation varies from limited procedural changes in
business processes, business rules and process management to the
transformation of entire enterprise business processes and its BPM
governance
High
Transformational
Change

Impact
of
Change

Procedural
Change
Low

Low Scale of Change High
July 3, 2010 310


• Procedural Type Changes
− BPM scenario: a business manager may not retain the role of the same process
ownership for more than two years, rather than three years. This is a change to
how the business process is managed
− Process scenario: a market research study launch requires authorisation by
both the Marketing Manager and also now the Sales Manager for that market
territory. This is a change to the business process
• Transformational Type Changes
− BPM scenario: an Enterprise Business Process Council comprised of all process
owners, the Chief Operating Officer and the Chief Financial Officer will be
created and meet quarterly to evaluate the Business Process Portfolio
performance and proposed major business process improvement projects
− Process scenario: the current evaluation of life insurance applications by a
fixed sequence of professional staff groups will be replaced by an application
coordinator who will select which professional staff groups need to be involved
with a particular application
July 3, 2010 311


• Procedural changes may need less formal (project)
management controls
• Need the approval of small number of personnel
depending upon the nature and scope of the change
• Transformational changes might require senior
management or Process Council approval and a formal
program or project management team
• Criteria for determining what type of approval and
oversight are necessary are part of the BPM governance
policy

July 3, 2010 312

Implementation

• Difference between implementing a business process and
implementing BPM
• Implementation of BPM involves
− Setting up the infrastructure for an organisation to manage their
business processes
− Defining how they will be managed
− Governance
− Tools to develop, maintain and monitor business processes
− Methodology to determine when new processes are required and
when
− changes to existing processes are needed
− Identifying when a process should be retired
− Detailing the steps involved in achieving each scenario

July 3, 2010 313

Business Process Implementation

• Focus primarily on Business Process implementation rather
than Business Process Management implementation

July 3, 2010 314

Business Process Implementation Topic Scope

Implementation

Implementation Implementation
Evaluation Quality Control
Phase Activities

Implementation Risk and Issue Implementation Orchestrating
Installation Training
Planning Management Construction Change

July 3, 2010 315

Implementation Phase

• Business Process Implementation is transforming an
approved business process design into operational
enterprise (or lesser scope) processes and revised BPM
policies and procedures that are accepted by the
appropriately trained stakeholders
• Success of the implementation effort is dependent
significantly on the buy-in and continued visible support by
senior management sponsors, process owners, process
champions and process performers (who are responsible
for the most critical tasks)

July 3, 2010 316


• Deliverables
− Manual and automated new or revised executable business processes
decomposed into detailed workflow scripts including associated business rules
and management controls
− BPM metrics and tools to evaluate the performance of the new or revised
business processes
− A new or revised Process Management organisation and set of processes for
monitoring, controlling, tracking and assessing process performance and a
means to align process performance to strategic goals
• Complete and accurate business process and business rules documentation
integrated into a business process rules repository
− As appropriate, installed and tested BPM software and manual activities with
related business applications, data sources and hardware
− Trained workflow performers and process management support staff
− Users’ acceptance of new or revised business tasks through successful change
management
− A plan for the evaluation of the implemented new or modified business
processes and continued assessment for improvement
July 3, 2010 317


• As the scale and complexity of new or revised workflows,
tasks, procedures, business rules and policies increases,
more formal project management and change
management oversight will be required
• Metrics needed for business process performers,
managers and support staff to evaluate the development
progress and the post-implementation benefits related to
these deliverables
• No universal set of metrics

July 3, 2010 318

Suggested Metrics
Description Metrics
1 Compare activities to be constructed or modified Number of matched activities
from the Design Phase with the most recent Number of activities specified
requirements specification. Are all the requested
features addressed? Assessed before Implementation
activities are planned.
2 Obtain a measure of the magnitude of the scope of Number of (sub)processes to alter
process changes. Review previous phase metric or Number of (sub)processes in relevant domain
develop
3 Assessment of readiness to begin near-term Number of resources committed
implementation activities Number of resources needed
4 RFP/Q progress by RFP/Q domain, if applicable Number of RFP/Q returned
Number of RFP/Q issued
5 Testing Progress (manual and automated Number of tests passed
components) Number of tests executed and
Number of remediations done
Number of tests failed
6 Completion progress by stage or cumulative: items Number of components finished
Number of components to be built
July 3, 2010 319

Suggested Metrics
Description Metrics
7 Completion progress by stage or cumulative: budget Amount expended
Amount budgeted
8 Completion progress by stage or cumulative: time # of hours incurred
# of hours budgeted
9 Completion progress by stage or cumulative: on time # of activities done on time
# of activities
10 Training performance Average, median and range of training test
scores compared to benchmark
11 Business process effectiveness improvement Actual outcome improvement
(by sub process) Expected improvement
12 Business process efficiency improvement (by sub Actual cycle time reduction
process) Expected cycle time reduction

July 3, 2010 320


• Business Process Implementation is the link between planned process
performance, process execution and business benefit realisation
• Activities may vary from a simple, straightforward process-rules change to a
major, complex process transformation
• Technological, behavioural, policy and workflow implementation tasks must be
managed carefully
• Human and software process components must execute within acceptable
tolerances to achieve performance targets
• A well-designed process that is poorly implemented will be a failure with both
short-term and longer-term consequences
• Process redesign or improvement effort, regardless of scale, that is well executed
will generate expected benefits and sustain the trust of decision makers related to
future business process improvement proposals
• Implementation effort includes risk management and consensus-building tasks
that could impact the Business Process implementation success or failure

July 3, 2010 321

Implementation Activities

• Business Process Implementation tasks in the approximate sequence
of execution
• Review project objectives, deliverables, metrics and timeline
• BPM and Senior Business Management decide whether or not to
outsource this business process
• If outsourcing is selected, a set of RFP’s are prepared and issued,
responses evaluated and a vendor selected (assuming at least one
qualifying response)
− The contract is negotiated and a transfer of assets occurs
− A Business Process Outsourcing (BPO) Relationship Manager reviews
installation; test results and evaluates security at the business process site
(including communications channels)
• A decision to purchase or build BPM software is made by the Process
Owner, BPM Project Manager and Application Development
Manager
• An implementation project plan and leadership group
July 3, 2010 322

Implementation Plan and Leadership Group
• Tasks in sequence with milestones
• Assessing and managing project risk
• Staff resource time and cost requirements estimated
• Obtaining necessary staff resources—perhaps modifying schedule
• Revisiting project costs, if revision from Master Budget is required
• Specify all the relevant BPM components impacted
• Prepare all the Change Requests for work to be performed and obtain approval
• Develop, send and evaluate all RFP’s and RFQ’s for appropriate items in identified in the prior step
• Develop the test plans listed in the prior section
• Develop the preliminary Business Process documentation and training material
• Continue Change Management activities to maintain Business Process owners and performers’ buy-in
• Install any scheduled software and hardware; complete any data conversion. Maintain versioning logs
• Perform tests of the Business Process and any related new software and hardware as noted the prior section.
Resolve exceptions quickly
• If outsourcing is selected, perform Acceptance Tests for outsourced business processes; remediate problems
• Provide training to Business Process owners, performers and support staff
• Launch the new or revised Business Processes as executable processes
• Evaluate performance metrics expected v. actual results (assuming performer learning curve has been
satisfied)

July 3, 2010 323

Implementation Planning

• Prior to performing any of the Implementation tasks of
larger-scale efforts, the Business Process project manager
should re-confirm the commitments from the project
sponsors and process owners
• Review with the BPM Implementation team leaders the
previous progress, updated plans and prepare or review
the Implementation Schedule and required resources

July 3, 2010 324

Implementation Planning – Project Review

• Review project requirements and history
− Business Process project objectives, scope, benefits and related
performance metrics
− BPM project timeline, rationale for major changes and deviations
and expectations for this Implementation phase
− Business process outsourcing considerations
− BPM project budget history and financial targets for the
Implementation phase
− BPM project risks: past, current and anticipated; how these were
or could be addressed
− BPM project change management progress including past
successes, failures and next challenges
− BPM introduction/modification rollout scenarios by (1) project
objectives’ priority and (2) early, visible benefits

July 3, 2010 325

Implementation Planning – Activity Specification

• After review, a complete set of BPM Implementation activities can
be specified
• Activities may have been done during initial business process project
planning, but should be reviewed and potentially modified due to
actual changes during prior project phases
• Each implementation activity specification should include:
− Objectives, performance metrics and list of deliverables—all related to
delivering improved customer value
− Risks for completion and how to be minimised
− Accountability for completion
− Financial, personnel, any IT support and other resources required
− Length of time for completion
− Any implementation task cross-functional interdependencies

July 3, 2010 326

Implementation Planning - Staffing

• Specification, review and possible revision of personnel
needs (e.g., BPM, IT, business process performers and any
outside consultants) to complete the defined tasks may
require revision of the implementation schedule
• Internal staff availability and commitments need to be
negotiated within the business process group and other
relevant company groups
• Gaps in availability and expertise may require contracting
with external parties

July 3, 2010 327

Implementation Planning – Budgeting

• Review the most recent version of the BPM
Implementation budget for consistency with revised
planned activities and their related costs
• Requests for additional funds may require the
development and presentation of a well documented
justification
• Depending upon the amount of funding received, the BPM
Implementation plan may require modification

July 3, 2010 328

Implementation Planning – Risk Analysis and
Management
• Throughout the Business Process Project, risk analysis and
management are performed to improve the chance for a successful
outcome
• Concerns focus on project cost, schedule and performance
• Risks
− Requirements scope creep can occur if Project Change Requests are not
scrutinised carefully (some may be deferred to post-implementation)
− Completion of scheduled activities can be delayed without interim reviews of
activity progress and actions to reduce further delay—possibly accelerate
appropriate remaining activities
− Intended project outcomes may not fulfill process owner’s and performers’
expectations if the developed BPM components deviate from the design
requirements—incrementally compare requirements to developed manual and
automated procedures
− Test procedures may not be consistent with test requirements creating an
opportunity for unrecognised defects in manual and automated process
activities
July 3, 2010 329

Management
• Risks
− Modifications to Business Process procedures are not updated in the business
process and rules repositories
− Cross-functional business process performer harmony may not be stressed
during training
− Training programs may not be reinforced with appropriate changes in
incentives, culture and leadership style
− RFP/Q may not have balanced team composition from the performer and
supporter/technical groups that could result in purchasing quality BPM
technology that does not align with the business objectives
− Contingency plans and walkthroughs for business or IT interruption have not
been documented and tested completely
− Incomplete stress testing of manual and automated business processes may
result in an inability to meet increasing business process workflow intensity
− Inadequately prepared Business Process and IT Help Centre staff can result in
process outcome defects and loss of customer satisfaction, loyalty and revenue

July 3, 2010 330

Management
• For any identified risks that have quantifiable threat probabilities
and consequences (financial and operational), perform quantitative
risk analysis with accompanying sensitivity analysis
• For identified risks that have insufficient quantifiable threat
probabilities and consequences, qualitative scenario analyses can be
performed to produce some useful insights and risk-reduction
planning
• Risk analysis is equally important for efforts that address primary
and support (operational) processes as well as management
processes
• Generation of value to the organisation is dependent upon all three
of these business process classes to be performing appropriately

July 3, 2010 331

Risk and Issue Management

Risk Factor Problem Business Process Implementation
Relevance
Unwilling user No commitment to change Obtain successful Business Process
performer and owner buy-in
Multiple users Creating a common appeal to Need strong leadership to
create buy-in overcome individual differences,
especially cross-functional
Unclear objective(s) Over promising expected results to Create a clear statement of
users Business Process project objectives
and benefits
Unclear link between task change Less commitment to adopt change Communicate an explicit link
and benefits between Business Process change,
benefits and rewards
Loss of budget support Adoption fails; benefits unrealised Deliver early benefits to sustain
BPM project support
Unfamiliarity with proposed Unrealised expected benefits; loss Obtain consultative help to assure
changes of support Business Process success

July 3, 2010 332


• Factors for successful implementation of larger-scale
efforts
− Develop a clear stakeholder cross-functional consensus re: BPM
effort objectives and success metrics
− Obtain senior business management visible support initially and
continuously throughout the program or project
− Obtain and maintain BPM cross-functional stakeholder support to
improve successful adoption and performance enhancement
− Identify and manage BPM project risks
− Protect against project scope creep
− Manage Business Process owners’, managers’ and performer’
expectations carefully to assure that delivered Business Process
modifications align with promised deliverables
July 3, 2010 333


• Factors for successful implementation of larger-scale
efforts
− Assure that BPM changes are consistent with organisation
culture, rewards’ expectations and leadership values
• If not, seek appropriate resources to modify these elements to maintain
BPM-enterprise management alignment
− Conform to project budget and schedule. Alterations require
stakeholder buy-in
− Deliver demonstrated staged BPM benefits quickly to sustain BPM
stakeholder buy-in
− Provide adequate process performer training and assistance
during initial experience with BPM modifications
− Completion of the BPM effort is not the end - just continuing the
journey for continuous BPM improvement

July 3, 2010 334

Implementation Construction

• After preparing the scheduled activities and securing required resources, the
construction phase may include both external-oriented and internal activities
construction phase may include both external-oriented and internal activities
• External-oriented activities address procurement of third party resources using
Requests for Proposals (RFP’s) and Requests for Quotes (RFQ’s)
• IT support resources, e.g., application and system software, hardware, operations
personnel may need procurement, upgrading or reconfiguring depending upon
the type and extent of the business process changes
• Typically, those components of business processes that are well defined,
structured and repetitive can be performed more efficiently by automated means
• Internal activities include the operational documentation of business processes,
business rules, BPM governance and policies and, as appropriate, interfaces with
IT applications, data resources and networks

July 3, 2010 335


• Business Process creation or modification includes
− Specification of activities’ procedures
− Activity task sequence
− Decisions with criteria
− Input content and sources,
− Output content and destinations
− Activity performer (human or IT application)
− Time for completion
− Frequency
− Triggering event for initiation
• Manual document
• Entry in the business process repository
• Input to a BPM suite tool component
• Decision to automate any of the business processes or any
components is based upon task complexity, degree of structure and
repetitiveness
July 3, 2010 336


• Business Rule creation or modification includes
− Specification of the related business process activity
− Triggering event
− Rule content
− Decision criteria
− Outcome alternatives,
− Source of the rule
− Reference to any enterprise legal or regulatory requirements

July 3, 2010 337

Installation

• Conversion and installation of the new or revised business process
tasks, BPM activities (including performance sensors) and changes to
the business process repository and related business rules may be
completed all at once or in stages
• Greater resistance to change, project scope and project complexity
all suggest a phased approach
• If manual BPM tasks have been automated, both manual and
automated components may be executed in parallel for a specified
time to check for consistent results
• Applications, middleware and database software plus any relevant
hardware are placed into production
• If the business process is outsourced, all the appropriate digital and
physical assets should be transferred to the business process
outsourcer per the contract

July 3, 2010 338

Training

• Business process training program content, schedule and
facilities must be planned
• Trainers should observe the usability tests for guidance in
training material preparation
• Process performers should experience the relevant task
walkthroughs with training to a defined performance
criterion
• Process owners also should complete much of the training
to understand the tasks being performed and measured
within each process

July 3, 2010 339

Orchestrating Change

• Typically the most challenging aspect to a Business Process
Implementation is reinforcing and finalising business
process performer and process owner buy-in or
acceptance of the changes
• Major challenge within a BPM project is motivating
relevant BPM participants to adopt new behaviours
• Intensity of a Change Management activity is dependent
upon the complexity and extent of the new or revised
business processes
• Change Management of BPM participants’ behaviour is
one of the most critical and difficult challenges for
achieving BPM project success

July 3, 2010 340


• Business drivers for change management
• Dominance of Improve Service Quality is consistent with the major
objective of BPM to facilitate an organisation’s quest to provide
superior products and services to customers
Improve Service
67%
Quality

Cost Reduction 40%

Process Efficiency 34%

Risk Reduction 32%

It-Business
30%
Alignment

Regulatory
28%
Compliance
July 3, 2010 341


• Effective change management activities begin with the project
launch and are sustained throughout a project
• To be successful, change management needs to address a group of
interrelated organisational factors
− Strategy - assure business processes contribute to customer value
− Structure - enables cross-functionality
− Systems - formal processes and procedures including: planning, budgeting,
resource allocation, controls and rewards, information and distribution
systems
− Leadership style - promotes a collaborative culture
− Staffing - team oriented, open to change
− Personnel skills - cross-activity trained
− Shared values - promoted through culture and performance incentives

July 3, 2010 342


• Change management for BPM should directly address the
these aligned with organisation strategy, structure and
environment
• To improve organisation performance, trained BPM
performers and managers must adopt modified tasks in
new or revised business processes within shared values
nurtured by the leadership
• Approach should produce intended, functional
consequences and minimise unintended, dysfunctional
consequences

July 3, 2010 343

Framework for Change Management

• Three-stage approach
− Activate the process owners and performers for change
− Provide clear training for new behaviour
− Support the new behaviour until it becomes learned or habitual
Stage Name Content

1 Unfreezing Creating motivation and readiness to change (or unlearning current task behaviour) by:
1. Communication and acceptance of disconfirming information - admission that something
is not working properly—a “burning bridge”
2. Connecting disconfirming information with a committed personal goal to reduce anxiety
or guilt
3. Create a feeling of “psychological safety” to minimise loss of face or self-esteem
2 Change Through cognitive restructuring and training, perceive things, judge things, feel things
and do things differently based upon a new perspective by:
1. identification with a role model, boss, mentor, trainer or consultant to see things from
another’s perspective
2. Scanning one’s personal environment for information that validates the proposed
change(s)
3 Refreezing Helping to integrate the new point of view and behaviours by:
1. New perspective and behaviour fits with an individual’s self-concept and incentives
2. Consistency with relevant others’ new behaviour and potentially new organisation
July 3, 2010 culture 344


• Specific tactics and guidelines for consideration
− Instill a sense of urgency for change
− Select a good change management team
− Leadership communicates an enterprise vision of change outcome
− Leadership communicates frequently to as many relevant people
as possible to sustain change momentum
− Remove obstacles to change
− Plan for early benefits
− Sustain a benefit stream to maintain commitment to change
− Institutionalise changes within the organisation culture and
rewards

July 3, 2010 345


• Change management is not episodic
• Agile organisation reacts quickly to changes originating
from customer demands, competitor strategies and
regulatory agencies
• Some changes are transformational
• Some changes are of lesser magnitude, but nonetheless
provide additional value to customers
• Change management should be viewed as a portfolio of
tools to be used flexibly for efforts of varying degree

July 3, 2010 346

Change Management

• During the Implementation Phase, change requests for business
process and business process management activity specifications
(e.g.; personnel, IT and financial resources; as well as BPM and Rules
repositories) may arise
• These should be prepared, reviewed and approved/denied
consistent with the organisation’s standard Project Change
Management policy and procedures
• Sufficient justification for the change request must be included
• Even smaller-scale efforts should submit a short-form request for
review to gain some level of oversight for undertaking any changes
to business processes

July 3, 2010 347

Evaluation

• Business process post-installation realised benefits
(contrasted to expected benefits) are evaluated from
− Assessing the financial and operational performance statistics
collected by the BPM performance systems data collection
(manual or automated)
− Business Process performer interviews
• Analysis should include a time series of statistics that has
allowed Business Process performers to have mastered the
task learning curve
• Evaluate the financial and operational performance of the
Business Process Implementation phase and the entire
Business Process development or improvement project
July 3, 2010 348

Quality Control

• Quality Control or test plans for new and revised business process
components are executed to evaluate the completeness,
correctness, consistency, robustness and usability of both manual
and automated tasks
• First set of tests addresses workflow function – each manual and
automated related new or revised task is independently evaluated
− Do the outputs satisfy the requirements?
− Is expected cycle-time achieved?
• Next integration tests evaluate interoperability between related
BPM, especially cross-functional processes’ components
− Internal automated and manual business process modules
− External components

July 3, 2010 349

Quality Control

• Stress Tests are run to assess either persons’ or the software’s and
hardware’s ability to complete “transactions” under high volume
demands with a typical mix of concurrently executing tasks
• Usability tests are completed by a sample of representative Business
Process performers to identify improvements prioritised for the
current release and a next release
• Acceptance test evaluates the operation of all the manual and
automated components with typical Business Process user
participation
• If this business process is outsourced, some representative from the
Business Process Implementation team should observe these tests
run at the outsourcer’s site

July 3, 2010 350

Implementation Roles

• Business Process (possibly IT) Test Specialists to design, execute and
assess various testing protocols, e.g., process walkthroughs,
simulations and controls, software verification as appropriate and
acceptance testing
• BPM Trainers who develop and provide training to business process
owners, managers, performers and support staff for both manual
and automated components
• For business processes that include automated components,
Application Maintenance, Database, Data Centre and Networking
management to assure end-to-end Business Process interoperability
• Organisation Development (internal) consultants to continue and
accelerate Change Management tasks
• Business Process Repository Manager to implement required
business process and business rules modifications
• Technical writers to create or modify user, Business Process and IT
manuals
July 3, 2010 351

Sustaining the BPM Lifecycle
Culture and Strategy
Process
Process
Methodology Refinement
Planning and
Strategy
Information Technology

Process Alignment
Process
Process Awareness Monitoring
Analysis of
Business
and
Process Measures Processes
Controlling

Process Sponsorship

Process Responsibility
Process Design and
Process Definition Implementation Modelling of
Business
Organisation Processes

July 3, 2010 352

Sustaining the BPM Lifecycle

• BPM Lifecycle is applicable to projects of varying scale
from limited procedural changes to large-scale process
transformation
− Some Life Cycle phases will have more detail and some less -
depending upon project complexity and scale
• Ongoing monitoring of new or revised Business Processes
continues to identify
− problems to be resolved
− further process improvement opportunities to be evaluated
• BPM help desk personnel also may uncover or learn about
additional Business Process problems and opportunities

July 3, 2010 353

Process Maintenance Activities

• Business Process enhancements provide new functionality to deliver
additional value to business process owners and enterprise
customers
• Business Process project implementation may have requested
changes that had to be postponed until post-implementation
stability was achieved
• Current performers and process owners also may suggest changes
for consideration
• Potential changes may include:
− Modification Business Process functionality
− Adding or modifying business process and rule elements or meta-data
− Modifying the composition of the BPM Governance Council

July 3, 2010 354

Process Maintenance Activities

• Experience with Business Process execution may suggest
efficiency or productivity opportunities to reduce manual
and automated process cycle time as well as operating
costs
• In turn, this should increase customer satisfaction, loyalty
and revenue
• In contrast to discretionary changes, regulations and
legislation may mandate Business Process changes
• Other changes in the external environment may also drive
business process modifications

July 3, 2010 355

Summary

• Business Process implementation must be considered as a critical set of activities
even though all the analysis and design has been completed
− Execution is the key to successful strategy
• Perform risk analysis and management to reduce unpleasant surprises and
provide business executives and process owners some degree of comfort
• Continue vigorous change management activities—people, in cross-functional
relations, are the weakest link in People, Process and Technology
− Use multiple channels to communicate frequently with senior management, process
owners and process performers
− Reinforce process/management changes with appropriate modifications to incentives
and organisational culture
• Business process outsourcing is a challenging process to manage
− Appoint trained relationship managers to improve the chance for success
• Business Process design changes must be minimised during implementation
− Business environmental factors merit continued scanning for changes that could impact
the current Business Process implementation actions

July 3, 2010 356

Summary

• Senior management and business process owners and business
process management must remain active and visible to lead
successful change
• Business Process conversion is meticulous, but an easy trap for
implementation failure
• The scope and rate of Business Process change should not exceed
the capacity of business process owners and performers to absorb
change
• Evaluate realised vs. expected benefits
− Share the wins
− Learn from the losses
• Inadequate training will lead to business process/management loss
of productivity and probable project failure
• Choose Business Process implementation techniques to match the
scope and complexity of the project requirements

July 3, 2010 357

Process Management Organisation

July 3, 2010 358

Process Management Organisation Topic Scope
Process Management
Organisation

Process Management
Process Management Roles Organisational Structures Team Based Performance
Organisation

Process Owner Process Governance

Project Manager Process Council

BPM Office/BPM Centre of
Process Analyst
Excellence

Functional Centres of
Process Designer
Excellence

Process Architects

Other Key Roles

July 3, 2010 359


• Organisational changes to consider as businesses
introduce and mature in the discipline of managing their
business processes
• Changes may be challenging
− Include changes in work performance processes, organisational
structure, roles and responsibilities, performance measures,
values and culture
• As institutions reach new levels of process maturity, new
skills, management structures and ways to align, motivate
and reward employees may be introduced
• Anticipate, plan, prepare and guide the business through
the transition to a process enterprise

July 3, 2010 360

The Process Enterprise

• A process centric organisation is structured, organised, managed and
measured around its primary business processes
• Companies discover that to be effective in managing their primary
business processes, they must assign clearly defined accountability
for the design, documentation, maintenance, upkeep and long term
health of these processes
• New roles, responsibilities, relationships and organisational
structures may be contemplated
• Often results in a significant change in management focus and the
way work is performed, evolving from
− A more traditional structure, focused on a particular resource or business
function
− To the cross-functional performance of the end-to-end process which delivers
value to customers

July 3, 2010 361


• Traditional management structures involve hierarchical delegation
of responsibility, from one level of management to the next, with
ultimate accountability to the organisation’s shareholders
• Delegation is expressed as downward managerial focus on command
and control of individual workers with responsibility for a specific set
of tasks
• Process organisations include horizontal accountability to the
customer for delivery of value across all functions
• Process focus involves process design, documentation,
measurement and improvement
• Process centric enterprise does not mean that process is the only
dimension of management, performance measurement or
organisational structure
− Financial, market and other performance measures remain important, as do
functional and product skills

July 3, 2010 362

Process Culture

• A process culture is a concept in which the business’ processes are
known, agreed on, communicated and visible to all employees
• Characteristics of a process culture include
− General agreement on what are the business processes
− Understanding how business processes interact and affect each other
− Clear definition of what value each process produces
− Documentation of how each process produces its results
− Understanding of what skills are required for each process
− Understanding of how well each process performs
− Ongoing measurement of process performance
− Management decisions based on process performance knowledge
− Owners of each process having responsibility and accountability for process
performance

July 3, 2010 363

Cross-Functional Processes
• The organisation chart by its
nature emphasises vertical
functions, seniority, vertical
reporting lines
• Creates local domains of
influence and vested
interests
• An organisation chart view
inhibits cross-functional
process view
• Everyone is partially
responsible so no-one has Organisation
overall responsibility Operational
Functions
July 3, 2010 364

Cross Functional Processes – Crossing “Vertical”
Operational Organisational Units

July 3, 2010 365

Process Management Roles

• Managerial structure in a
functionally oriented
company is typically based
on a departmental
hierarchy, where
managers are responsible
for workers performing
tasks related to a
particular resource or
function
• Personnel are combined
into divisions or
departments, each adding
additional layers of
management and control

July 3, 2010 366


• Management of a company’s core business processes is
likely to involve a new, horizontal dimension to the
organisation structure

Order
Fulfilment
Customer
Service
Product/
Development

July 3, 2010 367

Key Roles for The Process Enterprise

• Process Owner
• Process Project Manager
• Process Analyst
• Process Designer
• Process Architects
• Business Analyst
• Executive Management and Leadership
• IT Organisation
July 3, 2010 368

Process Owner

• An individual or group of individuals with an ongoing responsibility
and accountability for the successful design, development, execution
and performance of a complete end-to-end business process
• Titles such as process leader, process coordinator, process manager
and process steward are often used
• Scope of responsibility may vary
− May have direct or indirect authority over strategy, budgets and resources
− May be business process owners, i.e., those concerned with end-to-end
business processes which directly deliver value to the customers of the
organisation
− May be support process owners who may be concerned with those processes
which support the organisation’s business processes such as human resources,
financial or information technology processes

July 3, 2010 369

Process Owner

• May involve other duties such as
− Chairing transformation efforts
− Integrating process results with those of other process owners
− Advocating for process priorities
− Benchmarking process performance
− Coaching process performers

July 3, 2010 370

Process Owner

• Responsibility for process design
− Accountable for the overall integrity and integration of the process design
− May share decision rights relating to the process design with other managers or
participants
• Accountability for process performance
− May manage the process, i.e., how work gets done, but not necessarily the people who
perform the work
− Managing process performance involves developing a strategy for the process, setting
performance goals and objectives
− Includes insuring that resources and skills are in place, measuring and communicating
actual performance against targets and using this feedback to continuously reset goals
and objectives
− Initiate process transformation efforts and define incentives which insure that the
process continues to deliver value to its customers
• Advocacy and support
− Need to manage communications and advocate for the processes under their care with
executive management, customers, suppliers, participants and other internal and
external stakeholders
− Process managers continuously monitor results so they must also investigate and
resolve problems

July 3, 2010 371

Process Project Manager

• Often, the first version of a process owner is a project manager
responsible for a process improvement effort
• Typically have responsibility for a project outcome, i.e.,
improvement to a business process, but lack direct control over
resources, policies, budgets, etc.
• Project manager is responsible for
− Conjoining many disparate groups within the organisation
− Adhering to the definition of project delivery methodology
− Designing and implementing the processes
− Managing change in order to achieve an overall process improvement
• Throughout the project delivery process, project managers may
monitor and control process operations in order to ensure that the
scope of the project confirms to the project objectives

July 3, 2010 372

Process Analyst

• Manage process transformation projects, lead process
discovery and design workshops, coach process owners
and measure and report on process performance
• Typically have a great deal of skill in documenting and
understanding process design and performance patterns
• Provide analysis and assessment of current processes,
evaluate alternate process design options and make
recommendations for change based on various
frameworks

July 3, 2010 373

Process Designer

• Significant process knowledge who design new business
processes, transform existing business processes and
implement plans
• Possess analytical and creative skills
• Use visual and mathematical models to describe each step
in a process and the organisation of work
• Ensures that the process design is in alignment and
compliance with the overall business’ goals and policies

July 3, 2010 374

Process Architects

• May function in a business or technology role
• May be focused on managing business performance or on mapping
technology to business operations
• Responsible for developing and maintaining a repository of
reference models and standards with regard to a company’s
products and services, business processes, performance measures
and organisation
• Engaged in business process analysis and transformation initiatives
• Involvement may be from a standards and compliance perspective
or as they may serve as subject matter experts to advise the team on
the company’s process methodology
• Through the analysis of business process architecture, companies
identify opportunities for market advantage, business integration
and various internal process initiatives
July 3, 2010 375

Business Analyst

• Responsible for analysing the information and technology
needs of their business clients to help propose information
and technology solutions
• Facilitate meetings to assist the project team in analysing
current technology mapping
• Involved with business operations and designing new
information and technology functions
• Performs a liaison function between the business side of
an enterprise and the information technology department
or external service providers

July 3, 2010 376

Subject Matter Experts

• Deep understanding of the certain business functions or
operations, often possessing years of experience as a
participant in business operations
• Provide input on the current process and assist in
designing new processes
• May have institutional knowledge about the rules
governing the organisation’s processes, customer
requirements or the organisation’s culture
• Validate models and assumptions and are members of
implementation teams providing change leadership as
trusted stakeholders
July 3, 2010 377

Executive Management and Leadership

• Role of executive leadership is critical to business process management
• Set the vision, tone and pace of business process improvement
• Determine the direction and strategy of business process management, focusing
the enterprise on its larger objectives
• Allocate resources and reward success
• Unify the various missions and groups throughout the enterprise and appoint and
empower process owners or other individuals playing key roles in the
management of business processes
• Act as champions inspiring the enterprise to change, sometimes by creating a
sense of urgency to overcome skepticism and resistance
• Communicate the case for process management and remove obstacles which may
impede progress toward the goal
• Responsible for creating the environment for success, sometimes through
influence and persuasion, other times by resolving conflict and removing
roadblocks

July 3, 2010 378

IT Organisation

• roles within Information Technology groups who may play an
important part in business process management including
− Solution architects
− System analysts
− BPMS configuration specialists
− Developers
− Database administrators
• Experts help define supporting technology solutions and may assist
in defining new capabilities for business processes based on enabling
technology
• Assist in process transformation initiatives through the
implementation of new technology while ensuring that the
company’s technical standards are enforced

July 3, 2010 379

Organisational Structures

• Organisations have identified the need for new mechanisms for
planning, budgeting and allocating resources in order to ensure that
their processes are properly resourced, integrated and aligned with
their strategic objectives
• Important that organisations have a clear governance structure to
provide leadership and clarify decision rights to enable cross-
functional and departmental process improvement or management
programs to succeed
• Changes in the organisational governance structure that can be the
root of resistance to business process management initiatives,
sometimes causing them to fail
• Individuals who may have had a great deal of power and control
over resources based upon organisational functions, product lines or
geographic boundaries may find that their performance measures,
authority and span of control must change in order to successfully
implement business process management

July 3, 2010 380


• Business process management provides an end-to-end
perspective of how work is done
• End-to-end perspective crosses traditional organisational
boundaries and requires that the mechanisms by which
decisions are made and resources are allocated must also
be aligned with the end-to-end business process
• Sound governance provides a structure of authority and a
framework for collaboration
• Structure and framework enable proper allocation of
resources and efficient coordination of activity control
throughout the organisation
July 3, 2010 381


• Process Governance
• Process Council
• BPM Office/BPM Centre of Excellence
• Functional Centres of Excellence

July 3, 2010 382

Process Governance

• No single standard governance structure which is widely in
use
• Issues such as organisational strategy, culture and process
maturity, business process outsourcing and even the
nature of individual leaders can cause a significant
deviation from any given governance framework

July 3, 2010 383

Process Governance Options
Change
Project Based Continuous

Chief Information Officer
Chief Information Officer
High Lead
Lead
Degree Project Manager
Process Owner
of
Process
Enabled
by IT Chief Operations Officer Chief Information Officer
Low Lead Lead

Project Manager Process Owner

July 3, 2010 384

Process Council

• Organisations undertaking the process journey may want to consider
instituting a process council to address these issues
• Process council may be made up of a combination of executive
leaders, functional or departmental heads and the process owners
of the core cross-functional enterprise processes
• Mission may include
− The identification and resolution of any cross-process integration issues,
conflicts between process and functional (or departmental) ownership
− Resource allocation
− The development and alignment of the organisation’s business objectives,
goals and strategy

July 3, 2010 385

Process Council
Executive Leadership

Process Council

Executive Leaders, Process Owners, Functional Leaders, Support Areas

Sales Marketing Manufacturing Procurement Finance

Process Owner Order Fulfilment

Process Owner Product Development

Process Owner Customer Service

Process Owner Capacity Management

Process Owner Supporting Processes
Human Resources Management,
Information Technology Management,
Facility Management

July 3, 2010 386

BPM Office/BPM Centre of Excellence

• Business Process Management Office (BPMO) / BPM Centre of Excellence
(BPMCOE)
• BPMO acts in a manner similar to that of a project management office, identifying,
consolidating and reporting status on various process improvement projects
across the enterprise
• BPMCOE charters include setting standards, providing common tool and methods,
training and education on business process management principles and practices,
providing governance on overall process design and integrating business
processes at the enterprise level
• Play an integral role in prioritising and allocating scarce resources to business
process improvement efforts, as well as tracking and reporting process
performance metrics to the respective process owners and executive
management
• Responsible for maintaining the repository of process models, identifying
opportunities for improvement and working with various stakeholders in the
development of business cases for process improvement and transformation
efforts

July 3, 2010 387

Functional Centres of Excellence

• Rather than command and control the performance of individual tasks, process
owners find that they need to be supported by cross-functional teams who are
also focused on the performance of the overall process
• Instead of command and control oversight, these teams may work relatively
independently with guidance and support from management
• Encounter a need for change in the required skills and culture of their organisation
as they gain experience in process management
• Need to maintain and integrate new skills and professional expertise across all
business processes
• Specialised skills may have previously resided in a functional group of the
enterprise
• Best practices groups, sometimes called centres of excellence, provide knowledge,
standards, best practices, training and education
• Responsible for ensuring the proper resources with proper skills are placed and
allocated properly throughout the company’s business processes

July 3, 2010 388

Executive Leadership

Process Council

Executive Leaders, Process Owners, Functional Leaders, Support Areas

Centres of Production Human Capital Information
Order Acquisition Engineering
Excellence Technology Development Technology

Process Owner Order Fulfilment

Process Owner Product Development

Process Owner Customer Service

Process Owner Capacity Management

Process Owner Supporting Processes
Human Resources Management,
Information Technology Management,
Facility Management

July 3, 2010 389


• Centres of excellence may be virtual organisations (known
as a Community of Interest or COIN)
• Many centres of excellence are organised around a
particular skill or profession: sales, marketing, finance,
information technology, etc.
• Coaches may be assigned to business processes from the
centres of excellence with a responsibility for supporting
and developing members in order to ensure that the
caliber of localised skills are maintained and enhanced
• Centres offer training and education programs as well as
professional networking for sharing experiences
July 3, 2010 390

Team Based Performance

• Organisations that manage by business processes recognise that
changes must be made in the way performance is measured and
how employee performance is recognised and rewarded
• Consideration may be given to connecting employee compensation
to the performance of the process, to the results of the workgroup
and to their individual performance within that group
• Measures may be associated more closely to customer satisfaction
and the process results such as cycle time, service levels, quality and
value delivered
• Changes may also result in a change in culture, with increased
individual accountability to the outcome of a process and ultimately
the customer

July 3, 2010 391


• Every enterprise is unique, with its own unique culture, values,
incentive systems, business processes and structure
• Today many companies are still structured around a functional
hierarchy, with little or no accountability for the end-to-end business
processes which deliver customer value across functional silos
• As the power and benefit of managing business process becomes
more prevalent, organisational focus and structure is likely to evolve
to include a process dimension
• Evolution may lead to significant change in how work is performed
and managed
• Process ownership is critical to the successful management of their
core business processes

July 3, 2010 392

Summary

• An enterprise fosters a process culture when the business’ processes are known,
agreed upon, communicated and visible to all employees
• As an enterprise matures in managing their business processes, their
organisational structure will naturally tend toward change which comprehends a
process dimension
− Management of work from a downward managerial command and control approach
adapts to include a horizontal dimension reflective of end-to-end processes, driving
accountability to the customer for delivery of value across functions
• An individual or group is assigned the role of process owner for a complete end-
to-end business process
− Process owner has an ongoing responsibility and accountability for the successful
design, development, execution and performance of this process
• Successful process management within an enterprise will involve numerous roles
in addition to process owner
− Some individuals will have responsibility for more than one role
− More common roles include process manager, process analyst, process designer and
process architect, along with business analyst, subject matter expert and executive
management and leadership
− Several supporting roles which play an important

July 3, 2010 393

Summary

• It is critical that organisations have a clear governance structure to provide
leadership and clarify decision rights to enable cross-functional and departmental
process improvement or management programs to succeed
• While there are many governance structures being proposed and implemented,
there is currently no single standard for comprehending an organisational focus on
process within an organisational structure
• A process council, made up of executive leaders, functional or department heads
and process owners, is one common approach to governance
− Ensures alignment of business processes with enterprise strategies, goals and objectives
and may have responsibility to identify and resolve cross-process integration issues,
conflicts between process and functional ownership
− May have responsibility for the allocation of business process management resources
• Other organisational approaches to process management include the
establishment of a Business Process Management Office (BPMO), a BPM Centre of
Excellence (BPMCOE) or a functional centre of excellence (often known as a
Community of Interest or COIN)
• The Business Process Management professional must understand the myriad of
potential organisational changes which may be brought about through increasing
process maturity, so that they can guide the enterprise through the transition

July 3, 2010 394

Enterprise Process Management

July 3, 2010 395

Enterprise Process Management Topic Scope
Enterprise Process
Management

Process Process
Requirements of Process EPM Best From Planning to
Benefits of EPM Repository Management
EPM Frameworks Practices Action
Management Maturity

MIT Process
Customer Centric
Handbook
Measurement
Business Activity
Framework
Model

American
Process Portfolio Productivity and
Management Quality Council
(APQC)

Enterprise Process Value Chain
Improvement and Group - Value
Management Chain Reference
Planning Model (VRM)

SCOR (Supply
Chain Operations
Reference)
July 3, 2010 396


• Process management involves the transition from expressing
strategy in general terms or in financial terms to expressing strategy
in terms of observable cross-functional activity
• Requires both careful thought, a shift in mindset and a new set of
leadership behaviours
• Shift in mindset involves a deep appreciation that the financial goals
are simply the cumulative outcomes of the activities that the
organisation executes
− A shared understanding of the definition of each enterprise level business
process, including details on where the process starts, where it ends, the key
steps and the departments involved
− Clarity and agreement on the critical few measures of performance for each
process
− Acceptance of the estimates of current performance for each process
− Agreement on the size of the performance gap that needs to be bridged
− Agreement on the top priorities for improvement, allocation of resources and
deep dedication to taking action
− A shared understanding of accountability assignments
July 3, 2010 397


• Plans cannot be translated into action without a clear, shared
understanding of the accountability for improving and managing the
firm’s major enterprise level business processes
• In most organisations, no one person has authority or control over
the entire set of activities in an end-to-end business process
− Process management does not dominate or replace a business unit focus or
the need for a functional focus
− Instead, it represents an additional and valuable management practice that
emphasises the way in which a company creates value for customers
• Establishment of process governance is important to drive customer
centricity and collaboration at all management levels
• Final component in this planning stage is a solid communication plan
that clearly communicates the enterprise process view, key
accountability assignments and the high level goals and so engages
people in the organisation
July 3, 2010 398


• Assures alignment of the portfolio of end-to-end business
processes and process architecture with the organisation’s
business strategy and resource allocation
• Provides a governance model for the management and
evaluation of initiatives
• Involves the deliberate, collaborative and increasingly
technology-aided definition, improvement, innovation and
management of end-to-end business processes that drives
business agility

July 3, 2010 399

Benefits of Enterprise Process Management

• An organisation creates value for its customers via the performance
of its large cross-functional business processes
• These processes determine the way in which a firm designs, makes,
sells, delivers, services its products and performs its services
• Enterprise Process Management is the means for the firm’s leaders
to consciously and collaboratively improve and manage the flow of
work in performing for customers
• EPM is an essential management practice for the leaders of those
firms who wish to satisfy customers and improve performance
• Provides the means for a firm to better engage its people, shift the
organisation culture towards more of a performance based model,
enables leadership and facilitates growth

July 3, 2010 400

Enterprise Process Management and Operational
Processes
• You have to have them, manage them, monitor them,
update them
• You cannot ignore them or do without them
• They define day-to-day specific activities and associated
controls
• But you need to ensure that operational processes exist
with a larger enterprise ecosystem
• Process management does not dominate or replace a
business unit focus or the need for a functional focus
− It represents an additional and valuable management practice
that emphasises the way in which a company creates value for
customers

July 3, 2010 401


• EPM involves a high level, strategic assessment of the
organisational process view and a high level process
analysis and performance evaluation
• Should not be confused with more detailed process
analysis and modelling
• Essence of EPM is customer centricity and accountability
for the performance of the organisations critical cross-
functional processes
• EPM offers benefits in terms of managing the
organisation’s value chain
− Other benefits in terms of engagement, leadership and growth
July 3, 2010 402


• Process thinking can provide the needed context to engage
the entire organisation in executing on strategy
• By articulating strategic objectives in terms of the specific
improvement needed for these cross-functional activities,
organisations can better engage and even inspire
employees to action

July 3, 2010 403

Enterprise Process Management and Leadership
Behaviours
• Knowing the business involves understanding in detail the
work and the roles of key departments and key people
across the whole workflow as it crosses traditional
organisational boundaries
− Only then can executives have sufficient knowledge to deliver
best value to customers and shareholders
− Many executives do not appreciate the workflow at a sufficient
level of detail
− Lack of understanding can detract from how value is created for
customers
• Insist on realism
• Set clear and realistic goals and priorities
• Reward the doers
July 3, 2010 404


• Process thinking is also essential to growth
• Firms often lack the tools and management disciplines to tackle
growth in a structured, systematic way
• Rapid, sustainable growth requires not just a systematic approach
but also a systemic view and broad cross-functional collaboration
• A process focus on items such as flawless delivery and “first time
right” responsiveness are essential in providing existing products or
services to either existing or new markets
• In order to achieve flawless delivery and service, organisations must
measure and manage the performance of the large cross-functional
processes that deliver value to customers
− Involves the definition, improvement and management of the product or
service fulfillment process

July 3, 2010 405

Requirements of Enterprise Process Management

• EPM requires that the entire value chain involved in
providing customers with products and services be
defined, improved and managed in an integrated way
• Requires a shift in the traditional functional mindset which
dominates management thinking in many organisations
and the so-called “silo effect” in which each functional unit
is only concerned with its processes and coordination is
lacking

July 3, 2010 406

Requirements of Enterprise Process Management

• Role of measurement is indispensable to maintaining a
customer centric focus and assuring accountability for the
performance of the organisation’s large cross functional
business processes
• In EPM the focus is on measuring what counts to
customers - from the customers’ point of view
• For most organisations this will include metrics of quality,
timeliness, completeness, accuracy and responsiveness for
the product and services provided
− For example, the Supply Chain Council has defined the concept of
‘perfect orders’ as performance
• “in delivering: the correct product, to the correct place, at the correct time,
in the correct condition and packaging, in the correct quantity, with the
correct documentation, to the correct customer.”
July 3, 2010 407

Functional and Process Product/ Service Design
Functional Product/
Service Design

Marketing Finance Sales Engineering Manufacturing Distribution

Design Market Deliver
Build Product/
Product/ Product/ Product/
Service
Service Service Service

Process Product/
Service Design
July 3, 2010 408

Objectives of Enterprise Process Management

• Fundamental objectives of developing an enterprise view of process
management
− Define the large cross-functional business processes which deliver customer
value
− Articulate the organisation’s strategy in terms of its cross-functional business
processes
− Assign accountability for the improvement and management of the
organisation’s cross-functional processes
− Define the performance measures which matter to customers
− Define the organisation’s level of performance in terms of these customer
centric measures
• In order to implement the above there are three essential
deliverables
− A customer centric measurement framework
− An enterprise level process schematic
− An enterprise level process improvement and management plan

July 3, 2010 409

Customer Centric Measurement Framework

Process Output Metrics Indicators

Develop New Product Product or service Time to market
or Service introduction Variance to promise
date
Deliver Product or Product or service to The correct
Service customer product/service, to the
correct place, at the
correct time, in the
correct condition and Indicators that contain
packaging, in the correct measures of specified
quantity, with the metrics
correct documentation,
to the correct customer
Respond to Customer Response with correct First time right
Inquiry solution Responsiveness
Variance to promise
date

July 3, 2010 410

Process Portfolio Management

• Important component of governance
• Recognises that the establishment of improvement
priorities needs to be viewed on a portfolio basis
• Ties the enterprise together from a funding priority and
integration perspective
• Provides a method to evaluate and manage all enterprise
processes in a consolidated view
• Provides the framework for process governance with
respect to the management and evaluation of initiatives

July 3, 2010 411

Enterprise Process Improvement and Management
Planning

Strategy Execution

• Which is more important: strategy or execution?
• You cannot execute flawlessly in the absence of clear
strategy
• Also need a process view of the business on an end-to-end
basis
• The creation of process governance at the enterprise level
view of business processes is therefore vital
July 3, 2010 412

Planning
• Define and executing strategy in a process context
• It is the set of enterprise business processes which defines how work
is done and creates value for customers and shareholders
• Combination of
− A customer centric enterprise level measurement framework
− An enterprise level process schematic
• Permits the leadership of organisations to define the size of the gap
between current performance and desired performance for its large
cross functional processes
• Then it is possible to answer the question “Which of our core
processes need to be improved by how much in order to achieve
strategic goals?”
• It is the answer to this question that pays significant dividends in
terms of linking strategy to execution
July 3, 2010 413

Planning
• Aligning processes with business strategies implies that
adequate definitions of the organisation’s strategies have
been developed
− Not always the case
• For an organisation to take action on the improvement
and management of its enterprise level processes it is
essential to assign accountability for the performance of
these processes
• common methods of establishing process governance via
the assignment of accountability for process ownership
− Assigning accountability for the ownership of the process as an
additional responsibility to a senior functional manager
− Creating a staff position as a process owner or process steward
July 3, 2010 414

Planning
• Role of the process owner is to monitor the performance
of the enterprise level process and lead efforts in
improving and managing the process to deliver value to
customers
• Key cross-functional processes may be so large that no one
executive can have control over all the resources involved
in delivering value to customers
• Establishment of a process governance structure, often
involving a panel or council of executive process owners,
tasked with the measurement, improvement and
management of the organisation’s processes is an effective
approach

July 3, 2010 415

Assessment of a Process

Step Activity Description
1 Define the critical few measures of performance from a customer’s point of view
2 Define the triggering events, inputs, key steps, results and critical metrics for the
process
3 Assess the firm’s current performance for the process which directly creates value for
customers
4 Determine the level of desired performance for the process by expressing strategic
and operating goals in process terms
5 Assess the size of the performance gap between the firm’s current and desired
performance for this large cross-functional business process
6 Develop an improvement and management plan which clearly indicates the desired
scope of process improvement, the relative priority and accountability for action
7 Communicate the plan, engage and inspire people to take action and conduct training
on a common approach

July 3, 2010 416

Planning
• Process owners or stewards require some leverage in
order to carry out their assignments
• Some organisations have assigned the IT budget for the
introduction of new technology to the process owner as
one means of providing this leverage
• In other instances, the discretionary component of
executives’ and managers’ bonuses has been modified in
order to allocate 20-30% of that bonus to measurable
success in improving the company’s business processes

July 3, 2010 417

Planning
• One of the impacts of globalisation has been an increase in
the incidence of outsourcing
• In some instances, organisations may decide to outsource
or offshore an entire business process
• In other cases, a set of activities or a group of people might
be outsourced or taken offshore

July 3, 2010 418

Sample Enterprise Business Process Models

• The following sample organisational models illustrate
implementations of aligned cross-functional business
processes and have the following core characteristics:
− Enterprise-level process definition
− Focus on end-to-end cross-functional business processes that
deliver value to customers
− Designed for simplified communication
− Common understanding of processes among process owners and
users
− Simple structures and frameworks
− Appropriate use of external reference models and standards

July 3, 2010 419

Sample Enterprise Business Process Models - 1

Customer’s Process Needs

Business
Core Processes Business
Controlling Measurement
Process Process
Customer Product Order Customer
Processes That Acquisition Delivery Fulfilment Support Processes That
Results of Other
Enabling Processes Processes

Management Management Resources Technology Acquisition

Supplier’s Processes
July 3, 2010 420

Sample Enterprise Business Process Models - 2
Align

Supply Chain
Innovate Plan

Source Make Fulfil Customers
Sell

Build

People Finance Information Environment Governance

July 3, 2010 421

Sample Enterprise Business Process Models –
Common Structure
• Sample business process models have a common structure
• Generic structure that forms a template for specific
actualisations

Operational Processes With
Cross Functional Linkages
Vision,
Strategy,
Leadership,
Business
Management
Management and Support
Processes

July 3, 2010 422

Sample Enterprise Business Process Models –
Common Structure
Vision, Operational Processes With Cross Functional Linkages
Strategy,
Business Develop and
Market and Deliver Manage
Manage
Management Products and
Sell Products Products and Customer
and Services Services Service
Services

Vision and
Strategy

Business
Planning, Human Information
Merger, Resource Technology
Acquisition Management Management

Legal,
Governance Regulatory, Knowledge,
External
and Environment, Improvement
Relationship
Compliance Health and and Change
Management
Safety Management
Management

July 3, 2010 423

Define Measures Linked to Key Processes
Number of Profitability
Customer
New Per Inventory
Turnover
Customers Customer


Customer Customer’s Process Needs
Acquisition
Cost Core Processes
Business Business
Controlling Measurement Number of
Process Process
Customer Product Order Customer Customers
Acquisition Delivery Fulfilment Support
Processes That Processes That Complaints
Time to Fulfil Results of Other
Order Enabling Processes Processes
Time to
Management Management Resources Technology Acquisition Resolve
Complaints

Forecast
Accuracy Supplier’s Processes

Number of Delivery Payment
Time Invoice
Returns Accuracy Times
Accuracy
July 3, 2010 424

Actions to Achieve Enterprise Business Process
Approach
• Identify and understand the cross-functional, enterprise-
level business process that create and add value
• Understand and define the metrics that measure cross-
functional, enterprise-level business process performance
• Define a plan for managing and improving cross-functional,
enterprise-level business processes identifying priorities
and resources
• Ensure there is sponsorship, ownership, accountability for
results and recognition of achievements
• Communicate the vision to the organisation

July 3, 2010 425

Enterprise Business Process Models vs. Organisation
Chart
• How do the two compare?
• Organisation Chart • Enterprise Business Process Models
− Top-down structure focussing on − Functional areas that traverse
operational areas operational boundaries
− Focussed on internal organisation and − Focussed on end-to-end
structure accomplishments
− Compartmentalised − Joined-up
Strategy,
Manage
Services

Vision and
Strategy

Business

Legal,
External
Relationship
Management
Safety Management
Management

July 3, 2010 426

Baldrige Criteria Framework

• The Baldrige criteria framework focuses on continuous improvement
that is concentrated on the customer, led by management, based on
facts and data and directed toward results
Organisational Profile: Environment, Relationship, Challenges
Workforce and
Strategic
Human
Planning
Resources

Business
Leadership
Results

Customers and Process
Markets Management

Information, Measurement, Analysis and Knowledge Management

July 3, 2010 427

Baldrige Criteria Framework

• Baldrige criteria framework is a superset of the cross-
functional business process management view of an
organisation in order to deliver improved customer
satisfaction
• Included here for the sake of completeness
• We are concerned specifically with cross-functional
business processes relating to customer service and
customer relationship management
• Baldrige criteria framework can provide a proven
framework for this

July 3, 2010 428

Mapping Sample Business Process Model - 1
Strategy,
Manage
Services

Vision and
Strategy

Business

Legal,
External
Compliance Health and
Relationship
Management
and Change Business Environment
Safety Management
Management Competitors, Governments Regulations and Requirements, Standards, Economics

Customer’s Process Needs

Business
Core Processes Business
Controlling Measurement
Process Process
Customer Product Order Customer
Processes That Acquisition Delivery Fulfilment Support Processes That
Results of Other
Enabling Processes Processes

Management Management Resources Technology Acquisition

Supplier’s Processes
July 3, 2010 429

Mapping Sample Business Process Model - 2
Strategy,
Manage
Services

Vision and
Strategy

Business

Legal,
External
Relationship
Management
Safety Management
Management
Align

Supply Chain
Innovate Plan

Source Make Fulfil Customers
Sell

Build

People Finance Information Environment Governance
July 3, 2010 430

Process Management Model
Business Strategy, Business Models, Business Plans, Change Management Process
Leadership

Design and Implement Processes
Process
Performance

Measure Actual vs. Target Performance
Process
Design

Cause Analysis Create and Implement Solutions

Process Knowledge Execution Continuous Process
Redesign Management Improvement Improvement Improvement

Gap Success Share Best Practices

July 3, 2010 431

Process Frameworks

• Standards based frameworks used to facilitate process analysis
• Generally used to provide a “best practice how-to” view
• Frameworks can be adapted by a number of vertical industries
− MIT Process Handbook
− American Productivity and Quality Council’s (APQC) process classification framework
(PCF)
− Value Chain Group’s Value Chain Reference Model (VRM)
− Supply Chain Operations Reference (SCOR)
• Others
− ACORD - Insurance
− eTOM (Enhanced Telecom Operations Map) – Telecommunications
− HL7 – Clinical data
− Microsoft Customer Care Framework
− Baldrige Criteria Framework
• Models are an good source of information to stimulate thought, most
organisations will find it necessary to customise such models to their own
organisation for optimum use and relevance
July 3, 2010 432

MIT Process Handbook Business Activity Model
(BAM)
• Generic business model included in the Process Handbook
• Attempts to represent a high-level model of everything that goes on
in a business
• Top level of the model includes five basic activities that occur - in
some form - in most businesses: Buy, Make, Sell, Design and Manage

Design

Supplier Buy Make Sell Customer

Manage

July 3, 2010 433

MIT Process Handbook Business Activity Model
(BAM)
• Further breaks down each of these top-level activities, as
subparts
− Buy
• Identify own needs
• Identify potential sources
• Select supplier
• Place order
• Receive
• Pay
• Manage suppliers

July 3, 2010 434

American Productivity and Quality Council (APQC)

• APQC Process Classification Framework (PCF)
• High-level, industry-neutral enterprise model that allows
organisations to see their activities from a cross-industry process
viewpoint
• PCF is meant to represent a series of interrelated processes that are
considered to be business critical
• Used to enable organisations to understand their inner workings
from a horizontal process viewpoint, rather than a vertical functional
viewpoint
• APQC is an international benchmarking clearinghouse who has
collaborated with 80 organisations in developing framework for
process evaluation
• The purpose of the model is to provide a framework for identifying
“high-level, generic enterprise model that encourages businesses
and other organisations to see their activities from a cross-industry
process viewpoint instead of from a narrow functional viewpoint”
July 3, 2010 435

Operating Processes

2 Develop and 3 Market and Sell 4 Deliver
1 Develop Vision 5 Manage
Manage Products Products and Products and
and Strategy Customer Service
and Services Services Services

6 Develop and Manage Human Capital

7 Manage Information Technology

8 Manage Financial Resources

9 Acquire, Construct and Manage Property

10 Manage Environmental Health and Safety

11 Manage External Relationships

12 Manage Knowledge, Improvement and Change

July 3, 2010 436

PCF
• The Process Classification Framework provides four phases: Prepare, Plan,
Implement and Transition
• Prepare
− Comprehensive assessment that focuses on the core processes
− During this phase, a business case is identified with opportunities and determines the
expected business results
• Plan
− A time-phased approach to implement the changes identified during the assessment is
developed
− The process analyst and the analysis team refines, redesigns or reengineers core
business processes
• Implement
− Changes are implemented
• Transition
− Both tactical and strategic
− Tactically, employee teams develop process operating procedures and oversee the
transition to the new process
− Strategically, the organisation will repeat the model with other processes based on their
business needs and priorities

July 3, 2010 437

PCF
• 1.0 Develop Vision and Strategy (10002)
− 1.2 Develop business strategy (10015)
• 1.2.1 Develop overall mission statement (10037) Category
− 1.2.1.1 Define current business (10044)
− 1.2.1.2 Formulate mission (10045)
− 1.2.1.3 Communicate mission (10046)
• 1.2.2 Evaluate strategic options to achieve the objectives (10038)
− 1.2.2.1 Define strategic options (10047)
− 1.2.2.2 Assess and analyse impact of each option (10048)
• 1.2.3 Select long-term business strategy (10039) Process
• 1.2.4 Coordinate and align functional and process strategies (10040) Group
• 1.2.5 Create organisational design (structure, governance, reporting, etc.)
(10041)
− 1.2.5.1 Evaluate breadth and depth of organisational structure
(10049)
− 1.2.5.2 Perform job specific roles mapping and value add analyses
(10050)
− 1.2.5.3 Develop role activity diagrams to assess handoff activity
(10051) Process
− 1.2.5.4 Perform organisation redesign workshops (10052)
− 1.2.5.5 Design the relationships between organisational units (10053)
− 1.2.5.6 Develop role analysis and activity diagrams for key processes
(10054)
− 1.2.5.7 Assess organisational implication of feasible alternatives
(10055)
− 1.2.5.8 Migrate to new organisation (10056)
• 1.2.6 Develop and set organisational goals (10042) Activity
• 1.2.7 Formulate business unit strategies (10043)

July 3, 2010 438

Value Chain Group – Value Chain Reference Model
(VRM)
• VRM attempts to integrate the three domains of a Value
Chain; product, operations and customer Value Chain
Group describes VRM: as a model that provides “a
common terminology and standard process descriptions to
order and understand the activities that make up the value
chain.”
• VRM model supports the key issues and the meshing of
processes within and between the units of chains
(networks) for the benefit of Planning, Governing and
Execution (information, financial, physical flows)
• Objective to increase the performance of the total chain
and support the continuous evolution

July 3, 2010 439

(VRM)
Value Chain Group – Value Chain
Reference Model (VRM)

Plan Govern Execute

Plan Value Chain Govern Value Chain Market

Plan Product Development Govern Product Development Research

Plan Supply Chain Govern Supply Chain Develop

Plan Customer Relations Govern Customer Relations Acquire

Build

Fulfill

Brand

Sell

Support

July 3, 2010 440

(VRM)
Value Chain Group –
Value Chain Reference
Model (VRM)

Plan Govern Execute

Plan Product Plan Customer
Plan Value Chain Plan Supply Chain
Development Relations

Gather Product Gather Customer
Gather Value Chain Gather Supply Chain
Requirements Requirements
Requirements Requirements

Assess Product Assess Supply Chain Assess Customer
Assess Value Chain
Development Resources Relations
Resources
Resources Resources

Align Product Align Customer
Align Value Chain Align Supply Chain
Resources Resources
Resources Resources

Create Customer
Create Value Chain Create Product Create Supply Chain
Relations
Plan Development Plan Plan
Plan
July 3, 2010 441

(VRM)
• VRM framework organises processes through five levels
representing the various layers of the organisation
• As the processes work the way from the bottom (actions) through
the top to the strategic processes they become more complex and
are closer to the realisation of the strategic goals
− Strategic Processes
• Strategic processes are the top level processes in the value chain
• Specifically designed around the customer needs and the business strategy
− Tactical Processes
• Decomposed from strategic processes, tactical processes outline how the goals of
the strategic processes will be met
− Operational Processes
• Tactical processes are made up from operational processes which are where the
work gets done
− Activities
• Activities are groups of actions that make up the operational processes
− Actions
• Actions are the last group of processes and represent individual items of work that
cannot be broken down further

July 3, 2010 442

Supply Chain Operations Reference (SCOR)

• SCOR Model represents a framework which offers a means of
facilitating the identification of process models for nearly any and all
types of enterprises
− End-to-end process inclusive of the supply chain ecosystem
− Valuable for enhancing enterprise and stakeholder (internal and external)
communication for building and sustaining process-centricity into the
enterprise
• Process reference model containing over 200 process elements, 550
metrics and 500 best practices including risk and environmental
management
− Five levels of decomposition
• Organised around the five primary management processes of Plan,
Source, Make, Deliver and Return
• Developed by the industry for use as an industry open standard

July 3, 2010 443

Supply Chain Operations Reference (SCOR)

Level 1
Differentiates Business
Scope Defines Scope, Enterprise Strategy

Level 2
Differentiates Capabilities
Configuration Differentiates Supply-chain Strategies

Level 3
Names Tasks
Activity Links Metrics, Tasks and Practices

Level 4
Sequences Steps
Workflow Job Details

Level 5 Links Transactions
Transactions Details of Automation

July 3, 2010 444

Process Repository Management

• Central location for storing information about how an enterprise
operates
• Information may be contained in various media including paper, film
or electronic form with a storage mechanism appropriate to the
medium
• Electronic repositories range from passive containers which store
process artifacts (also referred to as process objects) to
sophisticated tools that serve as active participants in monitoring,
executing, managing and reporting on business processes
− In the form of Document Management Systems, Process Modelling Tools and
Business Process Management Systems
• Process Repository administration activities includes storing,
managing and changing process knowledge (objects, relationships,
enablers, attributes, business rules, performance measures and
models) for an enterprise
July 3, 2010 445

Process Repository Management and Enterprise
Process Management
• Common repository of business processes provides a central
reference location to ensure consistent communication of
− What the process is
− How it should be applied
− Who is responsible for its successful execution
− A clear understanding of the inputs or triggers and expected results upon
process completion
• Maintains information needed to adequately define measure,
analyse, improve and control business processes
• Helps to promote and support the understanding and acceptance of
the cross-functional nature of many of the enterprise’s business
processes
• Facilitates collaboration across functional business units by enabling
and enforcing a methodology that focuses on the end-to-end
process
July 3, 2010 446

Process Repository Management and Enterprise
Process Management
• Central process repository contributes to the success of the
enterprise’s business process strategy by providing a blueprint to
manage and control how process change is introduced and
implemented into the enterprise
• Becomes the system of record for information on process
ownership, technological enablers, business rules and controls, both
financial and operational
• May serve primarily as documentation about the enterprise’s
business processes or may be used to simulate various scenarios to
− Evaluate process improvements
− Detect and analyse problems
• Used to identify and validate the appropriate solution
• Sophisticated repositories can be interfaced with the enterprise’s
applications to enforce defined business rules

July 3, 2010 447

Process Management Maturity Levels

• Process Maturity Models define levels of awareness for
business process best practices and automation with some
assessing the management of operational processes
• In addition to optimising operational processes, BPM
needs to be aligned with the management and
stewardship of the process
− Results in distinct but integrated process maturity and process
management maturity
− Where management maturity must precede process operational
maturity at each level in order to be successful and sustainable

July 3, 2010 448

Process Management Maturity
Process Management Maturity Process Maturity
6
Co-operative Integrated
Needs 6 Process Process
Enterprise Steward/
Collaboration Lead
Continuously 5
Improving Optimised
Needs Quality 5 Process
Process
Management Manage/
Plan
Programme 4
Predictable Managed
4 Process Process
Needs
Participate/
Management
Control
Regulation 3
Disciplined
Defined
3 Procedures Process
Support/
Direct
2
Consistent Repeatable
2 Process Process
Recognise/
Organise
1
Initial State
1
Ignored
July 3, 2010 449

Process Management Maturity Models

• Hammer’s Process and Enterprise Maturity Model
• Object Management Group Business Process Maturity Model (BPMM)
• The Deming Prize of the Union of Japanese Scientists and Engineers
• The Malcolm Baldrige National Quality Award from the U.S. National Institute of Standards and
Technology
• The European Foundation for Quality Management Excellence Model
• The International Organisation for Standardisation 9000 family of standards
• The Process Based Management Assessment Framework of the Consortium for Advanced Management
- International (CAM-I)
• The 8 Omega Framework of the BPM Group
• The Business Process Management Maturity and Adoption Model of the Gartner Group
• The Capability Maturity Model Integration from the Carnegie Mellon Software Engineering Institute
• The Business Process Management Maturity Model of John Alden and Bill Curtis
• Gartner Group BPM maturity model
• ARIS/IDS Scheer/Software AG
• SAP
• …

July 3, 2010 450

BPM Maturity Model (BPMMM) – Some Key Issues

• What is the value of increasing BPM maturity?
• BPM is a capability and not a program or project or an end state
• How many maturity measurement dimensions should be used: single dimension,
multiple dimensions such as BPM implementation/reach, BPM process maturity,
BPM goal achievement?
• Provides a capability model with maturity levels for any organisation to achieve
desired level of organisational maturity and its associated value
• Increasing maturity involves broadening reach of BPM and improving constituent
business processes
• What are realistic examples of key BPM practices (and possibly case studies) at
each level of maturity?
• What actions are required to increase maturity?
• How much can BPM technology be separated from BPM implementation: from
content management tools such as SharePoint to BPM suites such as ARIS from
IDS Scheer?

July 3, 2010 451

BPMMM – High Level Capabilities

• Link BPMMM High Level Capabilities to BPM
implementation and operation framework:
− Strategy, Management and Governance
− Design and Implementation
− Operation and Measurement
− Optimisation
− Technology Infrastructure

July 3, 2010 452

BPM Management, Governance, Implementation and
Operational Framework and BPMMM – High Level
Capabilities Process KPI
Definition
Process Strategy
Design and
Development Operational
Process Library Process Usage
Data

IC CMF Critical
Process 1

Process
Templates Process
Publication IC CMF Critical
Business Process Process 2
Design and
Development

IC CMF Critical
Process 3

Process
Business Process Usage
Modification Analysis
July 3, 2010 453

BPM Management, Governance, Implementation
and Operational Framework
Process KPI
Process Strategy Definition
Design and
Development Operational
Process Library Process Usage
Data

IC CMF Critical
Process 1

Process
Templates Process
Publication IC CMF Critical
Business Process Process 2
Design and
Development

IC CMF Critical
Process 3

Process
Business Process Usage
Modification Analysis
July 3, 2010 454

BPM Management, Governance, Implementation
and Operational Framework
Optimisation

Strategy,
Management
and
Governance Operation and
Measurement

Design and
Implementation

Technology
Infrastructure
July 3, 2010 455

BPMMM Maturity Dimensions

Reach Process
Extended enterprise
Beyond Optimised Flexible, adaptable,
5 (suppliers, partners,
optimised processes
Enterprise customers) Processes

Across the organisation, Complete set of processes
Across Managed
4 including business and IT with continuous
Enterprise functions Processes improvement
Across the IT organisation
Repeatable Consistent use across
3 Across IT (centralised or distributed teams, projects and IT CMF
IT) Processes critical process

Within IT One or more IT domains or Defined Basic processes and
2 IT CMF critical process artifacts in place
Domain Processes

Within With individual project or IT Ad-hoc Defined and driven by
1 CMF critical process individuals
Projects Processes

July 3, 2010 456

BPM Maturity Model

Strategy, Technology and
Design and Operation and
Management and Optimisation Operational
Implementation Measurement
Governance Infrastructure

Service Operation Capability and Ability to Meet
Management
Process Creation and Work Performance Operational
Knowledge of BPM
Management Management Requirements

Continuous
Management Process Resource Configuration and
Capability
Commitment to BPM Management Management Asset Management
Improvement

Governance and Monitoring and Defect and Problem Integration and
Service Deployment
Change Management Control Identification Information Access

Quality of the
Personnel
Metrics Set

Planning and Use of the Metrics
Commitment Set

Service Process Performance
Integration Benchmarking

Competency
Development

July 3, 2010 457

Process Management Maturity

• Examination of maturity levels in these models includes the
identification of a number of known success factors
• Within each of these factors are suggested questions organisations
should examine in order to assess their level of business process
management maturity
• Sample set of questions organisations may use to begin assessing
their business process management maturity
• Answers to these questions (and those similar to them) provide
some guidance on an organisation’s BPM maturity level
• Provides the organisation the knowledge of their current business
process management maturity and in addition helps in assessing
which factors may need improvement or which factors can be
leveraged, helping them advance to a higher business process
management maturity level

July 3, 2010 458

Process Management Maturity Questions

• Organisation
− Does your organisation have a Process-Centric Approach? Is it customer focused?
− What is the level of process awareness and emphasis; among management?; among
stakeholders?; among staff/employees?
− What is your level of process management success?
• Process Definition (Organisational Scope)
− Are processes defined? Documented? To what extent?
− Is process success dependent on individuals or teams?
− Are defined processes standardised across the organisation?
• Process Responsibility (Accountability)
− Have process responsibilities been defined? Who is accountable?
• Process Sponsorship
− Who is (are) the primary sponsors of defined processes? Top Management?
− Middle management? Departmental? IT?
• Process Measures
− Have process measures been defined? Used? Planned?

July 3, 2010 459

Process Management Maturity Questions

• Process Awareness (People Involvement)
− Do your employees, management think in processes?
− What is the level of people involvement in process definition? Analysis? Process
improvement?
− What level of change management methods has been deployed?
− Has continuous training been aligned with processes?
• Process Alignment
− Are process goals aligned with defined business strategies?
− Are processes aligned with organisational goals?
− Are job descriptions aligned with process definitions?
− Are employee evaluations linked to processes?
• Information Technology
− Does IT management use BPM for its processes?
− Are BPM support applications defined and employed in key processes?
− Does management use BPM applications to support performance monitoring?
• Methodology
− Are BPM tools, process methodologies or process frameworks used? Successful?

July 3, 2010 460

EPM Best Practices

• Look at the business from the customer’s point of view
− Help change the typical inside-out view of the business that the traditional, functional
paradigm promotes
− Seeing from the customer’s point of view will help you identify the critical measures of
performance that reflect the customer’s particular requirements
• Try not to call the end-to-end processes by the same name that you use in
describing internal departments
− Will assist in shifting the mindset to a process oriented view - new names for seeing
things in new ways
• Be clear on the definition of each end-to-end process
− Clarify where the process starts, the key steps in the process, the departments involved,
the output and the major measures of process performance
− Assign a group of internal experts to prepare a “draft” schematic for review and
refinement by the top team
− Assure a high degree of buy-in and ownership at the top team level
• Do it quickly
− Don’t take weeks or months, hoping to get it perfect - will never be perfect
− A few weeks of data gathering and a couple of days off-site is all that is needed to
develop a workable model that will serve as a basis for next steps

July 3, 2010 461

EPM Best Practices

• Once the top team has reached a shared understanding on the
components of its own enterprise level process model, the next step
is to do the same for the firm’s current level of performance on a
few critical metrics
− Typically involves getting real data on a set of measures around the timeliness,
quality and cost of product or service delivery and other key aspects of the
firm, such as developing new products or services
− Can be quite problematic
− Data on qualitative factors such as on-time delivery, accuracy, responsiveness
and completeness are sometimes difficult to assemble
• Value in assembling and assessing this type of current performance
data
− Facilitates an objective and shared view of how the firm is performing when
set against customer requirements
− Sets the baseline for the subsequent assessment of the size of the gap
between current level of performance and desiredlevel of performance

July 3, 2010 462

EPM Best Practices

• Several major pitfalls to avoid in reaching a shared
understanding of how the firm is performing against
customer requirements
− Lack of candor in measuring what customers really want
− Subtler and, therefore, more problematic issue - often starts
when one or several members of the leadership team vehemently
challenge the validity of the data on current performance
• Lack of buy-in is difficult to assess and even more complex to address
• To mitigate this, it is useful for the leader to ask each member of the top
team to articulate his or her acceptance of the data on current
performance
− Working at the wrong level of detail
• Can occur when some leaders wish to dive into discussion of the as-is
conditions vs. optimised/improved processes
• Can deter and defer the high level strategic discussions which are vital at
this stage
July 3, 2010 463

EPM Best Practices

• Once a shared understanding of the definition of the firm’s
enterprise level business processes and its current
performance has been achieved, management team can
then proceed to build a plan that will improve and manage
the organisation’s large, cross-functional business
processes
• Such a plan needs to answer two fundamental questions
− Which business processes need to be improved and by how
much, in order to achieve strategic objectives?
− Who will be held accountable for this planned improvement and
management?

July 3, 2010 464

From Planning to Action

• Role of process owners or stewards extends far beyond
the simple monitoring of business process performance
• To convert plans into action, process owners need to
collaborate on critical process improvement projects
• close collaboration of the members of the process council
or panel is a critical success factor in the success of large,
cross-functional process improvement efforts

July 3, 2010 465

From Planning to Action - Principal Leadership
Behaviours
Definition Analysis Design Implementation
Agree on process Understand the flow of Probe to test the vision for Process owners chair
boundaries work in a cross functional the new design meetings with process
Set clear improvement context Understand the cross- management teams
goals Agree on the size of the functional Implications of throughout
performance gap how business should be implementation
Appoint the best people
Identify realistic Gain clarity on key issues, conducted in the future There is increasing

constraints disconnects, opportunities Gain clarity on the matrix conversation and
Insist on the prioritisation of performance measures awareness of cross-
Set a clear schedule process dependencies
of issues based on impact Constructively challenge
Charter to implement, not
Refine working team the recommendations for People begin to assign
just to design change their loyalty as much to
membership if needed process as to function or
Assess the business Case business
Inspect the high level
implementation plan People are aware of the
progress in closing the gap
between current and
desired performance
There is a visible
improvement in cross-
department collaboration
July 3, 2010 466

Challenges and Lessons Learned from Cross-
Functional BPM Implementation

Aligned Processes

Aligned Measures

Resources, Skills and Enabling Technology

Knowledge Sharing

Credibility and Simplicity in Communication

Process Improvement Tools
July 3, 2010 467

Aligned Processes

• Understanding, defining and aligning business processes
are key to success
• Aligned processes increase return
• Individual operational processes need to be connected to
larger cross-functional processes

July 3, 2010 468

Aligned Measures

• Appropriate performance measurement available to all is
important
• Need to measure results of cross-functional processes and
constituent operational processes
• Ensures focus is maintained on what is important

July 3, 2010 469

Resources, Skills and Enabling Technology

• Dedicated, trained and skilled resources are important
• Need usable, functional technology providing process
design, mapping features
• Ensure full-time responsibility

July 3, 2010 470

Knowledge Sharing

• Acquire and share internal and external expert knowledge
• Implement knowledge sharing technology
• Learn from others’ mistakes
• Use appropriate external expertise

July 3, 2010 471

Credibility and Simplicity in Communication

• Need to communicate the need to operate in a business
process oriented manner
• Need to sell the concept to personnel
• Showing results is necessary to get buy-in and sustain BPM
initiatives

July 3, 2010 472

Process Improvement Tools

• Process improvement is core to BPM
• Toolset is important

July 3, 2010 473

Summary

• Enterprise Process Management [EPM] assures alignment of the portfolio of end-
to-end business processes and process architecture with the organisation’s
business strategy and resource allocation
− Provides a governance model for the management and evaluation of initiatives
• EPM is an essential management practice that provides the means for a company
to create value for its customers
• The role of measurement is indispensable to maintaining a customer centric focus
and assuring accountability for the performance of the firm’s large cross
functional business processes
• EPM has three essential requirements: a customer centric measurement
framework, an enterprise level process schematic and an enterprise level process
improvement and management plan
• Business processes must be associated to a clear strategy
• Successful process governance requires clear ownership and accountability
assigned for each process
• The role of the Process Owner is to monitor performance and lead the
improvement and management of the processes
July 3, 2010 474

Summary

• Process Owners must be given the means necessary to successfully manage the
process
• EPM can engage the entire organisation in executing on strategy by clearly
defining and communicating the means to accomplish it
• Process principles and practices positively influence leadership behaviours such as
knowing the business, insisting on realism, setting clear and realistic goals and
priorities and rewarding the doers
• Process thinking is essential to business growth
• Each end to end process must be clearly and uniquely defined
• Avoid these three pitfalls:
− A lack of candor in measuring what customers really want
− Members of the leadership team challenging the validity of the data on current
performance
− Working at the wrong level of detail
• Enterprise Process Management involves the transition from expressing strategy
in general terms or in financial terms to expressing strategy in terms of observable
cross-functional activity and requires a shift in mindset and a new set of
leadership behaviours

July 3, 2010 475

BPM Technology

July 3, 2010 476

BPM Technology

• Increasing use of computer applications to assist with the analysis,
design, implementation, execution, management and monitoring of
business processes
• Business Process Management Systems (BPMS) include a large
number of computer applications that continue to evolve as our
understanding of business processes matures and requirements for
handling complex issues and large volumes of information increase
• The life cycle of developing, implementing, measuring and
monitoring processes can
• involve a number of complicated activities
• Computer systems to support these activities have matured in
sophistication
• All studies of successful BPM programs have found that BPM
Systems are important and necessary components of any BPM effort
July 3, 2010 477

BPM Technology

• BPM technology can
encompass some or
Process Strategy
all of BPM lifecycle
Process Control
− Process modelling and
design
− Simulation Management
− Implementation – of Change
and
publish designed Innovation
processes to
controlling platform
− Management and Process Design
control – operational Process
process platform Implementation
• Very wide range of
software
July 3, 2010 478

BPM Technology

• Experience shows that the application of technology is effective when the complexity of the
process or the amount of information to be processed is too great to manage with manual
methods
• Automation of processes is increasingly important for medium to large- scale enterprises,
especially in attempts to coordinate efforts among members of geographically disperse
work groups
• Automation of workflow can create remarkable increases in efficiency by reducing the time
and costs associated with process activities and the lag times involved between the steps in
a process, particularly when compared to paper based methods
• As an assistant to human efforts, technology can help people become more efficient by
providing memory aids, balancing work loads and making more information available in
decision processes
• Can establish performance measures to help us optimise the value of processes and we can
access data from process results that support management decisions
• When these business performance measures grow in complexity and rely on large amounts
of information from a number of sources, then computer support systems are essential
• Technologies applied to the tasks performed by business process management
professionals make their efforts more efficient and effective

July 3, 2010 479

Elements of BPM Technology

• BPM tools support or automate all or part of
− Modelling, analysis and design of processes
− Implementation and execution of processes
− Management decisions, business performance measures and
administrative activities
• Software applications may address specific tasks
supporting BPM or software vendors may offer a set of
applications covering a number of BPM activities

July 3, 2010 480

Software Components Supporting BPM Activities
BPMS Application

Business Process Knowledge Frameworks
Process Measures Software
User Application Rules for Specific Models for
for Specific Components/
Interface Processes Specific Processes
Processes Modules

BPMS Application

BPM Tools/Utilities
Software
User Interface Process Modelling Process
Requirements
Tools Tools Monitoring Tools
Tools

BPM Server Engines and Components
Enterprise
Business Rules Content Manager Architecture Data
Workflow Engine
Engine and Repository Integration Management
Engine

Language Platform

J2EE BPEL XML .NET

July 3, 2010 481

Modelling, Analysis, Design

• Business Process Modelling and Analysis (BPMA) starts with the
initial conception and description of a process
• Models of processes are created and various scenarios or alternate
processes are constructed in order to analyse the behaviour of
processes and optimise performance
• Technologies available for BPMA start with applications that support
graphical representations of the process and detailed descriptions of
the goals and requirements for the process
• Drawing a flowchart or map of the activities involved in a process
based on the requirements for the process is one of the early steps
in process development
• Mapping of business processes is an extremely important stage
necessary for designing and communicating processes that meet
business requirements and are realistic in terms of their use in
detailing implementation requirements

July 3, 2010 482


• Efforts to standardise methods for describing processes have resulted in a
standard graphical notation called Business Process Management Notation
(BPMN)
• BPMN is particularly useful as a formal system for the precise description of
classes, methods and properties of process activities
• BPMN is important for the technical design, coding and implementation of
business processes using BPMS
• Once the process is adequately described, other useful technologies for BPMA
may involve process modelling and simulations
• Simulation programs will simulate the behaviours of people (or machines) carrying
out the activities of a process
• Simulators will simulate the actions taken at each step,
• Simulate the flow of data and other information through the process and execute
rules that may change the process flow and dictate additional processes to be
initiated such as a process of approvals by a manager when the invoice amount
exceeds a certain value

July 3, 2010 483


• Metrics developed to measure performance such as the time
required to complete a step, the lag time between actions and the
cost of resources used will be included in a simulation exercise to
measure the effectiveness of the process
• Simulations and modelling are iterative activities in that a simulation
of a number of incidents will be run by a software program based on
a set of assumptions about how the tasks in steps are carried out
• During the simulation measures such as total time for completion
and costs are recorded to determine points for improvements
• Assumptions may be changed and another set of incidents will be
simulated to compare the results

July 3, 2010 484


• Features of a typical modelling and simulation application
are:
− The ability to graphically represent the process as a map of the
steps to be taken
− Methods to define the flow of information between steps and
conditions under which the flow may change
• If the flow of the process can be changed based on events, simulators
provide the ability to define the probability distribution of the likelihood of
one or more routes through the process
− Methods to state assumptions about measurable behaviours in
process steps such as the time to complete a task
• Such behaviours may be based on a probability distribution
• For example, the distribution of task completion times may be defined and
each simulation of an incident will use a completion time from that
distribution

July 3, 2010 485

Technologies that Support Implementation

• Once a process has been designed, putting that process
into operation may involve a number of information
technology support applications
• Some of the most important applications may be
considered in the following categories
− Electronic Document Management Systems that capture,
organise and provide information required for the execution of
steps in a process
− Electronic forms for information capture and distribution
− Workflow routing and management
− Workgroup collaboration

July 3, 2010 486

Electronic Document Management

• Virtually all business processes involve the use of information in
documents and data repositories
• Fundamental computer support systems are those applications that
help us collect and manage this information in electronic formats
• Electronic information in support of processes may be used by
people by “pushing” or “pulling” information to support the tasks
that are part of the process
− “Push” methods involve sending information to a person for initiating and/or
accomplishing a task
• A very basic form of an information push is sending an email to a person with
information for attention
− “Pull” methods rely on people finding and pulling information from an
information repository in order to accomplish a task

July 3, 2010 487

Electronic Forms

• A great deal of information useful for a business process
will be gathered through the use of forms
• Electronic forms provide a structured method for
capturing and presenting information
• Most computer applications use forms in one way or
another
• A significant trend in the development of electronic forms
that has a great impact on BPM is the standardisation of
the format of forms and embedded information fields

July 3, 2010 488

Workflow Automation

• Once the information involved in a process is captured and stored electronically,
the opportunity is presented for using the information with other applications
such as workflow automation
• Workflow automation involves systems that provide necessary information to
each activity in a process and manage the flow of actions and information based
on a set of rules
• Many workflow automation applications have been built on top of or are
embedded in content and document management systems as a means to push
information organised by these systems to workers involved in implementing the
actions in a process
• Some of the available BPM systems allow users to graphically map out a process,
define the flow and simulate the process, define the metrics and rules that will be
used to control the flow at the design phase
− Once the process definition is finalised, the design can be implemented as the
production workflow by assigning user roles, responsibilities and authorities
• Workflow Management Coalition (WFMC - www.wfmc.org) has developed a
framework for the establishment of workflow standards

July 3, 2010 489

Business Process Execution Language (BPEL)

• Technical trend is the use of the Business Process
Execution Language (BPEL), a programming language
optimised for executing process activities
• Using BPEL, a programmer formally describes a business
process, executes the steps in the process and coordinates
information from a variety of sources
• BPEL fits into the framework of service oriented
architectures and optimises the use of Web services

July 3, 2010 490

Workgroup Collaboration

• Experience gained from BPM successes and failures shows that one
of the most important success factors is the involvement and
interaction of management, process designers, people who perform
the tasks within processes and representatives of information
technology in the analysis, design and implementation of BPM
initiatives
• Applying BPM systems to poorly designed processes is a sure
formula for disappointing results
• Efforts to analyse and improve complex and sometimes cross-
functional processes will often involve the cooperation and
collaboration of groups of individuals starting with the analysis,
design and modelling of processes and continuing with the
implementation and management of process executions

July 3, 2010 491

Advantages and Risks of Process Automation

• BPMS can produce significant increases in efficiency through support of activities
such as
− Managing large amounts of documents and data
− The geographic distribution of information to workgroup members
− Reducing the lag time in taking critical actions through workflow and reallocating
repetitive, manual processes from people to machines
− Many of the efficiency gains provided by BPMS will also reduce operating costs
• Help in the assurance of compliance for policies necessary for critical legal and
regulatory compliance
− Track and audit actions that indicate compliance with controls designed to insure
quality in production processes and the veracity of information supplied to regulatory
bodies
• Supply timely information needed for management to measure the performance
of business processes and look for areas to improve
− Management can develop and access reports summarising data from many sources to
gain new conceptual understanding of interrelated processes across the enterprise
− Can provide critical points of control to insure that processes are working as intended
and exceptions or even dangerous conditions are detected and addressed through
intervention

July 3, 2010 492

Advantages and Risks of Process Automation

• Most significant risk is that we develop a false sense of
security that just because we can automate a process
− Automating poor processes will not gain better business practices
• Take care to ensure that automated processes work
properly
− Sophistication of some BPMS applications may mask process
errors or inefficiencies and careful, detailed understanding of
implementations is important
− Use of BPMS can increase exposures to information security risks
• Important to understand the technical working of BPMS to ensure that vital
data is not exposed to individuals that should not see it

July 3, 2010 493

BPM Standards

• Number of technology trends emerging in BPM that suggest
standard methods and practices
− To claim that there are true standards for BPM technologies is premature
− However, methods to design, automate, coordinate and simplify the execution
of BPM activities have involved common practices and frameworks for a
number of BPM activities and related technologies
• Some of these emerging methods include technologies such as
− Business Process Modelling Notation (BPMN) used for graphical design of
processes
− Business Process Execution Language (BPEL) for coding executable process
activities
− eXtensible Markup Language (XML) for sharing data and documents
− eXtensible Process Definition Language (XPDL) is a file format specification
compatible with BPMN notation standards and provides a common format for
sharing process models between tools

July 3, 2010 494

Trends and Convergence of Systems

• History of the development of systems that support BPM activities started with
applications designed to handle specific tasks
− Need to convert large amounts of paper documents into electronic forms spawned
scanning and imaging applications
• Requirements to track financial transactions led to the development of accounting
and ERP systems
• Efforts to gather information from disparate sources for the purpose of analysing
business performance launched EAI systems
• Problems associated with managing large repositories of documents led to the
development of document management systems
• As the concepts of BPM emerged with the emphasis on analysing, improving and
managing processes, existing application sets were employed and new
applications such as workflow, rules engines and design and simulation tools were
added to the systems options
• With a growing recognition of the important elements of the BPM lifecycle from
analysis and design to implementation and management, there has been a
significant movement among systems vendors to create sets of tools (applications)
that address the most important BPM requirements and interoperate with each
other

July 3, 2010 495

Trends and Convergence of Systems

• A family of applications or tools whose goal is to achieve loose
coupling among interacting software agents is an architectural style
known as a Service Oriented Architecture (SOA)
• Each application in the family of applications is viewed as a specific
service that may be implemented within a common hardware and
software architecture
• A full suite of applications following a SOA for BPM may include
− Process mapping, analysis and design tools
− Content management applications
− Workflow execution
− EAI services
− Business Intelligence
− Rules description and execution capabilities
− Process monitoring and control
− Performance management

July 3, 2010 496

Implications of BPM Technology

• Information systems are an integral part of business processes
• Development and deployment of most systems has been based on meeting
specific operational requirements and have been deployed by technical IT experts
• Typical problem in many organisations that has been recognised for years is the
lack of adequate communication and planning between executive management
responsible for the strategic and tactical direction of the organisation and the IT
management
• BPM professionals need to understand existing information systems and their
functions within business processes
• Enhanced ease of use of BPMS means that BPM professionals will become more
involved in configuring these systems to support business needs
• With systems that support the design and automation of execution code, the
business analyst and BP designer is less dependent on IT technical professionals
• The role of IT professionals is also changing because the technical requirements
for application development coding are decreasing
• The implication is that IT professionals need to become more involved in
understanding business strategies and supporting business processes as a part of
the BPM team

July 3, 2010 497

Implications of BPM Technology

• Legal and regulatory requirements are forcing executives
to pay more attention to internal processes and
competitive pressures add to the motivation of executives
and board members to understand and improve important
processes
• Advantages that may accrue from process improvement
activities can be substantial and BPM professionals will be
at the centre of critical changes

July 3, 2010 498

Summary

• Information systems are an integral part of business processes
− BPM professionals need to understand existing information systems and their functions
within business processes
• BPM Technologies address the full process management life cycle: process
modelling and design, process implementation and execution, process monitoring
and control, process performance analysis and assessment
• BPM systems and suites (BPMS) may include several of the capabilities of
technologies previously designed for specific capabilities such as: imaging,
document and content management, collaboration, workflow, work routing and
assignment, rules management and execution, metadata management, data
warehousing, business intelligence, application integration, communications
management and more
• Process Repositories are essential components of a full BPMS solution
− Central Process Repository helps to ensure consistent communication about a process
including what it is, how it should be applied, who is responsible for its successful
execution and expected results upon process completion
• Effective and sustainable business process management cannot be achieved
without the integration and deployment of appropriate technologies to support
operations and management decision making

July 3, 2010 499

Business Process Management and Business
Analysis

July 3, 2010 500

Business Process Management and Business
Analysis
• Significant overlap between Business Process
Management and Business Analysis
• Business Analysts often perform Business Process
Management analysis and design
• Business analysis skills of requirements elicitation and
process documentation are important to effective
Business Process Management implementation

July 3, 2010 501

Business Analysis

• Business Analysis
− Set of tasks, knowledge and techniques required to identify business needs
and determine solutions to business problems
− Business analysis is the connecting layer between strategy and
systems/technology
• Solutions
− Include a systems development component, but may also consist of process
development or improvement or organisational change
• Business Analyst
− Works as a liaison among stakeholders in order to elicit, analyse, communicate
and validate requirements for changes to business processes, policies and
information systems
− Understands business problems and opportunities in the context of the
requirements and recommends solutions that enable the organisation to
achieve its goals
July 3, 2010 502

Business Analysis Skills

• Ability to develop a clear and detailed understanding of:
− The requirements to solve a business problem, often with a
system implementation/solution selection
− How the proposed system or solution will interoperate or
integrate with the existing systems and technology in which the
new system will operate
− How the proposed system or solution fits the existing enterprise
architecture and business strategy
− The business problem from multiple perspectives: business, user,
functional, quality of service, implementation, etc.

July 3, 2010 503

Roles of the Business Analyst

• Gather requirements
• Document processes
• Identify improvement opportunities
• Document business requirements
• Act as the liaison between users and
system/solution/technical architects

July 3, 2010 504

Roles of the Business Analyst

• Gathers data that is unstructured –
comments/information/discussions/interviews from/with users)
• Converts that data into information in a structured format
• Converts that information into knowledge that is structured and
usable
• Develop requirements for change to:
− Business processes
− Information systems
• Understand business problems and opportunities
• Provide recommendations for solutions
• Be an advocate for the business user
• Work as a liaison among stakeholders

July 3, 2010 505

Importance of Business Analysis

• A factor present in every successful project and absent in every unsuccessful project is
sufficient attention to requirements
• Half of all bugs can be traced to requirement errors
• Fixing these errors consumes 75% of project rework costs
• 25%- 40% percent of all spending on projects is wasted as a result of re-work
• 66% of software projects do not finish on time or on budget
• 56% of project defects originate in the requirements phase of the project
• Completed projects have only 52% of proposed functionality
• 75-80% of IT project failures are the result of requirements problems
• The average project exceeds its planned schedule by 120%
• 53% of projects will cost 189% of their original estimate
• 30% of projects are cancelled before completion
• 50% of projects are rolled back out of production
• The typical project expends least effort on analysis where most errors originate and whose
errors cost most to fix
• Requirements errors cost the most and that poor requirements are the main cause of
software failure

July 3, 2010 506

Factors for Project Success

• Effective and targeted project management and systems
engineering processes, tools and techniques
• Appropriate executive decision making
• Effective project leadership
• High-performing teams
• Collaboration and respect between the business and IT
communities
• Business analysis processes that ensure the development
team will have a clear understanding of the customer’s
overall business and information needs
July 3, 2010 507

IT and Business Analysis

• IT need to possess expertise in multiple domains
• IT must prove it can understand business realities-
industry, core processes, customer bases, regulatory
environment
• Contribute real business value to their enterprise

July 3, 2010 508

Align Business Analysis to Solution Lifecycles

• Business Analysis exists in wider context
Strategy, Business Planning and Business Analysis

Business Initial Requirements Decision to Requirements Management and Change Operations and
Concept Discovery Elicitation Proceed Management Use

Solution Architecture and Design

Solution Solution Solution Specification and
Architecture Design Change Management

Project Management Cycle

Initiate Execute and Control

Plan Close

Solution Delivery - Implementation and Deployment Lifecycle

Setup and Implement
Manage Evolve
Prepare Develop Test Deploy

July 3, 2010 509

Business Analysis Challenges

• Lack of advance planning for projects and initiatives
• Lack of formal training for Business Analysts
• Inconsistent approach to business analysis
• Outsourcing and relying on external contractors to
perform major roles in system development
• Impatience with the analysis/design/planning process
• Gap between what Business Analysts are assigned to do
and what they should be assigned to do

July 3, 2010 510

Why Projects Fail

• Very significant Business/IT pain point
− All too frequent implementation of IT solutions that fail to meet business requirements
• Look at the general causes of those failures
− Look for solutions whose implementation will address those causes
• Projects fail to deliver solutions that meet requirements because of some
combination of some or all of the following conditions
− Poor understanding of the business need or problem
− Poorly defined and/or stated requirements
− Inadequately explored solution options
− Poor solution design
− Misalignment between requirements and project scope
− Poor project planning/execution
− Poor change management
• Many of these are related to business analysis and related activities
• Cannot separate project management, project portfolio management, business
analysis and solution architecture

July 3, 2010 511

Avoiding Project Failures

• Poor understanding of the business need or problem
− Implement effective requirements elicitation processes
− Implement business analysis processes and governance
• Poorly defined and/or stated requirements
− Gather requirements effectively
− Communicate requirements clearly to stakeholders
− Involve all relevant stakeholders appropriately
• Inadequately explored solution options
− Implement solution architecture standards and governance
− Conduct format cost/benefit analyses
− Reuse existing components
• Poor solution design
− Translate requirements into design
− Validate design
− Implement solution design standards and governance

July 3, 2010 512


• Misalignment between requirements and project scope
− Requirements drive scope of project, transition and operational aspects of the
proposed solution
− Translate requirements into IT language
• Poor project planning/execution
− Monitor deliverables
− Ensure quality
− Implement effective project management and governance
• Poor change management
− Implement effective change management and governance
− Effective change analysis
− Communicate to the solution team of changes in business requirements
− Communication to the business stakeholders of variations from the project
charter, reflected in an updated business case
July 3, 2010 513

Strategy, Business Planning and Business Analysis

Business Initial Requirements Decision to Requirements Management and Change Operations and
Concept Discovery Elicitation Proceed Management Use

Solution Architecture and Design

Solution Solution Solution Specification and
Architecture Design Change Management

Project Management Cycle

Initiate Execute and Control

Plan Close

Solution Delivery - Implementation and Deployment Lifecycle

Setup and Implement
Manage Evolve
Prepare Develop Test Deploy

Poor Misalignment
Inadequately
Understanding Poorly Defined Between Poor Project
Explored Poor Solution Poor Change
Of The And/Or Stated Requirements Planning/
Solution Design Management
Business Need Requirements And Project Execution
Options
Or Problem Scope

Business Solution Project Business
Analysis Architecture Management Analysis

• Ensure adequate and appropriate resources and involvement during
project lifecycle
July 3, 2010 514

Requirements

• A condition or capability needed by a stakeholder to solve a problem
or achieve an objective
• A condition or capability that must be met or possessed by a system
or system component to satisfy a contract, standard, specification or
other formally imposed documents
• A documented representation of a condition or capability
• Focus on a particular business process or processes
• Describe the business need or problem and address all the functions
associated with their delivery
• In project terms, requirements are the detailed items necessary to
achieve the goals of the project
• Requirements analysis is key to successful project
July 3, 2010 515

Requirements

• Objective is to define and describe the characteristics of an
acceptable solution to a business problem, so that the
project team has a clear understanding of how to design
and implement it

• It is all about requirements

July 3, 2010 516

Requirements Planning and Management

• Identify team roles: project manager, business analysts, developers, quality
assurance analysts, trainers, application architects, data modeler, database
analyst, infrastructure analyst, information architect, subject matter (functional)
experts, etc.
• Identify stakeholders (who will provide requirements information): executive
sponsor, solution owner (client), end users, functional managers, investors, etc.
• Distribute responsibilities amongst business analysts and other team members
and define coordination, team communication and knowledge sharing
mechanisms and processes
• Define risk monitoring and management approach for each identified risk
• Define the requirements and system development method
• Define the requirements and system development process
• Manage requirements change and scope: requirements creep is a big problem
• Define and collect project metrics and reporting mechanisms
• Other project planning and project management activities

July 3, 2010 517

Hierarchy of Requirements – from Enterprise to
Project/Initiative
Solutions delivered by
Business Vision and Re programmes and projects
qu
Goal ire cascade from business vision
me
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Hie service delivery
Strategy rar
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rom
Bu
Business Plan s in
ess
to
De Sp
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ery Programmes for fic
an Ini
dO
Strategic Objectives tia
tiv
pe es
Solutions delivered by rat
programmes and projects ion Systems and
need to be aligned to the Solutions
overarching business
vision and goal
Operation of Solution

July 3, 2010 518

Relative Cost of Fixing Errors During Project Lifecycle
1000

• Errors/gaps/omissions
become significantly

(Logarithmic Scale)
100
more expensive to fix at
later stages of project
lifecycle 10

1

t
n
n

g
g
ts

en
tio
sig

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in
en

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Low Cost Estimate High Cost Estimate

July 3, 2010 519

Complete View of Requirements Process
Requirements
Requirements
Enterprise Analysis Planning and
Elicitation
Management

Define the problem Plan the requirements
capture and management Gather the requirements
Define the solution scope process

Requirements Solution
Requirements
Analysis and Assessment and
Communication
Documentation Validation
Present requirements Analyse requirements
Define solution
Agree requirements Identify gaps
Ensure the solution
meets the requirements
Refine requirements Refine requirements

July 3, 2010 520

Business Analysis Body of Knowledge (BABOK)

• Developed by the IIBA (International Institute of Business Analysis) -
http://www.theiiba.org/
• BABOK is the collection of knowledge within the profession of
Business Analysis and reflects generally accepted practice
• Describes business analysis areas of knowledge, their associated
activities and tasks and the skills necessary to be effective in their
execution
• Identifies currently accepted practices
• Recognises business analysis is not the same as software
requirements
• Defined and enhanced by the professionals who apply it
• Captures the knowledge required for the practice of business
analysis as a profession

July 3, 2010 521

Business Analysis Body of Knowledge (BABOK)

• Describes in idealised approach to performing the
complete range of business analysis activities
• Can be customised to suit the needs of an organisation
and initiative

July 3, 2010 522

BABOK Knowledge Areas and Activity Flow
Business Analysis
Planning and
Monitoring

Solution
Enterprise
Assessment and
Analysis Requirements
Validation
Management
Elicitation
and
Communication
Requirements
Analysis

Underlying
Competencies
July 3, 2010 523

BABOK Knowledge Areas

• Business Analysis Planning and Monitoring
− Determine which activities are necessary in order to complete a business analysis effort
− Identification of stakeholders, selection of business analysis techniques, the process that will be
used to manage requirements and how to assess the progress of the work
• Elicitation
− Work with stakeholders to identify and understand their needs and concerns and the environment
in which they work
− Ensure that a stakeholder’s actual underlying needs are understood
• Requirements Management and Communication
− Manage conflicts, issues and changes in order to ensure that stakeholders and the project team
remain in agreement on the solution scope
− Communicate requirements to stakeholders
− Knowledge gained by the business analyst is maintained for future use
• Enterprise Analysis
− Identify a business need, refine and clarify the definition of that need and define a solution scope
that can feasibly be implemented by the business
• Requirements Analysis
− Prioritise and progressively elaborate stakeholder and solution requirements in order to enable the
project team to implement a solution that will meet the needs of the sponsoring organisation and
stakeholders

July 3, 2010 524

BABOK Knowledge Areas and Constituent Tasks
BABOK Knowledge
Areas

Business Analysis Requirements Solution
Enterprise Requirements Underlying
Planning and Elicitation Management and Assessment and
Analysis Analysis Competencies
Monitoring Communication Validation

Manage Solution Analytical
Plan Business Prepare for Define Business Prioritise Assess Proposed
Scope and Thinking and
Analysis Elicitation Need Requirements Solution
Requirements Problem Solving
Approach

Conduct Manage
Conduct Assess Capability Organise Allocate Behavioural
Elicitation Requirements
Stakeholder Gaps Requirements Requirements Characteristics
Activity Traceability
Analysis

Maintain Determine Specify and Assess
Plan Business Document Business
Requirements for Solution Model Organisational
Analysis Elicitation Results Knowledge
Re-use Approach Requirements Readiness
Activities

Prepare Define
Plan Business Confirm Define Solution Define Transition Communication
Requirements Assumptions and
Analysis Elicitation Results Scope Requirements Skills
Package Constraints
Communication

Plan
Requirements Communicate Define Business Verify
Validate Solution Interaction Skills
Management Requirements Case Requirements
Process

Manage Business Validate Evaluate Solution Software
Analysis Requirements Performance Applications
Performance
July 3, 2010 525

Business Process Management Technology Review

July 3, 2010 526

Business Process Management Technology Review

• Very wide range of business process software tools
available
• Purposes of this section are:
− Provide information on range of products available
− Provide details on ratings of software by analyst organisations
− Provide details on some free BPM software tools

July 3, 2010 527

BPA/BPM Vendors
ActionBase http://www.actionbase.com/
ActiveVos http://www.activevos.com/
Adobe Livecycle ES2 Suite http://www.adobe.com/products/livecycle/
Agilepoint http://www.agilepoint.com/
Appian http://www.appian.com/
Appway http://www.numcom.com/
AuraPortal http://www.auraportal.com/
BizAgi http://www.bizagi.com/
BOC http://www.boc-group.com/
Bonitasoft http://www.bonitasoft.com/
BP Logix http://www.bplogix.com/
Business Genetics http://www.businessgenetics.com/
BusinessPort http://www.businessport.net/
Casewise http://www.casewise.com/
Comarch SA http://bpm.comarch.com/
Cordys http://www.cordys.com/
Corporate Modelling http://www.corporatemodelling.com/
Cryo Technologies http://www.cryo.com.br/Inicio.aspx
eKuar http://www.ekuar.com/
EMC Documentum http://www.emc.com/products/category/subcategory/business-process-management.htm
Exomin http://www.exomin.com/

July 3, 2010 528

BPA/BPM Vendors
Flexite http://flexite.com/start/start.asp
FlowCentric http://www.flowcentric.com/
Fujitsu Interstage http://www.fujitsu.com/global/services/software/interstage/
GBTEC AG http://www.gbtec.de/
GetIceberg http://www.geticeberg.com/
Global 360 http://www.global360.com/
HandySoft http://www.handysoft.com/
IBM Websphere Modeler http://www.ibm.com/
ARIS http://www.ids-scheer.com/
ARIS Express http://www.ariscommunity.com/aris-express
iGrafx http://www.igrafx.com/
Intalio http://www.intalioworks.com
Integrify http://www.integrify.com/
Interfacing http://www.interfacing.com/
Interneer http://www.interneer.com/
ISIS Papyrus http://www.isis-papyrus.com/
jBPM http://www.jboss.org/jbpm
Karomi http://www.karomi.com/
K2 http://www.k2.com/
Lombardi http://www.lombardisoftware.com/
Mega http://www.mega.com/

July 3, 2010 529

BPA/BPM Vendors
Metastorm http://www.metastorm.com/
Method Park http://www.methodpark.com/en/home/
Microsoft Visio 2010 Beta http://www.microsoft.com/office/2010/en/visio/default.aspx
NGC e-POWER http://www.is.northropgrumman.com/products/epower/index.html
Nimbus Partners http://www.nimbuspartners.com/
Oracle http://www.oracle.com/us/technologies/bpm/index.htm
Orbis Software http://www.orbis-software.com/
Orbus http://www.orbussoftware.com/home
Orchestra http://orchestra.ow2.org/xwiki/bin/view/Main/WebHome
Outsystems http://www.outsystems.com/
Pallas Athena http://www.pallas-athena.com/
Panviva http://www.panviva.com/
Pega http://www.pega.com/
Pnmsoft http://www.pnmsoft.com/
Polymita http://www.polymita.com/
Process Maker http://www.processmaker.com/
Process Master http://www.processmaster.com/
proKosha http://www.prokosha.com/
QPR http://www.qpr.com/
Questetra http://www.questetra.com/en/about.html

July 3, 2010 530

BPA/BPM Vendors
RunMyProcess http://www.runmyprocess.com/
Salamander http://www.mood.co.uk/index.htm
Salesforce.com http://www.salesforce.com/platform/process/
Visual Process Manager
SAP Netweaver http://www.sap.com/platform/netweaver/index.epx
Savvion http://www.savvion.com/
Serena http://www.serena.com/
Skelta http://www.skelta.com/
Signavio http://www.signavio.com/en.html
Singularity http://www.singularity.co.uk/
Software AG http://www.softwareag.com/corporate/default.asp
Tibco http://www.tibco.com/
Triaster http://www.triaster.com/
uEngine http://www.uengine.org/web/guest/home
Ultimus http://www.ultimus.com/
Vicon http://www.vicon.biz/
Vitria http://www.vitria.com/
W4 http://www.w4.eu/indexen.html
Workpoint http://www.workpoint.com/
XSOL http://www.xsol.com/

July 3, 2010 531

BPM Product Reviews by Analysts

• Two sets of product reviews
• Business Process Analysis (BPA) tools
− Business architects, who require robust solutions aligned with enterprise architecture
− Business process (BP) architects, who redesign BPs at a conceptual level, regardless of
whether there would be a business process management suite (BPMS) implementation
− BP analysts, who redesign processes at a more detailed level, often using a BPMS
• Business Process Management Suites (BPMS)
− Support BPM throughout the business process life cycle
− Optimizing the performance of end-to-end business processes that span functions, as
well as processes that might extend beyond the enterprise to include partners,
suppliers and customers
− Making the business process visible (and thus explicit) to business and IT constituents
through business process modeling, monitoring and optimization
− Keeping the business process model synchronised with process execution
− Empowering business users and analysts to manipulate a business process model to
modify instances of the process
− Enabling rapid iteration of processes and underlying systems for continuous process
improvement and optimization

July 3, 2010 532

BPM Product Reviews by Analysts

• BPA tools encompass

Process Strategy
Process Control

Management
of Change
and
• BPMS tools encompass Innovation

Process Design
Process
Implementation

July 3, 2010 533

Gartner Magic Quadrant for Business Process
Analysis Tools – Feb 2010
• Ability to Execute Evaluation Criteria
− Product/Service
− Overall Viability (Business Unit,
Financial, Strategy, Organization)
− Sales Execution/Pricing
− Market Responsiveness and Track
Record
− Marketing Execution
− Customer Experience
− Operations
• Completeness of Vision Evaluation
Criteria
− Market Understanding
− Marketing Strategy
− Sales Strategy
− Offering (Product) Strategy
− Business Model
− Vertical/Industry Strategy
− Innovation
− Geographic

July 3, 2010 534

Sample Review - IDS Scheer/ARIS (Software AG)

• Strengths
− IDS Scheer has a Gartner-estimated 18% revenue share of the BPA tools market.
− Gartner customers report that ARIS has robust reporting and dashboard features across strategic, tactical and operational
levels.
− ARIS is one of the most comprehensive enterprise and BP architecture toolsets on the market, with strong support for a
wide variety of standards, methods and frameworks.
− ARIS is OEMed as Oracle's EA and BPA modeling tool of choice for its development environment, packages and BPMS.
− IDS Scheer has enhanced the process discovery features to allow dynamic analysis of current physical process, roles and
tasks.
− ARIS is also OEMed as SAP's EA and BPA modeling tool of choice for its development environment and packages.
− The new ARIS Express product is a free, lightweight BPA product for low maturity or occasional use. It can be used for
commercial use and has an upgrade path to ARIS professional products.
− ARIS includes features such as ABC, balanced scorecard, key indicator management and business rule design, while BAM
capabilities are offered in IDS Scheer's Process Performance Manager, and simulation in ARIS Business Simulator.
− Buyers focused on the BP analyst and BPMS category of tools will find that ARIS provides added value to them in the form
of extensive, predefined, industry-specific content and horizontal reference models to jump-start BP modeling efforts.
− ARIS includes bridges to the leading BPMSs.
− IDS Scheer has a workflow solution (engine) to automate its own governance process, which can be extended to third-
party products.
• Cautions
− Those with a business process analysis focus who are not interested in architecture or methodological rigor tend to find
ARIS overly sophisticated for their needs — although it is possible to deploy ARIS in a manner where less-sophisticated
modelers can be productive.
− Those with a BPMS focus should consider augmenting the modeling tools of their BPM vendors with ARIS for the
architects in their organizations.
− IDS Scheer's acquisition by Software AG will introduce a period of organization and product integration. Current and
potential ARIS users need to monitor the situation carefully

July 3, 2010 535

Gartner Magic Quadrant for Business Process
Management Suites – Feb 2009
• Ability to Execute Evaluation Criteria
− Product/Service
− Overall Viability (Business Unit,
Financial, Strategy, Organization)
− Sales Execution/Pricing
− Market Responsiveness and Track
Record
− Marketing Execution
− Customer Experience
− Operations
• Completeness of Vision Evaluation
Criteria
− Market Understanding
− Marketing Strategy
− Sales Strategy
− Offering (Product) Strategy
− Business Model
− Vertical/Industry Strategy
− Innovation
− Geographic Strategy

July 3, 2010 536

Forrester Business Process Analysis, EA Tools, And IT
Planning 2009
• Current Offering
− Modeling
− Analysis and simulation
− Life-cycle management
− Publishing and reporting
− Templates
− Product architecture
• Strategy
− Product strategy
− Solution cost
− Strategic alliances
− Corporate strategy
• Market Presence
− Installed base
− Customer references
− Revenues
− License versus service
− Revenue growth
− Delivery footprint

July 3, 2010 537

Forrester Integration-Centric Business Process
Management Suites 2008
• Current Offering
− Integration
− Business-to-business (B2B)
− Business process management (BPM)
− Service-oriented architecture (SOA)
• Strategy
− Product strategy
− Solution cost
− Strategic alliances
− Customer references
• Market Presence
− Installed base
− New customers
− Delivery footprint

July 3, 2010 538

Free BPM Software

• Review of limited range of BPM software to demonstrate
facilities available
− ARIS Express
− BonitaSoft
− BizAgi
− Intalio
− ProcessMaker

July 3, 2010 539

ARIS Express

• Available from http://www.ariscommunity.com/aris-express
• Free software developed by IDS Scheer to promote interest in and sales of their full ARIS
software
• Registration required
• Software run directly from the Web site – cannot be installed locally
• Really just a diagramming tool

July 3, 2010 540

ARIS Express

• Can generate a number of chart types:
− Organisation
− Process landscape – overview
− Business process – EPC format
− Data model – ERD
− IT infrastructure
− System landscape
− BPMN process
− Whiteboard
− General diagram

July 3, 2010 541

ARIS Express

• Main screen
• Select a model type
• Open an existing model

July 3, 2010 542

ARIS Express

• Sample process – EPC format

July 3, 2010 543

ARIS Express

• Sample process – BPMN

July 3, 2010 544

BizAgi

• Free fully-functional BPMN compliant process modeller
and simulation suite
• Three editions
− Xpress - .NET/SQL – Free edition
− Standard - .NET/SQL or Oracle
− Enterprise – J2EE/SQL or Oracle
• Very sophisticated and easy to use
• Model documentation can be published to SharePoint or
exported to Word or Visio or XPDL (XML)
• Can import from Visio or XPDL (XML)
• Good product to start your BPM activities

July 3, 2010 545

BizAgi

July 3, 2010 546

BizAgi

• Export functionality

July 3, 2010 547

BizAgi

July 3, 2010 548

BonitaSoft

July 3, 2010 549

Summary

• Free tools are a good place to start with BPM
• You need to move yourself up the maturity level hierarchy
• You will not achieve this in one go
• Start with simple objectives such as formally documenting
processes, storing the information in a shared repository
and publishing the information to a commonly accessible
facility (such as SharePoint)
• Look to perform process simulation as an aid to process
design and optimisation
• Then look at full BPMS implementation and process
automation

July 3, 2010 550

More Information

Alan McSweeney
alan@alanmcsweeney.com

July 3, 2010 551

Introduction to business process management

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