Business Process Management 2 Key Concepts Business Process

Business Process Management 2

Key Concepts Business Process Management (BPM) is a systematic approach that is used to make an organization's workflow effective, efficient and responsive to changing environment. Purpose of BPM To reduce human error and avoid miscommunication. Link operational processes to corporate strategies. Measure performance indicators from processes for evaluation of business success. Business Process Model A Business Process Model (BPMd) typically consists of workflow diagrams, descriptions, inputs and outputs, KPIs and data that provide both overview and detailed information about an organization’s business processes. 3

Key Concepts Utility of Business Process Model It helps to measure requirements of a process and eliminates the risk of losing value through inefficient or inappropriate activities. BPM Software that allows users to create BPM diagrams and integrate process content with critical business entities (departments, resources, etc. ) Please refer to Appendix A for more details about BPM soft-wares. Business Process Re-engineering (BPR) The realignment of business process strategies through the use of an analytic tool and an intense consultation process. BPR is an off-shoot of BPM implementation that involves a great deal of risk due to change management. 4

Key Concepts Business Process Design (BPD) BPD is the systematic working by which an organization understands, defines and documents the business activities that enable it to function efficiently, effectively and economically. Business Process Model (BPMd) Illustrated description of business processes, usually created with flow diagrams. The model contains the relationship between activities, processes, sub-processes and information, as well as roles, the organization and resources. It is also termed as Business Process Mapping. Workflow Simulation & Analysis An executable specification of a workflow that is used to simulate the behavior of the workflow under different circumstances. This application is a typical example of decision support in matters as BPR and operational control. Various qualitative and quantitative analytical methods have been developed to assess the effectiveness of existing or new workflows. 5

Important Terms Process Sequence of interdependent and interlinked activities which, at every stage, consume one or more resources (employee time, energy, machines, money) to convert inputs (data, material, parts, etc. ) into outputs. Sub-process A sub-process is a compound activity that is included within a task (process). Each task may have its own sub-processes. Each sub-process can also contain other sub-processes. Activities are the lowest-level process steps in modeling software where actual work is performed. Activities cannot be broken down into further steps. Process Owner The person (Resource) responsible for the process. Key Performance Indicators (KPIs) KPIs are descriptive time, cost or quality indicators used to capture the performance of a process. 6

Important Terms Job Description or Roles represent specific skill sets, responsibilities or positions in a business environment. Roles allow the modeler to define criteria required for performing the activity, rather than the specific individuals who will perform the activity. Scope of a Process It describes the boundaries of a process and includes start and end points, the context in which the process is performed and elements excluded from that context. Workflow Diagram It refers to a simple form of flowchart depicting the flow of tasks or actions from one person or group to another. It typically consists of a set of symbols representing actions or individuals connected by arrows indicating the flow from one to another. 7

Benefits of BPM 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Improves process quality, reliability and output. Helps for continuous process improvement that provides foundations for BPR. Maximizes process visibility that helps in reducing costs. Improves strategic decision-making by providing correct information at correct time. It provides end-to-end performance visibility and optimization of resources. Improves operational efficiency that results in the avoidance of wastage and loss of company resources. Consistent execution reduces process cycle time. Improves customer satisfaction by delivering better and enhanced value. Promotes organizational flexibility and business agility. Promotes communication and collaboration between departments. Helps in standardization of procedures. Helps in measuring KPIs and thus improves accountability. Promotes safe working conditions that protect company resources. Defines roles and responsibilities that increases employee efficiency and satisfaction. Simplifies regulatory compliance. 8

Process Composition Process Sub-process 1 Activity 1 Sub-process 2 Sub-process 3 Sub-process 4 Sub-process N Activity 2 Activity 3 Activity 4 Activity N 9

BPM Life-Cycle Following are stages in BPM Life-Cycle: Designing, Modeling, Executing, Monitoring & Optimizing 10

1. Designing BPD is the systematic working by which an organization understands, defines and documents the business activities that enable it to function efficiently, effectively and economically. The purpose of BPD is to ensure that processes are optimized, effective, meet customer requirements, support and sustain organizational development and growth. Designing a process that improves corporate performance is a challenging task that requires multi-disciplinary expertise and a plethora of inputs (for instance, organizational strategies, goals, constraints, human and technical capabilities, etc. ). The most common requirements of a BPD are: Customer and supply chain management Operational performance improvement Business process integration and automation Cost reduction New business opportunities. 12

2. Modeling The output of a BPD project is a streamlined, comprehensive, easy-to-use model of the ways in which a business delivers output to its customers. One of the key purposes of process modeling is to provide a “process view” of the business. BPMd typically consists of a set of diagrams, textual descriptions and data elements that provide both overview and detailed information about the business processes in a format that is easily understood by everyone. The key components of a typical BPMd are as given below: The set of processes and activities that take place within an organization A written description of each process or activity or task Workflow diagrams Inputs & outputs KPIs 13

3. Executing It refers to automating processes by using BPM application software that executes the required steps of a process. BPM soft-wares are either purchased or developed to fit to the requirements of a company. Please refer to Appendix A for BPM soft-wares. 14

4. Monitoring refers to tracking of individual processes, so that information about them can be checked. An example of the tracking is being able to determine the stage of a customer order (e. g. order arrived, awaiting delivery, invoice paid) so that problems in its operation can be identified and corrected. The degree of monitoring depends on what information a business requires to evaluate and analyze and how that business needs it to be monitored, in real-time, near real-time or ad-hoc. Here, business activity monitoring extends and expands the monitoring tools generally provided by Business Process Management Suites (BPMS). 15

5. Optimizing Refers to retrieving process performance information from monitoring phase, identifying the potential or actual problems, recognizing the opportunities for cost cuttings or further improvements and then, applying those enhancements in the design of the process. In more specific terms, optimizing may include the following activities: Improve processes and performance by reducing inefficiencies identified during monitoring. Simulate these changes using “what-if” simulation. Determine which changes will deliver the maximum improvement. 16

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Workflow for Purchase of Materials 18

Workflow for Project Delivery 19

Purchasing of Materials – Workflow Diagram 20

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Brief Background Hammer and Champy (1990 s) felt that the design of workflow in most large companies was based on facts about technology, people, practices, and organizational goals that were no longer applicable. They suggested seven principles of re-engineering to streamline the work process and, thereby, achieve significant levels of improvement in quality, time management, and cost: 1. Organize around outcomes, not tasks. 2. Identify all the processes in an organization and prioritize them in order of 3. 4. 5. 6. 7. redesign urgency. Integrate information processing work into the real work that produces the information. Treat geographically dispersed resources as though they were centralized. Link parallel activities in the workflow instead of just integrating their results. Put the decision point where the work is performed, and build control into the process. Capture information once and at the source. 22

Methodology BPR involves the redesign of business processes to achieve improvements in productivity, cycle time, quality and cost. BPR review starts with the description of existing business processes to deliver more value to the customers. BPR typically adopts a new value system that places emphasis on customer needs. They remove unnecessary organizational layers and eliminate unproductive activities in two key areas. First, BPR redesigns functional organizations into cross-functional teams. Second, BPR uses technology to improve data dissemination and decision making process. 23

Case Study -- Taco Bell (founded in 1962, California) created K-Minus Program (Kitchen-less Restaurant) based on the fact that they are a retail service company, not a manufacturing company. In the new process, meat, beans, corn shells, lettuce, tomatoes and cheese for their products are prepared outside of the restaurants in central commissaries. At Taco Bell restaurants, the food ingredients are prepared when ordered for customer consumption. Taco Bell has produced the following results: greater quality control, better employee morale, fewer employee accidents and injuries, big savings and more time to focus on the customer satisfaction. Currently, they are redefining how to deliver their food services, by taking their food service to public gathering places such as dining centers, schools, universities, airports, and stadia. Taco Bell has progressed from a $. 500 million regional company in 1982 to a $. 1. 9 billion in 2009 a national company. (Hammer & Champy 1993, pg. 178 -179) 24

Abbreviations # Abbreviatio n s Complete Term 1 IT Information Technology 2 BPD Business Process Design 3 BPM Business Process Management 4 BPMd Business Process Model 5 BPMS Business Process Management Suites 6 KPIs Key Performance Indicators 25

Appendix A: List of BPM soft-wares # BPM Software Website 1 Accu Process Modeler http: //www. accuprocess. com 2 Run. My. Jobs http: //www. runmyjobs. com 3 BPMS http: //www. sydle. com 4 BPM from IBM http: //www-142. ibm. com 5 Process. Maker http: //www. processmaker. com 6 Appian BPM Suite http: //www. appian. com 7 web. Methods BPMS http: //www. softwareag. com 8 Ultimus BPM & Workflow Solution Software http: //www. ultimus. com 9 Progress® Savvion®, http: //www. progress. com 10 Sequence Kinetics. TM BPM Software http: //www. pnmsoft. com/ 11 Oracle Business Process Management Suite http: //www. oracle. com/us/technologies/b p m 12 Skelta BPM & Workflow Software http: //www. skelta. com 13 Share. Point 2010 https: //www. microsoft. com 26

Appendix B: Books on BPM # Title of Book Publisher 1 B u s i n e s s P r o c e s s M a n a ge m e n t 2 B u s i n e s s P r o c e s s M a n a ge m e n t B P M 100 Su cce ss Se cr e ts Springler E m e r e o Pt y Lt d 3 D e l i v e r i n g t h e V a lu e o f B P M 4 H and book on BPM 2 5 B PM : P r a c t i c a l G u i d e l i n e s f or Su cce ssfu l I m p le m e n t a t io n 6 B u s i n e s s P r o c e s s M a n a ge m e n t D e m ys t i fi e d : A T u t o r i a l o n M o d e ls A ccent ure Springler BH E d e n h o ve n U n i ve r s i t y o f T e c h n o l o gy 27