Business Process Management Text Book Fundamentals of Business

Business Process Management • Text Book • Fundamentals of Business Process Management – Marlon Dumas, Marcello La Rosa, Jan Mendling and Hajo. A. Reijers Dr. R. Umarani Assistant Professor 1

Business Process Management Course Objective To Introduce Business Process Management as interdisciplinary field and provide an overview of the BPM lifecycle, from identifying processes to analysing, redesigning, implementing and monitoring these processes Dr. R. Umarani Assistant Professor 2

Business Process Management Course Outcome v Define the process using business management and IT aspects v. Analyse and design the business process v. Implement the process model using BPMN Dr. R. Umarani Assistant Professor 3

Business Process Management Course Syllabus - Introduction to BPM. origin and history. BPM Life cycle - Process Identification and Modelling. Key process. Designing process architecture. BPMN. Branching and Merging. Information Artifacts. Resources Dr. R. Umarani Assistant Professor 4

Business Process Management - Advanced Process Modelling. Process Decomposition. Process Reuse. Rework and Repetition. Handling events and exceptions. Processes and business rule - Process Discovery methods. Process Modelling Method. Process Model Quality assurance Dr. R. Umarani Assistant Professor 5

Business Process Management - Process analysis and redesign. Value added analysis. Root cause analysis. Issue documentation and impact assessment. Qualitative Process analysis. Flow analysis. Queues. Simulation. Redesign Dr. R. Umarani Assistant Professor 6

Business Process Management Unit – I Introduction to Business Process Management Dr. R. Umarani Assistant Professor 7

What is a (Business) Process? Collection of related events, activities and decisions, that involve a number of actors and resources, and that collectively lead to an outcome that is of value to an organization or its customers. Dr. R. Umarani Assistant Professor 8

Examples for Business Process • • • Order-to-Cash Quote to Order Procure-to-Pay Application-to-Approval Claim-to-Settlement Fault-to-Resolution (Issue-to-Resolution) Dr. R. Umarani Assistant Professor 9

Use Case: “My washing machine won’t work!” Dr. R. Umarani Assistant Professor 10

Processes and Outcomes • Every process leads to one or several outcomes, positive or negative – Positive outcomes deliver value – Negative outcomes reduce value • Fault-to-resolution process – Fault repaired without technician intervention – Fault repaired with minor technician intervention – Fault repaired and fully covered by warranty – Fault repaired and partly covered by warranty – Fault repaired but not covered by warranty – Fault not repaired (customer withdrew request) Dr. R. Umarani Assistant Professor 11

Use Case : Business Process Management (Built In) Equipment Rental Request Thro’ mail Depot Clerk: Receives catalogue from supplier Reject if not as PO Select the equipment Accept it is as PO Equip. put in use Engineer inspects When Rental period expires supplier takes the equip. Equipment reaches Site Engineer Not Availa ble Check with others Available Site engineer rejects Prepares Rental Request Works engineer Purchase order Accepts Reject Dr. R. Umarani Assistant Professor 12

What is a Business Process: Recap Dr. R. Umarani Assistant Professor 13

Origin and History of BPM • The Functional Organisation • The Introduction of Process Thinking • The Innovations and failures of Business Process re-engineering Dr. R. Umarani Assistant Professor 14

1. The Functional Organisation Dr. R. Umarani Assistant Professor 15

BPM: What is it? Body of principles, methods and tools to design, analyze, execute and monitor business processes. Dr. R. Umarani Assistant Professor 16

Why BPM? “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency. ” Dr. R. Umarani Assistant Professor 17

Why BPM? Dr. R. Umarani Assistant Professor 18

2. The Birth of Process Thinking CONTINUOUS PROCESS IMPROVEMENT (CPI) • Does not put into question the current process structure • Seeks to identify issues and resolve them incrementally, one step at a time and one fix at a time Dr. R. Umarani Assistant Professor 19

How to engage in BPM? BUSINESS PROCESS RE-ENGINEERING (BPR) • Puts into question the fundamental assumptions and principles of the existing process structure • Aims to achieve breakthrough, for example by removing costly tasks that do not directly add value Dr. R. Umarani Assistant Professor 20

The Ford Case Study (Hammer 1990) Ford needed to review its procurement process to (Mazda plant): • Do it cheaper (cut costs) • Do it faster (reduce turnaround times) • Do it better (reduce error rates) Accounts payable in North America alone employed > 500 people and turnaround times for processing POs and invoices was in the order of weeks Dr. R. Umarani Assistant Professor 21

The Ford Case Study • Automation would bring some improvement (20% improvement) • But Ford decided not to do it… Why? a) Because at the time, the technology needed to automate the process was not yet available. b) Because nobody at Ford knew how to develop the technology needed to automate the process. c) Because there were not enough computers and computer-literate employees at Ford. d) None of the above Dr. R. Umarani Assistant Professor 22

The correct answer is … Mazda’s Accounts Payable Department Dr. R. Umarani Assistant Professor 23

How the process worked? (“as is”) Dr. R. Umarani Assistant Professor 24

Reengineering Process (“to be”) Dr. R. Umarani Assistant Professor 25

The result… • 75% reduction in head count • Material control is simpler and financial information is more accurate • Purchase requisition is faster • Less overdue payments Why automate something we don’t need to do? Automate things that need to be done. Dr. R. Umarani Assistant Professor 26

3. The Rise and Fall of BPR BUSINESS PROCESS RE-ENGINEERING (BPR)/Business Process Redesign • Puts into question the fundamental assumptions and principles of the existing process structure • Aims to achieve breakthrough, for example by removing costly tasks that do not directly add value Dr. R. Umarani Assistant Professor 27

3. The Rise and Fall of BPR Factors • Concept Misuse • Over-radicalism • Support Immaturity Ideas behind BPM 1. Improve Process Eg. 100 US Manfg. Cos. 2. Technological – ERP and Wf. MSs Dr. R. Umarani Assistant Professor 28

How to engage in BPM? Dr. R. Umarani Assistant Professor 29

Job Function of a manager Dr. R. Umarani Assistant Professor 30

The BPM Life Cycle Process Identification Phase Dr. R. Umarani Assistant Professor 31

Phase 1: Performance Measure Identification and Selection Cost per execution Time Quality Cycle time Error rates Resource utilization Waiting time Violations Waste Non-valueadding time Customer feedback Dr. R. Umarani Assistant Professor 32

Stakeholders • Management Team – CEO, COO, CPO, CIO, CFO, HR Director. Process Owners. Process Participants. Process Analysts. System Engineers. BPM Group Dr. R. Umarani Assistant Professor 33

Process Model • • • Flow Chart Unified Modelling Language (UML) Event-driven Process Chains (EPC) Data Flow diagrams Business Process Model and Notation(BPMN) - rounded rectangles - control nodes/diamond shapes - arcs Dr. R. Umarani Assistant Professor 34

Phase 2: Process Discovery Dr. R. Umarani Assistant Professor 35

Phase 3: Process Analysis • • • High level of abstraction Model needs more details Simplicity and understandability Additional text annotations Coordinating the execution of the process Inputs and outputs of the process Dr. R. Umarani Assistant Professor 36

Phase 3: Process Analysis Issues in the Process: - Cycle Time for process. Idle time. Waiting time. Rework - Negative Outcome. Stem from miscommunication. Inaccurate data. Supplier side error Dr. R. Umarani Assistant Professor 37

Phase 4: Process Re-Design Dr. R. Umarani Assistant Professor 38

Phase 4: Process Re-Design • Understanding of the issues • Potential remedies • Propose redesigned version of the process Dr. R. Umarani Assistant Professor 39

Phases 5: Process Implementation • Organisational change management - Changes explained to the process participants - Informing to stakeholders - Training users - Monitoring the changes. Process Automation - Performance of tasks - Prioritize their work - Providing information - Performing automated cross checks Dr. R. Umarani Assistant Professor 40

Phase 6: Process Monitoring and Control • Require adjustments • Michael Hammer: “Every good process eventually becomes a bad process” Dr. R. Umarani Assistant Professor 41

Exercise: Student Admission Process 1. Who are the actors in this process? 2. Which actors can be considered to be the customer in this process? 3. What values does the process deliver to its customers? 4. What are the possible outcomes of this process? Dr. R. Umarani Assistant Professor 42

Exercise: Student Admission Process 5. Taking the perspective of the customer identify at least two performance measures that can be attached to this process 6. Taking the perspective of the customer think of at least two issues that this process might have 7. Based on the issues in the admission process identified, What possible changes do you think could be made to this process in order to address these issues? Dr. R. Umarani Assistant Professor 43

Unit I Completed • • • What is Business? What is Business Process Management? Know the Origin and History of BPM Stages in the Business Process Management Dr. R. Umarani Assistant Professor 44

Phase 2: Process Discovery Dr. R. Umarani Assistant Professor 45

Phase 2: Process Discovery Dr. R. Umarani Assistant Professor 46