Graduate Program in Business Information Systems BIS 581

Graduate Program in Business Information Systems BIS 581 Business Process Management Lecture-1 Aslı Sencer Department of Management Information Systems 1

Business Process Management-1 Definition Basic Properties Classification Process Hierarchy Process Interactions 2

What is Business Process Management? Motivation: • The business landscape is full of challenges, uncertainties and opportunities. Due to globalization and advances in IT, these challenges are becoming more significant. • BPM helps an organization’s business become more flexible and responsive to change. It increases the efficiency and effectiveness of the processes. Definiton: • BPM is a discipline combining software capabilities and business expertise to accelerate business improvement and facilitate business innovation towards its organizational goals. 3

Who needs process management? Priorities and goals Difficulties 4

Reasons for Business Process Improvement • Your customers, clients or suppliers complain about the business processes. • Your department makes numerous errors and makes the same mistake again and again. • You want to understand how your department can improve its efficiency so that your employees can spend their limited time on more valuable work. • You have accepted responsibility for a new business or department, or you want to understand the work. • You discovered challenges with the handoffs between departments. • You want to increase your department’s productivity. • You discovered dublication of data or tasks in multiple departments. • You started a new job and want to understand how the department works 5

What is a business process? Definition 1: A business process is a sequence of activites that converts a set of inputs in the form of raw materials, energy and knowledge into a set of outputs in the form of goods and services. Definition 2: A business process is a set of activites with logical interdependencies, performed to create a set of valuable output by using the resources of the company and serve them to internal and external customers. 6

Basic Properties of a Business Process Existence of a triger condition Existence of internal and external customers Existence of a responsible person with sufficient authority Repeatability Measurability Structural independence Input Process Output 7

Business Process Classification 1 Classification 2 Processes for external customers Basic Processes Processing of activities to produce an output for the external customers in the market Processes for internal customers Processing of activites to produce an output required by the departments and executives within the organization so as to achieve the organizational goals and efficient processing Processes that start due to an external customer request. Managerial Processes that take place to fulfill the organizational goals such as setting targets, screening the performance measures, preparing reports for the executives, etc. Support Processes that take place to support an ongoing basic process such as stock replenishment processes, cleaning and maintenance processes. 8

Critical Activity q Activites or processes that primarily affect the main output of the organization. These should be restructured, reengineered in the first place. q A delay in a critical activity causes a delay in the whole process completion time. q In parallel activities, the activites on the longest path are critical. Critical Process 1 (5 min) Process 2 (3 min) Process 3 (6 min) Critical 9

Process Hierarchy • • Basic processes can be divided into managable subgroups to form sub processes, sub-sub processes and activities in an hierarchy. An activity is the smallest component of a process that can not be further divided into sub processes. Basic process: Meal delivery process in a fast food restaurant Start Recieve the order Prepare the meal Deliver the meal End Basic process: Cargo delivery process Start Recieve cargo from customer Send cargo to the distribution center Deliver cargo to the address End 10

Example: Process Hierarchy 11

Process Maps • A process map is one of the best ways to help people understand any business process. It helps everyone involved in creating the process map learn how the process works, what activites constitute most of the work, where the handoffs occur between departments, and where the opportunities for improvement exist. • There are two approaches depending on the technique that someone subscribes to quality or reengineering. – Reengineering focuses on the future state , driven by customer needs and does not focus on the current process. – Quality is also concerned with the customer needs but examines the current process. 12

Process Modeling: Definitions • A process map is a visual representation of a series of connected activities that, when strung together, deliver a meaningful outcome to the client/customer. • A process map is composed of sub processes or activities that add value to the next step in the process. • Each activity is composed of a series of tasks, that are used to define the activity. • Each activity should start with an action verb that demonstrates doing or performing something. Examples of action verbs include words like develop, approve, update, run, and communicate. – Ex: Develop the business case, approve the expense report, update the forecast, run a report, communicate the status.

Modeling Process Interactions Process interactions are defined usually by the use of flowcharts. These business process models are actually the flowcharts generated by using a set of symbols. Basic symbols used in business process models Data On page reference Process/activity Document Off page reference Decision Screen input-output Beginning/end of the process Process connector Name of the data Process that is also used by other processes Data base input-output connector

Process Map Example: A Product Quality Test Process in a Fast Food Restaurant

Cross Functional Process Map • Sometimes two or more groups of people are responsible for the activities, say managers and analysts for ex. The analysts reside in a different department from the managers who request and approve the awards. • In representation, a process map may include several cross functional bands, one for each responsible person/department. • In a cross functional process map, it is easy to see when responsibility for a step in a process moves from one department to another, known as handoffs.

Ex: Cross Functional Process Map A Product Quality Test Process in a Fast Food Restaurant Handoff 17

Business Process Instance • A business process instance represents a concrete case in the oprational business of a company, consisting of activity instances. For example, each scenario for a product tested in a fast food restaurant is an instance.

Process Orchestrations • The ordering of activities in a business process are controlled by a BPMS as centralized software component run by the reseller company. This centralized component is very similar to a conductor who centrally controls the musicians in an orchestra; therefore business processes are also called process orchestrations. There are different languages to express orchestrations.

Process Interactions • The following process model represents the activites that a buyer performs to process an order. This process interacts with the business process of the corresponding reseller. + Represents the parallel activities that take place. This symbol is different than the decision module, since the instance has to dublicate itself to simultaneously flow along the parallel paths.

Ex: Process Interactions 1. 2. 3. 4. 5. 6. The business processes of buyer and the reseller can interact in the following way: The buyer sends an order message to the reseller (Place Order activity) The reseller accepts the order message in the Receive Order activity. The order information is extracted from the message and order processing continues. The reseller sends an invoice (Send Invoice) and ships the ordered products (Ship Products) The buyer receives the invoice in the Receive Invoice activity The buyer sends the payment in the Settle Invoice activity Buyer receives the ordered products in the Receive Products activity

Process Choreography • The interactions of a set of business processes are specified in a process choreography. This term indicates the absence of central agent that controls the activities in the business process. • The interaction can be achieved by sending and receiving messages. In order to realize correct interactions, the interacting business processes need to agree on a common choreography before they start interacting.

Ex: Process Choreography

Use of BPM Systems (BPMS) • Large parts of the interacting business processes or process orchestrations can also be implemented by software systems. • The buyer might use a Web browser to search the online catalogue, makes her choice, inputs her info and presses the Submit button. • The message flow from buyer to reseller is no longer implemented by surface mail, but by Internet protocols. The buyer’s Web browser sends a message to the reseller’s Web server, which calls a software module that places the order in the reseller’s ordering system.

Modifications in the Choreography • The realizations of business processes by participants can change without affecting the business process interactions. Ex: The buyer interacts with a different reseller, Reseller-A The reseller is protected from fraudulent buyers, but execution time is longer!

Summary: Basic Terminology • A business process consists of a set of activities that are performed in coordination in an organizational and technical environment. These activities jointly realize a business goal. • Business process management (BPM) includes concepts, methods and techniques to support the design, administration, configuration, enactment and analysis of business processes. • A business process management system (BPMS) is a generic software system that is driven by explicit process representations to coordinate the enactment of business processes. • A business process model consists of a set of activity models and execution constraints between them. 26

Exercise 1: Process Modeling Consider the registration process that you follow at the beginning of every semester. 1) Describe its inputs, resources, trigger condition, customers (internal/external), responsible person, repeatability, measurability, structural independence, output 2) Develop the cross functional map of the registration process. 3) Choose one of the sub processes and develop the process choreography for its subsub-processes. 27