IBM Software Group Web Sphere Process Improvement Workshop

IBM Software Group Web. Sphere Process Improvement Workshop Overview and preparation requirements SOA: The Key to Business Flexibility Hans Skalle Workshop Facilitator 612 -220 -1880, hskalle@us. ibm. com © 2006 IBM Corporation

Web. Sphere Process Improvement Workshop Topics 2 2 § Background – Why process improvement? § The Web. Sphere Process Improvement Workshop (PIW) – Overview § Sample Results § Preparation Requirements SOA: The Key to Business Flexibility

Web. Sphere Process Improvement Workshop Topics § Background – Why business process management? - Business process overview - Introduction to Business Services - IBM’s Services Oriented Architecture (SOA) Lifecycle for continuous improvement - IBM’s Web. Sphere BPM suite 3 3 § The Web. Sphere Process Improvement Workshop (PIW) – Overview § Sample Results § Preparation Requirements SOA: The Key to Business Flexibility

Business processes… § Coordinated chains of activities producing business value and results § Typically consist of: - Human activities (Human Workflow) - Business system activities (such as ERP, or CRM, …) - Combinations of human and system activities § Define how the business runs at an operational level § May be hidden or embedded: - In the organization and culture of a company - In the business systems of a company § Are often poorly understood § Reactively managed, improved 4 SOA: The Key to Business Flexibility

Companies that have implemented Business Process Monitoring systems are seeing results… “Three-quarters of 160 companies surveyed recently believe they are flying their business processes ‘blind and without instruments. ’ This lack of visibility, often due to old application software, is inhibiting all levels of management from seeing bottlenecks in such critical processes as capital risk management, claims tracking, compliance, inventory management, and customer service. ” § An average 9% improvement in revenues § A median 12% decrease in process-related expenses § A 10% return on assets (ROA) § An 18% return on investment (ROI) § 94% are moderately or very pleased with the overall improvement Business Process Monitoring has delivered Source: Aberdeen. Group, The Business Process Management Benchmark Report, October 2006 5 SOA: The Key to Business Flexibility

Pressure to grow, innovate and drive costs down – Business Process Management (BPM) is critical According to Gartner, pressure is coming from global competition, especially around price, which is commoditizing many businesses, and compliance with regulatory requirements such as the Sarbanes-Oxley Act. “To meet these challenges, organizations must find ways to better manage their business processes — that is, the ways in which they operate. ” – Gartner's Position on Business Process Management, 2006 Two factors are now enabling BPM: • The advance of BPM technology (BPM Suites) and technology standards for Services Oriented Architectures (SOA), XML and Web services. • The spread of Six Sigma and other process improvement methods, and the availability of process modeling tools for business analysts, in addition to architects and IT professionals. 6 SOA: The Key to Business Flexibility

Flexibility through Business Services Business process logic will no longer be deeply embedded in application code, where it is locked away and expensive to change. Instead, process logic will exist in the form of high value business services that are reusable. Processes using these services will be much more flexible and cheaper to maintain over time, allowing businesses to achieve dramatic results in responsiveness, cost effectiveness and profitability. Service Components are reusable building blocks 7 SOA: The Key to Business Flexibility Flexible, componentized business processes

Improving performance – Service-driven realignment Component reuse within and across processes drives costs down even more over time Examples: Credit authorization Corporate OTC SALES SUPPLY CHAIN Customer self-service FINANCE Div A Div B Div C CUSTOMER Orders Billing A/R Reusable Business Services As we create the future-state model we’ll look for opportunities to use Business Services to improve performance 8 SOA: The Key to Business Flexibility

IBM’s Services Oriented Architecture (SOA) framework for continuous improvement § Multi-dimensional framework designed to enable and sustain continued high performance - Managed interactions between people, processes and information - Model-driven implementation cycle - Governance framework supported by Registry and Repository 9 SOA: The Key to Business Flexibility § Enables the gap between business and technical design to be bridged § The Web. Sphere suite includes tools to measure and report process performance, supporting data-driven process management

Supporting continuous improvement and innovation The Web. Sphere BPM suite Web. Sphere Integration Developer Easy-to-use graphical tools to simplify and speed the assembly of composite applications Web. Sphere Process Server Flexible deployment of business processes, making plug-and-play of components a reality Web. Sphere Business Modeler Simple to use process modeling for the business analyst to help maximize process and business resource re-use “IBM has the broadest SOA platform…” Source: Forrester Research, Dec 21, 2005 10 SOA: The Key to Business Flexibility Web. Sphere Business Monitor Real-time visibility into process performance enabling process intervention and continuous improvement

Web. Sphere Process Improvement Workshop Kickoff Topics § Background – Why business process management? § The Web. Sphere Process Improvement Workshop (PIW) – Overview - Activities and scope - The PIW process 11 11 § Sample results § Preparation Requirements SOA: The Key to Business Flexibility

IBM Process Improvement Workshop (PIW) – Scope Web. Sphere PIW Goals: • Demonstrate Modeler value, capability • Demonstrate five-step improvement method Simple Scope: • Business (vs. technical) modeling • Sub-process (limited to +/- 20 tasks) On-site: Elapsed: 12 2 -3 days +/-1 week SOA: The Key to Business Flexibility Consulting Services Engagement Complex

What to look for in the current and future states Current state process Future state process § Bottlenecks and constraints § Streamlined with automated workflow § Rework, errors and exceptions § Exception-based including alerts and escalation (out of bounds conditions and time triggered) § Missing, incomplete information § Fragmented processes held together through spreadsheets, rekeying, informal workarounds § Numerous approvals and audits § Sequential activities creating delays § Paper-based processes § Lack of measures, performance indicators § Decisions based on feelings vs. facts § Processes that are too slow, too costly to be competitive 13 SOA: The Key to Business Flexibility § Improved access to accurate information through integration Improved process § Rules-driven approvals and routing § Use of managed parallel activities § Dashboard monitoring and decisionmaking based on real-time Key Performance Indicators, results § Improved ability to respond to and implement required regulatory controls § Reusable business services

Placing the scope of the PIW on the prioritization and evaluation matrix Greater effort Lower effort Reengineering project Associated with a key, meaningful initiative Scope of PIW Simulation may be used to assist with the calculation of payback and positioning Payback Lower, nonstrategic value Initiative A 14 Higher strategic value, linked to key initiative Initiative B SOA: The Key to Business Flexibility Initiative C Initiative D

Web. Sphere Business Modeler – Five steps to continuous process improvement § Develop pilot and implementation plans § Create measures § Assign technical attributes § Implement, Monitor performance Implement and Manage Define and Align Objectives Cycle of Improvement Model Future State, Evaluate Options § Look for opportunities to automate (e. g. workflow, integration vs. re-keying) § Model alternatives and rank by payback (use a simple matrix) § Gather feedback on the proposed process 15 SOA: The Key to Business Flexibility Assess and Analyze § Link to core process and/or key initiative § Define improvement objective (e. g. “Reduce process cycle time by…”) § Model exception paths including required corrective action Model Current State § Gather and load and Gather Data cost and time (duration) data § Classify activities (e. g. value add vs. rework) § Develop a simulation test plan § Simulate “As-Is” process to identify bottlenecks and high cost areas § Prioritize improvement opportunities

Web. Sphere Process Improvement Workshop process Pre-Workshop (approx 1 – 2 wks) IBM Representative Workshop Facilitator Customer LOB SMEs Discuss workshop value, process and determine dates Identify process, set expectations regarding scope Provide documentation (Visio, procedures, forms, input sheet) Onsite Workshop Post Workshop You are here Prepare Executive presentation, next steps summary Execute next steps Workshop Facilitator IBM Sales Representative Customer Conduct Process Improvement Workshop Possible next steps: 2 to 3§ Proof of Technology lab Days§ Additional workshop(s) § Software Investment Workshop Facilitator 16 Create draft currentstate model, project tree, Exec ppt SOA: The Key to Business Flexibility Workshop Facilitator Customer Representatives

Conduct Process Improvement Workshop – Day One Current State Deliver kickoff presentation to levelset expectations Approx 2 Hours Review current state and agree on/refine scope Day One: Establish boundaries, model and/or review the current state Approx 2 Hours Model current state using Web. Sphere Business Modeler Approx 4 Hours 17 SOA: The Key to Business Flexibility

Conduct Process Improvement Workshop – Day Two 18 Day One Day Two Current State Future State Deliver kickoff presentation to level set expectations Review current state and brainstorm futurestate improvements Approx 2 Hours Approx 1 Hours Review current state and agree on/refine scope Create future-state process model Approx 2 Hours Approx 4 Hours Model current state using Web. Sphere Business Modeler Compare current- and future-state models (simulation) Approx 4 Hours Approx 2 Hours SOA: The Key to Business Flexibility Day Two: Brainstorm improvements, model the future state

Conduct Process Improvement Workshop – Day Three 19 Day One Day Two Day Three Current State Future State Next Steps Deliver kickoff presentation to level set expectations Review current state and brainstorm futurestate improvements Package results, create Executive Presentation Approx 2 Hours Approx 1 Hours Approx 4 Hours Review current state and agree on/refine scope Create future-state process model Deliver Executive Presentation Approx 2 Hours Approx 4 Hours Approx 2 Hours Model current state using Web. Sphere Business Modeler Compare current- and future-state models (simulation) Agree on next steps Approx 4 Hours Approx 1 Hour SOA: The Key to Business Flexibility

Web. Sphere Process Improvement Workshop Kickoff Topics 20 20 § Background – Why business process management? § The Web. Sphere Process Improvement Workshop (PIW) – Overview § Sample Results § Preparation Requirements SOA: The Key to Business Flexibility

Sample Results Customer background § Had used Visio to document processes - Inconsistent from modeler to modeler No ability to simulate Some modeling standards in place Various symbols used for Task attributes § Six Sigma company - First major Six Sigma initiative - Worked with a newly formed Six Sigma project team - User of Six Sigma’s Design, Measure, Analyze, Improve, Control (DMAIC) methodology - Very talented team ü Strong engineering and manufacturing backgrounds ü Experienced with statistical process analysis 21 SOA: The Key to Business Flexibility

Sample Results PIW Activities § Pre-workshop Activities - Customer provided VISIO diagrams, documentation - Imported prior to the on-site workshop § On-site Activities - Refined and validated current state process flow ü Resolved VISIO symbols that did not map to BPML constructs ü Added model attributes including time and cost - Conducted simulation and analysis using basic techniques ü Analyzed standard time and cost reports ü Identified problem areas, constraints - Identified improvements based on problem areas - Created the proposed future state process model - Ran simulations and conducted comparative analysis ü Analyzed standard time and cost reports ü Analyzed Comparative reports - Created and delivered executive presentation to sponsors 22 SOA: The Key to Business Flexibility

Process Improvement Workshop – Visio import Model was completed by resolving and adding required BPMN components Minor Visio clean-up was required for import 23 SOA: The Key to Business Flexibility

Process Improvement Workshop –attributes added 24 SOA: The Key to Business Flexibility

Process Improvement Workshop – current state simulation 25 SOA: The Key to Business Flexibility

Process Improvement Workshop – evaluated improvement options § Potential Areas of Improvement - Consolidate / Eliminate Tasks - Maximize the use of Parallel paths - Increase probability of most desirable paths - Reduce task durations - Modify resource requirements - Automate tasks or sub-processes ü Implemented in the To-Be model 26 SOA: The Key to Business Flexibility

Process Improvement Workshop – Process Comparison 27 SOA: The Key to Business Flexibility

Web. Sphere Process Improvement Workshop Kickoff Topics 28 28 § Background – Why business process management? § The Web. Sphere Process Improvement Workshop (PIW) – Overview § Sample Results § Preparation Requirements SOA: The Key to Business Flexibility

Typical Process Improvement Workshop Timeline Kickoff Call Prep Work (checkpoint calls as required) Week 1 Week 2 Complete Data Collection Workshop (2 Deliver Executive -3 days) Presentation* Week 3 Week 4 Complete Current- and Futurestate Process Models *Note: Executive Presentation typically delivered on the last day of the workshop or shortly after. 29 SOA: The Key to Business Flexibility

Pre-workshop preparation requirements and timeline Timeframe IBM Day 1 (approx. 1 hr) Sponsor organizes initial Preparation Kick-off call Meet with Sponsor and discuss objectives of initial Prep kick-off call and determine required attendees Week 1 – Day 1 (approx. 1 hr) Sponsor and key participants attend the PIW Preparation Kick-Off Conduct Preparation Kick-off meeting. Review workshop methodology, set expectations and determine timeline. Week 1 4 -8 hrs) 30 Customer (approx. Identify applicable business processes and select one simple process Provide guidance on scope Week 1 thru 2 (approx. 4 -8 hrs) Sponsor arranges room, invites key stakeholders for Executive Presentations, and schedules process SMEs for workshop Prepare Executive Kick-off Presentation. Week 1 thru 2 (approx. 3 -5 days) Process SMEs gather and provide process documentation (Visio, forms, procedures). Draft current state model in Web. Sphere Business Modeler. Provide guidance for data collection. (optional Data Collection worksheet) End of Week 2 (approx 2 hrs) Review draft current state model Refine draft process model prior to workshop SOA: The Key to Business Flexibility

Process Improvement Workshop Resource Involvement Customer § Executive Sponsor – interested in the outcome, attends the PIW Kickoff and final Executive presentation § Client Lead - coordinates customer activities, active in preparation of executive presentation § Process SMEs – familiar with business process, conducts data collection for one simple business process, participates in workshop § Key Stakeholders – interested in the outcome, attends the PIW Kickoff and final Executive presentation, influences decision to move forward IBM § Web. Sphere Sales Rep – opportunity owner and manages client relationship § PIW Lead – manages PIW process and workshop, delivers PIW Executive Presentation (may also be Modeling Specialist) § PIW Modeling Specialist – assists client with data collection and selection of one simple business process, facilitates discussion and creates As Is and To Be models during workshop, conducts demo during Executive Presentation 31 SOA: The Key to Business Flexibility

Backup 32 SOA: The Key to Business Flexibility

Insurance Industry “New life policy” process – example § Insurance company, high cost, slow turn around for new business life policies - Paper based process, dependent on the resources constrained agents - Expensive High Underwriter involvement - Very Static and prone to losing documentation § Modeled future-state process - Added portal at the front-end - Converted paper requests to electronic format - Process streamlined and automated § Business Value - The weighted average cost for this process ü As-Is $16. 75 To-Be $14. 72 - The duration for the process ü As-Is 7 hours To-Be 3. 5 hours 33 SOA: The Key to Business Flexibility

Cross Industry Customer Record Update Process – example § Management is concerned about the accuracy and timeliness of the process and the eventual impact to business productivity - Sales, credit, and customer service use separate applications, using manual entry § Improved process - Web. Sphere Process Server and adapters to automatically detect new customers in SAP R/3, new data is sent to the appropriate applications, including the supplier § Business Value - Information is available in real-time and is accurate - The weighted average cost for this process: ü Current: $44 Future: $22 - The duration for the process: ü Current: 4 hours Future: 4 minutes 34 SOA: The Key to Business Flexibility

Web. Sphere Process Improvement Workshop A three-day educational and problem-solving work session during which we document a current business process, define a high level technology-enabled alternative process, and compare the two using Web. Sphere Modeler’s advanced simulation capability Activities § Establish process boundaries and link the process to business goals and benefits § Model the activities that make up the current-state process including decisions, failure points and exception paths § Document inputs/outputs, resources, roles, along with duration and revenue/cost values. § Identify changes to the process that would result in an improved, workflow- and/or services -enabled alternative and model the future-state process § Develop simulation test cases and perform static and dynamic analysis § Discuss Key Performance Indicators (KPIs) and implementation attributes Deliverables § Current- and future-state simulation results, process diagrams Participants § Customer: LOB executive sponsor, business process SMEs, IT architects § IBM: Process modeling experts, technology specialists 35 SOA: The Key to Business Flexibility

Web. Sphere Business Modeler – Five steps to New process design 1 5 (Pilot) Implement and Manage 4 Define Requirements and Align Objectives New Process Design Cycle Create Process Model(s) and Test with Simulation 2 Establish Key Measures, Examine Best Practices 3 Evaluate Building Blocks for Reuse 36 SOA: The Key to Business Flexibility Goal: Use the building blocks – global tasks, sub -processes, services – to design and “wire together” new processes

Business Process Management combines business expertise and enabling software Business Process Management is a differentiating business capability combining software capabilities and business expertise … through people, systems, and information to accelerate process improvements and facilitate business innovation Business Process Management 37 Software that Enables BPM Expertise that Delivers BPM • Tools, Rules • Dashboard, Forms • Repositories • Process Knowledge • Industry Methods and Models • Business consulting expertise SOA: The Key to Business Flexibility