Business Process Management

Institute for Certification of Computing ProfessionalsKewal Dhariwal © 2008

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National Collegiate Conference

Business Process Management (BPM)

How to get beyond ERP and move into the 21st Century

Kewal Dhariwal, PhD, CCP, I.S.P.

Manager, ICCP & Supply Chain Research

Athabasca University


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What is ICCP creating for a BPM Exam?

1.0. BPM Concepts and Roles1.1 Definitions1.2 Organizational Roles & Responsibilities

2.0. Business Management Perspective2.1. Business Concepts, Principles and Guidelines2.2. Performance Management2.3. Ongoing Monitoring and Controlling Execution

3.0. BPM Methodology Approaches and Techniques3.1. Enterprise Process Planning3.2. Process Analysis and Design3.3. Process Management Improvement

4.0. BPM Technology4.1. BPMS Implementation4.2. BPMS Technology Types


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Why BPM?

• “BPM is going to be the dominant management discipline in the 21st Century and is already the way that leading companies manage their businesses as a management discipline.”

• “The convergence of BPM and the continually increasing capabilities of BPM software enable organizations to manage and execute change in an increasingly hypercompetitive environment – to adapt, thrive and survive.”– Brett Champlin, CCP, CDMP, President - ABPMP


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Why BPM?

• “Enterprises are seeking to transform themselves into customer-focused, process-centric organizations and consider this transformation critical to their business success.”

• “A key part of that transformation is to reorganize information resources as substantially independent reusable services.”

• “A service oriented architecture (SOA) embraces this concept of reusable services and represents the next major step in the evolution of IT strategies.”

– Tom Dwyer, V.P. Research, Brainstorm Group– Mike Rosen, Editor SOA Magazine, Brainstorm Group


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What is happening in BPM?Results from a survey of 1200 companies (2007)

Carilu Deitrich, BEA BPM Product Manager

• Market consolidation and technical convergence

• 150 vendors providing small to large enterprise-class vendors with powerful solutions and modeling tools. Consolidation occurring to reduce that number to 25 for enterprise wide solutions.

• Spanning multiple packages• BPM increasingly being used to manage

processes that bridge multiple packaged applications.


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What is happening in BPM?

• People process problems• Organizational challenges such as internal politics

and change management outweigh technical challenges in deploying BPM.

• Continuous process improvement is the key to fostering BPM as an imperative business strategy

• BPM, Collaboration with Competitors• Companies are seeking ways to better support ad-

hoc, collaboration • BPM today does not support this well enough, but

BPM companies are moving towards this direction.


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What is happening in BPM?

• BPM adoption mostly departmental• Some leading-edge companies are tackling

enterprise-wide processes (more the exception than the rule).

• 1200 companies surveyed – 18% currently employing enterprise wide BPM

• 50% of surveyed group are focusing on departmental process problems

• BPM rapid growth attributable to bringing business strategists and technologists together to solve process problems


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What is BPM?Let’s explore it in detail

• BPM goals are to efficiently align the organization with the customers’ wants and needs

• BPM attempts to continuously improve processes – seeking process optimization by– Defining– Measuring– Improving your process


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What is BPM?• “Executives need to organize and manage, not only the

cost chain, but also everything else – including strategy and product planning – as one economic whole, regardless of the legal boundaries of individual companies.”

• “This is a shift from cost-led pricing to pricing-led costing.” – Peter Drucker – Management Challenges of the 21st Century.

• This change is from forecast-driven inventory style systems to responsive, flexible and demand-driven mass customization, globally.


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What is BPM?

• People• Customer facing staff are best suited to understand customer

needs and must be empowered to make improvements. • Many improvements can be done without involving

technology

• Business –Technology Divide• Business processes are managed by business people.• Information moves between software packages with requires

a service oriented architecture (SOA) often driven or governed by IT.


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What is BPM?

• Modeling• Modeling a business process is a business domain• Perfecting a business process is a staff domain.• Business modeling is Business Process

Management (BPM).

• Business –Technology Connection• The size and complexity of tasks often requires the

use of technology to model efficiently.• Business people, especially customer facing staff

must control and do the modeling.


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What is BPM?• Bridging IT and Business

• Bringing the power of technology to business staff and reducing their work should be the BPM group credo.

• BPM is the bridge between Business and IT.• BPM systems will develop to be industry specific.• A cyclical BPM life-cycle exists:

– Design– Modeling– Execution– Monitoring– Optimization


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What is BPM?

• Process Design• Identify existing processes• Design the “to-be” processes• Key Terms

» Representations of process flow» Actors within a process» Alerts & Notifications» Escalations» Standard Operating Procedures» Service Level Agreements» Task hand-over mechanisms


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What is BPM?

• Process Design– Techniques & notations

– IDEF0 – IDEF nn (U.S. Air Force- public domain)– IDEF0 – Function Modeling– IDEF1 – Information Modeling– IDEF1X – Data Modeling– IDEF3 – Process Description Capture

– Event Driven Process Chains (originally inside SAP/R3), now also through IDS Scheer, MS Visio, other tools.

– BPMN (simple diagrams with a small set of graphical elements) – developed by BPM Institute handed over to Object Management Group (OMG – maintained).

– Flow Objects– Connecting Objects– Swimlanes– Artifacts


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What is Business Process Modeling Notation (BPMN)?

• BPMN simple diagram (www.wikipedia.org )


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What is BPMN?

• BPMN larger example (www.wikipedia.org )


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What is BPM?

• Modeling– Starting with the Design (theoretical) introduce

variables – such as cost of materials, introduction of more people, etc. to determine how the processes might operate differently.

– What if analysis • What if only 90% of the people had to do the work?• What if only 50% were available (baby-boomers

retiring)


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What is BPM?

• Execution• Off-the-shelf BPM tools are available:

– http://bpm-directory.omg.org/vendor/list.htm» BEA, ID Scheer, Borland, etc.

• Enterprise-wide tools include all of the following and more:

– Graphical tools– Text language based modeling tools– Visual programming using metaphors– Business Rules – definitions governing system behavior-

leading to a business rule engine


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What is BPM?

• Monitoring• Individual process tracking (state and statistics)

– State of a customer order, state of a delivery, how many delivered on-time, right-quantity, right-place, etc.

– Identify problems and correct– Work with customers…once the problem is identified, fix the

connectivity issues (information rollups, data exchange, people communications, etc.)

• Measures: Cycle time, defect rate, productivity• Business Activity Monitoring (BAM)

– Real –time or Ad-hoc

• Process Mining– Compare event logs with “a-priori model” to analyze

bottlenecks, breakdowns in process, etc.


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What is BPM?

• Optimizing• Identifying process failures, bottlenecks, under

performance issues– Cause-effect analysis– Redesign or modification of process to

» Reduce Cost» Improve Quality» Increase Responsiveness


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Where does SOA fit in?

• Service Oriented Architecture (SOA) is a way of executing BPM more efficienty and effectively

• SOA provides the architecture to provision how processes exchange data in a flexible manner across business processes, both in the company and between collaborating companies (supply chains)…following the value chain more closely.

• SOA unifies business processes by structuring large applications as an ad-hoc collection of smaller modules called services.


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Where does SOA fit in?• XML has been used extensively in SOA to create data which is

wrapped in neat descriptive containers. • The services are described by Web Service Description Language

(WSDL) and SOAP a protocol for exchanging XML based messages over the internet using HTTP/HTTPS.

• The goal of SOA is to allow programs or applications to be strung together to form new ad-hoc applications which are built almost entirely from existing software services.

• WS-BEL – Web Services Business Execution Language (serialized XML) – processes in WS-BEL exclusively import and export functionality by using web interfaces.

• Software reuse is one goal without reconfiguring the existing application – So this is systems integration in a totally different manner than the 1980s and 1990s ERP methods which often required the company to change its processes to fit in with the ERP environments.


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New Rules for the Process-Managed EnterpriseHoward Smith and Peter Fingar (BPM-the Third Wave) 2003

Item Old Rule Disruption New Rule

1 Process-based clerical work and practice-based skilled work are

different

Process Desktop All forms of work can be described and managed by a single system

2 Processes are rigid scripts, focused mainly on the inputs and outputs of

discrete steps

Process Calculus Processes are fluid, dynamic, amoebic and adaptable

3 Executing a process means locating it in one place and under centralized

control

Distributed process execution and end-to-end processes

Processes can be as easily managed in a federated environment as a centralized

one

4 Collaboration requires standard approaches

Business process modeling languages

Firms are free to innovate because collaboration rests on a standard

representation for processes, not on standard processes

5 Companies have to start over Process discovery, introspection and projection combined with application componentization

Companies build on and transform what exists

6 Process must be kept simple in order to be manageable

Process participants Processes can be as complex as they need to be, yet still be manageable

7 Processes have to be changed in order to reduce the manual checking

required of accountants, auditors and supervisors

Process metrics and process lifecycle

Processes can monitor themselves


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ITEM OLD RULE DISRUPTION NEW RULE

8 A choice must be made between incremental process improvement, and

radical engineering

Lifetime process lifecycle management

There are no discontinuities

9 Incremental process improvements produce minor gains

Process analysis and transformation

Processes evolve in fits and starts, sometimes incrementally and

sometimes radically, but always non-disruptively

10 Radical change is painful and disruptive

Computer-aided process engineering

Replacement of organizational change with technological implementation

11 Companies need a large, dedicated, long-standing reengineering team

Process portal Process management vanishes becoming a part of everybody’s job

12 Process innovation is an art form, with uncertainties and ambiguities

Process calculus Process management is a precise science

13 Radical change takes a long time to implement

Process deployment and execution

Not all radical changes require radical changes to IT systems or organization

14 No team can reengineer more than one process at once

Process management system Continuous process improvement across many processes


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15 Radical change is top-down and continuous changes is bottom-up

Integrated process model There is no distinction – circumstances govern the approach you take. Process models developed quite independently

can be easily combined.

16 Reengineering never happens from the bottom-up

Process intranet Insights for process streamlining and process re-design arise naturally in the business, and are readily accepted by

those affected

17 Managers make all process design changes

Collaborative process design and closed loop process optimization

Change-making is part of everyone’s job

18 There must be a single process owner Collaborative process analysis Everyone that needs to be involved in the process improvement can be

involved

19 Processes can be designed only by the process team

Shared process repository As many designers as required can be involved, deep within the business

20 It takes work to have to find out where you are in a given process

Process metrics Processes measure themselves and tell you where they are

21 Every process team needs a human coach

Process training built into process designs

Processes as coaches


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ITEM OLD RULE DISRUPTION NEW RULE

22 Plans get revised only periodically Process modeling language Plans are processes, guiding the enterprise in real time

23 The only feasible processes are those supported by the existing IT systems

Process virtual machine Any process can be modeled and executed; it may have nothing to do

with IT

24 As few people as possible should be involved in the execution of a process

End-to-end processes, process data correlation, distributed

process execution

Everyone and every system can be involved without degradation of automation or efficiency through

manual hand-offs

25 Don’t bury reengineering in the middle of the corporate agenda

Process modeling methodology Value analysis, process analysis, quality management and costing are

combined into one analysis

26 Tradition counts for nothing Process discovery Tradition is everything, and must be built upon. Those who fail to learn

from the past are condemned to repeat it

27 Design processes so that only a small number of variants are needed

Process customization and process patterns

Any process can be reused to construct or constrain the design of hundreds,

even thousands of variants

28 A company has no more than ten to twenty processes of interest to process

engineers

Process discovery Organizations are more complex than they think


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29 The processes to be improved must be carefully selected and prioritized

Process optimization, analysis and transformation

Process improvement is built into the methodology; pain points emerge

naturally

30 Processes must be designed to eliminate excessive information exchange and data redundancy

Process data Strong processes are those that include all required participants who can freely and efficiently exchange and re-process

all required information

31 Work must be structured so that suppliers and customers can plan and

schedule their respective activities independently

Collaborative processes Coordination of independent activities is built into new processes

32 Divide overly complex processes into smaller number of simpler processes

Enterprise process model Manage processes as intellectual property and derive what is required for

execution automatically

33 Technology only participates in the process (as cogs in an engine)

Third wave Technology implements the process (drives the pistons; orchestrates the

cogs)

34 Processes change only when people change them

Capability passing, external process participants, business

rules

Processes can change themselves within limits set by process design


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35 Processes take a long time to design

Real-time process manufacturing; the real-

time enterprise

Just-in-time, single-purpose, throw-away processes are all

possible and useful and reflect the way business is

really done – experimentally and systematically

36 Changing processes across organizational boundaries is

virtually impossible

Process interface definition language and

end-to-end processes

Process management knows no organizational boundaries

37 There is a divide between “business” and “IT”

Third wave BPM Process owners design and deploy their own processes,

obliterating, not bridging, the business IT divide


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Future for BPM?

• Move from mechanistic systems to more complex environments where Human Intuition and Judgment are allowed for in the work flow.

• Better capture and adhere to business rules – Business Rules driven systems.

• Intelligent software agents will be used to replicate business rules behavior and model optimizing responses.

Business Process Management

Documents

bpm companies

bpm technology

bpm systems

collaboration bpm

convergence of bpm

bpm concepts

bpm adoption

bpm attempts