what every enterprise architect needs to know about bpm

Michael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyHoboken NJMichael.zurMuehlen@stevens.edu

What every Enterprise Architect needs to know about BPM

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What is BPM?

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What is BPM?

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Let’s start with the process definition:

A Business Process is the temporal and logical sequence of those activities that are necessary to manipulate an economically relevant object toward an overarching goal, creating value for a customer

What is BPM?

Business Process Management is comprised of the methods and tools that allow us to answer:

How do we make our processes perform better?

How do we maintain required compliance?

And, by the way: What are our processes?

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“Let’s try this out first”

Choose a single pilot process to gain experience with BPM

Good: High-value, low-medium risk business case

Example: Onboarding, Claims Processing

Bad: No-value, no-risk business case

Example: Vacation request, Expense reimbursement

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Scheduled Project Time during First BPM Project

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Business CaseProject Team SelectionProcess DiscoveryDocumentationFunctional and Technical SpecificationTools Evaluation and SelectionImplementationTesting and DebuggingDeployment and Training

Source: BPTrends (2006)

Problem: Process Confabulation

Problem

People should know why they perform tasks

If they don’t, they make up explanations

Consequence

Accurate process discovery becomes difficult

Reinforces assumptions that participants share about the process (Black Swan problem)

Solution

Observe rather than ask

Follow the process object

Rainy Day Approach: Use Specific Examples

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Problem: Paper BiasProblem

Process designs mimic paper-based processes

Consequence

Innovative designs are overlooked

Inefficiencies remain because technology capabilities are underutilized

But: Processes are easily understood by those who are used to paper

Solution

Model backwards

Focus on data dependencies

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Industrialization of Back Office

Input Channels

OrderManagement

Process

Job Types

Production ManagementTransparencyAutomation, but only if not

too complex / rareother regulatory requirementsno economies of scale

Trading

Acct. Mgmt.

Payments

Complaints

Input Cases

Search processes usingtechnical criteriabusiness criteria

Display shows statusstart timeend timeinstance data

Drill Down is possible

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Example: Back Office

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Example: Back Office

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“Let’s model everything”

Need an Enterprise Process Architecture

Comprehensive Process Documentation

Motivation

Compliance Requirements

Developing Global Standards

Mergers and Acquisitions

“We like to model”

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1.0Develop

Vision and Strategy

2.0Design and

Develop Products and

Services

3.0Market and

Sell Products and Services

4.0Deliver

Products and Services

5.0Manage

Customer Service

Operating Processes

6.0 Develop and Manage Human Capital

7.0 Manage Information Technology

8.0 Manage Financial Resources

9.0 Acquire, Construct, and Manage Property

10.0 Manage Environmental Health and Safety

11.0 Manage External Relationships

12.0 Manage Knowledge, Improvement, and Change

Management and Support Processes

Source: APQC (2007)

Enterprise Process Map: APQC

Roles &Responsi-

bilities

Process Owners

ProcessManagers

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Enterprise Process Map: Fortune 500

Methods Organization

Levelconcept

Conventionhandbook

Modelinghandbook

CorporateModelingService

EPM - Facility ManagementD

er

rele

van

te

Users

Shareholders

Market

Owners

Customer

De

r be

arb

eite

te

Customers

Market

Project study

Planning

Resource-disposition

TechnicalServices

AdministrativeServices

PersonnelServices

Marketingand

Acquisition

Market Activities Enactment of Services

Consulting

Contracting

Informations-verarbeitung

Information-processing Informations-

verarbeitung

Material-management Informations-

verarbeitung

Accounting,Finance Informations-

verarbeitungLegal Issues

Human Resources

AssetManagement Controlling

EnterpriseManagement

Process Management

Portfolio ReportingStrategical /Operative

Mgmt.

Users

Shareholders

Owners

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EPM - Retail Strategy

Management Accounting

IT Governance

Warehouse

Marketing

Sales

Distribution

Billing

AccountsReceivable

AccountsPayable

Purchasing

OrderManagement

Receiving

InvoiceAuditing

General Accounting and Asset Management

Cost AccountingHuman Resources

Reference Models

Core Process Example: Supply-Chain Operations Reference Model (SCOR)

Defines high-level process steps in the supply chainCan be customized at lower levels to reflect organization-specific detailsProvides common terminology and structure for operations in different lines of business

Support Process Example: IT Infrastructure Library (ITIL)Defines activities for IT support organizations such as helpdesk activitiesFor most businesses this is not an area of competitive differentiationStandard operating procedures and system support ensure the use of best practices 15

It is not necessary to create new models in all areas Option: Use industry-specific reference models that describe processes in a particular domain

Process Abstraction Levels

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Process Groupings

Business Activities

Core Processes

Business Process Flows

Detailed Process Flows

Level A

Level B

Level C

Level D

Level E

Level F

ObjectivesBusiness Activities

Delivery Units Products

Processes Systems

Scorecard

Sub Processes Roles System Functions

Operational Process Flows

Detailed Processes TransactionsDetailed Roles

Delivery Teams

Ownership ServicesProcess Groupings

Core processes

Source: British Telecommunications plc 2006

Process Abstraction Levels

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Process Groupings

Business Activities

Core Processes

Business Process Flows

Detailed Process Flows

Level A

Level B

Level C

Level D

Level E

Level F

ObjectivesBusiness Activities

Delivery Units Products

Processes Systems

Scorecard

Sub Processes Roles System Functions

Operational Process Flows

Detailed Processes TransactionsDetailed Roles

Delivery Teams

Ownership ServicesProcess Groupings

Core processes

Source: British Telecommunications plc 2006

What

How

Detailed Processes TransactionsDetailed Roles

ObjectivesBusiness Activities

Delivery Units Products

Processes Systems

Scorecard

Sub Processes Roles System Functions

Delivery Teams

Ownership ServicesProcess Groupings

Core processes

Enterprise Process Architecture

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Enterprise Process Map

Pro

cess

Lev

els

Strategy

Management IT

Warehous

Marketing

Sales

Distributio

Billing

AccountsAccounts

Purchasing

Order

Receiving

Invoice

General Accounting and Asset Cost Accounting

Human Resources

Enterprise Process Architecture: Benefits

Allow to short-circuit process identification phase

Provide neutral map for navigation along processes

Standardize terminology across the enterprise

Enable benchmarking across organizations

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“We’re doing SOA, let’s figure out this BPM stuff later”

Typical Procedure Analyze existing systems

Establish basic services

Implement Enterprise Services Bus

Try to identify processes that can leverage the services

ProblemWithout processes there is no point of reference for

services abstraction

granularity

usage frequency 19

SOA - What Programmers See

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Services - What Architects See

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What the Customer Wants

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Capabilities

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Alternative Implementation

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What are you really good at?

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Customers don’t care about processes per se, but about

their value proposition

Learn from OutsideUsage-based Insurance applies Telecom Billing Techniques

Progressive: Autograph Prototype ‘99-’01

Norwich Union:

Free GPS

Rate depends on mileage driven

Precondition: Flexible billing process

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Underwriting On DemandText2Insure

Provide Travel and Car Insurance via SMS

Provides Quote within 60 seconds

Reply “BUY”

Call from agent within 10 min for payment details

Cover2go

Accidental Death Insurance

Fees taken from cell phone bill

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From Core to Commodity

Treat the process as a serviceDefine a standard interfaceThink about creating value outside and at the front-end

Takeaways

Technology enables Process Change

Processes define Services

Core Processes become Commodities

Efficient Process Management creates room for problem solving

Industrialized Processes enable Innovation

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Michael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyCastle Point on the HudsonHoboken, NJ 07030Phone: +1 (201) 216-8293Fax: +1 (201) 216-5385E-mail: mzurmuehlen@stevens.eduWeb: stevens.edu/BPMslides: slideshare.net/mzurmuehlen

Thank You - Questions?

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