bam overview - software ag
TRANSCRIPT
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BAM & BPM:working together to deliverend-to-end process visibility
AMER Technology Premier Partner Software AG
Contact Benjamin Joseph 630 977 9779
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BAM + BPM = Process Visibility | August 2008 | Page 2
Agenda
Measure First: BAM as the foundation for BPM
5 steps to implementing BPM
Case Studies throughout
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BAM + BPM = Process Visibility | August 2008 | Page 3
Software AGs Business Infrastructure Technology
/various systems
BAM
BPM
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Productivity drives most process improvement initiatives
5%
13%
13%
19%
21%
23%
31%
33%
33%
34%
36%
47%
51%
71%
We are not embarking on a process
improvement initiative
Reduce manufacturing raw goods costs
Enhance stock price/investor value
Improve inventory performance
Reduce supplier cost
Improve yield
Improve delivery performance
Improve utilization of capacity
Enhance revenue
Reduce labor costs
Building a continuous improvement culture
Increase customer satisfaction
Eliminate wasteful process steps/activities
Improve productivity
What are your reasons from the following list for embarking on your process improvement initiative?
Source: October 2007 North American Business Process And Applications Online Survey
Base: 215 business process and applications professionals (multiple responses accepted)
What is yourOrganizationprepared to
measure?
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The Kinds of Processes Our Customers are Automating,Monitoring, Managing and Improving
Financial
Services
Inbound Correspondence
Processing
Loan Processing
Month-end Close
Payments Claims Processing
Client Valuations
Securities Trading
Supply Chain
& Operations
Order to Cash
Procure to Pay
Inventory Replenishment
Distribution Network
Delivery Visibility Product Recall
Trouble Ticket / Service
Calls Outage Management
Medical History Data
Exchange New Product Introduction
Customer Onboarding
Employee Onboarding
Service Fulfillment
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Critical CapabilitiesProcess-centric Business / Demand Driven Supply Chain / Manage by Exception
Raise the Bar
Understand baselines and variability Support CPI (e.g., Lean & Six Sigma)
Leverage best practices
Effectively Manage Risk Identify, predict, and
respond to exceptions Orchestrate a consistent
response Be in compliance (SOX,
Trade, SLAs)
Change the Game Tailor processes to key
customers, tradingpartners
Enable rapidly adaptivebusiness models
Provide ProcessTransparency
Document the full process Get end-to-end visibility Extend processes to trading
partners
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Mapping Business Process Capabilities to a Specific ProcessOrder to Cash
Business Process
Capabilities Order to Cash
Visibility Predict late shipments due to orders accepted within LT, orders stuck in
port, etc.; Monitor end-to-end O2C cycle time
Risk Avoidance Establish an integrated SLA Management framework with customers
Operational
Excellence Respond rapidly and efficiently to high volume of order exceptionsProcess
Innovation
Create tailored processes to serve different customer groups efficiently
and profitably
Sample
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Introduction to BAM:Measure First
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It All Starts with a ProcessGeneric Order-to-Cash Scenario
Sample
Review Order
Check OrderCompliance
Receive CustomerOrder
Receive Shipment
Transmit PO toSupplier
GenerateInvoice
Custom BillingSystem
Ship Goods
Prepare ShippingDocuments
Ship to FFGenerate PackShip
Customer Submit PO Pay Invoice
Create Factory PO
Create SalesOrder
Update Shipping
Docs and Changes
Consolidate Boxes
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How does BAM provide value?
Linked to the Business TopographyFollows the landscape of your business process - more than datawarehouse reporting - includes key in-between steps to providefull process visibility in real time!
Allows Intelligent Self-learningMonitors KPIs and builds a knowledge base of performance statisticsbased on time-centric criteria (e.g. time-of-day / time-of-week).which generate statistical boundaries based on historical patterns.
Provides Fingerprinting and Predictive alertingCompares current and historical activity to anticipate exceptions.Proactively notifies BAM users of exceptions.
(Alert via email, web services or SNMP traps)
Enterprise can react before situation becomes critical.
Supports Six Sigma AnalysisTracks rule violations, exceptions and process defects to enable SixSigma analysis and Pareto (80/20) charts. Intelligent prioritizationdrives faster process improvements with fewer resources.
Alert
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BAMs Main Monitoring Categories
Volumes: Counts of events,
quantities, any numeric-
based KPI
Velocities: Cycle-times,
time remaining till adeadline, any time based
KPI
Errors: Systems, sequence,
duplicates, timeouts,
matching, content baseddefects
Special conditions: Events
of interest, confluences
of KPIs, complex pattern
recognition
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BAM Monitors Volumes How many? How much?
Transaction revenue
Number of transactions
Cost
Margin
By Line of business By Process
Number of changes in a record
Number of calls
Number of tickets closed Number of process events
Number of compliance events
for audit
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Case Study: Seeing Whats Not There (Volume = 0)
Company High Tech Manufacturing firm
Operational
Challenge
Relies heavily on B2B transactions to drive revenue, but had no
visibility into the absence of events
Sample Pain
in the
Process
The company did not receive any orders from one of its major
customers for 8 days. There was no trigger to alert B2B Operations
group. As a result of missing a weeks worth of orders from this
major customer, the company did not meet its quarterly numbers.
Results Customers B2B Gateway investigated and fixed in 3 days
Establishing alerts to detect absence of orders from keycustomers
Extending
the Reach
Uncompleted activities, lack of closure, no escalation path
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BAM Monitors Velocities How fast? How long?
Velocities: The time-based component of
transaction steps or overall process
measurements
End-to-end Process cycle-time Cycle-times of individual steps
Wait-times between events
Time remaining to completion / Deadline
Management
Life-time of trouble ticket
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Case Study: Meeting Time-based Service Level Agreements
Company Health Care Services division of a major pharmaceutical company
Operational
Challenge
Demands to support a direct to customer distribution model
dramatically increased requirements for supply chain availability
and flexibility
Sample Pain
in the
Process
Company promises overnight delivery of medical devices to support
health care providers, but found any exception (EDI problem, data
consistency issue) could sideline an order in an exception queue for
long enough to miss the overnight window.
Results Problem resolution times slashed by 75%
Perfect order scores improved to over 99% Improved service levels
Reduction in shipping premiums and scrap
Extending
the Reach
Real-time Deadline Management based on process steps
Ability to support aggressive SLAs as a competitive differentiator
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BAM Monitors Errors How good?
Identifies, counts and measures errors to helpimprove understanding of the problems todrive closure.
With end-to-end monitoring helps understandprocess errors at the transaction level.
Incidents / Problems SLA Violations Bottlenecks in processes Rule violations Duplicate transactions
Time-outs
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Case Study: Operational Visibility Where am I broken?
Company Major Communication provider of data, voice & video in the U.S.
Operational
Challenge
Network Operations had little visibility into problem location and
status of their HFC Network
Sample Pain
in the
Process
If a network element (amplifier, tap, splitter) fails, the only
visibility is at the customer modem level. The company would roll
Field Service trucks to individual customers, not knowing the
problem resides upstream in the Network.
Results Pilot / Prototype indicated a Network alert one hour before the
customer called in with a complaint.
Network visibility model provides Points of Interest, indicatingfailure point.
BAM to monitor health metrics (SNR, Rx, Tx) to predict problems
before failure occurs
Extending
the Reach
Other network-based visibility: Utilities, Cell Towers, Pipelines
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BAM Monitors Special Conditions How normal?
Transactions greater thana set limit
The absence of expectedactivity
Combination of volumes,velocities and errormeasurement
Start and end events forspecific processes orcritical business situations
The speed of repair orrecovery activities
BAM & BPM allowbusiness operations tomanage by exception
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Case Study: Understanding Normal Operations
Company Electronic Products Company
Operational
Challenge
Incorrect incoming orders may trigger unwanted activity for
suppliers and manufacturing
Sample Painin the
Process
Product order from one of their resellers came in for one millionunits significant effort and coordination was needed to ramp up
supplier materials and manufacturing to meet demand. This order
was in error!
Results Identified the Resellers normal order pattern
Order was off by 2 decimal places
Created business rule to alert future issues
Extending
the Reach Capture currency translation errors (, $,, )
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Case Study: Fraud Detection / Pattern Recognition
Company Major U.S. Satellite Television provider
Operational
Challenge
Invisible fraudulent activities
Sample Pain
in the
Process
Users would repeatedly register for service Friday night and cancel
by Sunday night. Short duration of delivered service never
triggered a billing cycle, thus allowing free service.
Results Used BAM to identify patterns in behavior: ordering service
Friday night, cancelling Sunday night
Put in place monitors to detect future behavior
Reduced fraudulent activity
Extending
the Reach
Other complex pattern recognition: fraudulent credit card
usage, Anti-Money Laundering
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ExceptionSub-Process
Accept Reject Escalate
ErrorHandling Exception
Handling
DecisionSupport
Review Order
Check OrderCompliance
Receive CustomerOrder
Receive Shipment
Transmit PO toSupplier
GenerateInvoice
Custom BillingSystem
Ship Goods
Prepare ShippingDocuments
Ship to FFGenerate PackShip
Customer Submit PO Pay Invoice
Create Factory PO
Create SalesOrder
Update ShippingDocs and Changes
Consolidate Boxes
KPI KPI KPI
KPI
KPI
KPI
1. Establish Process2. Determine KPIs &
Measure Baseline
3. OrchestrateAND (if required)
Redesign Process
Measure First: BAM & BPM
KPI
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Case Study: Using BPM to Orchestrate the Process
Company A top 50 US retail and commercial bank
Operational
Challenge
M&A: Aggressive growth by acquisition resulted in manual processes
and disparate, disconnected systems.
Sample Pain
in the
Process
Before implementing an automated process for address changes, it
took more than seven employees working 6 hours per day to
handle the 30,000 monthly requests
Results Resource requirements reduced by over 85%
20% incremental increase in address changes handled
Extending
the Reach
Other manual processes: customer / partner / employee on-
boarding
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ExceptionSub-Process
Accept Reject Escalate
ErrorHandling Exception
Handling
DecisionSupport
Review Order
Check OrderCompliance
Receive CustomerOrder
Receive Shipment
Transmit PO toSupplier
GenerateInvoice
Custom BillingSystem
Ship Goods
Prepare ShippingDocuments
Ship to FFGenerate PackShip
Customer Submit PO Pay Invoice
Create Factory PO
Create SalesOrder
Update ShippingDocs and Changes
Consolidate Boxes
KPI KPI KPI
KPI
KPI
KPI
1. Establish Process2. Determine KPIs &
Measure Baseline
3. OrchestrateAND (if required)
Redesign Process
4. Identify Process
Improvements
Measure First: BAM & BPM
KPI
5. Play It Again Sam
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Lean-based KPIs: Measuring Muda (waste)
Transport Number & cost of Transportation process steps
Cycle time of transportation process steps
Waiting Process bottlenecks (#/time)
Time-outs (#/time)
Wait times between events (#/time)
Over production Cycle time between goods completion and ship to customer
Duplicate transactions (#/$)
Defects Defect PPM (#/$/%)
Errors handled (#/$)
SLA violations (#/$)
Rule violations (#/$)
Inventory False demand triggers (#/$)
Motion Unnecessary activity in a human/task part of the process
Extra processing Unnecessary transaction approvals (#/$)
Rework activities (#/$)
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Lean-based KPIs: Measuring Mura & Muri
MuraUnevenness /
Unnecessary
variation
End-to-end Process cycle-time (mean/variance)
Cycle-times of individual steps (mean/variance)
Time remaining to completion
Absence of expected activity
Combination measurements of volumes, velocities and errors Speed of repair or recovery activities
Cycle time of QA / Testing activities
Muri
Overburden /Over doing
Excess / non-value-add process steps
Excessive transactions
Manual prioritization
BAM Storm excess alerts
Limited / Restricted re-use of tools and processes
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Thank You!