Business Process Change and Discrete-Event Simulation:

Bridging the Gap

Vlatka Hlupic

Brunel University

Centre for Re-engineering Business Processes (REBUS)

Department of Information Systems and Computing

Uxbridge

CURRENT RESEARCH INTERESTS Business process modelling (REBUS)

Business process change approaches

Simulation software evaluation and selection

Information systems

Knowledge management (Brunel Centre for Knowledge Management - BKMC)

THE STRUCTURE OF PRESENTATION

Introduction

The Business Process Paradigm

Business Process Modelling (BPM)

Suitability of Discrete-Event Simulation for BPM

Discrete-event Simulation and Change Management Approaches

Awareness of Simulation Within the Business Community

Guidelines for a Wider Use of Simulation for BPM

Examples of BPM Projects Carried out Within the REBUS Centre

Conclusions

INTRODUCTION The subject of managing innovation and change

widely discussed in the business and management literature

A new management philosophy, method or technique (or fad) developed every few years

The main objective of each method is to improve business processes, reduce costs and provide better products and services to customers

Failure rates of change management projects

Can simulation and business process modelling help?

THE BUSINESS PROCESS PARADIGM

Business process view Numerous definitions exist in the literature Common elements Process Process input Process output

BUSINESS PROCESS MODELLING (BPM)

Numerous approaches, methodologies and tools

Process mapping tools - static view of processes

Some tools provide basic calculations of time components or process analysis

Most of BPM tools - not able to do “what if” analysis and show dynamic change of business processes

One of the major problems that contribute to the failure of business process change (BPC) projects is a lack of tools for evaluating the effects of designed solutions before implementation

The role of discrete-event simulation tools

SUITABILITY OF DISCRETE-EVENT SIMULATION FOR BPM

Discrete-event simulation - a symbolic representation of processes in ways that can be:

Replayed Dynamically analysed and Reconfigured into alternative scenarios

Simulation models can:

Dynamically model different parameter values such as arrival rates or service intervals

Incorporate the stochastic nature of business processes and the random behaviour of their resources

Capture the behaviour of both human and technical resources in the system

The visual interactive features of many simulation packages enable a graphical display of dynamic behaviour of model entities

The flow of information within and between business processes can be modelled as the flow of temporary entities between processing stations

A simulation model can be easily modified to follow changes in the real system and as such can be used as a decision support tool for continuous process improvement

A simulation model of non-existing business processes can be developed and used for process design

Figure 1. The Process of Business Process SimulationBusiness Process Simulation

Defining Modelling

Objectives

Deciding on Model

Boundaries

Data Collection and Analysis

Business Process

Simulation Model

Development

Model Testing

Model Experimantation

Output Analysis

Business Process Change

Recommendations

DISCRETE-EVENT SIMULATION AND CHANGE MANAGEMENT

APPROACHES Total Quality Management (TQM)

Just-In-Time (JIT)

Business Process Re-engineering (BPR)

Process Innovation

Knowledge Management

These approaches offer solutions to ongoing business and managerial problems, but there are now many criticisms about the lack of their success

Simulation modelling - means by which business processes may be analysed and evaluated, prior to implementing large-scale change

TQM

Simulation models can: Incorporate business activities undertaken by

employees Provide a graphical display of tasks undertaken

by different workers, their duration and sequence, and dynamic changes of activities

Be used regularly as decision support tools for continuous improvement

JIT

Real-time models of an integrated manufacturing system could incorporate models of inventory control systems, production design, resource planning and scheduling

Detailed models of inventory control systems can be used regularly to assess the impact of various JIT strategies, the inventory re-ordering policies, and optimal levels of inventory

BPR

Simulation models can be used for: Determining business processes that needed to

be radically changed Investigating the impact of radical changes Design of new processes

Process Innovation

Simulation models can be used: To investigate key processes to determine

innovation strategies To develop a vision of new processes To evaluate alternative models of new processes

Knowledge Management

Simulation models can be used: To investigate knowledge management

processes To simulate missing data needed for knowledge

management (e.g. MagentA) To evaluate alternative models of knowledge

management strategies

A major difference between change management approaches in the context of simulation is that models that support TQM and JIT are usually manufacturing oriented (they tend to represent the flow of physical objects)

Models that support BPR and Process Innovation normally deal with the flow of information and how resources may be re deployed

These models are usually ‘people oriented’ as business processes normally involve human resources

Models related to knowledge management mainly relate to information flow and storage, and could incorporate human resources and their involvement with knowledge management

Such models are not concerned with movements of physical objects within the system

CHANGE MANAGEMENTPROGRAMME

THE ROLE OF SIMULATION

Total Quality Management(TQM)

Decision support system for continuousimprovement, Graphical display of physicalelements, Simulating dynamic changes ofthe system, Communication tool, Problemunderstanding tool, AS-IS vs. TO-BEmodels, Random behavior of systemelements captured in models,Manufacturing oriented models, Modelsusually represent the flow of physicalobjects

Table 1. The role of simulation in supporting change management approaches

CHANGE MANAGEMENTPROGRAMME

THE ROLE OF SIMULATION

Just-In-Time(JIT)

Decision support system for continuousimprovement, Graphical display of physicalelements, Simulating dynamic changes ofthe system, Communication tool, Problemunderstanding tool, AS-IS vs. TO-BEmodels, Random behavior of systemelements captured in models,Manufacturing oriented models, Modelsusually represent the flow of physicalobjects

Business Process Re-engineering (BPR)

One off study for evaluating strategy forradical change, Graphical display ofbusiness processes, Simulating dynamicchanges of the system, Communicationtool, Problem understanding tool, AS-IS vs.TO-BE models, Random behavior of systemelements captured in models, ‘People’oriented models, models usually representthe flow of information

CHANGE MANAGEMENTPROGRAMME

THE ROLE OF SIMULATION

Process Innovation One off study for evaluating innovation tocore processes, Graphical display ofbusiness processes, Simulating dynamicchanges of the system, Communicationtool, Problem understanding tool, AS-IS vs.TO-BE models, Random behavior of systemelements captured in models, ‘people’oriented models, Models usually representthe flow of information

Knowledge Management Simulating knowledge managementprocesses and strategies, simulatingmissing data needed for knowledgemanagement, AS-IS vs. TO-BE models,data/information oriented models

AWARENESS OF SIMULATION WITHIN THE BUSINESS

COMMUNITY There is a little evidence about the

awareness of simulation within the business community

Relatively few publications on BPR and simulation are available

Sessions related to BPR and simulation are mainly organised at simulation related conferences

Pro Sci’s 1997 benchmarking study About 6% of companies studied used simulation

software as process modelling tool None of the 12 listed methodologies used for

process design include dynamic modelling None of 30 communication techniques used by

the companies include visual models

BPR training course

Simulation Study Group survey in 1997 (UK OR Society)

Table 2. The application areas of simulation - academic users

Application areas ofsimulation

Percentage ofusers

Manufacturing 83.3%

Health 27.7%

Service industryQueueingOil terminalsDefence

11.1%

Business processesChemical industryTrafficCommunication systems

5.5%

Table 3. The application areas of simulation - industrial users

Application areas ofsimulation

Percentage ofusers

Manufacturing 33.3%

CommunicationsDistribution

22.2%

Business processesTradingRepairStock controlCompiler networksCustomer service

11.1%

GUIDELINES FOR A WIDER USE OF SIMULATION FOR BPM

More widespread teaching of simulation on business and management courses both at undergraduate and postgraduate level

Increasing the awareness of top management

Wide dissemination of information about successful BP simulation case studies

Special journals on BP simulation

More books on BP simulation

Better business process simulation modelling tools

Systematic approach to dissemination of information about BP simulation at both national and international level

Organising simulation awareness seminars and training courses within organisations in a systematic manner

Further research in developing simulation theories, methods and software tools that will directly address requirements of business process modelling

EXAMPLES OF BPM PROJECTS CARRIED OUT WITHIN THE REBUS

CENTRE The REBUS Approach to Business Process Re-

engineering

Integrating Simulation in Organisational Design Studies

Living Information Systems Development in the Context of Business Process Re-engineering

Investigating the Suitability of Petri Nets for Business Process Modelling

Change Management Approaches and Simulation Modelling

Business Process Modelling of a Telephony System

Business Process Modelling of a Help Desk

CONCLUSIONS The potential benefits of using simulation for

BPM are apparent

However, this potential of business process simulation is yet to be recognised by the business community

The DTI sponsored study found that £300M could be saved by the British industry per year if simulation was more widely used within manufacturing industry

How much it could be saved by the business community?

Simulation modelling plays an important role in supporting change management approaches by providing continuity for change management in companies where the fads seem to come and go