what every enterprise architect needs to know about bpm
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Michael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyHoboken [email protected]
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: [email protected]: stevens.edu/BPMslides: slideshare.net/mzurmuehlen
Thank You - Questions?
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