From Process Management to Process Innovation

www.sungard.com/energy

From Business Process Management to Business Process InnovationMichael zur Muehlen, Ph.D.Director, Center of Excellence for Business Process InnovationStevens Institute of TechnologyHoboken [email protected]

Wednesday, January 14, 2009

Motivation

Drivers for Business Process Management (BPM)

Performance

Business Process ImprovementEngineering of Process-aware IS

Compliance

Mandated compliance (e.g. SOX)Desired compliance (e.g. ISO, ITIL)


How do you make a Cup of Coffee?


The Nescafé Process


The Espresso Machine Process


The Starbucks Process


BPM Questions


BPM Questions

How do we design and communicate this process?


BPM Questions

How do we design and communicate this process? How do we know that we perform this process well?


BPM Questions

How do we design and communicate this process? How do we know that we perform this process well? How do we know that we manage this process well?


BPM Questions

How do we design and communicate this process? How do we know that we perform this process well? How do we know that we manage this process well? How do we know that we maintain compliance?


BPM Questions

How do we design and communicate this process? How do we know that we perform this process well? How do we know that we manage this process well? How do we know that we maintain compliance? How should we organize and govern process

improvement efforts?


BPM Questions

How do we design and communicate this process? How do we know that we perform this process well? How do we know that we manage this process well? How do we know that we maintain compliance? How should we organize and govern process

improvement efforts? Which standards and technology are relevant?


Business Process Management

Business Process Automation

Business Process Innovation

Business Process Monitoring

Process Life Cycle


“Innovation is about imposing a discipline of

value creation in an organization”

Tom Koulopoulos



BPM and Business Value

Information Technology

Business Value



Information Technology X Business

Value


crea

tes

enables

Process Change


Information Technology X Business

Value



Great! Now What Do We

Do With It?


Process Innovation

Project Autograph

Usage-based Insurance Billing

New Process

New Technology

New Value Proposition


Process Innovation

Project Failed

Lack of Standard Process

Expensive Technology

Customers not ready


Learn from Outside

Telecom Billing Process

Free GPS

Rate depends on mileage driven

Industry-strength Billing Process


Relationship between BPM and Strategy

FINANCIAL

Primary Objectives

Financial Objectives are Paramount



FINANCIAL

Primary Objectives


CUSTOMER

Value PropositionCustomers Seek Value and Pay for it



PROCESS

Operations Customer Innovation Regulatory / Social

Processes Enable Value Creation

FINANCIAL

Primary Objectives


CUSTOMER




PROCESS

Operations Customer Innovation Regulatory / Social

Processes Enable Value Creation

FINANCIAL

Primary Objectives


LEARNING & GROWTH

ChangeAgenda

Strategic IT

Strategic Job

Families

Information

Capital

Human

Capital

Organization

Capital

Processes shape and are shaped by maturity

CUSTOMER



The BPM Maturity Model

Governance Method IT People CultureStrategic Alignment

Process Roles and Responsibilities

Process Design & Modeling

Process Skills & Expertise

Process Values & Beliefs

Process Improvement Plan

Decision Making Processes

Process Implementation &

ExecutionsProcess Education &

LearningProcess Attitudes &

BehaviorsStrategy & Process Capability Linkage

Process Management

Standards

Process Improvement &

InnovationProcess Knowledge Leadership

Attention to ProcessProcess Output Measurement

Process Metrics & Performance

LinkageProcess Control &

MeasurementProcess

Collaboration & Communication

Responsiveness to Process ChangeProcess Architecture

Process Management

Controls

Process Project & Program

Management

Process Management

LeadersProcess Social

NetworksProcess Customers

& Stakeholders

Business Process Management Maturity

Process Design & Modeling

Process Implementation &

Executions

Process Improvement &

Innovation

Process Control & Measurement

Process Project & Program

Management

Source: Rosemann & DeBruin 2006


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

their value proposition


Is This Value?


Is This Value?


This is Value!


Underwriting On Demand

Text2Insure

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


Process and Risk Management

Process Risk

Process-orientedRisk Management

Risk-orientedProcess Management


Risk Management and BPM

Compare Frew (2006)



BPM Risk ManagementFocus on providing value for stakeholders

Focus on ensuring value for stakeholders

Performance depends on effectiveness of business processes

Risk is an inherent property of business processes

Performance is influenced by process design

Risk is mitigated by process design

Feedback is obtained through Performance Indicators assigned to systems and processes

Feedback is obtained through Risk Indicators assigned to systems and processes

Performance objectives are achieved through optimized processes

Risk is mitigated through optimized processes

Compare Frew (2006)



BPM Risk ManagementFocus on providing value for stakeholders

Focus on ensuring value for stakeholders

Performance depends on effectiveness of business processes

Risk is an inherent property of business processes

Performance is influenced by process design

Risk is mitigated by process design

Feedback is obtained through Performance Indicators assigned to systems and processes

Feedback is obtained through Risk Indicators assigned to systems and processes

Performance objectives are achieved through optimized processes

Risk is mitigated through optimized processes

Compare Frew (2006)


From Core to Commodity: Recipe

Treat the Process as a Service Define a Standard Interface Create Value at the Front-End BPM enables OpRisk Management Compliance can be an Asset


Takeaways

BPM means two things: Performance and Compliance

Processes define services Processes are services Core processes can become commodities Process management creates problem solvers Industrialized processes enable innovation


www.sungard.com/energy

From Business Process Management to Business Process InnovationMichael 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]: http://www.cebpi.org


mailto:[email protected]

mailto:[email protected]

http://www.cebpi.org/

http://www.cebpi.org/