BPro._the Evolution of BPM by P. Harmon, 05

7/30/2019 BPro._the Evolution of BPM by P. Harmon, 05

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The Evolution of BPM Paul Harmon

DCI BPM New Orleans www.bptrends.com 1

2005, Business Process Trends www.bptrends.com 1

The Evolution of Business

Process Management

Paul Harmon

Executive Editor

Business Process Trends


Process Integration in Nineties

Sales

Department

Executive

Management

Horizonally Integrated Business ProcessThat Delivers A Specfic Product to a Targeted Group of

Customers

Strategy

Committee


2/27




Today: Horizontal & Vertical Alignment

Sales

Department

Executive

Management

Strategy

Committee

Vertically

Integrated

Measures,

Managers, and

Resources

Employees & IT Applications and

Infrastructure

Horizonally Integrated

ProcessesFrom Suppliers to Customers


Why the Interest in Business Process?

Make the company more efficient andproductive by improving existingprocesses

Allow the company to shift goals or getinto new businesses by providing thecompany with the ability to quickly andefficiently create new business processes

Keep focused on customers

Automate where reasonable


3/27




Business Process Change Initiatives

Value

Chain

Customers

Markets

Suppliers

Resources

Application &Databases

Employees

Value ChainManager

Senior Executive

Employees Employees Employees Employees Employees






Process Manager Process Manager Process Manager

Aligned

HR System

Aligned

IT Architecture

Process ComponentsERP System

Activity Based

Cost Accounting

BAM & DataWarehouse

Business Rules

Mang. System

Financial System

Business

Process

Architecture

Near Real-TimeMonitoring and

Control System

All Processes Managed by Enterprise BPM Systems

ManagementDashboard

ManagementDashboard

Processes Modeled and Optimized

Process

Management

System


We Have Lots of Technologies to Use

Business Rule

Management Systems

SEI's CMM for IT

1980s 1990's 2000s

Management

Business

Process

Redesign

Information

Technology

Workflow

Software Modeling Tools and Methodologies

(CASE, UML, MDA)

Quality

Control Total QualityManagement

Porter's Value

Chains

Business Process

Reengineering

Rummler-Brache

Performance Improvement

Performance

Improvement

Activity Based

Costing

Six Sigma

Lean

BPM

EAI

Packaged Software

(ERP, CRM)

Balanced

Scorecard

SCOR VCOR

BPO


4/27




The BPTrends Pyramid

Strategy

Level

Business ProcessLevel

Specific Process

Value Chain

Plans

& Goals

ImplementationLevel

Process Automatedby IT Systems

Process Performedby Employees

Physical Plant and Hardware Used.

Process

Management and

Measurement


Some of the Most Important Trends

1. BP Management System

2. BP Architecture

3. BP Process Analysis & Redesign Approach

4. Business Rules Management System

5. BP Automation (BPMS)

6. IT Components Aligned with BP

7. BP-based Enterprise Monitoring System

8. HR Support Aligned with BP

9. Significant BP Outsourcing


5/27


6/27




Coordinating the Management of Processes

CEO

Executive Committee

ProcessManagementTeam

DeliveryDepartment

ManufacturingDepartment

SalesDepartment

Customer

Process ArchitectureCommittee

Sales SupervisorManf.

SupervisorDelivery

Supervisor

Widget Value Chain

SalesProcess

DeliveryProcess

ManufacturingProcess

VP

Delivery

VP

Manufacturing

VP

SalesSVP Widget

Process

WidgetProcess


2. BP Architecture

The key tool for process management

A high-level overview of the value chains andkey processes that make up the organization

An alignment of strategic goals, value chainsand key processes

A clear-cut way to monitor the performance ofthe value chains and processes (KPIs)

A BP Architecture is NOT an IT EA Architecture


7/27




Too Many Independent Hierarchies

An Aligned Hierarchy

of Business Policies/

Rules


of Process Measures

An Aligned Hierarchy of

Job Responsibilities


of Organization Goals


We Need to Integrate Our Hierarchies


Business Policies/Rules


Process Measures


Job Responsibilities


Organization Goals


8/27




BP Operation Reference Frameworks

A OR Framework is a template for a BP

Architecture

The Supply Chain CouncilsSCOR Framework

The TeleManagement ForumseTOM/NGOSS Framework

Hewlett Packards Framework Suite

The VCOR Initiative


SCOR MODEL: Level 1

Supply

Chain

DeliverMakeSource

Plan

Return


9/27




The Level 1 SCOR Notation

S1 M1 D1 S1

S1 D1 S1M1 D1

Key OtherRM Suppliers

EuropeanRM Supplier

RM

SuppliersALPHA

Alpha

Regional

Warehouse

Customer

DR1 SR1 DR1 SR1

SR3DR3

P1

P2

P3

P4

P1

P2

P3

P4

P1

P2 P4

S2 M2

DR1

D2

SR1

S2


SCORs Level 1 Scorecard

Performance

AttributePerformance Attribute Definition Level 1 M etric

Supply Chain DeliveryReliability

The performance of the supply chain indelivering: the correct product, to the correctplace, at the correct time, in the correctcondition and packaging, in the correctquantity, with the correct documentation, tothe correct customer.

Delivery Performance

Fill Rates

Perfect Order Fulfillment

Supply ChainResponsiveness

The velocity at which a supply chain providesproducts to the customer.

Order Fulfillment Lead Times

Supply ChainFlexibility

The agility of a supply chain in responding tomarketplace changes to gain or maintaincompetitive advantage.

Supply Chain Response Time

Production Flexibility

Supply Chain CostsThe costs associated with operating thesupply chain.

Cost of Goods Sold

Total Supply Chain ManagementCosts

Value-Added Productivity

Warranty / Returns ProcessingCosts

Supply Chain AssetManagementEfficiency

The effectiveness of an organization inmanaging assets to support demandsatisfaction. This includes the managementof all assets: fixed and working capital.

Cash-to-Cash Cycle Time

Inventory Days of Supply

Asset Turns

CustomerFacingAttributes

InternalFacingAttributes


10/27




SCOR Benchmarks Provide Instant ROI

50%

$30M Revenue

$30M Indirect Cost

35 days

97 days

0%

63%

Supply Chain SCORcard Industry Benchmarks

Ov erv iew Met rics SCOR Lev el 1 Met rics Actual Pari ty Adv antage Superi or Value f rom Improv ements

Delivery Performanceto Commit Date

85% 90% 95%

Fill Rates 94% 96% 98%

EXTERNAL

Supply ChainReliability

Perfect OrderFulfillment

80% 85% 90%

Order FulfillmentLead Times

7 days 5 days 3 days

Flexibility

Responsiveness

Production Flexibility 30 days 25 days 20 days

Total SCMManagement Cost

19% 13% 8% 3%

INTERNAL

Cost Warranty Cost NA NA NA NA NA

Value Added EmployeeProductivity

NA $156K $306K $460K NA

Inventory Days ofSupply

119 days 55 days 38 days 22 days NA

AssetsCash-to-Cash Cycle

Time 196 days 80 days 46 days 28 days

Net Asset Turns(Working Capital)

2.2 turns 8 turns 12 turns 19 turns NA

Supply ChainResponse Time

82 days 55 days 13 days

45 days

$7 M Capital Charge

Key enabler to cost andasset improvements

$30M Revenue


3. BP Process Analysis & Redesign

New processes need to be designed

Inefficient or ineffective processes need tobe redesigned

Processes that work need to be improved

The entire effort needs to be coordinatedwith methodologies, software tools, and arepository


11/27




The Types of BP Methodologies

Strategyand Goals

Specific

Activity

Strategy

Level

BusinessProcess

Level

Business Process

Implementation

Level

Physical Plant and Hardware Used.

BP Architecture

BP Analysis

& Redesign

Organization

Performance

Management andMeasurement Issues

Involved in theImplementation of BPM

solutions.

Mangement and

Measurement Issues

Involved Establishing

Strategy and Goals

Mangement and

Measurement IssuesInvolved in

Executing Actual

Business Processes

and Activities

Human ResourceArchitecture IT Architecture

Data

Architecture

Application

Architecture

Network

Architecture

ApplicationDesigns

and Code

Database

Designs and

DataManagement

Systems

TechnologyArchitecture

Hardware Architecture

Job

Design

Activity

Measurement

Plan

Activity

Management

Plan

Job Aids,Training

Programs,

Knowledge

ManagementSystem

Activity/Performance

MonitoringSystem

Plans, Budgets,Hiring, Resource

Allocation,

Feedback,

Consequences

Human-IT

InterfaceModel

Screensand

Reports

Logical

Level

Physical

LevelIT Focused BP

Change

Methodologies

Narrow

Focused BP

Change

Methodologies

Broad Based

BP Change

Methodologies


BP Methodologies

Broad BP Change Methodologies Process Renewal Methodology (PRG)

Rummler Methodology (PDL)

xBML Methodology (Business Genetics)

More Focused Process Change Methodologies Balanced Scorecard

Six Sigma DMAIC

Proteus Business Rules Methodology (BR Solutions) ARIS Methodology (IDS Scheer)

IT Automation Methodologies UREP Methodology (Rational/IBM)

IDEF Methodology

Martin Oulds RIVA Methodology


12/27




Six Sigma and BPM

3. Analyze 4. Improve 5. Control2. Measure

ImplementMeasurement Document andMaintainPlanProject IdentifyMeasures Analyze Data

1. Define

1. Define project2. Identify customerrequirements3. Documentprocess4. Set goal

1. Identify Measures2. Define measures3. Develop & testdata collectionmethods4. Define baselinemeasures

1. Analyze date2. Explore possiblecauses and testhypothesises3. Identify causes

1. Select a soluton2. Pilot test solution3. Implement full scalesolution

1. Document andkeep score of results

1-2 wks.

1-2 wks.

2 wks.

4-8 wks

ongoing

-1-2-3 +1 +2 +3

68.26%

95.46%

99.73%

0.13%

0.13%

mean

34.13%

13.06%2.14%


An Aside: BPM Software Product Space

BPM Suites

Modeling Capability

+ BPM Engine

BPM

Applications

Modeling Capability+ BPM Engine

+ Application Components

BP

Languages

EAI Tools

Process

Simulation

Tools

BI and Data Warehouse

Products

Universal

BP Repository

Database capable ofstoring information

from all the BP tools.

Organization

Modeling Tools

Business ProcessArchitecture Tools

Packaged/

Enterprise

Application

Suites

Statistics

Tools

Graphics

Tools

Tool for creating, storingand using business rules.

Business Rule

Management Tools

BP

Modeling

ToolsModeling Capability

+ Repository

Modeling Capability +Ability to Monitor Runtime Process+

Dashboard Capability

BP

Monitoring

Tools

XML DSLs andBPEL, BPML

Software Development

Suites

Application Servers

WorkflowTools


13/27




BP Architecture, Modeling & Simulation Tools

BPM Suites


BPM

Applications



BP

Languages

EAI Tools

Process

Simulation

Tools


Products

Universal

BP Repository



Organization

Modeling Tools


Packaged/

Enterprise

Application

Suites

Statistics

Tools

Graphics

Tools


Business Rule

Management Tools

BPModeling


+ Repository



BP

Monitoring

Tools



Suites

Application Servers

Workflow

Tools


Business Process Modeling Tools

Include architecture, process modelingand simulation capabilities

Are holding their own against BPM Suitesthat also include modeling capabilities

Are popular with managers and redesignteams


14/27




Some BP Architecture, Modeling & Simulation Tools

CACIs SIMPROCESS

Holocentrics Holocentric IDS Scheers ARIS iGrafxs iGrafx Process MEGA Internationals MEGA Mi Services Mi SCOR Popkin Softwares System Architect Proformas ProVision ProModels Process Simulator

xBPM Innovations xBPL 2005 Modeling Suite


4. Business Rule Management Tools

BPM Suites


BPM

Applications



BP

Languages

EAI Tools

Process

Simulation

Tools


Products

Universal

BP Repository



Organization

Modeling Tools


Packaged/

Enterprise

Application

Suites

Statistics

Tools

Graphics

Tools


Business Rule

Management Tools

BP

Modeling


+ Repository



BP

Monitoring

Tools



Suites

Application Servers

WorkflowTools


15/27




Business Rules Management

Goal: Abstracting business rules from policy

manuals, software, and from training programsand saving them in a repository so they can besystematically managed

The effort needs to be aligned with businessprocess efforts

OMG Business Rule Standards

Business Rules Community

www.brcommunity.com

Business Rule Management Vendors


5. BP Automation: BPM Systems

The idea of using software to manageprocesses in something close to real time

New and confusing

Most companies are just exploring the

idea and it will evolve rapidly over thecourse of the next 2-3 years

There are no clear winners yet: Mostcompanies are yet sure how theyll usethis technology


16/27




What Is a BPM Suite?

A B EDC

Software Tool That Displays a Graphical View of a ProcessLogicalDescription of

the Process

PhysicalImplementation

of the Process

SoftwareComponent

B

SoftwareComponent

C

EnterpriseApplicationModule D

EnterpriseApplicationModule E

Software Tool (Engine)That Manages Links

Between Diagram andImpelementation

BPMS

Engine


The Key is Controlling the Business Process

A B E

D

C

Software Tool That Displays a Graphical View of a Process

Logical Description of the Process

Physical

Implementation

of the Process

SoftwareComponent

C

SoftwareComponent

B

EnterpriseApplicationModule E

Software Tool(Engine) That

Manages LinksBetween Diagram

and Impelementation

BPMS Engine

EnterpriseApplicationModule D

User

Interface

Business AnalystInterface


17/27




BPM Suites

BPM Suites


BPM

Applications



BP

Languages

EAI Tools

Process

Simulation

Tools


Products

Universal

BP Repository



Organization

Modeling Tools


Packaged/

Enterprise

Application

Suites

Statistics

Tools

Graphics

Tools


Business Rule

Management Tools

BPModeling


+ Repository



BP

Monitoring

Tools



Suites

Application Servers

Workflow

Tools


A BPM Continuum

LanguagesBPM

ServersTools/Utilities

BPMSuites

BPM Suites+Frameworks

Complete BPMApplications

Vendors who

sell languages,like BPEL orJava

Vendors who

sell BPM serverplatforms

Vendors who sell

stand alone toolsor utilities.

Vendors who

sell BPMSuites

Vendors whosell BPM

Suites withframeworks or

templates

Vendors who

sell completeBPM systemsor applications.

Languages provide the maximumflexibility and require the most workto get to a complete BPM system.These products are invariably usedby IT developers

Applications provide the minimumflexibility and require the lest workto get to a complete BPM system.

These products can be used bybusiness users.

BP Modeling Vendors

BAM MonitoringVendors

Business Rule Mang.System Vendors


18/27




A Layer Diagram of the BPM Space

Language/PlatformJ2EE

BPM Server

(Engines)

BPM Suite

BPM System or Applications

BP KnowledgeFrameworks

BPMS Application

Rules forSpecific

Processes

Models forSpecific

Processes

SoftwareComponents or

Modules

User Interfacesto Support

SpecificProcesses

An application that implements aprocess that can be examinedand changed dynamically.

ProcessModeling Tool

BPM Engine(Software)

XMLBPEL

BPM Engine(employees)

Business RuleEngine

ProcessMonitoring

Tools (BAM)

SoftwareRequirements

Tool

User InterfaceTools

BPM SUITE

BPM Tools/Utilities

ProcessMeasures for

SpecificProcesses

Eclipse


Some BPM Suite Vendors

Appians Appian Process Engine

Ascentns AgilePoint BPMS

B2B Internets XicoBPM

Chordiants Straight Through Service Processing

CommerceQuests TRAXION Enterprise BPM Suite

Eg Solutions eg Work Manager

Filenets Filenet Business Process Manager PegaSystems PegaRULES Process Commander

TIBCOs TIBCO Staffware Process Suite

Ultimus Ultimus BPM Suite

IBMs WebSphere Business Integration suite


19/27




BPEL and BPMN

Being embraced rather than understood

BPEL is currently only a variation on EAI

Maybe a BPEL+ can support bothemployee and IT activities, but that is inthe future

BPMN is a nice notation that hasnt gotmuch traction yet; ultimately its an

extension of UMLs Activity Diagrams


Petri Nets and Pi Calculus

There are groups meeting to sort out theunderlying basis for process automation

There will be meetings on this in 2005

They will probably get passed up by the

vendors and user companies who willselect more pragmatic solutions


20/27





Ultimately BPM relies on software

components They will need to be developed or

changed as processes change

Thus, BPM needs a clean link to SoftwareDevelopment technologies

UML, MDA, and components


The OMGs Model Driven Architecture

Code

Computation-Independent Model

(CIM)

Platform-SpecificModel(PSM)

Platform-Independent Model

(PIM)

Created by Business

Analysts to Describe

Business

Created by Architect/

Designer to Describe

Archtiecture

Created by Developer or Testerto Implement Solution

CIM >> PIMMapping

PIM >> PSMMapping

PSM >> CodeMapping


21/27




The OMGs BP Metamodels

UML 2.0Various

BP ToolsBPMN

J2EEVarious

BP ToolsBPEL

Business Process Definition MetamodelOntology

MetamodelBusiness Rules

Metamodel

XMI

MOF

Meta Object

Facility


A BP Repository and MDA

BPM Suites

Modeling Capability

+ BPM Engine

BPM

Applications

Modeling Capability+ BPM Engine+ ApplicationComponents

BP

Languages

EAI Tools

Workflow

Tools

Process

Simulation

Tools

Application Servers


Products

Universal

BP

RepositoryDatabase capable of

storing informationfrom all the BP tools.

Organization

Modeling Tools


Packaged/

Enterprise

Application

Suites

StatisticsTools

GraphicsTools

Can Create Diagrams.No Repository.


Business Rule

Management Tools

BP

Modeling

Tools

Modeling Capability+ Repository



BP

Monitoring

Tools

Used to Support 6 SigmaProjects


Software DevelopmentSuites

Adaptive

IBM

BEA

Oracle


22/27




7. BP-Based Enterprise Monitoring Systems

BPM Suites


BPM

Applications



BP

Languages

EAI Tools

Process

Simulation

Tools


Products

Universal

BP Repository



Organization

Modeling Tools


Packaged/

Enterprise

Application

Suites

Statistics

Tools

Graphics

Tools


Business Rule

Management Tools

BPModeling


+ Repository



BP

Monitoring

Tools



Suites

Application Servers

Workflow

Tools


BP-Based Enterprise Monitoring Systems

Everyone seems to think its part of BPMSystems

Its important to discriminate betweenmonitoring a specific process and providinginformation for senior managers

Business Performance Management,BAM, BI and Data Warehouses

The BPM Forum

IBM/OASIS Events Standard


23/27




Process Monitoring vs. Value Chain Monitoring

CEO

VP Line Mang

Manager

Staff Manager

ProcessSupervisor

Databasefor Appl.

DataOtherDatabases

DataWarehouse

BI

Application

Business Process orActivity - Execution

Monitor & ControlPlan & Staff

1

Application thatautomates part of

activity

4GL SystemCreates Inventory

Report

2

2

Strategy Level

Process Level

Activity andImplementation

Levels

Filtered &Summarized

Information

Value ChainLevel

4

4

3

3


BPM Applications

BPM Suites


BPM

Applications



BP

Languages

EAI Tools

Process

Simulation

Tools


Products

Universal

BP Repository



Organization

Modeling Tools


Packaged/

Enterprise

Application

Suites

Statistics

Tools

Graphics

Tools


Business Rule

Management Tools

BP

Modeling


+ Repository



BP

Monitoring

Tools



Suites

Application Servers

WorkflowTools


24/27




Packaged Applications vs. BPM Apps

Traditional Packaged Applications are difficult to

understand or to change BPM applications will incorporate Process

Models and BPM Enginbe based to make themeasier to manage and change

Packaged application vendors will attempt totransition to BPM (SAPs NetWeaver)

BPM Suite vendors will evolve into BPMapplication vendors

This is a very important part of BPM that has

hardly begun



BPM Suites will place more importance onanalyzing employee activities and aligningthem with business processes

Aligning Knowledge Management withprocesses

Aligning employee incentives andfeedback with processes

Aligning training with processes

www.ispi.org


25/27




The ISPI Human Performance Model

ExpenseReports

Updated ExpenseReport Ledger

Consequences

Feedback

Activity Support

4. Consequences

Feedback

Activity:Enter Expense

Reports

Process Defined

activitymeasures

Activity Specifications

Skill, Knowledge & Capability

*


9. Business Process Outsourcing

We are going to create more decentralizedorganizations, using outsourcing

The key is managing BPO is to have agood BP architecture and to manage withprocess-oriented techniques

BPO vendors will become majoradvocates and consumers of BPM


26/27




Some of the Most Important Trends

1. BP Management System

2. BP Architecture 3. BP Process Analysis & Redesign Approach

4. Business Rules Management System

5. BP Automation (BPMS)


7. BP-based Enterprise Monitoring System


9. Significant BP Outsourcing


SUMMARY

The challenge is the management of businessprocess change

We have too many technologies and not enoughfocus on why we should do BPM in the firstplace

We manage processes to improve corporateperformance

Companies need to set goals, develop astrategy, and then create a BP organization thatcan organize and coordinate their BPMresources


27/27



For More Information

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Documents

BPro._the Evolution of BPM by P. Harmon, 05