Business Process Management Today and Tomorrow · Business Process Traditions Business Management Information Technology Business Process Management BPMS Ford – Contentious Production

©2008 BPTrends Associates. All Rights Reserved.

BPM 2008

Business Process ManagementToday and Tomorrow

Paul HarmonExecutive EditorBusiness Process Trends

Copyright © 2008 BPTrends All Rights Reserved.2

Agenda

• Yesterday– Independent process traditions, each with

their own theories and practices

• Today

• Tomorrow


Business Process Traditions

Business Management

Information Technology

Business Process

Management

BPMS

Ford – Contentious Production LineTaylor – Scientific Management

WW II –Production First Computers

Quality Control, Six Sigma, Lean

InternetOutsourcing1900 2000

Work Simplification

2008


The Simplification/Quality Tradition

Main Focus: Continuous Process ImprovementGurus: Shewhart, Demings, Juran, Ohno, WomackOrganizations: ASQ, ISSSP


Six Sigma at the Process Level: DMAIC


LEAN Flow Kaizen: Value-Stream Mapping

An Enterprise LevelLEAN Modeling Technique

Start/End


Capability Maturity Model Integrated (CMMI)


The Process Management Tradition

Main Focus: Improvement of Organization PerformanceGurus: Rummler, Porter, Heskett, Kaplan & NortonOrganizations: HBR, ISPI, SCC


The Organization and the Value Chain

Production Marketing Sales & SupportFinanceEngineering

Management

Customers

Promote & Sell Product

Suppliers

new need

identifiednew product design

product available

promotions

order

product deliveredmaterials

Product Value Chain

Research & CreateNew Product

Make & Deliver Productsorder


Rummler’s Performance Model


Rummler’s Process Management Model


Michael Porter’s Value Chain Model

From Michael Porter, Competitive Advantage, Harvard, 1985


Kaplan and Norton’s Balanced Scorecard


Aligning Balanced Scorecards


Dividing Up the Scorecard Between Function and Process

Balanced Business Scorecard

Customer Perspective

Financial Perspective

Goals

Survive

Succeed

Prosper

Measures

Cash flow

Quarterly sales growth & operating income by division

Increased market share and ROE

Goals

New products

Response supply

Preferred supplier

Customer partnership

Measures

Percent of sales from new products, Percent of sales from proprietary products

On-time delivery (defined by customer)

Share of key accounts' purchases, Ranking by key accounts

Number of cooperative engineering efforts

Innovation & Learning Perspective

Goals

Technology leadership

Manufacturing learning

Product focus

Time to market

Measures

Time to develop next generation

Process time to maturity

Percent of products that equal 80% sales

New product interdiction vs. competition

Internal - Process Perspective

Goals

Technology capability

Manufacturing experience

Design productivity

New product introduction

Measures

Manufacturing geometry vs. competition

Cycle time, Unit cost, Yield

Silicon efficiency, Engineering efficiency

Actual introduction schedule vs. plan

Goal – Measure most likely assigned to Process Manager Goal – Measure most likely assigned to Functional Manager


Functional vs. Process Measures


Information Technology Tradition

Main Focus: Process AutomationGurus: Martin, Scheer, Hammer, Smith & Fingar...Organizations: ISO, WfMC, IEEE, OMG, IIBA, Gartner…


Agenda

• Yesterday• Today Some Interesting Developments

– Frameworks– Value Chains vs Networks– ERP and BPMS– The Uses of BPMS– BPMN and Business Rules– Modeling Customer Processes

• Tomorrow


Business Process Traditions


SCOR’s Business Process Framework


SCOR Benchmarks Provide Instant ROI

50%

$30M Revenue

$30M Indirect Cost

35 days

97 days

0%

63%

Supply Chain SCORcard Industry Benchmarks

Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements

Delivery Performanceto Commit Date 85% 90% 95%

Fill Rates 94% 96% 98%

EX

TER

NA

L

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%

INTE

RN

AL

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

Assets Cash-to-Cash CycleTime 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


Value Chain vs. Level 1 Processes (Value Nets)


Value Chains or Common Processes


Value Chains vs. Common Processes


ERP Reality: Multiple, Customized ERP Instances


Standardizing Processes to Standardize Instances


The Future Promise: ERP Modules Managed by BPMS


Computing Domains

CEO

SVP SVP SVP

VP VPVP VP

Mang.

Software for Various Special Projects

Process Modeling

Project Planning

Software Development

e.g. ERP, Tailored Applications

e.g. Spreadsheets, Email, Groupware, Decision

Support Systems


Two Ways of Thinking About BPMS

CEO

SVP SVP SVP

VP VPVP VP

Mang.

Software for Various Special Projects

Process Modeling

Project Planning

Software Development

e.g. ERP, Tailored Applications

e.g. Spreadsheets, Email, Groupware, Decision

Support Systems

BPMS IA BPMS Application created to automate a process

BPMS IIA BPMS Application created to help a business manager manage

a process


BPMN Diagrams

Fulfill Online Book Order

Customer

Company Web Portal

Order System

Exceptions Clerk

Receive Order

Ship Order

Packaging Fill Order

Shipping

Review Order order accepted Send

workorder to shipping

Place Order

order rejected

order incomplete: Ask customer for more information

Recieve Books

Close Order

books

Revise Order

order requires special processing

Re-Review Order

Credit Card Approval Center

Review-Approve Charge

credit card approval


The Tax Return Solution

• Rule 1

If the received date of the tax return is less than 6 months in the past, and

A claims a payment not received, or

A credit elect for a tax return from the same taxpayer for a previous year has not been posted,

Then the tax return for a given year must be held.

Submit Tax Return

Process Tax Return

Customer

Tax Agency Evaluate Tax Return


Modeling Customer Processes


Agenda

• Yesterday

• Today

• Tomorrow– A continued interest in processes, and,

perhaps an integrated process management practice at the heart of the organization


Why Process?

• Process describes how we do work in our organizations

• Change forces organizations to change how they do work

• The near future will be unrelenting change– New technologies

– New customer demands

– New markets throughout the world

– Overcapacity, intense global competition, acquisitions

– Outsourcing and specialization

– Greening of Process


Product/Technology Lifecycles


What’s Involved in BPM?


Trying to Find a Common Language


Some Major Types of Process Problems


Another View of the Three Perspectives

MANAGEMENT

QUALITY

Emphasis on performance,on measurement, process

ownership, alignment with strategy, with customer satisfaction,

shareholders, and competitive advantage

Emphasis on product quality and

consistency, on continuous process improvement, and

on creating a culture that cares

about process

Emphasis on using computer systems to automate processes, on reengineering to

make the best use of new computing

techniques and on analytics IDS Scheer

M. Hammer

G Rummler M Porter

E Deming

J Juran

Kaplan & NortonHaskett

T Davenport

S Shingo

T Ohno

J Womack

FW TaylorBusiness Rules

Balanced Scorecard

Capability Maturity Model

ASQ, ISSSP

HBS, ISPI, SCC

ReEngineering

OR Frameworks (SCOR)

WfMC, IIBA, OMG, BPMI, Gartner

Lean Six Sigma


Slides Available Later This Week

• Go to www.bptrends.com

• Search for BPM2008HarmonKeynote

Documents

Business Process Management Today and Tomorrow · Business Process Traditions Business Management Information Technology Business Process Management BPMS Ford – Contentious Production