January 2003 The role of BPM in the Real-Time Enterprise 30 th January, 2003 Lee White, President & COO CommerceQuest Ken Morris, CEO

January 2003

The role of BPMin the Real-Time Enterprise

30th January, 2003Lee White, President & COO

CommerceQuestKen Morris, CEOKMG Solutions

© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential

Agenda

Business Process Management: Overview

BPM: Better than Reality

Working Together: Roles for Key BPM Constituents


Agenda





Processes are valuable assets

“A company is only as productive as its processes.”

Eric Austvold, AMR Research,2002


Processes are valuable assets

All the world’s a process

Process thinking works

Take control through process

Processes are the next competitive battlefield


Processes are Valuable Assets

All the world’s a process

Process thinking works

Take control through process

Processes are the next competitive battlefield

And… governance and accountability are regulatory requirements


Most Key Business Areas Do Not Have Well Defined Processes

39.5

60.5

45

43.9

45.4

77.346.6

44.4

28

35.5

Consulting

Customer Svc.

Engineering

Finance

HR

IT

Logistics

Manufacturing

Marketing

Sales= Percentage of extremely or clearly automated

environments

Source: CIO Insight, 2002


Process Management is a Challenge

Processes:

Process improvement and integration projects are already in motion

Processes need human and systems support to succeed

Constantly change…and cannot keep up with business model changes

Cut across multiple functional boundaries

Measurement systems & management are aligned to functions, not processes

Are poorly or not documented


Models for Process Success

Six Sigma

BPR

TQM

ISO

Vertical Software

ERP

AccountabilityPerceived

CostsMeasurableBiz Results Sustainability

CrossFunctional

Impact

Source: CommerceQuest, 2003


What is Business Process Management?

“Business Process Management is THE thing…not integration, not messaging. It goes far beyond integration and hooking up applications. It is the essence of good business”

Jim Sinur, Gartner Group, July 2002


What is Business Process Management?

What is it?

A set of services and tools that support the creation, management and optimization of business process on both a human and application-level


Source: The Different and Evolving Meanings of ‘BPM’ ♦ Ken Vollmer - Giga

Business Process ManagementEvolution

ProcessAutomation

EAI

BPM(internal focus)

Workflow

BusinessProcessModeling

IntegratedB2B

Transport

BusinessProcess

Integration

BPM(internal & external)

Five Years Ago Today


Opportunity: Synergistic Benefits of BPM

ROI Expectations: 30 – 45% Greater

Process Definition:10-15%

Process Optimization:10-15%

Process Infrastructure:10-15%

source: Gartner Group Research, 2002


Impediments to Success

Functional Silos

Inflexible IT Systems: “concrete”

High perceived capital investment in systems with low perceived returns

Poorly Defined Processes


Real-time control with BPM

Arrange work and systems around processes:

See how work gets done (Model)

Learn what is happening (analyze)

Leverage what’s already there (integrate)

Control the business in real time (manage)

Manage closed-loop environment (audit/visibility)

Improve processes over time (optimize)


Top Issues that Drive Business Process Change

12.7

22.6

26.7

37.9

55.6

64.4

80.2

Other

Innovation/New ProductDev.

Response to Competitors

Speed Processes

Increase Revenue

Improve Productivity

Reduce Cost

Source: CIO insight, 2002


Benefits of BPM

Save time:

Reduce lag time and duplication of effort

Analyze and measure actual operations

Improve processes

Save money:

Increase reporting ratios; cut payroll

Increase productivity through task management

Avoid replacing or upgrading legacy systems

Save face:

Increase control and monitoring

Enforce business rules


Doing Nothing Puts Your Business at Risk

“Enterprises should begin to take advantage of explicitly defined processes. By 2005, at least 90% of large enterprises will have BPM in their enterprise nervous system (0.9 probability). Enterprises that continue to hard-code all flow control, or insist on manual process steps and do not incorporate BPM's benefits, will lose out to competitors that adopt BPM."

Gartner, WSJ BPMR,June 2002


Problems with the Current Promotions Process

• Currently there is no single solution that handles promotions

• There are at least 6 to 10 different departments and enterprises involved with the process

• Takes too long to set up and execute a promotion resulting in cost overruns

• Poor planning creates:

State-levied fines for false advertising

Lost sales due to out-of-stock conditions

Customer satisfaction issues

“Noise” in Computer Aided Ordering System

• Can’t run enough promotions due to inefficiencies in current process

• Unpredictable and therefore cannot plan properly


Example: Promotions Management

People SystemsBusiness Process (Control Logic)

Advertising

Merchandising

• Decide what we want to promote

• Determine product availability

• Order or allocate merchandise

• Notify participants

• Execute, monitor, measure, analyze, improve, and control

MerchandisingSystem

Suppliers

CRM

WMS

Legacy

Systems

Planning

Systems

Store

Systems


CRM

Traditional Approach: Chaos

People

Advertising

Merchandising

Suppliers

Systems

MerchandisingSystem

WMS

Legacy

Systems

Planning

Systems

Store

Systems

Business Process (Chaos)


MerchandisingSystem

Legacy

Systems

BPM Solution

People

CRM

WMS

Planning

Systems

Store

SystemsBusiness Process

- Queue- XML Service or Web service

Advertising

Merchandising

Suppliers

SystemsBusiness Process (Control Logic)


Agenda





Reality?


Degrees of Success and Failure

source: AMR research (CRM Projects)December 2002

12% of projects fail to go live

47% of projects go live but business users fail to adopt

25% of projects succeed in adoption but business benefits cannot be quantified

16% reach the promised land of measurably impacting business


ERP Systems Viewed Neutrally/Negatively in Ability to Support Business Process by Almost Half Interviewed

21.3

34

25.1

19.7

ExtremelyHelpful

Helpful SomewhatHelpful

NotHelpful

Source: CIO insight, 2002


Degrees of Success and Failure

You want

Measurable results

Improved/defined processes

Organizational adoption

Effective technology

Least level of business disruption


BPM: Positioned for Success

Business ProcessModeling

Design and Simulation

Define and Deliver and

Transfer Resources/Data Across Business

Integration Level

Business Process Management


BPM vs. BPR

BPR BPM

R = Re-engineering M = Management

Consultants Business Users

Printed “deliverables” (Re)usable models

Big bang (all or nothing) Start anywhere, your pace, incremental path

Not about systems Integration, leverage what you have invested in already


Source: The Different and Evolving Meanings of ‘BPM’ ♦ Ken Vollmer - Giga

Business Process ManagementRequires Flexibility

ProcessAutomation

EAI

BPM(internal focus)

Workflow

BusinessProcessModeling

IntegratedB2B

Transport

BusinessProcess

Integration

BPM(internal & external)

Five Years Ago Today


Delivering on the Opportunity: Key BPM Components

Process Definition

Process Optimization

Process Infrastructure


BPM: Process Definition and Optimization

Process Modeler

Graphical, drag-and-drop

Workflow

Business rules

Costing

Reporting

Organization Modeler

Graphical, drag-and-drop

Reporting structure

Workgroups

Roles

Real-time Engine

Inputs from people and systems

Dynamic task assigment (escalation, etc.)

Ongoing process enhancements


Agenda





Highly Centralized Business

Designate a process “czar” or Chief Process Improvement Officer (CPIO)

(source: AMR research, 2002)

Partner with CIO to lead team of process improvement leaders across the enterprise

Create “central command” on process issues

Be the BPM focal point: understand and make better use of existing technology from business point of view


Highly Decentralized Business

Create standards, methodologies for use by CPIO and business unit level CPIOS to drive change and help ensure adoption:

– Bottom-up organizational ownership

– “CPIO” congress to review strategy, results, best practices

– Incentive driven performance on specific tasks

– View of cross-functional applications/technologies


Success Factors

1. Flexible, accountable, sustainable, cross-functional and business driven process focus (ie Six Sigma)

2. The tools to support flexible, changeable and cross-functional business process

3. The right team, incentives, and organizational support model for your business environment: The process “czar” or distributed but coordinated teams

4. Understanding that there is only one process: the view from the business to the technology layer must be the same not similar

January 2003

Thank you!Questions?

Documents

January 2003 The role of BPM in the Real-Time Enterprise 30 th January, 2003 Lee White, President & COO CommerceQuest Ken Morris, CEO