MTAT.03.231Business Process Management (BPM)

(for Masters of ETM)

Lecture 3Process Implementation & Monitoring

Marlon Dumas

marlon.dumas ät ut . ee

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• Process identification

• Process modelling (as-is)• Process analysis• Process redesign (to-be)• Process implementation• Process monitoring

Business Process Lifecycle Management

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Process Implementation

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Harmon’s Process-centric Enterprise Architecture

Harmon (2004)

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Process Implementation

• Organisational Change and Enablement– User Participation– User Training– Change Planning and Management

• IT Implementation– Custom Software Application

• In-house development• Outsourced

– Packaged Enterprise System– Business Process Management System (BPMS)

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IT Implementation – Packaged Enterprise Systems

Typically classified into:• ERP: Enterprise Resource Planning, including

– Manufacturing, inventory control, procurement, financials, human resources

• SCM: Supply Chain Management, including– Material acquisition (forecasting, planning), logistics/transportation– Supplier relationship management

• CRM: Customer Relationship Management– Marketing, lead management, sales

• These functions may come together, or acquired separately– E.g. Salesforce (mainly CRM), SAP Business Suite, Oracle E-Business

Suite, Microsoft Dynamics AX.

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ERP Systems

• Multi-module application that helps a company manage key parts of its business in an integrated fashion.

• Key features include:– standardized environment with shared database independent of

applications and integrated applications– enables information flow across organizational boundaries to

support common transactions and business processes– intended to be customized for specific companies

• database configuration• bolt-on software

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Data Warehouse

On-Line Analytical Processing(OLAP)

Bolt-On Applications(Industry Specific Functions)

Sales&

Distribution

BusinessPlanning

Shop FloorControl

Logistics

Customers Suppliers

Operational DatabaseCustomers, Production,Vendor, Inventory, etc.

LegacySystems

Core Functions [On-Line Transaction Processing (OLTP)]

ERP System

ERP System

© Sumit Lodhia

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Business Process Execution Engines

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Danske Bank: Customer Package Process

Customer

Advisor

Create CardCreate Card

Create AccountCreate Account

Create CreditCreate Credit

Juni 2003 August 2003 December 2003October 2003 Marts 2007

Introduction of Customer packages.Word template to collect info

© Steen Brahe, Danske Bank

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Danske Bank: Customer Package Process

Customer

Advisor

Create CardCreate Card

Create AccountCreate Account

Create CreditCreate CreditBackoffice workers

Microsoft Office Word 2003.lnkEmail

Juni 2003 August 2003 December 2003October 2003 Marts 2007

Backoffice group createdHandles the creation process

© Steen Brahe, 2007

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Danske Bank: Customer Package Process

Customer

Advisor

Create CardCreate Card

Create AccountCreate Account

Create CreditCreate CreditBackoffice workers

Microsoft Office Word 2003.lnk

Case Transfer System

Not valid

Microsoft Office Word 2003.lnk

Juni 2003 August 2003 December 2003October 2003 Marts 2007

Case Transfer SystemAutomatic validation and transfering

© Steen Brahe, 2007

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Danske Bank: Customer Package Process

Juni 2003 August 2003 December 2003October 2003 Marts 2007

Workflow enabled creation process v. 1Automatic process control, 0% automated activities

Customer

Advisor

Backoffice workers

XML

Microsoft Office Word 2003.lnk

Case Transfer System

Not valid

Create CreditCreate Credit

Create CardCreate Card Create AccountCreate Account

Backoffice workers

© Steen Brahe, 2007

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Danske Bank: Customer Package Process

Customer

Advisor

Backoffice workers

XML

Microsoft Office Word 2003.lnk

Case Transfer System

ServiceA

Service B

Service C

Not valid

Create CreditCreate Credit

Juni 2003 August 2003 December 2003October 2003 Marts 2007

Workflow v. 680% automated activities

© Steen Brahe, 2007

Process Monitoring & Mining

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Processdesign

Processdesign

ProcessexecutionProcess

execution

Imple-mentation

Processdesign

Processdesign

ProcessexecutionProcess

execution

(Re-) implemen- tiation

ProcessMonitoringProcess

Monitoring

Analysis

Strengths/weaknesses

Process Monitoring

© Michael zur Muehlen

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• Runtime Monitoring (Business Activity Monitoring)

– Viewing the load of the process

– Identifying problematic cases

– Identifying late cases (risk of missing deadlines), etc.

• Post-mortem Monitoring (aka Business Process Analytics)

– Performance KPIs: cycle times, resource utilization, error rates, …

– Identification of bottlenecks

• See for example:

– BizAgi BAM: http://wiki.bizagi.com/en/index.php?title=Analysis_Reports_BAM

– Analytics: http://wiki.bizagi.com/en/index.php?title=Analysis_Reports_Analytics

Types of Process Monitoring

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Process Monitoring: Dashboards

Process Frequency

of Order Processing

Process Cycle Time

of Order Processing

Process Cycle Timeof Order Processingsplit up to different

Plants

IDS (2003)

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Process Mining Tools

• ARIS Process Performance Manager• Perceptive Process Mining• Fujitsu Interstage (BPM Analytics)• Fluxicon• ProM (open-source)

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informationsystem

operationalprocess

processmodels

eventlogs

models

process discovery

conformance testing

records

configures

supports/controls

(un)desiredproperties

log-based verification

refers to

Process Mining – The ProM Framework

www.workflowcourse.com

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ProM Demo

www.workflowcourse.com

http://www.processmining.org/

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• Collation and analysis of runtime data

• Comparison of actual- and target data

• Active impact on current process execution as well asfuture process modeling (target)

Goal:Improvement of an enterprise‘s adaptabilityto changes in the environment and in theenterprise itself

Beyond Monitoring - Process Controlling

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Process Controlling Objective:

Establish a system for controlling the process and providing feedback to the people involved

Establish Control Points• Control points are activities such as

– Inspection, verification, auditing, measuring, counting…– Usually considered business value adding

• Without control points and a control system the only way of assessing process performance is customer feedback The process ends up in a reactive mode Poor quality is discovered too late

• Location of control points is determined by – Criticality – impact on customer satisfaction– Feasibility – physically and economically possible

Laguna & Marklund

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Process Controlling (cont.)

Develop and Implement Measurements• Involves answering the questions

1.What is to be measured and controlled?2.What is currently measured (available data)?3.Can a business case be made for a new measurement

system?4.What is an adequate sampling method, sampling size &

frequency?

Laguna & Marklund

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Reference ModelsPerformance Measures in SCOR

Overall Inventory Turns Annual cost of goods sold (company info) average total inventory

Raw Materials Inventory Turns (manufacturing companies only)

Annual cost of raw materials purchased (3) average raw material inventory

Work-in-Process Inventory Turns (manufacturing companies only)

(Annual cost of raw materials purchased (3) + Annual cost of conversion (4)) average work in process inventory

Finished Goods Inventory Turns Annual cost of goods sold (company info) average finished goods inventory

Percentage of safety stock Average safety stock total inventory

Purchase order cycle time (in days for purchasing department and excludes supplier lead time)

Average amount of time (in days) elapsed from point of intention to place order to receipt of order by vendor

Supplier lead time Average amount of time (in days) elapsed from point of order to delivery

Supplier on-time delivery Percentage of orders supplier delivers on scheduled due date

Find more at: http://www.exinfm.com/workshop.html

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Benchmarking: SCORcards

T. Gulledge & T. Chavusholu: “Automating the construction of supply chain key performance indicators”, Industrial Management & Data Systems, 2008.

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Exercise

• CVS Case Study– Which performance measures is your to-be process

intended to improve?– How would you monitor these performance measures?– How would you ensure that pharmacies are indeed

applying the principles of the to-be process?

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Recap: The Layers of BPM Activities

ProcessExecution

Process Monitoring

Process Mining

ProcessPerform. Mgt.

ProcessControlling

Process Execution and Controlling

Process ImplementationProcess

ConfigurationProcess

DevelopmentProcessTraining

ProcessTesting

ChangeManagement

Process AnalysisProcess

IdentificationProcess

ModellingProcess

MeasurementProcessAnalysis

ProcessImprovement

BPM Setup

StrategicAlignment

BPMGovernance

BPMMethodology

Process-awareInfom. Systems

Culture &People

Lean/Six

Sigma