The Business Value of BPMMichael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyHoboken [email protected]
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BPM: The Business Value Question
BPM, BAM, BI, ESB, SOA, BLI, BLA,
BLUBB...
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Relationship
between
BPM
and
Strategy
FINANCIAL
PROCESS
LEARNING & GROWTH
CUSTOMER
Value Proposition
Operations Customer InnovationRegulatory /
Social
ChangeAgenda
Strategic IT
Strategic Job
Families
InformationCapital
HumanCapital
OrganizationCapital
Primary Objectives
Processes
Enable Value
Creation
Financial
Objectives are
Paramount
Processes
shapes and are
shaped by
organizational
maturity
Customers
Seek Value
and Pay for it
What is BPM?
Business Process Management is the collection of
methods and tools that allow us to answer questions
such as:
What are our processes?
How do we ensure their performance?
How do we maintain their compliance?
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Let’s start with the process definition:
A Business Process is the temporal and logical sequence
of those activities that are necessary to manipulate an
economically relevant object toward an overarching goal,
creating value for a customer
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MotivationDrivers 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)
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You’re Hired
Process: New Hire Integration
Background Check
Allocation of office space
Reservation of phone, pager
Creation of access rights in operational systems
Problem: Lost productivity due to late provisioning of work
infrastructure
Automating the process coordination reduced cycle time
from 2 week average to 2 days
BPM Goal: Performance
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You’re Fired
Process: Employee Termination
Removal of computer access rights
Collection of company-issued phone, pager, access card
Removal from employee directory
Problem: Not all equipment is collected, access rights
remain after an employee leaves
Automating the process coordination ensures that no step
is forgotten
BPM Goal: Compliance
crea
tes
enables
Process Change
All IT is Initially an Expense
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Information Technology X
Business Value
How do you make a Cup of Coffee?
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Boil Water
Thirsty
Put Coffee in CupPut Boiling Water
in Cup
Coffee is Ready
Co
ffe
e L
ove
r
The Nescafè Process
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Boil Water
Thirsty
Put Coffee in
Cup
Put Boiling
Water in Cup
Coffee is Ready
Fill Kettle
yes
no
Clean Cup
Yes
No
Kettle
empty?
Cup dirty?
Water is cold
Coffee L
over
Dis
hw
asher
The Espresso Machine Process
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The Starbucks Process
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Order
cancelled
> 5 min wait
Ba
rris
ta
Co
ffe
e S
ho
p
Ca
sh
ier
Ho
use
ho
ld
Thirsty
Collect
Payment
Go To Coffee
ShopOrder Coffee Pay for Coffee Take Coffee
Make CoffeeHand Coffee
To Customer
Payment
Order
cancelled
Insufficient Payment
Coffee
Order
> 5 min wait
+Done
Done
Leave
Discard Coffee
Done
Store Open
Take Order
BPM Questions
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How do we design and communicate this process?
How do we perform this process well?
How do we manage this process well?
How do we maintain compliance to rules and regulations?
How should technology support this process?
Types of BPM Projects
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0 25 50 75 100
75
56
45
36
33
31
24
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Improving Existing Processes
Redesigning a Major Business Process
Enterprise-wide Process Modeling
Measuring Organizational Performance
Process Automation using a BPMS
Delivery of Process Performance Data to Senior Executives
Process Automation using ERP Software
Monitoring Perfomance of Managers
OtherSource: Palmer (2007)
Scheduled Project Time during
First BPM Project
5%
3%
41%
4%
9%
11%
12%
7%
8%
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Business Case
Project Team Selection
Process Discovery
Documentation
Functional and Technical Specification
Tools Evaluation and Selection
Implementation
Testing and Debugging
Deployment and Training
Source: BPTrends (2006)
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Manage Change
Manage Execution
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Managing Risk with BPMS
Use formal Process Models to limit process non-compliance
Process Models can be scripts or maps
If Scripts: Use BPMS to automate control flow, task allocation,
application/service invocation
If Maps: Use collaborative tools to allow execution flexibility
BPMS provide risk management services
Authorizations / Access Control
Enforcement of routings, reviews
Audit capability to document compliance
Managing Risk with BRMS
Use Business Rules to limit contextual non-compliance
Document process objectives to prevent business rules from
turning into process rules
Performance Objectives combine BAM with BRMS
Decision rules allow context-dependent enforcement of
oversight
Use Business Rules Management System to enforce compliance
Document rules limit the state changes on documents
Example: Can’t go from draft to approved without review
Customer rules configure case handling
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NotationStandard
Integration Standards
InteractionStandards
StandardMetrics
AuditStandards
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Thank You – Questions?
Michael zur Muehlen, Ph.D.Howe 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
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