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© 2013 IBM Corporation
IBM Business Process Management
Create more ValueTransform your Business Processes NOW!Logan VadiveluDistinguished Chief Architect IBM Growth Market Technical Leader – BPM
© 2013 IBM Corporation
IBM Business Process Management
Agenda
A. Role of Process Innovation within organizations
B. Collaboration between Business and IT
C. Best practices for operationalizing process innovation and measuring ROI
© 2013 IBM Corporation
IBM Business Process Management
Agenda
A. Role of Process Innovation within organizations
B. Collaboration between Business and IT
C. Best practices for operationalizing process innovation and measuring ROI
4 © 2013 IBM Corporation
IBM Business Process Management
BPM Drivers
New Intelligence
New Intelligence
How can we take advantage of the
wealth of information
available in real time from a multitude of
sources to make more intelligent
choices?
Customers expect us to know them
I Need InsightI Need Insight
SmartWork
SmartWork
How can we work smarter,
supported by flexible and
maintainable processes
modeled for the new ways people buy, live & work?
Business demands more efficiency
I Need to Optimize
I Need to Optimize
Dynamic Infrastructure
Dynamic Infrastructure
How do we create an infrastructure that drives down cost, is intelligent and secure, and is
as dynamic as today’s business
climate ?
Core systems cannot adapt to changes
I Need to Respond Quickly
I Need to Respond Quickly
Risk Management
Risk Management
Standardization and regulation is coming
I Need to comply
I Need to comply
How can we establish risk management
controls that will ensure compliance in an ever-changing
and developing environment?
© 2013 IBM Corporation
IBM Business Process Management
Process improvement is of utmost importance
McKinsey 2011 Technology Survey of 927 IT and non-IT Executives, December 2011
https://www.mckinseyquarterly.com/High_Tech/Strategy_Analysis/A_rising_role_for_IT_McKinsey_Global_Survey_results_2900
© 2013 IBM Corporation
IBM Business Process Management
Flexible integration interconnects applications and services across the organization
Business rules and analytics provide flexibility for repeatable decisions that change frequently
Processes can mix structuredand unstructured activities, according to business needs
Building Blocks to Achieve Process InnovationEmpowering business and IT users to easily manage change
© 2013 IBM Corporation
IBM Business Process Management
Business Model Innovation (dynamic ecosystems)
Industrialisation
Business Performance Optimisation
Innovation•Go to market•Customer centricity•Personalisation•Product provision
Process Factory •Economies of scale•Asset reuse •Configure not build•Cloud delivery
COE*
GovernanceFrameworks and Industry
Standards
Component Business ModelsGovernance
Automation•Visibility / analytics•Lean six sigma•Fraud, compliance•Efficiency, STP
* COE = Centre of Excellent
Governance
Fitted into an overall Business Performance OptimisationFramework
© 2013 IBM Corporation
IBM Business Process Management
Business Model Innovation Focus
Level 2-Industrialise and automate the workflow
Level 3- The business has end-to-end process control with full visibility
Level 5 - Ability to rapidly innovate the business model
Level 4 - Componentise the end-to-end process to allow for reuse, standardisation innovation & operating model consolidation
Level 1- Early digitisation of work allows workflow
AGILITY
BPM ADOPTION
IndustrialiseFocus %
Business ModelInnovationFocus %
Most clients are at L1/L2 pushing for L3 - end-to-end process integration
Leading and innovative organisations e.g. in
Telecoms and mediaInfrastructure utilities,
transport Central government
have the vision and imperative to push for L4/L5
Note – this is intended to align to the BP(S)O maturity model
% Focussplit
High % focuson Industrialisation
High % focus on business model innovation
© 2013 IBM Corporation
IBM Business Process Management
Go-to-MarketDynamic pricingLeverage customer insights for target marketing
Order to CashAccount opening process automationAutomated order processing & fulfillment
Product DevelopmentReduce time to market of new products & servicesStreamline production procurement sourcing
Start at the Point of Greatest NeedTypical entry points to achieve process innovation
Insurance Automated claims processing Improved fraud detection
Banking Reduced loan processing times Risk & regulatory compliance
Retail Retail distribution supply chain
automation Customer loyalty programs
Manufacturing Manufacturing production quality and
control Reduced manufacturing production time
Energy & Utilities Power grid management Energy consumption
Travel & Transportation Online ticketing and reservations Travel and hotel pricing management
Healthcare Improved patient care Fitness & nutrition
Government Customs & border control Public safety
9
© 2013 IBM Corporation
IBM Business Process Management
Business Process Management is a Team Sport!
Business UsersBusiness
Leader
IT Leader
Process Owner
Business Analyst
IT Architect
“How can I work smarter supported by flexible and dynamic processes modeled
for the new way people buy, live &
work?”
understand and define business objectives within the boundaries of the organization constraints
link strategic intents to actionable entities and computable measures
collaborate on the operational aspects of the business to ensure the right actions are being taken
show how Process Engineering efforts are guided by the business strategy and show a clear path from strategy to results
Focus project efforts on the areas and processes that bring the most value to the business
© 2013 IBM Corporation
IBM Business Process Management
Successful Adoption of BPM Is A Journey for Business & ITCulture, Architectural Alignment, & Market Pressures Impact Adoption
Highly responsive, agile architecture
Faster ROI
Evolution of the Agile EnterpriseEvolution of the Agile Enterprise
Level 1 Level 2 Level 3 Level 4
Gap narrows
Business
Organizational silos with rigid boundaries. Few processes documented, measured. Inconsistent improvement methodology.
Organizational silos with rigid boundaries. Few processes documented, measured. Inconsistent improvement methodology.
ITIT is reactive. The majority of the IT budget is spent on maintaining the status quo. Integration is P2P. Minimal reuse, increasing backlogs.
IT is reactive. The majority of the IT budget is spent on maintaining the status quo. Integration is P2P. Minimal reuse, increasing backlogs.
Some processes documented. Basic measures in place for critical processes. SME-led improvement teams.
Some processes documented. Basic measures in place for critical processes. SME-led improvement teams.
Applications customized to support process change. Project/department-level IT Services developed. Reuse is copy-paste-modify.
Applications customized to support process change. Project/department-level IT Services developed. Reuse is copy-paste-modify.
Processes are modeled, simulated. KPIs and real-time dashboards provide visibility and guide disciplined improvement.
Processes are modeled, simulated. KPIs and real-time dashboards provide visibility and guide disciplined improvement.
Cross business unit BPM/SOA adoption and reuse grows. Business policies are used to manage process variation.
Cross business unit BPM/SOA adoption and reuse grows. Business policies are used to manage process variation.
Enterprise-level BPM/SOA adoption with much higher levels of reuse. Services are assembled dynamically. IT enables business change.
Enterprise-level BPM/SOA adoption with much higher levels of reuse. Services are assembled dynamically. IT enables business change.
Business and IT architectures are linked
Systematic improvement using predictive measures. Business Analysts reuse Services. Process change becomes a key differentiator.
Systematic improvement using predictive measures. Business Analysts reuse Services. Process change becomes a key differentiator.
© 2013 IBM Corporation
IBM Business Process Management
Agenda
A. Role of Process Innovation within organizations
B. Collaboration between Business and IT
C. Best practices for operationalizing process innovation and measuring ROI
© 2013 IBM Corporation
IBM Business Process Management
A Business and IT Approach that let's you meet tactical strategic priorities
© 2013 IBM Corporation
IBM Business Process Management
Agenda
A. Role of Process Innovation within organizations
B. Collaboration between Business and IT
C. Best practices for operationalizing process innovation and measuring ROI
© 2013 IBM Corporation
IBM Business Process Management
Processes inside applications• Processes are rigid and costly to change• IT changes needed lag far behind• With passage of time, changes may no longer be relevant
Processes that span applications• Any changes have implications across all applications • Inefficient and ineffective processes remain long after the need
for change has been recognized
Managed manual processes• No automation exists to enable on-the-fly process changes• No automation exists to trigger processes based on events or
patterns
Ad-hoc processes• Most systems are not equipped to capture ad-hoc work• Most ad-hoc processes often not tracked or monitored• Costs remain hidden and ad-hoc processes remain ad-hoc
Opportunities for business optimization and business innovation are lost
Challenges of Traditional Process Management
© 2013 IBM Corporation
IBM Business Process Management
BPM Shifts Development Towards a Business Driven Approach
StrategyMapping
ProcessMapping
ProcessAnalysis
ProcessDevelopment
ProcessMonitoring
ProcessOptimization
PlatformInstall & Config
EnvironmentConfiguration
EnvironmentConfiguration
ProductionTuning
Business Driven Process DesignBusiness Driven Process Design
Infrastructure ActivitiesInfrastructure Activities
© 2013 IBM Corporation
IBM Business Process Management
Organizations Turn to BPM to Transform the Traditional Development Process
Define, Measure, Analyze Improve Control
No Integrated Operational Control
No Integrated Operational Control
Implementation Highly Variable
Implementation Highly Variable
High Investment –Low Leverage
High Investment –Low Leverage
Process Improvement Disciplines (i.e. Six Sigma)
Solution Development Lifecycle
Analysis, Plan, Design
Code(Buy vs. Build)
Deploy, Maintain
No Systematic Operational Control
No Systematic Operational Control
Rigid knowledge buried deep in codeRigid knowledge
buried deep in codeFunctional Focus vs.
Business ViewFunctional Focus vs.
Business View
Inhibitors to Increased Effectiveness: No direct traceability to business
objectives No integrated measures of success Separation “gap” of business
knowledge from implementation Difficult to communicate and visualize
business impact of change Limited audience can effect change Not oriented towards the needs of
making people more effective: As collaborators and as participants
© 2013 IBM Corporation
IBM Business Process Management
Productivity Benefits grow with greater process maturity
© 2013 IBM Corporation
IBM Business Process Management
As Planning Shifts Towards Process ImprovementIdentify the Low Hanging Fruit and Start Small
Scope of first project
Associated with a key, meaningful
initiative
Associated with a key, meaningful
initiative
Simulation may be used to assist with the calculation of payback and positioning
Reengineering project
Never "One and Done"
Use a prioritization matrix early on in your process analysis
effort
Business importance
© 2013 IBM Corporation
IBM Business Process Management
Productivity Improvements are one of the main reasons clients implement BPM
© 2013 IBM CorporationPage 22
Pattern Characteristics
1. Human Automation
High emphasis on Human-to-Human interaction
Activities are well understood and the flow is structured
Requires visibility and measurement of human activities
2. STPOptimisation of a process with a key goal to increase the volume of throughput or work completed for that process (STP) System intensive integration, automated process. Transactional integrity is required by the service
3. STP + exception
As per STP but exceptions require human tasks to resolve them
4. “Perfect the instruction”
Cases that have become understood over time. Knowledge has been captured in the technology and the process is now suitable for STP
5. “Case”
Note: People have different definitions of case
- Unstructured or structured events (triggers) OR
- Activities require collaboration OR
- Often undetermined (but not always) OR
- Knowledge intensive OR
- Content (Paper/Image, fax, electronic document … digital image, voice, video …) OR
- Relies on people (sometimes specific expertise) OR
- Persistence (Lifecycle of case)
Productivity benefits also depend on which BPM patterns are required in advancing BPM maturity - with STP offering 100% automation
Content
/ Data
Analytics Mandatory defined activity at any time
Prescribed patternor sequence
Decision Services
Optional definedactivity at any time
Determ
inistic -Managed
Flexible Driven
Information / W
orker
Mgr.Clerk
Auditor
Human centric
Content STP service CaseKey
© 2013 IBM Corporation
IBM Business Process Management
Efficiency
Saved more than $100M with improved efficiencies and higher
levels of customer service
Effectiveness Agility
Cut “engineering” time of designers on car systems
by 20% in one year.
Take time and cost out of the process
Work smarter to deliver higher revenue and profit
Outmaneuver competitors with rapid response to change
Speed to market gains of over 50%
Reduced development time
by 40%
Drives $3.6M in additional revenue and saves $2.7M by integrated sourcing processes
with real-time inventory visibility
Line of Business Personnel Launch Campaigns in
Two Days Instead of Months
Project Program Transformation
23
BPM delivers increasing business value as adoption progresses
© 2013 IBM Corporation
IBM Business Process Management
1 to 3 Weeks1 to 3 Weeks 8 to 10 Weeks8 to 10 Weeks 2 to 3 Weeks2 to 3
Weeks1 to 2
Weeks1 to 2
Weeks
TestTest Go LiveGo
Live
• BPM Analyst (1)• Engagement Mgr
(1)• Infr. Specialists (1)
• BPM Analyst (1)• BPM Developer (2)• Engagement Manager (1)
• BPM Analyst (1)• BPM Developer (2)• Technical Architect (1)• Engagement Manager (1)
• BPM Developer (1)• Technical Architect (1)• Engagement Manager (1)• Infrastructure Specialists (1)
DevelopmentDevelopment
InfrastructureInfrastructure
• Environment Install / Config• LDAP integration
Training/ MentoringTraining/ Mentoring
• Deployment scripts/playbook• Production Tuning
•Model Process and Service Flows
•Build UI shells•Create Business
Data model•Prototype
Integrations and DB Design
•Mock up Reports
•Develop Process to specification
• Implement Services with Data Flow and DB layer
• Incorporate integrations
•Generate data to build reports
•Finish remaining 30% of UI functionality with look and feel
•Complete metrics and reports
• Implement exception handling and error proofing
• Goals, Critical Success Factors• As-Is Process Maps• Process Analysis• To-Be Process Maps• Executable BPD• Forms and Custom Reports• KPIs and SLAs• Business Data Model• Simulation
DefinitionDefinition
Quick Win Pilot – Iterative playbacksProven BPM project timeline & roles
© 2013 IBM Corporation
IBM Business Process Management
Project……..to Program…....to Transformation
Start small, grow fast
Build Project-Based Credibility
1
Establish a Program
2
Transform Across and Beyond the Enterprise
3
25
Use a proven methodology from a trusted partner
© 2013 IBM Corporation
IBM Business Process Management
26
Create Value – for you and your clients.
Transform your Business Processes. Now.
© 2013 IBM Corporation
IBM Business Process Management
For example, BPM Agility enables innovation in Business Models for Gridit and the Swedish Pensions Agency (PM)
Group of Telecom network operators who decided to collaborate rather than competeTheir idea is that there is more value in providing and managing digital content passed over a connection than providing the connection itself, which is becoming a commodity They built a business platform to bring network and content providers together to create new content-based offers to consumers
Catalogue
Serviceconsumer
Serviceconsumer
ServiceProvider
ServiceProvider
BusinessPlatform(BPM)
Basic BPM and SOA Vision to supportnew business models at Gridit and PM
Public Sector Agency Recognizes that today’s citizen needs help in managing their whole pension whether provided by the state, employers or private Vision is to build a whole pension platform to integrate this ecosystem to provide whole pension services, that no one can provide today that are aligned to the citizen’s and the state’s fast evolving needs
…. Dynamic ecosystem
IBM internal only
© 2013 IBM CorporationPage 29
Example 1: Productivity Improvements in Public Sector with BPM and RulesBackground Public Sector organisation Handling large volumes of cases Cases ranging from very simple (STP and STP + Exception
Pattern) to the very complex (human centric and “case”patterns”)
BPM maturity from level 1 to level 3
Issues Unable to ramp up business volumes without increasing
business FTE Risk of failure of end-of-life systems Inflexible systems Manual effort causes high business processing costs Need higher levels of process Automation through Rules and
BPM
Productivity Benefits Target of productivity improvements from 43% (low) to 65%
(high) primarily for easier cases Three-year ROI between 17-80%
© 2013 IBM CorporationPage 30
Example 1: client starting from level 1 and looking to move to level 3 with BPM and Rules
© 2013 IBM CorporationPage 31
Example 1: 50% Manual effort is caused by the process and 50% bydata issues, Decision Mgt. (Rules) and BPM can in aggregate increase productivity by between 46-64%
Future phases
Rules improve productivity by 8-
16%Over time rules are built to
increase Automation
Automation improves productivity by 26-
33%
over time e-formelement is achieved
Automation improves productivity by
9-15%
over time e-form is achieved & more
complex processes are automated
Easy cases Complex cases
Process related
Data related
% of FTE
% of Manual Effort
50%*
100%
0%
0% 65% 100%
* source: Head of Dept A
Productivity improvementLow = 43% High = 64%
Example process related –manual effort caused by late validation so errors get into system
Example data related –manual effort caused by complex / many data structures or case specifics
© 2013 IBM CorporationPage 32
Example 2: Productivity Improvements in Insurance with BPM
Background
Insurance client Human-centric integration pattern Need to grow business in an complex commercial area but underwriting process unable to scale without
significant extra manual effort
Issues
The desire is to achieve this growth with a design headcount of UW. This desire is hampered by the high skew of quote throughput during two peak weeks at the end of quarters. These two weeks handle approximately 35% of the quarterly quotation throughput
The current UW process is highly manual and therefore difficult to scale to achieve this growth within the design headcount. BPM software can automate and optimise the UW process to enable this scaling to take place. BPM will reduce rework and orchestrate integration across multiple back-end systems.
Productivity Benefits
Avoid adding 11 UW by end 3-year to achieve over 100% of plan at slightly under target HC by reducing the effort required for UW managed business by approximately 33-50% for Motor and 15–20% for non motor
3-Yr ROI of 384% (low 246%, high 707%) Net Benefits of £1.5m (Range £1.3m - £1.6m) Breakeven in 10 -15 months
© 2013 IBM CorporationPage 33
Example 2: The Proposed Solution Moves ABC from a Manual Rekey to a More Controlled and Efficient BPM System
ExcelModels
Trading
UWSystems
PaperDocument
System A
Manual re-key
PaperDocument
System A
ContentMgr?
12*Brokers 12*Brokers
Automated update
Trading
UW systems
BPM
Single point of user accessMain Opportunity for BPMLess Impact for BPM
ReplaceExcel models
Quotation/DocStandard Quotation/Doc
OutputsReports
As Is To Be
© 2013 IBM CorporationPage 34
0
20
40
60
80
100
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12Peak FTE 2.0 3.0 3.0 4.0 5.0 6.0 6.0 7.0 8.0 9.0 9.0 10.0Extra FTE 1.0 2.0 2.0 3.0 4.0 5.0 5.0 6.0
0
20
40
60
80
100
120
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12
Example 2: Motor – BPM avoids the need to add an extra four FTE in order to meet growth targets
“To Be” with BPM
Peak FTE required <4 Peak FTE required < 8 Peak FTE required > 8
Quotes/wk
Quotes/wk
2 Peak weeks perQtr = 35% of quotes
11 Non peak Weeks per Qtr = 65% of quotes
“As Is” Manual Processes Extra FTE
up to design team of 8
BPM enables growth within
Design extra headclount
BPM platformEnables growthWithout need to
Add more UW Headcount 4FTE
More than 8 FTE needed
Peak FTE 2.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 5.0 5.0 5.0 6.0Extra FTE 1.0 1.0 1.0 2.0
© 2013 IBM Corporation
IBM Business Process Management
3535
Continuous Process Improvement via Activity MonitoringProcess Visibility Helps Business Leaders Manage & Improve Operations
Identify trends, forecast events, make smart choices
Understand up-to-minute business performance by monitoring KPIs
Detect, respond rapidly to change
Rebalance human workload on the fly
Continuously improve key business processes
Customize dashboards easily
© 2013 IBM Corporation
IBM Business Process Management
BPM Workshops Overview4/8/2005
Discovery Workshop Itinerary
Day 1
Day 2
Day 3
Business Case Overview
Kick-off and Demo
Results Presentation
Document Findings & Proposed Approach
Approach Evaluation and Selection
Design Possible Approaches
Technology Review
Document Findings
Document Findings
Business Process/Rules
Review
Roadmap and Planning
Prep
Context & Approach Review
Follow-up Discussion
Documentation Review
Tailor Workshop Agenda
Business Process/Rules
Review
Business Process/Rules
Review
Business Process/Rules
Review
Business Process/Rules
Review
Parallel Discovery Tracks
Parallel Discovery Tracks
Parallel Discovery Tracks
Playback 0
Playback 0
Playback 1
Playback 1
Build from
scratch
Build from
scratch
36
© 2013 IBM Corporation
IBM Business Process Management
Maturity C
hallengesTechnology
Expertise
Succeed with an Initial Project
Establish a Program
Transform across the enterprise
Identify Business Challenge & Value
On-Demand Consulting AssistanceTurnkeyServices
Solution MentoringTraining
Simplicity to engage business users
Power to scaleas business requires
Realize fast value, foster BPM adoption and create transformational impact
Visibility Rapid timeto value Governance
Understand and document existing processes Identify key improvement
opportunities
Target high return projects
Leverage proven methodologies to ensure success
Increase skillsEstablish CoEOptimize
established projectsExtend to new projects
TransformationProgramProject
Infuse a culture of process across the organization
37
Ensure success with a proven approach for adopting BPM