OCEB2BI 05 Business Process Management Knowledge and Skills

From Training Material
Jump to navigation Jump to search


Module 5. Business Process Management
Knowledge and Skills⌘

References⌘

References⌘

BPM Lifecycle⌘

Marlon Dumas, Fundamentals of Business Process Management

BPM Lifecycle⌘

  • The first question is "What business processes are we intending to improve?"
  • The initial phase is called process identification - start by at identifying the processes that are relevant to the problem, delimiting the scope of these processes, and identifying relations between these processes (e.g. one process being part of another process)
  • Process architecture takes the form of a collection of processes and links between these processes representing different types of relation.
  • “You can’t control what you can’t measure”. Before starting to analyze any process in detail, it is important to clearly define the process performance measures (metrics) that will be used to determine whether a process is in “good shape” or in “bad shape”.

BPM Lifecycle⌘

  • Having understood the as-is process in detail, the next step is to identify and analyze the issues in the process.
  • Process Analysts collect information about the time spent in each task of the process: the amount of time that process participants spend actually doing work or waiting for something to happen.
  • Process redesign is to identify and analyze potential solutions for the issues.
  • Process implementation may involve organizational change management and process automation.
  • "Every good process eventually becomes a bad process" - the process needs to be monitored, managing a process requires a continuous effort.

Stakeholders in the BPM Lifecycle⌘

Management Team
CEO, COO, CIO, CFO, HR director		 Chief Executive Officer (CEO) responsible for the overall business success of the company.
Process Owner Responsible for the efficient and effective operation of a given process.
Process Participants Human actors who perform the activities of a business process on a day-to-day basis.
Process Analysts Conduct process identification, discovery, analysis and redesign activities. They coordinate process implementation as well as process monitoring and controlling.
System Engineers Involved in process redesign and implementation. They interact with process analysts to capture system requirements.

Ownership of Processes⌘

  • Developing roles and responsibilities for process is often difficult.
  • It commonly begins with the question of ownership and responsibility as an organization begins to understand the value of process and implement actions to manage those processes.
  • Assignment of process ownership is one of the indicators of an increasing level of process maturity.

Process Owner Responsibilities⌘

The Process Owner is responsible for the governance of process performance and process change — and specifically:

  • Defines the process mission, vision, tactics, goals, objectives, KPIs (Key Performance Indicators), and the measures that are aligned with the organization strategies.
  • Monitors and reports process performance against KPIs and health versus plans.
  • Synchronizes process improvement plans with other process owners within the value chain and other interfacing processes.
  • Ensures appropriate process designs, including the correct business requirements.
  • Defines and sponsors business process change and capability investments, which continuously increase the maturity of the process and sustain each level of maturity.

Process Owner Skills & Capabilities⌘

Measurement and Optimization⌘

by Ed Walters, What are CSFs and KPIs?

CSF and KPI⌘

  • CSFs and KPIs are techniques used for defining and measuring business objectives.
  • CSF is an acronym for Critical Success Factor.
  • KPI is an acronym for Key Performance Indicator.
  • A CSF is some feature of the internal or external environment of an organization that has a major influence on achieving the organization's aims.
  • A KPI is a quantifiable criteria that an organization uses to measure its performance in terms of meeting its CSFs.
  • There can be more than 1 KPI per CSF.
  • A KPI can be financial or non-financial.
Organization aims⌘

3 levels can be distinguished:

  1. Vision/Mission
    An expression of the basic reason why the organization was established and continues to exist.
  2. Strategic Goals
    Faced with the internal and external circumstances that an organization must deal with in the next years: what should be the focus of the organization so that it can successfully pursue its Vision.
  3. Objectives
    Strategic Goals are by their very nature high level expressions, big ideas. These Goals must be broken down into something more concrete and specific, so that tactical plans can be devised (budgets), responsibilities assigned and measurements made.

When combined, the 3 levels form the basis of a Business Plan.

Origin of CSFs and KPIs⌘
  • The concept of "success factors" was originally developed by D. Ronald Daniel of McKinsey and Company in the sixties.
  • The idea was most famously refined and popularized by Jack F. Rockart of the Sloan School of Management at the end of the 80s.
  • The concept of CSF/KPI:
    • You can’t manage what you can’t measure.
    • Things that are measured get done.
    • You can’t improve what you can’t measure.
4 basic types of CSF⌘

AKA Rockart's CSF types

  • Industry – these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
  • Environmental – these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category.
  • Strategic – these factors result from the specific competitive strategy chosen by the organization. The way in which the company chooses to position themselves, market themselves, whether they are high volume low cost or low volume high cost producers, etc.
  • Temporal – these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs.
How many CSFs and KPIs should there be?⌘
  • 3-5 strategic goals should be enough to focus the organization's efforts during a forthcoming 3-5 year period.
  • Balanced Scorecard technique suggests 3-5 goals per focus area. Each Goal should be broken down into 3-5 Factors, between 9 and 25 Factors that the organization should consider to be CSFs.
  • There should not be too many/too few factors.
  • For each CSF there must be at least one Measurement (KPI) and a Target for the current or forthcoming budget exercise.
  • Objective (tactical aim) = CSF + KPI + Target
  • The data that are associated with the KPIs needs to be captured and consolidated (through Business Intelligence software).
Steps in the CSFs and KPIs. Process⌘
  1. Establish the Vision.
  2. Determine Strategic Goals.
  3. Analyze each Goal - what Factors (CSF) influence the Goal.
  4. Assign at least 1 Measure for each Factor (KPI).
  5. Assign a Target.
Example of CSFs⌘

based on http://www.mindtools.com/pages/article/newLDR_80.htm

Consider a produce store, whose mission is:

"To become the number one produce store in Main Street by selling the highest quality, freshest farm produce, from farm to customer in under 24 hours on 75% of our range and with 98% customer satisfaction."

Business Activity Monitoring (BAM)⌘

  • BAM is the process of using computer software to electronically monitor business data based on user-defined business rules and the systematic electronic notification when those rules are triggered.
  • When an exception to the rule is identified, notification events typically occur in the form of an email, text message, social networking post, ...
  • The objective of BAM is to enable companies to make better informed decisions by giving them visibility across their organization in a real-time capacity.

BAM Components⌘

A BAM system is typically comprised of the following features:

  • Business Rules Engine — Allows users to set up business rules for the software to follow.
  • Notification Engine — Provides options to set up an email, text message or social networking post when an exception is identified.
  • Database connectivity - connection to data.
  • Logging — A BAM system provide some mechanism to track when an alert was sent or if any errors occurred during the processing.

Example Set of Control Services⌘

WebMethods, Business Activity Monitoring (BAM) The New Face of BPM

Process Simulation and Optimization⌘

by Denis Gagne, Modeling and Simulation in Business Process Management

Why simulating business models⌘

Advantages of simulation over testing on the real wold:

  • speed
  • low cost
  • no disturbance of current operations

Types of Simulation⌘

  • Visual Depiction - user is presented with an animated depiction of the business model
  • Scenario Simulation (Role Play) - user asked to take actions and make decisions within a simulated business environment
  • Numeric Simulation (Discreet Events) - user asked to provide values for input and decision parameters of a simulated business model
Visual Depiction⌘

Mostly used for teaching & learning, verification & validation.

Scenario Simulation⌘

Role play business simulation games mostly used for teaching & learning.

Numeric Simulation⌘

Examples: what-if analysis, risk assessment, revenue forecasting, ...

Mostly used for teaching & learning, persuasion & selling, analysis of a business situation, verification & validation.

Numeric Simulation Caveats (risks)⌘
  • Unrealistic user expectations
  • Business Model is not necessarily Simulation Model
    • Their goals may be misaligned.
  • Incorrect conclusions or predictions
  • Sub-optimization
    • Partial or sub-model optimization can lead you wrong way

Flow Analysis⌘

by Marlon Dumas, Fundamentals of Business Process Management

  • Flow analysis is a set of techniques that allow to estimate the overall performance (time, cost, error rate, ...) of a process given some knowledge about the performance of its activities.
  • Using this technique we can calculate the average cycle time of an entire process if we know the average cycle time of each activity.

Cycle Time Calculation⌘

  • (Average/Overall) cycle time of a process is the average time it takes between the moment the process starts and the moment it completes.
  • (Average) cycle time of an activity is the average time it takes between the moment the activity is ready to be executed and the moment it completes

Cycle Time with XOR gateway⌘

XOR gateway equation⌘

Cycle time of a fragment of a process model with XOR gateway:

CT=∑i=1npi⋅Ti

Cycle Time with AND gateway⌘

AND gateway equation⌘

Cycle time of a fragment of a process model with AND gateway:

CT=Max(T1,T2,...,Ti)

Overall vs. Theoretical Cycle Time⌘

  • Cycle time of an activity or of a process can be divided into waiting time and processing time.
    • Waiting time is the portion of the cycle time where no work is being done to advance the process (time spent in transferring information between process participants, waiting for synchronization, ...)
    • Processing time is the time that actors spend doing actual work.

Overall vs. Theoretical Cycle Time⌘

  • Overall cycle time of the process (CT) is the total amount of waiting time and processing time of each activity.
  • Theoretical cycle time (TCT) is the amount of time that an instance of the process would take if there was no waiting time at all

Cycle Time Efficiency⌘

  • Cycle time efficiency (CTE) is ratio of overall processing time relative to the overall cycle time.
CTE=TCTCT
  • A cycle time efficiency close to 1 indicates that there is little room for improving the cycle time.
  • A ratio close to zero indicates that there is a significant amount of room for improving cycle time by reducing the waiting time.

Balanced Scorecard⌘

by BPTrends, Paul Harmon: Balanced Scorecard

  • The Balanced Scorecard is an approach to align the goals and measures that are used to evaluate the work of managers.
  • Balanced Scorecard is a useful tool for identifying process performance measures across an entire organization.
  • Financial metrics (e.g. ROI) are not sufficient and in a long-term perspective using financial metrics only can have negative impact on customers and employees.
  • BSC can be used to counter the tendency to rely too heavily on financial accounting measures.
  • Balanced Scorecard considers four types of measures:
    • Financial Measures: How Do We Look to Shareholders?
    • Internal Business Measures: What Must We Excel At?
    • Innovation and Learning Measures: Can We Continue to Improve and Create Value?
    • Customer Measures: How Do Customers See Us?

Balanced Scorecard Example⌘

Creating a Good Model⌘

by David Bridgeland and Ron Zahavi, Business Modeling: A Practical Guide to Realizing Business Value

  • Not every model should be built.
  • Sometimes the costs of creating and using a model are greater than the benefits that are gained from its use (model value destruction).
  • Creating/using a model always takes time:
    • time interacting with the subject matter experts,
    • time spent constructing the model with modeling tools, and making the model simpler
    • time spent finding and fixing problems with the model,
    • and time spent verifying a model with subject matter experts.
    • time spent analyzing the model for business implications,
    • time spent explaining the model to others,
    • time spent maintaining the model when things change, and so on.

Creating a Good Model⌘

The decision about whether to create a model is ultimately an economic decision: Are we going to deliver more value using this model than we will spend creating/using/maintaining it?

Model Value Analysis⌘

  • For small models, that can be built in an hour or four, we typically make a quick informal analysis (Do we expect to realize enough benefits to offset the time and trouble of creating the model?)
  • More formal analysis - model value analysis - a summary of the expected costs and the expected benefits, and a comparison of the two.
  • Spend 1% of the total anticipated modeling time on the model value analysis, to decide whether the other 99% makes economic sense.

BPMS Tool fundamentals⌘

by Derek Miers and Paul Harmon, Introduction to Evaluating BPMS Suites

BPMS Key Drivers and Objectives 1⌘

  • Lower Business Costs and Increased Efficiency
    • BPM products support the automation of repetitive steps, integrating application systems as needed, and supporting complex decision-making. As a result, they provide a platform upon which firms can lower their fundamental operating costs while enhancing the value delivered.
  • Increased Adaptability, Flexibility, and Nimbleness (agility)
    • Effective BPM infrastructure will allow the firm to develop new products and services far more quickly than was previously possible.
  • Lower Cost of Systems Development and Support
    • Modern BPM products provide increased developer productivity, significantly lowering the cost of systems development.

BPMS Key Drivers and Objectives 2⌘

  • Lower Systems Implementation Risks
    • By modeling an entire process and then making incremental, evolutionary changes, managers are able to introduce change with lower risk.
  • Better Governance and Compliance
    • BPM technology can control the ways in which decisions are made and modifications to the process are introduced ensuring compliance and effective governance.
  • Better Customer Service
    • BPMS provides the glue to tie together disparate channels of customer interaction.

Processing Modeling⌘

  • This is the area where the effective capabilities of the product are most apparent – it is where the semantics of the vendor’s interpretation of process are made visible.
  • A key issue here is the degree of accessibility of the environment and the amount of IT specialist support required.

The BPM Technology Continuum⌘

Derek Miers and Paul Harmon, Introduction to Evaluating BPMS Suites, Figure 3

  • If you start with a language like Java, you can build any kind of BPM system you want. But it takes a lot of work, using only a language, to build a system.
  • As you move from left to right, the products become more structured and provide more ready-made components, making it easier and faster to develop finished applications.

The BPM Stack⌘

The BPM Stack⌘

Each layer sits on top of a lower level, using technologies defined at the lower level while adding additional utilities to integrate the levels below, to provide a more general functionality.

BPM Center of Excellence⌘

by Rich Seeley, Forrester Details “Secret Sauce” for BPM Success, and Lisa Dyer et al, Creating a BPM Center of Exellence (CoE)

  • A center of excellence may refer to a group of people, a department or a shared facility within an organization.
  • Setting up a center of excellence (COE) makes a major difference in the success of business process management (BPM).
  • Having a COE doesn't guarantee BPM success, but it "significantly increases the odds of BPM success"

Key focus areas of BPM CoE⌘

A BPM Center of Excellence (CoE) must address the following key focus areas of responsibility:

  • Defining a higher business goal or vision, driving BPM initiatives and aligning individual projects with that vision
    • strategy and long-term planning, tracking KPIs
  • Executing a scalable delivery resource model for discovering, implementing, deploying, managing, and supporting BPM initiatives
    • execution of BPM projects, creating, maintaining, and governing best practices
  • Administering a shared infrastructure for hosting and maintaining the solutions that are the outcomes of BPM initiatives
    • BPMS used for hosting, executing, and maintaining the process applications that are the outcomes of BPM

CoE key roles⌘

  • BPM Program Manager - a methodology coach who provides oversight in the area of driving iterations, playbacks, estimation, planning engagement methodology, and agile development in general.
  • BPM Analyst - focuses on discovering and modeling value-driven process requirements within the context of an individual project and with the intent of collaborating with the solution implementation team.
  • BPM Developer - a BPM implementation expert who is trained and experienced in using the BPM platform to develop solutions (team lead or solution architect).
  • BPM Integration Developer - a more technically focused version of the BPM Developer, focuses on building additional functionality outside the core product that is needed to complete the end-to-end solution.
  • Other roles:
    • Business users, SMEs, Process owners
    • Administrators, Enterprise Architects

Module 5. Questions⌘

  • What is the difference between Overall and Theoretical Cycle Time?
  • Assuming we know the average cost of each activity, how we can calculate the cost of a process?
  • What is Model Value Analysis?
  • What Types of Simulation are there?
  • What is the Process Owner responsible for?
  • What is CSF and KPI?
  • What is BAM?
Retrieved from "https://training-course-material.com/index.php?title=OCEB2BI_05_Business_Process_Management_Knowledge_and_Skills&oldid=34623"