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Prof. Dr. Hans-Jürgen Scheruhn

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1 Prof. Dr. Hans-Jürgen Scheruhn
Vorlesung im Wintersemester 2010/11 an der Leuphana-Universität Business Process Management (BPM) Prof. Dr. Hans-Jürgen Scheruhn Hochschule Harz Wernigerode Hochschule für angewandte Wissenschaften (FH)

Not Important Source: --Michelle Cantara, Gartner, Market Trends: Impact of Business Process Management on Consulting and Development & Integration Services, Worldwide, Extremely Important

3 The Concept of Reference Models
Since process models have become embedded in the BPM approach, the idea of a reference model or best-practice has emerged into BPM. Reference models can be thought of as templates from which process models may be developed. Reference models are often developed by associations of professionals. Therefore they are quite knowledge intensive. Examples of reference models include the APQC Process Classification Framework (PCF), the Information Technology Infrastructure Library (ITIL), or the Supply Chain Operations Reference model (SCOR).

4 Process Hierarchy Process Area Main Process Process Activity Extend
enterprise map Level 1 Main Process Level 2 Process Level 3 Activity Level 4

5 Business Process Description – As-Is Documentation
Business objects Process steps Business rules Involved Business Units R: Responsible; person who carries out the activity A: Accountable; person who is in charge C: Consulted; person asked before carrying out the activity or supporting the activity I: Informed; person has to be informed

6 Darstellung 4 IT-Integrationsebenen am Bsp. Fallstudie SSB
6 6 Darstellung 4 IT-Integrationsebenen am Bsp. Fallstudie SSB Ausführung SAP ERP Abbildung als Modell in ARIS (Ausschnitt) Benutzer-Rollen einnehmen und Prozesse via SAP GUI bedienen : Organisationssicht (OrgEinheiten / Planstellen / Rollen/ User) : Abstraktionsebene 1 bis 3 Präsentation Prozesse Prozesse ausführen : Ablauf der gesamten Fallstudie Einzelne Fallstudien-Abläufe Prozesssicht Wertschöpfungskette : Ebene 1 und 2 Ereignisgesteuerte Prozesskette : Eb. 3 Funktionen Transaktion ausführen : Alle Fallstudieninhalte auf einen Blick Funktionssicht Funktionsbaum : Ebene 1 bis 3 Daten ein- / ausgeben : Vollständiger SAP-Beleg- / Geldfluss Beschreibung SAP-Maskeninhalte Alle SAP Ein- / Ausgabedaten Alle SAP-Systemorganisationseinheiten Datensicht Informationsträgerdiagramm : Ebene 3 Maskendiagramm : Abstraktionsebene 4 Entity Relationship Diagramm : Ebene 3 Organigramm : Abstraktionsebene 1- 3 Daten

7 Architecture Maturity have change to Business Modularity –
A Brief history of Architecture Maturity Business Silos Standardized Technology Optimized Core Modularity Dynamic Venturing IT capability Local IT applications Shared technical platforms Companywide standardized processes or databases Plug-and-play business process modules Seamless merging with partners’ systems objectives ROI of local business initiatives Reduced IT cost Cost and quality of business operations Speed to market; strategic agility ROI of new business ventures Who defines applications Local business leaders IT and business unit leaders Senior management and process leaders IT, business, and industry leaders IT, business, and industry leaders and partners Strategic implications Local/functional optimization IT efficiency Business/operational efficiency Strategic agility Organic reconfiguration Ross, Jeanne. W Creating a strategic IT architecture completely: Learning in stages. MIS Quarterly Executive, 2(1), Ross, J. W., and Vitale, M. R The ERP Revolution: Surviving vs. Thriving. Information Systems Frontier, 2(2), Ross, J. W., Weill, P., and Robertson, D. C Enterprise Architecture as Strategy. Harvard Business School Publishing. Skok and Legge (2002) summarize the early key drivers for adopting ERP systems as: Legacy systems and Y2K system concerns Globalization of business Increasing national and international regulatory environment, for example, the European Monetary Union BPR and the current focus on process standardization, for example, ISO9000 Scalable and flexible emerging client/server infrastructures A trend towards collaboration among software vendors Source: Ross et. al, 2006

8 From Operational Efficiency to Business Agility
+ Operational Efficiency Business Process Reengineering Enterprise Resource Planning Business Network Transformation Business Process Platform 1990s s s Source: Adapted from the book: Business Process Management – The SAP Roadmap, 2009)

9 Enterprise Architecture
An enterprise architecture (EA) describes the structure of an enterprise, its decomposition into subsystems, the relationships between the subsystems, the relationships with the external environment, the terminology to use, and the guiding principles for the design and evolution of an enterprise. An enterprise architecture provides a holistic, systematic description of an enterprise. It encompasses business functions, business process, people, organisation, business information, software applications and computer systems with their relationships to enterprise goals. The hope for enterprise architecture is that applying systematic rational methods to the design of an enterprise will produce one that more effectively and efficiently pursues its purposes. Enterprise architecture models the organization’s core mission, each component critical to performing that mission, and how each of these components is interrelated. These components include: guiding principles, organization structure, business processes, people or stakeholders, applications, data, infrastructure, and other technologies.

10 Business Model A business model describes the rationale of how an organization creates, delivers, and captures value - economic, social, or other forms of value. The process of business model design is part of business strategy. In theory and practice the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

11 Business Model Management – Green BMM
"Green" business model management (BMM) describes the process of development of how new and/or existing business models can adapt and realign to become more environmentally sustainable and socially responsible. Source:Scheel, H., von Rosing, M., SAP Sustainability, 2010

12 Process Evolution - Business Process Modeling

13 Business Model Governance
Business model governance is the set of purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies affecting the way a business model is directed, administered or controlled. Source: Applying Real-World BPM in an SAP Environment, 2010

14 The SAP BPM Governance Framework
Source: BPM Governance (Adapted from the book: Business Process Management – The SAP Roadmap, 2009)

15 Business Process Management (BPM) Definition
Business Process Management (BPM) is a management discipline that requires organizations to shift to process-centric thinking, and to reduce their reliance on traditional territorial and functional structures. BPM requires and enables organizations to manage the complete revision cycles of their processes, from process design to monitoring and optimization, and to change them more frequently to adjust to changing circumstances. The development of BPM technologies is enabling business managers to abstract process flows and rules from the underlying applications and infrastructure, and to change them directly. BPM is neither a technology nor an updated version of BPR. It is an IT-enabled management discipline. It represents a fundamental change in how business manage and run their processes Source: Adapted from the book: Business Process Management – The SAP Roadmap, 2009

16 SAP Governance Modeling Activities in BPM
Source: Applying Real-World BPM in an SAP Environment, 2010

17 Governance: process parameters :
Purpose & Goal Why is the process performed? Ultimate reason for the existence of the process Example: Getting the right products to the right person at the right time based on existing orders Business Rules Which rules govern the business? Description of the operational characteristics of the business Example: Prioritization guidelines, disturbances, decision processes KPIs/PPis How is the process performance measured? Definition of measurable indicators to verify whether the process goals have been achieved Examples: # of created POs, process cycle time Objects Which objects are used, modified, and produced? Processes result in the manipulation of physical or informational objects. The two most important objects are input and output. Examples: purchase order (PO), invoice Process Owner Who is responsible for the process? Managers with end-to-end responsibility for individual processes Process Roles Which roles need to contribute to the process execution? Definition of all resources involved in performing the process Examples: hiring manager, recruiter, HR Business Partner Technology What kind of technology enables the process execution? Systems, tools, and hardware used Example: mySAP SRM Media By which media do processes interact? Means of communication used Examples: paper, fax, Process Flow Which processes precede and follow? Definition of process sequence and process interfaces, input and output Example: receive PO, check availability, confirm delivery date Organizational Units Which organizational units own the process execution? Processes are performed by one or more organizational units. Examples: Business department, HR, Controlling

18 Process Phases / Portals of OPM
18 Process Phases / Portals of OPM Intra Company Process Monitoring / SAP Business Workflow & SAP Netweaver BI Management Portal Balanced Scorecard 1.Strategic-planning Modelling As-Is and To-Be Status ARIS / SAP SolComp. 5. Process- controlling 2. Process- Design Enterprise Architect Portal Controller Portal 4.Process- execution 3.Implemen-tation Customer / Employee Portal Intra Company Process Integration / SAP Business Workflow / SAP NetWeaver BI / SAP SolMan Integration Portal Intra Company Process Control / SAP Business Workflow Process Portals not active in this Presentation !

19 The Process Maturity Journey
Level 5 Processes are continuously improved Level 4 Level 3 Processes are managed Level 2 Most Processes Organized Level 1 Some organized processes Process Maturity No organized processes Transformation Need Processes are improved at the work group or department level Processes are organized and redesigned at the enterprise level Processes are measured and managed systematically Process Teams continuously improve processes A culture of heroes New Functionality IT cost reduction and control Reduce time-to-market Documented processes Business responsiveness Change business process quickly and effectively Transformation from reactive to real-time Increase Transparency Business optimization Increase decision quality Optimization across boarders of Bus.& IT

20 SAP Solution Manager supports 4 lifecycles
Process Lifecycle BPM Method BPM Technology Business Model Process Model Performance Model Value Planning Value Identification Application Lifecycle Impl. Method Apllication Management Service Lifecycle Performance Monitoring Value Creation Project Lifecycle Project Managment PMI/ Prince 2 PM Tools PM of Value Creation Value Lifecycle Value Discovery Value Realization Value Optimization To Be Design Process Owner Process Architect Business Architect CIO Enterprise Architect Application Consultant Project Manager Program/Portfolio Manager Business Unit Owner Business Architect Business Analyst

21 Link with SAP Solution Manager / Solution Composer
Business Model Level 1 Level 2 Process Level 1 Process Level 2 Process Level 3 Process Level 4 SAP Solution Manager SAP system

22 Link between Business Model and SAP Solution Manager
SAP SRM Netweawer SAP ERP SAP SCM SAP PLM SAP CRM Scenario Process Step

23 Business Model Management Definition
The business model is simply a working description that includes the general details about the operations of a business. As part of the business model, there is a need to address internal factors that relate to the ongoing operation of the company. The competencies that are contained within the business model will address functions, purpose, offerings and services, including such factors as: Corporate structure, infrastructure & responsible The main business goals, e.g. strategic business objectives, critical success factors and key performance indicators Business Issues/pain points Core and None core Value creation and realization Financial indicators: Revenues and Cost Working with once business model helps a company to maintain focus on a core competitiveness and core differentiation, while keeping a comparative advantage with the none core competencies. Periodic reviews and updates help to keep the business model relevant to current competition, market changes, economic conditions and consumer demands. Generally speaking, the most that has to do with the strategic decisions and operation of the corporation can be said to be part of business model management. Source: Applying Real-World BPM in an SAP Environment, 2010

24 Performance Measurements in connection with BMM & BPM

25 Performance Measurements in connection with BMM & BPM

26 Prerequisites for Process Performance Measurement
Determining Process Performance Process Performance can only be measured if appropriate Performance Indicators are identified Prerequisites for Process Performance Measurement Clarify process scope (e.g. define start- and end-point of all involved processes, interfaces to other processes / work-streams) Identify and define adequate Process Performance Indicators (PPIs) Determine to-be values of PPIs, consider benchmarks as far as possible Evaluate measurement of as-is values of PPIs (e.g. read timestamps in systems) Record cycle time of all involved sub-processes (complete coverage of process chain) Process Performance Dimensions Time Quality Costs How can the end-to-end cycle time be measured? Are process interfaces aligned? What is the to-be cycle time? Are there any benchmarks /best-in-class values? How is the process quality measured? Which quality is aimed for? How can costs be allocated directly or indirectly to the process (labor costs, costs for infrastructure,…) Quality TRADE-OFF ! Volume Efficiency Volume Efficiency Which volume does the process need to handle? (e.g. # of orders) Are these items counted? How can process efficiency be measured (e.g. conversion ratios)? Which efficiency is aimed for? Costs Time

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