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Mastering Business Process Management:

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Presentation on theme: "Mastering Business Process Management:"— Presentation transcript:

1 Mastering Business Process Management:
What Business & Process Analysts Need to Know To Add Value to BPM Programs Carl F. Lehmann Principal Analyst BPMethods Desk: Cell:

2 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 2

3 What You Will Take Away This confirms that I possess the skills needed to bring value to BPM programs There is a logical decision framework or “mindset” used by successful BPM practitioners I should learn more about it 3

4 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 4

5 BPM is not new! 5 5

6 What Is New? Traditional definitions New thinking
Basic definition A logical series of related activities that converts input to results or output Value-added extension Designed to create or deliver customer value and/or; shareholder value through efficiency New thinking Processes are assets and must be managed as such If they are not they will become liabilities Process defined as an asset An asset that affects the quality of a product, service or brand to uniquely satisfy customer needs and differentiates its executor from competitors 6

7 What is New? “Core” processes “Non-core” processes Asset Types
Are necessary to the creation and delivery of customer & shareholder value They must be managed to maximize customer value & financial returns “Non-core” processes Perform supportive or management functions They must be managed to minimize risks & control costs Asset Types Operating processes Create or deliver value for which customers are willing to pay Support processes Facilitate or assist the execution of operating or management processes Management processes Measure, control quality & assure performance outcomes Help make decisions, control variance & resolve problems Control processes (a subclass of management processes) Adjust or correct a business process or its outcome, when performance measures vary, exceed acceptable thresholds or when a new opportunity is presented Exception control processes affect known and/or anticipated events Resolution control processes affect unknown and/or anticipated events 7

8 What is BPM & Why Is It Important?
Popular beliefs perceive BPM as… An enterprise-wide methodology A systematic approach to managing and improving specific processes A cost cutting or productivity initiative A set of new technologies BPM is a managerial discipline focused on execution, performance & outcomes Provides structure, methods & tools to align the workforce & IT with business strategy, helping organizations to execute & adapt while consistently achieving performance measures & business objectives It is the “art & science” of how an organization does things (end-to-end) and how it can continuously do them better Why is it important? Because HOW business gets done is just as important as WHAT gets done – how you do things creates Competitive Advantage Business processes define your “value chain”, they should be treated as assets and assembled “…in the best possible way!” 8

9 Competitive Advantage
“A systematic way of examining all the activities a firm performs and how they interact is necessary for analyzing the source of competitive advantage.” “The value chain disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation.” Source: Michael Porter, Competitive Advantage, 1985 9

10 Competitive Advantage
Competitive advantage is created when a firm integrates the activities of its value chain in “the best possible way.” Source: Michael Porter, Competitive Advantage, 1985 10

11 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 11

12 Technology Trends Software-as-a-Service Cloud
Services-Oriented Architecture Software-as-a-Service Cloud Internet – Open Source – XML Business Process Modeling – Rules – Business Intelligence ERP Dept. App. APIs Workflow ERP ETL EAI Dept. App. APIs Workflow Workflow Dept. App. Dept. App. APIs 12

13 Market Trends Notable acquisitions in the last 5 years (partial list)…
Platforms acquiring building blocks & migrating to “process-centric” services-oriented architecture …………… Lombardi (BPM Suite) …………….. iLog (Rules Engine) …………….. Aptsoft (Event Management) …………….. Cognos (Business Intelligence) …………….. TeleLogic (BP & App, Dev. Software) …………….. Filenet (Workflow) ……………….….. Proforma (BPA Software) ……………….….. Metastorm (BPA & BPMS) …………….…….. BEA (App. Dev. & BPMS) …………………... Chordiant (CRM / BPM) …………………... Savvion (BPMS) ……………….….. Business Objects (Business Intelligence) ……………….….. IDS Scheer (BPA) ……………….….. webMethods (App. Dev & BPM) ……………….….. Spotfire (Business Intelligence) …………………... Nimbus (Process Documentation) IBM IBMMetastorm Open Text Oracle Pega Progress Software SAP Software AG Tibco IBM …………...… Software AG ……………... Tibco ……………...

14 Gartner Magic Quadrant Gartner Magic Quadrant
BPM Vendor Landscape Gartner Magic Quadrant BPA Tools, 2008 Gartner Magic Quadrant BPM Suites, 2010 Source: Gartner Magic Quadrant for BPA Tools 2008 Source: Gartner Magic Quadrant for BPM Suites 2010 14

15 BPM Market Observations
Market Size & Growth Estimates for BPM software range between $2 to $5 billion for 2011 Annual growth rate estimates seem to find consensus around 15% Prognostications IBM reports that inefficient business processes cost Fortune 500 companies more than $480 billion dollars a year and public sector organizations as much as $1.3 trillion. Gartner, a leading IT research and advisory firm, reports that over 78% of business improvement projects yield internal rates of return of 15% or more. AIIM, the Association for Imaging and Information Management, reports that half of organizations practicing business process management realize investment payback within 18 months and over 70% realize payback within 2 years.

16 Benefits Sought Source: Forrester Software Survey, Q4 2009 16

17 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 17

18 How Industry Leaders View BPM
BPM is NOT… An isolated initiative, an IT project Just about processes BPM is… A managerial discipline that treats processes as strategic assets integral to creating & delivering customer & shareholder value, & sustaining competitive advantage A means to structure resources (people, business processes & IT) to make each more effective, adaptable & valuable to consistently achieve results while adapting to change Practice Business Process Portfolio Management Core & non-core processes managed as a portfolio of strategic assets Maximize customer value & financial returns Minimize risks & costs Industry leaders are highly effective at creating value & linking strategy with execution 18

19 To Create Value Leaders Ask…
How do we compete? (Competitive Strategy & Competitive Advantage) Define value Determine a defendable strategy through analysis (customer, market, industry, competitor) How do we focus operations? (The Discipline of Market Leaders) Pick an operating model (core processes, IT, organization, culture, mgmt. systems) Operational Excellence Product Leadership Customer Intimacy How do we manage performance? (Balanced Scorecard) Develop a performance measurement system (outcome measures & performance drivers) Financial perspective Customer perspective Internal business process perspective Learning & growth perspective How do we adapt? (The Adaptive Enterprise) Sense-and-respond techniques Adaptive Loop (sense, interpret, decide, act) Modular Organization (assemble cross-functional as needed) Commitment Management (record & track) The result: a strategic plan A process – not an event 19

20 To Achieve Results Leaders Ask…
How do we instill the correct organizational behavior? Empower & motivate Emphasize workforce collaboration (focused on end-to-end execution) Establish collaborative objectives (focused on transformational & end results) Managing responsibility & accountability (reinforcing strategy) How do we structure processes for strategic execution? Practice “Process-centric design” Document, model, simulate & analyze core processes (not just map) Measure performance through “KPI Sets” Design “Control Processes” (to manage anticipated & unanticipated events) Event management (techniques to sense change & execute control processes) How do we structure technology for strategic execution? Assess IT readiness for process change (First!, or at least early) Evolve toward a “Process-Centric” design & IT architecture How do we align strategy & resources for execution? Reveal cause-and-effect relationships across resources (Derivative Analysis) The result: an operating plan A process – not an event 20

21 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 21

22 Motivations & Approaches for BPM
A Problem Strategy & KPI Set Process Team Process Selection Methodology Modeling & Simulation Implementation & Control BPM Business Process Portfolio Management A Strategic Initiative Continuous Transformation Strategy & KPI Set(s) Program & BPM Team(s) Process Set Methodology(ies?), PMO? Redesigns & New Designs Modeling & Simulations Execute, Manage & Control Strategy & KPI Sets Center of Excellence (BPM Teams) Process Portfolio & Audit Multiple Methodologies, PMO Multiple Tools Governance Continuous Improvement Source: BPMethods

23 How To Audit Process Maturity
To achieve high-performance organizations must develop their enterprise capabilities & establish process enablers Enterprise capabilities Leadership: Senior executives who support the creation of processes. Culture: The values of customer focus, teamwork, personal accountability, and a willingness to change. Expertise: Skills in, and methodology for, process redesign. Governance: Mechanisms for managing complex projects and change initiatives. Process enablers Design: The comprehensiveness of the specification of how the process is to be executed. Performers: The people who execute the process, particularly in terms of their skills and knowledge. Owner: A senior executive who has responsibility for the process and its results. Infrastructure: Information and management systems that support the process. Metrics: The measures the company uses to track the process’s performance. Source: Michael Hammer, Harvard Business School Publishing

24 How To Inventory Processes
Select a process classification model APQC-PCF, SCC-SCOR, VCG-VRM, eTOM, ACORD, Strategy Map, custom, others… APQC’s PCF VCG VRM SCC SCOR Other or Custom 24

25 Source: APQC & BPMethods
How To Inventory Processes Conduct a Business Process Inventory Use the chosen classification model, take “stock” of processes Source: APQC & BPMethods

26 How To Evaluate Process Quality
Create evaluation criteria Used by management teams for qualitative evaluation, example criteria… CRITERIA DESCRIPTION (Qualitative Assessment) 1. Value Core, Secondary, Low, Outsourced, Not Applicable 2. Asset type Operating, Support, Management, Exception Control, Resolution Control 3. Use Routine, Periodic, Occasional, Not Used, Unknown, New 4. Complexity Simple, Low, Moderate, Complex, Highly Complex 5. Discipline Formal, Informal, Rely on 3rd Party 6. Automation Manual, Semi-automated, Fully-automated, Rely on 3rd Party 7. Documentation Detailed, Satisfactory, Unsatisfactory, Undocumented, Rely on 3rd Party 8. Training Sufficient, Insufficient, Not Available, Not Necessary, Rely on 3rd Party 9. Effectiveness Very Effective, Effective, Adequate, Not Very Effective, Not At All Effective 10. Efficiency Very Efficient, Efficient, Adequate, Not Very Efficient, Not At All Efficient Action Improve, Consolidate, Eliminate, Benchmark, Re-evaluate, Design, Outsource, Insource, None Timing Immediately, Near-Term, Long-Term, Unspecified Source: BPMethods

27 How To Manage Processes as Assets
Use Business Process Portfolio Management Focuses on how to improve the returns from diverse business processes that comprise an organization's value chain Create A Business Process Portfolio A classification system & common data repository used to inventory, document & manage detailed information & process lifecycles Database Document

28 How To Select Projects Problematic, strategic, transformational
What needs to be done? Speed Accuracy Growth Market Share Profit Satisfaction Acquisition Retention Churn Margins Efficiencies Costs Quality Response Innovation Revenue 28

29 How To Select Projects Consider type & complexity Transactional
Transformational Decision Making Source: BPMethods 29 29

30 How To Select Projects Use a Complexity Assessment Matrix
Modify as required Source: BPMethods

31 How To Document Processes
Identify process components What governs execution & value creation Process Design “How” What is needed to begin What value is created What is needed to execute & create value

32 How To Document Details
Name, classification, descriptive information, contacts Evaluation criteria, comments, action status Execution (high-level step-by-step activities/tasks) Best practices Associated policies & rules, controls, processes, systems Resources Performance measures (KPIs) Collaborative objectives Risks Related information & documents Process lifecycle management Communications plan Messages/changes to be communicated History

33 How To Measure Performance
Select KPI Set(s) (Balanced Scorecard meets Six Sigma) Source: BPMethods

34 How To Assess In-Place Systems
IT Readiness Assessment Helps business professionals ask the right questions of IT professionals Reveals capabilities & limitations of in-place IT systems Calculates the time, cost, effort & resources required to adapt IT systems to support process change Acquires data for ROI analysis of improvement projects Tests feasibility & accurately determines financial returns Helps justify IT investment if needed 34

35 How To Improve Processes
Select a methodology ISO, Six Sigma, Lean, ITIL, others… The PRACTICE MethodTM for Business Process Analysis & Improvement Phase 1: Plan (What do you want to do?) Business strategy review determines what strategic initiatives are to be pursued and/or what problems need to be solved Calls out how results will be measured, and who will be held accountable and responsible for outcomes Phase 2: Research (What are you doing now?) A Process Improvement Team researches current environment and what is needed to achieve the Phase 1 objectives A Project is created, in-place IT systems are evaluated for adaptability; a process analysis tool is selected (if needed) As-Is (or clean slate) process mapping and measuring begins Phase 3: Analyze, Correct & Test (How do you do what you want to do?) As-Is (or clean slate) process is modeled to measure actual (or assumed) performance & to find waste & inefficiency Specialized elicitation techniques are used to generate ideas for improvement (innovation) Process alternatives are tested and refined resulting in a final To-Be design Upon completion of return on investment (ROI) analysis & Acceptance Agreement a Next Step decision is made Phase 4: Implement & Control (Do it!) Implementation Plan, training, IT systems are adapted/augmented, new process is deployed A Quality Control Plan assure results are realized, consistent & repeatable Phase 5: Extend (Keep doing it better!) Processes monitored within a Strategic Planning & Review timetable to form a Continuous Process Improvement Program

36 How To Improve Processes
Understand the organization Organization charts, RACI Matrix, Stakeholder Classification Matrix High Low Potential for cooperation Low High Potential to Impact 36

37 How To Improve Processes
Skills Project management Methodology Scoping Team building Work breakdown structure Communications Risk management Execution Implementation Change management Quality control Business analysis Requirements gathering Artifact selection (diagrams, models, functional requirements, reports) Elicitation techniques (observation, interviews, workshops, use cases) Measurement & analysis Design and/or redesign Test 37

38 Source: Corporate Education Group
How To Improve Processes Select artifact set, elicitation techniques & requirements management tools Source: Corporate Education Group

39 How To Improve Processes
Select BPM tools If needed or desired Business Process Analyses (BPA) software Business Process Management Suites (BPMS) 39

40 How To Improve Processes
Process-centric design/redesign must include event management & control processes that can… Capture/manage roles Capture KPI Set(s), policies, business rules Capture performance threshold(s) Sense variation (events and/or opportunities) Includes trends prior to exceeding threshold Alert relevant systems & stakeholders (role based) Assemble/aggregate information From distributed disparate sources, internal & external Interpret information (exception & resolution [case] management) Based on strategic objectives, performance measures & rules of engagement Negotiate & record commitments Based on roles, empowerment, motivation, accountability, responsibility Disseminate information To all relevant systems & stakeholders Track & report commitments & results against KPI Set(s) & strategic objectives Core processes must have corresponding control processes Exception & resolution controls

41 Process-Centric IT Building Blocks
Must be capable of integrating sufficiently to support process-centric design Source: BPMethods

42 How To Manage Change Recognize barriers How to prevail
Turf battles by functional managers Workforce resistance to change No one in charge or in authority to push redesign Lack of incentives from department or oversight authority Inability to perform “out of the box” thinking Resource constraints Uncommitted top management Skepticism about “yet another effort” How to prevail People support what they create Start slowly, create involvement People have the right to their opinions Honor this, listen, let them know the team is aware & prepared to act When people hear “the process is broken” they may think “they’re broken” Make it perfectly clear, the process is the problem, not them! Continuous communication Judge managerial involvement (Is your time invested or wasted?) 42 42

43 Awareness Desire Knowledge Ability Reinforcement
How To Manage Change Technique: ADKAR Change Management Model Focuses on the individual, requires instilling & managing five key goals: Awareness of the need to change Desire to participate and support the change Knowledge of how to change (and what the change looks like) Ability to implement the change on a day-to-day basis Reinforcement to keep the change in place Facilitates workforce collaboration through collaborative objectives Awareness Desire Knowledge Ability Reinforcement Extend Implement & Control Analyze, Correct, Test Research Plan Methodology Successful Change Sources: Jeff Hiatt, Prosci Change Management, Change Management Learning Center, BPMethods 43 43

44 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 44

45 A BPM Practitioner: Sloan Valve
Source: ABPMP Chicago Speaker Series - The Process Enterprise: How Process Transformation Changes the Business. Tom Coleman  Chief Information and Process Officer for Sloan Valve Company, 10/2009 

46 A BPM Practitioner: Sloan Valve
Source: ABPMP Chicago Speaker Series - The Process Enterprise: How Process Transformation Changes the Business. Tom Coleman  Chief Information and Process Officer for Sloan Valve Company, 10/2009  46 46

47 Agenda What is BPM & why is it important? Market & technology trends
How industry leaders view BPM Questions they ask & the best practices they use How to manage, analyze and change business processes Techniques, tools, methods, technologies & practices A BPM Practitioner Summary Conclusion 47

48 Summary Conclusion BPM is an emerging managerial discipline focused on execution, performance & results Processes need to be managed as a portfolio of assets If not, they will become liabilities Technology is trending away from transaction-oriented applications to process-centric systems Process enablement is becoming de facto design by IT vendors Industry leaders view BPM as a way to achieve competitive advantage By uniquely creating & delivering customer & shareholder value By aligning people, process & technology By consistently achieving performance measures while adapting to change 48

49 Summary Conclusion Follow BPM “How To” techniques Sustain results
Audit process maturity Understand the organization Select a process classification model Conduct a business process inventory Evaluate process against qualitative criteria Use portfolio management techniques Create a business process portfolio Document processes, polices & rules Select KPI Sets Select improvement projects based on need, priority & complexity Select a methodology Assemble BPM skills, artifacts, elicitation techniques & tools Follow process-centric design/redesign principles & IT architectural constructs Recognize barriers and resistance, manage change Sustain results Recognize & overcome barriers Develop a Continuous Process Improvement Program 49

50 Coming March, 2012


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