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MBA 8220: Adopting a Process Perspective

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Presentation on theme: "MBA 8220: Adopting a Process Perspective"— Presentation transcript:

1 MBA 8220: Adopting a Process Perspective
Mike Gallivan Lars Mathiassen Richard Welke

2 Agenda The context The approach The tool box

3 Topic one The context

4 Scientific management Diffusion of innovation
The roots of BPI The quality movement Scientific management Work design Diffusion of innovation Increasing change pace 1. Inspections 2. Continuous improvement 3. Process innovation Business Process Innovation Thomas H. Davenport: Origins of Process Innovation (Appendix B to: Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press, 1992).

5 The decade of BPI Synonyms: agile business, self-service enterprise, virtual organization, process-focused … Definition: Business process fusion is the transformation of business activities that is achieved by integrating previously autonomous business processes to create a new scope of management capabilities. Gartner October 2003

6 The drivers behind BPI BPI Cost pressures, efficiency
Regulatory pressures Cost pressures, efficiency Need for agility, flexibility Finance/accounting Finance/accounting Finance/accounting Finance/accounting Process improvement Process improvement Process improvement Process improvement Trade/gov t policy (Sarbanes, BASEL II) I/T development I/T development I/T development I/T development Variance reduction Variance reduction Variance reduction Variance reduction Trade/gov Trade/gov Trade/gov Trade/gov t policy t policy t policy t policy BP Standards (Rosetta, ebXML, w3c, Oasis, OMG, ..) BP Standards BP Standards BP Standards BP Standards Professional org s (Quality, Lean, IEEE, ) Professional org Professional org Professional org Professional org s s s s (Sarbanes, BASEL II) (Sarbanes, BASEL II) (Sarbanes, BASEL II) (Sarbanes, BASEL II) (Rosetta, ebXML, (Rosetta, ebXML, (Rosetta, ebXML, (Rosetta, ebXML, (Quality, Lean, IEEE, (Quality, Lean, IEEE, (Quality, Lean, IEEE, (Quality, Lean, IEEE, w3c, Oasis, OMG, ..) w3c, Oasis, OMG, ..) w3c, Oasis, OMG, ..) w3c, Oasis, OMG, ..) ) ) ) ) Technology platforms Technology platforms Technology platforms Technology platforms CxO CxO CxO CxO best practice best practice best practice best practice Platform Vendors (SAP, Oracle, IBM, MS, ) Platform Vendors Platform Vendors Platform Vendors Platform Vendors BPI Industry leaders (GE, GM, Dell, Wal - Mart, Ashland, ..) Industry leaders Industry leaders Industry leaders Industry leaders (SAP, Oracle, IBM, (SAP, Oracle, IBM, (SAP, Oracle, IBM, (SAP, Oracle, IBM, (GE, GM, Dell, Wal (GE, GM, Dell, Wal (GE, GM, Dell, Wal (GE, GM, Dell, Wal - - - - MS, MS, MS, MS, ) ) ) ) Mart, Ashland, ..) Mart, Ashland, ..) Mart, Ashland, ..) Mart, Ashland, ..) Thought leaders (Gartner, Meta, HBR ) CxO CxO CxO CxO strategy strategy strategy strategy Consultancies Consultancies Consultancies Consultancies Thought leaders Thought leaders Thought leaders Thought leaders (Accenture, CSC, (Accenture, CSC, (Accenture, CSC, (Accenture, CSC, (Gartner, Meta, (Gartner, Meta, (Gartner, Meta, (Gartner, Meta, EDS, EDS, EDS, EDS, ) ) ) ) Academics Academics Academics Academics J J J J HBR HBR HBR HBR ) ) ) ) Maintaining technological currency Adopting industry “best practices”

7 BPI starts with customer needs
Wants it now Anytime, anyplace 24 x 7 x 365 Expects you to know them Personalized interaction, tailored information Product/service tailored to changing needs Mass customization (market of one) End-to-end need fulfillment in one-stop Understand the full need Organize to fulfill it, service it, replace it With minimum total costs to consumer Minimize client-experienced transaction costs Across multiple channels Bricks, clicks, mobile, face-to-face, etc.

8 1st – Nth Tier Operations Suppliers
BPI covers end-to-end Outsourcing Partners 1st – Nth Tier Operations Suppliers 1st – Nth Tier Customers The Business VALUE THREAD: An End-to-End Business Process Follow the then-what-chain Operating Resource Suppliers

9 BPI is multi-disciplinary
Techno- logy Process Digitization 100% Automated Semi - Automated Market Channel Interactions Manual 0% Automated Business partners Process Integration Uni-Channel Bi-Channel Multi – Channel Department Single Business - Cross Unit Enterprise Source: Kalakota and Robinson, Services Blueprint: Roadmap for Execution, Addison-Wesley (2003) Inter - Enterprise

10 BPI has complex solution space
Business Process Innovation BP representation BP modeling and assessment BP normative modeling BP normative design BP best practices and metrics Platform independent specs BP implementation platforms Competing platforms BP substitution BP outsourcing BP monitoring (BAM) BP monitoring & verification BP verification BP organization realignment Organizational restructuring

11 Topic two The approach

12 Defining BP Definitions:
(Smith & Fingar 2003): “The complete, dynamically coordinated set of collaborative and transactional activities that deliver value to customers.” (Work Flow Management Coalition): “A collection of interrelated works tasks, initiated in response to an event, that achieves a specific result for the customer of the process.” Characteristics Has well-defined products and customers Achieves defined customer-related business goals Involves several activities that collectively achieve the goals Crosses functional and/or organizational boundaries Large/complex involving flow of materials, information, value & commitments Very dynamic, responding to demands from customers to changing needs Widely distributed and customized across boundaries within/between BU’s Long running (e.g. cash to order may run for months or years) Dependent on human intelligence & judgment; mix of structured & unstructured tasks Difficult to make visible; often undocumented and implicit Smith & Fingar 2003

13 Identifying BP’s Some high-level business processes:
Supply chain management, demand chain management, product/service design, customer service, contract management, etc. Made up of a myriad of lower-level processes: Account management Advance planning & schedule Advertising Assembly Asset management Benefits administration Branch operations Budget control Build to order Call center service Capacity reservation Capital expenditures Check request processing Collateral fulfillment Collections Commissions processing Compensation Component fabrication Corporate communications Credit request/authorization Customer acquisition Customer inquiry Customer requirements Customer self-service Customer/product profitability Demand planning Distribution/VAR management Facilities management Financial planning Financial close/consolidation Hiring/orientation Installation management Integrated logistics Internal audit Inventory management Investor relations Invoicing IT service management Knowledge management Manufacturing Manuf. Capability development Market research & analysis Market test Materials procurement Materials storage Order dispatch & fulfillment Order management Organizational learning Payroll processing Performance management Physical inventory Planning & resource allocation Post-sales service Problem resolution management Process design Procurement Product data management Product design & development Product/brand management Product scheduling Program management Promotions Property tracking/accounting Proposal preparation Publicity management Real estate management Recruitment Returns & depot repair Returns management Quality control Sales channel management Sales commission planning Sales cycle management Sales planning Service agreement management Service fulfillment Service provisioning Shipping Zero-based budgeting

14 Maneuvering BP levels The visibility challenge Perspective Easy to Do
Focal Point Business With Perspective Customer channel strategy - Target to Engage Services - Engage to Close Marketing - Transact to Fulfill Involved - Retain to Sell - Request to Resolve Composite Processes - Sales Order Management Management The visibility challenge Business - Configuration - Payment and Billing Process - Problem Management Management - Returns Management - Role - Based Personalization, etc. Underlying business processes Technology - Customer Relationship Management Affected - Enterprise Resource Planning Enterprise - Order Fulfillment Applications - Financials Payment and Billing - Returns Management Technology Infrastructure

15 Designing BPI approach
Motivations (Why?) What motivates the study? What are the key performance indicators (KPI’s)? Who’s are the sponsors? What’s to be the outcome (s)? Approach Methods (How?) What steps to follow? In which sequence? Project discipline? Models (What?) Which aspects to focus on? How to capture and represent? How do the models inter-relate? People (Who?) Who are the stakeholders? E.g. customers, owners, analysts, designers, users. What roles do they play? How are they engaged?

16 Some motivations Why discover (go instead directly to design)?
Model/analyze existing processes Find weaknesses; understand interactions Establish common understanding/vocabulary Have a baseline for comparison to “should be” Invent new service and process What performance indicators? As-is; should-be Normative models Who is the (assumed) sponsor?

17 Some method options Initialization Determine sponsors, purpose, scope, deliverables Discover/Analyze Discover existing (as-is) process Design/Develop Decide methods, tools, teams, metrics, schedules Develop new (should-be) process alternative Implement/Deploy Confirm results with users, SME’s and owners Elaborate changed roles, structures, applications Assess impact on users, owners and other processes Work with HR, managers, clients, users to transition to new process Bottom-up, top-down, middle-out Free-form vs. structured elicitation Centralized vs. decentralized Models & their associated documentation (elaborated and evolved as the project progresses)

18 Some model types Model types: Views on models
Process flow diagrams (PFD’s) Show the flow of control from one activity to another Activities/tasks as blocks; control flow as connections Information flow diagrams Show the flow of information from one activity to another Generally superimposed on PFD’s Resource diagrams Inter-relationship among resources used by an activity, e.g. Organization (have) Units (staffed by) Employees (assigned) Roles (conduct) Activities Fixed assets (consumed by)  Activities Views on models Hierarchical (e.g. organization chart) End-to-end (process diagram) Swimlane (activities placed in resource rows) Static (diagrams) vs. dynamic (simulations)

19 Topic three The tool box

20 The BP triangle Customers Products & Services Environment Strategies
Steven Alter (2002). Substitute: - Work system  Business process - Business process  Work practices 1. Create a snapshot of the business process 2. Find problems and opportunities for improvement 3. Explore effects of proposed process changes Customers Products & Services Environment Strategies Work Practices Participants Information Technology Infrastructure

21 BP models Abstraction Gaps Business Problem Specification Model (BPSM)
BP Repository Representations & mappings Created by business owners to describe business problem Computation Independent Business Model (CIBM) Created by business analysts to describe business problem - solution Platform Independent Component Model (PICM) Abstraction Gaps Created by designer-architects to describe solution architecture Platform Specific Model (PSM) Created by developer-tester to implement solution Users Code

22 Example swimlane model
Organization structure Source: Proforma Corporation

23 BP normative models What are they? What is their value?
A process model constructed from a predefined set of alternatives Prescribed view of how the process should be seen and behave What is their value? Simplification of modeling (constrained choice vs. green field) Standardization enables Exchange of models across units & organizations Description of common problems and metrics Exchange of industry norms (benchmarking) and best practices

24 Supply chain normative model
Plan P1: Plan Supply Chain P2: Plan Source P3: Plan Make P4: Plan Deliver P5: Plan Returns Source Make Deliver SI: Source Stocked Products MI: Make-to- Stock DI: Deliver Stocked Products S2: Source MTO Products M2: Make-to- Order D2: Deliver MTO Products S3: Source ETO Products M3: Engineer-to- Order D3: Deliver ETO Products Return Source Return Delivery SCOR (Supply Chain Operations Reference model) RSI: Return Defective Products RDI: Return Defective Product RS2: Return MRO Product RD2: Return MRO Product RS3: Return Excess Product Enable RD3: Return Excess Product

25 Example of SCOR model Simple thread diagram

26 Schedule Product Deliveries
SCOR payoffs 1. Metrics 2. Industry benchmarking S1. Source Stocked Product Schedule Product Deliveries S1.1 Receive Product S1.2 Verify Product S1.3 Transfer Product S1.4 Authorize Supplier Payment S1.5 3. Prescribed level 3 processes


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