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