business process management today and tomorrow · business process traditions business management...
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©2008 BPTrends Associates. All Rights Reserved.
BPM 2008
Business Process ManagementToday and Tomorrow
Paul HarmonExecutive EditorBusiness Process Trends
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Agenda
• Yesterday– Independent process traditions, each with
their own theories and practices
• Today
• Tomorrow
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Business Process Traditions
Business Management
Information Technology
Business Process
Management
BPMS
Ford – Contentious Production LineTaylor – Scientific Management
WW II –Production First Computers
Quality Control, Six Sigma, Lean
InternetOutsourcing1900 2000
Work Simplification
2008
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The Simplification/Quality Tradition
Main Focus: Continuous Process ImprovementGurus: Shewhart, Demings, Juran, Ohno, WomackOrganizations: ASQ, ISSSP
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Six Sigma at the Process Level: DMAIC
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LEAN Flow Kaizen: Value-Stream Mapping
An Enterprise LevelLEAN Modeling Technique
Start/End
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Capability Maturity Model Integrated (CMMI)
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The Process Management Tradition
Main Focus: Improvement of Organization PerformanceGurus: Rummler, Porter, Heskett, Kaplan & NortonOrganizations: HBR, ISPI, SCC
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The Organization and the Value Chain
Production Marketing Sales & SupportFinanceEngineering
Management
Customers
Promote & Sell Product
Suppliers
new need
identifiednew product design
product available
promotions
order
product deliveredmaterials
Product Value Chain
Research & CreateNew Product
Make & Deliver Productsorder
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Rummler’s Performance Model
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Rummler’s Process Management Model
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Michael Porter’s Value Chain Model
From Michael Porter, Competitive Advantage, Harvard, 1985
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Kaplan and Norton’s Balanced Scorecard
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Aligning Balanced Scorecards
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Dividing Up the Scorecard Between Function and Process
Balanced Business Scorecard
Customer Perspective
Financial Perspective
Goals
Survive
Succeed
Prosper
Measures
Cash flow
Quarterly sales growth & operating income by division
Increased market share and ROE
Goals
New products
Response supply
Preferred supplier
Customer partnership
Measures
Percent of sales from new products, Percent of sales from proprietary products
On-time delivery (defined by customer)
Share of key accounts' purchases, Ranking by key accounts
Number of cooperative engineering efforts
Innovation & Learning Perspective
Goals
Technology leadership
Manufacturing learning
Product focus
Time to market
Measures
Time to develop next generation
Process time to maturity
Percent of products that equal 80% sales
New product interdiction vs. competition
Internal - Process Perspective
Goals
Technology capability
Manufacturing experience
Design productivity
New product introduction
Measures
Manufacturing geometry vs. competition
Cycle time, Unit cost, Yield
Silicon efficiency, Engineering efficiency
Actual introduction schedule vs. plan
Goal – Measure most likely assigned to Process Manager Goal – Measure most likely assigned to Functional Manager
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Functional vs. Process Measures
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Information Technology Tradition
Main Focus: Process AutomationGurus: Martin, Scheer, Hammer, Smith & Fingar...Organizations: ISO, WfMC, IEEE, OMG, IIBA, Gartner…
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Agenda
• Yesterday• Today Some Interesting Developments
– Frameworks– Value Chains vs Networks– ERP and BPMS– The Uses of BPMS– BPMN and Business Rules– Modeling Customer Processes
• Tomorrow
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Business Process Traditions
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SCOR’s Business Process Framework
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SCOR Benchmarks Provide Instant ROI
50%
$30M Revenue
$30M Indirect Cost
35 days
97 days
0%
63%
Supply Chain SCORcard Industry Benchmarks
Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements
Delivery Performanceto Commit Date 85% 90% 95%
Fill Rates 94% 96% 98%
EX
TER
NA
L
Supply ChainReliability
Perfect OrderFulfillment 80% 85% 90%
Order FulfillmentLead Times 7 days 5 days 3 days
Flexibility
Responsiveness
Production Flexibility 30 days 25 days 20 days
Total SCMManagement Cost 19% 13% 8% 3%
INTE
RN
AL
Cost Warranty Cost NA NA NA NA NA
Value Added EmployeeProductivity NA $156K $306K $460K NA
Inventory Days ofSupply 119 days 55 days 38 days 22 days NA
Assets Cash-to-Cash CycleTime 196 days 80 days 46 days 28 days
Net Asset Turns(Working Capital) 2.2 turns 8 turns 12 turns 19 turns NA
Supply ChainResponse Time 82 days 55 days 13 days
45 days
$7 M Capital Charge
Key enabler to cost andasset improvements
$30M Revenue
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Value Chain vs. Level 1 Processes (Value Nets)
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Value Chains or Common Processes
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Value Chains vs. Common Processes
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ERP Reality: Multiple, Customized ERP Instances
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Standardizing Processes to Standardize Instances
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The Future Promise: ERP Modules Managed by BPMS
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Computing Domains
CEO
SVP SVP SVP
VP VPVP VP
Mang.
Software for Various Special Projects
Process Modeling
Project Planning
Software Development
e.g. ERP, Tailored Applications
e.g. Spreadsheets, Email, Groupware, Decision
Support Systems
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Two Ways of Thinking About BPMS
CEO
SVP SVP SVP
VP VPVP VP
Mang.
Software for Various Special Projects
Process Modeling
Project Planning
Software Development
e.g. ERP, Tailored Applications
e.g. Spreadsheets, Email, Groupware, Decision
Support Systems
BPMS IA BPMS Application created to automate a process
BPMS IIA BPMS Application created to help a business manager manage
a process
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BPMN Diagrams
Fulfill Online Book Order
Customer
Company Web Portal
Order System
Exceptions Clerk
Receive Order
Ship Order
Packaging Fill Order
Shipping
Review Order order accepted Send
workorder to shipping
Place Order
order rejected
order incomplete: Ask customer for more information
Recieve Books
Close Order
books
Revise Order
order requires special processing
Re-Review Order
Credit Card Approval Center
Review-Approve Charge
credit card approval
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The Tax Return Solution
• Rule 1
If the received date of the tax return is less than 6 months in the past, and
A claims a payment not received, or
A credit elect for a tax return from the same taxpayer for a previous year has not been posted,
Then the tax return for a given year must be held.
Submit Tax Return
Process Tax Return
Customer
Tax Agency Evaluate Tax Return
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Modeling Customer Processes
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Agenda
• Yesterday
• Today
• Tomorrow– A continued interest in processes, and,
perhaps an integrated process management practice at the heart of the organization
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Why Process?
• Process describes how we do work in our organizations
• Change forces organizations to change how they do work
• The near future will be unrelenting change– New technologies
– New customer demands
– New markets throughout the world
– Overcapacity, intense global competition, acquisitions
– Outsourcing and specialization
– Greening of Process
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Product/Technology Lifecycles
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What’s Involved in BPM?
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Trying to Find a Common Language
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Some Major Types of Process Problems
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Another View of the Three Perspectives
MANAGEMENT
QUALITY
Emphasis on performance,on measurement, process
ownership, alignment with strategy, with customer satisfaction,
shareholders, and competitive advantage
Emphasis on product quality and
consistency, on continuous process improvement, and
on creating a culture that cares
about process
Emphasis on using computer systems to automate processes, on reengineering to
make the best use of new computing
techniques and on analytics IDS Scheer
M. Hammer
G Rummler M Porter
E Deming
J Juran
Kaplan & NortonHaskett
T Davenport
S Shingo
T Ohno
J Womack
FW TaylorBusiness Rules
Balanced Scorecard
Capability Maturity Model
ASQ, ISSSP
HBS, ISPI, SCC
ReEngineering
OR Frameworks (SCOR)
WfMC, IIBA, OMG, BPMI, Gartner
Lean Six Sigma
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