Business Process Management

Business Process Difference in BPM Vs ERP (SAP)(ERP supports ‘low-level’ processes in APQC Process hierarchy)

Aug 2012

Business Process Management

Agenda

Process Hierarchy defined by APQC (L1 - L4), and SAP (L1 – L6)

Business Process Levels in BPM versus ERP (SAP)

BPM orchestrates processes across systems, business units and value chain partners

What areas BPM delivers most value – an Analyst view

Key driver / criteria used for identifying processes for BPM

Common business problems in ERP / SAP

Business Process Management

APQC Process Classification Framework (PCF)Process Levels in APQC PCF

The APQC PCF is structured into 4 Levels: -1. Category: The highest level of process hierarchy in the enterprise, e.g. “Manage Order-to-Cash” or “Manage Product Sales / Customer Service”. -2. Process Group: Next level of processes as a group of processes, e.g. “Manage Multi-channel Order Capture” or “Develop Sales Strategy”. -3. Process: A series of activities converting inputs into outcomes, e.g. “Perform Order Capture (per channel)” or “Develop Sales Forecast”. -4. Activity: Indicates key tasks performed when executing a process, e.g. “Record Order in System(s)” or “Assign Sales Quota to team”.

Process Levels - APQC Process Classification Framework(Source: APQC – American Productivity and Quality Center)

APQC’s Process Classification Framework (PCF) first created in 1992 is a business taxonomy available as a generic cross-industry framework as well as 11-industry specific versions.

Process Hierarchy is a way of modeling large and complex processes through decomposition into lower level processes and detailed steps to show information at different granular levels.

Business Process Management

SAP Process Hierarchy

Business Process is the level that aggregates business oriented functions or steps to a unit that is meaningful and comprehensive in the sense that the steps or functions incorporated are essential to fulfill a business mission related task

A Process Step is typically executed by one person and documented using an appropriate representation of the object (paper, data in IT-system,...).

Activities are the lowest granularity for business process modeling and reflect the single actions an user ore a system performs in order to fulfill the Process Step. I.e. filling in the fields of a special mask consists of activities as each field has to be filled to end the step.

Source: SAPSource: SAP

Business Process Management

Business Processes Level in BPM Versus ERP / SAP

Web Order Capture Process

B2B Order Capture Process

CSR Order Capture Process

Mobile Order (Sales Rep) Capture Process

Web Order Capture Process

B2B Order Capture Process

CSR Order Capture Process

Multi-Channel Order Capture Example (Order-to-Cash Process Category)

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ivity

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Level-4 (APQC) / Level-5&6 in SAP

BPM enables, supports and manages higher level processes (Level 1 – 3)Some Customers implement only Level-2 & Level-3 and some aspects of Level-1 in BPM. If no ERP or app exists, BPM can be used for Level-4 process

ERP / SAP typically supports Level-4 and lower processes (mapped to one or more transactions);Some Customers implement Level-3 process in ERP / SAP through heavy customization (not a best-practice)

Level-2 & 3

Business Process Management

BPM extends standardized ERP processes across your enterprise for wider reuse to increase ROI

Mobile Order (Sales Rep) Capture Process

Web-based Order Capture Process

B2B Order Capture Process

CSR Order Capture Process

ERPCRM

Leverage Standardized, Out of the box SAP Processes (typically, Level-4 and lower); and minimize customization

Unique, Differentiating Processes (Level - 2 & 3) running in IBM BPM gives significant competitive edge

Adapt & Extend Integrate

- Easier to modify and better process change management- Quickly introduce business or compliance controls- Business rules, dynamically modify to meet business needs- End-to-End visibility and KPIs help make better decisions

Multi-Channel Order Capture Example (Order-to-Cash Process)

ERP

Business Process Management

What Areas BPM Delivers Most Value?

Source: MWD Advisors

Want Competitive Advantage, Make BPM a Core Competency - Gartner

Four areas in an organization where BPM adds value according to MWD Advisors, an European IT advisory firm based in the UK.

Business Process Management

Why - To BPM or Not to BPM ?Key Criteria that drive the need for executing business processes in BPM Systems

Its about importance to business and delivering value consistently

Its about need for flexibility and agility to respond to market dynamics

Its about abstraction from IT systems for easy and quick change

Its about coordinating work across multiple teams, organizational silos and value chain

Its about Compliance, Control, Visibility and Management

Business Process Management

Common Business Challenges faced with SAP / ERP

No Consistency in Execution; Missed SLAs

No Team Collaboration; All done via e-mail & phone calls; Missed SLAs from out-of-sync;

No guidance to users on sequence of transactions; Inconsistency in users performance / productivity; Need for extensive training to new employees; No prioritization or work load management;

No Collaboration / Work Load Management

No real-time visibility to status, decisions

No KPIs; Impacts SLA

SAP reporting is too detailed & difficult to find status; No process view; No alerts, KPIs, Charting

SAP Blueprinting processes are static, not

executable;No link to SAP transactions

SAP blueprint processes live in static docs, not executed; SAP only runs L-4 process (transactions) No link between transactions and blueprint process

No process discovery for baseline (as-is) process

No way to find out (discover) “as-is” process; Hard to optimize processes with no baseline (as-is)

Mostly done manually; No automation; no

flexibility

Heavy reliance on users doing things manually; No automation; no flexibility to meet changing business needs

Pain Point Business Challenges IBM BPM Solution

BPM Guided Workflow

Team Collaboration, Work Prioritization, Single UI by reusing SAP GUI in BPM; Reuse blueprint processes

Process ExecutionBPM executes Blueprint Processes imported from SAP Solution Manager

Process Discovery thru Monitoring (BAM);

Discover ‘as-is’ processes by tracing SAP transaction

flow via real-time Monitoring of SAP transaction events

End-to-End Integration and Automation (STP)

of Processes with Business Rules