business process management - information …irmac.ca/0809/dama toronto 20081121.pdfmanage and...

www.processrenewal.com

Business Process Management

Roger T. BurltonThe Process Renewal Consulting Group Inc.

www.processrenewal.com+1-778-330-2195

[email protected]

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Copyright

Business Process Management:

This seminar contains proprietary methods and materials developedby The Process Renewal Consulting Group Inc. of Coquitlam BC Canada.

They may not be copied, recorded, transmitted or reused without theexpressed permission of the author. All rights reserved.

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Reference Materials

www.amazon.comwww.amazon.co.ukwww.amazon.ca

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What Do People Think BPM Means?

BPTrends Survey: 2007. 274 Responses from throughout world.


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Facilities A process is a repeatable series of activities performed to produce a result of value for one or more stakeholders.

Scoping (Event) View:

Is initiated and terminated by one or more business events.

Relationship View:

Delivers outcomes of value to relevant stakeholders of the process.

Always connects to other processes in a value chain (our own or other stakeholders’).

Processing View:

Transforms inputs into outputs, according to policies and rules employing reusable resources.

Performance View:

Has performance indicators for which measurable objectives can be set and actual performance evaluated.

Functional / Organizational View:

Contains activities requiring a set of functional competencies often found in disparate organizational units.

Business Processes are enterprise assets with their own lifecycle and must be managed as such.

Different Perspectives of a Business Process

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BPM and Improvement Techniques are Complementary: They need one another

Architecture, Prioritization, Measurement, Management, Alignment & Control of All Process Change

Process Change ProjectsDocumentation Improvement Redesign Innovation

.

Human Resource Development

Job DesignTraining Knowledge

Management

Specific Activity

Business Process

Physical Plant and

IT Development

BPMS, BAMProcess Automation

Hardware Used

A Mix of IT and HR

Development ERP Implementation

ImplementationAutomation Employee/Job ChangesFacilities Changes

Strategy and Business ManagementBPM

Perspective

Six Sigma, Lean Perspective


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Maturity: What Level Do We Want to Reach? And By When?

Level 1. No Organized

Processes

Level 2. Some Organized

Processes

Level 3. Most Processes

Organized

Level 4. Processes Are

Managed

Level 5. Processes

Continuously Improved

Cultures of Heros

Processes are Improved at the Work Group or

Departmental Level

Processes are Organized and

Redesigned at the BS&T Level

Processes are Measured and

Managed Systematically

Processes Teams Continuously

Improve Processes

+ Architecture & KPIs

+ Measurement & Governance


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PRG’s BPM Management Framework (since 1994)

Understandthe

Enterprise

Architect&

Align

DefineProcessProject

Understandthe

Process

Renewthe

Process

DevelopCapabilities

Roll-out&

Nurture

ContinuouslyImprove

HumanChange

ManagementAwareness

PerceptionsUnderstanding

MotivationCommunications

Commitments

BP GovernanceProgram and Project ManagementOpportunity CostResource CommitmentGating CheckpointsQuality AssuranceRisk / Reward

Strategize Mode

Design Mode

Realize Mode

Manage and Govern Mode

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PRG’s Business Process Management Framework


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Business Strategy

Capability Architecture

Program of Change

Business Process

Architecture

Technology Architecture

Information Architecture

Org/HR Strategy

OtherStrategies

Migration Strategy

Project Portfolio

Business / Stakeholder

Strategy

PerformanceResults

Alignment

Strategic Intent

Business Drivers

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Traceability

Enterprise Performance Requires Strategic Alignment of Capabilities & Traceability of Decisions


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OMG’s Business Motivation Model

Ref

eren

ce: O

bjec

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: Bus

ines

s M

otiv

atio

n M

odel

(BM

M),

Req

uest

for C

omm

ent


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What does the successful future look like

The Goals for future of Value Creation (Stakeholder Expectations)

The Measurement Indicators of success (KPIs) for each Relationship Type

The KPI Target Levels and Interim Goalposts for performance Improvement during the Planning Timeframe

Those Capabilities that must be in place and critical factors that must be addressed to attain the Stakeholder goals of value, expectations and KPI targets

The Evaluation Criteria for Business, Process, Technology and Human Change Alternatives

Analyze Each Stakeholder Relationship

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Some Process Architecture Principles

The Architecture is built from the perspective of a clear “Organization in Focus” (OIF)

Everything coming into the OIF must come from an external stakeholder and be received by at least one process

Everything leaving the OIF must go to an external stakeholder and be produced by at least one process

Internal processes move stakeholder relationships through a lifecycle of state changes - from unawareness through termination

Internal processes move OIF assets through a lifecycle of state changes - from conception through retirement

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Prime Process Architecture Principle: Processes Start with Stakeholders

Owners Regulatory/Governance

Community

Market KnowledgeSources

Raw MaterialSuppliers

Human Resources themselves

IT Related ProvidersFacility & Equipment

Related Suppliers

Distributors

Customers &Consumers

Core = Customer + Product/Services Lifecycles

Guiding = Plan / Policy + Governance Related

Enabling = Non Core Supplier + Capability Lifecycles

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A process is a repeatable series of activities performed to produce a result of value for one or more stakeholders.

Non–verb structures disallowed:

Anything that ends in…ing…tion…ent…al

Business Process Semantics: Rules for Naming a Process

Strict Naming Convention:

A Process isdescribed by an

activeverb-noun

The name should unambiguously

communicate the intent of the

process not its start

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Verbs to be wary of:

Anything that is lazy and not clearly result focused

managehandleprocessdo


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Case Study Processes to Support Relationship Lifecycles

All Stakeholder Relationships go through a progression from unawareness through terminationInterview sample Stakeholders of each typeInterview internal representatives that deal with Stakeholders of each typeDevelop a list of situations and conditions that the Stakeholder experiences with the Organization-in-FocusSequence the experience points into a logical order from point of first contact to last one for today’s experiencesReview experience points and examine their relevance to the future view of the relationshipAdd new anticipated touch pointsDefine the OIF’s actions between touch pointsGroup into major relationship state changesValidate with internal stakeholdersAmend and finalize

What relationships do we have to

manage?


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Case Study Processes to Support Asset and Capability Lifecycles

All assets and capabilities go through a progression from concept identification through retirementInterview internal representatives that deal with assets of each typeSequence the states that the asset goes through in logical order fromDefine the OIF’s actions between touch pointsValidate with internal stakeholdersAmend and finalize

What things do we have to manage?


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Some Frameworks (Operations Reference Models) as an Architecture Productivity Aid

Audit of IT processesCOBIT (Control Objectives for Information and related Technology )

IT Governance Institute

Cross-Industry processesPCF (Process Classification Framework)

American Productivity Quality Center (APQC)

Government Services Patterns and Lifecycles

GSRM (Governments Strategic Reference Model)

Treasury Board Secretariat (Government of Canada)

IT Service Management (IT service support and delivery)

ITIL (IT Infrastructure Library)UK Office of Government Commerce & itSMF

Telecommunications IndustryeTOM (enhanced TelecomOperations Map)

Telemanagement Forum

Internal and Inter-company Value Chains

VRM (Value Reference Model Framework)

Value Chain Group

Inter-company Supply Chain Management

SCOR (Supply Chain Operations Reference Framework)

Supply Chain Council

FocusFrameworkSponsoring Body

For a comprehensive treatment of Reference Models and Frameworks visit www.BPTrends.com and search for “frameworks”


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APQC’s PCF (Process Classification Framework)


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Sample from the APQC PCF

2.0 Design and Develop Products and Services2.1 Design products and services

2.1.1 Develop strategy and concepts for new products and services2.1.1.1 Research customer and market needs2.1.1.2 Plan and develop cost and quality targets2.1.1.3 Develop product life cycle and development timing targets2.1.1.4 Research leading technology components and development

requirements2.1.1.5 Integrate leading technology into product/service concept and

components

Interpreting the PCFCategory: The highest level within the PCF indicated by whole numbers (e.g., 8.0).Process Groups: All PCF items with one decimal numbering (e.g., 8.1) are considered a process area.Process: All PCF items with two decimal numbering (e.g., 8.1.1) are considered processes.Activity: Items with three decimals (e.g., 8.3.1.1) are considered activities within a process.


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From Internal Process in Architecture or External Stakeholder

From Internal Process in Architecture or External Stakeholder

To Internal Process

in Architecture

or

External Stakeholder

From Internal Processin Architecture

or

External Stakeholder

Inputs

Outputs

Guides

Enablers

Do Something

Inputs are processed into Outputs according to Guides using Enablers when Events occur

Processes Interface Requirements: Look at IGOEs

Materials to be transformed

Information to be processed

States to be changed

Materials transformed

Information processed

States changed

Information to be referenced while

processing

Methods and Rules to guide the processing

Technologies to be applied

Facilities to be used

People to be assigned

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Establish Process KPIs: Top Down Perspective

We should have already determined :

the strategic measures of the OIFthe ways to measure relationship successIf not do it now

For each process at the top level of the architecture determine which processes:

are relevant in support of the strategic direction of the OIF and howare of value to the stakeholders and howthe KPIs for each process in terms of the support for the higher level KPIs

Financial Goals & Measures

Product & CustomerGoals & Measures

Process & OperationsGoals & Measures

Growth, Learning & People Goals & Measures

Balanced Scorecard Perspectives


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Strategic and External vs. Internal Performance Measures

Strategic and External Measures tell us about the results achieved by the value chains or business processes in delivery to stakeholdersInternal Measures tell us about the results achieved by contributing processes, sub-processes or activities


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Documentation Requirements at this Point

EventsOpeningClosing

Relevant StakeholdersOther Relevant ProcessesProcess Responsible Parties• Process Executive• Process Steward• Process Manager

Process GoalsKPIs

Indicator with Unit of Measure• Current Performance• Target Performance

Value Added RankPerformance GapIGOEs

InputsGuidesOutputsEnablers

Sub level ActivitiesSub Processes (next level)

• Other levels

Legend

Document Now• Document Later


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Governance Purpose & Scope

Process governance defines how processes will be managed

Provide Oversight

Ensure Alignment withStrategic Intent

Design & Monitor & Improve

Manage Operations

Operate

• Performance requirements• Business Strategies

• Strategic Direction• Priorities• Performance requirements

• Process Design• Performance requirements• Change Plan

• Roles & Responsibilities• Performance requirements

• Status• Performance Results• Significant changes

• Change Plan• Design Proposal• Performance results• Status

• Design recommendations• Performance reporting• Competency and capacity issues

• Performance Reporting• Issues and suggestions• Competency and Capacity concerns


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Case in Point: Financial Services FirmRoles and Reporting

Roles can recur at multiple levels:Value Chain

Value StreamProcess

Business unit

Focus = Performance Management

Focus = Change Management

Focus = Both Change and Performance Management

Legend:

Mechanisms to elaborate on decisions,synchronize activities, and report onperformanceAccountability relationshipCollaborative relationship

Executive

Manager

Steward

Lead

Coordinator


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Migration Strategy (Triage2)

1/3

1/3

1/3

1/3 1/3 1/3

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4

14

6 13

72

15

12

11

109

16

3

8

Greatest Value Potential to Business Strategy and Performance

Biggest

Gap

Ranking

pain

gain

A3

B2B3

C1C2C3

Inherent Value

Performance Gap

No/ Little Performance Gap

Moderate Performance Gap

Large Performance Gap

World Class Differentiation

Best Practice Competitive

Competent Commodity

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Enterprise Complexity Requires a More Elegant Architectural Model*

Principles

ValuesStrengths

Products

Opportunities

Vision

Strategy

GoalsObjectives

RequirementsThreats

Constraints

StakeholdersValue Chains

Events

Responsibilities

Triggers Functions

Business Rules

SkillsWorkflow

Procedures

Jobs

Roles

Information

Legal

Facilities

Knowledge

Financial Assets

DataTax

Objects Time

LocationsCost

Budget

Hardware

Databases

Applications

Middleware

Systems

Methodologies

Tools

Weaknesses

Mission

Organizations

Models

Use Cases

Services

People ProjectsRisks

Processes

FromTo

* Ref: Burlton, Zachman, Locke


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Business Process Architecture and Service Oriented Architecture (SOA)

Reference Mike Rosen , AZORA Technologies

SOA is concerned with the independent construction of services which can be combined to realize meaningful, higher levelbusiness processes within the context of the enterprise.

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Service: Encapsulates a unit of work, made availablethrough a service contract

Characterized by:• Dynamic binding• Loose coupling• Modular and self

contained• Composable


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Leverage Enterprise Stakeholders and Architecture into Process Project: External to Process Context

Owners Regulatory/Governance

Community

Market KnowledgeSources

Raw MaterialSuppliers

Human ResourceRelated

IT Related Providers

Facility & Equipment Related Suppliers

Distributors

Customers &ConsumersX

X

X X

XX X

X

Scoped Process in Focus

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Business Process Modeling: Options

Take Order

Cus

tom

erFi

nanc

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Ana

lyst

Cus

tom

er

Ser

vice

Cre

dit A

dvis

orO

rder

Tak

er

Take Request

Determine Charges

Advise Customer

Check Credit

Fill Out Kitchen Request

Place an

Order

Rejected Credit

Credit OK?

YesNO

Kitchen Request

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BPM provides: an overarching management framework and calls on a variety of tools, techniques and disciplines

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BPM: Management and GovernanceBPM: Management and Governance•• Super & InfraSuper & Infra--structurestructure•• Context SettingContext Setting

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B P MEnterprise ‘Stakeholder Analysis’ and ‘Architecture Modeling’‘Value Chain Analysis’ for Commonality in Architecture‘Industry Frameworks’ for Architecture and Benchmarking Waste elimination for Transactional Processes through ‘Lean’ISO certification templates for Process DocumentationReliability improvement and reduction of variation through ‘Six Sigma’‘Ishikawa’ for Root Cause Analysis for Continuous Improvement‘Scenario Analysis’ for Structured Walkthrough, Validation and Testing and IT RequirementsStructured Innovation through ‘TRIZ’Unstructured Innovation through ‘Brainstorming’‘BPMN modeling’ and ‘Iterative techniques’ for IT specifications and design


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Business Processes as Aligner of Capabilities

BPM: the discipline that improves measurable business process performance through ongoing optimization of enterprise-wide processes and their capabilities.

Local Resturant

Finance & Administration

Marketing & Sales

Purchasing

Transporation

CateringBanquet Services

Accounts Payable

Accounts Receivable

Legal Sevices

Faciliticies Management

Human Resources

Customer Service Information Systems

Operations

Food Preparation

Logistics

Credit

Delivery

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