Introduction to Business Process

Reengineering

Slide 2

Introduction The need for process improvement Process improvement methodologies

TQM, Lean, CMMI, Six Sigma

Slide 3

Process Improvement (Origins) Process improvement and project

management started with some very large projects and finding better ways to manage them Shipbuilding Large scale engineering projects Defense projects Etc…

Slide 4

The Need for Process Improvement Business and technology changes over

time and process must reflect those changes Look at the impact of the mobile phone

and the Internet the way we do business Companies improve processes to

Become more efficient (share data, communicate across the enterprise)

Reduce product defects and improve standardization

Slide 5

Process Ownership Different employees (stakeholders)

have a stake in one or more processes There should be one individual or group

who is responsible for a process (process owner)

The process owner should be responsible for the improvement of the owned process and have the authority to change it (responsibility == authority)

Slide 6

Process Improvement (Introduction) It’s about making processes better

It’s not about fighting fires It’s not about blaming someone for

inadequate existing processes It’s a problem solving approach (there

are various approaches) to fix what’s broken

Slide 7

Process Improvement (Goals - 1) Reduce variation

Perform the process the same way every time

Remove activities that contribute no value Improve efficiency

Improve customer satisfaction Improve effectiveness

Slide 8

Process Improvement (Goals - 2) Eliminate waste of money, people,

materials, time Improve safety and ergonomics

Slide 9

Common Process Improvement Questions What processes should be improved? What resources are needed to improve

those processes? How can we understand those existing

processes we are trying to improve? How can the improved process be

institutionalized?

Slide 10

General Process Improvement (Steps) Balanced Scorecard The following are summarized from the

document http://www.balancedscorecard.org/Portals/0/PDF/bpihndbk.pdf A bit dated but the information holds true

today

Slide 11

General Process Improvement (Steps) Select the process to be improved and

how it will be improved Clear metrics should be defined These metrics are often customer-centric It’s best to start small and define clear

process boundaries

Slide 12

General Process Improvement (Steps) Pareto charts or diagrams are a form of

bar graph and line chart with which to analyze frequency of problems or causes in a process The Pareto principle states that “for many

events, roughly 80% of the effects come from 20% of the causes

Slide 13

General Process Improvement (Steps)

Slide 14

General Process Improvement (Steps) Example

Simplify a process by eliminating or simplifying steps

Removing an unnecessary form or paper Quantify expected labor and paper

savings

Slide 15

General Process Improvement (Steps) Define the team that will improve the

process It’s important to select the right people

who have time The team should have a clear level of

authority and a team leader Consider team size

Larger teams (8-10) tend to have difficulty reaching consensus and achieving objectives

Define resources needed by the team

Slide 16

General Process Improvement (Steps) Fully define the existing process

Reverse engineer the process using a tool such as BPMN

The team should be clear thatthe flowchart is accurate

Beware of cross-functionalprocesses

Slide 17

General Process Improvement (Steps) Define the simplified

process Remove redundant or

unnecessary activities

Slide 18

General Process Improvement (Steps) Collect baseline data on the

existing process Time to execute the process Amount of material waste

Use this data to judge efficacy of the improved process

Slide 19

General Process Improvement (Steps) Assess process stability

Does the process have exceptions? What are those exceptions?

A run chart is a line plotted over time A control chart is a graph used to study

how a process changes over time Used to look at process variation

Slide 20

Control Chart (Example) Shows max, min, mean, and goal values

over time

Slide 21

Control Chart (Outcomes) Look at the root causes of variation and

try to remove it Was the root cause temporary in

nature? Was the root cause a one-time event such

as extraordinary weather

Slide 22

General Process Improvement (Steps) We do this after the process is

“stabilized” Is the process capable?

Are there unusual patterns in the data? Can the process be further improved? Are the data points within the specification

limits If not, the process is not capable

Look at ways to remove process exceptions

Slide 23

General Process Improvement (Steps) If necessary, identify root causes of why

a process is not stable and capable Change process redesign, as necessary

This can be iterative

Slide 24

General Process Improvement (Steps) Plan and implement

the process change

Slide 25

General Process Improvement (Steps) Collect new performance data and

compare with baseline data Did the process improve as expected? Did we improve process stability

(exceptions)? Did we improve process capability

(efficiency)? Do the data collection metrics need to be

changed? Assess feasibility of further

improvements

Slide 26

General Process Improvement (Steps)

Slide 27

CMMI (Introduction) The Capability Maturity Model

Integration approach is a way of assessing the strengths and weaknesses of existing processes for the purpose of improving them

It’s a set of best practices (framework) to improving processes

It’s a way of getting your customers what they want

Slide 28

CMMI (Introduction) CMMI is a model for improving process

but is not a process itself It’s managed by the CMMI institute at

cmmiinstitute.com It’s origins are in

Industry Government Academia

Slide 29

CMMI (History)

Slide 30

CMMI (Process Capability Levels) CMMI defines capability levels and

maturity levels – as the name implies Capability

Level 0: process is not performed or partially performed

Level 1: process is performed Level 2: process is managed Level 3: process is fully standardized and

documented (defined)

Slide 31

CMMI (Process Maturity Levels) Level 1 – Initial

Processes are ad hoc and chaotic Characterized by a tendency to

overcommit Level 2 – Managed

Business understands its processes Processes are periodically monitored

Level 3 – Defined Processes are well-characterized and

understood and improve over time

Slide 32

CMMI (Process Maturity Levels) Level 4 – Quantitatively managed

Quantitative objectives (metrics)are established for quality and process performance

Process performance is predictable Level 5 – Optimizing

Characterized by continuous improvement based on quantitative metrics

Slide 33

CMMI Taxonomy CMMI calls them constellations

CMMI for Acquisition CMMI for Development CMMI for Service

Plus the People Capability Maturity Model (People CMM) to help manage workforce

http://cmmiinstitute.com/

Slide 34

CMMI Process Areas Solutions are organized process areas

(types) 16 core processes

And specialized processes for Acquisition of software and hardware Development of software and hardware Services

Slide 35

CMMI Process Areas (Core) (I HAVE NOT LISTED THEM ALL) Configuration Management (CM)

(software) Maintain the integrity of work products

using configuration identification, configuration control, configuration status accounting, and configuration audits

Version control, document control, build management, release control

Slide 36

CMMI Process Areas (Core) Integrated Project Management (IPM)

Produce and maintain the project planning Project monitoring and control Quantitative project management

Percentage of defects removed by software testing activities, for example

Slide 37

CMMI Process Areas (Core) Measurement and Analysis (MA) As mentioned, what we measure is what

we get Typical measurement objectives

Reduce time to delivery Reduce total lifecycle cost Deliver specified functionality completely Improve prior levels of quality Improve prior customer satisfaction ratings Maintain and improve the acquirer/supplier

relationships

Slide 38

CMMI Process Areas (Core) Organizational process definition (OPD)

Responsible for software quality assurance (SQA)

A number of SDLCs (waterfall, agile, scrum, for example)

Organizational performance management (OPM) At CMMI level 5

Organizational Training (OT) Organizational Process Focus (OPF)

Slide 39

CMMI Process Areas (Core) Process and Product Quality Assurance Object evaluation processes, work

products and services Evaluation reports Noncompliance reports Corrective actions

Establish records Evaluation logs, QA reports, reports of

quality trends

Slide 40

CMMI Process Areas (Core) Requirements management (for

projects) Managing all changes to the requirements Maintaining the relationships among the

requirements, the project plans, and the work products

Identifying inconsistencies among the requirements, the project plans, and the work products

Taking corrective action Risk management

Slide 41

CMMI Process Areas (Acquisition) Acquisition Requirements Development

(ARD) Solicitation and Supplier Agreement

Development (SSAD) Agreement Management (AM) Acquisition Technical Management

(ATM) Acquisition Verification (AVER) Acquisition Validation (AVAL)

Slide 42

CMMI Process Areas (Development) Product integration Technical solutions

Slide 43

CMMI Process Areas (Services) Incident prevention and resolution Service continuity and delivery Service transition Strategic service management

Slide 44

Six Sigma (Introduction) Using standard measurement

techniques (statistical techniques) to measure operational performance

Motorola (Engineer Bill Smith was given credit for it in 1984)

Further developed at Texas Instruments Adopted by General Electric, in 1995

A central focus of GE’s business

Slide 45

Six Sigma (Objectives) Improve quality of process outputs by

identifying and removing errors (defects)

Minimize variability in business processes and manufacturing

Uses a set of quality management methods (statistical) and create method experts

Slide 46

Six Sigma (Methodology) 3.4 defects per million opportunities

There is a methodology to again this goal Define, Measure, Analyze, Improve,

Control (DMAIC)

Defects per million opportunities (DPMO)

Slide 47

Six Sigma (Example)

Slide 48

Six Sigma (Features) Focus on measureable and quantifiable

financial returns Emphasis on strong leadership and

passionate management Special infrastructure

Master black belt, black belt, green belt, red belt

Decision-making based on verifiable data No assumptions or guesswork

Slide 49

Six Sigma (Methodologies) DMAIC (duh-may-ick)

Use to improve existing business processes

DMADV (duh-mad-vee) Use to create new product or process

designs

Slide 50

Six Sigma (DMAIC) Define the problem Measure key aspects of the process and

collect relevant data Analysis the data

Understand cause-and-effect relationships Improve or optimize the current process Control deviations

Slide 51

Six Sigma (DMADV) Define design goals Measure characteristics critical to

quality Analyze and develop design alternatives Design details and optimize the design Verify the design

Set up pilot runs Implement the production process

Slide 52

ISO 9001 A set of process and quality

management standards https://

www.bsigroup.com/Documents/iso-9001/resources/BSI-ISO-9001-implementation-guide.pdf A good overview

Slide 53

ISO 9000 Principles Customer focus Leadership Involvement of people Process approach System approach to management Continual improvement Quantitative (factual) approach to

decision making