january 2003 the role of bpm in the real-time enterprise 30 th january, 2003 lee white, president...
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January 2003
The role of BPMin the Real-Time Enterprise
30th January, 2003Lee White, President & COO
CommerceQuestKen Morris, CEOKMG Solutions
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Agenda
Business Process Management: Overview
BPM: Better than Reality
Working Together: Roles for Key BPM Constituents
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Agenda
Business Process Management: Overview
BPM: Better than Reality
Working Together: Roles for Key BPM Constituents
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Processes are valuable assets
“A company is only as productive as its processes.”
Eric Austvold, AMR Research,2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Processes are valuable assets
All the world’s a process
Process thinking works
Take control through process
Processes are the next competitive battlefield
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Processes are Valuable Assets
All the world’s a process
Process thinking works
Take control through process
Processes are the next competitive battlefield
And… governance and accountability are regulatory requirements
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Most Key Business Areas Do Not Have Well Defined Processes
39.5
60.5
45
43.9
45.4
77.346.6
44.4
28
35.5
Consulting
Customer Svc.
Engineering
Finance
HR
IT
Logistics
Manufacturing
Marketing
Sales= Percentage of extremely or clearly automated
environments
Source: CIO Insight, 2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Process Management is a Challenge
Processes:
Process improvement and integration projects are already in motion
Processes need human and systems support to succeed
Constantly change…and cannot keep up with business model changes
Cut across multiple functional boundaries
Measurement systems & management are aligned to functions, not processes
Are poorly or not documented
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Models for Process Success
Six Sigma
BPR
TQM
ISO
Vertical Software
ERP
AccountabilityPerceived
CostsMeasurableBiz Results Sustainability
CrossFunctional
Impact
Source: CommerceQuest, 2003
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
What is Business Process Management?
“Business Process Management is THE thing…not integration, not messaging. It goes far beyond integration and hooking up applications. It is the essence of good business”
Jim Sinur, Gartner Group, July 2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
What is Business Process Management?
What is it?
A set of services and tools that support the creation, management and optimization of business process on both a human and application-level
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Source: The Different and Evolving Meanings of ‘BPM’ ♦ Ken Vollmer - Giga
Business Process ManagementEvolution
ProcessAutomation
EAI
BPM(internal focus)
Workflow
BusinessProcessModeling
IntegratedB2B
Transport
BusinessProcess
Integration
BPM(internal & external)
Five Years Ago Today
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Opportunity: Synergistic Benefits of BPM
ROI Expectations: 30 – 45% Greater
Process Definition:10-15%
Process Optimization:10-15%
Process Infrastructure:10-15%
source: Gartner Group Research, 2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Impediments to Success
Functional Silos
Inflexible IT Systems: “concrete”
High perceived capital investment in systems with low perceived returns
Poorly Defined Processes
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Real-time control with BPM
Arrange work and systems around processes:
See how work gets done (Model)
Learn what is happening (analyze)
Leverage what’s already there (integrate)
Control the business in real time (manage)
Manage closed-loop environment (audit/visibility)
Improve processes over time (optimize)
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Top Issues that Drive Business Process Change
12.7
22.6
26.7
37.9
55.6
64.4
80.2
Other
Innovation/New ProductDev.
Response to Competitors
Speed Processes
Increase Revenue
Improve Productivity
Reduce Cost
Source: CIO insight, 2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Benefits of BPM
Save time:
Reduce lag time and duplication of effort
Analyze and measure actual operations
Improve processes
Save money:
Increase reporting ratios; cut payroll
Increase productivity through task management
Avoid replacing or upgrading legacy systems
Save face:
Increase control and monitoring
Enforce business rules
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Doing Nothing Puts Your Business at Risk
“Enterprises should begin to take advantage of explicitly defined processes. By 2005, at least 90% of large enterprises will have BPM in their enterprise nervous system (0.9 probability). Enterprises that continue to hard-code all flow control, or insist on manual process steps and do not incorporate BPM's benefits, will lose out to competitors that adopt BPM."
Gartner, WSJ BPMR,June 2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Problems with the Current Promotions Process
• Currently there is no single solution that handles promotions
• There are at least 6 to 10 different departments and enterprises involved with the process
• Takes too long to set up and execute a promotion resulting in cost overruns
• Poor planning creates:
State-levied fines for false advertising
Lost sales due to out-of-stock conditions
Customer satisfaction issues
“Noise” in Computer Aided Ordering System
• Can’t run enough promotions due to inefficiencies in current process
• Unpredictable and therefore cannot plan properly
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Example: Promotions Management
People SystemsBusiness Process (Control Logic)
Advertising
Merchandising
• Decide what we want to promote
• Determine product availability
• Order or allocate merchandise
• Notify participants
• Execute, monitor, measure, analyze, improve, and control
MerchandisingSystem
Suppliers
CRM
WMS
Legacy
Systems
Planning
Systems
Store
Systems
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
CRM
Traditional Approach: Chaos
People
Advertising
Merchandising
Suppliers
Systems
MerchandisingSystem
WMS
Legacy
Systems
Planning
Systems
Store
Systems
Business Process (Chaos)
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
MerchandisingSystem
Legacy
Systems
BPM Solution
People
CRM
WMS
Planning
Systems
Store
SystemsBusiness Process
- Queue- XML Service or Web service
Advertising
Merchandising
Suppliers
SystemsBusiness Process (Control Logic)
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Agenda
Business Process Management: Overview
BPM: Better than Reality
Working Together: Roles for Key BPM Constituents
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Reality?
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Degrees of Success and Failure
source: AMR research (CRM Projects)December 2002
12% of projects fail to go live
47% of projects go live but business users fail to adopt
25% of projects succeed in adoption but business benefits cannot be quantified
16% reach the promised land of measurably impacting business
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
ERP Systems Viewed Neutrally/Negatively in Ability to Support Business Process by Almost Half Interviewed
21.3
34
25.1
19.7
ExtremelyHelpful
Helpful SomewhatHelpful
NotHelpful
Source: CIO insight, 2002
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Degrees of Success and Failure
You want
Measurable results
Improved/defined processes
Organizational adoption
Effective technology
Least level of business disruption
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
BPM: Positioned for Success
Business ProcessModeling
Design and Simulation
Define and Deliver and
Transfer Resources/Data Across Business
Integration Level
Business Process Management
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
BPM vs. BPR
BPR BPM
R = Re-engineering M = Management
Consultants Business Users
Printed “deliverables” (Re)usable models
Big bang (all or nothing) Start anywhere, your pace, incremental path
Not about systems Integration, leverage what you have invested in already
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Source: The Different and Evolving Meanings of ‘BPM’ ♦ Ken Vollmer - Giga
Business Process ManagementRequires Flexibility
ProcessAutomation
EAI
BPM(internal focus)
Workflow
BusinessProcessModeling
IntegratedB2B
Transport
BusinessProcess
Integration
BPM(internal & external)
Five Years Ago Today
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Delivering on the Opportunity: Key BPM Components
Process Definition
Process Optimization
Process Infrastructure
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
BPM: Process Definition and Optimization
Process Modeler
Graphical, drag-and-drop
Workflow
Business rules
Costing
Reporting
Organization Modeler
Graphical, drag-and-drop
Reporting structure
Workgroups
Roles
Real-time Engine
Inputs from people and systems
Dynamic task assigment (escalation, etc.)
Ongoing process enhancements
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Agenda
Business Process Management: Overview
BPM: Better than Reality
Working Together: Roles for Key BPM Constituents
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Highly Centralized Business
Designate a process “czar” or Chief Process Improvement Officer (CPIO)
(source: AMR research, 2002)
Partner with CIO to lead team of process improvement leaders across the enterprise
Create “central command” on process issues
Be the BPM focal point: understand and make better use of existing technology from business point of view
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Highly Decentralized Business
Create standards, methodologies for use by CPIO and business unit level CPIOS to drive change and help ensure adoption:
– Bottom-up organizational ownership
– “CPIO” congress to review strategy, results, best practices
– Incentive driven performance on specific tasks
– View of cross-functional applications/technologies
© CommerceQuest 2002 www.CommerceQuest.comCommerceQuest, 2003 Proprietary and Confidential
Success Factors
1. Flexible, accountable, sustainable, cross-functional and business driven process focus (ie Six Sigma)
2. The tools to support flexible, changeable and cross-functional business process
3. The right team, incentives, and organizational support model for your business environment: The process “czar” or distributed but coordinated teams
4. Understanding that there is only one process: the view from the business to the technology layer must be the same not similar
January 2003
Thank you!Questions?