mtat 03 231mtat.03.231 business process management … · 2009-02-14 · structure of the...

MTAT 03 231MTAT.03.231Business Process Management (BPM)

(for Masters of ETM)(for Masters of ETM)

Lecture 1: Introduction

Marlon Dumas

marlon.dumas ät ut . ee

Course ObjectiveCourse Objective

fThe objective of this course is to introduce the principles and methods of business process management. The course emphasises the role of business processThe course emphasises the role of business process modelling as an instrument to understand and analyse business operations, and to drive the design of Information Technology solutions to support the automation of business processes.

2

Your ExpectationsYour Expectations

3

Structure of the CourseStructure of the Course• Four sessions

1. 12.02 – Introduction to BPM and BPMN2. 12.03 – Process Analysis & Improvement3. 16.04 – Process Lifecycle Management4. 04.06 – Project Presentations and Exam

T h k th 5 i t h• Two homeworks worth 5 points each• Project (30 points) – starting on 16.04

E (60 i t )• Exam (60 points)

4

Readings and ResourcesReadings and Resources

• Recommended textbook– Manuel Laguna and Johan Marklund. Business Process

Modeling Simulation and Design Prentice Hall 2004 (espModeling, Simulation and Design, Prentice Hall, 2004. (esp. Chapters 1, 2 and 3)

• Other readings & resources listed in the course pages:g p g– http://courses.cs.ut.ee/2009/bpm

• Readings are examinable• Please register to the course mailing list

– [email protected]

5

Agenda for TodayAgenda for Today

Ti C t tTime Contents

10.15-12.15 Introduction to BPM

12.15-13.00 Lunch Break

13.00-15.00 Introduction to Process Modeling and BPMNg

15.00-15.15 Break

15.15-17.15 BPMN (Part II)

6

Part I

Introduction to Business Process ManagementManagement

BPM: What is it?

Body of methods to design, analyze, execute and monitor business operations involving humans, software, information and physical artifacts using process models.

8

So What is a (Business) Process( )“a collection of activities that takes one or more inputs and creates an output that is valuable to a customer.”pHammer & Champy, 1993 (“Reengineering the Corporation”)“any work that is recurrent, requires coordination, affects some aspect of organizational capabilities can be accomplished in different waysof organizational capabilities, can be accomplished in different ways that make a difference in terms of cost, value, service or quality.”Peter Keen, 1997 (“The Process Edge”)

“Collection of inter-dependent activities whose collective performance is intended to achieve a goal such as delivering a product or a service ”intended to achieve a goal such as delivering a product or a service.Examples:• Order-to-Cash• Procure-to-Pay • Claim-to-Resolution

9

“My washing machine won’t work!”

Warranty?

TechnicianCall Centre

CustomerP t

Technician

CustomerCustomerPartsStoreService

Dispatch

LUE

fault-report-to-resolution process VAL

10© Michael Rosemann

Core vs. Support ProcessesPorter’s Value Chain

11

Origins of BPMOrigins of BPM

• Organisational Managementg g– Smith, Taylor, Ford, Sloan

• Operations Management– MRP II, Kanban, Optimized Production Technology (OPT)

• Business Process Re-Engineering Hammer & Champy Davenport & Short– Hammer & Champy, Davenport & Short

• Quality ManagementTotal Quality Management (TQM) Six Sigma– Total Quality Management (TQM), Six Sigma

• Business Process Automation (BPA)Workflow Management Systems Case Handling Systems– Workflow Management Systems, Case Handling Systems, Document Routing, Business Process Management Systems

12

Organisational Management- Adam Smith (1776)

Observation: “a number of specialized workers, each performing a single step in the manufacture of a pin, could make far more pins in a day than the samecould make far more pins in a day than the same number of generalists.”

Quoted from Hammer & Champy 1993

13

Rationale for the Process View

• Weaknesses of functional org. and division of labor:– Focus on skills and resource utilization rather than work output– Reward systems tailored for the functional unit not the overall firm

Group behavior and cultures fostering an “us versus them” mentality– Group behavior and cultures fostering an us versus them mentality– Decentralization ⇒ “firms within the firm” with their own agenda

• Strengths of a process viewStrengths of a process view– Focus on work output ⇒ reduced risk for sub-optimization– Transparency of how contributions of individual workers fit into the

“big picture” ⇒ encourages involvement and empowerment– Helps break down barriers between departments

Creates a sense of loyalty towards the process to balance the– Creates a sense of loyalty towards the process to balance the loyalties within the functional units

Warning: extreme process view may lead to ‘process silos’

14

g p y p© Laguna & Marklund

Complementarity of Functional and Process ViewsProcess Views

Economy CultureRegulatory

Business Environment

Economy CultureRegulatory

Organisation SystemOrganisation System

Performance ManagedPerformance PlannedResourcesOther

Stakeholders

Financial

HumanFunction

AFunction

BFunction

CResources

Materials

TechnologyBusiness Processes Customers

15[after Rummler 1984]

Functional vs. Process ChangegFunctional Change Process Change

Rightsizing Restructuring BPA TQM BPR

Assumptions Staffing Reporting Technology Customer Work methodsti d l ti hi li ti dquestioned relationships applications needs

Focus of Staffing, job Organization Systems Bottom-up Radicalchange responsibilities improvements changes

Orientation Functional Functional Procedures Processes Processes

Role of IT Often blamed Occasionally To speed up Incidental Magnificationh i d i ti temphasized existing systems

Improvement Usually Dramatic or Incremental Incremental Dramatic andgoals incremental incremental significant

Frequency Usually one Usually Periodic Continuous Usually onetime one time time

1616© Laguna & Marklund

Why BPM?Why BPM?

“The first rule of any technology used in a business is that automation applied to an efficient operation

ill if th ffi iwill magnify the efficiency.The second is that automation applied to an inefficient operation will magnify the inefficiency ”inefficient operation will magnify the inefficiency.

17

Why BPM?y

Information Yieldso at oTechnology Business

Value

PYields

Enables

ProcessChange

Index Group (1982)

18

Why BPM?Why BPM?

Improving Business Processes = #1 businessImproving Business Processes #1 business priority for CIOs internationally, 4 years in a row...

Top 10 Business Priorities 2009Please select the top five business priorities for your enterprise/business unit in 2009?

I i b i 1Improving business processes 1

Cutting enterprise costs 2

Improving enterprise w orkforce effectiveness 3

Attracting and retaining new customers 4Attracting and retaining new customers 4Increasing the use of information/analytics in decision making 5Creating new products or services (innovation) 6Managing enterprise change initiatives 7T ti t d k t ff ti l ( f f ti i d li 8Targeting customers and markets more effectively (more effective service delivery 8Expanding current customer relationships (expanding “w allet share”) 9Consolidating business operations 10

© Gartner Group 2009 CIO Survey

19

© Gartner Group, 2009 CIO Survey

When to do BPM?• BPM most valuable when considering cross functional processes

– Challenging coordination issuesg g– Process inefficiencies often related to handing off work

from one station or person to another – delays and errorsTh f ti l i ti d di i i f l b di d t• The functional organization and division of labor paradigm dates back to Adam Smith and the late 1700’s

• Division of labor rationale: by focusing on fewer tasks ⇒– Workers’ skill level goes up ⇒ work faster– No time lost when workers switch between tasks

Workers well positioned to help develop better techniques– Workers well positioned to help develop better techniques and tools

• Drawback: more complex coordination issues when– More complex products and services– Customers demand more variety

20

Continuous Process Improvement vs. Process Re EngineeringProcess Re-Engineering

• Both approaches concerned with how to do things better– Complement each other

• Continuous Process Improvement (CPI) – Part of the TQM approach– Change that brings a process closer to its normal operatingChange that brings a process closer to its normal operating

standards– Does not question the fundamental assumptions and rules

th t d fi th t d ithat define the current process design– Deductive approach

• Business Process Re-Engineering (BPR)us ess ocess e g ee g ( )– Questions existing assumptions and rules– Requires new perspectives to generate innovative

l ti ith t ti l f b kth h i tsolutions with potential for breakthrough improvements– Inductive approach


Continuous vs. Radical ImprovementContinuous vs. Radical Improvement

ent

TheoreticalCapability

prov

eme

Statistical

Imp

IncrementalImprovement

RadicalImprovement

StatisticalProcessControl

Improvement Improvement

Time

22

BPR vs. CPIBPR vs. CPI

high CPI

pact

BPR chaos

ange

BPRCPI

im

CPIstagnation

cha

BPRCPI

low

low highfrequency

time

CPI

frequency

23(c) Wil van der Aalst, workflowcourse.com

How to do BPM?

Achieving

Strategy / Goals

UtilisingOvercoming

To-Be abili

ties (Strengths

Enablers)• IT• Knowledge

As Is• Issues

(WeaknessesOpportunities)

Guidelines To Be

Cap

a • Knowledge• People• Ability to change• Culture

• Issues • Barriers

Best Practice

Learning

ReferenceM d l

Benchki

Ideald l

Studyt

24

Models marking models tours

Process-centric Enterprise Architecture

25(c) Paul Harmon (2004) , BPTrends

Simplified Business Process LifecycleSimplified Business Process Lifecycle

• Process identification Process • Process modelling (as-is)• Process analysis

Modeling Tools

• Process re-design (to-be)• Process implementation

P• Process execution• Process monitoring/controlling

Process Management Systemsg g

26

The Layers of BPM Activitiesy

BPM SetupStrategic

AlignmentBPM

GovernanceBPM

MethodologyProcess Portfolio

ManagementCulture &

People

Process AnalysisProcess

IdentificationProcess

ModellingProcess

MeasurementProcessAnalysis

ProcessImprovement

Process ImplementationProcess Process Process Process Change

Process Execution and Controlling

ProcessConfiguration

ProcessDevelopment

ProcessTraining

ProcessTesting

ChangeManagement

ProcessExecution

ProcessPortfolio Mgmt.

ProcessPerform. Meas.

ProcessMining

ProcessControlling

Process Execution and Controlling


Example – Claims Handling in a Large Insurance Company

• Pilot project – claims handling for replacement of automobile glass

• Springboard for later, more ambitious redesign effortsp g , g• Set up procedure

1. The CEO appoints an executive sponsor to lead the projectproject

2. Team members are handpicked by the CEO and the sponsor

3. The team creates a flowchart of the existing process• Under the existing process the client may have to wait 1-2 weeks

before being able to replace the damaged auto glassbefore being able to replace the damaged auto glass⇒ Goal – A radical overhaul and improvement of the process to

shorten the client waiting time


Overview of the existing claims process

Request additional information

Pay

Cli tLocal

i d d tClaims

i

Notify agent

Give instructionsForwardclaim

Client independentagent

processingcenterFile claim

Request quote

Approvedglass

vendor

Provide quotePay


Existing claims processExisting claims process1. Client notifies a local agent that she wishes to file a claim. She is

given a claims form and is told to obtain a cost estimate from a localgiven a claims form and is told to obtain a cost estimate from a local glass vendor.

2. When the claims form is completed the local agent verifies the information and forwards the claim to a regional processing centerinformation and forwards the claim to a regional processing center.

3. The processing center logs the date and time of the claim’s arrival. The data is entered into a computer-based system (for record keeping only) by a clerk The claim is then placed in a hard copy filekeeping only) by a clerk. The claim is then placed in a hard copy file and passed on to a claims representative.

4. a) If the claims representative is satisfied with the claim it is passed along to several others in the processing chain and eventually aalong to several others in the processing chain and eventually a check is issued and sent to the client.b) If there are problems with the claim the representative mails it b k t th li t f tiback to the client for necessary corrections.

5. When the client receives the check she can go to the local glass vendor and replace the glass.


New Recommended DesignNew Recommended Design

ClientClaims

processing

Call in claim

p gcenter

PayNotify

Approvedglass

d

Schedule repair

vendor


Procedural changes to the new process

• The Claims representative is given final authority to approve the claim.

• Long term relationships with a limited number of glass vendors enables the insurance company to leverage its purchase power to pre-negotiate low prices.⇒ Clients no longer have to collect estimates.⇒ Vendors are certified for quality, price, reliability, etc.

• The Client now contacts the claims representative directly instead• The Client now contacts the claims representative directly instead of going via a local agent.


Structural changes to the new process

• A new 24 hour hotline enables the client to speak directly to a claims representative at the regional processing center.

• The claims representative gathers data over the phone, enters the data into the computer and resolves any issues on the spot. He tells the client to expect a phone call from a certain glass vendor to arrange the replacement.

• The claims information is immediately available for accounting via a LAN system and they can start processing the check and send it to the vendor.


Benefits of redesigned processg p• The client can have the glass replaced within 24 hours

As opposed to 10 days– As opposed to 10 days• The client has less work to do

– Only one phone call, no need for a cost estimateOnly one phone call, no need for a cost estimate• Problems handled immediately when the claim is filed• Lost or mishandled claims virtually disappeary pp• Less people involved in the process ⇒ lower op. costs• Long term relationships with glass vendors

⇒ Savings of 30-40% on paid claims due to special discounts

⇒ Consolidated monthly payments ⇒ lower handling costs⇒ Consolidated monthly payments ⇒ lower handling costs⇒ More consistent and reliable service

• Claims representative feels ownership of the process

34

Claims representative feels ownership of the process© Laguna & Marklund

Activity ClassificationA key astep in process re-design is classifying of the process activities

– Crucial in identifying waste and inefficiencies in existing processes

Two basic classification approaches:

Value-Adding

Activity

Value-Adding

Activity

Value Adding

Non-Value Adding

Non-Value AddingHandoffDelay

HandoffDelayRework

DelayReworkControlPolicy compliance

Business Value AddingControlPolicy compliance


Activity Classification

• Customer value-adding activities– Essential in order to meet customer expectations– Activities the customer would be willing to pay for

Involves doing the right things right– Involves doing the right things right– Performing the right activities– Doing them correctly, with high efficiency

• Business value adding activities– Control activities

Do not directly add customer value but are essential to– Do not directly add customer value but are essential to conducting business

• Non-value adding activities– Activities the customer is not willing to pay for


Activity Classification

Eli i ti f l ddi ti iti i k fi t t i• Elimination of non-value adding activities is a key first step in redesigning business processes

– Often achieved through task or activity consolidation

• Task and activity consolidation reduces– Hand-offs– Need for control activities– Process complexity


Process Re-Design and Performance MetricsMetrics

• Another key step in process re-design is determining what to improve– Performance must be measured against the stated

objectives

Profit maximizing firms Non-profit organizationsOverarching objective is usually to

maximize long term shareholder valueA common objective is survival and

growth while satisfying customer needs

Maximize revenues and Must use resources efficiently while

maximize long term shareholder value growth while satisfying customer needs

minimize costsy

understanding customer needs

Satisfying customer needs in an efficient waySatisfying customer needs in an efficient way

Well designed business processes

38

g p

© Laguna & Marklund

Let’s get our hands to workLet s get our hands to work…

• Laguna & Marklund textbook, section 1.7, exercises 1 and 2

39

Part II

Introduction to Business Process ModelingModeling

Process Modelling → Management

41

Your Modelling ExperienceYour Modelling Experience

• Who is familiar– with data modelling?g– with object-oriented modelling?

with process modelling?– with process modelling?– other modelling?

42

What is a Model?

Prepareshipment

Shipgoods

Registerorder

Receive

(Re)sendbill

Archiveorder

payment

Contactcustomer

PurchaseRequisition

Requirementfor materialhas arisen

Requisition PurchaseRequisitionreleased

for schedulingagreement

schedule/SA release

Purchaserequisitionreleased

for purchaseorder

Purchasing

Inbounddeliveryentered

Goodsreceived

Goodsi t

GoodsReceipt

Purchaseorder

created

Materialis released

Warehouse/Stores

receiptposted

Invoicereceived

43TO item

confirmedwithout

differences

Transferorderitem

is confirmed

Paymentmust

be effected

InvoiceVerification

Purposes of Process ModelingPurposes of Process Modeling

Process Compliance /

ProcessDocumentation

KnowledgeManagement

Improvementp

Risk Management

Process CostEnterpriseAnalysis/Simulation

pSystems

WorkflowManagement

EnterpriseArchitecture

Document SoftwareDocumentManagement

SoftwareEvaluation/Selection


Popular Process Modelling PurposesPopular Process Modelling Purposes

0.00%

10.00

%20

.00%

30.00

%40

.00%

50.00

%60

.00%

70.00

%80

.00%

90.00

%10

0.00%

45Recker et al. (2005)

Process Modeling Intention:

(Wreden, 1999)

As-Is versus To-Be

Process models can document the present situation (As-is modelling) or describe an targeted situation ( To-be modelling)

Start

E1F1

Start

P t it ti

10

E1

E2

E3E5

Minute(s)F520Minute(s)F4

F3

F2

F6E6

Start

E1

E2

F2

F1

Present situation Targeted situation

As-is models act as a blue print for analyzing how

To-be models act as a road map for creating the mostprint for analyzing how

processes are executed todaymap for creating the most efficient processing for new business initiatives

46

Process Modelling Viewpoints

Who?Organization

Who?

When?

What?Function When?

Process

Function

Which?

D t / S i / P d t47

Data / Service / Product

Process Modelling ViewpointsProcess Modelling Viewpoints

Wh t (f ti l ti )What (functional perspective)What tasks/function are happening in the process

Who (resource perspective)Who does these activities

When (control-flow perspective)In what order do they occur

Which (resource and data perspective)Which resources (i.e. materials, technology) is used in the processprocessWhich data is created/produced by the process

48

Process Model Granularity

49

Process Model GranularityProcess Model Granularity

• Main process (area):• Business process:

Personnel managementPersonnel recruitment

• Partial process:• Work step:

Select applicantEnter applicant data

• Elementary activity: Assign applicant number

50

Process Modeling Languages

• For business analystsB i P M d lli N t ti (BPMN)– Business Process Modelling Notation (BPMN)

– Event-driven Process Chains (EPC)– IDEF0, IDEF3– Flowcharts, data-flow diagrams (system analysis)– UML Activity Diagrams (system analysis)

• For business programmers– Business Process Execution Language (BPEL)– Yet Another Workflow Language (YAWL)– State machines and variants

And many, many more…51

d a y, a y o e

Purposes of Process Modeling

Abstract Models

OrganizationalAnalysis

Abstract Models

EPC, BPMN

Communication,

“AS IS”Process Models

simulation, activity-based costing…Process

Analysis & Design“TO BE”

Process Models

ures

for

vem

ent

PP

Mea

suIm

prov

ues Detailed ModelsProcess

ImplementationProcess

Evaluation

elsTa

rget

Val

u Detailed Models

BPEL, State Machines…

Data types, conditions, data f

Process Exec

utab

le

oces

s M

ode

Process

mappings, fault handling…

Integration, testing, deployment…

52Enactment & Monitoring

EPr

oProcess Metrics

Process Modeling Notations: EPCProcess Modeling Notations: EPC

53

Process Modeling Notations: BPMNProcess Modeling Notations: BPMN

54

Process Specification Language: YAWLProcess Specification Language: YAWL

55

Executable Process Specification Language: BPEL

56

BPMNBPMN

• Business Process Modeling Notationg• Originally developed by Business Process Management

Initiative (BPMI)• Handed over to Object Management Group (OMG) in 2005• Inspired by cross-functional flowcharts

S t d b t l• Supported by many tools:– IBM Websphere Business Modeler– ARIS, Oracle BPAS, O– Telelogic System Architect (now IBM)– ITP Commerce Process Modeler for Visio

O (htt //b t h i i t d d /O )– Oryx (http://bpt.hpi.uni-potsdam.de/Oryx)– Savvion, Lombardi, BizAgi, ...

57

BPMN from 10 000 milesBPMN from 10 000 miles…

• A process model in BPMN is called a Business Process Diagram (BPD)

• A BPD is essentially a graph consisting of four types of elements (among others):yp ( g )

58

ExampleExample

OAn Order Management process is triggered by thereception of a purchase order from a customer. Thepurchase order has to be checked against the stock repurchase order has to be checked against the stock rethe availability of the product(s) requested. Dependingon stock availability the purchase order may beconfirmed or rejected If the purchase order isconfirmed or rejected. If the purchase order isconfirmed, the goods requested are shipped and aninvoice is sent to the customer.

59

Order Management Process in BPMNOrder Management Process in BPMN

60

A little bit more on GatewaysA little bit more on Gateways …• Exclusive Decision / Mergeg

– Indicates locations within a business process where the sequence flow can take two or more alternative paths.O l f th th b t k– Only one of the paths can be taken.

– Depicted by a diamond shape that may contain a marker that is shaped like an “X”.p

• Parallel Fork / Join– Provide a mechanism to synchronize parallel flow and to

create parallel flow.– Depicted by a diamond shape that must contain a marker

that is shaped like a plus signthat is shaped like a plus sign.

61

Revised Order Management ProcessRevised Order Management Process

62

BPMN Exercise 1:Claims Notification process at a car insurer

When a claim is received, it is first checked whether the claimant isinsured by the organization. If not, the claimant is informed that theclaim must be rejected. Otherwise, the severity of the claim isj yevaluated. Based on the outcome (simple or complex claims),relevant forms are sent to the claimant. Once the forms arereturned, they are checked for completeness. If the forms provide allreturned, they are checked for completeness. If the forms provide allrelevant details, the claim is registered in the Claims Managementsystem, which ends the Claims Notification process. Otherwise, theclaimant is informed to update the forms Upon reception of theclaimant is informed to update the forms. Upon reception of theupdated forms, they are checked again.

63

Organisational modellingOrganisational modelling

• In general, organisational modelling encompasses:– People, departments, units, services, partners, clients, p , p , , , p , ,

suppliers…– Roles, entities, actors, …– Responsibilities, duties, skills, …

64

Organisational Modelling in BPMNOrganisational Modelling in BPMN

Bad news:• BPMN does not support the concepts previously

discussed• Organisational modelling in BPMN =

– LanesLanes– Pools

• Recommendation: Complement BPMN modelsRecommendation: Complement BPMN models with organisational charts and role/responsibility matrices

65

BPMN Elements PoolsBPMN Elements – PoolsPools represent business process participants. They are used to

Pool

participants. They are used to partition a set of activities from other pools.

Horizontal vs. verticalCan be a business entity or abusiness role.Each BPD contains at least one pool.

A Pool acts as the container for the Sequence Flow between activities. The Sequence Flow cannot crossThe Sequence Flow cannot cross the boundaries of a Pool.The interaction between Pools, e.g., between two collaboratingbetween two collaborating organizations, is shown through Message Flow.

66

BPMN Elements – Message FlowsgMessage Flow

Depicted by a dashed line with an openDepicted by a dashed line with an open arrowhead.Represent the flow of messages between two separate process participants that areseparate process participants that are prepared to send and receive them.

A Message Flow can connect directly to theA Message Flow can connect directly to the boundary of a Pool.

Represents an informative message to that participant.participant.

A Message Flow can cross the boundaries and connect directly to a Flow Object within that Poolthat Pool.

Represents a message that triggers certain action.

67

Order Management example (ctd )Order Management example (ctd.)

• The Order Management process now includes the customer as a process participant...

The Order Management process is started when acustomer places a purchase order. The purchase

d h t b h k d i t th t k thorder has to be checked against the stock re theavailability of the product(s). Depending on stockavailability the purchase order may be confirmed oravailability the purchase order may be confirmed orrejected. If the purchase order is confirmed, thegoods requested are shipped and an invoice is sentg q ppto the customer. The customer makes then makes thepayment.

68

Order Management BPD with SwimlanesOrder Management BPD with SwimlanesC

usto

mer

erS

uppl

ie

69

BPMN Elements – Swimlanes

Lanes represent sub-partitions within a p ppool. They are used to organize and categorize activities.

Horizontal vs verticalHorizontal vs. verticalMeaning is not specified by BPMN, Lanes are often used for internal roles (e.g., Manager, Associate), systems (e.g., an enterpriseAssociate), systems (e.g., an enterprise application), an internal department (e.g., shipping, finance), etc.

Both Sequences Flow and Message FlowBoth Sequences Flow and Message Flow can cross the boundaries of Lanes.Lanes can be nested:

E g an outer set of Lanes for companyE.g., an outer set of Lanes for company departments and then an inner set of Lanes for roles within each department.

70


The process now includes two departments• The process now includes two departments within the supplier organization...

Th h d i d b th S l &The purchase order received by the Sales &Distribution department has to be checked against thestock The order details are sent to the Warehousestock. The order details are sent to the Warehousedepartment that returns an availability notification. Ifthe purchase order is confirmed, the Warehousepdepartment collects the shipping details from thecustomer and ships the goods. The Sales &Di t ib ti d t t d i i t thDistribution department sends an invoice to thecustomer who then makes the payment.

71

Corresponding BPDCorresponding BPD

usto

mer

Cu

butio

n

uppl

ier

Sal

es &

Dis

trib

Su

War

ehou

se

72

BPMN Exercise 2: Lanes PoolsBPMN Exercise 2: Lanes, Pools

• Claims Handling process at a car insurerA customer submits a claim by sending in relevantdocumentation The Notification department checksdocumentation. The Notification department checksthe documents upon completeness and registers theclaim. The Handling department picks up the claimg p p pand checks the insurance. Then, an assessment isperformed. If the assessment is positive, a garage isphoned to authorise the repairs and the payment isphoned to authorise the repairs and the payment isscheduled (in this order). In any case (whether theoutcome is positive or negative), a letter is sent to the

t d th i id d t bcustomer and the process is considered to becomplete.

73

BPMN ArtifactsBPMN Artifacts

• Data Objects are a mechanism to show how data is required or produced by activities.

– Are depicted by a rectangle that has its upper-right corner folded over.corner folded over.

– Represent input and output of a process activity.• Annotations are a mechanism for the modeller to

provide additional text information to the diagram readerreader.

– Are depicted by open-ended rectangles.– Text annotations do not affect the flow of the process.

• Groups are a visual mechanism to logically groupGroups are a visual mechanism to logically group diagram elements informally.

– Are depicted by a rounded corner rectangle with a dashed line.

– The grouping does not affect the sequence flow and– The grouping does not affect the sequence flow and does not change the meaning of the elements contained within the group.

74

BPMN ConnectionsBPMN Connections

• Associations are used to link artifacts such as text or data objects with flow objects.j j

– Are depicted by a dotted line.– Can be directed or undirected.

• They can be used to show inputs and outputs ofThey can be used to show inputs and outputs of activities.

75


• Let’s have a look at some artifacts...The Purchase Order document serves as an input to the stockavailability check Based on the outcome of this check theavailability check. Based on the outcome of this check, thestatus of document is updated, either to “approved” or “rejected”.

Include the relevant documents in the process model. Also, forvisualization purposes, all parts of the processes that use orupdate the purchase order should be highlighted.update the purchase order should be highlighted.

76

Order Processing Model with ArtifactsOrder Processing Model with Artifacts

Send invoice

Confirm order

PurchaseOrder

Check stock availability Ship goodsUpdate PO: [approved]

Update PO: [rejected]

Order handling

Reject order

Order handling

77

BPMN Exercise 3: ArtifactsBPMN Exercise 3: Artifacts

The report related to the car accident is searched within the PoliceReport database and put in a file together with the claimdocumentation. This file serves as input to a claims handler whopcalculates an initial claim estimate. Then, an action plan is createdbased on a checklist available in the Document Managementsystem. Based on the action plan, a claims manager tries tosystem. Based on the action plan, a claims manager tries tonegotiate a settlement on the claim estimate. The claimant isinformed of the outcome, which ends the process.

Please depict all relevant documents in the model. Also visualizeactivities that are performed by the claims handler.y

78

Part III

BPMN Continues

BPMN Main Elements - RecapBPMN Main Elements Recap

Connections SwimlanesConnections

Message

Swimlanes

Message

Flow

Flow Objects Artifactsj

Gateway

Text Annotation

80

BPMN Flow Elements – Recap

Task Fl

cond 1

Start Event Task End Event Flow cond 2

default

AND-Join

default

OR-Split

c

AND-Split XOR MergeXOR-Decision~c

OR-Join

81

BPMN GatewaysBPMN Gateways

XOR lit ( l i ) t k b h• XOR-split (exclusive) take one branch• XOR-merge proceed when one branch has

l t dcompleted• AND-split (fork) take all branches• AND-join proceed when all incoming

branches have completed• OR-split (inclusive) take one or several

branches depending on conditions• OR-join proceed when all active incoming

branches have completed

82© QUT – BPM Research Group

14 February 2009 - Slide 82

Example: XOR & AND gatewaysExample: XOR & AND gateways

83

Example: OR gatewaysExample: OR gateways

84

An alternative to “split” gateways: Conditional flows

Head of DivisionInternational Travel

Receive Travel Request Head of Office

Domestic Travel

Financial OfficerFinancial Officer Approval

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BPMN Exercise 4BPMN Exercise 4

Map the following process fragment using OR-split, OR-join and/or conditional flows:When a claim is received, it is registered. After registration, the claim is classified leading to two possible outcomes: simple or complex. If the claim is simple, the policy is checked. For complex claims, both the policy and the damage are checked independentlythe policy and the damage are checked independently.

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Complex gatewaysComplex gateways

• Sometimes, it is not necessary to wait for all active branches to complete:

In an order placement process, a quote is sought from two preferred suppliers in parallel. As soon as

f th id t th d l tone of them provides a quote, the order placement process may proceed. The second quote, if any, is ignoredignored.

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Complex gateway exampleComplex gateway example

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Sub processesSub-processes

• A task in a process can be decomposed into a “sub-process”.

• Use this feature to:– Break down large models into smaller ones, making

h i d d d l ithem easier to understand and to explain– Identify parts of a process model that should be:

• repeated• repeated• executed multiple times in parallel• cancelled, or• compensated.

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Sub-processes: exampleSub processes: exampleOrder Handling Process

Ch k P h

OK Payment

Check Purchase Order

Payment Process

Issue Invoice t C t

Receive Payment N ti f B k

Confirm Payment to to Customer Notice from Bank yCustomer

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Process hierarchies

Process I it d

Receive and V lid tInquity and

QuoteValidate Order

Receive Order

Enter Order Check Credit

Access Credit

Clear OrderCredit

Available?Access Credit

RecordContact

customer account rep.

Fragment of the

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account rep. of the SCOR model

Block structured repetitionBlock-structured repetition

PO Protocol taken from www.rosettanet.com:

A customer sends a purchase order (PO) and expects to receive a “PO response” In the “PO response” each linereceive a PO response . In the PO response , each line item is marked as “accepted”, “rejected” or “pending”. If some line items are left pending, the customer expectssome line items are left pending, the customer expects to receive a “PO Update” later. Again, this “PO Update” marks line items as “accepted”, “rejected”, or “pending”. If some line items are left pending, the customer waits for another PO-Update, and so on until no line items are left pendingleft pending.

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Block-structured repetition: exampleBlock structured repetition: example

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Interlude: Arbitrary cyclesInterlude: Arbitrary cyclesSend PO

• Another way of capturing “repetition” is through “cycles”: flows that go back to

Receive PO Responsecycles : flows that go back to

an “earlier” task.• Choice between looping and

l i ft tt fcycles is often a matter of taste, but if it is possible to meaningfully cluster the Receive PO

Updateactivities to be repeated as a sub-process, looping is more suitable.

Update

di lipending line items

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Exercise 5: Repetition/cyclesExercise 5: Repetition/cycles

After a claim is registered, it is examined by a claims officer. The claims officer then writes a “settlement recommendation” Thissettlement recommendation”. This recommendation is then checked by a senior claims officer who may mark the claim as “OK”claims officer who may mark the claim as OK or “Not OK”. If the claim is marked as “Not OK”, it is sent back to the claims officer and the s se bac o e c a s o ce a d eexamination is repeated. If the claim is OK, the claim handling process proceeds.

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Multiple instancesMultiple instances

• Multiple instances ~ “parallel repetition” of an activity/sub-process

• Useful when the same activity should be executed for multiple entities or data items, e.g.

R t t f lti l li– Request quotes from multiple suppliers– Check the availability for each line item in an order

separatelyseparately– Send and gather questionnaires for multiple

witnesses in the context of an insurance claim

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Multiple instances exampleMultiple instances - example

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Event typesyp

Start/End Event – Indicates that an instance of the process is created/terminated when an event occursprocess is created/terminated when an event occurs without specifying the cause of this event

Intermediate event – Indicates that an event isIntermediate event Indicates that an event is expected to occur during the process, without indicating the cause of the event

Start Message Event – Indicates that an instance of the process is created when a message is received

End Message Event – Indicates that the process is terminated when a message is received

Intermediate Message Event – Indicates that an event is expected to occur during the process the event is triggered when a message is received

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event is triggered when a message is received.

Event types (cont.)yp ( )Start Timer Event – Indicates that an instance of the process is created at certain date(s)/time(s), e.g. start p ( ) ( ) gprocess at 6pm every Friday

Intermediate Timer Event – Triggered at certain date(s)/time(s) or after a time interval has elapsed since thetime(s), or after a time interval has elapsed since the moment the event is “enabled”

End Link Event – Indicates that the process flow continues elsewhere (e g in a separate diagram)elsewhere (e.g. in a separate diagram)

Start/Intermediate Link Event – Indicates that the process flow is being picked up from a “previous” diagram”.

Intermediate/End Exception Event – Indicates an error: the “end” version generates the exception event while the “intermediate” version consumes it

Intermediate/End Compensate Event – Indicates that the enclosing process must be compensated: the end version generates the compensation event while the “intermediate”

99version consumes it

Advanced event typesyp

Start Rule Event – Indicates that an instance of the process i d h i h l b his created each time that a rule becomes true, e.g. start the process each time that the number of people complaining for the same reason becomes greater than 5

Intermediate Rule Event – Triggered when a rule becomes true, e.g. when an employee is sick

Intermediate/End Cancel Event – Indicates that the enclosing process must be cancelled: the end version generates the cancellation event while the “intermediate”

End Terminate – Generates an event that causes the whole

generates the cancellation event while the intermediate version consumes it

process to be terminated forcefully (i.e. nothing else should be done).

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Modelling with events ExampleModelling with events - Example

A PO handling process starts when a PO is received. The PO is first registered. If the current date is not a working day the process waits until the followingworking day, the process waits until the following working day before proceeding.Otherwise, an availability check is performed and aOtherwise, an availability check is performed and a “PO response” is sent back to the customer. Anytime during the process, the customer may send a “PO change request”. When such a request is received, it is just registered, without further action.

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Modelling with events ExampleModelling with events - Example

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Event based decisionEvent-based decision

• With the XOR-split gateway, a branch is chosen based on expressions that evaluate over available dataavailable data

The choice can be made immediately after the incoming flow firesincoming flow fires

• Sometimes, the choice must be delayed until something happens choice is based on a racesomething happens choice is based on a race between events

• This is why BPMN distinguishes data-driven andThis is why BPMN distinguishes data driven and event-driven XOR-splits

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Event based decision ExampleEvent-based decision – Example

After a purchase order is sent, a customer can receive either a “PO Response” or an error message. It may happen that no response is received at all. If no response is received after 24 hours or if an error message is received, the purchasing officer should be notified. Otherwise, the PO Response is processed normally.

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Event based decision ExampleEvent-based decision – Example

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Exercise 5Exercise 5

In the context of a claim handling process, it is sometimes necessary to send a questionnaire to the claimant to gather additional information The claimant isclaimant to gather additional information. The claimant is expected to return the questionnaire within five days. If no response is received after five days, a reminder isno response is received after five days, a reminder is sent to the claimant. If after another five days there is still no response, another reminder is sent and so on until the completed questionnaire is received.

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Exception handlingException handling• Exceptions are events that deviate a process from its

“normal” coursenormal course• Handling exceptions often involves stopping a sub-

process and performing a special activityp p g p y• Three ways of stopping a sub-process in BPMN:

– Simple stop: Stop a sub-process and start an exception handling tiroutine

– Transaction cancellation: Stop a transaction, release resources reserved during the transaction and notify any partners involved in the transaction

– Compensation: Stop the sub-process, compensate any sub-sub-process, and run a compensation routine

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Exception handling – Examplep g p

Consider the previous “PO Change Request” example with the following variation: When a PO Change Request is received, it is first checked to determined if it can be accepted. If it is accepted, any processing related to the PO must be stopped. The PO change request is then registered. Thereafter, the process proceeds as it would after a “normal” PO is registered.

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Exception handling – ExampleException handling Example

Handle PO Next working day

R i t PO

Receive PO

Next working dayweekend/holiday

Check Send PO Register PO Availability Response

Register Modified PO

PO Changed

Receive PO Change PO ChangedChange

Check PO Change

OK

default

PO Changed

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default

...

Exercise 6

Extend the claim handling process as follows: After checking the insurance policy, a possible outcome is that the insurance is invalid. In this case, any processing i ll d d l tt i t t th t I this cancelled and a letter is sent to the customer. In the case of a complex claim, this implies that the damage checking is cancelled if it has not yet been completedchecking is cancelled if it has not yet been completed.

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Compensation – ExampleCompensation Example

After a PO is registered, checked, and a response has been sent back, a payment sub-process and a fulfilment sub process are startedprocess and a fulfilment sub-process are started in parallel. During these two sub-processes, a PO cancellation may be received from the userPO cancellation may be received from the user. In this case, both sub-processes are stopped, and a compensation routine is performed for a d a co pe sa o ou e s pe o ed oeach of them (e.g. reimbursement and/or goods return may need to occur).

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Compensation – Examplep pPO Processing

Receive PO Cancellation

Cancel PO

Receive PO

Register PO PaymentSend response

Re-imbursement

Fulfillment

Goods return

Terminate PO process

Goods return

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Modelling conventionsModelling conventions

?Why use modelling conventions?– To reduce variety– Increase the comparability of modelsIncrease the comparability of models– Support the analysis (with clear syntax, sematic and layout

standards)Acceleration and simplification (j st start and ‘Go’)– Acceleration and simplification (just start and ‘Go’)

– …

Different types of modelling conventions?– Organisational level

Project level– Project level– …

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Modelling GuidelinesModelling Guidelines

• Features to consider– Layout conventions– Naming conventions– Degree of detailing

The modelling lifecycle– The modelling lifecycle– Technical responsibilities– Levels of abstraction– …

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Procedure for Defining GuidelinesProcedure for Defining Guidelines

Selectmodelling methods

Definemodelling levels

Creategroup hierarchygg g p y

D fiCreate and administer users

Definenaming conventions

Definegraphics conventions

Determine procedure forDB management

Definemethod filters

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Modelling Guidelines

Typical categories of guidelines:Typical categories of guidelines:• Naming conventions for processes, tasks and

e entsevents• Guidelines for layout and usage of tasks,

events, lanes and pools• Process elements “to be avoided”

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Naming conventions for processes and tasks

• Names should be 1-3 words long• Begin with a verb followed by business object

name and possibly an adjective (e.g. Issue Driver Licence, Renew Driver Licence via Offline Agencies)Agencies)

• Avoid generic verbs such as Handle, Record…A id i i ( f f )• Avoid prepositions (to, from, for)

• Avoid naming business areas which are already d i l / lnamed in a lane/pool

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Verbs to avoidVerbs to avoid

• Update, Create, Read, Delete, Record, Download, Transmit: Too technical. Try Amend, change, generate retrieve remove capture register forwardgenerate, retrieve, remove, capture, register, forward

• Send: Could merely be a message flow from one business process to anotherbusiness process to another.

• Process, Handle, Manage: Too generic, would not reflect the specific objective of the process. Tryreflect the specific objective of the process. Try disseminate, distribute, etc.

• Input: Why do we have to input data? Maybe there is p y p yan opportunity for process optimisation here…

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Naming conventions for eventsNaming conventions for events

• For start/intermediate message events: indicate what is being sent or received (e.g. I i R i d)Invoice Received)

• For end message events indicate what is b i t ( O d S t)being sent (e.g. Order Sent)

• For time events, indicate frequency or d dli M thl W kl I i Ddeadline, e.g. Monthly, Weakly, Invoice Due.

• Event names (except for timer events): should b i ith f ll d b t ti i lbegin with a noun followed by a past participle

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Usage and layout guidelinesUsage and layout guidelines

• A task must always have at least one incoming and• A task must always have at least one incoming and one outgoing flow

• Input flows should come from the left or from the topp p• Output flows should come out of the right or the

bottom• A process model should contain at least one pool• A process model should contain at least one pool• Pools must be laid out horizontally• A pool may appear multiple times in a diagram to p y pp p g

improve presentation, but the name of the repeated pool must be italicised.

• Use link events to split large diagrams across multiple• Use link events to split large diagrams across multiple pages

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Process elements to be avoided(considered too “advanced”)

• Error, compensation and cancel events• Sub-processes with multiple instances (the p p (

“parallel bars” symbol) and compensation sub-processes (the “rewind” symbol)p ( y )

• OR gateways and complex gateways. On the other hand conditional flows are encouragedother hand, conditional flows are encouraged.

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Modelling guidelines: exampleHealth Treatment

ServiceRecords Close Service

Request Received

List of Patients Sent Schedule Appointment Request Sent

Assessment

Review Patient Chart

Diagnose Patient

for each diagnostic test

Order Diagnostic

Test

Review Test Results

Internal Diagnostics

Test

Care Planning

external test order request

external test

results

Conduct Test

Care Plan Request Received

External Diagnostics

Test Request Received Test Request Sent

122© Queensland Health

Wrap-up Modelling Exercise

Model the “plant hire” process described next:– Identify lanes, pools and participants– Identify normal (i.e. “ideal”) behaviour– Identify “exceptional” behaviour– Apply the modelling guidelines.

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Wrap-up Modelling Exercise

When a site engineer needs to hire a “plant” (truck, equipment, etc.) it sends a request to a clerk at the q p , ) qdepot. The clerk selects the most cost-effective plant item that complies with the request, checks its availability with the plant’s hirer and recommends that itavailability with the plant s hirer, and recommends that it be engaged. The engagement is approved by a works engineer at the depot after which the clerk sends a confirmation to the hirer, arranges with the site engineer for the plant to be inspected, and records the engagement in a system.engagement in a system.Eventually, the hirer sends an invoice to the clerk. After checking that the engagement corresponding to the invoice was fulfilled (by contacting the site engineer), the clerk forwards it to the payment department.

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And once I’ve got a model what’s next?And once I ve got a model, what s next?

Some process analysis techniques:– Cause-Effect-Analysisy– Scenario Techniques– Process Simulation– Activity-Based Costing– QoS Analysisy– Process Mining

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HomeworkHomework

• See handout• Can be completed in teams of up to 4 membersp p• To be returned on 12.03

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References and acknowledgmentsReferences and acknowledgments

• Compulsory reading for next session:• Compulsory reading for next session:– Laguna & Marklund, chapters 1 and 2

S t d di ( i bl )• Suggested readings (non-examinable)– M. zur Muehlen and J. Recker: “Process Discovery on a

Rain Da ” http //tin rl com/cbc4 fRainy Day”. http://tinyurl.com/cbc4uf– M. Rosemann. “Pitfalls of Process Modeling”. Business

Process Management Journal Volume 12 Number 2Process Management. Journal, Volume 12, Number 2, 2006 , pp. 249-254. http://tinyurl.com/c4vkyg

• Other resources are listed on the course Web page• Other resources are listed on the course Web page

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