BUSINESS PROCESS STRUCTURAL ANALYSIS
by
Gary S. Tjaden
Georgia Tech Center for Enterprise Systems
October, 1999
Business Process Structural Analysis
Introduction
The Discipline of Business Process Reengineering
Business Process Reengineering (BPR) has been popularized in recent years as the most
important technique for restructuring business operations to achieve dramatic
improvements in profitability and sustainable competitive advantage. Most often it is
described as emphasizing a "cross functional" orientation toward structuring activities
such that traditional organizational walls are eliminated and the end-customer is
integrated into the business processes. Often it is explained and justified in the context of
advances in information technology which, presumably, make such new organizations of
work more feasible than in the past.
In fact, BPR is nothing new. Every military force in history consisting of more than a few
soldiers has had to deal with the issues of how to organize for conducting military
campaigns. In the early part of this century, Frederick Winslow Taylor’s studies of
organizing work, described in The Principles of Scientific Management, had a great
influence on the growth of industry. In particular, Henry Ford and Alfred Sloan used
Taylor’s principles to grow their new companies, Ford Motor Co. and General Motors,
into huge and dominating enterprises.
Current BPR teachings often criticize "Taylorism" as the cause of so many of the ills of
modern businesses. However, blaming Taylor’s principles for the cause of current
business ills is like blaming the discoverer of aspirin for deaths due to aspirin overdose.
Any principles can be improperly applied, leading to damage and failure.
When Taylor developed his principles he was reacting to the then prevailing practice of
organizing work around the skills of independent artisans. A major assumption of that
approach to structuring business processes was that each artisan knew best how to
perform his work. Taylor showed, using the discipline of the scientific method, that this
assumption was not a safe one to make. He developed four major principles, which are
paraphrased (except for the fourth principle, which is a direct quotation) here:
1. A science should be developed for each work activity, identifying the "best way"
to perform it.
2. People performing an activity should be scientifically selected to have the proper
capabilities, and then trained in the science and their skills developed.
3. Managements’ relationship with workers should be one of cooperation in
performing the work according to the science.
4. "There is an almost equal division of the work and the responsibility between the
management and the workmen."
It is hard to fault these principles as being the cause of operational dysfunctions in
businesses. They are not, in fact, much different than those forming the basis for the
current popularized interest in BPR. However unadvisedly they may have been applied,
they did lead to remarkable improvements in the way business operations were
organized.
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Business Process Structural Analysis
The key to Taylor’s advances in organizational thinking was that the scientific method
should be used to develop a "best way." The "best way" must always be acknowledged to
be relative to the available tools and labor skills for performing business activities. They
will change over time, so business processes must continually be reengineered to produce
a new "best way." What shouldn’t change over time, however, is use of the scientific
method to find it. The necessity to continually reengineer appears to be one of the areas
where Taylor’s principles have been misapplied.
The scientific method requires first developing an hypothesis as to how an improvement
might be achieved, then testing the hypothesis in very controlled ways so that its validity
can be confirmed or denied. Implicit in the ability to both state and test an hypothesis is
that there is a way to measure whether it is true or false, and to measure and control all of
the variables in the environment surrounding it which may impact the results. That is,
there must be a good set of measurable metrics for the domain of interest. Today this is
not the case for business process designs or structures.
The current state of BPR reminds me of an automobile repair incident I experienced. On
the way home from work in the middle of the hot Georgia summer I found that the car’s
air conditioner was not producing cold air. The next day I took it to a convenient repair
shop near work to have it looked at. The mechanic recharged the freon, and told me the
compressor was leaking and would need to be replaced. The cost, with labor, would be
about $500, less the $50 he charged for the freon. I decided to seek a second opinion.
That weekend I left the car at a repair shop specializing in diagnostics. They used a very
sensitive instrument to measure the loss of pressure. They found that there was no loss of
pressure. After running several other tests, all negative, they deduced that the only
remaining possible cause could be the radiator cap. It was not holding pressure in the
cooling system, which allowed the engine compartment to become too hot for the air
conditioner to dissipate heat adequately. The cost to repair was $50 for the diagnostic
service plus $5 for a new radiator cap.
The concepts presented here are intended to provide a sound basis for the diagnosis and
repair of poorly functioning business processes. Through developing a useful set of
business process structural metrics, a scientific discipline is provided for what is currently
the "art" of business process reengineering. Trial-and-error can be a very costly
approach to fixing broken business processes, just as it can with broken machines.
It appears that the mystique of the "information revolution" has contributed to the loss of
focus on the need for a discipline for BPR. Somehow the magic of computer technology
has been expected to soothe the ineffectiveness of business operations. Today, however,
it is well documented, and becoming better understood, that information technology
should not be the primary focus for business process reengineering projects. Of
considerably more importance is the ability to benchmark the existing processes, and use
these benchmarks to both design the new processes and measure progress towards
achieving the new processes’ objectives. The role of information technology is as a
critical enabler of the implementation of the new processes.
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Business Process Structural Analysis
Business Process Metrics
Business process metrics fall into two major categories: operational, and structural.
Operational metrics are those that measure how the process is performing through time.
The specific metrics one might use tend to depend on the purpose of the process.
Consider the simplified example of a portion of a process for repairing aircraft radar
units, shown in Figure 1. The boxes represent steps in the process and the arrows
represent the transfer of material or information, called material flows, between the steps.
Operational metrics for such a process might be:
•
units repaired per day,
•
mean time to repair,
•
percent repaired correctly, and
•
units repaired per person.
Receive
Defective Unit
Return
Unit
Diagnose
Problem
Prepare
Parts
Send
Order
Repair
Unit
Receive
Parts
Return
Parts
Figure 1 Repair Radar Units Business Process
Choosing good operational metrics is often a matter of common sense. A methodology
for doing so, called the goal/question/metric paradigm, has been developed and found to
be very effective.
Operational metrics tend to be meaningful only if measurements are made and recorded
periodically for comparison. This is because the benchmarks produced using such metrics
measure the performance of the process, which will vary through time in reflection of
changing demands on the process, and changes in the personnel and tools used in the
process.
While operational metrics deal directly with dynamic properties of business processes,
structural metrics deal with static properties. These static, or structural, properties
strongly influence the performance of the process, however. Hence structural metrics deal
indirectly with the dynamic properties.
Consider the example of a Naval Aircraft Carrier Task Force deployed in a war game
exercise. An operational metric might be the percentage of "enemy” submarines detected,
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Business Process Structural Analysis
while a structural metric might be the ratio of cruisers to destroyers in the task force. The
structure of the task force, as reflected in the structural metric, would probably have a
large impact on actual operation during a war game, and hence on the values measured
for the operational metric.
Traditional structural metrics include, for example, the ratio of indirect to direct persons,
number of management levels, and the ratio of process time to cycle time. These metrics
can be thought of as efficiency metrics because they tend to deal with how well the
resources of the process are utilized.
However, in the commercial world it is well known that one can have a very “efficient”
business process, but yet fail miserably in the marketplace. For this reason, new kinds of
structural metrics dealing with effectiveness are being developed. An example of a
structural effectiveness metric that has been studied extensively is the Capability
Maturity Model (CMM) for software development business processes. This particular
metric is not directly applicable to other types of business processes, although it appears
that it would be possible to extend it to be so.
Work over the last several years in the area of business process reengineering has
identified structural properties of business processes which are felt to be important to be
reengineered into “good” processes. Among these one can list simplicity, integration,
self-learning, agility, virtuality and robustness. Each of these properties, and others that
could be suggested, lend themselves to being metrified. Metrics for three of these
properties, called Simplicity, Integration and Flexibility, have been developed. They will
be described in detail in Chapter 3.
Business Process Benchmarking
Benchmarking is the activity of collecting measurements against well defined metrics,
and using these measurements to both set objectives for the future and measure progress
against the objectives. Of particular importance in benchmarking business processes is
the way the collected measurements are analyzed. Both operational and structural
measurements are needed to properly benchmark business processes.
Measurements of operational benchmarks are used to make three determinations:
1. is the process performing as desired,
2. if not, are any performance problems due to special causes, and
3. are the performance problems, if any, due to deficiencies in the process’
structure?
The analysis techniques for making these determinations are those of the discipline of
statistical process control, using control charts. This discipline is well developed, and
there are many good books on the subject.
The most critical issue regarding the use of operational metrics is to make sure the
process is performing in statistical stability (e.g., no problems due to special causes)
before any process design changes are contemplated. Changing the structure of an
unstable process is essentially like “shooting in the dark.”
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Business Process Structural Analysis
If an analysis of the operational benchmarks indicates that structural changes are needed,
an analysis of the structural benchmarks is used to determine the nature of the changes
required. This analysis involves examining both aggregated measures to determine the
general nature of the problems, and then an analysis of more detailed measurements of
the structural units of the process to give clues as to specific areas needing redesign.
One of the benefits of good structural metrics and the benchmark measurements using
them is that they lead to rapid identification of problem areas. For example, Fig. 2 shows
a radar chart of the aggregated measurements for an actual business process (of a DoD
unit) for the structural metrics of Cycle-Time (CT) Efficiency, Simplicity, Integration and
Flexibility. This particular business process measures far from optimum on all of the
metrics.
Per Cent Of Maximum
CT Efficiency
100%
50%
50%
19%
14%
Flexibility
0%
Simplicity
8%
14%
Integration
Figure 2 Aggregated Structural Benchmarks
This situation is not necessarily bad, however. If management’s strategic objectives for
the process are, for example, that it be well integrated, then perhaps it should score closer
to optimal on CT Efficiency and Integration, but not necessarily better on Simplicity and
Flexibility. The purpose of a chart such as Fig. 2 is to assist the process owners in
deciding upon needed strategic changes, and then to provide a benchmark against which
to compare planned and actual future changes to the process’ structure.
Fig. 3 shows the benchmark values of the Integration metric for each of the material
flows of this same process. From this chart it can be determined that only three of the
flows are even moderately well integrated. If higher levels of integration are to be
achieved, restructuring of essentially all of the flows will be required. Again, planning
such changes should involve recomputing the metrics under the assumed changes, and
then comparing the new values to the initial benchmarks to assess expected improvement.
How could this approach to benchmarking impact reengineering of the Repair Radar
Units process of Fig. 1? While a little more information would be needed to properly
determine its benchmark measurements for the structural effectiveness metrics, this
overly simplified process model can be used to illustrate the nature of the metrics’
contribution to a successful reengineering project.
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G. S. Tjaden
Business Process Structural Analysis
I-Points
Unit Integration
10
100%
8
80%
6
60%
4
40%
2
20%
0
m1
m2
m4
m6
m7
m8
m 10
m 12
m 14
m 15
m 16
m 17
m 18
m 19
m 20
m 21
m 22
m 23
0%
m 24
Material Flows
Figure 3 Integration Benchmark For Each Material Flow
Suppose that the desire is to use Electronic Data Interchange (EDI) to make the process
more integrated with the spare parts suppliers. Assume that the initial benchmark
measurements are those of Figs. 2 and 3. Further assume that EDI is used merely to
automate the Send Order activity of Fig. 1. In this case it can be concluded with
confidence that the new process would be, at best, slightly improved relative to the CT
Efficiency and Simplicity metrics, but would be virtually unchanged relative to the
Integration and Flexibility metrics.
If the strategic goal is to demonstrate the achievement of “Enterprise Integration,” (at one
time a mandated imperative in the DoD) the simple change assumed above would result
in failure of the project, unless no one thought to measure it against such metrics, in
which case no conclusions could be reasonably made. Achieving success against these
metrics would require more significant structural changes to the process to be designed
and implemented.
In fact, this simple example can be used as a reminder that in reengineering, the business
processes should be redesigned based upon business objectives before the enabling
information technology is chosen.
Chapter 2
Modeling The Structure
Business Processes
A business process (BP) is a collection of activities which are performed in a systematic
fashion to produce finished goods from raw materials. The activities of a BP are also
business processes in the sense that they have all of the same formal structural properties
as any BP. They can be thought of as sub-BPs. The purpose of a business process is to
add value to raw materials and embody this value in the finished goods.
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Business Process Structural Analysis
Environment
Every business process exists within an environment consisting of one or more other
business processes. These external BPs fall into several categories:
•
Suppliers, which provide raw materials to the BP.
•
Users, which take the BP’s finished goods as raw material inputs.
•
Customers, which have full authority over if and when a BP is executed, and
•
Owners, which have the authority to modify, create or destroy the BP, in addition
to the above customer authorities. Owners are also Customers
In general, a BP will have multiple Suppliers, Users, Customers and Owners. A single
external BP may fall into more than one category. For example, a User BP may also be a
Customer BP. Customer BPs ultimately determine the value of the BP’s finished goods.
Activities
Activities are comprised of three types of entities: people, tools used by the people to
execute the activity, and procedures defining how the activity is executed. In Fig. 4
below, activity A1 executes an activity (process) instance which produces an output of
material of type Mx. This material is used as an input by Activity A2. The actual physical
transfer activity is presumed to be part of A1, unless explicitly defined as a separate
activity. The production of Mx and transfer from A1 to A2 is called a material flow. An
item of material can be either physical, such as a bolt or piece of paper, or logical, such as
a telephone or e-mail message. An activity can have any number of material inputs and
outputs. With respect to Mx, A1 is called a producer or supplier activity and A2 is called a
consumer or user activity. This specific material flow is denoted Mx12.
MX 12
Raw material
A1
Finished goods
Raw material
A2
Finished goods
Figure 4 Basic Business Process Elements
Since an activity is also a business process, it is itself comprised of a collection of subactivities, each having material flow inputs and outputs, and each (possibly) adding value
contributing to the value-added delivered to the ultimate customer.
An activity is described by specifying a textual name, the names of the people or groups
of people which perform the activity, the number of people, its operating cost, and its
amortized capital cost. The activity name must be comprised of only two or three words,
a verb, a noun, and an optional adjective. Activities are also given unique hierarchical
numbers as shortcut identifiers.
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Business Process Structural Analysis
Material Flow Descriptions
The formal description of each type of material which can flow between two activities,
Mxab, consists of several properties. The name of a material item type is an arbitrary
alpha-numeric string, denoted by the subscript, "x", above. The activity which produces
the item as an output, the supplier activity, is denoted by the first superscript "a" above.
The activity which consumes the item as an input, a user activity, is denoted by the
second superscript "b" above. Thus, the definition of each material flow item includes the
properties Name, Supplier, and User. All three of these attributes must be specified to
uniquely identify a material flow. In this way a material item which is a copy of another
item (e.g., a copy of a purchase order approval), but which flows to a unique activity, will
be uniquely identified.
There are a number of additional properties needed to define a material flow for purposes
of modeling important BP structural characteristics. These are called Cycle, Effort,
Delivery, Authority and Performance.
Cycle
The total elapsed time for a single instance of each output flow to be produced is called
the Cycle Time. Time is counted from when the first input required to produce the
output arrives at the producing activity to when the output is actually delivered by the
activity to its user activity. For example, suppose two documents are required as inputs
to produce a purchase order. The first document arrives at the Order Supplies activity at
9:00 am on Day 1, the second document arrives at 4:30 on Day 2, and the purchase order
is issued at 11:00 am on Day 3. The cycle time is the number of business hours from
9:00 am on Day 1 to 11:00 am on Day 3, or 18 business-hours, assuming 8-hour business
days.
For activities which produce a continuous flow of outputs, or have a continuous flow of
inputs it is reasonable to use average or typical values for Cycle Time, so long as data is
collected for a long enough period of time to determine accurate average values.
Effort
The Effort property is used to identify the people who actually perform the work which
produces each output material flow, the amount of effort expended in doing so. An
individual person may contribute to several different outputs produced by several
different activities. All such effort must be recorded for each such output. Three subproperties, Name, Group and Process Time are required to specify the Effort property.
For each person expending effort on producing the flow, their Name and Group must be
specified. The Name can be either their real name, such as Jim W. or Mary P., or it could
be an initial or number. The Group is the functional area to which they belong, such as
Purchasing, or Accounting. Together the Name and Group must be unique for the
process being modeled. Process Time is the amount of effort in hours expended by each
person to produce one instance of the output.
Delivery
The Delivery property indicates how the production (output) of the material flow is
scheduled. Its values are enumerated from the following: Per-Event (PE), Per-Request
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G. S. Tjaden
Business Process Structural Analysis
(PR), Per-Request-Direct (PRD), Per-Schedule (PS), or Per-Command. In the
following discussion, Mpab is the material flow whose Delivery attribute is being
specified.
Per-Event delivery occurs when Mpab is output as a response to some event external to
the producing activity, Aa, without being requested. The event must be reported to Aa by
a material flow input, Meca, to Aa. The activity, Ac, which produces flow Meca need not be
Ab, the user activity of material flow Mpab . The flow, Meca, however, must be reporting
state information regarding Ab on a periodic and continuous basis, and Aa must itself
make the decision as to whether to produce Mpab. Output of an exception report by a
quality control activity when defect rates exceed control limits is an example of PerEvent delivery scheduling. Just-in-time delivery of raw material items based upon the
event that a stocking level in a user activity has reached a certain limit is also an example.
Per-Request delivery means that Mpab is output only after a material flow, say Mrca, is
received as an input to Aa, and Mrca specifically requests production of Mpab. Typically
several material flows must occur for the requested material to actually be delivered. For
example, as shown in Fig. 5, a user activity in Company 2 issues a request for needed
materials to its purchasing department, which then sends a purchase order to Company
1’s sales department, which then sends the order to the order fulfillment department,
which finally results in the shipping department delivering the ma-terial. Since Mrca is a
request, Aa has the authority to reject it (e.g., due to prior requests from other customers).
Per-Request-Direct delivery occurs when the requesting flow, Mrca, is output directly by
the user activity as an input to the producing activity. That is, when Ab and Ac are the
same activity in a Per-Request delivery situation.
Per-Schedule delivery occurs when there is a periodic output of a series of material
flows, Mpab, based upon some pre-determined schedule. The output is produced without
any consideration to the status of the user activity, Ab. No scheduling material flow is
required to be apparent. Typically the scheduling activity is performed externally to the
process being modeled, or is done at a time outside of the time-frame of interest to the
modeling activity. Output of monthly accounting reports is an example. This type of
delivery is found in traditional pipelined assembly lines where each stage produces its
output at a predetermined rate, without regard to whether the next stage has a surplus or a
scarcity of raw materials. Inventory buffers between stages are usually required to
A4
Fulfill Order
Mpurchase-order
Mship-authoriztion
Company 1
Company 2
A1
Ship Product
A3
Purchase Product
Mrequest-purchase
A2
Use Product
MProduct
Figure 5 Example of Per-Request Delivery
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Business Process Structural Analysis
smooth the flows.
Per-Command delivery occurs when an owner activity, Ao, of the producing activity,
Aa, outputs a material flow, Mcoa, commanding that Mpab be produced. Such a
commanding flow, Mcoa, is not pre-scheduled, and Aa has no authority to refuse to
comply with it. An example is when a corporate controller’s department issues a memo to
all of the corporation’s business units instructing them to produce a special accounting
report.
Authority
The Authority attribute represents relationships between activities and a material flow.
Each material flow, Mxab, can have one or more activities, including the supplier and user
activities, which can exercise some authority for coordinating the activity instances which
produce that flow. Three types of authority are defined: User (U), Customer (C), and
Owner (0). An Authority attribute is specified for a given material flow by listing the
names of activities having authority and the authority (U,C or 0) possessed by each such
activity.
User authority is the authority of a user activity to either accept or reject the input
material flow. If the input must be accepted for use (cannot be rejected), then the activity
has no authority at all over the material flow. Customer authority includes the above
User authority, plus the additional authority to begin, suspend, continue or terminate the
process instance of the activity producing the material flow. Finally, Owner authority
includes Customer authority as well as the authority to create, modify or eliminate the
producing activity.
Consider the example, diagrammed below in Fig. 6, of a person buying shoes at a shoe
store. The customer is modeled as the activity, AB, of Buy Shoes, while the store is
represented as the activity, AS, of Sell Shoes. During the execution of a process instance a
number of different material items will flow between the activities. For example, the
spoken message by the customer asking to see shoes is a material flow, as is the payment
to the shoe store, the receipt for the payment, and the shoes themselves. As with any
modeling methodology, not all of the details will be important enough to be modeled.
Mshoes
AB
Buy Shoes
AS
Sell Shoes
Mpayment
Figure 6 Example of the Authority Property
The customer may choose to enter the shoe store and ask to buy shoes. Thus, the
customer activity, AB, has the authority to begin an instance of the shoe store’s process or
activity, AS, of selling shoes (i.e., producing the output material flow Mshoes). Similarly,
the customer may choose to leave the shoe store at any time without buying anything.
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Therefore, AB has the authority to terminate the instance of AS. Since the customer may
also choose to accept or reject any shoes offered by the store, AB also has accept and
reject authority over Mshoes. The customer may also ask the shoe store salesperson to
leave the customer alone a short time while making a decision (or a telephone call), and
then continue the sales process. So AB also possesses suspend and continue authority.
However, the customer of a shoe store does not have the authority to cause the shoe store
to modify the way it sells shoes, to develop or create an entirely new process for selling
shoes, or to close the shoe store (eliminate the process or activity). So AB does not have
modify, create, or eliminate authority over Mshoes. Thus, with respect to Mshoes, AB has
Customer (C) authority.
Likewise, the Sell Shoes activity, AS, has some authority itself over Mshoes. The shoe store
can refuse to sell this customer shoes (accept, reject), can ask the customer to leave the
store (terminate), and ask the customer to wait while, for example, another customer is
being served (suspend, continue). The Sell Shoes activity even has begin authority,
because it can initiate the process by enticing customers into the store through various
marketing activities. So AS also has Customer (C) authority with respect to Mshoes. The
Authority relationship, in this case, is reciprocal between the user and supplier activities.
AS may also have additional authority. If the manager of the shoe store is also the owner,
for example, AS will have the authority to modify the current activity, develop an entirely
new one (open a new store), or eliminate the existing activity (close the store). The Sell
Shoes activity, AS, would then have Owner (0) Authority with respect to Mshoes. If the
store manager were not the owner, it may be meaningful to include in the model a third
activity, AO, as the Owner activity, as shown in Fig. 7. In this case, As would have
Customer Authority with respect to Mshoes, while AO would have Owner Authority.
AO
Own Store
MMonthly-report
Mannual-review
Mshoes
AB
Buy Shoes
AS
Sell Shoes
Mpayment
Figure 7 Example of Owner Authority
The Authority attribute must be specified for each material flow produced or consumed
by an activity. It is specified as a list of pairs (tuples), where the first item in each pair is
the name of the activity having the authority, and the second item is the Authority
(U,C,O).
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Performance
Performance, like Authority, is also a relationship between activities and material flows.
A Performance relationship is defined by specifying, for a given material flow, two
attributes called Target and Measurement. Each attribute is a list of material flows.
The Target attribute is used to identify activities, called Targeters, which set goals or
objectives (targets) on the performance of the activity which produces the material flow
being defined. The producer activity could be a Targeter itself. The actual targets,
however expressed, must be communicated to various activities in the BP or to external
BP’s via material flows.
In practice only the material flows are identified when specifying this attribute because
the Targeter activities are those which produce the "targeting" material flows. Returning
to the expanded example of the shoe store, above, assume the Owner activity, AO, sets
sales targets for the number of shoes to be sold by the store during the next year, and
communicates them to the store manager in the manager’s annual review. The annual
review is a material flow from AO to AS. The Target attribute for Mshoes would be
Manual-review, implying AO as the Targeter. In general, other activities (perhaps AS
itself) will also be Targeters for a given material flow.
The Measurement attribute is used to identify activities, called Measurers, which track
the performance of the material flows relative to their "Target(s)" and report the results. If
the shoe store manager keeps track of his sales and reports them to the owner in his
monthly reports, then AS is a Measurer for Mshoes, and Mmonthly-reoprt from AS to AO is the
"Measure" material flow. Perhaps the Owner activity, AO, tracks the monthly sales
figures and reports them to the store manager in a monthly accounting statement. In this
case AO is the measurer for Mshoes, and the Measure material flow is the accounting
statement (not shown).
Targeting and measuring flows are called Administrative Flows, because their purpose
is to guide the administration of the process’ execution, not to contribute directly to the
value-added output(s) of the process. Flows which contribute directly to the value-added
outputs are called Operational Flows. Distinguishing between such flows can have a
number of uses in analyzing business processes, Here this characterization is used only
in computing the Flexibility metric, as described below.
Data Collection Methodology
The small set of properties which define the structure of a business process, together with
their precise definitions, allow for a rapid and simple methodology for collecting the raw
data needed for a complete business process model. The data are collected by completing
a series of simple paper forms.
Data collection is so simple that process members can use the forms on there own to
provide the modeling data after a training period of a half day or so. The training is done
by walking the members through the modeling of one of their sub-processes.
Once collected, the data is entered into a PC application, called BP Analyzer, which
automatically performs the analysis. Experienced business process analysts can collect
the data by entering it directly into BP Analyzer, bypassing the paper form method.
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Business Process Structural Analysis
The methodology consists of a series of steps which are applied recursively and
iteratively until the desired level of detail is reached:
1. On the Upper Level Activity Description form enter the name the top level
activity (business process) to be modeled, The name must consist of only a
noun, verb and (optional) adjective.
2. In the activity boxes in the bottom portion of the Upper Level Activity
Description form enter the names of the major sub-activities, again using only
a noun, verb and adjective.
3. Repeat Step 2 on additional Upper Level Activity Description forms for each
sub-activity having more than one type of operational output material flow.
4. Do Steps 5 - 9 for each sub-activity resulting from completing Step 3.
5. Enter the sub-activity name at the top of a Lower Level Activity Description
form.
6. Decompose each sub-activity further into sub-activities, and enter the name of
each of these in one of the activity boxes in the bottom portion of the Lower
Level Activity Description form. Sketch in additional boxes, or use another
form if needed. Circle the "I" in the box to indicate this sub-activity is internal
to the process.
7. Enter the name of any external activities in boxes on the form. Circle the "E’
in the box to indicate these are external activities. If these are also external
activities to other, upper level, sub-activities, use the same name for them on
all forms.
8. Draw directed lines representing the material flows between the sub-activity
boxes on the bottom portion of the form. Name each material flow type, and
label each material flow with a unique number prefixed with "m". Include all
material flows from and to external activities. Use the same label for material
flows which are the same type but are inputs to or outputs of different subactivities.
9. For each sub-activity on the bottom of the Lower Level Activity Description
form fill out a Bottom Level Activity Description and Material Flows form.
Iterate Steps 6 through 9 until all information is entered accurately.
At any point in the process it is possible and acceptable to return to a previous step to add
some item which was forgotten. It is not essential that the steps are followed in strict
order, either. It is, however, essential that all of the steps are completed.
The forms for capturing the required information are shown below.
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13
G. S. Tjaden
Business Process Structural Analysis
Upper Level Activity Description
Business Process Name (verb, noun, [adj.]):
Sub-Activities
Name:
Name:
Name:
Name:
1:
2:
3.:
4:
Name:
Name:
Name:
Name:
6
7
8
Name:
Name:
Name:
Name:
9
10
11
12
Name:
Name:
Name:
Name:
13
14
15
16
Name:
Name:
Name:
Name:
17
18
19
20
5
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G. S. Tjaden
Business Process Structural Analysis
Lower Level Activity Description
Upper Level Activity No.:
Activity Name
Time Units (secs, hrs, etc.)
Sub-Activities and Material-Flows
Identify each material-flow with a name and unique number of the form Mxx (E = External activity, I = Internal activity)
Name:
1
Name:
EI
Name:
5
EI
EI
6
10
EI
14
EI
7
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All rights reserved.
18
EI
EI
11
EI
15
EI
19
15
8
EI
12
EI
Name:
EI
Name:
EI
EI
Name:
Name:
EI
4
Name:
Name:
Name:
EI
Name:
Name:
Name:
Name:
17
3
Name:
Name:
13
EI
Name:
Name:
9
2
Name:
16
EI
Name:
EI
20
EI
G. S. Tjaden
Business Process Structural Analysis
Bottom Level Output Material Flow Definitions
Activity No.:
Activity Name:
**Individually list each person in activity who can work on this flow. If more than one person works in parallel to produce a different copy
of the flow, show a non-zero average process time for only one of them.
*Circle One
Output.
No.
***Per one unit produced
Effort
Delivery
Type*
PR
**Person Name
Cycle
Group
Name
***Person- ***Bus.time
time
****List material flow numbers
Performance
Targeting
Flows****
Measuring
Flows****
*****List activity numbers
Authority
Activity*****
PRD
PE PS PC
PR
PRD
PE PS PC
PR
PRD
PE PS PC
PR
PRD
PE PS PC
PR
PRD
PE PS PC
PR
Type*
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
PRD
PE PS PC
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
PR = Per-Request, PRD = Per-Request-Direct, PE = Per-Event, PS = Per-Schedule, PC = Per-Command, U = User, C = Customer, O = Owner
Copyright 1999, Georgia Tech Research Corp.
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16
G. S. Tjaden
Business Process Structural Analysis
Chapter 3
Analyzing The Structure
Approach
Much of the literature on business process engineering refers to the "characteristics" of
good and bad business process designs (structures or architectures). Terms such as
flexible, complex, dynamic, etc. are used in these characterizations. Most often case
study anecdotes are used to explain the meanings of these terms. These anecdotes are also
used to justify the claimed goodness or badness of a business process having such
characteristics.
It has been said that "what cannot be measured cannot be managed." The on-going
operation of any business process requires some way of measuring how the process is
performing in order to manage it so that goals are met. In the same fashion, reengineering
the structure of a business process requires a way to measure its structure so that goals for
improving it can be set and achievement of these goals can be determined.
In order to measure business process structures, the various "characteristics" are
expressed as quantifiable metrics. The data collected about a business process as defined
in Chapter 1 is used to compute the values of these "structural metrics." The metrics are
defined so that they measure the degree to which a particular BP structure possesses the
characteristic. All business processes are treated as possessing each of the characteristics
to some degree. The "personality" of a business process is, then, considered to be the
collection of the measurement values for all characteristics.
This approach is similar to the way human personalities are characterized by, for
example, the Myers-Briggs technique. In fact, the usefulness of the BP structural metrics
approach is analogous to the usefulness of human personality analysis approaches. They
use simple methods to develop an understanding, which can then be used to effect
changes.
Business Process Structural Characteristics
BP structural characteristics used here are identified with two terms, representing
opposite extremes of a range of values:
Characteristic
1. Simplicity
2. Flexibility
3. Integration
4. Efficiency
Range
simple ……... complex
dynamic…… static
integrated….. segregated
efficient……...inefficient
Simplicity
This characteristic is drawn from Hammer & Champy. They argue that good business
processes should be simple in that they have relatively few "steps" or, as they are called
in Chapter 1, activities. Hammer & Champy further argue that the steps themselves
Copyright 1999, Georgia Tech Research Corp.
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17
G. S. Tjaden
Business Process Structural Analysis
should be relatively complex. That is, rather than have many very simple activities which
require little human intellect but lots of hand-offs of output materials, a good process
architecture will minimize hand-offs and maximize the use of human intellectual
capacity. It should be noted that Davenport (Process Innovation, p. 118) gives the counter
example of "... Federal Mogul’s new process for producing automobile component
prototypes, though it has more steps than the old process, takes one-seventh the time."
The formal definition of Simplicity presented here will allow such statements and claims
as those of Hammer & Champy and Davenport to be consistent and precise.
It should be remembered that it is the complexity of the structure of the business process
with which this characteristic is concerned. We are not trying to characterize the
complexity of work itself, only the way it is organized. For example, suppose we wish to
organize a business process to assemble automobiles. The traditional process is to break
the effort down into many simple steps, so that each step can be performed by a single
person having minimal skills. The other extreme would be to have a single, very highly
skilled person assemble the entire automobile. The multiple step structure is very
"complex", while the single step structure is very "simple".
The modeling attributes that are important to measuring the complexity of a business
process are the number of activities, a, the number of material flows, m, and the number
of people, p. The sum of these numbers is called the Basic Complexity, CA = a+m+p. It is
in units of "complexity elements", or "compes".
The "simplest" business process (see Fig. 8) would be one having only one activity, a
single input material flow, a single output material flow and a single person performing
the activity. This structure has CB = 4. A slightly more complex process structure would
be one with two activities, A1 and A2, one person in each activity, a single input material
flow from the external environment into A1, a single material flow from A1 to A2, and a
single output material flow from A2 to the external environment. This structure has CB =
7.
A1
(p = 1)
(p = 1)
Simplest Process
CB = 4
A2
(p = 1)
Slightly More Complex
CB = 7
Figure 8 Business Process Complexity
Note that the complexity of the simplest structure could be increased without adding a
second activity. Merely adding one more person or one more material flow would
increase its complexity, although not by very much. Thus, simplifying the structure of a
business process could be accomplished by, for example, decreasing the number of input
material flows. Thinking back to the example of the structure in which a single person
assembles an entire automobile, it is clear that it would be less complex to assemble an
Copyright 1999, Georgia Tech Research Corp.
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G. S. Tjaden
Business Process Structural Analysis
automobile from a few large sub-assemblies as opposed to many individual nuts, bolts,
and gears. Indeed, many business process structural improvements can be achieved by
finding new suppliers or types of raw materials.
It is important to follow certain rules when constructing a business process model from
which structural simplicity, as defined here, will be determined. Each activity must have
at least one person, one input-material flow and one output material flow. Otherwise it
doesn’t count as an activity, and any material flow elements should be counted with some
valid activity. Thus, an operation which is fully automated, such as, for example,
distributing parts to assembly stations, can’t be modeled as a process without including
the people necessary to maintain the automatic distribution equipment.
If two or more people are using the same inputs to produce the same outputs with the
same procedure, they should all be grouped together into a single activity (or set of
activities). This requirement arises because the structure of a process in which outputs are
produced by many people doing the same things concurrently is simpler than the
structure which would result from using the same number of people to produce the same
outputs by performing simple tasks serially. The hand-offs of material from person to
person make the serial process more complex. The automobile assembly example
referred to above illustrates this point.
Since, by definition, an activity is also a business process, each activity, Ai, will also have
a Basic Complexity, C Ai . It is not the case, however, that the complexity of the business
process, P, is the sum of the complexities of the activities of which it is comprised. That
is,
C BP ≠
n
∑ CB
i =1
i
where n is the number of activities in P. This is so because the material flows between
activities would be double counted as both inputs and outputs.
However, it is important to measure the complexity of a business process in terms of the
complexity of its underlying activities. To do so the concept of Average Activity
Complexity, C A , of a process, P, is defined. This is just the Basic Complexity divided by
the number of activities, expressed in compes per activity. That is:
C A = CB
a
C A is often referred to as simply Activity Complexity. It is, of course, possible for two
processes to have identical Basic Complexities but different Average Activity
Complexities because they have a different number of activities.
For a given value of CB Hammer & Champy would argue that C A should be maximized.
They would also probably argue that the optimum process structure should have
simultaneous optima of a minimum CB and a maximum C A .
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G. S. Tjaden
Business Process Structural Analysis
C A , for a given CB, can have values over only a limited range. Obviously the maximum
occurs when a = 1 . The minimum value of C A occurs when a is greatest. The maximum
number of activities in a business process having a given Basic Complexity, say CBx,,
would occur when each of the activities is the simplest possible (CB = 4 for each activity)
and the structure is entirely serial, as in Fig. 1. With such a structure the number of
activities, amax, is given with the expression amax = (CBx-1)/3. This is so because, after
accounting for the final output material flow, each activity has three elements: one input,
one person, and one activity. It is easy to see, then, that
min C A =
3C B x
C B x −1
= 3/ 4
C Bx
CB − 1
≈ 3/ 4
and that
max C A = C B x
The actual value of C A within this range is the indicator of the degree to which the
activities are simple or complex. This degree, expressed as a percentage, is the Simplicity
metric, defined formally as:
Simplicity =
C A − min C A
× 100
max C A − min C A
Flexibility
This business process characteristic is based largely on the concepts in Dynamic
Manufacturing, by Hayes, Wheelwright and Clark. It has to do with the way a business
process is controlled. The authors propose that the control characteristics of a
manufacturing process can be categorized on the ordered range: reactive, preventive,
progressive, dynamic. They argue that dynamic control is the most preferable. Others
have used the term "learning organization" to express similar notions.
These ideas are based on the underlying premise that an enterprise’s business processes,
as contrasted with its products, can be a source of sustainable competitive advantage. In
order to become so, however, the enterprise must have in place appropriate mechanisms
to continually enhance, and reengineer its processes so they are both better than and
unique from competitor’s. If these mechanisms are included in the enterprise’s business
processes, the processes are said to be dynamic. At the opposite end of the scale proposed
by Hayes, et. al., if a process only has mechanisms allowing it to merely react to process
problems after they are detected, and then to make minor or non-structural adjustments to
the process, it is called reactive.
The concept of flexible processes appears to be directly applicable to any type of business
process, not just manufacturing ones. However, many non-manufacturing business
processes do not possess mechanisms sufficient to be characterized as even reactive. That
is, mechanisms for detecting when a process is either not satisfying its users or is not in
Copyright 1999, Georgia Tech Research Corp.
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G. S. Tjaden
Business Process Structural Analysis
control, and then quickly making minor adjustments to correct the situation, do not exist.
Such processes are called "static". In our characterization the value "static" represents the
most extreme opposite of "dynamic".
The most static business process is one for which no targets are set for its outputs. This
follows from a well established principle of business process engineering which says that
a process cannot be improved if it is not measured. This condition can easily be
determined from the data collected in modeling the processes. If none of the material
flow outputs have Targeter activities (or Targeting material flows), the process is
completely static.
There are a number of other structural properties which, if present, contribute to moving a
process towards being dynamic. In order to quantify the relative degree of flexibility of a
process these properties are given points, or weights. The properties are called Flexibility
Properties, or F-Properties, and the point values are called F-Points. Table 1 lists these
properties and points. Each material flow for a process, including inputs from and outputs
to the environment, are examined for these properties, and all applicable points awarded
and summed. The metric for measuring process flexibility is defined below, after the FProperties themselves are discussed.
An output material flow, Mx, is directly targeted if the targeter activity, At, reports the
target directly to the producer activity, Ap . That is, if the targeting material flow for MX
is an input to the activity of which MX is an output. Points are awarded for this property
because a producer activity that has a direct relationship with its targeter is more likely to
improve than when targets are set indirectly (e.g., by a corporate bureaucrat at a remote
headquarters).
Additional points are awarded if the direct targeter is the user activity of the material
flow. A process is even more likely to improve if the users of its outputs set the targets,
especially directly. Fewer points are awarded if the user is an indirect targeter (e.g., target
communicated up through the user’s control hierarchy and then down through the
producer’s). However, involving the user in setting targets is always more dynamic than
not involving them at all. Points are also awarded if the user is notified of the target, even
if it is not a targeter. And some points are awarded if the producer activity itself is
involved in target setting. Even if the producer is the only targeter, the process is more
likely to improve if it has a target than if it does not.
In a similar manner points are awarded for measurement relationships, with more points
awarded for direct than indirect ones. Finally, additional points are awarded if the
producer or user have ownership authority over the production of the material flow.
These points are awarded in reflection of the well accepted principle that empowering the
people most closely associated with a process with the authority to change it is mostly
likely to result in continual improvement.
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G. S. Tjaden
Business Process Structural Analysis
Table 1 Properties of the Flexibility Metric
F-Property
Flow is Targeted
Flow is Directly Targeted
User is Direct Targeter
User is Indirect Targeter
User is a Recipient of Target, and not a Targeter
Producer is Targeter
Flow is Measured
Flow is Directly Measured
User is Direct Measurer
User is Indirect Measurer
User is Recipient of Measure, and not a Measurer
Producer is Measurer
Producer has Owner Authority
Producer has Customer Authority
Producer has User Authority
User has Owner Authority for Producer
User has Customer Authority for Producer
User has User Authority for Producer
TOTAL POSSIBLE POINTS (per material flow)
F-Points
5
5
5
3
2
3
5
5
5
3
2
3
10
7
5
10
7
5
Max. Points
5
5
5
2
3
5
5
5
2
3
10
10
60
Any material flow may have multiple direct targeter and measurer activities. However, if
so, points are awarded for only one of each. Without the benefit of experimental evidence
to indicate otherwise, it is assumed that only a small incremental improvement may be
provided by such additional targeting and measuring, and that this improvement is offset
by the complications of meeting multiple targets.
Points are assigned, per Table 1, for each material flow in the process. They are totaled
for each flow to produce the F- value, FM x , for the flow. The maximum value which
FM x can have is 60. These individual flexibility values are summed and divided by the
total number of operational material flows to produce a normalized total value
quantifying the flexibility of the process. For a process, P, this quantity is denoted FP . It
has a value between 0 and 60. The Flexibility metric is the value FP expressed as a
percentage of maximum. It is computed as:
m op
∑ Fm
Flexibility = i =1
60
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i
× 100, where mop is the number of operational flows
22
G. S. Tjaden
Business Process Structural Analysis
Integration
The Integration metric is a measure of the structural relationships fostering cooperation
between processes (or between activities within a process). Its purpose is to capture in
measurable terms the notion that a close, or integrated, relationship between a supplier
and a customer/user is in many cases preferable to one that is arms-length, or segregated.
The implementation of "just-in-time" raw material deliveries to a manufacturing process,
for example, depends upon having an integrated relationship between the supplier and the
user. On the other hand, certain relationships, such as the supply of commodity services
(e.g., road construction) to government agencies, are often purposely structured to be
segregated.
Another term that is sometimes used to express the concept of an integrated relationship
is "partnership." The dictionary (Webster’s New World, 1994) defines a partnership to be
a business relationship in which the profits and risks are shared. This definition appears
to capture much of the essence of the issues underlying the use of the term integrated.
The opposite of a partnership relationship would be an adversarial relationship. While the
term segregated does not necessarily imply adversarial, it is certainly the case that real
business process relationships can indeed be adversarial. Examples include those between
some labor unions and company management, and between a customer who sues a
supplier for failure to perform or a supplier who sues a customer for failure to pay. While
the latter two examples may not be structurally induced, there are many examples in the
literature which argue that an adversarial relationship between a labor union and
management often is. It is also sometimes argued that structural flaws can contribute to
the deterioration of a relationship into becoming adversarial.
The metric we need must provide for measurement of the structural characteristics which
determine the degree to which two or more business processes or activities can operate
together to accomplish their objectives. There has been great interest, especially in
federal/DoD arenas, in the topics of "enterprise integration” and "integrated product
process development." The issues being studied are closely aligned with those of this
metric. Thus the integrated/segregated labels have been chosen for it. Other labels used in
this context, such as partners/adversaries and equal risk/one-sided risk, are treated as
synonymous with, and therefore subsumed within, the integrated/segregated metric.
Consider two activities A1 and A2, with A1 supplying material flow MX to A2, as shown
below in Fig. 9. The tightest level of integration between these two activities would occur
when Al supplies Mx to A2 whenever A2 needs it, without requiring A2 to formally
request its supply. The structure or architecture which corresponds to this situation is that
of Mx flowing under Per-Event delivery, with no other interaction required between A1
and A2, either directly or indirectly. That is, no other activities or material flows are
involved, except the flow, Mx`, reporting the event occurring within A2 which causes A1
to produce an instance of Mx.
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G. S. Tjaden
Business Process Structural Analysis
MX
(PE)
A1
A2
Mx`
Figure 9 Tightest Possible Integration
It should be noted that it is possible for there to be multiple material flows between A1
and A2, and that the "value" under the integration metric may be different for each.
Integration must be considered separately for each material flow. The value of the
Integration metric for material flow Mx is denoted as Ix, to reflect this situation. Later it
will be discussed how these individual integration values are combined into an overall
value for a set of activities (and an entire business process).
Each activity, A1, A2, will, in general, have relationships with many other activities. A1
will have suppliers, owners, customers and, probably, other users. A2 will have other
suppliers and its own users, owners and customers. These relationships may or may not
influence the value of Ix. To the extent that the flow of Mx is controlled by material flows
in addition to or in place of Mx', the integration of A1 and A2 for Mx will be less close or
tight than the maximum degree of tightness defined above. Indeed, these other controlling
material flows may be indirect, passing through a number of activities before finally
being input to A1.
Consider the example shown in Fig. 10. In this example the flow Mx is produced on a perrequest basis, with the request coming to A1 in the form of flow M3'. This flow is an input
to A1. However, flow M3' depends for its production on flow M2', which in turn depends
on flow M1', an output of A1. This situation, a generalized version of Figure 5, is typical
M2`
A1
A2
M3`
M1`
~
A1
MX
(PR)
A2
Figure 10 Less Integrated
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24
G. S. Tjaden
Business Process Structural Analysis
of that occurring when A1 and A2 are in different companies. AB is the purchasing
activity for A2’s company, for example, and AA is the order production activity for A1’s
company. It could just as well occur within a single company, however
Values are assigned to each material flow for the Integration metric based on its delivery
type as shown in Table 2. Here, however, each material flow, Mx, can be assigned only
one of the values, which becomes the I-value, IMx, for the flow.
Table 2 Properties of the Integration Metric
Delivery Type
Per-Event (PE)
Per-Request-Direct (PRD)
Per-Request (PR)
Per-Schedule (PS)
Per-Command (PC)
I-Points
10
7
4
1
0
The Integration value, IP, for an entire process, P, is the sum of the individual I-values,
divided by the number of material flows in the process. It, also, is expressed as a
percentage from the maximum I-value (10), and is computed as:
m
∑ Ii
Integration = i =1 × 100, where m is the number of flows
10
The I-Point assignments reflect the relative contribution made by the associated Delivery
attribute to structural support for integration between activities. Every material flow in a
process has a Delivery attribute, and therefore an assigned I-value. This is in contrast to
the Flexibility metric, where material flows may have an implied D-value of zero because
they are neither targeted nor measured, and the user and producer do not have ownership
authority.
Copyright 1999, Georgia Tech Research Corp.
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25
G. S. Tjaden