Smart Work for a Smarter Planet Making BPM Real Mike Howell Business Process Excellence Manager © 2010 IBM Corporation Duration: ~ 60 minutes • Topics – – – – Why BPM BPM Deployment BPM at corporate CIO level Three examples of BPM at business unit level and use of BPM software enablement – Questions • Outcomes – Awareness of how BPM and associated software play out in a large globally integrated organization © 2010 IBM Corporation 2 Today’s Landscape Challenges Progress • Recession Hits Economy • Inefficiencies Abound • New Technology Is Driving Change © 2010 IBM Corporation 3 Economic flows are increasingly multi-directional, but information flows and visibility are still critical to value Global investment banks send derivatives processing to Dublin Customer service centers in Nova Scotia handle warranty inquiries for US shoppers Between 2000 and 2003, foreign firms built 60,000 manufacturing plants in China Asian clothing manufacturers outsourcing design to Italian designers Asian chipmakers using US engineers for expertise US radiologists send x-rays to Australia for analysis 23 © 2010 IBM Corporation 4 New Priorities Have Emerged • Collaboration: Rising expectations of demanding customers -2008 IBM CEO Study • Process: #1 priority for the fourth year in a row -2009 Gartner CIO Study • Business Flexibility: #1 driver of SOA Adoption -2008 Forrester Study How can we work smarter? © 2010 IBM Corporation 5 The Need for Action is Clear Poor collaboration contributes to the U.S. healthcare system losing more than $100 billion a year to fraud. Inefficient processes leave up to 22 percent of total port containers empty in North America. $11.5B worth of produce is wasted in India because outdated post-harvest infrastructure lacks service orientation © 2010 IBM Corporation 6 Business Process Management is a solution Business Process Management (BPM) is • a customer-focused , process centric approach for delivering business performance that combines process and governance methodologies with information technologies • a set of methods, tools, and technologies used to design, implement, measure, analyze, improve and control operational business processes. • a communication vehicle between business, employees and information technologists to foster effective, agile, and transparent business processes. “I define process management as designing, measuring, and managing work on an end-to-end basis across the enterprise. I define a process as an organized group of related tasks that work together to create value for customers. Everything else (process owners, redesign teams, metrics, etc.) all flow from these." – Dr. Michael Hammer © 2010 IBM Corporation 7 Business Process Management can be deployed at any level using this framework 1.0 Develop business vision and mission 5.0 Develop and validate KPIs, Dashboards 2.0 Develop strategic business objectives 6.0 Collect data on KPIs, Dashboards 3.0 Create Core, Enabling, Key Subprocesses 7.0 Rank relative performance 4.0 Identify process owners and their R & R 8.0 Create project selection criteria, select projects © 2010 IBM Corporation 9.0 Select Improvement Method 10.0 Execute projects Note the emphasis on Key Performance Indicators and dashboards that provide visibility into the process 11.0 Monitor and manage to achieve business objectives 8 IBM uses a number of tailored methodologies for process improvement PROCESS EXCELLENCE Design New Process/Product/Services Improve Existing Process/Product/Services DMAIC DFLSS Lean Development TOC Lean DFSS OTM Six Sigma VSM Software Service Process Product DOX Agile Seven Basic Tools Kaizen/ RPC Waste Analysis DMEDI IIDOV, CDOV Needless Complexity Response to Signal DOE 8D PDCA DOE Discovery Process/Product Development © 2010 IBM Corporation On-going Improvements 9 BPM TRANSFORMATION FRAMEWORK Results A B A - Project Selection Pain Points VSM Base-lining MDBT CTQ Flow-down Process Owner Training Executive Council Champion Training Consultant training Practitioner Training E Deployment champions C- Change Management Better Change Method BTO CM Model Kotter Model F - Accountability/Rewards Project Team Recognition Transformation consultants Practitioners Results F Bus. Area Steering Committee Project Reviews E- Resource Selection D - Training Executive Awareness B -Leadership Engagement Bus. Area Steering Committee Project Prioritization QFD/VOC Theory of Constraints D C Practitioner Recognition Yearly Program Celebrations Performance Evaluations © 2010 IBM Corporation 10 Business Process Management proceeds through various stages Adhoc and variable processes. Success depends on individual and heroic efforts. Metrics are not available or ignored. Business Strategies have been clearly defined and communicate d. Project and Change Management in place. Learning from successes and failures are captured. Standardized methods and processes are in place and followed. Data on KPIs and process metrics are collected and acted upon Process improvement methods have made processes more efficient and effective Dynamic businesses with agile business models Software that in one package helps value stream map, collect data on KPIs, generate reports, model and simulate adds value and enables more rapid transformation no matter where you are. © 2010 IBM Corporation 11 Manage the enterprise as a system of interconnected processes that transform inputs to deliver business (customer and stockholder) wants and needs BPM Vision: Optimize the enterprise, a system of interconnected processes, that transform inputs to deliver business (customer and stockholder) wants and needs Inputs Business Wants and needs 1) Develop high level process maps called “SIPOCs” and document them using Websphere modeler 2) Connect the SIPOCs together and manage them as an integrated system 3) Develop detailed as-is process maps and improve the processes to optimize the enterprise. © 2010 IBM Corporation 12 Corporate level implementation of BPM • 5 core, 4 enabling and 4 support processes defined. • End-to-end Enterprise Executive Process Owners identified along with their roles and responsibilities Enterprise Process Framework (epf) • Key sub-processes with inputs and outputs (KPIs) defined as part of an enterprise process framework. • Standards defined: – Process teams should leverage the process taxonomy as the starting point for transformation and process improvement initiatives. – All process documentation must be provided in a common format, which is consistent with the process industry standard, APQC Process Classification Framework – All business processes must be modeled using Websphere Business Modeler (WBM) that enables you to design, model, analyze, and generate reports for your business processes. 11.0 Manage Finances sub-processes • We are integrating end-to-end processes across business units, geographies and capturing the models within Websphere Business Modeler • Business units have used epf, KPIs, etc. to manage and improve their performance. © 2010 IBM Corporation 13 Business Unit BPM Example I © 2010 IBM Corporation 14 One of IBM’ s support sub-processes, creation and maintenance of customer information, was already captured in WBM and was not performing to expectations and was improved through application of Lean Six Sigma method. 75 hours Only 36% of the complex update requests were completed within the 24 hour requirement with an average cycle time of 75.3 hours Delays in completion led to 1) delays in contract development, pricing and order placement, 2) Inaccurate maintenance contracts and/or untimely billing, 3) Missed sales forecasts and improper flow of commission revenue and 4) Complaints from requesters Solution Eliminated non-value added activities such as the CSO form, sending information to the Content Manager for Legal Name and Enterprise Changes, searching for request by the Asset Manager Simplified work by centralized access to Complex Update requests Standardized work for processors and Asset managers by providing check lists and standardized source and searches. Replaced batch processing with first-in first-out one-piece flow. Improved process was fed into WBM Original Process Problem Statement Processor - Over twelve Processors dedicated to Complex updates - Re-entered information already in the request into a different database before routing to Asset Manager - Had to find requests processed or returned by Asset Manager in a different database from the one it was created in. 7.6 hours Dashboard 15 Streamlined Process Benefits Enabled same day request completion for 98+% of the requests Reduced average completion cycle time ~10X to 7.6 hours Cost avoidance benefits from not having to hire more processors to meet the requester specification. No requester complaints since process improvements in place. Faster contract development, pricing, and order placement More timely billings and flow of commissions revenue Asset Manager: - Worked request in a different environment (vs. the Processor) - High level of rejections by Asset Manger because not all Processors were experienced in handling Complex updates. - Did not notify Requester once request processed Daily Takt Report Processor – Four Processors dedicated to Complex updates at 50% of their time. – No need to re-key information already in the request into a different database before routing to Asset Manager – Balanced loads Asset Manager – Does not need to work in a dual environment. Minimal number of rejections – Notifies Requester directly. © 2009 IBM Corporation Business Unit BPM Example II © 2010 IBM Corporation 16 Used BPM baselining approach Define Identified Critical Customer Requirements through Focus groups Documented high level SIPOC , detailed “as is” end to end process and value-stream maps with cross-functional team involvement Measure Developed a data collection plan & collected initial data on current process performance Identified 16 potential quick wins Developed Communications & Stakeholder Plans Identified several improvement projects An example of a project improved using Lean Six Sigma follows Everyone is Singing from the same Song Sheet Everyone is Seeing Priorities and Performance the same. © 2010 IBM Corporation 17 Lean Six Sigma Project launched after base-lining Where We Were: It took an of average 3.5 days (81 hours) from order placement to shipment. D Define Opportunities M Measure Performance A Analyze Opportunity I Improve Performance C Control Performance © 2010 IBM Corporation Critical Customer Requirement < 48 hours from order placement to shipment As-Is Process Collect Data Baseline Performance Customer Validation (23) Potential Xs to (3) Critical Xs ID Improvements Launch Pilot Control Xs to deliver order in less than 48 hours 18 Program Results Generated new revenue with reduced average cycle time from 81 to 27 hours Customer Satisfaction increased 3 levels (from 1 to 4) in focus group surveys Leveraged results to other geographies Importance / Priority Characteristic Cycle Time Customer Satisfaction Before After Before After ~5 (Very High) ~5 (Very High) 1 (Very Dissatisfied) 4 (Satisfied) Positive customer feedback: “…has saved a couple of deals for me already” “This program is a HUGE plus. Exactly what we need….” “…you did what you said you would do…” © 2010 IBM Corporation 19 Customers, operations and management wanted further improvement • Customers pleased with progress and wanted further reduction in fulfillment cycle time to less than 24 hours • Operations team wanted to increase execution consistency and capacity further and more execution than audit focus. • Executive Management committed to model driven approach as a way to manage business process. © 2010 IBM Corporation 20 BPM enabled by Websphere Business Modeler being used to optimize process further • WebSphere Business Modeler used to create detailed process model based on Phase 1 Fast Ship target process – Process flows Input to initial Business Operation Model – Control panel Basis for monitoring & KPI requirements – Enhancements identified Prioritized improvements • Websphere Business Modeler to model the flow of a customer request as different entities through the process to increase process efficiency & execution consistency © 2010 IBM Corporation 21 WBM enabled model drives Agility and Optimizes Costs Gain valuable insight… Agile Business Model Integrate structured and unstructured data, massive data and uncertain data Transform it into useful information Gain insight from analytics, find optimal solutions to complex problems and empower action… Dynamic Business Processes Adapt and respond dynamically Transform insight into action Automate processes end-to-end © 2010 IBM Corporation 22 Business Unit BPM Example III © 2010 IBM Corporation 23 ITDelivery Business Process Management System ITDelivery BPMS Ownership By Service Line Governance Global Governance Standard Processes Processes Modeled and Engineered using Websphere Business Modeler and Rational Method Composer Process Integration Governance Model © 2010 IBM Corporation Process Improvement Audit and Assessment Reporting and Review Process Measurement Process Deployment Controlled through Change Management Quality Focus Supported by automation to ensure consistent deployment and process improvement 24 Standard processes across the IBM Lines of Business • Aligned to ITIL V3 and other industry standards • Rigorous engineering of inputs, outputs, controls and roles • Same process models underlie, software products, consulting, and outsourcing © 2010 IBM Corporation 25 ITIL® is the foundation upon which IBM IT processes are built Strengths ITIL • • • • PRM-IT Process Reference Model for IT ITUP IBM Tivoli Unified Process Wide ranging, narrative treatment of the lifecycle of Service Management Largely consistent style across the set of books Introduction of key new concepts Provides process objective, goals, activities, high level responsibilities • Coherent, consistent model and downstream items such as assessment matrixes • Integrated set of rigorously defined inputs, outputs and controls – essential for process automation • Covers the full range of IT – includes governance • PRM-IT is customer shareable – can be used by our customers for their infrastructure • • • • • • Builds on PRM-IT Simple web navigation and visualization of processes Is built on Rational Method Composer – provides simple tool to customize & tailor processes Provides roles and responsibilities at the task level – key for process automation Provides detailed activity flow Our customers can download and use ITUP for free © 2010 IBM Corporation 26 ITUP: IBM Tivoli Unified Process Adds task level, roles, process flow, tailoring and an easily navigable web interface ITD ITUP: http://ausgsa.ibm.com/projects/i/itd-itup/release/en/index.htm#ITD_ITUP/guidances/supportingmaterials/process_content_intro_updated_27F2C708.html Customer Download: http://www-306.ibm.com/software/tivoli/governance/servicemanagement © 2010 IBM Corporation 27 Engineering of ITDelivery Processes: Change Management Example PRM-IT Process Standard for Change Management ITIL Specifies Best Practice Guidelines for Change Management Account X Change Management Procedure & Work Instructions Change Workflow and Manual Work Instruction © 2010 IBM Corporation Change Management Team and Approvers (7 ITUP Roles) Specific ITDelivery Change Process is defined in IT Unified Process, with drill downs and process roles for each step of the Process Change Management Tool 28 Management System Structure for Process Governance • Every process is owned, managed, reviewed and improved by a global competency owner • Management system is automated through tools to ensure audit readiness and management review – Processes were maintained in Websphere Business Modeler and were dynamically updated with inputs by users. © 2010 IBM Corporation 29 Our infrastructure services are made up of competency segments to form fully integrated, consistent delivery capabilities Technology Integration Mgt Japan Infrastructure/ Resource Mgt Americas Service Management AP Business Acquisition Asset management Security & Risk Management End User Services Server Systems Operations Operational Competencies Services we sell Europe Support Competencies Support functions Segments lead in definition, standardization, and continuous improvement of metrics, processes, tools, skills, intellectual capital for their business areas © 2010 IBM Corporation 30 Global IT Delivery Competency Model: Standard Structure and Definition provides the means for clear ownership and decision-making across all areas of Service Delivery AP EUR AG Japan Service Delivery Service Line Component Service Line Service Line Component Competency Segment Global IT Delivery Competency Service Line Component Service Line Component Service Line Service Line Component Service Line Component Service Line Competency Standards / Integration / Enablement Process © 2010 IBM Corporation Tools Metrics Quality Benchmarking 31 Leveraging the Competency Management Systems Everyone is Singing from the same Song Sheet GCSE - Global competency Segment Executive GCSL - Global competency Segment Leader TIM - Technology Integration Management GSAR - Global Solution Architecture Repository GSAR,TIM, Process Standards Center of Excellence GCSE GCSL SERVICE LINE OWNER Focused Process Management Training SERVICE LINE COMPONENT OWNER GLOBAL PROCESS MANAGER DELIVERY PROJECT EXECUTIVE ~1240 Accounts ACCOUNT PROCESS OWNER © 2010 IBM Corporation Aligning processes to service designs, making decisions regarding cost and best practice alignment, participating in standards strategies and providing Global Leadership. Owners of change management and implementation decisions. Analyzing metrics, tracking deviations, providing direction to accounts and keeping SLO/SLCO informed of process defects. This role may be performed by the SLO/SLCO. Owner of SLAs and delivery quality to the customer. Standards will demonstrate IBM’s knowledge and global abilities. Could provide service to one account or many so using standards will increase effectiveness. 32 Continual Process Improvement • BPM applies prevention methodologies to implement and improve business processes and achieve process management objectives of effectiveness, efficiency, adaptability – Effective - process produces outputs that conform to customer requirements (the basic definition of quality) – Efficient - process produces the required output at the lowest possible cost – Adaptable - process is designed to maintain effectiveness and efficiency as customer requirements and the environment change – Used Websphere Business Modeler to dynamically update changes. Account Process Managers (APMs) deploy BPM at the account level Four focus activities: © 2010 IBM Corporation 33 Account Process Management Account Process Management and BPM Account Process Management uses BPM methodology Goal is to continuously improve quality of service delivery processes Participants Account Process Owners (APOs) own process improvement Subject Matter Experts (SMEs) participate in improvement activities Process Improvement Teams (PITs) are formed as needed Account Process Manager (APM) facilitates and supports improvement Account Process Management Key Activities Establish Business Process Management (BPM) basics Measure process maturity, identify gaps, develop plans Measure process performance and analyze gaps Develop process improvement plans to address gaps Develop controls to maintain process performance © 2010 IBM Corporation 34 Continuous Process Improvement Activities Define Measure / Analyze Process Owners Process Requirements Process Documentation Document Control Document Repository Process Roles Support Tools Measurements Issues Tracking Process Improvement Teams Process Performance Targets Process Maturity Targets Measure process performance Identify process performance gaps Measure process maturity Identify process maturity gaps Monitor process compliance Improve / Control Address process maturity/performance gaps Conduct Process Improvement Projects Control process performance Service Delivery teams (Account Process Owners and SMEs) own process improvement Account Process Manager facilitates improvement activities © 2010 IBM Corporation 35 Key Take-Aways BPM can be started and used at any level (though it is preferable to start at the highest level and go down). – Start simple, pilot and then expand Use an enabling software to capture processes so they can be integrated at the global level and standardized – Use KPI dashboards from software for managing and improving processes Communicate findings and share learnings across organizations Recognize and reward organizations that manage through process. Make sure all six BPM transformation elements are in place. © 2010 IBM Corporation 36 Jumpstart Your BPM Projects Today! IBM BPM BlueWorks Accelerate business process improvement at no cost with this cloud-based platform. Some of the features and tools include: Hundreds of industry-specific strategy, capability and process maps Private online tools and work spaces to build new business processes Capability to share online work spaces with your colleagues