Business Process Management
San Francisco Public Utilities Commission
Agenda
1. Process 101: What is BPM?
2. BPM Drivers: What can BPM
do for my organization?
3. Interfacing Professional
Services
4. EPC 5: Product Demonstration
Process 101: What is a Process?
Simplest Process Definition:
Organized group of related activities that together create a result of value to the customer
Finance:
Credit Authorization
Budgeting
Auditing
Banking:
Straight Through Processing
Legal:
Account Provisioning
Contracts
Loan/Credit Processing
Human Resources:
Hiring
Energy:
HR Development
Short Term Trading
Performance Evaluation
Long Term Trading
Operations/Logistics:
Strategic Planning
Purchasing
Contracts
Manufacturing:
Invoicing
Product R&D
Shipping
Product Engineering
Quality Assurance
Production
Simplified Processes
Process flow
Input
Bacon
Eggs
Expense Slips
Position
Requisition
Output
Preparing the breakfast
Breakfast
Producing an expense report
Hiring an employee
Expense
Report
New
Employee
Process 101: The Construct
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Inputs /Outputs
Resources
Organization
Suppliers
Knowledge
Applications
Metrics
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Results
Boundaries
Client
Owner
Instances
What is BPM?
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Business Process Management
Business Process Modeling
Business Process Monitoring
Business Performance Management
Business Performance Monitoring
BPM = Transformation
BPM Provides Organizations with:
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Transparency
Agility
Compliance
Performance Management
Collaboration
Alignment
Knowledge Management
Communication
Fluidity
The Process Maturity Model
BPM can help your organization achieve process maturity.
Level 1
Initial
Processes are Adhoc and chaotic
Level 3
Level 2
Defined
Repeatable
Small Scale processes
Understood &
repeatable
Processes
Documented
& Standardized
Across Org
Level 4
Managed
Processes
are measured
& controlled
Level 5
Optimized
Continuous
Improvement via
Feedback
& Collaboration
Process Maturity Model
What is process maturity?
Operational Consistency
Culture of Collaboration & Knowledge Sharing
Clarity/Transparency
Distribution of Policies & Standard Procedures
Cost Avoidance
Maximize Value to Customers
Internal & External (Customer) Confidence
Accountability & Efficiency Across All Ranks
Analyst Predictions
Gartner - “BPMS will grow from $1B this year to $2.6B in 2011.” (2007)
Forrester - “…grow from approximately $1.6 billion in 2006 to $6.3 billion by 2011.” (2007)
IDC - “…to reach $5.5 billion in 2011, a 44% five-year compound annual growth rate (CAGR).” (2007)
WinterGreen Research - “…markets at $1.3 billion in 2007 are expected to reach $4.6 billion by
2014.”
Source: http://bpmfundamentals.wordpress.com/2008/11/21/bpm-adoption-and-delivered-value-market-research-and-analysis/
Roadblocks to Successful BPM Implementation
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Company culture
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Silo effect
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Improperly maintained processes
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Unclear process ownership
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Lack of process knowledge sharing
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One-time product syndrome
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Lack of awareness of potential gains
With the help of the Enterprise Process Center (EPC),
organizations easily overcome these obstacles.
BPM Drivers
Why does my organization need BPM?
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Compliance / Standards / Regulations
– ISO
Improve Organizational Management
• Best Practice Initiatives: Quality / Performance /
Productivity
– ITIL
– APQC’s Process Classification Framework
Business Process Improvement =
ROI Expectations: 30 – 45% Greater
Process Infrastructure:
10-15%
Process Optimization:
10-15%
Process Definition:
10-15%
source: Gartner Group Research, 2002
Why BPM is Critical to Compliance
BPM
Compliance
Clear Process Framework
Transparency from the top
Visibility of Key Processes
Drill down, Transparency to lower
levels
Clarity of Roles & system Ownership
Accountability Matrix: Who/what is
Responsible for what
Visibility of Control Points, KRI
Ensure Risk Management clarity
throughout the Enterprise
Visibility of Process Review State,
Traceability
Be ready at any time to Internal Audits
Discussion Forums, All Users Input
Collaboration, Maturity Culture,
Issues/Corrective Actions
Compliance: ISO
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ISO compliance is often seen as being synonymous
with Quality Management.
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The Enterprise Process Center makes ISO
compliance manageable.
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The EPC aids ISO initiatives by:
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ISO 9000: Quality Management
ISO 14000: Environment Management
ISO 20000: Technology Management
Mapping, distributing and maintaining key processes.
Supporting change
Automating audit process – ability to track corrective actions
Enhancing transparency
Embedding business rules within processes
Beyond achieving compliance, the EPC achieves
process improvement.
ISO Success Story: RAAF
Royal Australian Air Force Aeronautical
Information Systems
(RAAF AIS)
BPM in support of ISO 9001
Case Overview: RAAF AIS
Mission
To provide the Australian Defence Force with tailored, accurate and current
aeronautical information.
Their Challenge
• Obtain ISO 9001 Certification.
Starting Point
• All processes were described in Word & Excel documents.
• Employees would not update their processes because doing so was
extremely cumbersome.
• Internal Auditors had a hard time understanding the company’s processes.
Quality System Requirements
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Document core processes & related tasks
– Demonstrate process control
– Document duties of personnel
Document Control Requirements
– Decide who will write the procedures and when will they be reviewed
Records Control
Manage Corrective & Preventive Actions
Control Nonconforming Product(s)
Run Internal Audits
Remain flexible
Integration with other business management tools
Be transportable for use with other media, such as PDF, Word, etc
Results
• Obtained ISO 9001 Certification.
• No corrective actions assigned by the external auditors.
• Overtaken the HQ group in Adelaide and their QMS, which has been in
place for over 5 years.
“The EPC allowed our people to show their processes in an easy
to understand format.”
“It fit- perfectly with the ISO process approach.“
“Auditors understood the method very easily.”
Warren Harrison, Business Improvement Manager
Royal Australian Air Force
Best Practices: Overview
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Best Practice programs help improve
processes for greater efficiency and
standardization.
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Creates a standard for benchmarking.
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Enable swift process improvement and
deployment.
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BPM helps increase overall project
success when handling a best practice
initiative.
Best Practice: ITIL
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ITIL (the IT Infrastructure Library) is the most widely
accepted approach to IT service management in the
world.
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ITIL provides a cohesive set of best practices, drawn
from the public and private sectors internationally.
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Goal: increase the integrity of corporate IT
architectures and to manage the service lifecycle.
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BPM aids in ITIL compliance by:
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Managing the standardization of IT processes.
Performing a gap analysis.
Mapping computer assets to process activities.
Best Practice: APQC PCF
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The American Productivity and Quality Centre (APQC) is a
non-profit organization focused on best practices,
benchmarking, and knowledge management
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Process Classification Framework (PCF) helps organizations
find ways to improve their processes
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PCF includes process specific KPIs
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BPM and PCF go hand in hand:
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They ensure that processes are executed efficiently.
They help improve overall operational efficiency.
Succeeding with BPM
 Keep it Simple
 Create Process Framework across the Enterprise, Multiple levels
 Tie in Policies, Procedures, Resources and Responsibilities
 Create the Culture
 Ensure Compliance means Performance
 Implement Active Life Cycle
 Manage Change
Process Management
What can process management do for my business?
■ Increases Customer & Financer Confidence
■ Brings Operational Consistency
■ Improve Knowledge Management
■ Creates a Culture of Knowledge Sharing
■ Provides Clarity (operational/strategic)
■ Minimizes Human Error
■ Reduces Costs & Increases Cost Avoidance
■ Ensure & Maximize Value to Customers
■ Overall Accountability & Efficiency
Process Management ROI
■ Knowledge Management
■ BPM retains company knowledge
(alleviates Baby Boomer retirement
stress on organizations)
■ Allows for easy training with existing
knowledge
■ Time/Cut Costs
■ Creative/Innovative Process Changes
■ Timely Access to Information
■ Timely Executions
Direct IMPACT on your BOTTOM LINE = Σ all ROI above
Interfacing Professional Services
San Francisco Public Utilities Commission
Interfacing Service Products
Process
Readiness
Assessment
Process Discovery
Readiness
Executive Level
Commitment
Process Readiness
vs. Company Goals
Quick Start
Program.
Installation
Configuration
End User Training
Admin Training
Solution
Design
Sarbanes-Oxley
ISO 9000
ITIL
Other Regulatory
Compliance
Monitoring and Improvement
Process Automation Review
Goal Review, KPI & Dashboard Design
Process Portfolio Management
Process Improvement Workshops
Business Process Management Framework Deployment
Process
Modeling
Training
Modeling Principles
Modeling Business
Processes
Framework
Design
Process Orientation
Content Structure Design
Organization, Resource Library
design
Accountability Structure
Design
Guidelines and Good Practices
Process Framework Audit
Framework Design Review
Sample Process Audit
Deployment Program Execution Review
Audit Report & Recommendations
6 Phases For Successful BPM Program
Process Maturity Matrix
Continuous Process
Improvement via
Feedback & Collaboration,
In-Depth Analysis &
Review, Automation &
Monitoring
Risk Management
Organizational Innovation & Deployment
Causal Analysis & Resolution
Processes are Measured,
Maintained & Controlled
Quantitative Process Management
Software Quality Management
Organizational Process Focus
Processes Standardized
& Reused Across
Organizational Units
Organizational Process Definition
Organizational Training
Implement Best Practice Frameworks/Methodology
Integrated Teaming
Integrated Supplier Management
Decision Analysis & Resolution
Small Scale Processes are
Understood & Documented
Ad-hoc & Chaotic - Knowledge
is Stored Only in Employee
Computers
Requirements Managed
Process/Product Planning
Project Monitoring & Control
Measurement & Analysis
Efficient Planning & Proposals
Product & Process Quality Assurance
Design
Develop
Integrate
Test
Mapping & Data Gathering Workshop
Interfacing Employs a 10 Step Process Workshop Methodology:
1. Identify the process “as you know it” that will be modeled.
2. Pinpoint the corresponding process (or processes) in the Best Practice Framework (BPF).
3. Review & customize the sub-processes under this BPF process, and select which ones to model.
4. Define the SIPOC for each sub-process to set the scope.
5. Identify the process details: activities, the performer(s) and the material flow.
6. Simplify the flow by merging activities.
7. Determine whether to group activities into sub-processes.
8. Review the materials (inputs, outputs).
9. Attach relevant documentation: policies, procedures, forms and reference files.
10. Validate the processes!!!
Using Best Practice Frameworks &
Methodologies
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Process Maturity & Benchmarking Matrix
APQC’s Process Classification Framework
SIPOC
Six Sigma – DMAIC
ADKAR – Change Management
Industry Specific Best Practice Methods:
• eTOM – Telecom Framework
• ITIL – IT Framework
• SCOR – Supply Chain
• COSO & COBIT – Control Management
APQC – Process Classification Framework
APQC – Process Classification Framework
Key Performance Indicators (KPI) :
Recruit, Select, and Hire Employees
•Average days to fill open positions
•Average days between opening and fill
•Ratio of acceptances to hires
•Ratio of acceptances to offers
•Ratio of qualified applicants to total applicants
Developing and Managing Human Capital
SIPOC
Candidate:
[fulfills job
requirements]
Candidate:
[short-listed]
Exam
Results:
[passed]
Process Swimlane
ADKAR – Change Management Model
Process Improvement Methodology
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
Improve & Manage
Change
Control, Review &
Adapt
Keys to success:
• Start with a small process that can be completed in a short time frame to
gain experience and confidence.
• Start with non-strategic processes where you have the authority to carry
out proposed changes.
• Set clear and realistic timelines and expectations.
• Focus on the short term payoff.
• Do not spread resources thinly.
• Build your team so that you have all the necessary skills within it.
• Consider bringing in an outsider to gain a fresh perspective.
• Management and primary stakeholders must be involved, or else even a
limited implementation will fail.
Define an Area for Improvement
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
Improve & Manage
Change
Control, Review &
Adapt
• Identify the cause of the problem & how it impacts:
– customer satisfaction
– employee involvement
– financial returns
• What are the potential risks
– in doing the project?
– in not completing the project?
• Ensure alignment across all areas of the company. Improving isolated
processes leads to frustration and does not benefit customers, employees or
shareholders.
• Obtain the commitment and visible involvement of top management.
• Create cross functional teams.
Measure Performance
Define an Area for
Improvement
Measure
Performance
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Analyze &
Benchmark
Improve & Manage
Change
Key Performance Indicators (KPIs) must
– be linked to the company’s strategy & goals
– reflect what’s important to the company’s customers
– be quantifiable
– be specific
KPIs should include a balance of
– result metrics: measure the output quality
– process metrics: help in predicting the process output
Track only the most important KPIs. Keep things simple and clear.
Set realistic targets.
Roll-up KPI metrics into meaningful dashboards.
KPIs must be revisited and fine-tuned periodically.
Communicate KPIs to all employees!
Link employee performance to KPIs.
Control, Review &
Adapt
Analyze
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
• Cleanse your data to ensure
integrity.
• Look for recurring patterns.
• Averages can be misleading.
• Move past the symptoms to reveal
the root cause of issues.
Improve & Manage
Change
Control, Review &
Adapt
Analyze & Benchmark
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
Improve & Manage
Change
Control, Review &
Adapt
• Collaborate: Identify, share, and leverage knowledge and best practices:
– Across your organization
– With other organizations
• Benchmark regularly against other companies: Measure the process against a
set of established benchmarks.
• Build control points into a process: process owners, customers, & stakeholders
should be able to decide if the process is meeting current benchmarks.
Improve
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
Improve & Manage
Change
Control, Review &
Adapt
• Create To-Be processes and simulate.
– Automate manual tasks
– Re-organize the workforce
– Eliminate duplicate or unnecessary activities
• When designing new processes, do not think of existing procedures – Be
Creative!
• Performing process improvement is a project, so all principles of project
management apply.
• Measure twice, but cut once: Be clear about the impact on other processes
before rolling out changes that affect others.
Manage Change
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
Tools to manage change
Improve & Manage
Change
Phases of change
Communications
Awareness
Awareness
Sponsor roadmap
Desire
Training
Knowledge
Knowledge
Resistance Management
Coaching
Ability
Ability
Reinforcement
Reinforcement
©Prosci. Used with permission under terms of license agreement.
Control, Review &
Adapt
Control, Review & Adapt
Define an Area for
Improvement
Measure
Performance
Analyze &
Benchmark
Improve & Manage
Change
Control, Review &
Adapt
• Establish who owns a business process. Without personal responsibility, the
process will fail.
• Processes are living and breathing entities, evolving over time. They should be
reviewed and audited every 3 to 12 months.
• Standardize similar processes: Leverage best practice processes within your
own organization.
Benchmarking Maturity Matrix
The Benefits of Risk Management
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Risk management allows business owners to include risks in their business
strategy, allowing them to:
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Achieve Compliance (SOX, ISO, Basel etc)
Easily provide audit trails
Enhance visibility and transparency
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Prioritize risks - divide and conquer
Improve reliability
Decrease breakdowns and downtime
Increase product quality
Risk Management – A Business Imperative
Identifying Risk
Virtually Every Business Process Has Associated Risks
Risk Management
Identify Risks.
Implement Controls to Mitigate those Risks.
Risk/Control Matrices
Controls
Name
Consult Better
Business Bureau
Objective (point)
Owners
Ensure Valid Vendor
Accounts
Payable Clerk
Require 3 References
Ensure Valid Vendor
From Vendors
Accounts
Payable Clerk
Compare P.O. to
Price List
Accounts
Payable Clerk
Ensure Genuine P.O.
Details
Orders >50K Require Ensure Genuine Order
Accounting
Management
- Increase
Manager
Approval Process
Accountability
Activity Linked
To
Description
ID#
COSO Man/Auto P/D Key Control
Consult better business
bureau to conduct
Enter Vendor Into
BV238
background check and
System
ensure vendor competency
Request 3 reference letters
Enter Vendor Into
to ensure business etiquette
DJ937
System
of vendor
Verify that P.O.
Compare P.O. to price list
Has Been
to ensure pricing and
DK438
Entered Into
quantities are valid
System
Send orders >50K through
management approval
Approve Invoice LC929
process to ensure maximum
accountability
R
M
D
Y
I
M
P
Y
R
M
D
Y
M
A
P
Y
Risk
Name
Type
Fraudulent
Vendors
Entered Into
System
Financial
P.O. Fraud Financial
Impact Likelihood
Gross
Risk
5
3
15
5
4
20
Net
Associated Control(s) Impact Net Likelihood
Reference
Check/Consult Better
Business Bureau
Compare P.O. To
Price List/Management
Approval
Net Risk
Effectiveness of
Controls
Priority
4
1
4
73%
Very Low
2
4
17
15%
High
Business Rules
Formalize Company Policies
Key Benefits
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Enforce company policy
through standardized rule
objects
• Model operations, definitions,
and constraints
• Manage change more
efficiently
• Maintain rules separately from
processes
Best Practice: ITIL V3
ITIL V3® - Information Technology Infrastructure Library
Provides Best Practice IT Service Management Processes.
Service Delivery
Service Support
Security Management
Source: iET Solutions, 2008.
BPM and Risk Management
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BPM grants your company the ability to visualize
and manage the flow of activities that comprises
your company operations.
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For any company there are hundreds of processes that are
executed daily.
BPM eliminates inefficiencies and bottlenecks that lead to poor
company performance and reduced profit.
The ability to see the as-is state of your company allows for
greater versatility and understanding when planning for risk.
Risk can be found at any point in your processes.
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By combining BPM and Risk Management, you gain the ability to
manage risks along the dynamic process dimension.
This allows your company to implement specific context-sensitive
controls.
By managing risks and controls in a process framework, you can
ensure that controls are implemented effectively.
gets results…
with clear guidelines
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Set the Strategy and Involve Stakeholders
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Put Pressure from the top and Get Buy-in from the bottom
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Give Management Ownership
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Distribute Accountability to Employees
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Plan & Implement efficient & effective Workshops
■ Use SIPOC, lay it out as you know it
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Match with Best Practice Framework
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Integrate the Knowledge: Policies, Procedures
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Analyze the current process and examine changes
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Review with employees to bounce ideas & attain feedback on potential changes
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Get the buy-in from both management & end-users to a new “to be” process
Maintain Collaboration & Open lines of Communication between all levels of the
organization & across departments
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Establish a Process Centric Culture & Long-term ROI effects
EPC 5:
Product Demonstration
San Francisco Public Utilities Commission
Agenda
Company
Overview
EPC Product
Demonstration
BPM Positioning &
Process Maturity
Clients &
Industries
EPC Web Portal
EPC Modeler
Employee
Experience
Building a Model
Service Products
EPC Architecture
EPC Modules
Overview
Interfacing Technologies Corporation
MS Visio Process Modeling
Improved MS Visio Process Modeling
Business Process Management
2000
1997
2008
Process simulation and analysis
1994
Interfacing has provided BPM Software
and services for over 20 years.
1.
2.
3.
4.
5.
Established in 1983
Numerous awards
Established the FirstSTEP
Fortune 500 clients
Partnerships
Our full range of products bring key
benefits to your business:
1.
2.
3.
4.
5.
6.
7.
Analyze and correct process inefficiencies.
Manage risk factors.
Reduce process costs.
Improve operational efficiency.
Adapt quickly to change.
Clarify accountability and ownership.
Provide process knowledge across
organizational boundaries.
From Chaos to Order
From Chaos to Order
Level 1
Initial
Processes are
Ad-hoc and chaotic
Level 2
Level 3
Level 4
Defined
Repeatable
Small Scale Processes
Understood & Repeatable
Processes Documented
& Standardized
Across Organization
Process Maturity Model
Level 5
Managed
Processes are
Measured & Controlled
Optimized
Feedback For
Continuous Process
Improvement
EPC Management Modules
Organizational Management
Resources
Roles
Assets
Organization
Processes
Documents
Business Intelligence - Performance
Risks
Rules
Services
Master Data
Process Management
Order Entry
Order
fulfillment
Notify
failure to
Client
To order
fulfillment
Enter
Order
Request
Submit
Order
Request
Organization
Save
Order
Request
Processes
Validate
Order
Request
Save
Validated
Order
Documents
Business Intelligence - Performance
Notify
Success to
client
Risks
Rules
Services
Master Data
Document Management
Notify
failure to
Client
Enter
Order
Request
Organization
Save Order
Request
Processes
Validate
Order
Request
Save
Validated
Order
Documents
Business Intelligence - Performance
Notify
Success to
client
Risks
Rules
Services
Meta Data
Risk Management
Notify
failure to
Client
Enter
Order
Request
Submit
Order
Request
Validate
Order
Request
Save Order
Request
Save
Validated
Order
Notify
Success to
client
IT Risk: Ensure
Unableproper
to saveredundant
order
IT Control:
request
due to are
corrupt
database.
systems
in place.
Organization
Processes
Documents
Business Intelligence - Performance
Risks
Rules
Services
Master Data
Business Rule Management
Notify
failure to
Client
Enter
Order
Request
Save Order
Request
Validate
Order
Request
Save
Validated
Order
Notify
Success to
client
Submit
Order
Request
Organization
Processes
Documents
Business Intelligence - Performance
Risks
Rules
Services
Master Data
Meta Data Management
Notify
failure to
Client
Enter
Order
Request
Save Order
Request
Validate
Order
Request
Save
Validated
Order
Notify
Success to
client
Order
Request
Organization
Processes
Documents
Business Intelligence - Performance
Risks
Rules
Services
Master Data
Services Management
Notify
failure to
Client
Enter
Order
Request
Save Order
Request
Validate
Order
Request
Save
Validated
Order
Notify
Success to
client
Submit
Order
Request
Organization
Processes
Documents
Business Intelligence - Performance
Risks
Rules
Services
Master Data
Business Intelligence
Organization
Processes
Documents
Business Intelligence - Performance
Risks
Rules
Services
Master Data
Architecture
Our Clients
Thank You!
www.interfacing.com