BPM 2008
Business Process Management
Today and Tomorrow
Paul Harmon
Executive Editor
Business Process Trends
©2008 BPTrends Associates. All Rights Reserved.
Agenda
• Yesterday
– Independent process traditions, each with
their own theories and practices
• Today
• Tomorrow
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Business Process Traditions
Business Management
Work Simplification
Business
Process
Management
Quality Control, Six Sigma, Lean
BPMS
Information Technology
1900
Ford – Contentious Production Line
Taylor – Scientific Management
WW II –
Production
First Computers
Outsourcing
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Internet
2000
2008
3
The Simplification/Quality Tradition
Main Focus: Continuous Process Improvement
Gurus: Shewhart, Demings, Juran, Ohno, Womack
Organizations: ASQ, ISSSP
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Six Sigma at the Process Level: DMAIC
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LEAN Flow Kaizen: Value-Stream Mapping
Start
/End
An Enterprise Level
LEAN Modeling
Technique
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Capability Maturity Model Integrated (CMMI)
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The Process Management Tradition
Main Focus: Improvement of Organization Performance
Gurus: Rummler, Porter, Heskett, Kaplan & Norton
Organizations: HBR, ISPI, SCC
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The Organization and the Value Chain
Management
Engineering
new
need
identified
Production
Finance
Marketing
Sales &
Support
Product Value Chain
promotions
new product design
Research & Create
New Product
Promote & Sell Product
order
product available
order
Customers
Make & Deliver Products
materials
product delivered
Suppliers
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Rummler’s Performance Model
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Rummler’s Process Management Model
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Michael Porter’s Value Chain Model
From Michael Porter, Competitive Advantage, Harvard, 1985
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Kaplan and Norton’s Balanced Scorecard
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Aligning Balanced Scorecards
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Dividing Up the Scorecard Between Function and Process
Balanced Business Scorecard
Financial Perspective
Innovation & Learning Perspective
Goals
Measures
Goals
Measures
Survive
Cash flow
Technology
leadership
Time to develop next generation
Succeed
Quarterly sales growth & operating
income by division
Manufacturing
learning
Process time to maturity
Product focus
Percent of products that equal 80%
sales
Prosper
Increased market share and ROE
Time to market
New product interdiction vs.
competition
Customer Perspective
Internal - Process Perspective
Goals
Measures
Goals
Measures
Technology
capability
Manufacturing geometry vs.
competition
New products
Percent of sales from new products,
Percent of sales from proprietary
products
Manufacturing
experience
Cycle time, Unit cost, Yield
Design
productivity
New product
introduction
Silicon efficiency, Engineering
efficiency
Actual introduction schedule vs. plan
Goal – Measure most likely assigned to Process Manager
Response
supply
Preferred
supplier
Customer
partnership
On-time delivery (defined by
customer)
Share of key accounts' purchases,
Ranking by key accounts
Number of cooperative engineering
efforts
Goal – Measure most likely assigned to Functional Manager
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Functional vs. Process Measures
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Information Technology Tradition
Main Focus: Process Automation
Gurus: Martin, Scheer, Hammer, Smith & Fingar...
Organizations: ISO, WfMC, IEEE, OMG, IIBA, Gartner…
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Agenda
• Yesterday
• Today
Some Interesting Developments
– Frameworks
– Value Chains vs Networks
– ERP and BPMS
– The Uses of BPMS
– BPMN and Business Rules
– Modeling Customer Processes
• Tomorrow
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Business Process Traditions
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SCOR’s Business Process Framework
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SCOR Benchmarks Provide Instant ROI
Supply Chain SCORcard
EXTERNAL
Overview Metrics SCOR Level 1 Metrics
Industry Benchmarks
Actual
Parity
Advantage
Superior
Delivery Performance
to Commit Date
50%
85%
90%
95%
Supply Chain
Reliability
Fill Rates
63%
94%
96%
98%
0%
80%
85%
90%
$30M Revenue
Responsiveness
Perfect Order
Fulfillment
Order Fulfillment
Lead Times
Supply Chain
Response Time
35 days
7 days
5 days
3 days
$30M Revenue
97 days
82 days
55 days
13 days
Key enabler to cost and
asset improvements
Production Flexibility
45 days
30 days
25 days
20 days
Total SCM
Management Cost
19%
13%
8%
3%
$30M Indirect Cost
Warranty Cost
NA
NA
NA
NA
NA
NA
$156K
$306K
$460K
NA
119 days
55 days
38 days
22 days
NA
196 days
80 days
46 days
28 days
$7 M Capital Charge
2.2 turns
8 turns
12 turns
19 turns
NA
Flexibility
INTERNAL
Cost
Assets
Value Added Employee
Productivity
Inventory Days of
Supply
Cash-to-Cash Cycle
Time
Net Asset Turns
(Working Capital)
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Value from Improvements
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Value Chain vs. Level 1 Processes (Value Nets)
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Value Chains or Common Processes
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Value Chains vs. Common Processes
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ERP Reality: Multiple, Customized ERP Instances
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Standardizing Processes to Standardize
Instances
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The Future Promise: ERP Modules Managed by BPMS
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Computing Domains
CEO
SVP
VP
SVP
VP
SVP
e.g. Spreadsheets, Email,
Groupware, Decision
Support Systems
VP
Software for
Various
Special
Projects
VP
Project
Planning
Mang.
Process
Modeling
Software
Development
e.g. ERP, Tailored Applications
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Two Ways of Thinking About BPMS
Software for
Various
Special
SVP
SVP
A BPMS Application created to help a business manager manage Projects
CEO
VP
VP
e.g. Spreadsheets, Email,
Groupware, Decision
Support Systems
BPMS
SVP II
VP
a processVP
Project
Planning
Mang.
Process
Modeling
BPMS I
A BPMS Application created to automate a process
Software
Development
e.g. ERP, Tailored Applications
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BPMN Diagrams
Fulfill Online Book Order
Customer
Company
Web Portal
Order
System
Place
Order
Revise
Order
Receive
Order
order incomplete:
Ask customer for
more information
Review
Order
order requires
special processing
Exceptions
Clerk
Recieve
Books
order
rejected
Close
Order
order accepted Send
workorder to shipping
Re-Review
Order
Packaging
Fill Order
books
Shipping
Credit Card
Approval
Center
credit card
approval
Ship
Order
Review-Approve
Charge
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The Tax Return Solution
Customer
Submit Tax
Return
Tax Agency
Evaluate
Tax Return
Process
Tax Return
• Rule 1
If the received date of the tax return is less than 6 months
in the past, and
A claims a payment not received, or
A credit elect for a tax return from the same taxpayer for a
previous year has not been posted,
Then the tax return for a given year must be held.
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Modeling Customer Processes
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Agenda
• Yesterday
• Today
• Tomorrow
– A continued interest in processes, and,
perhaps an integrated process management
practice at the heart of the organization
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Why Process?
• Process describes how we do work in our
organizations
• Change forces organizations to change how they
do work
• The near future will be unrelenting change
– New technologies
– New customer demands
– New markets throughout the world
– Overcapacity, intense global competition, acquisitions
– Outsourcing and specialization
– Greening of Process
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Product/Technology Lifecycles
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What’s Involved in BPM?
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Trying to Find a Common Language
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Some Major Types of Process Problems
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Another View of the Three Perspectives
M Porter
G Rummler
MANAGEMENT
Haskett
HBS, ISPI, SCC
Emphasis on performance,
on measurement, process
ownership, alignment with strategy,
with customer satisfaction,
shareholders, and competitive
advantage
Kaplan & Norton
Balanced Scorecard
OR Frameworks (SCOR)
M. Hammer
Capability Maturity Model
ReEngineering
T Davenport
QUALITY
FW Taylor
Lean Six Sigma
Emphasis on
E Deming
product quality and
consistency, on
J Juran
continuous process
improvement, and
S Shingo
on creating a
culture that cares
T Ohno
about process
J Womack
ASQ, ISSSP
Emphasis on using
Business Rules
computer systems to
automate processes,
on reengineering to
make the best use of
new computing
techniques and on
IDS Scheer
analytics
WfMC, IIBA, OMG,
BPMI, Gartner
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Slides Available Later This Week
• Go to www.bptrends.com
• Search for
BPM2008HarmonKeynote
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