MTAT 03 231 Business Process Management BPM for

MTAT. 03. 231 Business Process Management (BPM) (for Masters of ETM) Lecture 3 Process Implementation & Monitoring Marlon Dumas marlon. dumas ät ut. ee

Business Process Lifecycle Management • Process identification • • • Process modelling (as-is) Process analysis Process redesign (to-be) Process implementation Process monitoring 2 2

Process Implementation

Harmon’s Process-centric Enterprise Architecture 4 Harmon (2004)

Process Implementation • Organisational Change and Enablement – User Participation – User Training – Change Planning and Management • IT Implementation – Custom Software Application • In-house development • Outsourced – Packaged Enterprise System – Business Process Management System (BPMS) 5

IT Implementation – Packaged Enterprise Systems Typically classified into: • ERP: Enterprise Resource Planning, including – Manufacturing, inventory control, procurement, financials, human resources • SCM: Supply Chain Management, including – Material acquisition (forecasting, planning), logistics/transportation – Supplier relationship management • CRM: Customer Relationship Management – Marketing, lead management, sales • These functions may come together, or acquired separately – E. g. Salesforce (mainly CRM), SAP Business Suite, Oracle E-Business Suite, Microsoft Dynamics AX. 6

ERP Systems • Multi-module application that helps a company manage key parts of its business in an integrated fashion. • Key features include: – standardized environment with shared database independent of applications and integrated applications – enables information flow across organizational boundaries to support common transactions and business processes – intended to be customized for specific companies • database configuration • bolt-on software 7

ERP System Legacy Systems Data Warehouse ERP System On-Line Analytical Processing (OLAP) Bolt-On Applications (Industry Specific Functions) Suppliers Customers Core Functions [On-Line Transaction Processing (OLTP)] Sales & Distribution Business Planning Shop Floor Control Logistics Operational Database Customers, Production, Vendor, Inventory, etc. © Sumit Lodhia 8

Business Process Execution Engines Big Vendors • • Oracle SOA Suite IBM BPM Microsoft Biz. Talk Microsoft Windows Workflow Foundation • SAP Net. Weaver BPM Other closedsource • Biz. Agi • Progress Savvion • Metastorm BPM • TIBCO Active. Matrix BPM Commercial Open-Source • Intalio|BPM • Activiti • Bonita. Soft Community Open-Source • YAWL • Enhydra Shark 9

Danske Bank: Customer Package Process Juni 2003 August 2003 October 2003 December 2003 Marts 2007 Introduction of Customer packages. Word template to collect info 10 © Steen Brahe, Danske Bank

Danske Bank: Customer Package Process Juni 2003 August 2003 October 2003 December 2003 Marts 2007 Backoffice group created Handles the creation process 11 © Steen Brahe, 2007

Danske Bank: Customer Package Process Juni 2003 August 2003 October 2003 December 2003 Marts 2007 Case Transfer System Automatic validation and transfering 12 © Steen Brahe, 2007

Danske Bank: Customer Package Process Juni 2003 August 2003 October 2003 December 2003 Marts 2007 Workflow enabled creation process v. 1 Automatic process control, 0% automated activities 13 © Steen Brahe, 2007

Danske Bank: Customer Package Process Juni 2003 August 2003 October 2003 December 2003 Marts 2007 Workflow v. 6 80% automated activities 14 © Steen Brahe, 2007

Process Monitoring & Mining

Process Monitoring Process design Strengths/ weaknesses Process design Implementation Process execution (Re-) implementiation Process Monitoring Analysis Process execution © Michael zur Muehlen 16

Types of Process Monitoring • Runtime Monitoring (Business Activity Monitoring) – Viewing the load of the process – Identifying problematic cases – Identifying late cases (risk of missing deadlines), etc. • Post-mortem Monitoring (aka Business Process Analytics) – Performance KPIs: cycle times, resource utilization, error rates, … – Identification of bottlenecks • See for example: – Biz. Agi BAM: http: //wiki. bizagi. com/en/index. php? title=Analysis_Reports_BAM – Analytics: http: //wiki. bizagi. com/en/index. php? title=Analysis_Reports_Analytics 17

Process Monitoring: Dashboards Process Cycle Time of Order Processing Process Frequency of Order Processing Process Cycle Time of Order Processing split up to different Plants IDS (2003) 18

Process Mining Tools • • • ARIS Process Performance Manager Perceptive Process Mining Fujitsu Interstage (BPM Analytics) Fluxicon Pro. M (open-source) 20

Process Mining – The Pro. M Framework www. workflowcourse. com 21

Pro. M Demo http: //www. processmining. org/ www. workflowcourse. com 22

Beyond Monitoring - Process Controlling • Collation and analysis of runtime data • Comparison of actual- and target data • Active impact on current process execution as well as future process modeling (target) Goal: Improvement of an enterprise‘s adaptability to changes in the environment and in the enterprise itself 23

Process Controlling Ø Objective: ü Establish a system for controlling the process and providing feedback to the people involved Establish Control Points • Control points are activities such as – Inspection, verification, auditing, measuring, counting… – Usually considered business value adding • Without control points and a control system the only way of assessing process performance is customer feedback Þ The process ends up in a reactive mode Þ Poor quality is discovered too late • Location of control points is determined by – Criticality – impact on customer satisfaction – Feasibility – physically and economically possible Laguna & Marklund 24

Process Controlling (cont. ) Develop and Implement Measurements • Involves answering the questions 1. What is to be measured and controlled? 2. What is currently measured (available data)? 3. Can a business case be made for a new measurement system? 4. What is an adequate sampling method, sampling size & frequency? Laguna & Marklund 25

Reference Models Performance Measures in SCOR Overall Inventory Turns Annual cost of goods sold (company info) average total inventory Raw Materials Inventory Turns (manufacturing companies only) Annual cost of raw materials purchased (3) average raw material inventory Work-in-Process Inventory Turns (manufacturing companies only) (Annual cost of raw materials purchased (3) + Annual cost of conversion (4)) average work in process inventory Finished Goods Inventory Turns Annual cost of goods sold (company info) average finished goods inventory Average safety stock total inventory Percentage of safety stock Purchase order cycle time (in days for purchasing department and excludes supplier lead time) Average amount of time (in days) elapsed from point of intention to place order to receipt of order by vendor Supplier lead time Average amount of time (in days) elapsed from point of order to delivery Supplier on-time delivery Percentage of orders supplier delivers on scheduled due date Find more at: http: //www. exinfm. com/workshop. html 26

Benchmarking: SCORcards T. Gulledge & T. Chavusholu: “Automating the construction of supply chain key performance indicators”, Industrial Management & Data Systems, 2008. 27

Exercise • CVS Case Study – Which performance measures is your to-be process intended to improve? – How would you monitor these performance measures? – How would you ensure that pharmacies are indeed applying the principles of the to-be process? 28

Recap: The Layers of BPM Activities BPM Setup Strategic Alignment BPM Governance BPM Process-aware Methodology Infom. Systems Culture & People Process Analysis Process Identification Process Modelling Process Measurement Process Analysis Process Improvement Process Training Process Testing Change Management Process Perform. Mgt. Process Controlling Process Implementation Lean/ Six Sigma Process Configuration Process Development Process Execution and Controlling Process Execution Process Monitoring Process Mining 29