Growing a BPM Center of Excellence

Michael zur Muehlen, Ph.D.Stevens Institute of TechnologyHowe School of Technology ManagementCenter for Business Process InnovationHoboken, New [email protected]

Building BPM CompetencyGrowing a Center of Excellence

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Agenda

Background

What is your challenge?

How good are you?

How good do you want to become?

Components

Mechanics

Tools

Skills

Governance

Culture

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“They have done process innovation very well,” says Nelson Fraiman, a professor at Columbia Business School [...] “Product innovation? No. But tell me one Chinese company that has done product innovation very well. They are brilliant at process. I think you should give a cheer for process innovation.”

Source: New York Times, November 9, 2012

What’s your Challenge?

Increase Transparency

Standardize Operations

Manage Risk

Increase Performance

Create Innovation

Often: All of the above

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Why BPM?

5

0 75 150 225 300

Number of Responses

216

146

117

106

68

50

Cost/ProductivityResponsivenessCustomer SatisfactionInnovationImprove ITRisk Management

Source: BPTrends

Do Process Managers Exist?

6

19%

32%

27%

13%

10%

Value Chain ManagerProcess Manager for Major ProcessesProcess Manager for Speci!c ProcessesAll Managers are Process ManagersOther

Source: BPTrends

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Visibility

Paper

8

Industrial BPM

Input Channels

BusinessProcess

Management= Work

Management

Process Types

White collar production managementTransparent work pipelineAutomation, but only if not

too complex / rareregulatory requirementslack of economies of scale

Phone

Fax

E-mail

Process 1

Process 2

...

Process n

Web

9

Search processes using‣technical and‣business criteria

Display shows ‣status‣start time‣end time‣instance data

Industrial Back-Of!ce

10

Task Management

How Good Are You?

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Governance Method IT Support People CultureStrategic Alignment

Process Roles and Responsibilities

Process Design & Modeling

Process Skills & Expertise

Process Values & Beliefs

Process Improvement Plan

Decision-making Processes

Process Implementation &

Execution

Process Education & Training

Process Attitudes & Behaviors

Strategy & Process Capability Linkage

Process Management Standards

Process Improvement & Innovation

Process Knowledge Management

Leadership Attention to Process

Process Output Measurement

Process Metrics & Performance Linkage

Process Control & Measurement

Process Collaboration & Communication

Responsiveness to Process Change

Process / Business Architecture

Process Management Controls

Process Project & Program

Management

Process Management Leaders

Process Social Networks

Process Customers & Stakeholders

Business Process Management Maturity Model

Process Design & Modeling

Process Implementation &

Execution

Process Improvement & Innovation

Process Control & Measurement

Process Project & Program

Management

P"1 P"2 P"3& P"4&

Design Purpose The$process$has$not$been$designed$on$an$end1to1end$basis.$Functional$managers$use$the$legacy$design$primarily$as$a$context$for$functional$performance$improvement.$

The$process$has$been$redesigned$from$end$to$end$in$order$to$optimize$its$performance.$

The$process$has$been$designed$to$fit$with$other$enterprise$processes$and$with$the$enterprise’s$IT$systems$in$order$to$optimize$the$enterprise’s$performance.$

The$process$has$been$designed$to$fit$with$customer$and$supplier$processes$in$order$to$optimize$inter1enterprise$performance.$

Context The$process’s$inputs,$outputs,$suppliers,$and$customers$have$been$identified.$

The$needs$of$the$process’s$customers$are$known$and$agreed$upon.$

The$process$owner$and$the$owners$of$the$other$processes$with$which$the$process$interfaces$have$established$mutual$performance$expectations.$

The$process$owner$and$the$owners$of$customer$and$supplier$processes$with$which$the$process$interfaces$have$estab1lished$mutual$performance$expectations.$

Documentation The$documentation$of$the$process$is$primarily$functional,$but$it$identifies$the$interconnections$among$the$organiza1tions$involved$in$executing$the$process.$

There$is$end1to1end$documentation$of$the$process$design.$

The$process$documentation$describes$the$process’s$inter1faces$with,$and$expectations$of,$other$processes$and$links$the$process$to$the$enterprise’s$system$and$data$architecture.$

An$electronic$representation$of$the$process$design$supports$its$performance$and$management$and$allows$analysis$of$environmental$changes$and$process$reconfigurations.$

Performers Knowledge Performers$can$name$the$process$they$execute$and$identify$the$key$metrics$of$its$performance.$

Performers$can$describe$the$process’s$overall$flow;$how$their$work$affects$customers,$other$employees$in$the$pro1cess,$and$the$process’s$performance;$and$the$required$and$actual$performance$levels.$

Performers$are$familiar$both$with$fundamental$business$concepts$and$with$the$drivers$of$enterprise$performance$and$can$describe$how$their$work$affects$other$processes$and$the$enterprise’s$performance.$

Performers$are$familiar$with$the$enterprise’s$industry$and$its$trends$and$can$describe$how$their$work$affects$inter1enterprise$performance.$

Skills Performers$are$skilled$in$problem$solving$and$process$improvement$techniques.$ Performers$are$skilled$in$teamwork$and$self1management.$ Performers$are$skilled$at$business$decision$making.$ Performers$are$skilled$at$change$management$and$change$

implementation.$

Behavior Performers$have$some$allegiance$to$the$process,$but$owe$primary$allegiance$to$their$function.$

Performers$try$to$follow$the$process$design,$perform$it$cor1rectly,$and$work$in$ways$that$will$enable$other$people$who$execute$the$process$to$do$their$work$effectively.$

Performers$strive$to$ensure$that$the$process$delivers$the$results$needed$to$achieve$the$enterprise’s$goals.$

Performers$look$for$signs$that$the$process$should$change,$and$they$propose$improvements$to$the$process.$

Owner Identity The$process$owner$is$an$individual$or$a$group$informally$charged$with$improving$the$process’s$performance.$

Enterprise$leadership$has$created$an$official$process$owner$role$and$has$filled$the$position$with$a$senior$manager$who$has$clout$and$credibility.$

The$process$comes$first$for$the$owner$in$terms$of$time$allo1cation,$mind$share,$and$personal$goals.$

The$process$owner$is$a$member$of$the$enterprise’s$most$senior$decision1making$body.$

Activities The$process$owner$identifies$and$documents$the$process,$communicates$it$to$all$the$performers,$and$sponsors$small1scale$change$projects.$

The$process$owner$articulates$the$process’s$performance$goals$and$a$vision$of$its$future;$sponsors$redesign$and$im1provement$efforts;$plans$their$implementation;$and$ensures$compliance$with$the$process$design.$

The$process$owner$works$with$other$process$owners$to$integrate$processes$to$achieve$the$enterprise’s$goals.$

The$process$owner$develops$a$rolling$strategic$plan$for$the$process,$participates$in$enterprise1level$strategic$planning,$and$collaborates$with$his$or$her$counterparts$working$for$customers$and$suppliers$to$sponsor$inter1enterprise$process1redesign$initiatives.$

Authority The$process$owner$lobbies$for$the$process$but$can$only$encourage$functional$managers$to$make$changes.$

The$process$owner$can$convene$a$process$redesign$team$and$implement$the$new$design$and$has$some$control$over$the$technology$budget$for$the$process.$

The$process$owner$controls$the$IT$systems$that$support$the$process$and$any$projects$that$change$the$process$and$has$some$influence$over$personnel$assignments$and$evaluations$as$well$as$the$process’s$budget.$

The$process$owner$controls$the$process’s$budget$and$exerts$strong$influence$over$personnel$assignments$and$evaluations.$

Infrastructure Information Systems Fragmented$legacy$IT$systems$support$the$process.$ An$IT$system$constructed$from$functional$components$sup1ports$the$process.$

An$integrated$IT$system,$designed$with$the$process$in$mind$and$adhering$to$enterprise$standards,$supports$the$process.$

An$IT$system$with$a$modular$architecture$that$adheres$to$industry$standards$for$interenterprise$communication$sup1ports$the$process.$

Human Resource Systems Functional$managers$reward$the$attainment$of$functional$excellence$and$the$resolution$of$functional$problems$in$a$process$context.$

The$process’s$design$drives$role$definitions,$job$descrip1tions,$and$competency$profiles.$Job$training$is$based$on$pro1cess$documentation.$

Hiring,$development,$reward,$and$recognition$systems$em1phasize$the$process’s$needs$and$results$and$balance$them$against$the$enterprise’s$needs.$

Hiring,$development,$reward,$and$recognition$systems$rein1force$the$importance$of$intra1$and$interenterprise$collabora1tion,$personal$learning,$and$organizational$change.$

Metrics Definition The$process$has$some$basic$cost$and$quality$metrics.$ The$process$has$end1to1end$process$metrics$derived$from$customer$requirements.$

The$process’s$metrics$as$well$as$cross1process$metrics$have$been$derived$from$the$enterprise’s$strategic$goals.$

The$process’s$metrics$have$been$derived$from$interenter1prise$goals.$

Uses Managers$use$the$process’s$metrics$to$track$its$perfor1mance,$identify$root$causes$of$faulty$performance,$and$drive$functional$improvements.$

Managers$use$the$process’s$metrics$to$compare$its$perfor1mance$to$benchmarks,$best1in1class$performance,$and$cus1tomer$needs$and$to$set$performance$targets.$

Managers$present$the$metrics$to$process$performers$for$awareness$and$motivation.$They$use$dashboards$based$on$the$metrics$for$day1to1day$management$of$the$process.$

Managers$regularly$review$and$refresh$the$process’s$met1rics$and$targets$and$use$them$in$strategic$planning.$

largely$true$ somewhat$true$

largely$untrue$

Organization of BPM Initiatives

12

23%

46%

16%

15%

Did not identify or de!ne speci!c Process TeamIdenti!ed and de!ned Internal Process TeamPlan to create BPM COESuccessfully implemented BPM COE

Source: Palmer (2007)

Organization of BPM Initiatives

13

36%

18%

16%

15%

1%4%5%

6%

No formal BPM GroupBPM Group at Executive LevelBPM Group at Departmental LevelBPM Group in ITBPM Group within HRBPM Group within FinanceBPM Group within Quality ControlOther

Source: BPTrends

14

BPM Capability GrowthSource: Forrester (2009)

Mechanics

15

16

“Vision without execution is hallucination” Thomas Alva Edison

Scheduled Project Time during First BPM Project

5% 3%

41%

4%9%

11%

12%

7%

8%

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Business CaseProject Team SelectionProcess DiscoveryDocumentationFunctional and Technical Speci!cationTools Evaluation and SelectionImplementationTesting and DebuggingDeployment and Training

Source: BPTrends (2006)

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Normal FlowTask

End EventStart Event / Event

PoolData-Based XOR

Start MessageText Annotation

Message FlowParallel Fork/Join

LanesGateway

Sub-Process (Collapsed)AssociationData Object

Intermediate TimerIntermediate Message

End TerminateSub-Process (Expanded)

End LinkDefault Flow

Inclusive Decision/MergeActivity LoopingException Task

Start LinkEnd Message

End ExceptionComplex Decision/Merge

Event-Based XORMultiple Instance

GroupTransaction

Intermediate EventEnd Cancel

CompensationIntermediate Compensation

Conditional FlowException Flow

Intermediate LinkStart Timer

Off-page connectorStart Rule

Intermediate RuleIntermediate Multiple

End CompensationStart Multiple

Intermediate ExceptionIntermediate Cancel

End MultipleCompensation Association

source: zur Muehlen, Recker (2007)

Process Description Levels

Process Groupings

Business Activities

Core Processes

Business Process Flows

Detailed Process Flows

Level A

Level B

Level C

Level D

Level E

Level F

ObjectivesBusiness Activities

Delivery Units Products

Processes Systems

Scorecard

Sub Processes Roles System Functions

Operational Process Flows

Detailed Processes TransactionsDetailed Roles

Delivery Teams

Ownership ServicesProcess Groupings

Core processes

Source: British Telecommunications plc 2006

What

How

Tools

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21

“All models are wrong, some are useful”George P.E. Box

Collaboration

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Tools

Use Cases

Documentation

Modeling

Analysis

Simulation

Execution

Prediction

User Groups

Line of Business

Software Engineers

Business Analyst

Enterprise Architect

Executives

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Skills24

BPM Project Issues

25

Project Management

MaintenanceDesignSetup

Modelers Users Info. Providers

Tools and Lang.

Commitment to Change

Value Proposition Governance

Strategy-related Issues

Top Management

Support

End-goal perceptions

Economic Value (economics)

PoliticsCommit-ment to

long term

ROI Justification

Sponsorship

Lack of value metrics (i.e.,

Balanced Scorecard)

Corporate standards

Focus on Initiatives

Incentives

Governance

Lack of Benchmarks

Costs

New tool acquisition

Training

Costs associated with

updating the models

Ownership of models

Lack of control

Lack of coordination

point

Strategy-related Issues26

Process Modeling Life Cycle Issues

Setup

Lack of common

methodology

Design

Consoli-dation and Integration

Lack of modeling objectives

Lack of standards for reuse

Variant management

InfrastructureModel quality

assuranceRework Timeliness

Corporate modeling standard

Level of abstraction

Modeling guidelines

Maintenance

Model maintenance

Modeling-related Issues27

Resource-related Issues

Process Modeler

BPM education

Model User

Integration of activities

Level of expertise

and experience

Cost efficiency

Capability to abstract

Turnaround time

Knowledge sharing

Level of complexity

Hierarchical decompo-sition of models

Tool and Language

Lack of model

utilization

Resistance to change / adoption of

BPM

Lack of transfer

Lack of communication

Lack of using full toolset

features

Intellectual property

Limited access to repository

Information Provider

Loss of knowledge

Lack of adequate

toolset

Integration with other modeling

tools

Lack of good graphical process mapping

Lack of efficient repository search

engine

Resource-related Issues28

Different Perspectives

Who is in charge?

What are the possible

outcomes?What’s the

overall status?

What happens

next?

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Process Analyst Process Modeler Systems AnalystBPM Project/Program

ManagerProcess Owner

Responsibility

Process identi!cation, performance analysis, redesign, monitoring, continual improvement

Process documentation, architecture development, high-level work"ow implementation

Process implementation, systems integration, interface design

Project/program planning, scheduling, oversight, staf!ng, reporting

Oversee individual process, staf!ng, monitoring of key performance indicators, sponsorship of process improvement efforts

Tools Used

Process modeling toolset, Simulation tool, Business Intelligence tools

Process modeling toolset

Work"ow automation, application integration, software development

Project management toolset

Process dashboard, Business Intelligence tools

Domain Expertise

Process application area (eg. procurement), Data analytics, Quality management, Reengineering

Process documentation technique (eg. BPMN)

Process implementation platform (eg. BPMS), Systems Integration (eg. SOA)

Project management, Process improvement methodology

Domain of the individual process, process performance measurement (eg. linkage to balanced scorecard)

Typical DegreeMBA, MS in IS, ME in Industrial Engineering

BS in IS, BE in Industrial Engineering

MS in IS, CS or related discipline

Business Administration background

MBA

Typical Background

Business Administration; Operations Research; Industrial Engineering

Information Systems; Industrial Engineering

Information Systems; Computer Science; Systems Engineering

Business Administration

Business Administration

External Certi!cation(s)

Business Analyst Body of Knowledge (BABOK), Lean Six Sigma Green Belt / Black Belt / Master Black Belt

OMG Certi!ed Expert in BPM, Lean Six Sigma Black Belt

OMG Certi!ed UML Professional

Project Management Institute (PMI) Certi!ed Project Management Professional (PMP)

n/a

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Governance

Stra

tegy

Re

visi

on

Process Metrics

Export for other reporting purpose

ProcessImplementation

ProcessDesign

Process Enactment

Process Evaluation

Process Models

Impl

emen

ted

Proc

esse

s

Mea

sure

s fo

r Im

prov

emen

t

Process Metrics

Mea

sure

-m

ents

Process Monitoring

Goal Specification,Strategy Definition

Targ

et M

etri

cs

Modeling and Specification

Build Time / Integration

Run Time / Task and Resource

Allocation

Business Activity Monitoring

Process Mining / Warehousing

OrganizationalAnalysis

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Business Process Management

Business Process Automation

Business Process Innovation

Business Process Monitoring

Stra

tegy

Re

visi

on

Process Metrics



ProcessDesign

Process Enactment

Process Evaluation

Process Models

Impl

emen

ted

Proc

esse

s

Mea

sure

s fo

r Im

prov

emen

t

Process Metrics

Mea

sure

-m

ents

Process Monitoring


Targ

et M

etri

cs




Allocation




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Manage Change

Manage Execution

Stra

tegy

Re

visi

on

Process Metrics



ProcessDesign

Process Enactment

Process Evaluation

Process Models

Impl

emen

ted

Proc

esse

s

Mea

sure

s fo

r Im

prov

emen

t

Process Metrics

Mea

sure

-m

ents

Process Monitoring


Targ

et M

etri

cs




Allocation




34





ReactiveProblemSolving

Anticipatory Problem Solving

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Who Owns the Process?

CoreProcess 2

CoreProcess 4

Core Process 3

Core Process 1

CoreProcess 5

Product Line 1

Product Line 2

Product Line 3

Product Line 4

Product Line 5

Process Manager

Process Manager

Process Manager

Process Manager

Process Manager

Compare: Sainsbury (2006)

36

Process Ownership

Source: Sainsbury (2006)

Roles &Responsi-

bilities

Process Owners

ProcessManagers

37

Enterprise Process Map: Fortune 500

Methods Organization

Levelconcept

Conventionhandbook

Modelinghandbook

CorporateModelingService

38

BPM Roles - Example

Focus Role Objective

Process Sponsor

Process Framework Executive

Process Executive

Process Owner

Process Manager

Process DB Manager

Process Modeler

Strategic

Operational

SharedService

Responsible for ARIS

Modeling Processes

Implement & Optimize

Process Performance Management

Standardize & Optimize

Facilitate & Drive

Method & Compatibility

LevelCorporate Regional

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Culture

40

“If it doesn’t make three people angry, it is not a process”

Beyond Reengineering (Michael Hammer, 1996)

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Process Improvement vs. Established Practice

Does your BPM specialist look like this?

42

Or like this? 43

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“You know, the cultural change takes time,” Mr. Smisek said. “And people resist change. People are sort of set in their ways.” [...]“And there are people who don’t like that,” he said. “I understand that. What I want is those people to either change or leave.”

Source: New York Times, November 29, 2012

Takeaways

De!ne your challenge

Assess your skills

Determine how you will learn

Match the mechanics to your needs

Invest in tools, but not too much

Grow skills, and spread them

Be clear about your culture, and how it will change

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Thank You - Questions?

Michael zur Muehlen, Ph.D.

Center for Business Process Innovation

Howe School of Technology Management

Stevens Institute of Technology

Castle Point on the Hudson

Hoboken, NJ 07030

Phone: +1 (201) 216-8293

Fax: +1 (201) 216-5385

E-mail: [email protected]

Web: http://www.stevens.edu/bpm

slides: www.slideshare.net/mzurmuehlen

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